Prospectus Mecenate 2009

Transcription

Pursuant to article 2, paragraph 3, of Italian law No. 130 of 30 April 1999
Mecenate S.r.l.
(incorporated with limited liability under the laws of the Republic of Italy)
€401,300,000 Class A-2009 Residential Mortgage-Backed Floating Rate Notes due 2047
€82,750,000 Class B-2009 Residential Mortgage-Backed Floating Rate Notes due 2047
Issue Price for all Classes of Notes: 100 per cent.
This Prospectus contains information relating to the issue by Mecenate S.r.l. (the “Issuer”) of the €401,300,000 Class A-2009 Residential Mortgage-Backed Floating Rate Notes due 2047 (the “Class A Notes”)
and the €82,750,000 Class B-2009 Residential Mortgage-Backed Floating Rate Notes due 2047 (the “Class B Notes” and, together with the Class A Notes, the “Rated Notes”). In connection with the issue of
the Rated Notes, the Issuer will also issue the €12,954,000 Class C-2009 Residential Mortgage-Backed Floating Rate Notes due 2047 (the “Junior Notes” and, together with the Rated Notes, the “Notes”). The
Rated Notes and the Junior Notes will be subscribed by BancaEtruria Società Cooperativa, having its registered office at via Calamandrei, 255, I-52100 Arezzo, Italy (“BancaEtruria” or the “Originator”).
The Issuer is a limited liability company incorporated under the laws of the Republic of Italy under article 3 of Italian law No. 130 of 30 April 1999 (Disposizioni sulla cartolarizzazione dei crediti), as amended
from time to time (the “Securitisation Law”) having its registered office at via Calamandrei, 255, I-52100 Arezzo, Italy and registered with the Bank of Italy pursuant to, respectively, article 106 and article 107
of Italian legislative decree No. 385 of 1 September 1993 (the “Banking Act”). The Issuer is directed and co-ordinated (soggetta all’attività di direzione e coordinamento) by BancaEtruria and belongs to the
BancaEtruria Banking Group (as defined below).
This Prospectus is issued pursuant to article 2, paragraph 3 of the Securitisation Law and constitutes a prospetto informativo for all Classes of Notes in accordance with the Securitisation Law. The Junior Notes
are not being offered pursuant to this Prospectus.
The proceeds of the issue of the Notes will be applied by the Issuer to fund the purchase of a portfolio of residential mortgage loans which qualify either as mutui fondiari or as mutui ipotecari owed to
BancaEtruria (the “Claims”). The Claims have been transferred to the Issuer pursuant to the terms of a transfer agreement dated 7 January 2009, and subsequently amended on 30 January 2009, between the
Issuer and BancaEtruria. The principal source of funds available to the Issuer for the payment of interest and the repayment of principal on the Notes will be collections received in respect of the Claims.
Interest on the Notes is payable by reference to successive interest periods (each an “Interest Period”). Interest on the Notes will accrue on a daily basis and will be payable in arrear in euro on 22 April 2009,
being the first Interest Payment Date (as defined below), and thereafter quarterly in arrear on 22 July, 22 October, 22 January and 22 April in each year (in each case, subject to adjustment for non-business days
as set out in Condition 6 (Interest)) (each such date, an “Interest Payment Date”). Prior to the service of an Issuer Acceleration Notice, the rate of interest applicable to the Rated Notes for each Interest Period
shall be the rate offered in the euro-zone inter-bank market (“EURIBOR”) for three-month deposits in euro (save that for the first Interest Period the rate will be obtained upon linear interpolation of EURIBOR
for two and three-month deposits in euro) (as determined in accordance with Condition 6 (Interest)), plus the following margins in respect of each Class of Rated Notes:
Class
Applicable margin
Class A Notes
0.20 per cent. per annum
Class B Notes
0.50 per cent. per annum
This Prospectus has been approved by the Irish Financial Services Regulatory Authority (the “Financial Regulator”), as competent authority under Directive 2003/71/EC (the “Prospectus Directive”). The
Financial Regulator only approves this Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. Such approval relates only to the Rated Notes which are to
be admitted to trading on the regulated market of the Irish Stock Exchange or other regulated markets for the purposes of Directive 2004/39/EC or which are to be offered to the public in any Member State of
the European Economic Area. Application has been made to the Irish Stock Exchange for the Rated Notes to be admitted to the Official List and trading on its regulated market. No application has been made to
list the Junior Notes on any stock exchange.
The Class A Notes are expected, on issue, to be rated “AAA” by Fitch Ratings Ltd. (“Fitch”). The Class B Notes are expected, on issue, to be rated “BBB-” by Fitch. A credit rating is not a recommendation
to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by Fitch. Credit ratings address the likelihood of timely payment of interest at the applicable rate
of interest on each Interest Payment Date on the Class A Notes, the ultimate payment of interest at the applicable rate of interest on the Class B Notes and the ultimate payment of the Principal
Amount Outstanding of the Rated Notes at the Maturity Date. The Junior Notes will not be assigned a rating.
Payments under the Notes may be subject to withholding for or on account of tax, or to a substitute tax, in accordance with Italian legislative decree No. 239 of 1 April 1996, as subsequently amended. Upon the
occurrence of any withholding for or on account of tax, whether or not in the form of a substitute tax, from any payments under the Notes, neither the Issuer nor any other person shall have any obligation to pay
any additional amount to any holder of Notes of any Class.
The Notes will be limited recourse obligations solely of the Issuer. In particular, the Notes will not be obligations or responsibilities of, or guaranteed by, the Representative of the Noteholders, the Principal
Paying Agent, the Listing Agent, the Agent Bank, the Collection Account Bank, the Transaction Bank, the Corporate Servicer, the Computation Agent, the Servicer, the Swap Counterparty, the Swap Guarantor,
the Transaction Bank Guarantor (each as defined below in “Key features – The Principal Parties”), BancaEtruria (in any capacity), the Underwriter, the Arranger nor the shareholders of the Issuer. Furthermore,
none of such persons accepts any liability whatsoever in respect of any failure by the Issuer to make payment of any amount due on the Notes.
The Notes will be issued in dematerialised form (emesse in forma dematerializzata) on the terms of, and subject to, the Conditions and will be held in such form on behalf of the beneficial owners, until
redemption and cancellation thereof, by Monte Titoli S.p.A. with registered office at via Mantegna, 6, I-20154 Milan, Italy (“Monte Titoli”) for the account of the relevant Monte Titoli Account Holders. The
expression “Monte Titoli Account Holders” means any authorised institution entitled to hold accounts on behalf of their customers with Monte Titoli (and includes any Relevant Clearing System which holds
account with Monte Titoli or any depository banks appointed by the Relevant Clearstream System), société anonyme (“Clearstream, Luxembourg”) and Euroclear Bank S.A./N.V. as operator of the Euroclear
System (“Euroclear”). The Notes will be deposited by the Issuer with Monte Titoli on 2 February 2009, will at all times be in book entry form and title to the Notes will be evidenced by book entry in
accordance with the provisions of article 28 of Italian legislative decree No. 213 of 24 June 1998 and with the regulation issued by the Bank of Italy and the Commissione Nazionale per le Società e la Borsa
(“CONSOB”) on 22 February 2008, as subsequently amended. No physical document of title will be issued in respect of the Notes.
The Notes will mature on the Interest Payment Date (as defined below) which falls in October 2047 (the “Maturity Date”), subject as provided in Condition 8 (Payments). Before the Maturity Date, the Notes
will be subject to mandatory and/or optional redemption in whole or in part in certain circumstances (as set out in Condition 7 (Redemption, purchase and cancellation)).
The Class A Notes will be redeemed in priority to the Class B Notes and the Junior Notes (except if, and for so long as, the Pro-Rata Amortisation Conditions (as defined below) are met, when the Rated Notes
of all Classes will rank pari passu among themselves). The Class B Notes will be redeemed in priority to the Junior Notes (except if, and for so long as, the Pro-Rata Amortisation Conditions (as defined below)
are met, when the Rated Notes of all Classes will rank pari passu among themselves).
If the Class A Notes, the Class B Notes and/or the Junior Notes cannot be redeemed in full on the Maturity Date as a result of the Issuer having insufficient funds available to it in accordance with the terms and
conditions of the Notes (the “Conditions” and each, a “Condition”) for application in or towards such redemption, including the proceeds of any sale of Claims or any enforcement of the Note Security (as
defined below), any amount unpaid shall remain outstanding and the Conditions shall continue to apply in full in respect of the Notes until the earlier of (i) the date on which the Notes are redeemed in full and
(ii) the Cancellation Date (as defined below), at which date any amounts remaining outstanding in respect of principal or interest on the Notes shall be reduced to zero and deemed to be released by the holder of
the relevant Notes and the Notes shall be cancelled.
The Issuer has no assets other than those described in this Prospectus. For a discussion of certain risks and other factors that should be considered in connection with an investment in the Rated Notes,
see the section entitled “Risk factors” beginning on page 41.
Arranger
UBS Investment Bank
The date of this Prospectus is 2 February 2009.
This Prospectus comprises a prospectus for the purposes of article 5.4 of the Prospectus Directive and for the
purpose of giving information with regard to the Issuer and the Rated Notes which according to the particular
nature of the Issuer and the Rated Notes, is necessary to enable investors to make an informed assessment of the
assets and liabilities, financial position, profit and losses and prospects of the Issuer.
This Prospectus has been prepared on the basis that any offer of Notes in any Member State of the European
Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) will be made
pursuant to an exemption under the Prospectus Directive, as implemented in that Relevant Member State, from the
requirement to publish a prospectus for offers of Notes. Accordingly any person making or intending to make an
offer in that Relevant Member State of Notes which are the subject of the offering contemplated in this Prospectus
may only do so in circumstances in which no obligation arises for the Issuer or the Arranger to publish a prospectus
pursuant to article 3 of the Prospectus Directive in relation to such offer. Neither the Issuer nor the Arranger (both
as defined below) have authorised, nor do they authorise, the making of any offer of Notes in circumstances in
which an obligation arises for the Issuer, the Arranger or the Underwriter or to publish a prospectus for such offer.
None of the Issuer, the Representative of the Noteholders, UBS Limited (the “Arranger”) or any other party to any
of the Transaction Documents (as defined below), other than the Originator, has undertaken or will undertake any
investigations, searches or other actions to verify the details of the Claims sold by the Originator to the Issuer, nor
have the Issuer, the Representative of the Noteholders, the Arranger or any other party to any of the Transaction
Documents, other than the Originator, undertaken, nor will they undertake, any investigations, searches or other
actions to establish the creditworthiness of any debtor in respect of the Claims.
The Issuer accepts responsibility for the information contained in this Prospectus. To the best of the knowledge of
the Issuer (which has taken all reasonable care to ensure that such is the case), the information contained in this
Prospectus is in accordance with the facts and contains no omission likely to affect its import. The Issuer, having
made all reasonable enquiries, confirms that this Prospectus contains or incorporates all information which is
material in the context of the issuance and offering of the Notes, that the information contained or incorporated in
this Prospectus is true and accurate in all material respects and is not misleading, that the opinions and intentions
expressed in this Prospectus are honestly held and that there are no other facts the omission of which would make
this Prospectus or any of such information or the expression of any such opinions or intentions misleading. The
Issuer accepts responsibility accordingly.
The Originator has provided the information under the sections headed “The Portfolio and the Provisional
Portfolio”, “The Originator and Servicer”, “The Servicing and collection policies” and any other information
contained in this Prospectus relating to itself, the collection and underwriting procedures relating to the Portfolio,
the Provisional Portfolio, the relevant Claims, Mortgage Loans and Mortgages (each as defined below) and,
together with the Issuer, accepts responsibility for the information contained in those sections. The Originator has
also provided the historical data used as assumptions to make the calculations contained in the section headed
“Estimated weighted average life of the Rated Notes and assumptions” on the basis of which the information and
assumptions contained in the same section have been extrapolated and, together with the Issuer, accepts
responsibility for such historical data. The Issuer accepts responsibility for the other information and assumptions
contained in such section as described above. To the best of the knowledge of the Originator (having taken all
reasonable care to ensure that such is the case) the information and data in relation to which it is responsible as
described above are in accordance with the facts and do not contain any omission likely to affect the import of such
information and data.
UBS Limited has provided the information under the sections headed “The Swap Counterparty and the Swap
Guarantor”, below and, together with the Issuer, accepts responsibility for the information contained in those
sections, and to the best of the knowledge and belief of UBS Limited (having taken all reasonable care to ensure
that such is the case), such information is in accordance with the facts and contains no omission likely to affect its
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import. Save as aforesaid, UBS Limited has not, however, been involved in the preparation of, and does not accept
responsibility for, this Prospectus or any part hereof.
BNP Paribas Securities Services S.A. has provided the information under the sections headed “The Transaction
Bank and the Transaction Bank Guarantor”, below and, together with the Issuer, accepts responsibility for the
information contained in those sections, and to the best of the knowledge and belief of BNP Paribas Securities
Services S.A. (having taken all reasonable care to ensure that such is the case), such information is in accordance
with the facts and contains no omission likely to affect its import. Save as aforesaid, BNP Paribas Securities
Services S.A. has not, however, been involved in the preparation of, and does not accept responsibility for, this
Prospectus or any part hereof.
No person is authorised to give any information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as having been authorised by or on
behalf of the Arranger, the Representative of the Noteholders, the Issuer, the Corporate Servicer, the shareholders
of the Issuer, the Swap Counterparty, BancaEtruria (in any capacity) or any other person. Neither the delivery of
this Prospectus nor any sale or allotment made in connection with the offering of any of the Notes shall, under any
circumstances, constitute a representation or imply that there has been no change in the affairs of the Issuer,
BancaEtruria (in any capacity), UBS Limited or BNP Paribas Securities Services S.A. or in the information
contained herein since the date hereof or the date upon which this Prospectus has been most recently amended or
supplemented or that there has been no adverse change in the financial position of the Issuer, BancaEtruria (in any
capacity), UBS Limited or BNP Paribas Securities Services S.A. since the date hereof or the date upon which this
Prospectus has been most recently amended or supplemented or that the information contained in it or any other
information supplied in connection with the Notes is correct as of any time subsequent to the date on which it is
supplied or, if different, the date indicated in the document containing the same.
To the fullest extent permitted by law and with the exception for the information under section headed “The Swap
Counterparty and the Swap Guarantor”, the Arranger accepts no responsibility whatsoever for the contents of this
Prospectus or for any other statement, made or purported to be made by the Arranger or on its behalf in connection
with the Issuer, UBS Limited or the Originator or the issue and offering of the Notes. The Arranger accordingly
disclaims all and any liability whether arising in tort or contract or otherwise (save as referred to above) which it
might otherwise have in respect of this Prospectus or any such statement.
This Prospectus does not constitute an offer, or an invitation by or on behalf of the Issuer to subscribe or purchase,
any of the Notes, and may not be used for the purpose of an offer to, or a solicitation by, anyone in any jurisdiction
or in any circumstances in which such an offer or solicitation is not authorised or is unlawful.
Each of the Arranger and the Representative of the Noteholders has not independently verified the information
contained herein. Accordingly, no representation, warranty or undertaking, expressed or implied, is made and no
responsibility or liability is accepted by each of the Arranger and the Representative of the Noteholders or any of
them as to the accuracy or completeness of the information contained in this Prospectus or any other information
provided by the Issuer or BancaEtruria in connection with the Notes or their distribution.
The Notes constitute limited recourse obligations of the Issuer. Each Note will be secured, in each case, over
certain of the assets of the Issuer pursuant to and as more fully described in the section entitled “The other
Transaction Documents”, below. Furthermore, by operation of Italian law, the Issuer’s right, title and interest in and
to the Claims will be segregated from all other assets of the Issuer and amounts deriving therefrom will only be
available, both prior to and following a winding-up of the Issuer, to satisfy the obligations of the Issuer to the
holders of the Notes, to pay any costs, fees, expenses and other amounts required to be paid to the Representative
of the Noteholders, the Principal Paying Agent, the Listing Agent, the Agent Bank, the Collection Account Bank,
the Transaction Bank, the Corporate Servicer, the Computation Agent, the Servicer, the Swap Counterparty,
BancaEtruria (in any capacity), the Arranger or the shareholders of the Issuer and to any third-party creditor in
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respect of any costs, fees, expenses or liabilities incurred by the Issuer to such third-party creditor in relation to the
securitisation of the Claims contemplated by this Prospectus (the “Securitisation”). Furthermore, none of such
persons accepts any liability whatsoever in respect of any failure by the Issuer to make payment of any amount due
on the Notes. Amounts derived from the Claims will not be available to any other creditors of the Issuer and will be
applied by the Issuer in accordance with the applicable order of priority for the application of Issuer Available
Funds (as defined below).
The distribution of this Prospectus and the offering, sale and delivery of Notes in certain jurisdictions may be
restricted by law. Persons into whose possession this Prospectus comes are required by the Issuer and the
Underwriter to inform themselves about, and to observe, any such restrictions. Neither this Prospectus nor any part
of it constitutes an offer, and may not be used for the purpose of an offer to sell any of the Notes, or solicitation of
an offer to buy any of the Notes, by anyone in any jurisdiction or in any circumstances in which such offer or
solicitation is not authorised or is unlawful.
This Prospectus is not intended to provide the basis of any credit or other evaluation and should not be considered
as a recommendation by the Issuer, BancaEtruria (in any capacity) or the Arranger that any recipient of this
Prospectus should purchase any of the Notes. Each investor contemplating purchasing Notes should make its own
independent investigation of the Claims, the Portfolio, the Provisional Portfolio and of the financial condition and
affairs, and its own appraisal of the creditworthiness, of the Issuer.
The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the
“Securities Act”), are in bearer form and are subject to U.S. tax law requirements. Subject to certain exceptions,
the Notes may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S.
persons (as defined in Regulation S under the Securities Act). For a further description of certain restrictions on the
offering and sale of the Notes and on distribution of this Prospectus, see “Subscription and sale”, below.
The Notes may not be offered or sold directly or indirectly, and neither this Prospectus nor any other offering
circular nor any prospectus, form of application, advertisement, other offering material nor other information
relating to the Issuer or the Notes may be issued, distributed or published in any country or jurisdiction (including
the Republic of Italy, the United Kingdom and the United States), except under circumstances that will result in
compliance with all applicable laws, orders, rules and regulations. No action has or will be taken which could allow
an offering (offerta al pubblico) of the Notes to the public in the Republic of Italy. For a further description of
certain restrictions on offers and sales of the Notes and the distribution of this Prospectus, see “Subscription and
sale”, below.
Each initial and each subsequent purchaser of a Note will be deemed, by its acceptance of such Note, to have made
certain acknowledgements, representations and agreements intended to restrict the resale or other transfer thereof
as described in this Prospectus and, in connection therewith, may be required to provide confirmation of its
compliance with such resale or other transfer restrictions in certain cases. See “Subscription and sale”, below.
This Prospectus is to be read in conjunction with all the documents which are incorporated herein by reference. See
“Documents incorporated by reference” below.
All references in this Prospectus to “Euro“, “€” and “euro” refer to the currency introduced at the start of the third
stage of European economic and monetary union pursuant to the Treaty establishing the European Community
(signed in Rome on 25 March 1957), as amended.
The language of this Prospectus is English. Certain legislative references and technical terms have been cited in
their original language in order that the correct technical meaning may be ascribed to them under applicable law.
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Table of Contents
Documents incorporated by reference ................................................................................................................ 2
Key features ....................................................................................................................................................... 3
Structure diagram ............................................................................................................................................. 40
Risk factors ...................................................................................................................................................... 41
Credit structure ................................................................................................................................................. 61
The Portfolio and the Provisional Portfolio...................................................................................................... 68
The Originator and Servicer ............................................................................................................................. 77
The Servicing and collection policies .............................................................................................................. 83
The Issuer’s bank accounts............................................................................................................................... 88
Terms and Conditions of the Notes .................................................................................................................. 90
Schedule - Rules of the Organisation of Noteholders .................................................................................... 139
Use of proceeds .............................................................................................................................................. 155
The Issuer ....................................................................................................................................................... 156
The Transaction Bank and the Transaction Bank Guarantor .......................................................................... 162
The Swap Counterparty and the Swap Guarantor .......................................................................................... 163
Selected aspects of Italian law ....................................................................................................................... 164
The Agency and Accounts Agreement ........................................................................................................... 169
The Transfer Agreement ................................................................................................................................. 175
The Servicing Agreement ............................................................................................................................... 182
The Warranty and Indemnity Agreement ....................................................................................................... 188
The other Transaction Documents.................................................................................................................. 207
Estimated weighted average life of the Rated Notes and assumptions........................................................... 212
Taxation in the Republic of Italy .................................................................................................................... 214
Subscription and sale...................................................................................................................................... 219
General information ....................................................................................................................................... 222
Index of defined terms ................................................................................................................................... 226
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DOCUMENTS INCORPORATED BY REFERENCE
This Prospectus should be read and construed in conjunction with the following documents:
(i)
the financial statements of the Issuer as at 31 December 2006; and
(ii)
the financial statements of the Issuer as at 31 December 2007,
together in each case with the report of the auditors of the Issuer thereon, which have been previously
published and which have been filed with the Irish Stock Exchange.
Such documents shall be deemed to be incorporated in, and form part of this Prospectus, save that any
statement contained in a document which is deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for the purpose of this Prospectus to the extent that a statement contained herein
modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement
so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
Copies of documents deemed to be incorporated by reference in this Prospectus may be obtained (without
charge), during usual office hours on any weekday, from the registered office of the Issuer and the Specified
Offices of, respectively, the Representative of the Noteholders and the Principal Paying Agent (as set forth in
Condition 17 (Notices)).
The table below sets out the relevant page references for the financial statements of the Issuer for the financial
years ended 31 December 2006 and 31 December 2007 and the report of the auditors of the Issuer on the
financial statements of the Issuer as at 31 December 2006 and 31 December 2007. Information contained in
the documents incorporated by reference other than information listed in the table below is for information
purposes only, and does not form part of this Prospectus.
Documents
Information contained
Page
Financial statements as at 31 December 2006
Report on the management
4
Balance sheet
12
Income statement
12
Notes to the financial statements
16
Auditors’ report
Report of the auditors on the financial
statements of the Issuer as at 31 December
2006
1
Documents
Page
3
Balance sheet
10
Income statement
10
14
2007
1
Auditors’ report
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KEY FEATURES
The following information is a summary of the transactions and assets underlying the Notes. It has to be read
as an introduction to this Prospectus and is qualified in its entirety by reference to the detailed information
presented elsewhere in this Prospectus and in the Transaction Documents.
Certain terms used in this section, but not defined, may be found in other sections of this Prospectus, unless
otherwise stated. An index of defined terms is contained at the end of this Prospectus, commencing on page
226.
1.
The principal parties
Issuer
Mecenate S.r.l. (the “Issuer”) is a limited liability company incorporated
in the Republic of Italy under article 3 of Italian law No. 130 of 30 April
1999 (disposizioni sulla cartolarizzazione dei crediti), as amended from
time to time (the “Securitisation Law”). The Issuer is registered with the
companies’ register of Arezzo under number 01710160514, with the
general register (elenco generale) held by the Bank of Italy pursuant to
article 106 of Italian legislative decree No. 385 of 1 September 1993 (the
“Banking Act”) under number 33695 and with the special register (elenco
speciale) held by the Bank of Italy pursuant to article 107 of the Banking
Act. The registered office of the Issuer is at via Calamandrei, 255, I-52100
Arezzo, Italy and its tax identification number (codice fiscale) is
01710160514. The Issuer is directed and co-ordinated (soggetta all’attività
di direzione e coordinamento) by BancaEtruria and belongs to the Banca
Etruria Banking Group (as defined below).
The Issuer has been established as a special purpose vehicle for the
purposes of issuing asset-backed securities. The Issuer may carry out other
securitisation transactions in addition to the one contemplated in this
Prospectus, subject to certain conditions.
In accordance with the Securitisation Law, the Issuer has already engaged
in two securitisation transactions carried out in accordance with the
Securitisation Law, completed on 27 March 2002 and on 9 May 2007 and
involving (i) the acquisition of monetary claims and other connected rights
arising from a portfolio of performing residential mortgage loans acquired
from BancaEtruria and (ii) the issue of asset-backed notes in an aggregate
amount of €1,015,230,000 (the “Previous Securitisations Notes”).
See “The Issuer”, “Key features – The Portfolio”, and “The Portfolio and
the Provisional Portfolio”, below.
Shareholders
The equity capital of the Issuer is held by BancaEtruria (having an equity
interest of €9,000, being equal to 90 per cent. of the equity capital of the
Issuer), ConEtruria S.p.A. (having an equity interest of €500, being equal
to 5 per cent. of the equity capital of the Issuer) and Finanziaria Italiana
S.p.A. (having an equity interest of €500, being equal to 5 per cent. of the
equity capital of the Issuer).
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BancaEtruria Società Cooperativa is a bank organised as a cooperative
company (società cooperativa) under the laws of the Republic of Italy,
registered with the companies’ register of Arezzo under number
00367210515 and with the register of banks (albo delle banche) held by
the Bank of Italy pursuant to article 13 of the Banking Act under number
5390.0 (codice meccanografico) (“BancaEtruria”). BancaEtruria is the
parent company of the “Gruppo Banca Etruria” registered with the
register of banking groups held by the Bank of Italy pursuant to article 64
of the Banking Act under number 5390.0 (the “BancaEtruria Banking
Group”). BancaEtruria’s registered office is at via Calamandrei, 255, I52100 Arezzo, Italy.
ConEtruria S.p.A. is an Italian joint stock company (società per azioni),
registered with the companies’ register of Arezzo under number
03942420484, with the register (elenco generale) held by the Bank of Italy
pursuant to article 106 of the Banking Act under number 31588 and with
the special register (elenco speciale) held by the Bank of Italy pursuant to
article 107 of the Banking Act. The registered office of ConEtruria S.p.A.
is at via Calamandrei, 255, I-52100 Arezzo, Italy and its tax identification
number (codice fiscale) is 03942420484. ConEtruria S.p.A. is directed and
co-ordinated (soggetta all’attività di direzione e coordinamento) by
BancaEtruria and belongs to the BancaEtruria Banking Group.
Finanziaria Italiana S.p.A. is an Italian joint stock company (società per
azioni), registered with the companies’ register of Arezzo under number
00103340519. The registered office of Finanziaria Italiana S.p.A. is at via
Ernesto Rossi, 28, I-52100 Arezzo, Italy and its tax identification number
(codice fiscale) is 00103340519.
Originator
BancaEtruria (in such capacity, the “Originator”) sold the Claims to the
Issuer pursuant to the terms of a transfer agreement dated 7 January 2009
(the “Initial Execution Date”) and subsequently amended on 30 January
2009 (the “Signing Date”) between the Issuer and the Originator (the
“Transfer Agreement”).
See “Key features – The Portfolio”, “The Transfer Agreement” and “The
Warranty and Indemnity Agreement”, below.
Representative of the
Noteholders
BNP Paribas Securities Services S.A., a French société anonyme with
capital stock of Euro 165,279,835, having its registered office at Rue
d’Antin, Paris, France, operating for the purpose hereof through its Milan
Branch located in via Ansperto, 5, I-20123 Milan, Italy, registered with the
companies’ register held in Milan, Italy at number 13449250151, fiscal
code and VAT number 13449250151, enrolled in register of banks (albo
delle banche) held by the bank of Italy at number 5483 is the
representative of the holders of the Notes (the “Representative of the
Noteholders”) pursuant to the terms of the Intercreditor Agreement dated
the Signing Date.
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Corporate Servicer
BancaEtruria is the corporate services provider to the Issuer (in such
capacity, the “Corporate Servicer”). Pursuant to the terms of a corporate
services agreement dated the Signing Date (the “Corporate Services
Agreement”), the Corporate Servicer has agreed to provide certain
administrative and secretarial services to the Issuer.
Subordinated Loan Provider
BancaEtruria is the subordinated loan provider (in such capacity, the
“Subordinated Loan Provider”) pursuant to the terms of a subordinated
loan agreement dated the Signing Date (the “Subordinated Loan
Agreement”) between the Issuer, the Representative of the Noteholders
and the Subordinated Loan Provider pursuant to which the Subordinated
Loan Provider has agreed to grant to the Issuer a subordinated loan in an
amount equal to €10,488,000 (the “Subordinated Loan”).
The Subordinated Loan will be repaid in accordance with the applicable
Priority of Payments. The Subordinated Loan will be drawn down by the
Issuer on the Issue Date and immediately credited to the Cash Reserve
Account, except for €50,000 which will be credited to the Expenses
Account. See “Credit structure”, below.
Servicer
BancaEtruria (in such capacity, the “Servicer”) will administer the
Portfolio on behalf of the Issuer pursuant to the terms of a servicing
agreement dated the Initial Execution Date, and subsequently amended on
the Signing Date between the Issuer and the Servicer (the “Servicing
Agreement”).
See “Key features – The Portfolio”, “The servicing and collection
policies”, “The Originator and the Servicer” and “The Servicing
Agreement”, below.
Computation Agent
BNP Paribas Securities Services S.A., a French société anonyme with
capital stock of Euro 165,279,835, having its registered office at Rue
d’Antin, Paris, France, operating for the purpose hereof through its Milan
Branch located in via Ansperto, 5, I-20123 Milan, Italy, registered with the
companies’ register held in Milan, Italy at number 13449250151, fiscal
code and VAT number 13449250151, enrolled in register of banks (albo
delle banche) held by the bank of Italy at number 5483, or any other
person for the time being acting as such, is the computation agent to the
Issuer (in such capacity, the “Computation Agent”) pursuant to the terms
of an agency and accounts agreement dated the Signing Date between the
Issuer, the Representative of the Noteholders, the Computation Agent, the
Collection Account Bank, the Transaction Bank, the Principal Paying
Agent, the Listing Agent and the Agent Bank (the “Agency and Accounts
Agreement”). See “Key features – The Portfolio” and “The Agency and
Accounts Agreement”, below.
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5
Collection Account Bank
BancaEtruria, or any other person for the time being acting as such, is the
collection account bank to the Issuer in respect of the Collection Account
(in such capacity, the “Collection Account Bank”) pursuant to the terms
of the Agency and Accounts Agreement. The Collection Account Bank has
opened, and will maintain, the Collection Account and the Expenses
Account in the name of the Issuer and will operate such accounts in the
name and on behalf of the Issuer.
See “Key features – The Accounts”, “The Agency and Accounts
Agreement”, “The Issuer’s bank accounts” and “The Originator and
Servicer”, below.
Transaction Bank
BNP Paribas Securities Services, London branch, a French société
anonyme with capital stock of Euro 165,279,835, having its registered
office at Rue d’Antin, Paris, France, operating for the purpose hereof
through its London Branch located in 55 Moorgate, London EC2R 6PA,
United Kingdom, or any other person for the time being acting as such, is
the transaction bank to the Issuer in respect of certain of the Issuer’s bank
accounts (in such capacity, the “Transaction Bank”) pursuant to the terms
of the Agency and Accounts Agreement. The Transaction Bank has
opened, and will maintain, certain bank accounts in the name of the Issuer
which will be operated, in the name and on behalf of the Issuer, by the
Computation Agent.
See “Key features – The Accounts”, “The Agency and Accounts
Agreement”, “The Issuer’s bank accounts” and “The Transaction Bank and
the Transaction Bank Guarantor”, below.
BNP Paribas S.A. is the Transaction Bank guarantor (in such capacity, the
“Transaction Bank Guarantor”) under the terms of the Transaction Bank
guarantee (the “Transaction Bank Guarantee”) and which
unconditionally guarantees the obligations of the Transaction Bank under
the Agency and Accounts Agreement.
Principal Paying Agent
BNP Paribas Securities Services S.A., Milan branch, or any other person
for the time being acting as such, is the principal paying agent (in such
capacity, the “Principal Paying Agent”) pursuant to the terms of the
Agency and Accounts Agreement. In addition to the above, the Principal
Paying Agent has opened, and will maintain, the Payments Account in the
name of the Issuer and will operate such account in the name and on behalf
of the Issuer.
Furthermore, should the Issuer resolve to invest in Eligible Investments, in
accordance with the Agency and Accounts Agreement, the Issuer will open
with the Principal Paying Agent the Eligible Investments Securities
Account into which all securities constituting Eligible Investments will be
deposited.
See “Key features – The Accounts” and “The Agency and Accounts
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6
Listing Agent
BNP Paribas Securities Services, Luxembourg Branch, a French société
anonyme with capital stock of Euro 165,279,835, having its registered
office at Rue d’Antin, Paris, France, operating for the purpose hereof
through its Luxembourg Branch located in 33, Rue de Gasperich HowaldHesperange, L-2085 Luxembourg, or any other person for the time being
acting as such, is the listing agent (in such capacity, the “Listing Agent”)
pursuant to the terms of the Agency and Accounts Agreement.
Agent Bank
BNP Paribas Securities Services S.A., Milan Branch, or any other person
for the time being acting as such, is the agent bank (in such capacity, the
“Agent Bank”) pursuant to the terms of the Agency and Accounts
Agreement.
Swap Counterparty
UBS Limited, or any successor swap counterparty appointed from time to
time in respect of the Securitisation, is the swap counterparty (in such
capacity, the “Swap Counterparty”) under the terms of the Swap
Agreement.
See “Credit structure — The Swap Agreement” and “The Swap
Counterparty and the Swap Guarantor”, below.
Swap Guarantor
2.
UBS AG is the swap guarantor (in such capacity, the “Swap Guarantor”)
under the terms of the swap guarantee (the “Swap Guarantee”) and which
unconditionally guarantees the obligations of the Swap Counterparty under
the Swap Agreement.
Summary of the Notes
The Notes
On 2 February 2009 (the “Issue Date”), the Issuer will issue:
(a)
€401,300,000 Class A – 2009 Residential Mortgage-Backed Floating
Rate Notes due 2047 (the “Class A Notes”);
(b) €82,750,000 Class B – 2009 Residential Mortgage-Backed Floating
Rate Notes due 2047 (the “Class B Notes” and, together with the
Class A Notes, the “Rated Notes”); and
(c)
€12,954,000 Class C – 2009 Residential Mortgage-Backed Floating
Rate Notes due 2047 (the “Junior Notes” and, together with the
Rated Notes, the “Notes”).
The Notes will constitute limited recourse obligations of the Issuer. It is
not anticipated that the Issuer will make any profits from this transaction.
The Notes will be governed by Italian law.
Form and denomination of
the Notes
The authorised denomination of the Rated Notes will be €50,000. The
authorised denomination of the Junior Notes will be €1,000.
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The Notes will be issued in dematerialised form (emesse in forma
dematerializzata) and will be wholly and exclusively deposited with
Monte Titoli in accordance with article 28 of Italian legislative decree No.
213 of 24 June 1998, through the authorised institutions listed in article 30
of such legislative decree.
The Notes will be held by Monte Titoli on behalf of the Noteholders until
redemption and cancellation for the account of each relevant Monte Titoli
Account Holder. Monte Titoli shall act as depository for Clearstream,
Luxembourg and Euroclear. The Notes will at all times be in book entry
form and title to the Notes will be evidenced by book entries in accordance
with: (i) the provisions of article 28 of Italian legislative decree No. 213 of
24 June 1998; and (ii) the regulation issued by the Bank of Italy and the
Commissione Nazionale per le Società e la Borsa (“CONSOB”) on 22
February 2008, as subsequently amended. No physical document of title
will be issued in respect of the Notes.
Ranking
In respect of the obligations of the Issuer to pay interest and to repay
principal on the Notes, the terms and conditions of the Notes (the
“Conditions”) and the Intercreditor Agreement provide that:
(a)
in respect of the obligations of the Issuer to pay interest on the Notes
prior to the service of an Issuer Acceleration Notice:
(A) the Class A Notes rank pari passu without any preference or
priority amongst themselves and in priority to the Class B Notes
and the Junior Notes;
(B) the Class B Notes rank pari passu without any preference or
priority amongst themselves and in priority to the Junior Notes,
but subordinate to the Class A Notes; and
(C) the Junior Notes rank pari passu without any preference or
priority amongst themselves, but subordinate to the Rated
Notes,
provided that,
(i)
for so long as there are Class A Notes outstanding, following the
occurrence of the Class B Notes Trigger Event, interest accruing
on the Class B Notes will not be payable and will be deferred
until the Interest Payment Date when all the Class A Notes will
be redeemed in full, subject to the availability of Issuer
Available Funds;
(ii) for so long as there are Rated Notes outstanding, following the
occurrence of the Junior Trigger Event or of the Class B Notes
Trigger Event, interest accruing on the Junior Notes will not be
payable and will be deferred until the Interest Payment Date
when all the Rated Notes will be redeemed in full, subject to the
availability of Issuer Available Funds;
(b) in respect of the obligations of the Issuer to repay principal on the
Notes, prior to the service of an Issuer Acceleration Notice and if, and
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8
for so long as, the Pro-Rata Amortisation Conditions are not met:
(A) the Class A Notes rank pari passu and without any preference or
priority amongst themselves and in priority to repayment of
principal on the Class B Notes and the Junior Notes;
(B) the Class B Notes rank pari passu and without any preference
or priority amongst themselves but subordinate to repayment of
principal on the Class A Notes and in priority to repayment of
principal on the Junior Notes and no amount of principal in
respect of the Class B Notes shall become due and payable or be
repaid until redemption in full of the Class A Notes; and
(C) the Junior Notes rank pari passu and without any preference or
priority amongst themselves but subordinate to repayment of
principal on the Rated Notes and no amount of principal in
respect of the Junior Notes shall become due and payable or be
repaid until redemption in full of the Rated Notes;
(c)
in respect of the obligations of the Issuer to repay principal on the
Notes, prior to the service of an Issuer Acceleration Notice and if, and
for so long as, the Pro-Rata Amortisation Conditions are met:
(A) all Classes of Rated Notes will rank pari passu and without any
preference or priority among themselves and in priority to the
Junior Notes;
(B) the Junior Notes rank pari passu and without any preference or
priority amongst themselves but subordinate to repayment of
principal on the Rated Notes and no amount of principal in
respect of the Junior Notes shall become due and payable or be
repaid until redemption in full of the Rated Notes;
(d) in respect of the obligations of the Issuer (a) to pay interest and (b) to
repay principal on the Notes following the service of an Issuer
Acceleration Notice:
(A) the Class A Notes will rank pari passu without any preference
or priority amongst themselves and in priority to the Class B
Notes and the Junior Notes;
(B) the Class B Notes will rank pari passu without any preference
or priority amongst themselves, but subordinate to payment in
full of all amounts due under the Class A Notes and in priority
to the Junior Notes; and
(C) the Junior Notes will rank pari passu without any preference or
priority amongst themselves, but subordinate to payment in full
of all amounts due under the Rated Notes.
See “Key features - Priorities of Payments”, “Key features – Optional
Redemption”, “Risk factors - Subordination and credit enhancement” and
“Terms and Conditions of the Notes”, below.
Limited recourse nature of
the Issuer’s obligations under
The obligations of the Issuer to each of the holders of the Notes will be
limited recourse obligations of the Issuer. The Noteholders will have a
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9
the Notes
claim against the Issuer only to the extent of the Issuer Available Funds, in
each case subject to and as provided in the Intercreditor Agreement and the
other Transaction Documents.
Costs
The costs of the transaction (with the exception of certain initial costs of
setting up the transaction which will be paid by the Originator) including
the amounts payable to the various agents of the Issuer appointed in
connection with the issue of the Notes, will be funded from the Issuer
Available Funds and will therefore be included in the Priority of Payments.
Interest on the Notes
The Class A Notes and the Class B Notes will bear interest on their
Principal Amount Outstanding from and including the Issue Date at a rate
equal to EURIBOR (as determined by the Agent Bank in accordance with
the Conditions) plus the following margins:
(a)
in respect of the Class A Notes, a margin of 0.20 per cent. per annum;
and
(b) in respect of the Class B Notes, a margin of 0.50 per cent. per annum.
The Junior Notes will bear interest in accordance with Conditions 6(c)
(Rate of interest on the Notes) and 6(d) (Interest on the Junior Notes).
Interest on each Class of Notes will be payable in euro in arrear on each
Interest Payment Date subject to the applicable Priority of Payments and
subject as provided in Condition 8 (Payments).
“Interest Payment Date” means (a) prior to the service of an Issuer
Acceleration Notice, 22 April 2009 (being the first Interest Payment Date),
and, thereafter 22 July, 22 October, 22 January and 22 April in each year
(or, if any such date is not a Business Day, that date will be the first
following day that is a Business Day unless that day falls in the next
calendar month in which case that date will be the first preceding day that
is a Business Day) and (b) following the service of an Issuer Acceleration
Notice, the day falling 10 Business Days after the Accumulation Date (if
any) or any other day on which any payment is due to be made in
accordance with the Post-Enforcement Priority of Payments, the
Conditions and the Intercreditor Agreement.
“Business Day” means a day on which banks are open for business in
Milan, Dublin and London and which is a TARGET Settlement Day.
“Principal Amount Outstanding” means, on any day:
(a)
in relation to each Class, the aggregate principal amount outstanding
of all Notes in such Class; and
(b) in relation to a Note, the principal amount of that Note upon issue
less the aggregate amount of all Principal Payments in respect of that
Note which have become due and payable (and which have actually
been paid) on or prior to that day.
Maturity Date of the Notes
Save as described below and unless previously redeemed in full, the Issuer
will redeem the Notes at their respective Principal Amounts Outstanding
on the Interest Payment Date falling in October 2047 (the “Maturity
Date”).
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See “Key features – Optional Redemption”, below.
If the Class A Notes, the Class B Notes and/or the Junior Notes cannot be
redeemed in full on the Maturity Date, as a result of the Issuer having
insufficient funds available to it in accordance with the Conditions for
application in or towards such redemption, including the proceeds of any
sale of Claims or any enforcement of the Note Security, any amount
unpaid shall remain outstanding and the Conditions shall continue to apply
in full in respect of the Notes until the earlier of (i) the date on which the
Notes are redeemed in full and (ii) the Cancellation Date, at which date
any amounts remaining outstanding in respect of principal or interest on
any Notes shall be reduced to zero and deemed to be released by the holder
of the relevant Notes and the Notes shall be cancelled. The Issuer has no
assets other than the Claims and the Issuer’s Rights (as defined below) as
described in this Prospectus as well the Previous Portfolio (as defined
below) and the agreements entered into by the Issuer in relation to the
Previous Securitisations (as defined below) which, however, do not
constitute collateral for the Notes and are not available to the Noteholders.
“Cancellation Date” means the later of (i) the last Business Day in
October 2052; (ii) the date when the Portfolio Outstanding Amount will
have been reduced to zero; and (iii) the date when all the Claims then
outstanding will have been entirely written off by the Issuer.
Withholding tax on the Notes
A Rated Noteholder (as defined below) who is resident for tax purposes in
a country which does not allow for a satisfactory exchange of information,
without a permanent establishment in Italy to which the Rated Notes are
effectively connected, will receive amounts of interest payable on the
Rated Notes net of Italian withholding tax referred to as a substitute tax
(any such withholding or deduction for or on account of Italian tax under
Decree 239, a “Decree 239 Withholding”).
Upon the occurrence of any withholding for or on account of tax, whether
or not through a substitute tax, from any payments of amounts due under
the Notes, neither the Issuer, the Representative of the Noteholders, the
Principal Paying Agent nor any other person shall have any obligation to
pay any additional amount to any Noteholders.
See “Taxation in the Republic of Italy”, below.
Security for the Notes
By operation of Italian law, the Issuer’s right, title and interest in and to the
Claims will be segregated from all other assets of the Issuer and amounts
deriving therefrom will only be available, both prior to and following a
winding-up of the Issuer, to satisfy the obligations of the Issuer to the
holders of the Class A Notes (the “Class A Noteholders”), the holders of
the Class B Notes (the “Class B Noteholders” and, together with the Class
A Noteholders, the “Rated Noteholders”) and the holders of the Junior
Notes (the “Junior Noteholders” and, together with the Rated
Noteholders, the “Noteholders”), each of the Other Issuer Creditors and
any third-party creditor to whom the Issuer has incurred costs, fees,
expenses or liabilities in relation to the securitisation of the Claims
(together, the “Issuer Creditors”).
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The Issuer will grant the following security:
(i)
an Italian law deed of pledge to be executed on or around the Issue
Date (the “Italian Deed of Pledge”) pursuant to which the Issuer
will grant in favour of the Issuer Secured Creditors, concurrently
with the issue of the Notes, an Italian law pledge over all monetary
claims and rights and all the amounts (including payment for
claims, indemnities, damages, penalties, credits and guarantees) to
which the Issuer is entitled from time to time pursuant to the
Transfer Agreement, the Warranty and Indemnity Agreement, the
Agency and Accounts Agreement (other than in respect of certain
provisions of the Agency and Accounts Agreement which are
governed by English law), the Servicing Agreement, the
Intercreditor Agreement, the Corporate Services Agreement, the
Letter of Undertaking, the Subordinated Loan Agreement, the
Underwriting Agreement and the Shareholders’ Agreement; and
(ii)
an English law deed of charge and assignment to be executed on or
around the Issue Date (the “English Deed of Charge and
Assignment” and the security created thereunder, together with the
security created under the Italian Deed of Pledge, the “Note
Security”) pursuant to which the Issuer will grant in favour of the
Representative of the Noteholders for itself and as trustee for the
Noteholders and the other Issuer Secured Creditors, inter alia, (a)
an English law charge over the Transaction Accounts; (b) an
English law assignment by way of security of all the Issuer’s rights
under the Swap Agreement and the Swap Guarantee, the provisions
of the Agency and Accounts Agreement which are governed by
English law, the Transaction Bank Guarantee and all future
contracts, agreements, deeds and documents governed by English
law to which the Issuer may become a party in relation to the Notes,
the Claims and the Portfolio; and (c) a floating charge over all of
the Issuer’s assets which are subject to the charge and assignments
described under (a) and (b) above and not effectively assigned
thereunder.
“The other Transaction Documents – The Italian Deed of Pledge”, the
“The other Transaction Documents – The English Deed of Charge and
Assignment” and “Terms and Conditions of the Notes”, below.
Intercreditor Agreement
On the Signing Date, the Issuer, the Representative of the Noteholders on
its own behalf and on behalf of the Noteholders, the Principal Paying
Agent, the Listing Agent, the Agent Bank, the Computation Agent, the
Collection Account Bank, the Transaction Bank, the Swap Counterparty,
BancaEtruria (in any capacity), the Corporate Servicer, the Subordinated
Loan Provider, the Servicer and the Underwriter (with the exception of the
Issuer and the Noteholders, the “Other Issuer Creditors”) have entered
into an intercreditor agreement (the “Intercreditor Agreement”) pursuant
to which the Other Issuer Creditors have agreed to the limited recourse
nature of the obligations of the Issuer and to the Priority of Payments
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described below. The Intercreditor Agreement is governed by Italian law.
Mandate Agreement
Pursuant to the terms of a mandate agreement dated the Signing Date (the
“Mandate Agreement”), the Representative of the Noteholders is
empowered to take such action in the name of the Issuer, inter alia,
following the service of an Issuer Acceleration Notice, as the
Representative of the Noteholders may deem necessary to protect the
interests of the Noteholders and the Other Issuer Creditors. The Mandate
Agreement is governed by Italian law.
Purchase of the Notes
The Issuer may not purchase any Notes at any time.
Listing of the Rated Notes
Application has been made for the Rated Notes to be listed on the Irish
Stock Exchange. No application has been made to list the Junior Notes on
any stock exchange.
Ratings
Upon issue it is expected that:
(a)
the Class A Notes will be rated “AAA” by Fitch; and
(b) the Class B Notes will be rated “BBB-” by Fitch.
A credit rating is not a recommendation to buy, sell or hold securities and
may be subject to revision, suspension or withdrawal at any time by Fitch.
Credit ratings address the likelihood of timely payment of interest at the
applicable rate of interest on each Interest Payment Date on the Class A
Notes, the ultimate payment of interest at the applicable rate of interest on
the Class B Notes and the ultimate payment of the Principal Amount
Outstanding of the Rated Notes at the Maturity Date.
The Junior Notes will not be assigned a rating.
As of the date of this Prospectus the unsecured, unsubordinated debt
obligations of Banca Etruria is rated by Fitch as follows:
(a)
“F2” by Fitch (in respect of short-term debt); and
(b) “BBB+” by Fitch.
If the long-term unsecured, unsubordinated debt obligations of Banca
Etruria ceases to be rated at least the rating assigned by Fitch to the then
outstanding Class B Notes as at the time of the relevant downgrading or
withdrawal, this might result in Fitch reviewing the Class B Notes credit
rating and likely in a downgrade of the rating assigned to the Class B
Notes.
Selling Restrictions
There are restrictions on the sale of the Notes and on the distribution of
information in respect thereof.
See “Subscription and sale”, below.
3.
The Portfolio
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Transfer of the Claims
On the Initial Execution Date, pursuant to the Transfer Agreement, the
Issuer purchased without recourse (pro soluto) from BancaEtruria the
monetary claims and other connected rights (the “Claims”) arising from a
portfolio of (i) residential mortgage loans which qualify as mutui fondiari
(the “Fondiari Mortgage Loans”) and (ii) other residential mortgage
loans which do not qualify as mutui fondiari (the “Ipotecari Mortgage
Loans”) (together with the Fondiari Mortgage Loans, the “Mortgage
Loans” or the “Portfolio”) owed to BancaEtruria.
The payment of the purchase price of the Claims to the Originator will be
financed by, and will be limited recourse to, the proceeds of the issue of
the Notes on the Issue Date.
See “The Portfolio and the Provisional Portfolio” and “The Transfer
Warranties in relation to the
Portfolio
On the Initial Execution Date, the Issuer and the Originator entered into a
warranty and indemnity agreement, subsequently amended on the Signing
Date (the “Warranty and Indemnity Agreement”), pursuant to which
BancaEtruria has given certain representations and warranties in favour of
the Issuer in relation to the Portfolio and the Claims and has agreed to
indemnify the Issuer in respect of certain liabilities of the Issuer incurred in
connection with the purchase and ownership of the Claims. Pursuant to the
Warranty and Indemnity Agreement, the Issuer may, in specific limited
circumstances relating to a breach of representations in relation to the
Mortgage Loans, require BancaEtruria to repurchase certain Claims. The
Warranty and Indemnity Agreement is governed by Italian law.
See “The Warranty and Indemnity Agreement”, below.
Servicing and collection
procedures
Pursuant to the terms of the Servicing Agreement, the Servicer has agreed
to administer and service the Portfolio on behalf of the Issuer and, in
particular, to administer and manage each Claim as well as the relationship
with any person who is a borrower under a Mortgage Loan (a
“Borrower”).
Monies received or recovered in respect of the Mortgage Loans and related
Claims (the “Collections”) are initially paid to BancaEtruria in its capacity
as Servicer.
The Collections are required to be transferred by the Servicer into the
Collection Account by 10:00 a.m. (Milan time) of the Business Day
immediately following the day of receipt, for value the relevant receipt
date, in accordance with the procedure described in the Servicing
Agreement, provided that, in the case of exceptional circumstances causing
an operational delay in the transfer, the Collections are required to be
transferred to the Collection Account by 10:00 a.m. (Milan time) of the
Business Day immediately following the day on which the operational
delay in the transfer has been solved and, in any case, within 10 Business
Days from the date in which the exceptional circumstance has been
verified. The Servicing Agreement provides that if monies already
transferred to the Collection Account are identified as having not been
paid, in whole or in part, by the relevant Borrower, following the
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14
verification activity carried out by the Servicer, the Servicer may deduct
those unpaid amounts from the Collections not yet transferred to the Issuer.
The Collection Account Bank is then required to transfer by 4.00 p.m.
(London time) on each Business Day all amounts standing to the credit of
the Collection Account into the Claims Transaction Account which is held
with the Transaction Bank.
Collections in respect of the Mortgage Loans will be calculated by
reference to successive Collection Period.
“Collection Date” means 6 January, 6 April, 6 July and 6 October of each
year.
“Collection Period” means (a) prior to the service of an Issuer
Acceleration Notice, each period commencing on (but excluding) a
Collection Date and ending on (and including) the next succeeding
Collection Date and in the case of the first Collection Period, the period
commencing on the Valuation Date (excluded) and ending on 6 April 2009
(included); and (b) following the service of an Issuer Acceleration Notice,
each period commencing on (but excluding) the last day of the preceding
Collection Period and ending on (and including) the immediately
following Accumulation Date.
The Servicer has undertaken to prepare and submit to the Computation
Agent, the Swap Counterparty, the Swap Guarantor, Fitch, the
Representative of the Noteholders, the Arranger, the Corporate Servicer
and the Issuer by no later than 12 January, 12 April, 12 July and 12
October in each calendar year (or, if any such date is not a day on which
banks are open for general business in Arezzo, the immediately preceding
day that is a day on which banks are open for general business in Arezzo)
(each such date, a “Reporting Date”) quarterly reports (each, a “Servicer
Report”) in the form set out in the Servicing Agreement and containing
information as to the Portfolio and any Collections in respect of the
preceding Collection Period.
The Servicer is obliged to appoint a firm of internationally recognised
auditors acceptable to the Issuer, or the same auditors auditing the financial
statements of the Servicer which will, by the date set for the approval of
the Issuer’s annual accounts, issue a report on the auditing procedure
carried out as agreed with the Servicer. Such procedure will be carried out
for the purposes of verifying that the information and the figures contained
in two Servicer Reports chosen by the appointed auditors out of the last
four Servicer Reports prepared, accurately reflect the accounting records of
the Issuer and that the procedures applied by it in administering and
monitoring the collections are such as to ensure that the collections are
properly and accurately recorded and applied in accordance with the
Servicing Agreement.
See “The Servicing Agreement” and “The servicing and collection
Policies”, below.
Servicing Fees
In return for the services provided by the Servicer in relation to the
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15
ongoing management of the Portfolio, on each Interest Payment Date and
in accordance with the Priority of Payments, the Issuer will pay to the
Servicer the following servicing fees:
(a)
an annual fee equal to 0.07 per cent. of the Collections received in
respect of the Claims (other than Crediti in Sofferenza) in the
immediately preceding Collection Period (including VAT or other
taxes where applicable) for the collection activity of the Claims (other
than Crediti in Sofferenza) to be provided under the Servicing
Agreement;
(b) an annual fee equal to 0.08 per cent. of the Collections received in
respect of the Claims (other than Crediti in Sofferenza) in the
immediately preceding Collection Period (including VAT or other
taxes where applicable) for the administration activity of the Claims
(other than Crediti in Sofferenza) to be provided under the Servicing
Agreement;
(c)
an annual fee equal to 3 per cent. of the Collections received in
respect of Crediti in Sofferenza collected in the immediately
preceding Collection Period (including VAT where applicable); and
(d) a quarterly fee of €1,000 (excluding VAT or other taxes where
applicable and including expenses sustained by the Servicer) for the
advising activities and technical assistance to be provided under the
Servicing Agreement,
(the “Servicing Fees”).
“Defaulted Claims” means those Claims (A) under which there are at
least (i) 6 (six) Delinquent Instalments (in case of monthly payment) or (ii)
2 (two) Delinquent Instalments (in case of quarterly payment) or (iii) 2
(two) Delinquent Instalment (in case of semi-annual payment) or (B) are
classified as Crediti in Sofferenza by the Servicer.
“Delinquent Claims” means (A) those Claims under which there is 1
(one) Delinquent Instalment and (B) which are not classified as Defaulted
Claims.
“Delinquent Instalment” means an instalment which, at a given date, is
due but not fully paid and remains such for at least 30 days, following the
date on which it should have been paid, under the terms of the relevant
Mortgage Loan.
“Unpaid Instalment” means an instalment which, at a given date, is due
but not fully paid and remains such for at least 15 days, following the date
on which it should have been paid, under the terms of the relevant
Mortgage Loan.
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16
“Crediti ad Incaglio” means those Claims (A)(i) under which there are at
least 6 (six) Unpaid Instalments (in case of monthly payment) or at least 4
(four) Unpaid Instalments (in case of quarterly payment) or at least 2 (two)
Unpaid Instalments (in case of semi-annual payment) or (ii) which are
classified as delinquent (crediti ad incaglio) by the Servicer on behalf of
the Issuer in accordance with the Bank of Italy’s supervisory regulations
and (B) which are not classified as Crediti in Sofferenza yet.
“Crediti in Sofferenza” means those Claims classified as such by the
Servicer on behalf of the Issuer in accordance with the regulation of the
Bank of Italy.
See “The Servicing Agreement” and “The servicing and collection
policies”, below.
4.
The Accounts
The Collection Account and
the Expenses Account
Pursuant to the terms of the Agency and Accounts Agreement, the Issuer
has opened with the Collection Account Bank for the purposes of this
Securitisation the following accounts:
(a)
a euro-denominated account (the “Collection Account”) into which,
inter alia, the Servicer will be required to transfer all the Collections
as they are collected in accordance with the Servicing Agreement;
and
(b) a euro-denominated current account into which the Issuer will deposit
€50,000 (the “Retention Amount”) on the Issue Date (the “Expenses
Account”). The Expenses Account will be replenished on each
Interest Payment Date, in accordance with the Pre-Enforcement
Interest Priority of Payments and subject to the availability of
sufficient Interest Available Funds, up to the Retention Amount and
such amount will be applied by the Issuer to pay all fees, costs,
expenses and taxes required to be paid in order to preserve the
corporate existence of the Issuer or to maintain it in good standing or
to comply with applicable legislation.
The Payments Account
has opened with the Principal Paying Agent for the purposes of this
Securitisation a euro-denominated current account into which, inter alia,
(i) on the second Business Day preceding each Interest Payment Date the
Issuer will be required to transfer from the other Transaction Accounts the
amounts necessary to make the payments due in accordance with the
applicable Priority of Payments; and (ii) on each Interest Payment Date,
the Swap Counterparty is required to make the payments due by it to the
Issuer under the Swap Transactions (the “Payments Account”).
In addition, should the Issuer resolve to invest in Eligible Investments, in
accordance with the Agency and Accounts Agreement, the Issuer will open
with the Principal Paying Agent a securities account (the “Eligible
Investments Securities Account”) into which all securities constituting
Eligible Investments will be deposited.
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17
The Transaction Accounts
has opened with the Transaction Bank for the purposes of this
Securitisation the following accounts:
(a)
a euro-denominated account with respect to the Claims (the “Claims
Transaction Account”) into which the Collection Account Bank will
be required to transfer, on a daily basis, the balance standing to the
credit of the Collection Account;
(b) a euro-denominated current account into which the Issuer will be
required to deposit, inter alia, (i) on the Issue Date, €10,438,000,
being a portion of the amount drawn down by the Issuer under the
Subordinated Loan Agreement; and (ii) on each Interest Payment
Date, in accordance with the Pre-Enforcement Interest Priority of
Payments and subject to the availability of sufficient Interest
Available Funds, the amount necessary (if any) to replenish it so that
the balance of the Cash Reserve Account equals the Target Cash
Reserve Amount (the “Cash Reserve Account”); and
(c)
Equity Capital Account
a euro-denominated current account into which the Issuer will be
required to deposit, inter alia, (i) on each Interest Payment Date up
to, but excluding, the First Amortisation Interest Payment Date, any
Principal Deficiency Ledger Amount; and (ii) any amount available
for such purpose on each Interest Payment Date to be credited to such
account in accordance with the applicable Priority of Payments (the
“Principal Account” and, together with the Claims Transaction
Account and the Cash Reserve Account, the “Transaction Accounts”
and, together with the Collection Account, the Expenses Account, the
Payments Account and the Eligible Investments Securities Account
(if any), the “Accounts”).
In the context of the Previous Securitisations, the Issuer has also opened
with BancaEtruria a euro-denominated account (the “Equity Capital
Account”) into which the Issuer’s equity capital of €10,000 will be
required to be deposited for as long as any Notes are outstanding.
In accordance with the Securitisation Law, the Issuer is a multi-purpose
vehicle and in the context of the issuance of the Previous Securitisations
Notes has opened certain bank accounts. The sums standing from time to
time to the credit of such bank accounts will not be available to the Issuer
Creditors because, pursuant to the Securitisation Law, the assets relating to
each securitisation transaction will constitute assets segregated for all
purposes from the assets of the Issuer and from the assets relating to other
securitisation transactions. The assets relating to a particular securitisation
transaction will not be available to the holders of notes issued to finance
any other securitisation transaction or to the general creditors of the Issuer.
For a more detailed description of the cash flows through the Accounts, see
“The Issuer’s bank accounts”, below.
Provisions relating to the
Transaction Bank
If the Transaction Bank (or any successor Transaction Bank) ceases to be
an Eligible Institution, the Issuer will, by no later than 30 (thirty) calendar
days from the date when the Transaction Bank (or any successor
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18
Transaction Bank) ceases to be an Eligible Institution: (i) terminate the
appointment of the Transaction Bank (or any successor Transaction Bank);
(ii) close the Claims Transaction Account, the Cash Reserve Account and
the Principal Account opened with the Transaction Bank; and,
simultaneously (iii) open a replacement Claims Transaction Account, a
replacement Principal Account and a replacement Cash Reserve Account
with a substitute transaction bank which is an Eligible Institution and the
Issuer will notify the Representative of the Noteholders and Fitch.
Principal Paying Agent
If the Principal Paying Agent (or any successor Principal Paying Agent)
ceases to be an Eligible Institution, the Issuer will, by no later than 30
(thirty) calendar days from the date when the Principal Paying Agent (or
any successor Principal Paying Agent) ceases to be an Eligible Institution:
(i) terminate the appointment of the Principal Paying Agent (or any
successor Principal Paying Agent); (ii) close the Payments Account and the
Eligible Investments Securities Account (if any) opened with the Principal
Paying Agent; and, simultaneously (iii) open a replacement Payments
Account and a replacement Eligible Investments Securities Account with a
substitute principal paying agent which is an Eligible Institution and the
Issuer will notify the Representative of the Noteholders and Fitch.
“Eligible Institution” means (i) any depository institution organised under
the laws of any state which is a member of the European Union or of the
United States of America, whose short-term unsecured and unsubordinated
debt obligations are rated at least “F1” by Fitch; and (ii) BNP Paribas
Securities Services S.A., as Principal Paying Agent and Transaction Bank,
for so long as (A) the unsecured and unsubordinated debt obligations of
BNP Paribas S.A. are rated at least “F1” by Fitch in respect of the shortterm debt; (B) BNP Paribas S.A. has guaranteed, in a manner satisfactory
to Fitch, the payment obligations of BNP Paribas Securities Services S.A.,
which may arise from the Transaction Documents of which BNP Paribas
Securities Services S.A., as Principal Paying Agent and Transaction Bank,
is a party.
Collection Account Bank
If the Collection Account Bank (or any successor Collection Account
Bank) ceases to be rated at least as high as “F2” by Fitch (in respect of
short-term debt), the Issuer will, by no later than two Business Days from
the date when the Collection Account Bank (or any successor Collection
Account Bank) ceases to be rated at least as high as “F2” by Fitch, either
(A) (i) terminate the appointment of the Collection Account Bank (or any
successor Collection Account Bank); (ii) close the Collection Account and
the Expenses Account opened with the Collection Account Bank (or any
successor Collection Account Bank); and, simultaneously (iii) open a
replacement Collection Account and a replacement Expenses Account with
a substitute collection account bank the short-term unsecured and
unsubordinated debt obligations of which are rated “F1” or above by Fitch
and the Issuer will notify the Representative of the Noteholders and Fitch
or (B) take such other action in line with Fitch’s criteria.
Computation Agency
Pursuant to the Agency and Accounts Agreement, the Computation Agent
has agreed to provide the Issuer with certain calculation, notification and
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19
reporting services in relation to the Portfolio and the Notes. By no later
than the third Business Day prior to each Interest Payment Date (each such
date, a “Calculation Date”), the Computation Agent will calculate, inter
alia, the Interest Available Funds and the Principal Available Funds and the
payments to be made under the Priority of Payments set out below based,
inter alia, on the Statement of the Collection Account, the Statement of the
Expenses Account, the Statement of the Payments Account and the
Statement of the Transaction Accounts, the Servicer Reports and will
prepare a report (the “Payments Report”) setting forth, inter alia, each of
the above amounts and will deliver the Payments Report to, inter alia, the
Issuer, the Principal Paying Agent, the Collection Account Bank, Fitch, the
Corporate Servicer and the Servicer.
In addition, the Computation Agent has agreed to prepare and deliver (by
no later than 7 (seven) days immediately following each Interest Payment
Date) to, inter alia, the Issuer, the Representative of the Noteholders, the
Irish Stock Exchange, the Underwriter and Fitch, a report substantially in
the form set out in the Agency and Accounts Agreement (the “Investor
Report”) containing details of, inter alia, the Portfolio, amounts received
by the Issuer from any source during the preceding Collection Period,
amounts paid by the Issuer during such Collection Period and amounts
paid by the Issuer on the immediately preceding Interest Payment Date.
The first Investor Report will be available by no later than five calendar
days immediately following the Interest Payment Date falling in April
2009. The Investor Report will also be available on the website of the
Computation Agent, currently at https://gctabsreporting.bnpparibas.com.
In carrying out its duties, the Computation Agent will be entitled to rely on
certain information provided to it by the Servicer, the Collection Account
Bank, the Transaction Bank, the Agent Bank, the Principal Paying Agent,
the Swap Counterparty, the Corporate Servicer and the Issuer.
Payments under the Notes
5.
Based on the Payments Report, the Principal Paying Agent shall make the
payments under the Notes set forth in the relevant Priority of Payments
described below.
Priorities of Payments
Issuer Available Funds
On each Calculation Date, the Computation Agent will calculate the Issuer
Available Funds which will be used by the Issuer to make the payments
contained in the Priority of Payments set out below.
“Interest Available Funds” means, on each Calculation Date and in
respect of the immediately following Interest Payment Date, an amount
equal to the sum of:
(i)
the Interest Components received by the Issuer in respect of the
Mortgage Loans in the Portfolio during the Collection Period
immediately preceding such Calculation Date;
(ii)
without duplication of (i) above, an amount equal to the Interest
Components invested in Eligible Investments (if any) during the
immediately preceding Collection Period from the Claims
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20
Transaction Account, following liquidation thereof on the preceding
Liquidation Date;
(iii)
all amounts of interest accrued on the Accounts and paid during the
Collection Period immediately preceding such Calculation Date;
(iv)
any amount due and payable, although not yet paid, to the Issuer by
the Swap Counterparty in accordance with the terms of the Swap
Agreement on the Interest Payment Date immediately following the
relevant Calculation Date;
(v)
without duplication of (i) and (iv) above, payments made to the
Issuer by any other party to the Transaction Documents during the
Collection Period immediately preceding such Calculation Date
(other than the payments referred to in item (vii) of the definition of
“Principal Available Funds”);
(vi)
the Revenue Eligible Investments Amount realised on the preceding
Liquidation Date, if any;
(vii)
any other amount standing to the credit of the Collection Account,
the Claims Transaction Account and the Payments Account as at the
end of the Collection Period immediately preceding the relevant
Calculation Date but excluding those amounts constituting Principal
Available Funds and the amounts listed below;
(viii) on each Calculation Date, up to (but excluding) the Calculation
Date immediately preceding the Maturity Date, to the extent that the
funds under (i) to (vii) (inclusive) above would not be sufficient to
make the payments falling due on the immediately following
Interest Payment Date under items (i) to (viii) of the PreEnforcement Interest Priority of Payments, the lower of (i) that
portion of the Cash Reserve which is equal to such shortfall and (ii)
the Cash Reserve;
(ix)
any Cash Reserve Excess available for such purpose after
repayment in full of the Subordinated Loan; and
(x)
on the earlier of the Calculation Date immediately preceding (A) the
Maturity Date and (B) the Interest Payment Date on which the
Rated Notes will be redeemed in full, the amount standing to the
credit of the Cash Reserve Account at such date to the extent that
such amounts have not been utilised on the same date to augment
the Principal Available Funds,
but excluding (i) any amount paid by the Swap Counterparty upon
termination of the Swap Transactions in respect of any termination
payment and, until a replacement swap counterparty has been found,
exceeding the net amounts which would have been due and payable by the
Swap Counterparty with respect to the next Interest Payment Date, had the
Swap Transactions not been terminated; and (ii) the Collateral (if any).
“Principal Available Funds” means, on each Calculation Date and in
respect of the immediately following Interest Payment Date, an amount
equal to the sum of:
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21
(i)
the Principal Components received by the Issuer in respect of the
Mortgage Loans (other than Defaulted Claims) in the Portfolio
during the Collection Period immediately preceding such
Calculation Date;
(ii)
without duplication of (i) above, an amount equal to the Principal
Components (other than those relating to Defaulted Claims)
invested in Eligible Investments (if any) during the immediately
preceding Collection Period from the Claims Transaction Account,
following liquidation thereof on the preceding Liquidation Date;
(iii)
the Principal Deficiency Ledger Amount calculated in respect of
such Calculation Date;
(iv)
the Funds Provisioned for Amortisation as at such Calculation Date,
if any;
(v)
any proceeds deriving from the sale of the Claims (other than
Defaulted Claims) in accordance with the Transaction Documents;
(vi)
any amount that will be credited and/or retained on the immediately
following Interest Payment Date under items (x) and (xi) of the PreEnforcement Interest Priority of Payments;
(vii)
payments made to the Issuer by the Originator (i) pursuant to the
Warranty and Indemnity Agreement and/or the Transfer Agreement
during the Collection Period immediately preceding such
Calculation Date in respect of indemnities or damages for breach of
representations or warranties and (ii) in respect of indemnities or
damages relating to principal or interest components on any Claims
which are not Defaulted Claims;
(viii) on the Calculation Date immediately preceding the Final
Redemption Date and on any Calculation Date thereafter, the
balance standing to the credit of the Expenses Account at such
dates; and
(ix)
on the Calculation Date immediately preceding the Maturity Date,
to the extent that the funds under (i) to (viii) (inclusive) above
would not be sufficient to repay, on the immediately following
Interest Payment Date, the Rated Notes in full and to make all other
payments ranking in priority thereto, the lower of: (i) that portion of
the Cash Reserve which is equal to such shortfall; and (ii) the Cash
Reserve,
provided that, if on any Interest Payment Date, as a result of the application
of the funds indicated under item (i) to (ix) above, the Principal Amount
Outstanding of the Rated Notes (considering payments falling due on such
Interest Payment Date) would be equal to, or lower than, the Liquidity
Reserve then available (excluding therefore the portion of the Liquidity
Reserve utilised, if any, on the same Interest Payment Date to augment the
Interest Available Funds), than the Liquidity Reserve, or a portion thereof,
shall be used to augment the Principal Available Funds so as to allow a
repayment in full of all Rated Notes on such Interest Payment Date.
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22
“Principal Components” means the principal component of each
Instalment, including amounts received upon prepayments of principal in
respect of the Mortgage Loans.
“Interest Components” means the collections deriving from the interest
component of each Instalment and the amounts due in respect of expenses,
commissions for direct debit payments, collection commissions,
Prepayment Fees, any recoveries received in respect of any Defaulted
Claims (including the interest components of any recoveries received in
respect of any Defaulted Claims) and any other amount which is not a
Principal Component.
“Prepayment Fees” means the fees, if any, due from any Borrower who
chooses voluntarily to prepay his/her relevant Mortgage Loan.
“Instalment” means the scheduled monthly, quarterly or semi-annually
payment falling due from the relevant Borrower under a Mortgage Loan
and which consists of an Interest Component and a Principal Component.
“Issuer Available Funds” means (i) as of each Calculation Date prior to
the service of an Issuer Acceleration Notice, the aggregate of all Interest
Available Funds and all Principal Available Funds and (ii) as of each
Calculation Date following the service of an Issuer Acceleration Notice,
the aggregate of the amounts received or recovered by or on behalf of the
Issuer or the Representative of the Noteholders in respect of the Claims,
the Note Security and the Issuer’s Rights under the Transaction Documents
(but excluding the Collateral (if any)).
“Funds Provisioned for Amortisation” means, in respect of each
Calculation Date, the amounts, if any, retained in and/or credited to the
Principal Account on the immediately preceding Interest Payment Date
under item (ii) of the Pre-Enforcement Principal Priority of Payments.
Principal Deficiency Ledger
The Computation Agent has established four principal deficiency ledgers
(the “Principal Deficiency Ledgers”), namely: (i) a principal deficiency
ledger in respect of the Class A Notes (the “Class A Notes Principal
Deficiency Ledger”); (ii) a principal deficiency ledger in respect of the
Class B Notes (the “Class B Notes Principal Deficiency Ledger”); and
(iii) a principal deficiency ledger in respect of the Junior Notes (the
“Junior Notes Principal Deficiency Ledger”).
The Principal Deficiency Ledgers have been established by the
Computation Agent pursuant to the Agency and Accounts Agreement and
will be used by the Computation Agent to record, as a debit entry, any
Principal Deficiency Amount in respect of the Claims.
Any Principal Deficiency Amount will be debited:
(i)
first, to the Junior Notes Principal Deficiency Ledger so long as,
and to the extent that, the debit balance of the Junior Notes
Principal Deficiency Ledger is less than or equal to the Principal
Amount Outstanding on the Junior Notes (taking into account any
Principal Deficiency Amount previously debited to such Junior
Notes Principal Deficiency Ledger and in respect of which funds
//
23
have not yet been allocated in accordance with the Pre-Enforcement
Interest Priority of Payments);
(ii)
second, to the Class B Notes Principal Deficiency Ledger so long
as, and to the extent that, the debit balance of the Class B Notes
Amount Outstanding on the Class B Notes (taking into account any
Principal Deficiency Amount previously debited to such Class B
Interest Priority of Payments); and
(iii)
third, to the Class A Notes Principal Deficiency Ledger so long as,
and to the extent that, the debit balance of the Class A Notes
Amount Outstanding on the Class A Notes (taking into account any
Principal Deficiency Amount previously debited to such Class A
Interest Priority of Payments).
A portion of the Interest Available Funds, available for such purpose in
accordance with the Pre-Enforcement Interest Priority of Payments, will be
utilised to reduce to zero the debit balances of the Principal Deficiency
Ledgers described above.
“Principal Deficiency Amount” means, in respect of a Claim which has
become a Defaulted Claim during a Collection Period, the Outstanding
Principal of such Defaulted Claim, calculated on the date when such Claim
has been qualified as a Defaulted Claim.
“Outstanding Principal” means, on any date and in respect of each Claim,
the aggregate of all Principal Components scheduled to be paid after such
date and not yet paid together with the Principal Components due and
unpaid.
“Insurance Premia” means the insurance premia paid by the Originator
and which are due to the Originator by the Issuer in accordance with the
Transfer Agreement.
“Rateo Amounts” means an amount equal to all interest accrued but not
paid in respect of the Mortgage Loans as at the Valuation Date (inclusive)
being equal to €1,579,014.89, which will be paid to the Originator in
accordance with the applicable Priority of Payments.
“Originator’s Claims” means, collectively, the monetary claims that the
Originator may have from time to time against the Issuer under the
Transfer Agreement (other than in respect of the Purchase Price) and the
Warranty and Indemnity Agreement, and including, without limitation, the
Rateo Amounts, the Insurance Premia and all amounts due and payable to
the Originator for the repayment of any loan extended to the Issuer under
clause 12.4 (Finanziamento spese di arbitraggio) of the Transfer
Agreement and clause 6.4(c) (Risoluzione delle controversie) of the
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24
Warranty and Indemnity Agreement.
“Servicer’s Advance” means those amounts due to the Servicer under
clauses 3.8 and 12.5(d) of the Servicing Agreement.
Pre-Enforcement Priorities of Payments
Pre-Enforcement Interest
Priority of Payments
Prior to the service of an Issuer Acceleration Notice, the Interest Available
Funds as calculated on each Calculation Date will be applied by the Issuer
on the Interest Payment Date immediately following such Calculation Date
in making payments or provisions in the following order of priority (the
“Pre-Enforcement Interest Priority of Payments”) but, in each case,
only if and to the extent that payments or provisions of a higher priority
have been made in full:
(i)
first, in or towards satisfaction, pro rata and pari passu, according
to the respective amounts thereof, of any and all outstanding taxes
due and payable by the Issuer in relation to this Securitisation (to
the extent that amounts standing to the credit of the Expenses
Account are insufficient to pay such costs and to the extent not paid
by BancaEtruria under the Transaction Documents);
(ii)
second, in or towards satisfaction, pro rata and pari passu,
according to the respective amounts thereof, of:
(A) any and all outstanding fees, costs, liabilities and any other
expenses to be paid in order to preserve the corporate
existence of the Issuer, to maintain it in good standing, to
comply with applicable legislation and to fulfil obligations of
the Issuer to third parties (not being Other Issuer Creditors)
incurred in relation to this Securitisation (to the extent that
amounts standing to the credit of the Expenses Account are
insufficient to pay such costs and to the extent not paid by
BancaEtruria under the Transaction Documents);
(B) any and all outstanding fees, costs, expenses and taxes
required to be paid in connection with the listing, deposit or
ratings of the Notes, or any notice to be given to the
Noteholders or the other parties to the Transaction Documents
(to the extent that amounts standing to the credit of the
Expenses Account are insufficient to pay such costs);
(C) any and all outstanding fees, costs and expenses of and all
other amounts due and payable to the Representative of the
Noteholders or any appointee thereof; and
(D) the amount necessary to replenish the Expenses Account up to
the Retention Amount;
(iii)
third, in or towards satisfaction, pro rata and pari passu, according
to the respective amounts thereof, of any and all outstanding fees,
costs and expenses of and all other amounts due and payable to the
Principal Paying Agent, the Listing Agent, the Agent Bank, the
Computation Agent, the Servicer, the Corporate Servicer, the
Collection Account Bank and the Transaction Bank, each under the
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25
Transaction Document(s) to which each of them is a party;
(iv)
fourth, in or towards satisfaction of all amounts due and payable to
the Swap Counterparty under the terms of the Swap Agreement
other than any termination payment due to the Swap Counterparty
following the occurrence of a Swap Trigger but including, in any
event, the amount of any termination payment due and payable to
the Swap Counterparty in relation to the termination of the Swap
Transactions to the extent of any premium received (net of any
costs reasonably incurred by the Issuer to find a replacement swap
counterparty), if any, by the Issuer from a replacement swap
counterparty in consideration for entering into swap transactions
with the Issuer on the same terms as the Swap Transactions;
(v)
fifth, in or towards satisfaction, pro rata and pari passu, of all
amounts of interest due and payable on the Class A Notes;
(vi)
sixth, in or towards reduction of the Class A Notes Principal
Deficiency Ledger to zero;
(vii)
seventh,
(A) for so long as there are Class A Notes outstanding, on each
Interest Payment Date up to (but excluding) the Interest
Payment Date following the occurrence of the Class B Notes
Trigger Event; and
(B) on the Interest Payment Date on which the Class A Notes are
redeemed in full and on each Interest Payment Date thereafter,
in each case regardless of the occurrence of the Class B Notes
Trigger Event,
in or towards satisfaction, pro rata and pari passu, of all amounts
of interest due and payable on the Class B Notes;
(viii) eighth, in or towards reduction of the Class B Notes Principal
(ix)
ninth, for so long as there are Rated Notes of any Class outstanding,
to credit the Cash Reserve Account with the amount required, if
any, such that the Cash Reserve equals the Target Cash Reserve
Amount;
(x)
tenth, to credit to or retain in the Principal Account an amount equal
to the portion of Principal Available Funds utilised under item (i) of
the Pre-Enforcement Principal Priority of Payments on the
preceding Interest Payment Date or, to the extent that such amounts
have not already been credited to or retained in the Principal
Account, on any preceding Interest Payment Date;
(xi)
eleventh, for so long as there are Rated Notes of any Class
outstanding, on each Interest Payment Date following the
occurrence of the Junior Trigger Event or of the Class B Notes
Trigger Event, to credit and/or retain the remainder of the Interest
Available Funds to the Principal Account;
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26
(xii)
twelfth, in or towards reduction of the Junior Notes Principal
(xiii) thirteenth,
(A) for so long as there are Rated Notes of any Class outstanding,
provided that neither the Junior Trigger Event nor the Class B
Notes Trigger Event has occurred, in or towards satisfaction
of:
(I)
all amounts of interest due and payable to the
Subordinated Loan Provider under the Subordinated
Loan Agreement; and
(II)
all amounts of principal due and payable to the
Loan Agreement; and
(B) on the Interest Payment Date on which the Class B Notes are
in each case regardless of whether either the Junior Trigger
Event or the Class B Notes Trigger Event has occurred, in or
towards satisfaction of:
(I)
all amounts of interest due and payable to the
Loan Agreement; and
(II)
all amounts of principal due and payable to the
Loan Agreement;
(xiv) fourteenth,
(A) for so long as there are Rated Notes of any Class outstanding,
on each Interest Payment Date, provided that neither the
Junior Trigger Event nor the Class B Notes Trigger Event has
occurred, in or towards satisfaction, pro rata and pari passu,
of all amounts of interest due and payable on the Junior Notes
(other than the Junior Notes Additional Interest Amount and
the Junior Notes Additional Remuneration); and
(B) on the Interest Payment Date on which the Class B Notes are
in each case regardless of whether either the Junior Trigger
Event or the Class B Notes Trigger Event has occurred, in or
towards satisfaction, pro rata and pari passu, of all amounts
of interest due and payable on the Junior Notes (other than the
Junior Notes Additional Interest Amount and the Junior Notes
Additional Remuneration);
(xv)
fifteenth, in or towards satisfaction of any termination payment due
and payable to the Swap Counterparty under the terms of the Swap
Agreement following the occurrence of a Swap Trigger other than
the payments referred to under item (iv) above;
(xvi) sixteenth, in or towards satisfaction, pro rata and pari passu,
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27
(A) all amounts due and payable to BancaEtruria in respect of
Originator’s Claims (if any) under the terms of the
Transaction Documents;
(B) all amounts due and payable to the Servicer as Servicer’s
Advance (if any) under the terms of the Servicing Agreement;
and
(C) in connection with a limited recourse loan under the Letter of
Undertaking;
(xvii) seventeenth, in or towards satisfaction, pro rata and pari passu,
according to the respective amounts thereof, of any and all
outstanding fees, costs, liabilities and any other expenses to be paid
to fulfil obligations to any Other Issuer Creditor incurred in the
course of the Issuer’s business in relation to this Securitisation,
including all amounts due and payable to the Underwriter under the
terms of the Underwriting Agreement (other than amounts already
provided for in this Pre-Enforcement Interest Priority of Payments);
and
(xviii) eighteenth, in or towards satisfaction, pro rata and pari passu, of
the Junior Notes Additional Interest Amount (if any) due and
payable on the Junior Notes.
From time to time, during an Interest Period, the Issuer shall, in
accordance with the Agency and Accounts Agreement, be entitled to apply
amounts standing to the credit of the Expenses Account in respect of
certain monies which properly belong to third parties, other than the
Noteholders and the Other Issuer Creditors, in order to preserve the
corporate existence of the Issuer or to maintain it in good standing or to
comply with applicable legislation, and in payment of sums due to third
parties, other than the Noteholders and the Other Issuer Creditors, under
obligations incurred in the course of the Issuer’s business.
Pre-Enforcement
Principal
Priority of Payments
Prior to the service of an Issuer Acceleration Notice, the Principal
Available Funds as calculated on each Calculation Date will be applied by
the Issuer on the Interest Payment Date immediately following such
Calculation Date in making payment or provision in the following order of
priority (the “Pre-Enforcement Principal Priority of Payments” and,
together with the Pre-Enforcement Interest Priority of Payments, the “PreEnforcement Priority of Payments”) but, in each case, only if and to the
extent that payments or provisions of a higher priority have been made in
full:
(i)
first, to pay all the amounts due under items (i) to (vii) of the PreEnforcement Interest Priority of Payments (with the exclusion of
item (vi)) to the extent not paid under the Pre-Enforcement Interest
Priority of Payments due to insufficiency of Interest Available
Funds;
(ii)
second, on each Interest Payment Date up to, but excluding, the
//
28
First Amortisation Interest Payment Date, to credit or retain, as the
case may be, all such amounts to the Principal Account;
(iii)
third, on the First Amortisation Interest Payment Date and on each
Interest Payment Date thereafter:
(A) if the Pro-Rata Amortisation Conditions are not met on such
Interest Payment Date, in or towards repayment, pro rata and
pari passu, of the Principal Amount Outstanding of the Class
A Notes until the Class A Notes are repaid in full;
(B) if the Pro-Rata Amortisation Conditions are met on such
Interest Payment Date, in or towards repayment, pro rata and
pari passu, of the Principal Amount Outstanding of all Classes
of Rated Notes;
(iv)
fourth, upon repayment in full of the Class A Notes and following
the occurrence of the Class B Notes Trigger Event, in or towards
satisfaction, pro rata and pari passu, of all amounts of interest due
and payable on the Class B Notes to the extent not already paid
under item (vii) of the Pre-Enforcement Interest Priority of
Payments;
(v)
fifth, upon repayment in full of the Class A Notes, in or towards
repayment, pro rata and pari passu, of the Principal Amount
Outstanding of the Class B Notes;
(vi)
sixth, upon repayment in full of the Class B Notes, in or towards
satisfaction of all amounts of principal due and payable to the
Subordinated Loan Provider under the Subordinated Loan
Agreement, if any, to the extent not paid under items (xiii)(A)(II) or
(xiii)(B)(II) of the Pre-Enforcement Interest Priority of Payments;
(vii)
seventh, upon repayment in full of the Class B Notes and following
the occurrence of the Junior Trigger Event or of the Class B Notes
Trigger Event, in or towards satisfaction, pro rata and pari passu,
of all amounts of interest due and payable on the Junior Notes
under item (xiv) of the Pre-Enforcement Interest Priority of
Payments to the extent not already paid under the same item;
(viii) eighth, in or towards repayment, pro rata and pari passu, of the
Principal Amount Outstanding of the Junior Notes until the
Principal Amount Outstanding of the Junior Notes is equal to
€50,000;
(ix)
ninth, on the Final Redemption Date and on any Interest Payment
Date thereafter, in or towards repayment, pro rata and pari passu,
of the Principal Amount Outstanding of the Junior Notes until the
Junior Notes are redeemed in full; and
(x)
tenth, up to but excluding the Final Redemption Date, in or towards
satisfaction, pro rata and pari passu, of the Junior Notes Additional
Remuneration (if any) due and payable on the Junior Notes.
The “Pro-Rata Amortisation Conditions” will be met in respect of a
specific Interest Payment Date if:
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29
(a)
on each of the two immediately preceding Interest Payment Dates,
the Cash Reserve equals or exceeds the Target Cash Reserve Amount
as at the relevant Interest Payment Date (upon making all the
payments and provisions to be made on such Interest Payment Date);
and
(b) the Principal Deficiency Ledgers are either zero or have been reduced
to zero; and
(c)
the aggregate Outstanding Principal of all Defaulted Claims as at the
end of the immediately preceding Collection Period does not exceed
3.3 per cent. of the Initial Portfolio Outstanding Amount; and
(d) the aggregate Outstanding Principal of all Delinquent Claims as at the
end of the immediately preceding Collection Period does not exceed
4.4 per cent. of the Initial Portfolio Outstanding Amount; and
(e)
the aggregate Principal Amount Outstanding of the Class B Notes and
the Junior Notes, as at the immediately preceding Interest Payment
Date, expressed as a percentage of the Principal Amount Outstanding
of the Notes as at the same date (in each case after deducting any
Principal Payment made on that Interest Payment Date) is at least
twice the same percentage as at the Issue Date; and
(f)
the Portfolio Outstanding Amount is higher than 10 per cent. of the
Initial Portfolio Outstanding Amount; and
(g) neither the Class B Notes Trigger Event nor the Junior Trigger Event
shall have ever occurred; and
(h) at least 5 years have elapsed since the Issue Date.
The “Class B Notes Trigger Event” will have occurred when the
aggregate of the Outstanding Principal of all Defaulted Claims, calculated
on the date when each such Claim has been qualified as a Defaulted Claim,
is equal to or higher than 11.0 per cent. of the Initial Portfolio Outstanding
Amount.
The “Junior Trigger Event” will have occurred when the aggregate of the
Outstanding Principal of all Defaulted Claims, calculated on the date when
each such Claim has been qualified as a Defaulted Claim, is equal to or
higher than 3.50 per cent. of the Initial Portfolio Outstanding Amount.
“Outstanding Balance” means, on any date and in respect of each
Defaulted Claim, the relevant Outstanding Principal calculated as at the
date when each such Claim was classified as a Defaulted Claim minus the
aggregate amount of recoveries received in respect of such Claim.
Post-Enforcement Priority of
Payments
Following the service of an Issuer Acceleration Notice, or, in the event that
the Issuer opts for the early redemption of the Notes under Condition 7(c)
(Optional redemption of the Notes) or Condition 7(d) (Optional
redemption for taxation, legal or regulatory reasons), the Issuer Available
Funds as calculated on each Calculation Date will be applied by or on
behalf of the Representative of the Noteholders on the Interest Payment
Date immediately following such Calculation Date in making payments or
provisions in the following order (the “Post-Enforcement Priority of
Payments”) but, in each case, only if and to the extent that payments of a
//
30
higher priority have been made in full:
(i)
first, in or towards satisfaction, pro rata and pari passu, according
to the respective amounts thereof, of any and all outstanding taxes
to be paid in order to preserve the corporate existence of the Issuer,
to maintain it in good standing and to comply with applicable
legislation, incurred in relation to this Securitisation (to the extent
that amounts standing to the credit of the Expenses Account are
BancaEtruria under the Transaction Documents and to the extent
the Issuer is not already subject to any insolvency or analogous
proceeding);
(ii)
second, in or towards satisfaction, pro rata and pari passu,
(A) any and all outstanding fees, costs, liabilities and any other
expenses to be paid in order to preserve the corporate
existence of the Issuer, to maintain it in good standing, to
comply with applicable legislation and to fulfil obligations of
the Issuer to third parties (not being Other Issuer Creditors)
incurred in relation to this Securitisation (to the extent that
amounts standing to the credit of the Expenses Account are
BancaEtruria under the Transaction Documents and to the
extent the Issuer is not already subject to any insolvency or
analogous proceeding);
(B) any and all outstanding fees, costs, expenses and taxes
required to be paid in connection with the listing, deposit or
ratings of the Notes, or any notice to be given to the
Noteholders or the other parties to the Transaction Documents
(to the extent that amounts standing to the credit of the
Expenses Account are insufficient to pay such costs and to the
extent the Issuer is not already subject to any insolvency or
analogous proceeding); and
(C) any and all outstanding fees, costs and expenses of, and all
other amounts due and payable to, the Representative of the
Noteholders or any appointee thereof;
(iii)
third, in or towards satisfaction, pro rata and pari passu, according
to the respective amounts thereof, of any and all outstanding fees,
costs and expenses of and all other amounts due and payable to the
Principal Paying Agent, the Listing Agent, the Agent Bank, the
Computation Agent, the Servicer, the Corporate Servicer, the
Collection Account Bank and the Transaction Bank, each under the
Transaction Document(s) to which each of them is a party;
(iv)
fourth, in or towards satisfaction of all amounts due and payable to
the Swap Counterparty under the terms of the Swap Agreement
other than any termination payment due to the Swap Counterparty
following the occurrence of a Swap Trigger but including, in any
//
31
event, the amount of any termination payment due and payable to
the Swap Counterparty in relation to the termination of the Swap
Transactions to the extent of any premium received (net of any
costs reasonably incurred by the Issuer to find a replacement swap
counterparty), if any, by the Issuer from a replacement swap
counterparty in consideration for entering into swap transactions
with the Issuer on the same terms as the Swap Transactions;
(v)
fifth, in or towards satisfaction, pro rata and pari passu, of all
amounts due and payable in respect of interest (including any
interest accrued but unpaid) on the Class A Notes at such date;
(vi)
sixth, in or towards repayment, pro rata and pari passu, of the
Principal Amount Outstanding of the Class A Notes;
(vii)
seventh, in or towards satisfaction, pro rata and pari passu, of all
interest accrued but unpaid) on the Class B Notes at such date;
(viii) eighth, in or towards repayment, pro rata and pari passu, of the
Principal Amount Outstanding of the Class B Notes;
(ix)
ninth, in or towards satisfaction of any termination payment due
and payable to the Swap Counterparty under the terms of the Swap
Agreement following the occurrence of a Swap Trigger other than
the payments referred to under item (iv) above;
(x)
tenth, in or towards satisfaction of:
(a) all amounts of interest due and payable to the Subordinated
Loan Provider (including any interest accrued but unpaid)
under the Subordinated Loan Agreement; and
(b) all amounts of principal due and payable to the Subordinated
Loan Provider under the Subordinated Loan Agreement;
(xi)
eleventh, in or towards satisfaction, pro rata and pari passu,
according to the respective amounts thereof, of all amounts due and
payable to BancaEtruria:
(A) in connection with a limited recourse loan under the Letter of
Undertaking;
(B) in respect of Originator’s Claims (if any) under the terms of
the Transaction Documents; and
(C) all amounts due and payable to the Servicer as Servicer’s
Advance (if any) under the terms of the Servicing Agreement;
(xii)
twelfth, in or towards repayment, pro rata and pari passu, of all
interest accrued but unpaid) on the Junior Notes at such date (but
excluding all amounts due and payable in respect of the Junior
Notes Additional Interest Amount at such date);
(xiii) thirteenth, in or towards repayment, pro rata and pari passu, of the
Principal Amount Outstanding of the Junior Notes until the
Principal Amount Outstanding of the Junior Notes is equal to
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32
€50,000;
(xiv) fourteenth, on the Post-Enforcement Final Redemption Date and on
any date thereafter, in or towards repayment, pro rata and pari
passu, of the Principal Amount Outstanding of the Junior Notes
until the Junior Notes are redeemed in full; and
(xv)
fifteenth, up to but excluding the Post-Enforcement Final
Redemption Date, in or towards satisfaction, pro rata and pari
passu, of all amounts due and payable in respect of the Junior Notes
Additional Interest Amount at such date,
provided, however, that if the amount of the monies at any time available
to the Issuer or to the Representative of the Noteholders for the payments
above shall be less than 10 per cent. of the Principal Amount Outstanding
of all Classes of Notes, the Representative of the Noteholders may at its
discretion invest such monies in some or one of the investments authorised
pursuant to the Intercreditor Agreement. The Representative of the
Noteholders at its discretion may vary such investments and may
accumulate such investments and the resulting income until the
immediately following Accumulation Date.
The Issuer is entitled, pursuant to the Intercreditor Agreement, to dispose
of the Claims in order to finance the redemption of the Notes following the
service of an Issuer Acceleration Notice.
In the event that the Issuer redeems any Notes in whole or in part prior to
the date which is 18 months after the Issue Date, the Issuer will be required
to pay a tax in Italy equal to 20 per cent. of all interest accrued on such
principal amount repaid early up to the relevant repayment date. This
requirement will apply whether or not the redemption takes place
following an Event of Default under the Notes or pursuant to any
requirement of the Issuer to redeem Notes following the service of an
Issuer Acceleration Notice in connection with any such Event of Default.
Consequently, following an Event of Default, the Issuer may, with the
consent of the Representative of the Noteholders, and shall, if so instructed
by the Representative of the Noteholders, delay the redemption of the
Notes until the end of such 18-month period.
See “Taxation in the Republic of Italy”.
6.
Optional redemption
Optional redemption of the
Notes
Prior to the service of an Issuer Acceleration Notice, the Issuer may
redeem the Notes of all Classes (in whole but not in part) at their Principal
Amount Outstanding (plus any accrued but unpaid interest) in accordance
with the Post-Enforcement Priority of Payments and subject to the Issuer
having sufficient funds to redeem all the Notes (or the Rated Notes only, if
all the Junior Noteholders consent) and to make all payments ranking in
priority, or pari passu, thereto, starting from the First Amortisation Interest
Payment Date on any Interest Payment Date on which the Portfolio
Outstanding Amount is equal to, or less than, 10 per cent. of the lower of:
(i) the Initial Portfolio Outstanding Amount; and (ii) the Purchase Price,
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33
subject to the Issuer:
(a)
giving not more than 60 days’ nor less than 30 days’ notice to the
Representative of the Noteholders and the Noteholders, in accordance
with Condition 17 (Notices), of its intention to redeem all Classes of
Notes (in whole but not in part); and
(b) having provided, prior to giving any such notice, to the
Representative of the Noteholders a certificate signed by the
chairman of the board or the sole director of the Issuer (as applicable)
to the effect that it will have the funds on such Interest Payment Date
to discharge its obligations under the Notes (or the Rated Notes only,
if all the Junior Noteholders consent) and any obligations ranking in
priority, or pari passu, thereto; and
(c)
giving not more than 60 days’ nor less than 30 days’ written notice to
the Bank of Italy of its intention to redeem all Classes of Notes (in
whole but not in part),
provided, however, that:
(I)
pursuant to the Transfer Agreement, the consideration for the
purchase of the Claims to be paid by the Originator (should the
Originator purchase the Claims from the Issuer) may not exceed: (A)
the outstanding principal amount of the Claims to be repurchased,
provided that none of such Claims qualify as Crediti ad Incaglio or
Crediti in Sofferenza or (B) the aggregate of: (I) the market value of
the Claims which are classified as Crediti ad Incaglio or as Crediti in
Sofferenza (if any), as determined by one or more third-party experts
independent from the Originator and its banking group in accordance
with the Transfer Agreement; and (II) the outstanding principal of the
Claims which are classified neither as Crediti ad Incaglio or as
Crediti in Sofferenza; and
(II) in the event that (a) a third-party purchaser, other than the Originator,
purchases the Claims from the Issuer; (b) any Further Notes are then
outstanding; and (c) such Further Notes are rated by Fitch, Fitch,
upon request from the Issuer, gives written confirmation to the Issuer
and the Representative of the Noteholders that the redemption of the
Notes would not adversely affect the then current rating of the
Further Notes then outstanding.
“Portfolio Outstanding Amount” means, on each Interest Payment Date,
the aggregate Outstanding Principal of all the Claims as at the end of the
immediately preceding Collection Period, and “Initial Portfolio
Outstanding Amount” means the aggregate of the outstanding principal
amount of all the Claims as at the Valuation Date (net of any payments of
principal due in respect of the Claims as of, and including, the Valuation
Date), being equal to €497,004,971.21.
of the Claims in order to finance the redemption of the Notes in the
circumstances described above.
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34
Optional redemption for
taxation, legal or regulatory
reasons
Prior to the service of an Issuer Acceleration Notice, the Issuer may
redeem the Notes of all Classes (in whole but not in part) at their Principal
Amount Outstanding (plus any accrued but unpaid interest) in accordance
with the Post-Enforcement Priority of Payments and subject to the Issuer
having sufficient funds to redeem all the Notes (or the Rated Notes only, if
all the Junior Noteholders consent) and to make all payments ranking in
priority, or pari passu, thereto, on any Interest Payment Date if, by reason
of a change in law or the interpretation or administration thereof since the
Issue Date:
(a)
the assets of the Issuer in respect of this Securitisation (including the
Claims, the Collections and the other Issuer’s Rights) become subject
to taxes, duties, assessments or governmental charges of whatever
nature imposed, levied, collected, withheld or assessed by the
Republic of Italy or by any political sub-division thereof or by any
authority thereof or therein or by any applicable taxing authority
having jurisdiction; or
(b) either the Issuer or any paying agent appointed in respect of the Rated
Notes or any custodian of the Rated Notes is required to deduct or
withhold any amount (other than in respect of a Decree 239
Withholding) in respect of any Class of Rated Notes, from any
payment of principal or interest on such Interest Payment Date for or
on account of any present or future taxes, duties, assessments or
governmental charges of whatever nature imposed, levied, collected,
withheld or assessed by the Republic of Italy or by any political subdivision thereof or by any authority thereof or therein or by any other
applicable taxing authority having jurisdiction and provided that such
deduction or withholding may not be avoided by appointing a
replacement paying agent or custodian in respect of the Rated Notes
before the Interest Payment Date following the change in law or the
interpretation or administration thereof; or
(c)
any amounts of interest payable on the Mortgage Loans to the Issuer
are required to be deducted or withheld from the Issuer for or on
account of any present or future taxes, duties, assessments or
governmental charges of whatever nature imposed, levied, collected,
withheld or assessed by the Republic of Italy or by any political
subdivision thereof or by any authority thereof or therein or by any
other applicable taxing authority having jurisdiction; or
(d) it is or will become unlawful for the Issuer to perform or comply with
any of its obligations under or in respect of the Notes or any of the
Transaction Documents to which it is a party;
(i)
giving not more than 60 days’ nor less than 30 days’ written notice
(which notice shall be irrevocable) to the Representative of the
Noteholders and the Noteholders, pursuant to Condition 17
(Notices), of its intention to redeem all (but not some only) the
Notes; and
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35
(ii)
providing to the Representative of the Noteholders:
(A) a legal opinion (in form and substance satisfactory to the
Representative of the Noteholders) from a firm of lawyers of
international repute (approved in writing by the
Representative of the Noteholders) opining on the relevant
change in law or interpretation or administration thereof;
(B) a certificate from the chairman of the board of directors or the
sole director of the Issuer (as applicable) stating that the
obligation to make such deduction or withholding or the
suffering by the Issuer of such deduction or withholding
cannot be avoided or, as the case may be, the events under
paragraph (d) above will apply on the next Interest Payment
Date and cannot be avoided by the Issuer taking reasonable
endeavours; and
(C) a certificate from the chairman of the board of directors or the
sole director of the Issuer (as applicable) to the effect that it
will have the funds on such Interest Payment Date to
discharge its obligations under: (i) the Notes (or the Rated
Notes only, if all the Junior Noteholders consent) and any
obligations ranking in priority, or pari passu, thereto; and (ii)
any additional taxes payable by the Issuer by reason of such
early redemption of the Notes.
of the Claims in order to finance the redemption of the Notes in the
circumstances described above.
Estimated maturity and
average life of the Rated
Notes and assumptions
The weighted average life of the Rated Notes cannot be predicted as the
actual rate at which the Mortgage Loans will be repaid and a number of
other relevant factors are unknown. Calculations of the estimated weighted
average life of the Notes have been based on certain assumptions including
the assumptions that the Mortgage Loans are subject to a constant payment
rate as shown in “Estimated weighted average life of the Rated Notes and
assumptions, below.
The estimated weighted average life of the Rated Notes, at various
assumed constant payment rates for the Mortgage Loans, is set out under
“Estimated weighted average life of the Rated Notes and assumptions”,
below.
7.
Credit structure
Cash Reserve
The Issuer will establish a reserve fund in the Cash Reserve Account.
“Cash Reserve” means the monies standing to the credit of the Cash
Reserve Account at any given time. Pursuant to the Subordinated Loan
Agreement, the Subordinated Loan Provider has agreed to advance to the
Issuer a subordinated loan, in an amount of €10,488,000, which the Issuer
will deposit on the Issue Date into the Cash Reserve Account, except for
€50,000 which will be credited to the Expenses Account.
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36
“Target Cash Reserve Amount” means €10,438,000 (being an amount
equal to 2.1 per cent. of the aggregate Principal Amount Outstanding of the
Notes as at the Issue Date) save that:
(A) upon repayment of at least 75 per cent. of the initial aggregate
Principal Amount Outstanding of the Rated Notes, the Target Cash
Reserve Amount will be reduced to €3,000,000 (being an amount
equal to 0.6 per cent. of the aggregate Principal Amount Outstanding
of the Notes as at the Issue Date) provided that:
(a)
on each of the two immediately preceding Interest Payment
Dates, the Cash Reserve equals or exceeds the Target Cash
Reserve Amount as at the relevant Interest Payment Date (upon
making all the payments and provisions to be made on such
Interest Payment Date);
(b) the Principal Deficiency Ledgers are either zero or have been
reduced to zero;
(c)
the aggregate Outstanding Principal of all Delinquent Claims as
at the end of the immediately preceding Collection Period does
not exceed 7.0 per cent. of the Initial Portfolio Outstanding
Amount;
(d) the aggregate Outstanding Principal of all Defaulted Claims as
at the end of the immediately preceding Collection Period does
not exceed 3.50 per cent. of the Initial Portfolio Outstanding
Amount; and
(e)
at least 5 years have elapsed since the Issue Date;
(B) on the Calculation Date immediately following the Interest Payment
Date on which the Rated Notes will be redeemed in full, the Target
Cash Reserve Amount will be reduced to zero.
If at the time the Target Cash Reserve Amount is reduced, the Cash
Reserve exceeds the reduced Target Cash Reserve Amount, the excess (the
“Cash Reserve Excess” which, for the avoidance of doubt, does not
include any Revenue Eligible Investments Amounts or interest accrued on
the Cash Reserve Account) will be applied (i) in or towards satisfaction of
any amounts outstanding under the Subordinated Loan Agreement, and (ii)
if the Subordinated Loan has been fully repaid, to augment the Interest
Available Funds to be calculated on the immediately following Calculation
Date.
On each Interest Payment Date, the Cash Reserve will be increased or
replenished, as the case may be, up to the Target Cash Reserve Amount out
of the Interest Available Funds and in accordance with the PreEnforcement Interest Priority of Payments.
On the Maturity Date, the Cash Reserve will be utilised to augment the
Principal Available Funds to the extent necessary to allow the Issuer to
repay the Rated Notes in full and to make all other payments ranking in
priority thereto.
The Principal Deficiency
On each Interest Payment Date, subject to the availability of Interest
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37
Ledger Amount
Available Funds, provisions will be made by the Issuer against any
Principal Deficiency Amount in accordance with the Pre-Enforcement
Interest Priority of Payments. Such provisions (being the Principal
Deficiency Ledger Amount, as defined below) will be used, on the same
Interest Payment Date, to augment the Principal Available Funds and will
therefore be applied to make payments or provisions due on the same date
in accordance with the Pre-Enforcement Principal Priority of Payments
including, without limitation, payments due in respect of interest on the
Rated Notes of any Class to the extent not paid under the Pre-Enforcement
Interest Priority of Payments due to the insufficiency of Interest Available
Funds.
“Principal Deficiency Ledger Amount” means, in respect of each
Calculation Date immediately preceding an Interest Payment Date, the
amounts retained in and/or credited to the Principal Account on such
Interest Payment Date pursuant to items (vi), (viii) and (xii) of the PreEnforcement Interest Priority of Payments.
Eligible Investments
Pursuant to the Agency and Accounts Agreement, should the Issuer resolve
to invest in Eligible Investments, the Issuer will open the Eligible
Investments Securities Account with the Principal Paying Agent and the
Computation Agent (I) shall, if so instructed by the Originator, in the name
and on behalf of the Issuer, instruct the Transaction Bank to withdraw:
(a)
the balance of the Cash Reserve Account may be invested in Eligible
Investments on the Business Day immediately following each Interest
Payment Date;
(b) the balance of the Principal Account may be invested in Eligible
Investments on the Business Day immediately following each Interest
Payment Date; and
(c)
the balance of the Claims Transaction Account may be invested in
Eligible Investments on a weekly basis on the last Business Day of
each week,
each such date, an “Investment Date” that are necessary to execute the
above-mentioned instructions, to invest in the above mentioned Eligible
Investments and to execute the purchase of the same Eligible Investments
in the name and on behalf of the Issuer and (II) shall, in the name and on
behalf of the Issuer, credit or deposit, as applicable, the financial
instruments constituting or underlying the Eligible Investments thus
purchased for the account of the Issuer to the Eligible Investments
Securities Account.
Swap Agreement
The Issuer has entered into the Swap Agreement with the Swap
Counterparty in order to hedge against the potential interest rate exposure
of the Issuer in relation to its floating rate interest obligations under the
Rated Notes.
See “Credit structure — The Swap Agreement”, below.
Letter of Undertaking
Pursuant to a letter of undertaking in relation to the Issuer (the “Letter of
Undertaking”) dated the Signing Date between the Issuer, BancaEtruria
//
38
and the Representative of the Noteholders, BancaEtruria has undertaken to
provide the Issuer with all necessary monies (in any form of financing
deemed appropriate by the Representative of the Noteholders, for example
by way of a subordinated loan, the repayment of which is effected in
compliance with item (xvi)(C) of the Pre-Enforcement Interest Priority of
Payments or, as the case may be, item (xi)(A) of the Post-Enforcement
Priority of Payments) in order for the Issuer to pay any losses, costs,
expenses or liabilities in respect of certain exceptional liabilities described
under “The other Transaction Documents – The Letter of Undertaking”,
below.
Prospective Noteholders’ attention is drawn to the fact that the Letter of
Undertaking does not and will not constitute a guarantee by BancaEtruria
or any of the shareholders of the Issuer of any obligation of a Borrower or
the Issuer. The Letter of Undertaking is governed by Italian law.
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39
STRUCTURE DIAGRAM
The following structure diagram does not purport to be complete and is taken from, and is qualified in its
entirety by, the remainder of this Prospectus. Words and expressions defined elsewhere in this Prospectus
shall have the same meanings in this structure diagram.
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40
RISK FACTORS
(A)
//
41
The following is a summary of certain aspects of the issue of the Notes, the Issuer and the related transactions
about which prospective Noteholders should be aware. This summary is not intended to be exhaustive, and
prospective Noteholders should also read the detailed information set out elsewhere in this Prospectus, in any
document incorporated by reference and in the Transaction Documents and reach their own views prior to
making any investment decision. Additional risks and uncertainties not presently known to the Issuer or that it
currently believes to be immaterial could also have a material impact on its business operations. Words and
expressions defined in the Conditions or elsewhere in this Prospectus have the same meanings in this section.
Investing in the Notes involves certain risks. Prospective investors should consider, among other things, the
following:
Risk factors in relation to the Notes
Absence of secondary market and limited liquidity
There is not, at present, a secondary market for the Notes. Although the application has been made to list the
Rated Notes on the regulated market of the Irish Stock Exchange, there can be no assurance that a secondary
market for any of the Rated Notes will develop, or, if a secondary market does develop in respect of any of
the Rated Notes, that it will provide the holders of such Rated Notes with liquidity of investments or that it
will continue until the final redemption or cancellation of such Rated Notes. Illiquidity means that a
Noteholder may not be able to find a buyer to buy its Notes readily or at prices that will enable the Noteholder
to realise a desired yield. Illiquidity can have a severe adverse effect on the market value of the Notes.
Consequently, any sale of Notes by Noteholders in any secondary market which may develop may be at a
discount to the original purchase price of those Notes. Any Class of Notes may experience illiquidity,
although generally illiquidity is more likely to occur in respect of Classes that are especially sensitive to
prepayment, credit or interest rate risk or that have been structured to meet the investment requirements of
limited categories of Noteholders.
In addition, prospective Noteholders should be aware of the prevailing and widely reported global credit
market conditions (which continue at the date hereof), whereby there is a general lack of liquidity in the
secondary market for instruments similar to the Notes. As a result of the current liquidity crisis, there exist
significant additional risks to the Issuer and the investors which may affect the returns on the Notes to
investors.
Moreover, the current liquidity crisis has stalled the primary market for a number of financial products
including instruments similar to the Notes. While it is possible that the current liquidity crisis may soon
alleviate for certain sectors of the global credit markets, there can be no assurance that the market for
securities similar to the Notes will recover at the same time or to the same degree as such other recovering
global credit market sectors.
There exist significant additional risks for the Issuer and investors as a result of the current crisis.
These risks include, among others, (i) the likelihood that the Issuer will find it harder to dispose of the Claims in
accordance with the Transaction Documents, (ii) the possibility that, on or after the Issue Date, the price at which
assets can be sold by the Issuer will have deteriorated from their effective purchase price, (iii) the increased
illiquidity and price volatility of the Notes as there is currently no secondary trading in asset-backed securities and
(iv) a reduction in enforcement recoveries. These additional risks may affect the returns on the Notes to investors.
Suitability
Prospective investors should determine whether an investment in the Notes is appropriate in their particular
circumstances and should consult with their legal, business and tax advisers to determine the consequences of
an investment in the Notes and to arrive at their own evaluation of the investment.
Investment in the Notes is only suitable for investors who:
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1.
have the requisite knowledge and experience in financial and business matters to evaluate the merits
and risks of an investment in the Notes;
2.
have access to, and knowledge of, appropriate analytical tools to evaluate such merits and risks in the
context of their financial situation;
3.
are capable of bearing the economic risk of an investment in the Notes; and
4.
recognise that it may not be possible to dispose of the Notes for a substantial period of time, if at all.
Prospective investors in the Notes should make their own independent decision whether to invest in the Notes
and whether an investment in the Notes is appropriate or proper for them, based upon their own judgement
and upon advice from such advisers as they may deem necessary.
Prospective investors in the Notes should not rely on or construe any communication (written or oral) of the
Issuer, the Originator, the Arranger nor the Underwriter as investment advice or as a recommendation to
invest in the Notes, it being understood that information and explanations related to the Conditions shall not
be considered to be investment advice or a recommendation to invest in the Notes.
No communication (written or oral) received from the Issuer, the Arranger or the Underwriter or the
Originator or from any other person shall be deemed to be an assurance or guarantee as to the expected results
of an investment in the Notes.
Performance of the Portfolio
The Portfolio comprises (i) residential mortgage loans which qualify as mutui fondiari and (ii) other
residential mortgage loans which qualify as mutui ipotecari and which were classified as performing (crediti
in bonis) by the Originator in accordance with the Bank of Italy’s supervisory regulations as at the Valuation
Date. There can be no guarantee that the Borrowers will not default under such Mortgage Loans or that they
will continue to perform thereunder. It should be noted that adverse changes in economic conditions may
affect the ability of the Borrowers to repay the Mortgage Loans.
The recovery of overdue amounts in respect of the Mortgage Loans will be affected by the length of
enforcement proceedings in respect of the Portfolio, which in the Republic of Italy can take a considerable
amount of time depending on the type of action required and where such action is taken. Factors which can
have a significant effect on the length of the proceedings include the following: (i) certain courts may take
longer than the national average to enforce the Mortgage Loans and the Mortgages; (ii) obtaining title deeds
from land registries which are in the process of digitising their records can take up to two or three years; and
(iii) further time is required for the proceedings if it is necessary first to obtain a payment injunction (decreto
ingiuntivo) and if the Borrower raises a defence or counterclaim to the proceedings. In the Republic of Italy it
takes an average of six to seven years from the time lawyers commence enforcement proceedings to the time
an auction date is set for the forced sale of any assets. See “Selected aspects of Italian law”.
Recovery proceeds may also be affected by, among other things, a decline in property values. No assurance
can be given that the values of the mortgaged properties have remained or will remain at the same level as on
the dates of origination of the related Mortgage Loans. If the residential property market in the Republic of
Italy experiences an overall decline in property values, such a decline could, in certain circumstances, result
in the value of the security created by the Mortgages being significantly reduced and, ultimately, may result in
losses to the Noteholders.
Credit risk on Banca Etruria
As of the date of this Prospectus the unsecured, unsubordinated debt obligations of Banca Etruria is rated by
Fitch as follows:
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(a)
“F2” by Fitch (in respect of short-term debt); and
(b)
“BBB+” by Fitch.
If the long-term unsecured, unsubordinated debt obligations of Banca Etruria ceases to be rated at least the
rating assigned by Fitch to the then outstanding Class B Notes as at the time of the relevant downgrading or
withdrawal, this might result in Fitch reviewing the Class B Notes credit rating and likely in a downgrade of
the rating assigned to the Class B Notes.
No independent investigation in relation to the Portfolio
None of the Issuer, the Arranger, the Underwriter nor any other party to the Transaction Documents (other
than the Originator) has undertaken or will undertake any loan file review, searches or other actions to verify
the details of the Claims and the Portfolio, nor has any of such persons undertaken, nor will any of them
undertake, any investigations, searches or other actions to establish the creditworthiness of any Borrowers or
any other debtor thereunder. There can be no assurance that the assumptions used in modelling the cash flows
of the Claims and the Portfolio accurately reflects the status of the underlying Mortgage Loans.
The Issuer will rely instead on the representations and warranties given by the Originator in the Warranty and
Indemnity Agreement and in the Transfer Agreement. The only remedies of the Issuer in respect of the
occurrence of a breach of a representation and warranty which materially and adversely affects the value of a
Claim will be the requirement that the Originator indemnifies the Issuer for the damage deriving therefrom or
repurchases the relevant Claim. See “The Warranty and Indemnity Agreement”. There can be no assurance
that the Originator will have the financial resources to honour such obligations.
The parties to the Warranty and Indemnity Agreement have expressly agreed, pursuant to clause 8 thereof,
that claims for a breach of representation or warranty given by the Originator may be pursued against the
Originator until one year and one day after the earlier of (A) the Cancellation Date and (B) the day on which
any note issued or to be issued by the Issuer (including the Notes) have been paid in full. However, there is a
possibility that legal actions initiated for breach of some representations or warranties be nonetheless subject
to a one year statutory limitation period if article 1495 of the Italian civil code (which regulates ordinary sales
contracts (contratti di compravendita)) is held to apply to the Warranty and Indemnity Agreement.
Liquidity and credit risk
The Issuer is subject to the risk of delay arising between the receipt of payments due from Borrowers and the
scheduled Interest Payment Dates. The Issuer is also subject to the risk of, inter alia, default in payment by
the Borrowers and failure by the Servicer to collect or recover sufficient funds in respect of the Claims in
order to enable the Issuer to discharge all amounts payable under the Notes. These risks are mitigated: (A) in
respect of the Class A Notes, by the credit support provided to the Class A Notes by the subordination of the
Class B Notes and the Junior Notes; (B) in respect of the Class B Notes, by the credit support provided to the
Class B Notes by the subordination of the Junior Notes; and (C) by the liquidity and, to a lesser extent, credit
support provided in respect of each Class of Rated Notes by the Cash Reserve.
However, in each case, there can be no assurance that the levels of credit support and liquidity support
provided will be adequate to ensure punctual and full receipt of amounts due under the Notes.
Interest rate risk
The Issuer expects to meet its obligations under the Rated Notes primarily from Collections in respect of the
Claims. Such Collections may have no correlation to EURIBOR. To protect the Issuer from a situation where
EURIBOR increases to such an extent that the Collections are no longer sufficient to cover the Issuer’s
obligations under the Rated Notes, the Issuer has executed six swap transactions with the Swap Counterparty
pursuant to the Swap Agreement.
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Should the Swap Counterparty and the Swap Guarantor fail to provide the Issuer with all amounts owing to
the Issuer (if any) on any payment date under the Swap Agreement, or should the Swap Transactions be
otherwise terminated, then the Issuer may have insufficient funds to make payments of principal and interest
on the Rated Notes. See “Credit structure - The Swap Agreement”.
However, prospective investors’ attention is drawn to the fact that, in such circumstances, if the Issuer is not
able to make payments due on the Rated Notes, such non-payment could constitute an Event of Default and
cause the Representative of the Noteholders to serve to the Issuer an Issuer Acceleration Notice in respect of
the Notes.
The Swap Counterparty will be entitled, under certain circumstances, to terminate the Swap Transaction in
respect of which (i) it is obliged to gross up payments following any withholding or deduction for or on
account of any taxes or (ii) it receives a payment in respect of which an amount is required to be deducted or
withheld for or on account of any taxes.
The Swap Agreement will contain certain termination events and events of default which will entitle either
party to terminate the Swap Transactions. For instance, the Issuer may terminate the Swap Transactions, inter
alia, if the Swap Counterparty is downgraded below certain rating thresholds set out in the Swap Agreement
and the Swap Counterparty fails to take such action as is required in the Swap Agreement to remedy such
downgrade.
If the Swap Transactions are terminated for any reason, the Issuer may be required to pay an amount to the
Swap Counterparty as a result of the termination. Following such a termination, any payments by the Issuer to
the Swap Counterparty will be made in accordance with the applicable Priority of Payments.
Noteholders’ directions and resolutions in respect of early redemption of the Notes
In a number of circumstances, the Notes may become subject to early redemption. Early redemption of the
Notes as a result of some circumstances may be dependent upon receipt by the Representative of the
Noteholders of a direction from, or a resolution passed by, a certain majority of Noteholders. If the economic
interest of a Noteholder represents a relatively small proportion of the majority and its individual vote is
contrary to the majority vote, its direction or vote may be disenfranchised and, if a determination is made by
certain of the Noteholders to redeem the Notes, such minority Noteholders may face early redemption of the
Notes held by them.
Subordination and credit enhancement
In respect of the obligations of the Issuer to pay interest and to repay principal on the Notes, the Conditions
and the Intercreditor Agreement provide that:
(a)
in respect of the obligations of the Issuer to pay interest on the Notes prior to the service of an Issuer
Acceleration Notice:
A)
the Class A Notes rank pari passu without any preference or priority amongst themselves and in
priority to the Class B Notes and the Junior Notes;
B)
the Class B Notes rank pari passu without any preference or priority amongst themselves and in
priority to the Junior Notes but subordinate to the Class A Notes; and
C)
the Junior Notes rank pari passu and without any preference or priority amongst themselves, but
subordinate to the Rated Notes,
provided that,
(i)
for so long as there are Class A Notes outstanding, following the occurrence of the Class B Notes
Trigger Event, interest accruing on the Class B Notes will not be payable and will be deferred
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until the Interest Payment Date when all the Class A Notes will be redeemed in full, subject to the
availability of Issuer Available Funds;
(ii)
(b)
(c)
(d)
for so long as there are Rated Notes outstanding, following the occurrence of the Junior Trigger
Event or of the Class B Notes Trigger Event, interest accruing on the Junior Notes will not be
payable and will be deferred until the Interest Payment Date when all the Rated Notes will be
redeemed in full, subject to the availability of Issuer Available Funds;
in respect of the obligations of the Issuer to repay principal on the Notes, prior to the service of an Issuer
Acceleration Notice and if, and for so long as, the Pro-Rata Amortisation Conditions are not met:
A)
the Class A Notes rank pari passu and without any preference or priority amongst themselves and
in priority to repayment of principal on the Class B Notes and the Junior Notes;
B)
the Class B Notes rank pari passu and without any preference or priority amongst themselves but
subordinate to repayment of principal on the Class A Notes and in priority to repayment of
principal on the Junior Notes and no amount of principal in respect of the Class B Notes shall
become due and payable or be repaid until redemption in full of the Class A Notes; and
C)
the Junior Notes rank pari passu and without any preference or priority amongst themselves, but
subordinate to payment of interest and repayment of principal on the Rated Notes and no amount
of principal in respect of the Junior Notes shall become due and payable or be repaid until
redemption in full of the Rated Notes;
in respect of the obligations of the Issuer to repay principal on the Notes, prior to the service of an Issuer
Acceleration Notice and if, and for so long as, the Pro-Rata Amortisation Conditions are met:
A)
all Classes of Rated Notes will rank pari passu and without any preference or priority among
themselves and in priority to the Junior Notes; and
B)
the Junior Notes rank pari passu and without any preference or priority amongst themselves but
subordinate to repayment of principal on the Rated Notes and no amount of principal in respect
of the Junior Notes shall become due and payable or be repaid until redemption in full of the
Rated Notes;
in respect of the obligations of the Issuer (a) to pay interest and (b) to repay principal on the Notes
following the service of an Issuer Acceleration Notice:
A)
the Class A Notes will rank pari passu and without any preference or priority amongst
themselves and in priority to the Class B Notes and the Junior Notes;
B)
the Class B Notes will rank pari passu and without any preference or priority amongst
themselves but subordinate to payment in full of all amounts due under the Class A Notes and in
priority to the Junior Notes; and
C)
the Junior Notes will rank pari passu and without any preference or priority amongst themselves,
but subordinate to payment in full of all amounts due under the Rated Notes.
For so long as there are Class A Notes outstanding, following the occurrence of the Class B Notes Trigger
Event, interest accruing on the Class B Notes will not be payable and will be deferred until the Interest
Payment Date when all the Class A Notes will be redeemed in full, subject to the availability of Issuer
Available Funds.
For so long as there are Rated Notes outstanding, following the occurrence of the Junior Trigger Event or of
the Class B Notes Trigger Event, interest accruing on the Junior Notes will not be payable and will be
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46
deferred until the Interest Payment Date when all the Rated Notes will be redeemed in full, subject to the
availability of Issuer Available Funds.
As a result, to the extent that any losses are suffered by any of the Noteholders, such losses will be borne in
the first instance by the Junior Noteholders, then, provided that the Pro-Rata Amortisation Conditions do not
apply (to the extent that the Class B Notes have not been redeemed) by the Class B Noteholders and then (to
the extent that the Class A Notes have not been redeemed) by the holders of the Class A Notes.
Prospective investors in the Class A Notes, the Class B Notes and the Junior Notes should have particular
regard to the sections headed “Key Features - Summary of the Notes – Ranking” and “Credit structure” below
in determining the likelihood or extent of any shortfall of funds available to the Issuer to meet payments of
interest and/or repayment of principal due under the Class A Notes, the Class B Notes or, as applicable, the
Junior Notes.
Principal Deficiency Ledger
Upon default by the Borrowers and classification of the relevant Mortgage Loan as a Defaulted Claim, the
Issuer will be obliged to record any related Principal Deficiency Amount first in the Junior Notes Principal
Deficiency Ledger and, when the amount debited to the Junior Notes Principal Deficiency Ledger is equal to
the Principal Amount Outstanding of the Junior Notes, in the Class B Notes Principal Deficiency Ledger and,
when the amount debited to the Class B Notes Principal Deficiency Ledger is equal to the Principal Amount
Outstanding of the Class B Notes, in the Class A Notes Principal Deficiency Ledger.
These principal deficiencies will be recouped from subsequent receipts (other than principal receipts) into the
Principal Account and, subject to the payment of prior-ranking obligations as set out under the PreEnforcement Interest Priority of Payments, first credited to the Class A Notes Principal Deficiency Ledger,
and second (once the balance on the Class A Notes Principal Deficiency Ledger is reduced to nil) to the Class
B Notes Principal Deficiency Ledger, and third (once the balance on the Class B Notes Principal Deficiency
Ledger is reduced to nil) to the Junior Notes Principal Deficiency Ledger.
If there are insufficient funds available as a result of such principal deficiencies, then one or more of the
following consequences may ensue:
(i)
the Issuer’s interest and other net income may not be sufficient, after making the payments to be made
in priority thereto, to pay, in full or at all, interest due on the Class B Notes and/or the Junior Notes;
(ii)
there may be insufficient funds to redeem the Class A Notes and/or the Class B Notes and/or the Junior
Notes at their face value unless prior to their final maturity date the Issuer's interest and other net
income is sufficient, after making other payments to be made in priority thereto, to reduce to nil the
debit provision in the relevant Principal Deficiency Ledger; and
(iii)
if the aggregate debit balances, notwithstanding any reduction as aforesaid, exceed the aggregate face
value of the Junior Notes, the Class B Noteholders may not receive by way of principal repayment the
full face value of their Class B Notes, and if they exceed the aggregate face value of the Class B Notes
and the Junior Notes, the Class A Noteholders may not receive by way of principal repayment the full
face value of their Class A Notes.
See “Key features - Principal Deficiency Ledgers”, above and “Credit structure”.
Limited enforcement rights
The protection and exercise of the Noteholders’ rights and the enforcement of the Note Security is one of the
duties of the Representative of the Noteholders. The Conditions limit the ability of individual Noteholders to
commence proceedings (including proceedings for a declaration of insolvency) against the Issuer by
conferring on the Meeting of the Noteholders the power to determine in accordance with the Rules of the
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Organisation of Noteholders the ability of any Noteholder to commence any such individual actions.
Accordingly, individual Noteholders may not, without breaching the Conditions, be able to commence
proceedings or take other individual remedies against the Issuer unless the Meeting of the Noteholders has
approved such action in accordance with the provisions of the Rules of the Organisation of Noteholders.
Remedies available for the purpose of recovering amounts owed in respect of the Notes shall be limited to
actions in respect of the Claims, the Issuer Available Funds and the Note Security (but, for the avoidance of
doubt, excluding the Collateral (if any)). In the event that the amounts recovered pursuant to such actions are
insufficient, after payment of all other claims ranking in priority to or pari passu with amounts due under the
Notes of each Class, to pay in full all principal and interest and other amounts whatsoever due in respect of
the Rated Notes, the Rated Noteholders will have no further actions available in respect of any such unpaid
amounts.
Relationship among Noteholders and between Noteholders and Other Issuer Creditors
The Intercreditor Agreement contains provisions applicable where, in the opinion of the Representative of the
Noteholders, there is a conflict between all or any of the interests of one or more Classes of Noteholders or
between one or more Classes of Noteholders and any other Issuer Creditors, requiring the Representative of
the Noteholders to have regard only to the holders of the Notes of the Most Senior Class (as defined in
Condition 1 (Definitions)) then outstanding and the Representative of the Noteholders is not required to have
regard to the holders of any other Class of Notes then outstanding, nor to the interests of the other Issuer
Creditors, except to ensure that the application of the Issuer’s funds is in accordance with the applicable
Priority of Payments. In addition, the Intercreditor Agreement contains provisions requiring the
Representative of the Noteholders to have regard to the interests of each Class of Noteholders as a class and
relieves the Representative of the Noteholders from responsibility for any consequence for individual
Noteholders as a result of such Noteholders being domiciled or resident in, or otherwise connected in any way
with, or subject to the jurisdiction of, a particular territory or taxing jurisdiction.
Under Condition 10 (Events of Default), the Representative of the Noteholders is not obliged to serve to the
Issuer an Issuer Acceleration Notice declaring the Notes to be due and payable (without prejudice to
Condition 3(b) (Ranking)), unless it is directed to do so either:
1.
in writing by the holders of at least 60 per cent. of the Principal Amount Outstanding of the Most Senior
Class of Notes; or
2.
by an Extraordinary Resolution of the holders of the Most Senior Class of Notes,
and in addition, in each case, provided that it is indemnified and/or secured to its satisfaction against all
liabilities and all costs and expenses (provided that supporting documents are delivered) which it may incur in
so doing. In addition, following an Event of Default pursuant to Condition 10(a)(ii) (Breach of other
obligations) and 10(a)(iii) (Failure to take action), the service of an Issuer Acceleration Notice has to be
approved either in writing by the holders of at least 60 per cent. of the Principal Amount Outstanding of the
Most Senior Class or by an Extraordinary Resolution of the holders of the Most Senior Class.
The Intercreditor Agreement contains provisions requiring the Representative of the Noteholders to have
regard to the interests of the Other Issuer Creditors as regards all powers, trusts, authorities, duties and
discretions of the Representative of the Noteholders (except where expressly provided otherwise), but
requiring the Representative of the Noteholders, in the event of a conflict between the interests of the holders
of any Class of outstanding Notes and any Other Issuer Creditor, to have regard only (except where
specifically provided otherwise) to the interests of the holders of such Class of outstanding Notes, except to
ensure that the application of the Issuer’s funds is in accordance with the applicable Priority of Payments.
Rights of set-off
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Pursuant to article 1248 of the Italian law civil code, in the context of an assignment of monetary claims,
notwithstanding the notification of the assignment to the debtor, the debtor retains the right to set-off any
claims owed to him/her by the assigning creditor, provided that they arose prior to the notification date,
against the amount due by him/her to the relevant owner, from time to time, of the assigned monetary claim.
The debtors under the Mortgage Loans are entitled to exercise rights of set-off in respect of amounts due
under any Mortgage Loan to the Issuer against any amounts payable by the Originator to the relevant
Borrower which came into existence (were crediti esistenti) prior to the later of: (i) the publication of the
notice of assignment of the Claims in the Italian Official Gazette (Gazzetta Ufficiale della Repubblica
Italiana) and (ii) the registration of such notice in the competent companies’ register. Under the terms of the
Warranty and Indemnity Agreement, the Originator has agreed to indemnify the Issuer in respect of any
reduction in amounts received by the Issuer in respect of the Portfolio as a result of the exercise by any
Borrower of a right of set-off.
Securitisation Law
As at the date of this Prospectus, no interpretation of the application of the Securitisation Law has been issued
by any Italian governmental or regulatory authority, except for (i) regulations issued by the Bank of Italy
concerning, inter alia, the accounting treatment of securitisation transactions for special purpose companies
incorporated under the Securitisation Law, such as the Issuer, and the duties of the companies which carry out
collection and recovery activities in the context of a securitisation transaction, (ii) the decree of the Italian
Ministry of Treasury dated 4 April 2001 and the Bank of Italy regulation dated 16 December 2002 on the
terms for the registration of the financial intermediaries in the register held by the Bank of Italy pursuant to
article 107 of the Banking Act. Consequently, it is possible that such authorities may issue further regulations
relating to the Securitisation Law or to the interpretation thereof, the impact of which cannot be predicted by
the Issuer as at the date of this Prospectus.
Servicing of the Portfolio
The Portfolio has been serviced by BancaEtruria up to the transfer of the Claims as the owner of the relevant
Claims and, following the transfer of the Claims to the Issuer, by BancaEtruria as Servicer pursuant to the
Servicing Agreement. Consequently, the net cash flows from the Portfolio may be affected by decisions made,
actions taken and collection procedures adopted by the Servicer pursuant to the Servicing Agreement.
The Servicer has been appointed by the Issuer as responsible for the collection of the Claims transferred by it
(as Originator) to the Issuer and for the cash and payment services (soggetto incaricato della riscossione dei
crediti ceduti e dei servizi di cassa e pagamento). In accordance with the Securitisation Law, the Servicer is
therefore responsible for ensuring that the collection of the Claims serviced by it and the relative cash and
payment services comply with Italian law and with this Prospectus.
Commingling risk
The Issuer is subject to the risk that, in the event of insolvency of the Servicer, the collections then held by the
Servicer are lost or temporarily unavailable to the Issuer.
In order to reduce such risk, the Collections are required to be transferred by the Servicer into the Collection
Account by 10:00 a.m. (Milan time) of the Business Day immediately following the day of receipt, for value
the relevant receipt date in accordance with the procedure described in the Servicing Agreement, provided
that, in the case of exceptional circumstances causing an operational delay in the transfer, the Collections are
required to be transferred to the Collection Account by 10:00 a.m. (Milan time) of the Business Day
immediately following the day on which the operational delay in the transfer has been solved. Pursuant to the
Agency and Accounts Agreement, the Collection Account Bank is then required to transfer by 4.00 p.m.
(London time) on each Business Day all amounts standing to the credit of the Collection Account into the
Claims Transaction Account which is held with the Transaction Bank. Prospective Noteholders should note
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that, following the insolvency of the Servicer, the Issuer (or the substitute servicer on behalf of the Issuer) will
have to issue new payment instructions to the Borrowers to pay directly to the Issuer or the substitute servicer.
The Issuer is subject to the risk that monies paid by the Borrowers to the insolvent Servicer prior to the new
instructions being issued are lost or temporarily unavailable to the Issuer. In order to reduce that risk, the
Issuer has established a Credit Reserve which is fully funded on the Issue Date and which (if ever utilised)
will be replenished, subject to the availability of sufficient Interest Available Funds, in accordance with the
Pre-Enforcement Interest Priority of Payments. See “Credit structure”, below.
Yield and repayment considerations
The yield to maturity of the Notes of each Class will depend, inter alia, on the amount and timing of
repayment of principal (including prepayments and sale proceeds arising on enforcement of a Mortgage Loan)
on the Mortgage Loans. Such yield may therefore be adversely affected by a higher or lower than anticipated
rate of prepayments on the Mortgage Loans.
Prepayments may result from the refinancing or sale of properties by Borrowers voluntarily or as a result of
enforcement proceedings under the relevant Mortgage Loans, as well as from the receipt of proceeds from
building insurance and life insurance policies.
The rate of prepayment of Mortgage Loans cannot be predicted and is influenced by a wide variety of
economic, social and other factors, including prevailing mortgage loan market interest rates and margins
offered by the banking system, the availability of alternative financing and local and regional economic
conditions. Therefore, no assurance can be given as to the level of prepayment that the Mortgage Loans will
experience.
The stream of principal payments received by a Noteholder may not be uniform or consistent. No assurance
can be given as to the yield to maturity which will be experienced by a holder of any Notes. See further
“Prepayment fees and subrogation under the Bersani Decree” and “Estimated Weighted Average Life of the
Rated Notes and assumptions”, below.
Administration and reliance on third parties
The ability of the Issuer to make payments in respect of the Notes will depend upon the due performance by
the parties to the Transaction Documents of their respective various obligations under the Transaction
Documents to which they are each a party. In particular, without limitation, the punctual payment of amounts
due on the Notes will depend on: (a) the ability of the Servicer to service the Portfolio and to recover the
amounts relating to Defaulted Claims (if any), (b) the Swap Counterparty complying with its obligations
under the Swap Agreement, (c) the Swap Guarantor complying with its obligations under the Swap Guarantee
and (d) the continued availability of hedging under the Swap Transactions. Prospective Noteholders should
note that the Swap Transactions may be terminated in certain circumstances set out in the Swap Agreement. In
addition, the ability of the Issuer to make payments under the Notes may depend to an extent upon the due
performance by the Originator of its obligations under the Warranty and Indemnity Agreement. The
performance by such parties of their respective obligations under the relevant Transaction Documents is
dependent on the solvency of each relevant party. In each case, the performance by the Issuer of its
obligations under the Transaction Documents is also dependent on the solvency of, amongst others,
BancaEtruria, the Swap Counterparty and the Swap Guarantor.
In the event of the termination of the appointment of the Servicer under the Servicing Agreement, it would be
necessary for the Issuer to appoint a substitute servicer (acceptable to the Representative of the Noteholders).
Such substitute servicer would be required to assume responsibility for the services required to be performed
under the Servicing Agreement for the Mortgage Loans. The ability of a substitute servicer to perform fully
the required services would depend, inter alia, on the information, software and records available at the time
of the relevant appointment. There can be no assurance that a substitute servicer will be found or that any
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substitute servicer will be willing to accept such appointment or that a substitute servicer will be able to
assume and/or perform the duties of the Servicer pursuant to the Servicing Agreement. In such circumstances,
the Issuer could attempt to sell all, or part of, the Claims, but there is no assurance that the amount received
on such a sale would be sufficient to repay in full all amounts due to the Noteholders. The Representative of
the Noteholders has no obligation to assume the role or responsibilities of the Servicer or to appoint a
substitute servicer.
Italian Usury law
The interest payments and other remuneration paid by the Borrowers under the Mortgage Loans are subject to
Italian law No. 108 of 7 March 1996 (the “Usury Law”), which introduced legislation preventing lenders
from applying interest rates equal to, or higher than, rates (the “Usury Rates”) set every three months on the
basis of a decree issued by the Italian Treasury (the last such decree having been issued on 19 December
2008). In addition, even where the applicable Usury Rates are not exceeded, interest and other benefits and/or
remuneration may be held to be usurious if: (i) they are disproportionate to the amount lent (taking into
account the specific situations of the transaction and the average rate usually applied for similar transactions);
and (ii) the person who paid or agreed to pay them was in financial and economic difficulties. The provision
of usurious interest, benefits or remuneration has the same consequences as non-compliance with the Usury
Rates.
The Italian Government, with law decree No. 394 of 29 December 2000 (the “Usury Law Decree” and,
together with the Usury Law, the “Usury Regulations”), converted into law by law No. 24 of 28 February
2001, has established, inter alia, that interest is to be deemed usurious only if the interest rate agreed by the
parties exceeds the Usury Rate applicable at the time the relevant agreement is reached. The Usury Law
Decree also provides that, as an extraordinary measure due to the exceptional fall in interest rates in the years
1998 and 1999, interest rates due on instalments payable after 2 January 2001 on loans already entered into on
the date on which the Usury Law Decree came into force (such date being 31 December 2000) are to be
substituted with a lower interest rate fixed in accordance with parameters determined by the Usury Law
Decree.
As the Usury Law Decree became law at the end of February 2001, no official or judicial interpretation of it is
yet available. However, the Italian Constitutional Court has rejected, with decision No. 29/2002 (deposited on
25 February 2002), a constitutional exception raised by the Court of Benevento (2 January 2001) concerning
article 1, paragraph 1, of the Usury Law Decree (now reflected in article 1, paragraph 1 of the above
mentioned conversion law No. 24 of 28 February 2001). In so doing, it has confirmed the constitutional
validity of the provisions of the Usury Law Decree which hold that interest rates may be deemed to be void
due to usury only if they infringe Usury Regulations at the time they are agreed between the borrower and the
lender and not at the time such rates are actually paid by the borrower.
Pursuant to the Warranty and Indemnity Agreement, the Originator has undertaken to indemnify the Issuer in
respect of any losses, costs and expenses that may be incurred by the Issuer in connection with any loss or
reduction on any interest accrued prior to the Initial Execution Date. If a Mortgage Loan is found to
contravene the Usury Regulations, the relevant Borrower might be able to claim relief on any interest
previously paid and to oblige the Issuer to accept a reduced rate of interest, or potentially no interest on such
Mortgage Loan. In such cases, the ability of the Issuer to maintain scheduled payments of interest and
principal on the Notes may be adversely affected.
Compounding of interest (anatocismo)
Pursuant to article 1283 of the Italian civil code, accrued interest in respect of a monetary claim or receivable
may be capitalised after a period of not less than six months only (i) under an agreement subsequent to such
accrual or (ii) from the date when any legal proceedings are commenced in respect of that monetary claim or
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receivable. Article 1283 of the Italian civil code allows derogation from this provision in the event that there
are recognised customary practices (usi) to the contrary. Banks and financial companies in the Republic of
Italy have traditionally capitalised accrued interest on a three-monthly basis on the grounds that such practice
could be characterised as a customary practice (uso normativo). However, a number of recent judgments from
Italian courts (including the judgments from the Italian Supreme Court (Corte di Cassazione) No. 2374/99,
No. 2593/2003, No. 21095/2004, No. 4094/2005 and No. 10127/2005) have held that such practices are not
uso normativo. Consequently, if customers of the Originator were to challenge this practice and such
interpretation of the Italian civil code were to be upheld before other courts in the Republic of Italy, there
could be a negative effect on the returns generated from the Mortgage Loans. BancaEtruria has consequently
represented in the Warranty and Indemnity Agreement to indemnify the Issuer in respect of any losses, costs
and expenses that may be incurred by the Issuer in connection with any challenge in respect of interest on
interest.
In this respect, it should be noted that article 25, paragraph 3, of legislative decree No. 342 of 4 August 1999
(“Law No. 342”), enacted by the Italian Government under a delegation granted pursuant to law No. 142 of
19 February 1992, has considered the capitalisation of accrued interest (anatocismo) made by banks prior to
the date on which it came into force (19 October 1999) to be valid. After such date, the capitalisation of
accrued interest is no longer possible upon the terms established by a resolution of the CICR issued on 22
February 2000. Law No. 342 has been challenged and decision No. 425 of 17 October 2000 of the Italian
Constitutional Court has declared as unconstitutional under the provisions of Law No. 342 regarding the
validity of the capitalisation of accrued interest made by banks prior to the date on which Law No. 342 came
into force.
Legal proceedings
BancaEtruria and the BancaEtruria Banking Group are subject to a variety of claims and are party to a large
number of legal proceedings arising in the ordinary course of business. Although the outcome of such claims
is inherently uncertain and several litigants claim relatively large sums in damages, BancaEtruria has
represented and warranted that, as of the date of the Warranty and Indemnity Agreement, to its knowledge, it
is not involved in any litigation the outcome of which might jeopardise BancaEtruria’s ability to perform the
obligations under the Transaction Documents to which it is a party.
Prepayments by Borrowers
In the decision No. 4842 of 5 April 2002 (“Decision 4842/2002”), the Italian Supreme Court held that, in a
bankruptcy (which applies to both companies and individuals, but only if they are acting as entrepreneurs),
prepayments in respect of certain unsecured debt obligations made by the bankrupt entity are subject to the
claw-back provisions of article 65 of the Italian royal decree No. 267 of 16 March 1942, as subsequently
amended (the “Bankruptcy Law”), rather than article 67 of the Bankruptcy Law, on the grounds that any
such prepayment constitutes a payment of a debt not yet due.
If Decision 4842/2002 were held to apply also to secured debt obligations, which is not certain, this decision
would be significant because article 65 of the Bankruptcy Law provides that a payment of a debt not yet due
and payable, which falls due on or after the bankruptcy of the payor, is ineffective as against the creditors of
the bankruptcy estate if such payment is made in the two years preceding the bankruptcy.
Decision 4842/2002 is also significant because article 4 of the Securitisation Law provides that special
purpose vehicles such as the Issuer are specifically exempt from claw-back under article 67 of the Bankruptcy
Law in respect of payments made to them by the underlying debtors, whereas the Securitisation Law does not
exempt the Issuer from article 65 of the Bankruptcy Law.
Decision 4842/2002 appears to depart from Supreme Court decision No. 1153 of 10 April 1969 (“Decision
1153/1969”) which held that a prepayment of a loan following the debtor’s election to prepay in accordance
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52
with the terms of a loan agreement constitutes a payment of a debt that is due and payable and therefore could
only be clawed back under article 67 (and not article 65) of the Bankruptcy Law. Moreover, it is not certain
that Decision 4842/2002 will apply to prepayments of mortgage loans because it deals with the prepayment of
a bond issue and only briefly refers to ordinary loans. In addition, if Decision 4842/2002 was held to also
apply to secured debt obligations, the consequences would be inequitable, in that a secured creditor might, as
a result, become an unsecured creditor. Finally, it should be noted that Italian court decisions are not binding
on other courts, including courts of first instance: in this respect, it is worth noting that a decision of the court
of first instance of Milan (Tribunale di Milano, sez. II) of 17 May 2004 confirmed the principle stated in
Decision 1153/1969.
In a recent decision (decision No. 19978 of 18 July 2008), the Supreme Court held that if the debtor’s right of
prepayment is mandatorily provided for by the law and may not be excluded by the parties (as is the case with
fondiari mortgage loans), the prepayment of the relevant mortgage loan does not fall within the scope of
article 65 of the Bankruptcy Law. If this recent Supreme Court decision was upheld in future instances, the
risk that prepayments of Mortgages Loans can be declared ineffective pursuant to article 65 of the Bankruptcy
Law should be limited to the portion of the Portfolio which does not qualify as fondiari mortgage loans.
Prepayment fees and subrogation under the Bersani Decree
On 31 January 2007 the Italian Government adopted law decree No. 7 which was later converted into law by
Law No. 40 of 2 April 2007 (the “Bersani Decree”).
The Bersani Decree aims at, inter alia, increasing competitiveness in a number of sectors, including the
banking sector with particular regard to residential mortgage loans.
The costs associated with prepayment of mortgage loans in Italy (including the prepayment fees requested by
Italian banks and the notarial fees and tax costs associated with the refinancing) have caused prepayment rates
in the Italian market to be lower compared to other jurisdictions. The Bersani Decree aims at reducing these
costs with a view to allow borrowers to refinance their mortgage loans more easily.
With specific regard to mortgage loans (and, in particular, mortgage loans granted to individuals for the
purchase or the restructuring of residential properties) executed after 2 February 2007, under article 7 of the
Bersani Decree prepayment fees are no longer permitted. Any provision to the contrary is null and void.
The Bersani Decree contains also provisions applicable to mortgage loans for the purchase of residential
properties executed before 2 February 2007 (such as the Mortgage Loans in the Portfolio). In this respect, the
Bersani Decree lays down basic rules which may lead to a renegotiation of the relevant mortgage loans and,
more importantly, a reduction of the applicable prepayment fees. Pursuant to article 7 of the Bersani Decree,
on 2 May 2007 the Italian banking association (ABI – Associazione Bancaria Italiana) and the national
consumers’ associations as identified in accordance with article 137 of the legislative decree No. 206 of 6
September 2006 (i.e. the Italian consumers’ protection code) agreed the general guidelines for a renegotiation
of the existing mortgage loans (the “Prepayment Agreement”). The terms of the Prepayment Agreement
reproduced below have been extracted by a press release issued by the Italian banking association (ABI –
Associazione Bancaria Italiana) on 2 May 2007 and has been accurately reproduced and, as far as the Issuer
is aware and able to ascertain from information published by the Italian banking association (ABI –
Associazione Bancaria Italiana), no facts have been omitted which would render this information inaccurate
or misleading.
In particular, the Prepayment Agreement provides for the following maximum thresholds for prepayment fees:
(a)
in respect of floating rate mortgage loans:
(i)
0.50 per cent.;
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53
(b)
(c)
(ii)
0.20 per cent. if the prepayment occurs in the third year before the maturity of the mortgage
loan; and
(iii)
nil if the prepayment occurs in the last two years before the maturity of the mortgage loan;
in respect of fixed rate mortgage loans granted before 1 January 2001:
(i)
0.50 per cent.;
(ii)
loan; and
(iii)
nil if the prepayment occurs in the last two years before the maturity of the mortgage loan;
in respect of fixed rate mortgage loans granted after 31 December 2000:
(i)
1.90 per cent. if the prepayment occurs during the first half of the tenor of the mortgage loan;
(ii)
1.50 per cent. if the prepayment occurs during the second half of the tenor of the mortgage loan;
(iii)
loan; and
(iv)
nil if the prepayment occurs in the last two years before the maturity of the mortgage loan.
In respect of mixed rate mortgage loans (i.e. those mortgage loans whose interest rate may vary from a fixed
rate to a floating one and viceversa), the Prepayment Agreement provides for the applicability of one of the
reductions described under (a), (b) and (c) above depending, inter alia, on the date of granting of the
mortgage loans, the remaining term of, and type of interest rate applied to, the relevant mortgage loan as at
the date when the prepayment occurs.
The Prepayment Agreement further provides that if the contractually agreed prepayment fee is equal to or
lower than the thresholds described above, the applicable prepayment fee will be subject to the following
additional reductions:
(I)
in respect of floating rate mortgage loans and fixed rate mortgage loans granted before 1 January 2001,
0.20 per cent.; and
(II)
in respect of fixed rate mortgage loans granted after 31 December 2000, if (i) the contractually agreed
prepayment fee is equal to or higher than 1.25 per cent., 0.25 per cent.; and (ii) the contractually
agreed prepayment fee is lower than 1.25 per cent., 0.15 per cent.
In any case, banks (and therefore their assignees, including the Issuer) may not refuse the renegotiation of an
existing mortgage loan (including the Mortgage Loans in the Portfolio) if the relevant debtor proposes to
reduce the prepayment fee within the limits set out in the Prepayment Agreement.
Moreover, under article 8 of the Bersani Decree, a debtor under a mortgage loan may unilaterally subrogate
(i.e. replace) the original lending bank (or its assignees, including the Issuer) with a new lender in accordance
with article 1202 of the Italian civil code even if the original mortgage loan agreement provides that the
relevant debtor may not repay the loan before a pre-determined term. In case of subrogation, the mortgage
and collateral securities that guarantee the mortgage loan will pass to the new lender without any substantial
formality.
Prospective noteholders’ attention is drawn to the fact that the entry into force of the Bersani Decree is
expected to have an impact on the market of residential mortgage loans with particular regard to the
enforceability of the borrowers’ obligations to pay prepayment fees to the lender (and their assignees,
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54
including the Issuer) and the rate of prepayments. As a result of the entry into force of the Bersani Decree, the
Issuer may not be able to recover the prepayment fees in the amount originally agreed with the Borrowers.
Furthermore, the rate of prepayment in respect of the Mortgage Loans can be sensibly different than the one
traditionally experienced by the Originator for residential mortgage loans or the one assumed for the purposes
of calculating the weighted average life of the Rated Notes in the section headed “Estimated Weighted
Average Life of the Rated Notes and assumptions”, below.
Borrower’s right to suspend payments under a Mortgage Loan
Pursuant to article 2, paragraph 475 and ff. of Italian law No. 244 of 24 December 2007 (“Law 244/2007”)
any borrower under a mortgage loan agreement executed for the purpose of acquiring a “first home” real
estate property (unità immobiliare da adibire ad abitazione principale) giving evidence of its incapability to
pay any instalments falling due under a mortgage loan is entitled to suspend payment of any such instalments
for no more than two times during the life of the relevant mortgage loan and for a maximum duration of 18
months (the “Borrower Payment Suspension Right”). Upon exercise of the Borrower Payment Suspension
Right the duration of the relevant mortgage loan will be extended of a period equal to the duration of the
relevant suspension period. Mortgage Loans comprised in the Portfolio may be affected by the exercise of
such rights and affect payments under the Notes. According to Law 244/2007 the Ministry of Economy and
Finance and the Ministry of Social Affairs shall enact a ministerial regulation detailing, among other things,
the terms and conditions for the exercise of the Borrower Payment Suspension Right (the “Implementing
Regulation”). As of the date of this Prospectus the Implementing Regulation has not been adopted.
Interest cap in relation to floating rate Mortgage Loans
Article 2 of law decree No. 185 of 29 November 2008 (“Law Decree 185”) provides for an interest cap in
relation to floating rate mortgage loans granted for the purpose of purchasing, building or refurbishing real
estate assets used as main houses before 31 October 2008. Law Decree 185 applies also to those floating rate
mortgage loans renegotiated in accordance with the Convention.
In particular, the interest component of any instalment falling due during the year 2009 will be recalculated by
applying the higher of (i) four per cent. (excluding any spread, ancillary expenses or any other additional
costs) and (ii) the interest rate provided by the relevant loan agreement as of the relevant execution date (the
“Interest Cap”).
The positive difference between the amount which would have been payable under the original terms of the
relevant floating rate mortgage loan and the amount to be paid by the relevant borrower by applying the
Interest Cap (the “Δ Amount”) will be borne by the Republic of Italy. Law Decree 185 requires the Italian tax
authority (Agenzia delle Entrate) to implement specific regulations setting out, amongst other, the terms for
payment of the Δ Amount to the banks by the Republic of Italy.
It is to be noted, however, that Law Decree 185, although effective since the date of its publication, will
remain into force only for a period of 60 days, at the expiration of which, unless converted into law by act of
the Italian parliament, will cease to be effective retroactively as if it were never issued. There is no assurance
that Law Decree 185 will be converted into law.
Further, under the terms of the Transfer Agreement, the Originator has agreed to indemnify the Issuer in
respect of any reduction in the interest components received by the Issuer in respect of the Portfolio as a result
of the application of the Interest Cap.
Claw-back of the transfer of the Claims
The transfer of the Claims under the Transfer Agreement is subject to claw-back upon bankruptcy of the
Originator under article 67 of the Bankruptcy Law, but only in the event that the adjudication of bankruptcy
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55
of the Originator occurs within three months or, in cases where paragraph 1 of article 67 applies, within six
months of the completion of the securitisation transaction.
Mutui fondiari
The Originator has represented that part of the Mortgage Loans qualify as mutui fondiari, as defined in article
38 of the Banking Act. Pursuant to article 39, paragraph 5, of the Banking Act, upon repayment of each fifth
of the original debt, the borrowers under mutui fondiari loans are entitled to a proportional reduction of any
mortgage related to the loan. Accordingly, the underlying value of the Mortgages comprised in the Portfolio
may decrease from time to time in connection with the partial repayment of the Mortgage Loans. In addition,
the borrowers have the right to obtain that part of the real estate assets originally constituting security for the
Mortgage Loans are freed from the mortgage, it being understood that, as mutui fondiari, the principal amount
of each Mortgage Loan shall not be permitted to exceed 80 per cent. of the value of the real estate assets
constituting security for such Mortgage Loan, except in the event that additional guarantees are provided for
by the relevant Borrower in accordance with the Bank of Italy’s supervisory guidelines.
In relation to mutui fondiari, the right to prepay the loan is provided for by article 40 of the Banking Act and
the prepayment fee is pre-set under the relevant loan agreement.
Moreover, in relation to mutui fondiari, special enforcement and foreclosure provisions apply. Pursuant to
article 40, paragraph 2 of the Banking Act, a mortgage lender is entitled to terminate a loan agreement and
accelerate the mortgage loan (diritto di risoluzione contrattuale) if the borrower has delayed an instalment
payment at least seven times whether consecutively or otherwise. For this purpose, a payment is considered
delayed if it is made between 30 and 180 days after the payment due date. Accordingly, the commencement of
enforcement proceedings in relation to mutui fondiari may take longer than usual. Article 40 of the Banking
Act, therefore, prevents the Servicer from commencing proceedings to recover amounts in relation to mutui
fondiari until the relevant Borrowers have defaulted on at least seven payments.
Withholding tax under the Rated Notes
Where the Rated Notes fall within the category of bonds (obbligazioni) or debentures similar to bonds (titoli
similari alle obbligazioni), as defined in section “Taxation in the Republic of Italy”, below, any beneficial
owner of an interest payment relating to the Rated Notes of any Class, who is a non-Italian resident without a
permanent establishment in Italy to which the Rated Notes are effectively connected and (a) is resident, for
tax purposes, in a country which does not allow for a satisfactory exchange of information, or (b) has failed to
comply with the requirements and procedures set forth in Italian legislative decree No. 239 of 1 April 1996, as
subsequently amended (“Decree 239”) in order to benefit from an exemption, will receive amounts of interest
payable on the Rated Notes net of Italian withholding tax, referred to as a substitute tax (imposta sostitutiva).
As at the date of this Prospectus, such withholding tax is levied at the rate of 12.5 per cent. or such lower rate
as may be applicable under the relevant double taxation treaty, if any.
In the event that the Notes are redeemed in whole or in part (including following the service of an Issuer
Acceleration Notice) prior to the date which is 18 months after the Issue Date, the Issuer will be obliged to
pay a tax in Italy at a rate of 20 per cent. on interest accrued up to the relevant repayment date. See “Taxation
in the Republic of Italy”.
In the event that withholding taxes are imposed in respect of payments to Noteholders of amounts due
pursuant to the Notes, whether or not through a substitute tax, the Issuer will not be obliged to gross up any
such payments or otherwise compensate Noteholders for the lesser amounts the Noteholders will receive as a
result of the imposition of withholding taxes.
EU Savings Directive
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Legislative Decree No. 84 of 18 April 2005 implemented in Italy, as of 1 July 2005, the European Council
Directive No. 2003/48/EC on the taxation of savings income. Under the Directive, Member States, if a
number of important conditions are met, are required to provide to the tax authorities of another Member
State details of payments of interest (or similar income) paid by a person within its jurisdiction to an
individual resident in that other Member State. However, for a transitional period, Belgium, Luxembourg and
Austria will instead be required (unless during that period they elect otherwise) to operate a withholding tax
system in relation to such payments (the ending of such transitional period being dependent upon the
conclusion of certain other agreements relating to information exchange with certain other countries). Same
details concerning payment of interest (or similar income) shall be provided to the tax authorities of a number
of non-EU countries and territories, which have agreed to adopt similar measures with effect from the same
date.
Projections, forecasts and estimates
Forward-looking statements, including estimates, any other projections, forecasts in this Prospectus, are
necessarily speculative and subjective in nature and some or all of the assumptions underlying the projections
may not materialise or may vary significantly from actual results.
Such statements are subject to risks and uncertainties that could cause the actual results to differ materially
from those expressed or implied by such forward-looking statements. Prospective investors are cautioned not
to place undue reliance on these forward-looking statements, which speak only as of the date of this
Prospectus and are based on assumptions that may prove to be inaccurate. No one undertakes any obligation
to update or revise any forward-looking statements contained herein to reflect events or circumstances
occurring after the date of this Prospectus.
Fixed and floating security
Security given under the English-law governed transaction documents, howsoever expressed, may take effect
as a floating charge and thus on enforcement certain preferential creditors may rank ahead of the Issuer
Secured Creditors.
Change of law
The structure of the transaction and, inter alia, the issue of the Notes and the rating assigned to the Rated
Notes are based on Italian and English law, on tax and administrative practice in effect at the date hereof and
having due regard to the expected tax treatment of all relevant entities under such law and practice. No
assurance can be given as to any possible change to Italian or English law, tax or administrative practice after
the Issue Date.
Risk factors in relation to the Issuer
Source of payments to Noteholders
The Notes will be limited recourse obligations solely of the Issuer and will not be the responsibility of, or be
guaranteed by, any other entity. In particular, the Notes will not be obligations or responsibilities of, or be
guaranteed by, BancaEtruria (in any capacity), the Representative of the Noteholders, the Principal Paying
Agent, the Listing Agent, the Agent Bank, the Transaction Bank, the Collection Account Bank, the Corporate
Servicer, the Computation Agent, the Servicer, the Back-up Servicer (if any), the Swap Counterparty, the
Swap Guarantor, the Transaction Bank Guarantor, the Underwriter, the Arranger, the shareholders of the
Issuer or any other person. None of such persons accepts any liability whatsoever in respect of any failure by
the Issuer to make any payment of any amount due on the Notes.
As at the date hereof, the Issuer’s principal assets in respect of the Securitisation are the Claims. For a
description of the Claims and the Criteria, see “The Portfolio and the Provisional Portfolio” and “The
Transfer Agreement”.
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57
The Issuer will not have any significant assets, for the purpose of meeting its obligations under this
Securitisation, other than the Claims, any amounts and/or securities standing to the credit of the Accounts and
its rights under the Transaction Documents to which it is a party.
Consequently, there is no assurance that, over the life of the Notes or at the redemption date of any Notes
(whether on maturity, on the Cancellation Date, or upon redemption by acceleration of maturity following
service of an Issuer Acceleration Notice or otherwise), there will be sufficient funds to enable the Issuer to
pay interest when due on the Notes and/or to repay the outstanding principal on the Notes in full.
The ability of the Issuer to meet its obligations in respect of the Rated Notes will be dependent on, inter alia,
the timely payment of amounts due under the Mortgage Loans by the Borrowers, the receipt by the Issuer of
Collections received on its behalf by the Servicer in respect of the Mortgage Loans from time to time in the
Portfolio, as well as on the receipt of any payments required to be made by the Swap Counterparty or the
Swap Guarantor under the Swap Agreement and of any other amounts required to be paid to the Issuer by the
various agents and counterparts of the Issuer pursuant to the terms of the relevant Transaction Documents.
The performance by such parties of their respective obligations under the relevant Transaction Documents is
dependent on the solvency of each relevant party. See “Risk Factors - Administration and reliance on third
parties”, below.
The Notes will be limited recourse obligations solely of the Issuer. If there are not sufficient funds available to
the Issuer to pay in full all principal and interest and other amounts due in respect of the Notes, then the
Noteholders will have no further claims against the Issuer in respect of any such unpaid amounts. Following
the service of an Issuer Acceleration Notice, the only remedy available to the Noteholders and the Other
Issuer Creditors is the exercise by the Representative of the Noteholders of the Issuer’s Rights.
Upon enforcement of the Note Security, the Representative of the Noteholders will have recourse only to the
Claims and to the assets pledged, charged and assigned pursuant to the Italian Deed of Pledge and the English
Deed of Charge and Assignment. Other than as provided in the Warranty and Indemnity Agreement, the
Transfer Agreement, the Servicing Agreement and the Letter of Undertaking, the Issuer and the
Representative of the Noteholders will have no recourse to the Originator or to any other entity including, but
not limited to, in circumstances where the proceeds received by the Issuer from the enforcement of any
particular Mortgage Loan are insufficient to repay in full the Claim in respect of such Mortgage Loan.
If, upon default by one or more Borrowers under the Mortgage Loans and after the exercise by the Servicer of
all usual remedies in respect of such Mortgage Loans, the Issuer does not receive the full amount due from
those Borrowers, then Rated Noteholders may receive by way of principal repayment an amount less than the
face value of their Rated Notes and the Issuer may be unable to pay in full interest due on the Rated Notes.
Claims of unsecured creditors of the Issuer
Without prejudice to the right of the Representative of the Noteholders to enforce the Note Security, the
Conditions contain provisions stating, and each of the Other Issuer Creditors has undertaken pursuant to the
Intercreditor Agreement, that no Noteholder or Other Issuer Creditor will petition or begin proceedings for a
declaration of insolvency against the Issuer until one year and one day after the later of (A) the Cancellation
Date and (B) the day on which any note issued or to be issued by the Issuer (including the Notes) has been
paid in full. There can be no assurance that each and every Noteholder and Other Issuer Creditor will honour
its contractual obligation not to petition or begin proceedings for a declaration of insolvency against the Issuer
also before one year has elapsed after the later of (A) the Cancellation Date and (B) the day on which any
note issued or to be issued by the Issuer (including the Notes) has been paid in full. In addition, under Italian
law, any other creditor of the Issuer who is not a party to the Intercreditor Agreement, an Italian public
prosecutor (pubblico ministero), a director of the Issuer (who could not validly undertake not to do so) or an
Italian court in the context of any judicial proceedings to which the Issuer is a party would be able to begin
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58
insolvency or winding-up proceedings against the Issuer in respect of any unpaid debt. Such creditors could
arise, for example, by virtue of unexpected expenses owed to third parties including those additional creditors
that the Issuer will have as a result of the Previous Securitisations or any Further Securitisation (both as
defined below). In order to address this risk, the Priority of Payments contains provisions for the payment of
amounts to third parties. Similarly, monies to the credit of the Expenses Account may be used for the purpose
of paying the ongoing fees, costs, expenses, liabilities and taxes of the Issuer to third parties not being Other
Issuer Creditors.
The Issuer is unlikely to have a large number of creditors unrelated to this Securitisation or any other
securitisation transaction because the corporate object of the Issuer, as contained in its by-laws (statuto), is
limited and the Issuer has provided certain covenants in the Intercreditor Agreement which contain
restrictions on the activities which the Issuer may carry out with the result that the Issuer may only carry out
limited transactions.
No creditors other than the Representative of the Noteholders on behalf of the Noteholders, the Other Issuer
Creditors and any third-party creditors having the right to claim for amounts due in connection with this
Securitisation would have the right to claim in respect of the Claims, even in a bankruptcy of the Issuer.
Notwithstanding the above, there can be no assurance that, if any bankruptcy proceedings were to be
commenced against the Issuer, the Issuer would be able to meet all of its obligations under the Notes.
Previous Securitisations and Further Securitisations
The Issuer’s principal assets are the Claims and the other two portfolios of claims arising from residential
mortgage loan contracts acquired by the Issuer in accordance with the transfer agreements entered into on 21
December 2001 and on 29 March 2007 from BancaEtruria in the context of two separate securitisation
transactions (the “Previous Portfolios” and the “Previous Securitisations”, respectively). The Issuer will not
have as at the Issue Date any significant assets other than the Claims, the Issuer’s Rights, the Previous
Portfolios and the agreements entered into by the Issuer in relation to the Previous Securitisations.
In addition, the Issuer may, by way of a separate transaction, purchase (or finance pursuant to article 7 of the
Securitisation Law) and securitise further portfolios of monetary claims in addition to the Claims (each, a
“Further Securitisation”). Before entering into any Further Securitisation, the Issuer is required, inter alia,
to obtain the written consent of the Representative of the Noteholders and to obtain confirmation from Fitch
that the then current ratings of the Rated Notes will not be adversely affected by such Further Securitisation.
Under the terms of article 3 of the Securitisation Law, the assets relating to each securitisation transaction
carried out by a company are stated to be segregated from all other assets of the company and from those
related to each other securitisation transaction, and, therefore, on a winding-up of such a company, such assets
will only be available to holders of the notes issued to finance the acquisition of the relevant receivables and
to certain creditors claiming payment of debts incurred by the company in connection with the securitisation.
Accordingly, the right, title and interest of the Issuer in and to the Claims should be segregated from all other
assets of the Issuer (including, for the avoidance of doubt, any other portfolio purchased by the Issuer
pursuant to any Further Securitisation) and amounts deriving therefrom should be available on a winding-up
of the Issuer only to satisfy the obligations of the Issuer to the Noteholders and the payment of any amounts
due and payable to the other Issuer Creditors.
Although the Securitisation Law provides for the assets relating to a securitisation transaction carried out by
the Issuer to be segregated and separated from those of the Issuer or of other securitisation transactions
carried out by the Issuer, such as the Previous Securitisations or any Further Securitisation, this segregation
principle will not extend to the tax treatment of the Issuer and should not affect the applicable methods of
calculation of the net taxable income of the Issuer.
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Tax treatment of the Issuer
Taxable income of the Issuer is determined, without any special rights, in accordance with Italian presidential
decree No. 917 of 22 December 1986 as subsequently amended (the Italian Income Taxes Consolidated
Code). Pursuant to the regulations issued by the Bank of Italy on 22 March 2000 (schemi di bilancio delle
società per la cartolarizzazione dei crediti) and on 14 February 2006 (Istruzioni per la redazione dei bilanci
degli intermediari finanziari iscritti nell'Elenco Speciale, degli Istituti di moneta elettronica, delle Società di
gestione del risparmio e delle Società di intermediazione mobiliare), the assets, liabilities, costs and revenues
of the Issuer in relation to the Securitisation will be treated as off-balance sheet assets, liabilities, costs and
revenues. Based on the general rules applicable to the calculation of the net taxable income of a company,
pursuant to which such taxable income should be calculated on the basis of accounting earnings (i.e. onbalance sheet earnings), subject to such adjustments as are specifically provided for by applicable income tax
rules and regulations and according to the guidelines of the Italian tax authorities (circular No. 8/E of 6
February 2003), no taxable income should accrue to the Issuer until the satisfaction of the obligations of the
Issuer to the holders of the Notes, to the Other Issuer Creditors and to any third-party creditor to whom the
Issuer has incurred costs, liabilities, fees and expenses in relation to the Securitisation of the Claims. Future
rulings, guidelines, regulations or letters relating to the Securitisation Law issued by the Italian Ministry of
Economy and Finance, or other competent authorities, might alter or affect the tax position of the Issuer, as
described above.
Pursuant to the Bank of Italy regulations, the accounting information relating to the Securitisation of the
Claims will be contained in the Issuer’s Nota Integrativa which, together with the balance sheet and the profit
and loss statements, forms part of the financial statements of Italian limited liability companies (società a
responsabilità limitata).
The Issuer believes that the risks described above are the principal risks inherent in the transaction for
holders of the Rated Notes but the inability of the Issuer to pay interest or repay principal on the Rated
Notes of any such Class of Notes may occur for other reasons and the Issuer does not represent that the
above statements of the risks of holding the Rated Notes are exhaustive. While the various structural
elements described in this Prospectus are intended to lessen some of these risks for holders of the Rated
Notes, there can be no assurance that these measures will be sufficient or effective to ensure payment to
the holders of the Rated Notes of such Classes of interest or principal on such Rated Notes on a timely
basis or at all.
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CREDIT STRUCTURE
Ratings of the Notes
It is a condition precedent to the issue of the Notes that:
(a)
the Class A Notes will be rated “AAA” by Fitch; and
(b)
the Class B Notes will be rated “BBB-” by Fitch.
A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision,
suspension or withdrawal at any time by Fitch. Credit ratings address the likelihood of timely payment of
interest at the applicable rate of interest on each Interest Payment Date on the Class A Notes, the ultimate
payment of interest at the applicable rate of interest on the Class B Notes and the ultimate payment of the
Principal Amount Outstanding of the Rated Notes at the Maturity Date.
The Junior Notes will not be assigned a rating.
Cash flow through the Accounts
Collections in respect of the Mortgage Loans will be paid by the Borrowers to BancaEtruria in its capacity as
Servicer. Under the Servicing Agreement, the Servicer is required to transfer the Collections into the
Collection Account by 10:00 a.m. (Milan time) of the Business Day immediately following the day of receipt,
for value the relevant receipt date, provided that, in the case of exceptional circumstances causing an
operational delay in the transfer, the Collections are required to be transferred to the Collection Account by
10:00 a.m. (Milan time) of the Business Day immediately following the day on which the operational delay in
the transfer has been solved and, in any case, within 10 Business Days from the date in which the exceptional
circumstance has been verified.
The Collection Account Bank is then required to transfer by 4.00 p.m. (London time) on each Business Day
all amounts standing to the credit of the Collection Account into the Claims Transaction Account which is
held with the Transaction Bank.
Under the Agency and Accounts Agreement, the Transaction Bank has agreed to pay interest on funds on
deposit from time to time in the Transaction Accounts at a rate agreed between the Issuer and the Transaction
Bank.
Monies standing to the credit of the Equity Capital Account, including interest accruing thereon from time to
time, will not constitute Issuer Available Funds and will not be used to pay interest or repay principal on the
Notes.
Eligible Investments
Pursuant to the Agency and Accounts Agreement, should the Issuer resolve to invest in Eligible Investments,
the Issuer will establish the Eligible Investments Securities Account as a securities account into which it will
deposit all Eligible Investments from time to time bought by or on behalf of the Issuer.
the Computation Agent (I) shall, if so instructed by the Originator, in the name and on behalf of the Issuer,
instruct the Transaction Bank to withdraw:
(i)
the balance of the Cash Reserve Account may be invested in Eligible Investments on the Business Day
immediately following each Interest Payment Date;
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(ii)
the balance of the Principal Account may be invested in Eligible Investments on the Business Day
immediately following each Interest Payment Date; and
(iii)
the balance of the Claims Transaction Account may be invested in Eligible Investments on a weekly
basis on the last Business Day of each week,
each such date, an “Investment Date” that are necessary to execute the above-mentioned instructions, to
invest in the above mentioned Eligible Investments and to execute the purchase of the same Eligible
Investments in the name and on behalf of the Issuer and (II) shall, in the name and on behalf of the Issuer,
credit or deposit, as applicable, the financial instruments constituting or underlying the Eligible Investments
thus purchased for the account of the Issuer to the Eligible Investments Securities Account.
The investment instructions from the Originator to the Computation Agent in connection with the Eligible
Investments to be purchased on each Investment Date will be given with the modalities from time to time
agreed between the Originator and the Computation Agent.
Cash Reserve
The Issuer will establish a reserve fund in the Cash Reserve Account.
“Cash Reserve” means the monies standing to the credit of the Cash Reserve Account at any given time.
The Cash Reserve Account will be funded and replenished as follows. Pursuant to the Subordinated Loan
Agreement, the Subordinated Loan Provider has agreed to advance to the Issuer a subordinated loan in an
amount equal to €10,488,000, which the Issuer will deposit on the Issue Date into the Cash Reserve Account,
except for €50,000 which will be credited to the Expenses Account.
Thereafter, on each Interest Payment Date, the Cash Reserve will be increased or replenished, as the case may
be, up to the Target Cash Reserve Amount out of the Interest Available Funds and in accordance with the PreEnforcement Interest Priority of Payments.
“Target Cash Reserve Amount” means €10,438,000 (being an amount equal to 2.10 per cent. of the
aggregate Principal Amount Outstanding of the Notes as at the Issue Date) save that:
(A)
upon repayment of at least 75 per cent. of the initial aggregate Principal Amount Outstanding of the
Rated Notes, the Target Cash Reserve Amount will be reduced to €3,000,000 (being an amount equal
to 0.6 per cent. of the aggregate Principal Amount Outstanding of the Notes as at the Issue Date)
provided that:
(a)
on each of the two immediately preceding Interest Payment Dates, the Cash Reserve equals or
exceeds the Target Cash Reserve Amount as at the relevant Interest Payment Date (upon
making all the payments and provisions to be made on such Interest Payment Date);
(b)
the Principal Deficiency Ledgers are either zero or have been reduced to zero;
(c)
the aggregate Outstanding Principal of all Delinquent Claims as at the end of the immediately
preceding Collection Period does not exceed 7.0per cent. of the Initial Portfolio Outstanding
Amount;
(d)
the aggregate Outstanding Principal of all Defaulted Claims as at the end of the immediately
preceding Collection Period does not exceed 3.5 per cent. of the Initial Portfolio Outstanding
Amount; and
(e)
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(B)
on the Calculation Date immediately following the Interest Payment Date on which the Rated Notes
will be redeemed in full, the Target Cash Reserve Amount will be reduced to zero.
If at the time the Target Cash Reserve Amount is reduced, the Cash Reserve exceeds the reduced Target Cash
Reserve Amount, the excess (the “Cash Reserve Excess” which, for the avoidance of doubt, does not include
any Revenue Eligible Investments Amounts or interest accrued on the Cash Reserve Account) will be applied
(i) in or towards satisfaction of any amounts outstanding under the Subordinated Loan Agreement, and (ii) if
the Subordinated Loan has been fully repaid, to augment the Interest Available Funds to be calculated on the
immediately following Calculation Date.
On the Maturity Date, the Cash Reserve will be utilised to augment the Principal Available Funds to the extent
necessary to allow the Issuer to repay the Rated Notes in full and to make all other payments ranking in
priority thereto.
The Cash Reserve may be invested by the Issuer or the Computation Agent on behalf of the Issuer in Eligible
Investments.
The Principal Deficiency Ledger Amount
On each Interest Payment Date, subject to the availability of Interest Available Funds, provisions will be made
by the Issuer against any Principal Deficiency Amount in accordance with the Pre-Enforcement Interest
Priority of Payments. Such provisions (being the Principal Deficiency Ledger Amount, as defined below) will
be used, on the same Interest Payment Date, to augment the Principal Available Funds and will therefore be
applied to make payments or provisions due on the same date in accordance with the Pre-Enforcement
Principal Priority of Payments including, without limitation, payments due in respect of interest on the Rated
Notes of any Class to the extent not paid under the Pre-Enforcement Interest Priority of Payments due to the
insufficiency of Interest Available Funds.
“Principal Deficiency Amount” means, in respect of a Claim which has become a Defaulted Claim during a
Collection Period, the Outstanding Principal of such Defaulted Claim, calculated on the date when such
Claim has been qualified as a Defaulted Claim.
“Principal Deficiency Ledger Amount” means, in respect of each Calculation Date immediately preceding
an Interest Payment Date, the amounts retained in and/or credited to the Principal Account on such Interest
Payment Date pursuant to items (vi), (viii) and (xii) of the Pre-Enforcement Interest Priority of Payments.
“Outstanding Principal” means, on any date and in respect of each Claim, the aggregate of all Principal
Components scheduled to be paid after such date and not yet paid together with the Principal Components due
and unpaid.
Under the terms of the Agency and Accounts Agreement, the Computation Agent will maintain four principal
deficiency ledgers (the “Principal Deficiency Ledgers”), namely: (i) a principal deficiency ledger in respect
of the Class A Notes (the “Class A Notes Principal Deficiency Ledger”); (ii) a principal deficiency ledger in
respect of the Class B Notes (the “Class B Notes Principal Deficiency Ledger”); and (iii) a principal
deficiency ledger in respect of the Junior Notes (the “Junior Notes Principal Deficiency Ledger”). The
Principal Deficiency Ledgers have been established by the Computation Agent pursuant to the Agency and
Accounts Agreement and will be used by the Computation Agent to record, as a debit entry, any Principal
Deficiency Amount in respect of the Claims.
Any Principal Deficiency Amount will be debited:
(i)
first, to the Junior Notes Principal Deficiency Ledger so long as, and to the extent that, the debit
balance of the Junior Notes Principal Deficiency Ledger is less than or equal to the Principal Amount
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63
Outstanding on the Junior Notes (taking into account any Principal Deficiency Amount previously
debited to such Junior Notes Principal Deficiency Ledger and in respect of which funds have not yet
been allocated in accordance with the Pre-Enforcement Interest Priority of Payments);
(ii)
second, to the Class B Notes Principal Deficiency Ledger so long as, and to the extent that, the debit
balance of the Class B Notes Principal Deficiency Ledger is less than or equal to the Principal Amount
Outstanding on the Class B Notes (taking into account any Principal Deficiency Amount previously
debited to such Class B Notes Principal Deficiency Ledger and in respect of which funds have not yet
been allocated in accordance with the Pre-Enforcement Interest Priority of Payments); and
(iii)
third, to the Class A Notes Principal Deficiency Ledger so long as, and to the extent that, the debit
balance of the Class A Notes Principal Deficiency Ledger is less than or equal to the Principal Amount
Outstanding on the Class A Notes (taking into account any Principal Deficiency Amount previously
debited to such Class A Notes Principal Deficiency Ledger and in respect of which funds have not yet
been allocated in accordance with the Pre-Enforcement Interest Priority of Payments).
Subordination
Payments of interest and repayment of principal under the Rated Notes are subject to certain subordination
and ranking provisions. For a more detailed description of the ranking among the various Classes of Notes
and the relative subordination provisions see “Key Features - Summary of the Notes – Ranking” above and
Condition 3(b) below.
See “Key features - Priorities of Payments”, “Risk factors – Subordination and credit enhancement” and
“Terms and Conditions of the Notes”.
Note Security
The Notes will be secured by the Note Security. See “Key features - Summary of the Notes, Security for the
Notes”.
The Swap Agreement
General
On or around the Issue Date, the Issuer will enter into six swap transactions with the Swap Counterparty
(collectively, the “Swap Transactions” and “Swap Transaction” means any one of those as the context
requires) to mitigate the Issuer’s interest rate exposure arising as a result of differences between the rates of
interest charged on the Mortgage Loans and the rates at which the Rated Notes bear interest. Each Swap
Transaction is documented as a confirmation under the 1992 ISDA Master Agreement (Multicurrency-Cross
Border), the Schedule and the credit support annex thereto (the “Credit Support Annex”), as published by
the International Swaps and Derivatives Association, Inc., (“ISDA”), each governed by English law
(collectively, the “Swap Agreement”). The Swap Agreement is entered into between the Issuer, the Swap
Counterparty and the Representative of the Noteholders except that the confirmations of the Swap
Transactions have been executed by the Issuer and the Swap Counterparty only.
The Swap Transactions
Two of the Swap Transactions to be entered into by the Issuer are intended to mitigate the interest rate risk
derived from fixed rate mortgages in the Portfolio. Under these Swap Transactions, the Issuer shall receive 3month Euribor on each Interest Payment Date and shall pay a fixed rate.
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Two of the Swap Transactions to be entered into by the Issuer are intended to mitigate the interest rate risk
derived from floating rate mortgages in the Portfolio. Under these Swap Transactions, the Issuer shall receive
3-month Euribor on each Interest Payment Date and shall pay 6-month Euribor plus a margin.
Two of the Swap Transactions to be entered into by the Issuer are intended to offset the effect of caps on the
floating rate interest of some of the floating rate mortgages in the Portfolio. When the income from these
mortgages is capped in high interest rate scenarios, the Issuer will receive compensating interest through these
Swap Transactions.
Ratings downgrades
The Swap Agreement will contain certain limited termination events and events of default which will entitle
either party to terminate the Swap Transactions. These are set out in detail in the Swap Agreement, but some
of these termination events are summarised here.
In particular, following the occurrence of an Initial Fitch Rating Event (as defined in the Conditions), the
Swap Counterparty shall, within the time periods specified in and further subject to other details as set out in
the Swap Agreement, either:
(i)
transfer all of its rights and obligations under the Swap Agreement to a suitably rated entity; or
(ii) procure another suitably rated entity to become co-obligor or guarantor in respect of its obligations
under the Swap Agreement; or
(iii) transfer collateral in accordance with the Credit Support Annex; or
(iv) take such other action as will result in the rating of the Rated Notes following such action being
maintained at, or restored to, the level it would have been immediately prior to such Initial Fitch Rating
Event.
Following the occurrence of a First Subsequent Fitch Rating Event (as defined in the Conditions), the Swap
Counterparty shall take one of the actions set out in paragraphs (i) to (iv) above and shall procure an external
verification on a weekly basis from an independent third party of (i) its mark-to-market calculations of all
Swap Transactions for the purposes of the transfer of collateral under the Credit Support Annex and (ii) the
correct and timely posting of all collateral.
If, following the occurrence of an Initial Fitch Rating Event or a First Subsequent Fitch Rating Event, the
Swap Counterparty fails to take any one of the measures described above within the relevant time period
specified in the Swap Agreement, then, subject to any terms specified under the Swap Agreement, such failure
will constitute a termination event under the Swap Agreement with the Issuer being entitled to terminate the
Swap Transactions.
Furthermore, following the occurrence of a Second Subsequent Fitch Rating Event (as defined in the
Conditions), the Swap Counterparty shall, within the time period specified in and further subject to other
details as set out in the Swap Agreement, either:
(A) transfer all of its rights and obligations under the Swap Agreement to a suitably rated entity; or
(B) procure another suitably rated entity to become co-obligor or guarantor in respect of its obligations
under the Swap Agreement; or
(C) take such other action as will result in the rating of the Rated Notes following such action being
maintained at, or restored to, the level it would have been immediately prior to such Second Subsequent
Fitch Rating Event.
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Pending compliance with the measures above, the Swap Counterparty shall continue to transfer collateral in
accordance with the Credit Support Annex.
Subject to other details as set out in the Swap Agreement, failure by the Swap Counterparty to take the
applicable course of action following the occurrence of a Second Subsequent Fitch Rating Event within the
relevant time period specified in the Swap Agreement will constitute a termination event under the Swap
Agreement with the Issuer being entitled to terminate the Swap Transactions.
Moreover, the Swap Counterparty will be entitled, under certain circumstances, to terminate the Swap
Transaction in respect of which (i) it is obliged to gross up payments following any withholding or deduction
for or on account of any taxes or (ii) it receives a payment in respect of which an amount is required to be
deducted or withheld for or on account of any taxes.
To the extent that the Issuer obtains any tax credit, allowance, set off or repayment from the tax authorities of
any jurisdiction relating to any deduction or withholding giving rise to such payment (a “Tax Credit”), it will
pay to Party A as soon as practical after receipt of the same so much of the cash benefit (as calculated below)
relating thereto which it has received as will leave Party B in substantially the same (but in any event no
worse) position as Party B would have been in if no such deduction or withholding had been required. Any
any Tax Credit obtained by the Issuer will be paid directly to the Swap Counterparty and outside of the
applicable Priority of Payments.
Return of Excess Swap Collateral
If, following the occurrence of an Initial Fitch Rating Event or a First Subsequent Fitch Rating Event, the
Swap Counterparty is required to transfer collateral in accordance with the Credit Support Annex, the Issuer
will open a Collateral Account with an Eligible Institution acting through a branch located in England.
The Issuer’s obligation to return, from time to time, any Excess Swap Collateral to the Swap Counterparty
will be met, from time to time, by utilising monies and/or securities standing to the credit of the Collateral
Account. The Issuer will make these payments and/or will return collateral to the Swap Counterparty as they
fall due which may include days other than the Interest Payment Dates. These payments and/or return of
collateral will be made directly to the Swap Counterparty and outside of the applicable Priority of Payments.
Termination of the Swap Transactions
Under the Swap Agreement, the Swap Counterparty may terminate the Swap Transactions in a limited number
of circumstances.
If the Swap Transactions are terminated for any reason, the Swap Counterparty or the Issuer may be required
to pay an amount to the other party as a result of the termination. Following such a termination any payments
by the Issuer to the Swap Counterparty will be made in accordance with the applicable Priority of Payments.
Accordingly,
(i)
any termination payment payable by the Issuer to the Swap Counterparty, other than an amount payable
following the occurrence of a Swap Trigger (and save as otherwise provided in the applicable Priority of
Payments), will be made in accordance with item (iv) of the Pre-Enforcement Interest Priority of
Payments, or, as applicable, item (iv) of the Post-Enforcement Priority of Payments; and
(ii) any termination payment (if any) payable by the Issuer to the Swap Counterparty following the
occurrence of a Swap Trigger (save as otherwise provided in the applicable Priority of Payments), will
be made in accordance with item (xv) of the Pre-Enforcement Interest Priority of Payments, or, as
applicable, item (ix) of the Post-Enforcement Priority of Payments.
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Any amount paid by the Swap Counterparty to the Issuer upon termination of the Swap Transactions in
respect of any termination payment and exceeding the net amounts which would have been due and payable
by the Swap Counterparty with respect to the next Interest Payment Date had the Swap Transactions not been
terminated will not form part of the Issuer Available Funds in respect of the immediately following Interest
Payment Date. Such amount may be utilised by the Issuer, on any day, to pay the premium due to the
replacement swap counterparty for entering into swap transactions reflecting, as closely as reasonably
possible, the economic, legal and credit terms of the terminated Swap Transactions.
Transfer
The Swap Counterparty may, subject to certain additional conditions set out in the Swap Agreement, transfer
all or substantially all of its rights and obligations with respect to the Swap Agreement to any other entity that
has the Fitch’s First Trigger Required Ratings or whose present and future obligations owing to the Issuer are
guaranteed by a guarantor with the Fitch’s First Trigger Required Ratings.
For the purposes above, an entity shall have the “Fitch’s First Trigger Required Ratings” if its unsecured
and unsubordinated debt obligations are rated “A” or above (in respect of long-term debt) and “F1” or above
(in respect of short-term debt) by Fitch.
See “The Swap Counterparty and the Swap Guarantor” below.
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THE PORTFOLIO AND THE PROVISIONAL PORTFOLIO
The arrangements entered into or to be entered into by the Issuer on or prior to the Issue Date, taken together
with the structural features of the Securitisation (including the Portfolio and the proceeds expected to be
received therefrom, the Swap Agreement, the Cash Reserve, the Note Security, the Conditions of the Notes
and the rights and benefits set out in the Transaction Documents), are expected to have characteristics that
demonstrate capacity to produce funds to service any payments which become due and payable in respect of
the Notes in accordance with the Conditions. However, regard should be had both to the characteristics of the
Portfolio and the other assets and rights available to the Issuer under the Securitisation and the risks to which
the Issuer and the Notes may be exposed. Prospective holders of the Notes should consider the detailed
information set out elsewhere in this Prospectus, including without limitation under the section “Risk
Factors” above.
The Claims purchased by the Issuer pursuant to the Transfer Agreement arise out of a portfolio consisting of
(i) mortgage loans which qualify as mutui fondiari (medium-long term loans secured by mortgages on real
estate, issued by a bank in accordance with the provisions of article 38 and following of the Banking Act) (the
“Fondiari Mortgage Loans”) and (ii) mortgage loans (mutui ipotecari) which do not qualify as mutui
fondiari (the “Ipotecari Mortgage Loans” and, together with the Fondiari Mortgage Loans, the “Mortgage
Loans” or, collectively, the “Portfolio”).
The Mortgage Loans comprising the Portfolio have been selected on the basis of certain criteria which are
summarised under “The Transfer Agreement” below (the “Criteria”) and which were published on 10 January
2009 in No. 3 Parte II of the Italian Official Gazette (Gazzetta Ufficiale della Repubblica Italiana), as
integrated on 24 January 2009 in No. 9 Parte II of the Italian Official Gazette (Gazzetta Ufficiale della
Repubblica Italiana), and registered with the competent companies' register as required by the Securitisation
Law. See “The Transfer Agreement”, below.
All information and statistical data contained in this section, on the other hand, are representative of the
characteristics of a portfolio (the “Provisional Portfolio”) as of 31 October 2008 (the “Preliminary
Valuation Date”). The Provisional Portfolio of mortgage loans described below, therefore, differs from the
Portfolio in that it results from the application of the Criteria as at the Preliminary Valuation Date instead of
the Valuation Date.
Accordingly, the information in relation to the Provisional Portfolio set out below does not necessarily reflect
the composition of the Portfolio either on the Valuation Date or on the Issue Date.
As at the Preliminary Valuation Date, the Provisional Portfolio consisted of No. 6023 mortgage loans
extended to 5920 customers of the Originator. As at the Preliminary Valuation Date, the aggregate outstanding
principal balance of the claims was €517,234,125.38.
Each Mortgage Loan comprised in the Portfolio has the following characteristics:
(a)
Mortgage Loan status
Each Mortgage Loan is performing. This means that:
(b)
(i)
as at the Valuation Date, no Mortgage Loan was classified by the Originator as a delinquent
claim (credito ad incaglio) or as a defaulted claim (credito in sofferenza);
(ii)
at least one instalment has fallen due and has been timely paid; and
(iii)
as at the Valuation Date, all due instalments of each Mortgage Loan have been paid.
Security
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Each Mortgage Loan is secured by an economically first-ranking priority voluntary mortgage (ipoteca
di primo grado economico), that is:
(i)
a first-ranking priority voluntary mortgage (ipoteca volontaria di primo grado legale); or
(ii)
a voluntary mortgage with subordinate ranking (ipoteca volontaria di grado legale successivo
al primo) where (A) the request of the cancellation of the mortgages ranking in priority thereto
has been filed with the competent land register or (B) the debts secured by the prior-ranking
mortgages have been fully repaid; or
(iii)
(c)
a second-ranking priority voluntary mortgage (ipoteca volontaria di secondo grado legale)
provided that (A) both the first-ranking mortgage and the second-ranking mortgage are in
favour of the Originator in relation to two mortgage loans granted to the same borrower; and
(B) the mortgage loan secured by the first-ranking mortgage is included in the Portfolio.
Currency
The Mortgage Loans are denominated in Euro (or originally disbursed in a different currency and
subsequently re-denominated in Euro).
(d)
(e)
Loan types
(i)
Each Mortgage Loan is either (i) a mortgage loan which qualifies as mutuo fondiario (mediumlong term loans secured by mortgages on real estate, issued by a bank in accordance with the
provisions of article 38 and following of the Banking Act) or (ii) an ordinary mortgage loan, as
specified under exhibit 1 to the Transfer Agreement.
(ii)
Each Mortgage Loan is secured by a mortgage over a residential property.
Interest rate types
Each Mortgage Loan belongs to one of the following four categories: (i) fixed rate loans (the “Fixed
Rate Mortgage Loans”), (ii) floating rate loans (the “Floating Rate Mortgage Loans”), (iii) Optional
Rate Mortgage Loans (as defined below) and (iv) Modular Rate Mortgage Loans (as defined below).
“Optional Rate Mortgage Loans” are those Mortgage Loans which contemplate the right, that can be
exercised one or more times during the life of the Mortgage Loan, of the relevant borrower to switch
from a floating rate to a fixed rate.
“Modular Rate Mortgage Loans” are those Mortgage Loans in respect of which interest accrues at a
fixed rate for a specified period of time determined by contract and at a floating rate thereafter.
Each Floating Rate Mortgage Loan and each Modular Rate Mortgage Loan is linked to one of the
following rates of interest: (a) Euribor; (b) Ribor; (c) IRS; or (d) TUR (Tasso Ufficiale di Riferimento).
Each Optional Rate Mortgage Loans is linked to Euribor or to a relevant IRS for the immediately
succeeding fixed period.
(f)
Payment method
The Borrowers utilise one of the following payment methods:
(A)
direct debit of the Borrowers’ bank account opened with the Originator (addebito permanente in
conto corrente) or the inter-banking direct debit of the Borrowers' bank account opened with a
bank other than the Originator (R.I.D. – rimessa interbancaria diretta); and
(B)
payment at BancaEtruria’s premises for a portion of the Portfolio.
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(g)
Amortisation profile
The amortisation profile of each Mortgage Loan in the Portfolio is determined in accordance with one
of the following methods:
(h)
(A)
the so-called “French method” whereby instalments consist of (i) a principal component which
increases over time according to a pre-determined schedule agreed at the date of disbursement
and (ii) a decreasing interest component;
(B)
the so-called “fixed-instalment method” whereby instalments in respect of each Mortgage Loan
are constant throughout its life and consist of the interest component and a principal component
equal to the positive difference, if any, between the amount of the constant instalment and the
interest component. Thus, a decrease of the applicable interest rate will cause a shortening of
the amortisation profile of the relevant Mortgage Loan. In case, on the other hand, of an
increase in the floating rate interest, the amount of principal comprised in the constant
instalments would be reduced and the amortisation plan would be extended accordingly;
provided, however, that by contract the last instalment of such Mortgage Loans falls due no
later than 30 June 2037.
Year of origination
Each Mortgage Loan was originated by BancaEtruria between 1 January 1997 and 31 October 2008
(both dates inclusive).
(i)
Loan-to-value ratio
Each Mortgage Loan has an original loan-to-value ratio (the “LTV”), calculated on the date of
disbursement by the Originator between 2.53 per cent. and 100.00 per cent.
The LTV in respect of each Mortgage Loan is calculated by dividing the original balance of the
Mortgage Loan by the lower of (i) the value of the mortgaged real estate asset as appraised during the
course of the origination of the same Mortgage Loan and (ii) the amount for which the mortgage is
registered.
(j)
Term
As at the Valuation Date, each Mortgage Loan matures between 28 February 2009 (included) and 30
June 2039 (included).
(k)
Governing law
Each Mortgage Loan is governed by Italian law.
(l)
Excluded mortgage loans
The Portfolio does not comprise, inter alia, the following mortgage loans:
(1)
mortgage loans advanced, under any applicable law (even regional) or regulation in force in
the Republic of Italy providing for financial support (mutui agevolati and convenzionati) of
any kind with regard to principal and/or interest to the relevant borrower; and
(2)
mortgage loans entered into after 1 January 2008 (exclusive) and in relation to which the
ratio between (i) the original amount of the loan and (ii) the value of the immovable asset on
which the mortgage has been granted is higher than 80%.
//
70
Additional mortgage loans have been excluded from the Portfolio in accordance with the Criteria set out in
the Transfer Agreement (see “The Transfer Agreement”, below).
Main characteristics of the Provisional Portfolio
The following tables set out information on the characteristics of the Provisional Portfolio derived from
information provided by the Originator in connection with the purchase of the Claims by the Issuer. The
amounts, where relevant, are in euro. The information in the following tables reflects the position as at
Preliminary Valuation Date. The characteristics of the Portfolio as at the Valuation Date or Issue Date may
vary from those set out in the tables as a result, inter alia, of repayment of mortgage loans prior to,
respectively, the Valuation Date or the Issue Date.
Certain monetary amounts and percentages included in this section have been subject to rounding
adjustments; accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the
figures which preceded them.
TABLE 1 – Key data of the Provisional Portfolio on the Valuation Date
The following table shows the key data of the Provisional Portfolio on the Valuation Date:
CHARACTERISTICS
VALUE
Total balance (€)
€517,234,125.38
Average balance (€)
€85,876.49
Number of loans (#)
6,023
Number of borrowers (#)
5,920
Weighted average current loan to original valuation (%)
46.47
Weighted average spread for variable loans (%)
1.29
Percentage of variable loans (%)
49.78
Weighted average fixed rate for fixed rate loans (%)
5.59
Percentage of fixed rate mortgages (%)
50.22
Weighted average seasoning (months)
28.82
Weighted average maturity (months)
211.05
TABLE 2 – Breakdown of the Provisional Portfolio by Outstanding Principal as at the Valuation Date
The following table shows the breakdown of the Provisional Portfolio by Outstanding Principal as at the
Valuation Date:
Breakdown by range of current balance
(€)
1 - 50,000
50,001 - 100,000
Outstanding value (€)
Outstanding
value (%)
No. of loans
No. of
loans (%)
67,535,225
13.06
2,356
39.12
147,276,386
28.47
1,971
32.72
//
71
100,001 - 150,000
128,977,587
24.94
1,019
16.92
150,001 - 200,000
61,885,650
11.96
349
5.79
200,001 - 250,000
33,565,473
6.49
148
2.46
250,001 - 300,000
18,308,733
3.54
65
1.08
300,001 - 350,000
10,396,017
2.01
32
0.53
350,001 - 400,000
7,695,726
1.49
20
0.33
400,001 - 450,000
4,694,564
0.91
11
0.18
450,001 - 500,000
4,767,040
0.92
10
0.17
32,131,723
6.21
42
0.7
517,234,125
100.00
6,023
100.00
>= 500,001
Total:
Maximum: 1,712,850.76
Minimum: 10,008.86
Average: 85,876.49
TABLE 3 – Breakdown of the Provisional Portfolio by type of Mortgage Loan
The following table shows the breakdown of the Provisional Portfolio by type of Mortgage Loan
Current interest rate type
Fixed
Outstanding
value (%)
No. of
loans (%)
No. of loans
259,770,892
50.22
3,173
52.68
Modular
165,716
0.03
2
0.03
Variable
257,297,518
49.74
2,848
47.29
Total:
517,234,125
100.00
6,023
100.00
TABLE 4 – Breakdown of the Provisional Portfolio by original loan-to-value
The following table shows the breakdown of the Provisional Portfolio by original loan-to-value
Original LTV range distribution (%)
<= 40
Outstanding Value (€)
Outstanding
Value (%)
No. of Loans
No. of Loans (%)
167,112,241
32.31
2,671
44.35
40.01 – 50
73,108,663
14.13
795
13.20
50.01 – 60
68,436,609
13.23
649
10.78
60.01 – 70
88,614,297
17.13
742
12.32
70.01 – 80
99,067,703
19.15
865
14.36
>= 80.01
20,894,613
4.04
301
5.00
517,234,125
100.00
6,023
100.00
Total:
//
72
Maximum (%): 100.00
Minimum (%): 2.53
Weighted average (%): 51.75
TABLE 5 – Breakdown of the Provisional Portfolio by current loan-to-value
The following table shows the breakdown of the Provisional Portfolio by current loan-to-value
Current LTV range distribution (%)
<= 40
Outstanding Value (€)
Outstanding
Value (%)
No. of Loans
No. of Loans (%)
210,781,906
40.75
3,643
60.48
40.01 – 50
73,148,512
14.14
679
11.27
50.01 – 60
59,730,367
11.55
508
8.43
60.01 – 70
89,096,855
17.23
632
10.49
70.01 – 80
70,437,466
13.62
446
7.40
>= 80.01
14,039,018
2.71
115
1.91
517,234,125
100.00
6,023
100.00
Total:
Maximum (%): 100.00
Minimum (%) 0.70
Weighted average (%): 46.47
TABLE 6 – Breakdown of the Provisional Portfolio by Outstanding Principal in respect to Banca Etruria’s
employee within the Provisional Portfolio
The following table shows the breakdown of the Provisional Portfolio by Outstanding Principal in respect to
Banca Etruria’s employee within the Provisional Portfolio
Flag employee
Employee
Outstanding Value
(%)
No. of
Loans (%)
No. of Loans
38,646,940
7.47
667
11.07
Non-Employee
478,587,185
92.53
5,356
88.93
Total:
517,234,125
100.00
6,023
100.00
TABLE 7 – Breakdown of the Provisional Portfolio by residual life
The following table shows the breakdown of the Provisional Portfolio by residual life
Remaining term (years)
1- 5
18,948,366
//
73
Outstanding
value (%)
3.66
No. of loans
852
No. of
Loans
(%)
14.15
5.01 - 10
103,997,087
20.11
1,843
30.6
10.01 - 12
18,358,516
3.55
237
3.93
12.01 - 14
48,148,567
9.31
518
8.6
14.01 - 16
49,939,590
9.66
529
8.78
16.01 - 18
21,787,986
4.21
209
3.47
18.01 - 20
79,102,899
15.29
639
10.61
20.01 - 22
17,996,062
3.48
128
2.13
22.01 - 24
23,079,418
4.46
190
3.15
24.01 - 26
14,595,689
2.82
105
1.74
26.01 - 28
17,524,510
3.39
105
1.74
>= 28.01
103,755,433
20.06
668
11.09
Total:
517,234,125
100.00
6,023
100.00
Maximum: 30.67
Minimum: 0.33
Weighted average: 17.59
TABLE 8 – Breakdown of the Provisional Portfolio by seasoning
The following table shows the breakdown of the Provisional Portfolio by seasoning in months from
origination to Valuation Date
Breakdown by seasoning (months)
Outstanding
Value (%)
No. of
Loans
No. of loans (%)
<= 11
178,896,250
34.59
1,471
24.42
11 - 23
151,377,612
29.27
1,314
21.82
24 - 35
69,101,949
13.36
628
10.43
36 - 47
20,673,011
4
234
3.89
48 - 59
17,962,014
3.47
218
3.62
60 - 71
12,028,566
2.33
224
3.72
72 - 83
13,066,097
2.53
245
4.07
84 - 95
3,298,050
0.64
113
1.88
96 - 107
30,496,847
5.9
961
15.96
108 - 119
17,131,477
3.31
521
8.65
>= 120
3,202,252
0.62
94
1.56
Total:
517,234,125
100.00
6,023
100.00
Maximum: 141
Minimum: 0
Weighted average: 28.82
//
74
TABLE 9 – Breakdown of the Provisional Portfolio by region
The following table shows the breakdown of the Provisional Portfolio by region
Property region
Abruzzo
Outstanding
value (%)
No. of
loans
No. of loans
(%)
10,578,545
2.05
124
2.06
Basilicata
41,524
0.01
2
0.03
Calabria
471,688
0.09
7
0.12
Campania
973,074
0.19
23
0.38
11,283,727
2.18
75
1.25
Friuli
218,895
0.04
2
0.03
Lazio
144,028,631
27.85
1,532
25.44
33,912
0.01
1
0.02
5,889,366
1.14
51
0.85
Marche
35,851,694
6.93
356
5.91
Molise
218,491
0.04
3
0.05
Piemonte
427,557
0.08
8
0.13
Puglia
292,571
0.06
9
0.15
Sardegna
2,760,316
0.53
8
0.13
Sicilia
3,308,320
0.64
54
0.9
Toscana
262,659,285
50.78
3,313
55.01
Umbria
37,887,152
7.32
450
7.47
Veneto
309,378
0.06
5
0.08
Total:
517,234,125
100.00
6,023
100.00
Emilia-Romagna
Liguria
Lombardia
TABLE 10 – Breakdown of the Provisional Portfolio by range of spreads over the relevant parameter (for
floating rate loans)
The following table shows the breakdown of the Provisional Portfolio by spread
Spread (floating loans only, %)
<= 1.00
Outstanding
value (%)
No. of loans
No. of Loans (%)
84,932,128
32.99
942
33.05
1.01 - 1.50
104,273,692
40.5
1,226
43.02
1.51 - 2.00
58,553,615
22.74
540
18.95
2.01 - 2.50
9,041,784
3.51
117
4.11
662,015
0.26
25
0.88
>= 2.51
//
75
Total:
257,463,233
100.00
2,850
100.00
Maximum %: 3.95
Minimum %: 0.50
Weighted average %: 1.29
TABLE 11 – Breakdown of the Provisional Portfolio by range of fixed rate for fixed rate mortgages
The following table shows the breakdown of the Provisional Portfolio by range of fixed rate for fixed rate
mortgages
Interest rate for fixed rate mortgage (%)
Outstanding
value (%)
No. of loans
No. of
loans (%)
<= 2.00
10,036,548
3.86
157
4.95
2.01 - 4.00
22,224,729
8.56
306
9.64
4.01 - 5.00
4,771,262
1.84
127
4
5.01 - 5.50
19,306,273
7.43
400
12.61
5.51 - 6.00
97,084,502
37.37
1,136
35.8
6.01 - 6.50
93,144,274
35.86
860
27.1
6.51 - 7.00
12,490,711
4.81
165
5.2
712,593
0.27
22
0.69
259,770,892
100.00
3,173
100.00
>= 7.01
Total:
Maximum %: 8.10
Minimum %: 2.00
Weighted average %: 5.59
TABLE 12 – Breakdown of the Provisional Portfolio by payment frequency
The following table shows the breakdown of the Provisional Portfolio by payment frequency
Payment frequency
Monthly
Outstanding value (%)
No. of loans
No. of loans
(%)
385,751,327
74.58
3,653
60.65
3,515,494
0.68
25
0.42
Semi-annually
127,967,305
24.74
2,345
38.93
Total
517,234,125
100.00
6,023
100.00
Quarterly
//
76
THE ORIGINATOR AND SERVICER
Banca Popolare dell’Etruria e del Lazio
BancaEtruria traces its origins back to Banca Mutua Popolare Aretina, a bank established in 1881, which
acquired Banca Popolare Senese and Banca Popolare di Livorno in 1971, creating Banca Popolare
dell’Etruria. Following acquisitions of Banca Popolare dell’Alto Lazio (1988) and other small regional banks
(Banca Popolare di Pontevalleceppi, Banca Popolare di Cagli, Banca Popolare di Gualdo Tadino and Banca
Cooperativa di Capraia, Montelupo e Vitolini) BancaEtruria assumed its current name and operating structure.
BancaEtruria is the parent company of the BancaEtruria Banking Group. Its principal activities, both directly
and indirectly through its subsidiaries and associated companies, include retail and corporate banking service
and car, real estate, equipment leasing and bancassurance.
BancaEtruria is a mid-sized mutual bank (at 22 rank position as a group among the Italian banks in terms of
business activity) with a network of 197 branches at BancaEtruria Banking Group level (1st December
2008)1, including 8 branches of Banca Federico del Vecchio, Florence, of which share capital (100%) was
bought by BancaEtruria during year 2006 and 2007, and 3 branches of Banca Lecchese, Lecco, of which
share capital (53.66%) was bought by BancaEtruria during year 2007.
1,695 (1,838 the Group) 2 staff concentrated in central Italy and, in particular, in the regions of Tuscany,
Umbria, Lazio and Marche, where around 86.29% of its branches are to be found. It also has a presence in
Abruzzo, Emilia Romagna, Lombardy and Veneto, and since 1st December 2008 in Molise region as well. Its
clients are made up of more than 214,276 private and 39,836 corporate customers (September 2008). The
client base allows a high spread of credit risk, stable relationships with clients and good fund raising
opportunities.
For year 2008 Fitch Ratings has confirmed the rating assigned to BancaEtruria on 2007, and it is BBB+ for
long term debt credit rating.
BancaEtruria is a co-operative limited liability joint stock company (Società cooperativa per azioni a
responsabilità limitata). As such, the level of individuals’ stockholdings in the cooperative is limited by law to
0.5% of the total share capital. Each shareholder has only one vote, notwithstanding the size of his or her
shareholding. Also as a result of this legal form, its members may not make agreements between themselves
(voting or blocking syndicates) in relation to the exercise of rights attaching to the shares. In order to become
a member of BancaEtruria, a person must make a written application to the board of directors of
BancaEtruria. The board, in considering the application and deciding whether or not to grant membership,
looks to the interests of BancaEtruria and to the BancaEtruria cooperative form. BancaEtruria, like other
cooperative lending banks, has a very wide spread shareholder base (47,489 shareholders as of 30 June, 2008)
who also make up a significant portion of BancaEtruria’s clients. Given the loyalty of clients, BancaEtruria’s
strategy of expanding this membership base in order to increase its sales of services (offered in exclusive or to
shareholders or at special conditions) has proved to be effective.
Banca Etruria’s share are listed on the Italian Stock Exchange.
Main activities of BancaEtruria and the BancaEtruria Banking Group
1
Data included 14 new branches bought from Unicredit Group on 1 December 2008
2
Data as at 30 June 2008
//
77
BancaEtruria acts primarily as a lending institution. The focus of this activity is the parent company, to which,
as at 30 June 2008, 88.66% of the total business of the Group was attributable. The BancaEtruria Banking
Group is also active in the following sectors: leasing, real property, financial consultancy services for business
and bancassurance.
As part of an initiative to improve efficiency, reduce costs, and shorten the decision making process, the
Group reorganised during the previous years.
Banca Federico del Vecchio S.p.A.
Banca del Vecchio, in BancaEtruria Banking Group since 2007, operates in the city of Florence. The
management guidelines mainly concentrated on enhancing the strong points of the Del Vecchio brand on the
Florence market. With regard to its own Business Plan, Banca Federico del Vecchio starts 2008 with a totally
new organisation and management setup which, from a retail point of view, will be further expanded by the
acquisition of the 6 branches from Banca Etruria operating in the city of Florence, which was completed on
March 2008.
Banca Popolare Lecchese S.p.A.
Banca Lecchese, located in Lecco, North of Italy, acts as a local bank in its territory with a particularly
attention to families and small enterprises. After the acquisition of the Monza branch from Banca Etruria on
November 2008, the Banca Lecchese is now present in the Lecco province with three branches with the aim
to increase its network in the following three years.
Etruria Fund Management Company S.A.
Etruria Fund Management Company S.A. is a company incorporated in Luxembourg in 1997 to carry out
placement of diversified “Umbrella Funds” managed by Société de Banque Suisse and sold in Italy under the
BancaEtruria brand.
ConEtruria S.p.A.
ConEtruria S.p.A. (formerly EuroEtruria Servizi Finanziari S.p.A.) has recently restructured his activities
which are now characterised by the offer of consumer credit (credito al consumo) and of financial loans
related to specific categories of employee (cessione del quinto dello stipendio).
Etruria Leasing S.p.A.
BancaEtruria leasing operations are carried out through the wholly-owned subsidiary Etruria Leasing S.p.A
(“Etruria Leasing”) which is primarily concerned with car and real estate leasing (with a small presence in
equipment leasing), through branch offices of the three banks of the BancaEtruria Banking Group.
Etruria Immobili e servizi S.p.A. and Etruria Informatica S.r.l
Etruria Immobili e Servizi S.p.A. (“EIS”) and Etruria Informatica S.r.l. provide the BancaEtruria Banking
Group with operational support. EIS manages BancaEtruria’s real property assets supplying general logistic
services. Etruria Informatica supports manly BancaEtruria and the other companies of Gruppo Banca Etruria
in the field of information technology and data processing systems, since 2004 when BancaEtruria has
completely outsourced its IT system to Cedacri S.p.A.
BAP—BancAssurance Popolari S.p.A.
BAP was established in March 2000, as a joint-venture between BancaEtruria and Assurances Banques
Populaire (a French company). In October 2005 BancaEtruria has increased its quota in BAP’s share capital
up to 90%, while the remained quota of 10% is still in the possession of the French company. BAP’s sells its
//
78
life assurance products manly through BancaEtruria Banking Group’s branches and through other Italian
cooperatives small banks.
BAP is not a company member of the BancaEtruria Banking Group, although is under BancaEtruria’s control and
its included in the consolidated annual report.
BancAssurance Popolari Danni S.p.A. (“BAP Danni”)
2008 is the first year of business for BAP Danni which was established to operate in the personal and equity
insurance sector. These operations will allow BancaEtruria Banking Group to enhance its own product
portfolio especially for Retail customers who, as recent statistics continue to highlight, require great
protection and guarantees against risks.
Management
The management of BancaEtruria is divided between the Board of Directors, the Executive Committee
(Comitato Esecutivo) and Senior Management (Direzione Generale). In addition, the Italian Civil Code
requires BancaEtruria to have a supervisory body, the Board of Statutory Auditors (Collegio Sindacale).
Board of Directors
The table below is sets out the names of the current members of the Board of Directors of BancaEtruria,
together with their positions.
Elio Faralli 1
Giuseppe Fornasari 1
Natalino Guerrini
Alberto Bonaiti
Luigi Bonollo
Giovan Battista Cirianni
Giampaolo Crenca
Enrico Fazzini 1
Augusto Federici 1
Gerardo Gatti
Giovanni Inghirami
Carlo Platania 1
Alberto Rigotti
Lorenzo Rosi
Rossano Soldini
Chairman of the Board
Vice President of the Board (Vicario)
Vice President of the Board
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Note:
1
Member of the Executive Committee
Statutory auditors
Pursuant to Italian law, in addition to electing the Board of Directors, BancaEtruria’s ordinary shareholder’s
meeting also elects a Board of Statutory Auditors (Collegio Sindacale) composed of three to five independent
experts in accounting matters, plus two alternate auditors who will automatically replace a statutory auditor
who resigns or is otherwise unable to serve as a statutory auditor. Each member of the Board of Statutory
Auditors must be registered with the national register of statutory auditors.
The following table sets out the current members of the Board of Statutory Auditors and their respective
positions:
//
79
Mario Badiali
Franco Arrigucci
Saro Lo Presti
Azelio Senserini
Paolo Cerini
Luca Civitelli
Gianfranco Neri
Chairman
Statutory Auditor
Statutory Auditor
Statutory Auditor
Statutory Auditor
Acting Auditor
Acting Auditor
Decision making bodies
BancaEtruria operates through its Central Management (Direzione Centrale) and its Local Structure (Struttura
Periferica).
The Central Management is under the direct control of the General Manager. It is made up of 3 Central Area
(Management and HR, Operations and CFO), and 9 Area divided by function (Credit Control & Default,
Credit, Internal Audit, Marketing, Market, Planning & Management Control, Finance, Legal, Organization &
IT). These Area are in turn subdivided into Departments and Offices which are specialised in particular areas
of business. Reporting to the Market Area there are 8 sections of Territorial Area (Direzione Territoriale)
which are divided geographically (City of Arezzo, North Tuscany, South Tuscany, Arezzo Province, UmbriaNorth Lazio, Marche-Abruzzo, Rome and Area North) and which are responsible for coordination among
Central Management and the Local Structure.
The Local Structure is divided into various Branches (Branches of I°, II° level). Each Territorial Area
coordinates the activities of the Local Branches within their area.
Decision-making bodies are found within the Local Structure (Territorial Areas, Branches) or within Central
Management (Credit Committee, Management Committee, Executive Committee).
To support the Corporate Governance have been established specific Committees with decisional-making
powers or consultancy duties. Those Committees are appointed by the Board of Directors and they are:
•
Top Management Committee
•
General Management Committee
•
Credit Committee
•
Risk and ALM Committee
•
Crisis Committee and Business Continuity Committee
Top Management Committee
The Top Management Committee (weekly meeting) is made up of the General Manager (who acts as
chairman), the two Vice General Managers and CFO. It acts as a consultant to the General Manager and
decides on the strategic direction of BancaEtruria and related political and management issues.
General Management Committee
The General Management Committee (biweekly meeting) is made up of the General Manager (who acts as
chairman), the Vice General Managers and the Directors of all Areas. It acts as a consultant to the General
Manager.
//
80
It takes on the role of Governance Committee to insure the strategic actions and activities planned are realised
at any level, including the companies member of the BancaEtruria Banking Group.
Credit Committee
The Credit Committee (weekly meeting) has the capacity to decide upon the granting of credit within the
limits of the powers delegated to it. It is made up of a member of the General Manager (who acts as
chairman), the Directors of Credit, Market and Finance Areas.
Risk and ALM Committee
It is made up of a member of the General Manager (who acts as chairman), the two Vice General Managers,
the CFO, the Directors of the Credit, Credit Control & Default, Planning & Management Control, Finance
and Organization & IT Areas. Attend to the meeting the Responsible of Risk Management Department (which
is appointed as Risk Manager) as well.
In accordance with the strategic plans and under the power received by the Board of Directors, the Risk and
ALM Committee decides on risk management and risk control at BancaEtruria Banking Group level and on
Asset and Liability Management and Capital and Asset Allocation at BancaEtruria Banking Group level.
It also evaluates all companies risks (credit, market and operational, and all risk under the ICAAP process).
Crisis Committee and Business Continuity Committee
It is made up of a member of the General Manager, the two Vice General Managers, the CFO, the Director of
Organization & IT Area (which is appointed as Crisis Manager). The Committee, which acts in respect of the
Business Continuity Management Regulation where duties and activities are regulated, insures the
government of crisis status in which the Bank might incur. May attend to the meeting the Director of Internal
Audit and the Risk Manager.
Banca Etruria’s Disaster Recovery and Business Continuity Management Project
The Business Continuity plan implemented by Banca Etruria, requires the setup of a “back-up” server which
can guarantee the functions performed by Head Office. 25 fully functional work positions were installed in
special offices at the branch in Chianciano Terme which are connected to the Parent Company’s software
network. In compliance with the deadlines notified by the Supervisory Bodies, it was possible to conduct
technical and functional tests simulating a crisis situation which made the Head Office Campus inaccessible.
To improve the level of data processing connection security, the MPLS network that connects Head Office to
the two data processing centres at Cedacri S.p.A. (both the primary and bakup centres) was duplicated.
Executive Committee
The Executive Committee is made up of the Chairman of the Board of Directors, the Acting Vice President
and from 3 to 5 Directors. It makes decisions on all lending which falls outside the competence of the
Management Committee, with the following exceptions:
•
loans specified by article 136 of the Banking Act;
•
loans to subsidiaries of BancaEtruria or companies in which BancaEtruria has a certain stake;
Monitoring credit risk
Control of credit risk is made initially by the Local Branches and subsequently by the Territorial Area. The
Credit Control Area at Central Management monitors the quality of entire credit portfolio in “bonis” of the
Bank.
//
81
The Local Branches
The Local Branches directly manage the lending relationship with clients and asses credit risks relating to
their own positions and exposures in the ambit of their day-to-day activities.
Territorial Area
The dedicated office to the credit control verifies day-by-day the risk credit management done by the local
branches and supports their activities, in particularly to remove all critical situation.
Credit Control & Default Area
The Credit Control & Default Area, divided in two sector (Credit Control and Default Control) monitors
business risk as a whole by checking compliance with standards set by Senior Management (first level
controls) and, if it finds any breaches, identifying the causes and returning risk to acceptable level by
involving the local branches and the Territorial Area offices.
The Credit Control & Default Area carries out its monitoring responsibilities using the data and information
systems of BancaEtruria (tables of limits exceeded, etc.) and, for matters within the competence of central
management, analyses proposals for renewed lending which it may put before its superiors.
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82
THE SERVICING AND COLLECTION POLICIES
Set out below is a summary of the main features of the servicing and collection policies adopted by
BancaEtruria for the granting and servicing of the Mortgage Loans. Prospective Noteholders may inspect a
copy of the servicing and collection policies upon request at the registered office of the Issuer, the
Representative of the Noteholders and at the Specified Offices of, respectively, the Principal Paying Agent and
the Listing Agent. For a description of the portfolio, see “The Portfolio and the Provisional Portfolio”, above.
For a description of the obligations undertaken by BancaEtruria under the Servicing Agreement, see “The
Servicing Agreement”, below. For a description of the representations and warranties given and the
obligations undertaken by BancaEtruria under the Warranty and Indemnity Agreement, see “The Warranty
and Indemnity Agreement”, below.
Procedures
All borrowers can either pay either semi-annually, quarterly or monthly on the last day of the relevant period
by direct debit or by cash/money transfer only at a BancaEtruria branch.
During the night of the last day of each month, the credit department runs a report indicating any borrowers
who had insufficient funds in their account to “cover” the direct debit. It takes approximately up to 3 days to
reconcile the payment and the mortgage instalments (same day for direct debit payments and 2-3 days for
branch payments). As soon as the balance is reconciled, each branch manager, having this report available,
will contact the debtor in order to identify the reason for the missed payment.
After a missed payment:
•
after the first day following a missed payment, the customer can pay the instalment by cash without
any penalty interest, or if the payment is a direct debit he has a maximum of 10 days to pay its
unpaid instalment without any penalty interest.
•
After 10 days, as the case above described, penalty interest starts accruing from the date of the
missed payment.
•
Until the “Procedura Concorsuale/Esecutiva” (foreclosure procedure) is initiated, the penalty
interests are charged at the rate of 3% over the rate of the current instalment; once foreclosure
procedure has started only legal interests will be accrued (currently 3%).
•
Until the non-matured capital outstanding is transferred to the non performing area, the penalty
interests are accrued only on the due and unpaid instalments (principal + interests). Subsequently
penalty interest accrue on the “total principal” (unpaid instalments + outstanding principal, not yet
due).
After 45 days from the missed payment, starts a calls (weekly) process entrusted to a specialized entities
(currently three companies are appointed by BancaEtruria), in order to assess Borrowers’ financial conditions
and to “press” for a payment. This activity is constantly under control by BancaEtruria and after 60 days
without a positive results (recovery in the bonis status) the position is transferred to a “door to door” activity,
done by specialized entities appointed by BancaEtruria, called “esazione”.
The “esazione” is carried out for about 90 days; at the end if no positive results are achieved the position is
transferred to a status called “Monitoria legale” which consists in stressing the debtor with also written notice
from the legal officers, intimidating the “coattive” actions if the position is not recovered. This activity is
carried out for 90 days.
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83
If the missed payments persist after all actions above described, BancaEtruria will transfer the debtor to the
“sofferenza” status (non performing loan).
Before to transfer the debtor to NPL Department (“Contezioso”), all the activities are followed and monitored
by the “Incaglio” Department
•
The term “Incaglio” identifies a situation of temporary difficulty for the borrower requiring extra
care from the bank in managing the borrower’s position and assessing the risks associated to the
exposure.
•
If at any point in time the difficulty were deemed not to be “temporary” but rather, irrecoverable,
then the client’s position should be transferred to Contenzioso (NPL department).
As per the Italian standards, the debtor is moved to a “watch list” based on the Bank of Italy regulations.
The below tables identifies the maximal number of missed payments (even not consecutive) necessary for the
Bank of Italy to transfer the position from in bonis to incaglio:
Length of the Loan
Semi-annual
payments
Quarterly payments
Monthly
payments
Annual
payments3
2
3
3
5
5
7
1
1
36 months or less
More than 36 months
•
Once moved to incaglio the bank will contact the client and agree a “piano di rientro”
(reimbursement plan). The client will agree with the bank on how to settle the unpaid instalments.
The table below shows the amount of all Incagli as of 30June 2008 and their breakdown:
Type of clients
31/12/2007
30/06/2008
Number of
position at Incaglio
Amount
(€/1,000)
3,776
3,299
125,917
128,050
Range
(€/1,000),
Amount as at 30/6/2008
(€/1,000)
All amount
< 100
≥ 100
30,342
19,100
78,607
Breakdown for mortgage loan4
Cluster of clients
Incagli appointed to outsourcer5
Incagli partite anomale (anomalous)
Incagli Grandi Rischi (big risk)
•
If after this period of time, the client has not fully reimbursed the debt, the position will usually be
transferred to Contenzioso and classified as a “Sofferenza” (or in “Contenzioso”):
-
the Contenzioso department will now start the legal recovery procedure with the “Atto di
Precetto”. This is an official document issued by a local tribunal. The tribunal will send a
request to the borrower. He/she will have to pay the total amount due within ten days;
3
If early instalment, six months from the missed payment.
4
Data include all customers (private, corporate).
5
All credit given to specialized entities in order to asses borrower’s financial conditions and to “urge” for a payment.
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84
-
if after ten days the payment has not been made, the mortgage contract is considered invalid
(“nullo”) according to the Italian civil code and the debt acceleration starts;
-
the bank has 90 days from the requests of the Atto di Precetto to request the “pignoramento”
(“attachment”);
-
the “pignoramento” consists of the following three legal procedures (to be carried out by a
registered lawyer at the local tribunal):
- register the “pignoramento” at the “conservatoria registri immobiliari”;
- notify the borrower;
- register the “pignoramanto” at the “Cancelleria” of the local tribunal.
•
Once the “pignoramento” is completed the tribunal will sell the property (“istanza di vendita”) via
an auction. The bank, having the “Ipoteca” will be able to settle the outstanding loan.
Recovery process
Once the loan is classified as contenzioso, the recovery procedure starts based on the following 12 steps:
1
Petition to pay: the first step of the recovery process is a petition prepared by a lawyer for
BancaEtruria and notified through an officer of the court.
2
Attachment: not sooner than ten days, no longer than 90 days after the petition to pay has been
received by the debtor, BancaEtruria applies to the court for an attachment of the claim to the
property. This is a key stage, it makes the claim public and whilst BancaEtruria is bound by
previous dealings with the property third parties are now on notice of the claim. The court opens
a file on the claim.
3
Petition for sale: not sooner than ten days, no longer than 90 days after the petition to pay,
BancaEtruria lodges a petition for sale asking the court to fix a hearing to arrange an auction of
the mortgaged property. At this point BancaEtruria can apply for the case to be heard by a
Public Notary who is likely to handle the process more speedily than the judge (as provided by
the New Law as defined below).
4
Production of documents: previously the law required BancaEtruria to produce copies of all
the documents evidencing every dealing with the property for the last 20 years before the
hearing date for the auction arrangements could be fixed. The law no. 302 of 3 August 1998
(“New Law”) accepts a notaries certificate instead. The certificate summarises details of title
and dealings with the mortgaged property over the last 20 years; the period taken for production
of this document is set by law in 60 days.
5
Date of first hearing: the judge fixes and notifies a date for the first hearing to appoint a CTU
valuer (independent professional named by the court), the date is completely arbitrary and
BancaEtruria’s lawyer tries to get it fixed as soon as possible. BancaEtruria is obliged to notify
all the relevant parities.
6
Notification of foreclosure: the judge notifies all interested parities of the hearing date for the
appointment of a CTU valuer. This includes other mortgagees and those with public rights.
7
First hearings: the judge/notary assesses the petition, attachment and production of documents
and, if all is in order, nominates a CTU valuer from a prescribed list and fixes a date (usually in
a couple of months).
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85
8
Valuer appointment hearing: the judge describes the property and the CTU valuer swears to
provide a true valuation. The judge sets a timescale for the valuation and a further hearing date
to hear the CTU valuer’s evidence. The CTU valuer can always apply for an extension of time
and its possible for BancaEtruria’s own appointed expert to assist the CTU valuer to try to speed
up the process.
9
CTU hearing: the CTU valuer deposits his valuation with the Secretary of the court. The CTU
valuation evidence is presented and discussed between the relevant parties. If the CTU valuation
is accepted, the judge/notary set the first action date. Occasionally, when in its opinion the
valuation is not sufficient consistent, BancaEtruria might require a new valuation which is
carried out by an independent valuer.
10
Auction: the judge is joined by an auctioneer while the notary conducts the auction himself and
the property is allotted to the highest bidder. Every bid is left open for three minutes. The
bidders, who have had to pay a deposit to the court, know how many other bidders there are and
who they are.
11
Sale completed: on average the property is sold at the second auction. When an auction is
“deserted” the judge/notary would/should set a new action at 20% less of the CTU valuation.
12
Distribution hearings: BancaEtruria or its lawyers prepares a distribution plan. A hearing is
held to agree and to divide up the proceeds of sale according to the plan and to the respective
entitlement. The deposit (less taxes and other costs) will be paid between 30 and 60 days after
the final distribution hearing has been determined.
The sofferenza (default) department is composed of 10 professionals based in Arezzo, which are highly
experienced (all have a degree and the majority of them has a degree in Law), BancaEtruria uses also 30
external lawyers (chosen from a list of 120) in order to speed up the legal procedures (in particular the
collection of legal documentation).
The default department is also in charge of finding possible DPOs or Out of Court Settlement’s solutions.
The DPO solutions can usually be achieved during the first 18 months of the legal process from the beginning
of the foreclosure procedure, using one of the following two methods:
Piani di rientro: BancaEtruria proposes a new amortisation plan where the balance to be amortised is the sum
of the outstanding principal, plus interests, plus penalty interest, plus legal costs. The “piano di rientro” is
however “set” using as a maximum time the estimated time to recovery based on the legal time remaining to
conclude the procedure.
Transattiva: this is where a lump sum is proposed by the client. To settle the total debit should be the client’s
proposal is often accompanied by a new buyer of the property.
Whether the outcome is a Piano di Rientro or a Transativa Solution, the client will be classified as
“sofferenza” until the balance is fully repaid. In fact, as the original contract is no longer valid, the client
cannot be “replaced” into a performing position.
Once a DPO is achieved, potential write off may arise. The table below shows the various authority levels for
the write off procedure:
€/1000 max. individually
Max loss for each position
General Manager
Area Control & Default Manager
500
300
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86
€/1000 max. individually
Max loss for each position
Default Dept. Manager
Employees of Default Dept.
15
50
As soon as a foreclosure procedure is started, penalty interests are charged at the rate indicated in the contract
subject to the “Usury Law” maximum reference level (i.e. the average of the rates applied to the same type of
assets in the previous quarter). The usury interest is set quarterly by the Italian Treasury and is published in
the Gazzetta Ufficiale.
If the foreclosure procedure (“Procedura Concorsuale/Esecutiva”) has been started, BancaEtruria can only
charge the legal interest. The legal interest is yearly set by the Italian Government (article 2855 of the Italian
Civil Code and articles 54 and 55 of the Italian Insolvency Law ).
Once a first action is called by the relevant judge or notary, BancaEtruria will disseminate the information
using one of the following options:
•
local newspapers; and
•
Istituti di Vendita Giudiziaria (“VG”, only for certain tribunals)
In 1998, the Italian Parliament issued the New Law enabling a local notary to carry out certain tasks
previously done by the local tribunal, including determining the value of the property and managing all the
various steps of the auction.
The New Law has reduced the time to recovery in the foreclosure procedures. In particular the table below,
based on the information provided by the BancaEtruria external lawyers, shows the cumulative time to
recovery for the most “used” tribunal by BancaEtruria6.
Tribunal
Region
Arezzo
Livorno
Grosseto
Siena
Firenze
Roma
Rieti
Perugia
Toscana
Toscana
Toscana
Toscana
Toscana
Lazio
Lazio
Umbria
First
CTU
CTU
herring identification valuation First auction
(m)7
(m)
(m)
(m)
3
5
3
1
3
21
5
3
3
4
3
1
2
9
5,5
3
4
2
3
2,5
7
8
6
3
8
3
4
4
5
42
8
7
Second Distributio
auction n approved
(m)
(m)
6
1
5
2,5
3,5
22
2,5
7
8
6
5
6
14
21
9
8,5
Cash Average
settled
time
(m) (years)
7
7
2
3
7
13
5,5
1,5
2.6
2
3,5
3
4
9
3,5
3,5
6
Sources: Studio Legale Batini & Associati, Studio Legale Avv. Marco Cutini, Avvocato Giovannni Burroni,Avvocato Paolo Panzieri, Studio
Legale Ammirati e Verdelli, Studio Legale Cappelletti, Studio Legale Pierfederici, Studio Legale Avvocato Maurizio Giornetti
7
Months
//
87
THE ISSUER’S BANK ACCOUNTS
Pursuant to the terms of the Agency and Accounts Agreement, the Issuer has opened with:
(A)
the Collection Account Bank the following accounts:
(i)
a euro-denominated current account with the Collection Account Bank into which, inter alia,
the Servicer will be required to transfer all the Collections as they are collected in accordance
with the Servicing Agreement (the “Collection Account”); and
(ii)
a euro-denominated current account into which the Issuer will deposit €50,000 (the “Retention
Amount”) on the Issue Date (the “Expenses Account”). The Expenses Account will be
replenished on each Interest Payment Date, in accordance with the Pre-Enforcement Interest
Priority of Payments and subject to the availability of sufficient Interest Available Funds, up to
the Retention Amount and such amount will be applied by the Issuer to pay all fees, costs,
expenses and taxes required to be paid in order to preserve the corporate existence of the Issuer
or to maintain it in good standing or to comply with applicable legislation;
(B)
the Principal Paying Agent a euro-denominated current account into which, inter alia, will be credited
(i) on the second Business Day preceding each Interest Payment Date and any other Business Day on
which any payment of principal and/or interest in respect of any of the Notes becomes due and
payable, all the amounts standing to the credit of the Claims Transaction Account on the last day of the
immediately preceding Collection Period (including any interest paid on the Claims Transaction
Account); and (ii) on each Interest Payment Date, payments made by the Swap Counterparty under the
Swap Agreement (the “Payments Account”); and
(C)
the Transaction Bank, the following accounts:
(a)
a euro-denominated account with respect to the Claims (the “Claims Transaction Account”)
into which the Collection Account Bank will be required to transfer, on a daily basis, the
balance standing to the credit of the Collection Account;
(b)
a euro-denominated current account into which the Issuer will be required to deposit, inter alia,
(i) on the Issue Date, €10,438,000, being a portion of the amount drawn down by the Issuer
under the Subordinated Loan Agreement; and (ii) on each Interest Payment Date, in accordance
with the Pre-Enforcement Interest Priority of Payments and subject to the availability of
sufficient Interest Available Funds, the amount necessary (if any) to replenish it so that the
balance of the Cash Reserve Account equals the Target Cash Reserve Amount (the “Cash
Reserve Account”);
(c)
a euro-denominated current account into which the Issuer will be required to deposit, inter alia,
(i) on each Interest Payment Date up to, but excluding, the First Amortisation Interest Payment
Date, any Principal Deficiency Ledger Amount; (ii) any amount available for such purpose on
each Interest Payment Date to be credited to such account in accordance with the applicable
Priority of Payments (the “Principal Account” and, together with the Claims Transaction
Account and the Cash Reserve Account, the “Transaction Accounts”).
In addition to the above, should the Issuer resolve to invest in Eligible Investments, in accordance with the
Agency and Accounts Agreement, the Issuer will open with the Principal Paying Agent a securities account
into which will be deposited all securities constituting Eligible Investments (the “Eligible Investments
Securities Account” and, together with the Collection Account, the Expenses Account, the Payments Account
and the Transaction Accounts the “Accounts”).
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88
In the context of the Previous Securitisations, the Issuer has also opened, with BancaEtruria a eurodenominated account (the “Equity Capital Account”) into which the Issuer’s equity capital of €10,000 will
be required to be deposited for as long as any Notes are outstanding.
In accordance with the Securitisation Law, the Issuer is a multi-purpose vehicle and in the context of the
issuance of the Previous Securitisations Notes has opened certain bank accounts. The sums standing from
time to time to the credit of such bank accounts will not be available to the Issuer Creditors, because, pursuant
to the Securitisation Law, the assets relating to each securitisation transaction will constitute assets segregated
for all purposes from the assets of the Issuer and from the assets relating to other securitisation transactions.
The assets relating to a particular securitisation transaction will not be available to the holders of notes issued
to finance any other securitisation transaction or to the general creditors of the Issuer.
If the Transaction Bank (or any successor Transaction Bank) ceases to be an Eligible Institution, the Issuer
will, by no later than 30 (thirty) calendar days from the date when the Transaction Bank (or any successor
Transaction Bank) ceases to be an Eligible Institution: (i) terminate the appointment of the Transaction Bank
(or any successor Transaction Bank); (ii) close the Claims Transaction Account, the Cash Reserve Account
and the Principal Account opened with the Transaction Bank; and, simultaneously (iii) open a replacement
Claims Transaction Account, a replacement Principal Account and a replacement Cash Reserve Account with
a substitute transaction bank which is an Eligible Institution and the Issuer will notify the Representative of
the Noteholders and Fitch.
If the Principal Paying Agent (or any successor Principal Paying Agent) ceases to be an Eligible Institution,
the Issuer will, by no later than 30 (thirty) calendar days from the date when the Principal Paying Agent (or
any successor Principal Paying Agent) ceases to be an Eligible Institution: (i) terminate the appointment of the
Principal Paying Agent (or any successor Principal Paying Agent); (ii) close the Payments Account and the
Eligible Investments Securities Account (if any) opened with the Principal Paying Agent; and, simultaneously
(iii) open a replacement Payments Account and a replacement Eligible Investments Securities Account (if
any) with a substitute principal paying agent which is an Eligible Institution and the Issuer will notify the
Representative of the Noteholders and Fitch.
If the Collection Account Bank (or any successor Collection Account Bank) ceases to be rated at least as high
as “F2” by Fitch (in respect of short-term debt), the Issuer will, by no later than two Business Days from the
date when the Collection Account Bank (or any successor Collection Account Bank) ceases to be rated at least
as high as “F2” by Fitch, either (A) (i) terminate the appointment of the Collection Account Bank (or any
successor Collection Account Bank); (ii) close the Collection Account and the Expenses Account opened with
the Collection Account Bank (or any successor Collection Account Bank); and, simultaneously (iii) open a
replacement Collection Account and a replacement Expenses Account with a substitute collection account
bank the short-term unsecured and unsubordinated debt obligations of which are rated “F1” or above by Fitch
and the Issuer will notify the Representative of the Noteholders and Fitch or (B) take such other action in line
with Fitch’s criteria.
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89
TERMS AND CONDITIONS OF THE NOTES
The following is the text of the terms and conditions of the Notes (the “Conditions”).
The €401,300,000 Class A – 2009 Residential Mortgage-Backed Floating Rate Notes due 2047 (the “Class A
Notes”), the €82,750,000 Class B – 2009 Residential Mortgage-Backed Floating Rate Notes due 2047 (the
“Class B Notes” and, together with the Class A Notes, the “Rated Notes”) and the €12,954,000 Class C –
2009 Residential Mortgage-Backed Floating Rate Notes due 2047 (the “Junior Notes” and, together with the
Rated Notes, the “Notes”) will be issued by Mecenate S.r.l. (the “Issuer”) on 2 February 2009 (the “Issue
Date”) in order to finance the purchase of the Claims (as defined below). The Issuer is a company
incorporated with limited liability under the laws of the Republic of Italy in accordance with the
Securitisation Law, having its registered office at via Calamandrei, 255, I-52100 Arezzo, Italy. The Issuer is
registered in the general register held by the Bank of Italy pursuant to the Banking Act under number 33695
and in the special register of financial intermediaries held by the Bank of Italy pursuant to article 107 of the
Banking Act, and in the companies’ register held in Arezzo under number 01710160514.
The Notes are subject to and with the benefit of an agency and accounts agreement (the “Agency and
Accounts Agreement”) dated 30 January 2009 (the “Signing Date”) between the Issuer, BancaEtruria as
collection account bank (in such capacity, the “Collection Account Bank”, which expression includes any
successor collection account bank appointed from time to time in respect of the Notes), BNP Paribas
Securities Services S.A., Milan branch as principal paying agent, computation agent and agent bank (in such
capacities, respectively, the “Principal Paying Agent”, the “Computation Agent” and the “Agent Bank”,
which expressions include any successor principal paying agent, computation agent and agent bank
respectively appointed from time to time in respect of the Notes), BNP Paribas Securities Services, London
Branch as transaction bank (in such capacity, the “Transaction Bank”, which expression includes any
successor transaction bank appointed from time to time in respect of the Notes), BNP Paribas Securities
Services, Luxembourg Branch as listing agent (in such capacity, the “Listing Agent”, which expression
includes any successor listing agent appointed from time to time in respect of the Rated Notes and, together
with the Principal Paying Agent, the Agent Bank, the Collection Account Bank, the Transaction Bank and the
Computation Agent, the “Agents”) and BNP Paribas Securities Services S.A., Milan Branch as representative
of the holders of the Notes (in such capacity, the “Representative of the Noteholders”, which expression
includes any successor or additional representative of the Noteholders appointed from time to time).
The Noteholders are deemed to have notice of and are bound by and shall have the benefit of, inter alia, the
terms of the rules of the organisation of the Noteholders (the “Rules of the Organisation of Noteholders”)
which constitute an integral and essential part of these Conditions. The Rules of the Organisation of
Noteholders are attached hereto as a schedule. The rights and powers of the Representative of the Noteholders
and the Noteholders may be exercised only in accordance with the Rules of the Organisation of Noteholders.
Certain of the statements in these Conditions include summaries of, and are subject to, the detailed provisions
of the Agency and Accounts Agreement, the Intercreditor Agreement (as defined below) and the other
Transaction Documents (as defined below). Any reference in these Conditions to a particular Transaction
Document is a reference to such Transaction Document as from time to time created and/or modified and/or
supplemented in accordance with the provisions therein contained and any deed or other document expressed
to be supplemental thereto, as from time to time so amended and/or modified and/or supplemented.
The holders of the Class A Notes (the “Class A Noteholders”), the holders of the Class B Notes (the “Class B
Noteholders” and, together with the Class A Noteholders, the “Rated Noteholders”) and the holders of the
Junior Notes (the “Junior Noteholders” and, together with the Rated Noteholders, the “Noteholders” and
each a “Noteholder”) are entitled to the benefit of, are bound by, and are deemed to have notice of, all the
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90
provisions of the Agency and Accounts Agreement, the Rules of the Organisation of Noteholders, the
Intercreditor Agreement and the other Transaction Documents applicable to them. Copies of the Agency and
Accounts Agreement, the Rules of the Organisation of Noteholders, the Intercreditor Agreement and the other
Transaction Documents are available for inspection during normal business hours by the Noteholders at the
Specified Office of the Representative of the Noteholders and at the Specified Offices of the Principal Paying
Agent.
The Issuer has published to prospective Noteholders the prospetto informativo required by article 2 of Italian
law No. 130 of 30 April 1999 (disposizioni sulla cartolarizzazione dei crediti), as amended from time to time
(the “Securitisation Law”). Copies of the prospetto informativo will be available, upon request, to the holder
of any Note during normal business hours at the Specified Office of the Representative of the Noteholders and
at the Specified Offices of each of the Principal Paying Agent.
Any references below to a “Class” of Notes or a “Class” of Noteholders will be a reference to the Class A
Notes, the Class B Notes or the Junior Notes, as the case may be, or to the respective holders thereof,
respectively. References to “Noteholders” or to the “holders” of Notes are to the beneficial owners of the
Notes.
The principal source of funds available to the Issuer for the payment of amounts due on the Notes will be
collections and recoveries made in respect of the Claims. The Claims will be segregated from all other assets
of the Issuer by operation of the Securitisation Law and, pursuant to the Intercreditor Agreement, amounts
deriving therefrom will be available, both before and after a winding-up of the Issuer, to satisfy the
obligations of the Issuer to the Noteholders, to pay costs, fees and expenses due to the Other Issuer Creditors
under the Transaction Documents and to pay any other creditor of the Issuer in respect of costs, liabilities,
fees or expenses payable to any such other creditor in relation to the securitisation of the Claims by the Issuer
through the issuance of the Notes (the “Securitisation”).
The Servicer shall ensure the proper segregation of the Issuer’s accounting and property from
activities and the Servicer, as “soggetto incaricato della riscossione dei crediti e dei servizi di
pagamento” pursuant to article 2(6) of the Securitisation Law, shall be responsible for verifying
transactions to be carried out in connection with the Securitisation comply with applicable laws
consistent with the contents of the Prospectus.
its own
cassa e
that the
and are
Under the terms of the Mandate Agreement and the Intercreditor Agreement, the Issuer has, inter alia, granted
a mandate to the Representative of the Noteholders, pursuant to which, inter alia, following service of an
Issuer Acceleration Notice, the Representative of the Noteholders shall be authorised under article 1723,
second paragraph, of the Italian civil code, to exercise, in the name of the Issuer but in the interest and for the
benefit of the Noteholders and the Other Issuer Creditors, all the Issuer’s contractual rights arising out of the
Transaction Documents to which the Issuer is a party and in respect of the Claims, including the right to sell
them in whole or in part, in the interest of the Noteholders and the Other Issuer Creditors.
The Noteholders are entitled to the benefit of, are bound by, and are deemed to have notice of all the
provisions of the Transaction Documents applicable to them. In particular, each Noteholder, by reason of
holding one or more Notes, (a) recognises the Representative of the Noteholders as its representative, acting
in its name and on its behalf, and agrees to be bound by the terms of the Transaction Documents to which the
Representative of the Noteholders is a party as if such Noteholder was itself a signatory thereto, and (b)
acknowledges and accepts that the Underwriter shall not be liable in respect of any loss, liability, claim,
expense or damage suffered or incurred by any of the Noteholders as a result of the performance by BNP
Paribas Securities Services S.A., Milan Branch (or any permitted assignee or successor) of its duties as
Representative of the Noteholders provided in the Transaction Documents and these Conditions.
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91
1.
Definitions
(a)
In these Conditions:
“Accounts” means, collectively, the Collection Account, the Expenses Account, the Payments
Account, the Eligible Investments Securities Account (if any) and the Transaction Accounts, and
“Account” means any one of them;
“Accumulation Date” means, following the service of an Issuer Acceleration Notice, the earlier of: (i)
each date on which the amount of the monies at any time available to the Issuer or to the
Representative of the Noteholders for the payments to be made in accordance with the PostEnforcement Priority of Payments shall be equal to at least 10 per cent. of the aggregate Principal
Amount Outstanding of all Classes of Notes and (ii) each day falling 10 Business Days before the day
that, but for the service of an Issuer Acceleration Notice, would have been an Interest Payment Date;
“Arranger” means UBS Limited;
“BancaEtruria” means BancaEtruria Società Cooperativa;
“Basic Terms Modification” has the meaning given to it in the Rules of the Organisation of
Noteholders;
“Borrowers” means, collectively, the borrowers under the Mortgage Loans and “Borrower” means
any one of them;
“Business Day” means a day on which banks are open for business in Milan, Dublin and London and
which is a TARGET Settlement Day;
“Calculation Date” means the third Business Day prior to each Interest Payment Date;
“Cancellation Date” means the later of (i) the last Business Day in October 2052; (ii) the date when
the Portfolio Outstanding Amount will have been reduced to zero; and (iii) the date when all the
Claims then outstanding will have been entirely written off by the Issuer;
“Cash Reserve” means the monies standing to the credit of the Cash Reserve Account at any given
time;
“Cash Reserve Account” means a euro-denominated account opened by the Issuer with the
Transaction Bank, as better identified in the Agency and Accounts Agreement;
“Cash Reserve Excess” means, at the time the Target Cash Reserve Amount is reduced, the amount by
which the Cash Reserve exceeds the reduced Target Cash Reserve Amount but, for the avoidance of
doubt, does not include any Revenue Eligible Investments Amounts or interest accrued on the Cash
Reserve Account;
“Claims” has the meaning given to the term “Crediti” in the Transfer Agreement, which term
identifies the debt claims arising from the Mortgage Loans comprised in the Portfolio;
“Claims Transaction Account” a euro-denominated account opened by the Issuer with the
“Class A Notes Principal Deficiency Ledger” means the ledger established and maintained by the
Computation Agent in respect of the Class A Notes pursuant to the Agency and Accounts Agreement
where any Principal Deficiency Amount will be recorded as a debit entry in accordance with Condition
3(g) (Principal Deficiency Ledgers);
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92
“Class A Rate of Interest” has the meaning given in Condition 6(c) (Rate of interest on the Notes);
“Class B Notes Principal Deficiency Ledger” means the ledger established and maintained by the
Computation Agent in respect of the Class B Notes pursuant to the Agency and Accounts Agreement
“Class B Rate of Interest” has the meaning given in Condition 6(c) (Rate of interest on the Notes);
“Clearstream, Luxembourg” means Clearstream Banking, société anonyme;
“Collateral” means (i) prior to the occurrence of an Early Termination Date (as defined in the Swap
Agreement) for the Swap Transactions, the amount and/or securities (if any) standing to the credit of
the account into which the collateral posted pursuant to the Swap Agreement is held (the “Collateral
Account”); and (ii) following the date on which the Swap Transactions are terminated, the monies
and/or securities standing to the credit of the Collateral Account (if any) in an amount equal to the
Excess Swap Collateral;
“Collection Account” means a euro-denominated current account opened by the Issuer with the
Collection Account Bank, as better identified in the Agency and Accounts Agreement;
“Collection Date” means 6 January, 6 April, 6 July and 6 October of each year;
“Collection Period” means (a) prior to the service of an Issuer Acceleration Notice, each period
commencing on (but excluding) a Collection Date and ending on (and including) the next succeeding
Collection Date and in the case of the first Collection Period, the period commencing on the Valuation
Date (excluded) and ending on 6 April 2009 (included); and (b) following the service of an Issuer
Acceleration Notice, each period commencing on (but excluding) the last day of the preceding
Collection Period and ending on (and including) the immediately following Accumulation Date;
“Collection Policies” means the servicing and collection policies set out in schedule 1 to the Servicing
Agreement;
“Collections” means any monies from time to time paid, as of (but excluding) the Valuation Date, in
respect of the Mortgage Loans and the related Claims;
“CONSOB” means the Commissione Nazionale per le Società e la Borsa;
“Corporate Services Agreement” means the agreement dated the Signing Date between the
Corporate Servicer, the Representative of the Noteholders and the Issuer;
“Corporate Servicer” means BancaEtruria or any successor corporate servicer appointed from time to
time in respect of this Securitisation;
“Crediti ad Incaglio” means those Claims (A)(i) under which there are at least 6 (six) Unpaid
Instalments (in case of monthly payment) or at least 4 (four) Unpaid Instalments (in case of quarterly
payment) or at least 2 (two) Unpaid Instalments (in case of semi-annual payment) or (ii) which are
classified as delinquent (crediti ad incaglio) by the Servicer on behalf of the Issuer in accordance with
the Bank of Italy’s supervisory regulations and (B) which are not classified as Crediti in Sofferenza
yet;
“Crediti in Sofferenza” means those Claims classified as such by the Servicer on behalf of the Issuer
in accordance with the regulation of the Bank of Italy;
“Decree 239” means Italian legislative decree No. 239 of 1 April 1996, as subsequently amended;
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93
“Decree 239 Withholding” means any withholding or deduction for or on account of “imposta
sostitutiva” under Decree 239;
“Defaulted Claims” means those Claims (A) under which there are at least (i) 6 (six) Delinquent
Instalments (in case of monthly payment) or (ii) 2 (two) Delinquent Instalments (in case of quarterly
payment) or (iii) 2 (two) Delinquent Instalment (in case of semi-annual payment) or (B) are classified
as Crediti in Sofferenza by the Servicer;
“Delinquent Claims” means (A) those Claims under which there is 1 (one) Delinquent Instalment and
(B) which are not classified as Defaulted Claims.
“Delinquent Instalment” means an instalment which, at a given date, is due but not fully paid and
remains such for at least 30 days, following the date on which it should have been paid;
“Eligible Institution” means (i) any depository institution organised under the laws of any state which
is a member of the European Union or of the United States of America, whose short-term unsecured
and unsubordinated debt obligations are rated at least “F1” by Fitch; and (ii) BNP Paribas Securities
Services S.A., as Principal Paying Agent and Transaction Bank, for so long as (A) the unsecured and
unsubordinated debt obligations of BNP Paribas S.A. are rated at least “F1” by Fitch in respect of the
short-term debt; (B) BNP Paribas S.A. has guaranteed, in a manner satisfactory to Fitch, the payment
obligations of BNP Paribas Securities Services S.A., which may arise from the Transaction Documents
of which BNP Paribas Securities Services S.A., as Principal Paying Agent and Transaction Bank, is a
party;
“Eligible Investments” means:
(A)
euro-denominated senior (unsubordinated) debt securities or other debt instruments but
excluding, for the avoidance of doubt, credit-linked notes and money market funds, or
(B)
repurchase transactions, to the extent that title to the securities underlying such repurchase
transactions (in the period comprised between the execution of the relevant repurchase
transactions and their respective maturity) effectively passes to the Issuer, between the Issuer
and an Eligible Institution in respect of euro-denominated debt securities or other debt
instruments,
provided that, in all cases: (i) such investments are immediately repayable on demand, disposable
without penalty or have a maturity date falling on or before the next following Liquidation Date; (ii)
such investments provide a fixed principal amount at maturity (such amount not being lower than the
initially invested amount) and (iii) the debt securities or other debt instruments, or in the case of
repurchase transactions, the debt securities or other debt instruments underlying the repurchase
transactions, are issued by, or fully and unconditionally guaranteed on an unsubordinated basis by, an
institution whose unsecured and unsubordinated debt obligations are rated at least (A) “F1” by Fitch in
respect of short-term debt with regard to investments having a maturity of less than one month or (B)
“F1+” by Fitch in respect of short-term debt with regard to investments having a maturity between one
and three months, or such other rating in line with Fitch’s criteria;
“Eligible Investments Securities Account” means a securities account which, in accordance with the
Agency and Accounts Agreement, the Issuer will open with the Principal Paying Agent if it resolves to
invest in Eligible Investments;
“English Deed of Charge and Assignment” means the deed of charge and assignment to be executed
on or around the Issue Date between the Issuer and the Representative of the Noteholders and
governed by English law;
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94
“English Law Transaction Documents” means the Swap Agreement, the Swap Guarantee, the
Transaction Bank Guarantee, the English Deed of Charge and Assignment and the provisions of the
Agency and Accounts Agreement which are governed by English law;
“Equity Capital Account” means a euro-denominated deposit account opened with BancaEtruria into
which the Issuer’s equity capital of €10,000 shall remain deposited for as long as any Notes are
outstanding;
“EURIBOR” means:
(i)
prior to the service of an Issuer Acceleration Notice and in respect of each Interest Period, the
rate offered in the euro-zone inter-bank market for three-month deposits in euro (save that for
the first Interest Period the rate will be obtained upon linear interpolation of EURIBOR for twoand three-month deposits in euro) which appears on Bloomberg page EUR003M index in the
menu MMCV1 or (A) such other page as may replace the Bloomberg page EUR003M index in
the menu MMCV1 on that service for the purpose of displaying such information or (B) if that
service ceases to display such information, such page as displays such information on such
equivalent service (or, if more than one, that one which is approved by the Representative of the
Noteholders) as may replace the Bloomberg page EUR003M index (the “Screen Rate”) at or
about 11.00 a.m. (Brussels time) on the Interest Determination Date falling immediately before
the beginning of such Interest Period;
(ii)
following the service of an Issuer Acceleration Notice and in respect of each Interest Period, the
rate offered in the euro-zone inter-bank market for deposits in euro applicable in respect of such
Interest Period which appears on the Screen Rate nominated and notified by the Agent Bank for
such purpose or, if necessary, the relevant linear interpolation, as determined by the Agent Bank
in accordance with the Agency and Accounts Agreement at or about 11.00 a.m. (Brussels time)
on the Interest Determination Date which falls immediately before the end of the relevant
Interest Period; or
(iii)
if the Screen Rate is unavailable at such time for deposits in euro in respect of the relevant
period, then the rate for any relevant period shall be the arithmetic mean (rounded to four
decimal places with the mid-point rounded upwards) of the rates notified to the Agent Bank at
its request by each of the Reference Banks as the rate at which deposits in euro in respect of the
relevant period in a representative amount are offered by that Reference Bank to leading banks
in the euro-zone inter-bank market at or about 11.00 a.m. (Brussels time) on the relevant
Interest Determination Date; or
(iv)
if, at that time, the Screen Rate is unavailable and only two or three of the Reference Banks
provide such offered quotations to the Agent Bank, the relevant rate shall be determined, as
aforesaid, on the basis of the offered quotations of those Reference Banks providing such
quotations; or
(v)
if, at that time, the Screen Rate is unavailable and only one or none of the Reference Banks
provides the Agent Bank with such an offered quotation, the relevant rate shall be the rate in
effect for the immediately preceding period to which one of sub-paragraphs (i) or (ii) above
shall have applied;
“Euro” or “euro” or “€” means the currency introduced at the start of the third stage of European
economic and monetary union pursuant to the Treaty establishing the European Community (signed in
Rome on 25 March 1957), as amended;
“Euroclear” means Euroclear Bank S.A./N.V. as operator of the Euroclear System;
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95
“euro-zone” means the region comprising those member states of the European Union that adopted the
single currency in accordance with the Treaty establishing the European Community (signed in Rome
on 25 March 1957) as amended by the Treaty on European Union (signed in Maastricht on 7 February
1992) and the Treaty of Amsterdam (signed on 2 October 1997);
“Event of Default” has the meaning given to it in Condition 10 (Events of Default);
“Excess Swap Collateral” means an amount equal to the value of the collateral (or the applicable part
of any collateral) provided by the Swap Counterparty to the Issuer in respect of the Swap
Counterparty's obligations to transfer collateral to the Issuer under the Swap Agreement (as a result of
the ratings downgrade provisions in the Swap Agreement), which is in excess of the Swap
Counterparty’s liability to the Issuer under the Swap Agreement as at the date of termination of the
Swap Transactions, or which the Swap Counterparty is otherwise entitled to have returned to it under
the terms of the Swap Agreement;
“Expenses Account” means the euro-denominated current account opened by the Issuer with the
Collection Account Bank, as better identified in the Agency and Accounts Agreement;
“Extraordinary Resolution” has the meaning given to it in the Rules of the Organisation of
Noteholders;
“Financing Bank” means BancaEtruria in its capacity as financing bank under the Letter of
Undertaking or any permitted successor or assignee thereof;
“First Amortisation Interest Payment Date” means the Interest Payment Date falling in October
2010;
“Final Redemption Date” means the Interest Payment Date immediately following the earlier of: (i)
the date when the Portfolio Outstanding Amount will have been reduced to zero; and (ii) the date when
all the Claims then outstanding will have been entirely written off by the Issuer;
“Fitch” means Fitch Ratings Ltd.;
“Funds Provisioned for Amortisation” means, in respect of each Calculation Date, the amounts, if
any, retained in and/or credited to the Principal Account on the immediately preceding Interest
Payment Date under item (ii) of the Pre-Enforcement Principal Priority of Payments;
“Initial Execution Date” means 7 January 2009;
“Initial Portfolio Outstanding Amount” means the aggregate of the outstanding principal amount of
all the Claims as at the Valuation Date (net of any payments of principal due in respect of the Claims
as of, and including, the Valuation Date), being equal to €497,004,971.21;
“Insolvent” means, in respect of the Issuer, that:
(i)
the Issuer ceases or threatens to cease to carry on its business or a substantial part of its
business;
(ii)
the Issuer is deemed unable to pay its debts pursuant to or for the purposes of any applicable
law; or
(iii)
the Issuer becomes unable to pay its debts as they fall due;
“Instalment” means the scheduled monthly, quarterly or semi-annually payment falling due from the
relevant Borrower under a Mortgage Loan and which consists of an Interest Component and a
Principal Component;
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96
“Insurance Premia” means the insurance premia paid by the Originator and which are due to the
Originator by the Issuer in accordance with the Transfer Agreement;
“Intercreditor Agreement” means an intercreditor agreement dated the Signing Date between the
Issuer, the Noteholders (represented by the Representative of the Noteholders) and the Other Issuer
Creditors;
“Interest Amount” has the meaning given to it in Condition 6(e) (Calculation of Interest Amounts);
“Interest Amount Arrears” means the portion of the relevant Interest Amount for the Notes of any
Class, calculated pursuant to Condition 6(e) (Calculation of Interest Amounts), which remains unpaid
on the relevant Interest Payment Date including, for the avoidance of doubt, the Interest Amount
calculated in respect of the Class B Notes following the occurrence of the Class B Notes Trigger Event
or the Junior Notes following the occurrence of the Class B Notes Trigger Event or of the Junior
Trigger Event;
“Interest Available Funds” means, on each Calculation Date and in respect of the immediately
following Interest Payment Date, an amount equal to the sum of:
(i)
the Interest Components received by the Issuer in respect of the Mortgage Loans in the
Portfolio during the Collection Period immediately preceding such Calculation Date;
(ii)
without duplication of (i) above, an amount equal to the Interest Components invested in
Eligible Investments (if any) during the immediately preceding Collection Period from the
Claims Transaction Account, following liquidation thereof on the preceding Liquidation Date;
(iii)
all amounts of interest accrued on the Accounts and paid during the Collection Period
immediately preceding such Calculation Date;
(iv)
any amount due and payable, although not yet paid, to the Issuer by the Swap Counterparty in
accordance with the terms of the Swap Agreement on Interest Payment Date immediately
following the relevant Calculation Date;
(v)
without duplication of (i) and (iv) above, payments made to the Issuer by any other party to the
Transaction Documents during the Collection Period immediately preceding such Calculation
Date (other than the payments referred to in item (vii) of the definition of “Principal Available
Funds”);
(vi)
the Revenue Eligible Investments Amount realised on the preceding Liquidation Date, if any;
(vii)
any other amount standing to the credit of the Collection Account, the Claims Transaction
Account and the Payments Account as at the end of the Collection Period immediately
preceding the relevant Calculation Date but excluding those amounts constituting Principal
Available Funds and the amounts listed below;
(viii) on each Calculation Date, up to (but excluding) the Calculation Date immediately preceding the
Maturity Date, to the extent that the funds under (i) to (vii) (inclusive) above would not be
sufficient to make the payments falling due on the immediately following Interest Payment
Date under items (i) to (viii) of the Pre-Enforcement Interest Priority of Payments, the lower of
(i) that portion of the Cash Reserve which is equal to such shortfall and (ii) the Cash Reserve;
(ix)
any Cash Reserve Excess available for such purpose after repayment in full of the Subordinated
Loan; and
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(x)
on the earlier of the Calculation Date immediately preceding (A) the Maturity Date and (B) the
Interest Payment Date on which the Rated Notes will be redeemed in full, the amount standing
to the credit of the Cash Reserve Account at such date to the extent that such amounts have not
been utilised on the same date to augment the Principal Available Funds,
but excluding (i) any amount paid by the Swap Counterparty upon termination of the Swap
Transactions in respect of any termination payment and, until a replacement swap counterparty has
been found, exceeding the net amounts which would have been due and payable by the Swap
Counterparty with respect to the next Interest Payment Date, had the Swap Transactions not been
terminated; and (ii) the Collateral (if any);
“Interest Components” means the collections deriving from the interest component of each
Instalment and the amounts due in respect of expenses, commissions for direct debit payments,
collection commissions, Prepayment Fees, any recoveries received in respect of any Defaulted Claims
(including the interest components of any recoveries received in respect of any Defaulted Claims) and
any other amount which is not a Principal Component;
“Interest Determination Date” means:
(a)
prior to the service of an Issuer Acceleration Notice, in respect of each Interest Period, the date
falling two TARGET Settlement Days prior to the Interest Payment Date at the beginning of
such Interest Period;
(b)
following the service of an Issuer Acceleration Notice, in respect of each Interest Period, the
date falling two TARGET Settlement Days prior to the Interest Payment Date at the end of such
Interest Period;
“Interest Payment Date” means (a) prior to the service of an Issuer Acceleration Notice, 22 April
2009 (being the first Interest Payment Date) and, thereafter 22 July, 22 October, 22 January and 22
April in each year (or, if any such date is not a Business Day, that date will be the first following day
that is a Business Day unless that day falls in the next calendar month in which case that date will be
the first preceding day that is a Business Day) and (b) following the service of an Issuer Acceleration
Notice, the day falling 10 Business Days after the Accumulation Date (if any) or any other day on
which any payment is due to be made in accordance with the Post-Enforcement Priority of Payments,
the Conditions and the Intercreditor Agreement;
“Interest Period” has the meaning given to it in Condition 6(a) (Interest Payment Dates and Interest
Periods);
“Irish Stock Exchange” means Irish Stock Exchange Limited;
“Issuer” means Mecenate S.r.l.;
“Issuer Acceleration Notice” has the meaning given to it in Condition 10(b) (Service of an Issuer
Acceleration Notice);
“Issuer Available Funds” means (i) as of each Calculation Date prior to the service of an Issuer
Acceleration Notice, the aggregate of all Interest Available Funds and all Principal Available Funds
and (ii) as of each Calculation Date following the service of an Issuer Acceleration Notice, the
aggregate of the amounts received or recovered by or on behalf of the Issuer or the Representative of
the Noteholders in respect of the Claims, the Note Security and the Issuer’s Rights under the
Transaction Documents (but excluding the Collateral (if any));
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98
“Issuer Creditors” means (i) the Noteholders (represented, as the case may be, by the Representative
of the Noteholders); (ii) the Other Issuer Creditors; and (iii) any other third-party creditors in respect of
any taxes, costs, fees, liabilities or expenses incurred by the Issuer in relation to the Securitisation;
“Issuer Secured Creditors” means the Noteholders, the Representative of the Noteholders, the
Computation Agent, the Servicer, the Principal Paying Agent, the Agent Bank, the Collection Account
Bank, the Subordinated Loan Provider, the Transaction Bank, the Swap Counterparty, the Underwriter,
the Listing Agent, the Corporate Servicer and BancaEtruria (in respect of any monetary obligation due
to it by the Issuer under the Letter of Undertaking, the Transfer Agreement and the Warranty and
Indemnity Agreement);
“Issuer’s Rights” means the Issuer’s right, title and interest in and to the Claims, any rights that the
Issuer has acquired under the Transaction Documents and any other rights that the Issuer has acquired
against the Originator, any Other Issuer Creditors (including any applicable guarantors or successors)
or third parties for the benefit of the Noteholders in connection with the securitisation of the Claims;
“Italian Deed of Pledge” means a deed of pledge under Italian law to be executed on or around the
Issue Date between the Issuer and the Representative of the Noteholders acting on its own behalf and
on behalf of the other Issuer Secured Creditors;
“Italian Law Transaction Documents” means the Transfer Agreement, the Servicing Agreement, the
Warranty and Indemnity Agreement, the Corporate Services Agreement, the Intercreditor Agreement,
the Agency and Accounts Agreement, the Italian Deed of Pledge, the Mandate Agreement, the
Shareholders’ Agreement, the Letter of Undertaking, the Subordinated Loan Agreement, the
Underwriting Agreement, these Conditions and the Rules of the Organisation of Noteholders;
“Junior Notes Additional Interest Amount” means, on each Interest Payment Date:
(a)
prior to the service of an Issuer Acceleration Notice, the Interest Available Funds to be applied
on such Interest Payment Date minus all payments or provisions to be made under the PreEnforcement Interest Priority of Payments under items (i) to (xvii); or
(b)
following the service of an Issuer Acceleration Notice or in the event the Issuer opts for the
early redemption of the Notes under Condition 7(c) (Optional redemption of the Notes) or
Condition 7(d) (Optional redemption for taxation, legal or regulatory reasons), the Issuer
Available Funds minus all payments or provisions to be made under the Post-Enforcement
Priority of Payments under items (i) to (xiv);
“Junior Notes Additional Remuneration” means, on each Interest Payment Date:
(a)
prior to the service of an Issuer Acceleration Notice, the Principal Available Funds to be applied
on such Interest Payment Date minus all payments or provisions to be made under the PreEnforcement Principal Priority of Payments under items (i) to (ix); or
(b)
following the service of an Issuer Acceleration Notice or in the event the Issuer opts for the
early redemption of the Notes under Condition 7(c) (Optional redemption of the Notes) or
Condition 7(d) (Optional redemption for taxation, legal or regulatory reasons), an amount
equal to zero;
“Junior Notes Principal Deficiency Ledger” means the ledger established and maintained by the
Computation Agent in respect of the Junior Notes pursuant to the Agency and Accounts Agreement
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“Letter of Undertaking” means a letter of undertaking dated the Signing Date between the Issuer, the
Representative of the Noteholders and the Financing Bank;
“Liquidation Date” means the date falling two Business Days before each Calculation Date;
“Liquidity Ledger” means the ledger established and maintained by the Computation Agent in respect
of the Cash Reserve Account pursuant to the Agency and Accounts Agreement which will be used by
the Computation Agent to allocate monies from time to time standing to the credit of the Cash Reserve
Account;
“Liquidity Reserve” means the portion of the Cash Reserve which is allocated to the Liquidity Ledger
at any given time;
“Local Business Day” has the meaning given to it in Condition 8(c) (Payments on business days);
“Mandate Agreement” means a mandate agreement dated the Signing Date between the Issuer and
the Representative of the Noteholders;
“Maturity Date” has the meaning given to it in Condition 7(a) (Final redemption);
“Meeting” has the meaning given to it in the Rules of the Organisation of Noteholders;
“Monte Titoli” means Monte Titoli S.p.A.;
“Monte Titoli Account Holder” means any authorised institution entitled to hold accounts on behalf
of their customers with Monte Titoli (and includes any Relevant Clearing System which holds account
with Monte Titoli or any depository banks appointed by the Relevant Clearing System);
“Mortgage Loans” means, from time to time, the aggregate of the residential mortgage loans
comprised in the Portfolio, the Claims in respect of which have been transferred to the Issuer in
accordance with the Transfer Agreement and “Mortgage Loan” means any one of these;
“Most Senior Class” means, at any point in time:
(a)
the Class A Notes; or
(b)
if no Class A Notes are then outstanding, the Class B Notes; or
(c)
if no Class B Notes are then outstanding, the Junior Notes;
“Note Security” has the meaning given thereto in Condition 4 (Note Security);
“Organisation of Noteholders” means the organisation of the Noteholders created by the issue and
subscription of the Notes and regulated by the Rules of the Organisation of Noteholders attached
hereto as a schedule;
“Originator” means BancaEtruria, or any permitted successor or assignee thereof;
“Originator’s Claims” means, collectively, the monetary claims that the Originator may have from
time to time against the Issuer under the Transfer Agreement (other than in respect of the Purchase
Price) and the Warranty and Indemnity Agreement, and including, without limitation, the Rateo
Amounts, the Insurance Premia and all amounts due and payable to the Originator for the repayment of
any loan extended to the Issuer under clause 12.4 (Finanziamento spese di arbitraggio) of the Transfer
Agreement and clause 6.4.3 (Risoluzione delle contoversie) of the Warranty and Indemnity Agreement;
“Other Issuer Creditors” means, collectively, the Representative of the Noteholders, BancaEtruria (in
any capacity), the Servicer, the Transaction Bank, the Subordinated Loan Provider, the Corporate
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100
Servicer, the Collection Account Bank, the Computation Agent, the Principal Paying Agent, the Listing
Agent, the Agent Bank, the Swap Counterparty and the Underwriter;
“Outstanding Balance” means, on any date and in respect of each Defaulted Claim, the relevant
Outstanding Principal calculated as at the date when each such Claim was classified as a Defaulted
Claim minus the aggregate amount of recoveries received in respect of such Claim;
“Outstanding Principal” means, on any date and in respect of each Claim, the aggregate of all
Principal Components scheduled to be paid after such date and not yet paid together with the Principal
Components due and unpaid;
“Payments Account” means a euro-denominated current account opened by the Issuer with the
Principal Paying Agent, as better identified in the Agency and Accounts Agreement;
“Portfolio” means the aggregate of all Mortgage Loans;
“Portfolio Outstanding Amount” means, on each Interest Payment Date, the aggregate Outstanding
Principal of all the Claims as at the end of the immediately preceding Collection Period;
“Post-Enforcement Final Redemption Date” means the earlier to occur between: (i) the date when
the Notes are due for payment under Condition 7(c) (Optional redemption of the Notes) or Condition
7(d) (Optional redemption for taxation, legal or regulatory reasons) in the event that the Issuer opts
for the early redemption of the Notes in accordance therewith, (ii) the date when the Portfolio
Outstanding Amount will have been reduced to zero, and (iii) the date when all the Claims then
outstanding will have been entirely written off by the Issuer;
“Post-Enforcement Priority of Payments” means the provisions relating to the order of priority of
payments as set out in Condition 3(f) (Post-Enforcement Priority of Payments);
“Pre-Enforcement Interest Priority of Payments” means the provisions relating to the order of
priority of payments as set out in Condition 3(d) (Pre-Enforcement Interest Priority of Payments);
“Pre-Enforcement Principal Priority of Payments” means the provisions relating to the order of
priority of payments as set out in Condition 3(e) (Pre-Enforcement Principal Priority of Payments);
“Prepayment Fees” means the fees, if any, due from any Borrower who chooses voluntarily to prepay
his/her relevant Mortgage Loan;
“Previous Securitisations” means the securitisation transactions, completed in March 2002 and in
May 2007, involving the acquisition of receivables arising from two portfolios of residential mortgage
loans originated by BancaEtruria;
“Previous Transactions Documents” means the documents, deeds and agreements defined as
“Transaction Documents” in the offering circulars related to the Previous Securitisations;
“Principal Account” means a euro-denominated current account opened by the Issuer with the
“Principal Amount Outstanding” means, on any day:
(a)
in relation to each Class, the aggregate principal amount outstanding of all Notes in such Class;
and
(b)
in relation to a Note, the principal amount of that Note upon issue less the aggregate amount of
all Principal Payments in respect of that Note which have become due and payable (and which
have actually been paid) on or prior to that day;
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“Principal Available Funds” means, on each Calculation Date and in respect of the immediately
following Interest Payment Date, an amount equal to the sum of:
(i)
the Principal Components received by the Issuer in respect of the Mortgage Loans (other than
Defaulted Claims) in the Portfolio during the Collection Period immediately preceding such
Calculation Date;
(ii)
without duplication of (i) above, an amount equal to the Principal Components (other than those
relating to Defaulted Claims) invested in Eligible Investments (if any) during the immediately
preceding Collection Period from the Claims Transaction Account, following liquidation
thereof on the preceding Liquidation Date;
(iii)
the Principal Deficiency Ledger Amount calculated in respect of such Calculation Date;
(iv)
the Funds Provisioned for Amortisation as at such Calculation Date, if any;
(v)
any proceeds deriving from the sale of the Claims (other than Defaulted Claims) in accordance
with the Transaction Documents;
(vi)
any amount that will be credited and/or retained on the immediately following Interest Payment
Date under items (x) and (xi) of the Pre-Enforcement Interest Priority of Payments;
(vii)
payments made to the Issuer by the Originator (i) pursuant to the Warranty and Indemnity
Agreement and/or the Transfer Agreement during the Collection Period immediately preceding
such Calculation Date in respect of indemnities or damages for breach of representations or
warranties and (ii) in respect of indemnities or damages relating to principal or interest
components on any Claims which are not Defaulted Claims;
(viii) on the Calculation Date immediately preceding the Final Redemption Date and on any
Calculation Date thereafter, the balance standing to the credit of the Expenses Account at such
dates; and
(ix)
on the Calculation Date immediately preceding the Maturity Date, to the extent that the funds
under (i) to (viii) (inclusive) above would not be sufficient to repay, on the immediately
following Interest Payment Date, the Rated Notes in full and to make all other payments
ranking in priority thereto, the lower of: (i) that portion of the Cash Reserve which is equal to
such shortfall; and (ii) the Cash Reserve,
provided that, if on any Interest Payment Date, as a result of the application of the funds indicated
under item (i) to (ix) above, the Principal Amount Outstanding of the Rated Notes (considering
payments falling due on such Interest Payment Date) would be equal to, or lower than, the Liquidity
Reserve then available (excluding therefore the portion of the Liquidity Reserve utilised, if any, on the
same Interest Payment Date to augment the Interest Available Funds), than the Liquidity Reserve, or a
portion thereof, shall be used to augment the Principal Available Funds so as to allow a repayment in
full of all Rated Notes on such Interest Payment Date;
“Principal Components” means the principal component of each Instalment, including amounts
received upon prepayments of principal in respect of the Mortgage Loans;
“Principal Deficiency Amount” means, in respect of a Claim which has become a Defaulted Claim
during a Collection Period, the Outstanding Principal of such Defaulted Claim, calculated on the date
when such Claim has been qualified as a Defaulted Claim;
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102
“Principal Deficiency Ledger Amount” means, in respect of each Calculation Date immediately
preceding an Interest Payment Date, the amounts retained in and/or credited to the Principal Account
on such Interest Payment Date pursuant to items (vi), (viii) and (xii) of the Pre-Enforcement Interest
Priority of Payments;
“Principal Deficiency Ledgers” means the Class A Notes Principal Deficiency Ledger, the Class B
Notes Principal Deficiency Ledger and the Junior Notes Principal Deficiency Ledger and “Principal
Deficiency Ledger” means any one of these;
“Principal Payments” has the meaning given in Condition 7(e) (Mandatory redemption of the Notes);
“Priority of Payments” means, as the case may be, any of the Pre-Enforcement Principal Priority of
Payments, Pre-Enforcement Interest Priority of Payments or the Post-Enforcement Priority of
Payments;
“Purchase Price” has the meaning given to the term “Prezzo di Acquisto” in the Transfer Agreement,
which term identifies the purchase price of the Claims;
“Rate of Interest” means the Class A Rate of Interest, the Class B Rate of Interest or, as applicable,
the Junior Notes Rate of Interest;
“Rateo Amounts” means an amount equal to all interest accrued but not paid in respect of the
Mortgage Loans as at the Valuation Date (inclusive) being equal to €1,579,014.89, which will be paid
to the Originator in accordance with the applicable Priority of Payments;
“Reference Banks” means, initially, Barclays Bank PLC, Lloyds TSB Bank plc and HSBC Bank plc,
each acting through its principal London office and, if the principal London office of any such bank is
unable or unwilling to continue to act as a Reference Bank, the principal London office of such other
bank as the Issuer shall appoint and as may be approved in writing by the Representative of the
Noteholders to act in its place;
“Relevant Date” means, in respect of any payment in relation to the Notes, whichever is the later of:
(a)
the date on which the payment in question first becomes due; and
(b)
if the full amount payable has not been received by the Principal Paying Agent or the
Representative of the Noteholders on or prior to such date, the date on which, the full amount
having been so received, notice to that effect has been given to the Noteholders in accordance
with Condition 17 (Notices);
“Reporting Date” means 12 January, 12 April, 12 July and 12 October in each calendar year (or, if
any such date is not a day on which banks are open for general business in Arezzo, the immediately
preceding day that is a day on which banks are open for general business in Arezzo) with the first
Reporting Date falling on the Valuation Date;
“Retention Amount” means the amount of €50,000;
“Revenue Eligible Investments Amount” means, as at each Liquidation Date, any interest or other
remuneration on the Eligible Investments bought by or for the account of the Issuer other than
repayment of principal or repayment of the initial capital invested, as applicable, in respect of each
Eligible Investment;
“Secured Amounts” means all the amounts due, owing or payable by the Issuer, whether present or
future, actual or contingent, to the Noteholders under the Notes and the other Issuer Secured Creditors
pursuant to the relevant Transaction Documents;
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103
“Security Interest” means any mortgage, charge, pledge, lien, right of set-off, special privilege
(privilegio speciale), assignment by way of security, retention of title or any other security interest
whatsoever or any other agreement or arrangement having the effect of conferring security;
“Servicer” means BancaEtruria or any successor servicer appointed from time to time in respect of
this Securitisation;
“Servicer Report” means the report prepared and submitted by the Servicer to the Computation
Agent, the Swap Counterparty, Fitch, the Representative of the Noteholders, the Corporate Servicer,
the Arranger and the Issuer in the form set out in the Servicing Agreement and containing information
as to the Portfolio and any Collections in respect of the preceding Collection Period;
“Servicer’s Advance” means those amounts due to the Servicer under clauses 3.8 and 12.5(4) of the
Servicing Agreement;
“Servicing Agreement” means the servicing agreement dated the Initial Execution Date, and
subsequently amended on the Signing Date, between the Issuer and the Servicer;
“Shareholders’ Agreement” means the shareholders’ agreement in relation to the Issuer dated the
Signing Date between the Issuer, BancaEtruria, ConEtruria S.p.A., Finanziaria Italiana S.p.A. and the
Representative of the Noteholders;
“Specified Offices” has the meaning given in Condition 17(d) (Initial Specified Offices);
“Subordinated Loan” means €10,488,000;
“Subordinated Loan Agreement” means the subordinated loan agreement dated the Signing Date
between the Subordinated Loan Provider, the Representative of the Noteholders and the Issuer;
“Subordinated Loan Provider” means BancaEtruria, or any permitted successor or assignee thereof;
“Swap Agreement” means the 1992 ISDA Master Agreement (Multicurrency-Cross Border) and the
Schedule and credit support annex thereto executed on or around the Signing Date between the Issuer,
the Swap Counterparty and the Representative of the Noteholders, together with the Swap Transactions
executed thereunder on or around the Signing Date between the Issuer and the Swap Counterparty;
“Swap Counterparty” means UBS Limited or any successor swap counterparty appointed from time
to time in respect of this Securitisation;
“Swap Guarantor” means UBS AG or any successor swap guarantor appointed from time to time in
respect of this Securitisation;
“Swap Guarantee” means the guarantee provided by the Swap Guarantor guaranteeing the due and
punctual payment of all amounts payable by the Swap Counterparty under the Swap Agreement, when
the obligations of the Swap Counterparty become due and payable thereunder;
“Swap Transactions” means the swap transactions entered into between the Issuer and the Swap
Counterparty on the Signing Date and “Swap Transaction” means any one of those;
“Swap Trigger” means the occurrence of an early termination of one or all Swap Transactions due to
either
(a)
(i) the occurrence of an Initial Fitch Rating Event or a First Subsequent Fitch Rating Event or a
Second Subsequent Fitch Rating Event and (ii) the failure by the Swap Counterparty to take
such action as is required in the Swap Agreement to remedy such Initial Fitch Rating Event or
First Subsequent Fitch Rating Event or Second Subsequent Fitch Rating Event; or
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104
(b)
the occurrence of an Event of Default (as defined in the Swap Agreement (which, for the
avoidance of doubt, is not the same as an Event of Default under the Notes) and as designated
as such by the Issuer) in respect of the Swap Counterparty;
“Target Cash Reserve Amount” means €10,438,000 (being an amount equal to 2.10 per cent. of the
aggregate Principal Amount Outstanding of the Notes as at the Issue Date) save that:
(A)
(B)
upon repayment of at least 75 per cent. of the initial aggregate Principal Amount Outstanding of
the Class A Notes, the Target Cash Reserve Amount will be reduced to €3,000,000 (being an
amount equal to 0.6 per cent. of the aggregate Principal Amount Outstanding of the Notes as at
the Issue Date) provided that:
(A)
on each of the two immediately preceding Interest Payment Dates, the Cash Reserve
equals or exceeds the Target Cash Reserve Amount as at the relevant Interest Payment
Date (upon making all the payments and provisions to be made on such Interest Payment
Date);
(B)
the Principal Deficiency Ledgers are either zero or have been reduced to zero;
(C)
the aggregate Outstanding Principal of all Delinquent Claims as at the end of the
immediately preceding Collection Period does not exceed 7.0 per cent. of the Initial
Portfolio Outstanding Amount;
(D)
the aggregate Outstanding Principal of all Defaulted Claims as at the end of the
immediately preceding Collection Period does not exceed 3.5 per cent. of the Initial
Portfolio Outstanding Amount; and
(E)
on the Calculation Date immediately following the Interest Payment Date on which the Rated
Notes will be redeemed in full, the Target Cash Reserve Amount will be reduced to zero;
“TARGET Settlement Day” means any day on which the TARGET System is open;
“TARGET System” means the Trans-European Automated Real-Time Gross Settlement Express
Transfer (known as TARGET2) System which was launched on 19 November 2007 or any successor
thereto;
“Transaction Accounts” means the Claims Transaction Account, the Principal Account and the Cash
Reserve Account, and “Transaction Account” means any one of them;
“Transaction Bank Guarantee” means the guarantee provided by the Transaction Bank Guarantor
unconditionally guaranteeing the obligations of the Transaction Bank under the Agency and Accounts
Agreement;
“Transaction Bank Guarantor” means BNP Paribas S.A. or any successor Transaction Bank
guarantor appointed from time to time in respect of this Securitisation;
“Transaction Documents” means, collectively, the Italian Law Transaction Documents and the
English Law Transaction Documents;
“Transfer Agreement” means a transfer agreement dated the Initial Execution Date, and subsequently
amended on the Signing Date, between the Issuer and the Originator;
“Underwriter” means BancaEtruria in its capacity as underwriter of the Notes;
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105
“Unpaid Instalment” means an instalment which, at a given date, is due but not fully paid and
remains such for at least 15 days, following the date on which it should have been paid under the terms
of the relevant Mortgage Loan;
“Valuation Date” means 2 January 2009;
“Warranty and Indemnity Agreement” means a warranty and indemnity agreement dated the Initial
Execution Date, as amended on the Signing Date, between the Issuer and the Originator and amended
on the Signing Date.
(b)
In these Conditions, the following events are deemed to have occurred as set out below:
an “Initial Fitch Rating Event” will have occurred if the unsecured, unsubordinated debt obligations
of the Swap Counterparty (or the Swap Counterparty’s guarantor including, for so long as the Swap
Guarantee is in place, the Swap Guarantor) cease to be rated at least as high as:
(i)
“A” by Fitch (in respect of short-term debt); or
(ii)
“F1” by Fitch (in respect of long-term debt);
the “Class B Notes Trigger Event” will have occurred when the aggregate of the Outstanding
Principal of all Defaulted Claims, calculated on the date when each such Claim has been qualified as a
Defaulted Claim, is equal to or higher than 11.0 per cent. of the Initial Portfolio Outstanding Amount;
an “Insolvency Event” will have occurred in respect of the Issuer if:
(i)
the Issuer becomes subject to any applicable bankruptcy, liquidation, administration,
receivership, insolvency, composition or reorganisation (among which, without limitation,
fallimento, liquidazione coatta amministrativa, concordato preventivo, accordi di
ristrutturazione and amministrazione straordinaria, each such expression bearing the meaning
ascribed to it by the laws of the Republic of Italy, and including also any equivalent or
analogous proceedings under the law of the jurisdiction in which the Issuer is deemed to carry
on business including the seeking of liquidation, winding-up, reorganisation, dissolution,
administration, receivership, arrangement, adjustment, protection or relief of debtors) or similar
proceedings or the whole or any substantial part of the undertaking or assets of the Issuer are
subject to a pignoramento or similar procedure having a similar effect (other than any portfolio
of assets purchased by the Issuer for the purposes of further securitisation transactions), unless
in the opinion of the Representative of the Noteholders (who may in this respect rely on the
advice of a lawyer selected by it), such proceedings are being disputed in good faith with a
reasonable prospect of success;
(ii)
an application for the commencement of any of the proceedings under (a) above is made in
respect of or by the Issuer or the same proceedings are otherwise initiated against the Issuer
and, in the opinion of the Representative of the Noteholders (who may in this respect rely on
the advice of a lawyer selected by it), the commencement of such proceedings are not being
disputed in good faith with a reasonable prospect of success;
(iii)
the Issuer takes any action for a re-adjustment or deferment of any of its obligations or makes a
general assignment or an arrangement or composition with or for the benefit of its creditors
(other than the Issuer Secured Creditors) or is granted by a competent court a moratorium in
respect of any of its indebtedness or any guarantee of any indebtedness given by it or applies
for suspension of payments; or
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106
(iv)
an order is made or an effective resolution is passed for the winding-up, liquidation,
administration or dissolution in any form of the Issuer (except a winding-up for the purposes of
or pursuant to a solvent amalgamation or reconstruction, the terms of which have been
previously approved in writing by the Representative of the Noteholders) or any of the events
under article 2484 of the Italian civil code occurs with respect to the Issuer;
the “Junior Trigger Event” will have occurred when the aggregate of the Outstanding Principal of all
Defaulted Claims, calculated on the date when each such Claim has been qualified as a Defaulted
Claim, is equal to or higher than 3.50 per cent. of the Initial Portfolio Outstanding Amount;
the “Pro-Rata Amortisation Conditions” will be met in respect of a specific Interest Payment Date if:
(a)
on each of the two immediately preceding Interest Payment Dates, the Cash Reserve equals or
exceeds the Target Cash Reserve Amount as at the relevant Interest Payment Date (upon
making all the payments and provisions to be made on such Interest Payment Date); and
(b)
the Principal Deficiency Ledgers are either zero or have been reduced to zero; and
(c)
the aggregate Outstanding Principal of all Defaulted Claims as at the end of the immediately
Amount; and
(d)
the aggregate Outstanding Principal of all Delinquent Claims as at the end of the immediately
Amount; and
(e)
the aggregate Principal Amount Outstanding of the Class B Notes and the Junior Notes, as at
the immediately preceding Interest Payment Date, expressed as a percentage of the Principal
Amount Outstanding of the Notes as at the same date (in each case after deducting any
Principal Payment made on that Interest Payment Date) is at least twice the same percentage as
at the Issue Date; and
(f)
the Portfolio Outstanding Amount is higher than 10per cent. of the Initial Portfolio Outstanding
Amount; and
(g)
neither the Class B Notes Trigger Event nor the Junior Trigger Event shall have ever occurred;
and
(h)
a “First Subsequent Fitch Rating Event” will have occurred if the unsecured, unsubordinated debt
obligations of the Swap Counterparty (or the Swap Counterparty’s guarantor including, for so long as
the Swap Guarantee is in place, the Swap Guarantor) cease to be rated at least as high as:
(a)
“BBB+” by Fitch (in respect of short-term debt); or
(b)
“F2” by Fitch (in respect of short-term debt);
a “Second Subsequent Fitch Rating Event” will have occurred if the unsecured, unsubordinated debt
obligations of the Swap Counterparty (or the Swap Counterparty’s guarantor including, for so long as
the Swap Guarantee is in place, the Swap Guarantor) cease to be rated at least as high as:
(a)
“BBB-” by Fitch (in respect of short-term debt); or
(b)
“F3” by Fitch (in respect of short-term debt).
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107
For the purposes of the Conditions, payments made by the Swap Guarantor, in accordance with the
terms of the Swap Guarantee, shall be treated as if they were payments made by the Swap
Counterparty under the Swap Agreement.
2.
Form, denomination and title
(a)
Form
The Notes are in dematerialised form (emesse in forma dematerializzata) and will be wholly and
exclusively deposited with Monte Titoli in accordance with article 28 of Italian legislative decree No.
213 of 24 June 1998, through the authorised institutions listed in article 30 of such legislative decree.
(b)
Denomination
The Rated Notes are issued in the denomination of €50,000. The Junior Notes are issued in the
denomination of €1,000.
(c)
Title
The Notes will be held by Monte Titoli on behalf of the Noteholders until redemption and cancellation
for the account of each relevant Monte Titoli Account Holder. Monte Titoli shall act as depository for
Clearstream, Luxembourg and Euroclear. The Notes will at all times be in book entry form and title to
the Notes will be evidenced by book entries in accordance with: (i) the provisions of article 28 of
Italian legislative decree No. 213 of 24 June 1998; and (ii) the regulation issued by the Bank of Italy
and the Commissione Nazionale per le Società e la Borsa (“CONSOB”) on 22 February 2008, as
subsequently amended. No physical document of title will be issued in respect of the Notes.
(d)
Holder Absolute Owner
Except as ordered by a court of competent jurisdiction or as required by law, the Issuer, the
Representative of the Noteholders and to the Principal Paying Agent may (to the fullest extent
permitted by applicable laws) deem and treat the Monte Titoli Account Holder, whose account is at the
relevant time credited with a Note, as the absolute owner of such Note for the purposes of payments to
be made to the holders of such Note (whether or not the Note shall be overdue and notwithstanding
any notice to the contrary, any notice of ownership or writing on the Note or any notice of any
previous loss or theft of the Note) and shall not be liable for doing so.
3.
Status, ranking and priority
(a)
Status
The Notes are limited recourse obligations of the Issuer and, accordingly, the extent of the obligation
of the Issuer to make payments under the Notes is limited to the share of the Issuer Available Funds
available for such purpose in accordance with the applicable Priority of Payments. The Notes are
secured over certain assets of the Issuer pursuant to the Note Security. The Noteholders acknowledge
that the limited-recourse nature of the Notes produces the effects of a contratto aleatorio under Italian
law and they accept the consequences thereof, including but not limited to, the provisions of article
1469 of the Italian civil code. The rights arising from the Note Security are included in each Note.
(b)
Ranking
(i)
In respect of the obligations of the Issuer to pay interest on the Notes prior to the service of an
Issuer Acceleration Notice:
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108
(A)
the Class A Notes rank pari passu without any preference or priority amongst
(B)
the Class B Notes rank pari passu without any preference or priority amongst
themselves and in priority to the Junior Notes, but subordinate to the Class A Notes; and
(C)
the Junior Notes rank pari passu without any preference or priority amongst themselves,
but subordinate to the Rated Notes;
provided that,
(ii)
(iii)
(i)
for so long as there are Class A Notes outstanding, following the occurrence of the Class
B Notes Trigger Event, interest accruing on the Class B Notes will not be payable and
will be deferred until the Interest Payment Date when all the Class A Notes will be
redeemed in full, subject to the availability of Issuer Available Funds;
(ii)
for so long as there are Rated Notes outstanding, following the occurrence of the Junior
Trigger Event or of the Class B Notes Trigger Event, interest accruing on the Junior
Notes will not be payable and will be deferred until the Interest Payment Date when all
the Rated Notes will be redeemed in full, subject to the availability of Issuer Available
Funds;
in respect of the obligations of the Issuer to repay principal on the Notes, prior to the service of
an Issuer Acceleration Notice and if, and for so long as, the Pro-Rata Amortisation Conditions
are not met:
(A)
the Class A Notes rank pari passu and without any preference or priority amongst
themselves and in priority to repayment of principal on the Class B Notes and the Junior
Notes;
(B)
the Class B Notes rank pari passu and without any preference or priority amongst
themselves but subordinate to repayment of principal on the Class A Notes and in
priority to repayment of principal on the Junior Notes and no amount of principal in
respect of the Class B Notes shall become due and payable or be repaid until redemption
in full of the Class A Notes; and
(C)
the Junior Notes rank pari passu and without any preference or priority amongst
themselves but subordinate to repayment of principal on the Rated Notes and no amount
of principal in respect of the Junior Notes shall become due and payable or be repaid
until redemption in full of the Rated Notes;
in respect of the obligations of the Issuer to repay principal on the Notes, prior to the service of
an Issuer Acceleration Notice and if, and for so long as, the Pro-Rata Amortisation Conditions
are met:
(A)
all Classes of Rated Notes will rank pari passu and without any preference or priority
among themselves and in priority to the Junior Notes; and
(B)
the Junior Notes rank pari passu and without any preference or priority amongst
themselves but subordinate to repayment of principal on the Rated Notes and no amount
of principal in respect of the Junior Notes shall become due and payable or be repaid
until redemption in full of the Rated Notes;
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109
(iv)
(v)
(c)
in respect of the obligations of the Issuer (a) to pay interest and (b) to repay principal on the
Notes following the service of an Issuer Acceleration Notice:
(A)
the Class A Notes will rank pari passu without any preference or priority amongst
(B)
the Class B Notes will rank pari passu without any preference or priority amongst
themselves, but subordinate to payment in full of all amounts due under the Class A
Notes and in priority to the Junior Notes; and
(C)
the Junior Notes will rank pari passu without any preference or priority amongst
themselves, but subordinate to payment in full of all amounts due under the Rated Notes.
The Intercreditor Agreement and the Rules of the Organisation of Noteholders provide that the
Representative of the Noteholders shall have regard to the respective interests of all
Noteholders in connection with the exercise of the powers, authorities, rights, duties and
discretions of the Representative of the Noteholders under or in relation to the Notes or any of
the Transaction Documents. If, however, in the opinion of the Representative of the
Noteholders, there is a conflict between the interests of the Class A Noteholders and the
interests of the holders of any other Classes of Notes, the Representative of the Noteholders is
required under the Intercreditor Agreement and the Rules of the Organisation of Noteholders to
have regard only to the interests of the Class A Noteholders, until the Class A Notes have been
entirely redeemed. Once the Class A Notes have been entirely redeemed, if in the opinion of the
Representative of the Noteholders there is a conflict between the interests of the Class B
Noteholders and the interests of the Junior Noteholders, the Representative of the Noteholders
is required to have regard only to the interests of the Class B Noteholders, until the Class B
Notes have been entirely redeemed.
Sole obligations
The Notes are obligations solely of the Issuer and are not obligations of, or guaranteed by, any other
parties to the Transaction Documents.
(e)
Pre-Enforcement Interest Priority of Payments
Prior to the service of an Issuer Acceleration Notice, the Interest Available Funds as calculated on each
Calculation Date will be applied by the Issuer on the Interest Payment Date immediately following
such Calculation Date in making payments or provisions in the following order of priority (the “PreEnforcement Interest Priority of Payments”) but, in each case, only if and to the extent that
payments or provisions of a higher priority have been made in full:
(i)
first, in or towards satisfaction, pro rata and pari passu, according to the respective amounts
thereof, of any and all outstanding taxes due and payable by the Issuer in relation to this
Securitisation (to the extent that amounts standing to the credit of the Expenses Account are
insufficient to pay such costs and to the extent not paid by BancaEtruria under the Transaction
Documents);
(ii)
second, in or towards satisfaction, pro rata and pari passu, according to the respective amounts
thereof, of:
(A)
any and all outstanding fees, costs, liabilities and any other expenses to be paid in order
to preserve the corporate existence of the Issuer, to maintain it in good standing, to
comply with applicable legislation and to fulfil obligations of the Issuer to third parties
(not being Other Issuer Creditors) incurred in relation to this Securitisation (to the extent
//
110
that amounts standing to the credit of the Expenses Account are insufficient to pay such
costs and to the extent not paid by BancaEtruria under the Transaction Documents);
(B)
any and all outstanding fees, costs, expenses and taxes required to be paid in connection
with the listing, deposit or ratings of the Notes, or any notice to be given to the
Noteholders or the other parties to the Transaction Documents (to the extent that
amounts standing to the credit of the Expenses Account are insufficient to pay such
costs);
(C)
any and all outstanding fees, costs and expenses of and all other amounts due and
payable to the Representative of the Noteholders or any appointee thereof; and
(D)
the amount necessary to replenish the Expenses Account up to the Retention Amount;
(iii)
third, in or towards satisfaction, pro rata and pari passu, according to the respective amounts
thereof, of any and all outstanding fees, costs and expenses of and all other amounts due and
payable to the Principal Paying Agent, the Listing Agent, the Agent Bank, the Computation
Agent, the Servicer, the Corporate Servicer, the Collection Account Bank and the Transaction
Bank, each under the Transaction Document(s) to which each of them is a party;
(iv)
fourth, in or towards satisfaction of all amounts due and payable to the Swap Counterparty
under the terms of the Swap Agreement other than any termination payment due to the Swap
Counterparty following the occurrence of a Swap Trigger but including, in any event, the
amount of any termination payment due and payable to the Swap Counterparty in relation to the
termination of the Swap Transactions to the extent of any premium received (net of any costs
reasonably incurred by the Issuer to find a replacement swap counterparty), if any, by the Issuer
from a replacement swap counterparty in consideration for entering into swap transactions with
the Issuer on the same terms as the Swap Transactions;
(v)
fifth, in or towards satisfaction, pro rata and pari passu, of all amounts of interest due and
payable on the Class A Notes;
(vi)
sixth, in or towards reduction of the Class A Notes Principal Deficiency Ledger to zero;
(vii)
seventh,
(A)
for so long as there are Class A Notes outstanding, on each Interest Payment Date up to
(but excluding) the Interest Payment Date following the occurrence of the Class B Notes
Trigger Event; and
(B)
on the Interest Payment Date on which the Class A Notes are redeemed in full and on
each Interest Payment Date thereafter, in each case regardless of the occurrence of the
Class B Notes Trigger Event,
in or towards satisfaction, pro rata and pari passu, of all amounts of interest due and payable on
the Class B Notes;
(viii) eighth, in or towards reduction of the Class B Notes Principal Deficiency Ledger to zero;
(ix)
ninth, for so long as there are Rated Notes of any Class outstanding, to credit the Cash Reserve
Account with the amount required, if any, such that the Cash Reserve equals the Target Cash
Reserve Amount;
(x)
tenth, to credit to or retain in the Principal Account an amount equal to the portion of Principal
Available Funds utilised under item (i) of the Pre-Enforcement Principal Priority of Payments
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111
on the preceding Interest Payment Date or, to the extent that such amounts have not already
been credited to or retained in the Principal Account, on any preceding Interest Payment Date;
(xi)
eleventh, for so long as there are Rated Notes of any Class outstanding, on each Interest
Payment Date following the occurrence of the Junior Trigger Event or of the Class B Notes
Trigger Event, to credit and/or retain the remainder of the Interest Available Funds to the
Principal Account;
(xii)
twelfth, in or towards reduction of the Junior Notes Principal Deficiency Ledger to zero;
(xiii) thirteenth,
(A)
(B)
for so long as there are Rated Notes of any Class outstanding, provided that neither the
Junior Trigger Event nor the Class B Notes Trigger Event has occurred, in or towards
satisfaction of:
(I)
all amounts of interest due and payable to the Subordinated Loan Provider under
the Subordinated Loan Agreement; and
(II)
all amounts of principal due and payable to the Subordinated Loan Provider
under the Subordinated Loan Agreement; and
on the Interest Payment Date on which the Class B Notes are redeemed in full and on
each Interest Payment Date thereafter, in each case regardless of whether either the
Junior Trigger Event or the Class B Notes Trigger Event has occurred, in or towards
satisfaction of:
(I)
all amounts of interest due and payable to the Subordinated Loan Provider under
the Subordinated Loan Agreement; and
(II)
all amounts of principal due and payable to the Subordinated Loan Provider
under the Subordinated Loan Agreement;
(xiv) fourteenth,
(xv)
(A)
for so long as there are Rated Notes of any Class outstanding, on each Interest Payment
Date, provided that neither the Junior Trigger Event nor the Class B Notes Trigger Event
has occurred, in or towards satisfaction, pro rata and pari passu, of all amounts of
interest due and payable on the Junior Notes (other than the Junior Notes Additional
Interest Amount and the Junior Notes Additional Remuneration); and
(B)
on the Interest Payment Date on which the Class B Notes are redeemed in full and on
each Interest Payment Date thereafter, in each case regardless of whether either the
Junior Trigger Event or the Class B Notes Trigger Event has occurred, in or towards
satisfaction, pro rata and pari passu, of all amounts of interest due and payable on the
Junior Notes (other than the Junior Notes Additional Interest Amount and the Junior
Notes Additional Remuneration);
fifteenth, in or towards satisfaction of any termination payment due and payable to the Swap
Counterparty under the terms of the Swap Agreement following the occurrence of a Swap
Trigger other than the payments referred to under item (iv) above;
(xvi) sixteenth, in or towards satisfaction, pro rata and pari passu, according to the respective
amounts thereof, of:
//
112
(A)
all amounts due and payable to BancaEtruria in respect of Originator’s Claims (if any)
under the terms of the Transaction Documents;
(B)
all amounts due and payable to the Servicer as Servicer’s Advance (if any) under the
terms of the Servicing Agreement; and
(C)
in connection with a limited recourse loan under the Letter of Undertaking;
(xvii) seventeenth, in or towards satisfaction, pro rata and pari passu, according to the respective
amounts thereof, of any and all outstanding fees, costs, liabilities and any other expenses to be
paid to fulfil obligations to any Other Issuer Creditor incurred in the course of the Issuer’s
business in relation to this Securitisation, including all amounts due and payable to the
Underwriter under the terms of the Underwriting Agreement (other than amounts already
provided for in this Pre-Enforcement Interest Priority of Payments); and
(xviii) eighteenth, in or towards satisfaction, pro rata and pari passu, of the Junior Notes Additional
Interest Amount (if any) due and payable on the Junior Notes.
From time to time, during an Interest Period, the Issuer shall, in accordance with the Agency and
Accounts Agreement, be entitled to apply amounts standing to the credit of the Expenses Account in
respect of certain monies which properly belong to third parties, other than the Noteholders and the
Other Issuer Creditors, in order to preserve the corporate existence of the Issuer or to maintain it in
good standing or to comply with applicable legislation, and in payment of sums due to third parties,
other than the Noteholders and the Other Issuer Creditors, under obligations incurred in the course of
the Issuer’s business.
(f)
Pre-Enforcement Principal Priority of Payments
Prior to the service of an Issuer Acceleration Notice, the Principal Available Funds as calculated on
each Calculation Date will be applied by the Issuer on the Interest Payment Date immediately
following such Calculation Date in making payment or provision in the following order of priority (the
“Pre-Enforcement Principal Priority of Payments” and, together with the Pre-Enforcement Interest
Priority of Payments, the “Pre-Enforcement Priority of Payments”) but, in each case, only if and to
the extent that payments or provisions of a higher priority have been made in full:
(i)
first, to pay all the amounts due under items (i) to (vii) of the Pre-Enforcement Interest Priority
of Payments (with the exclusion of item (vi)) to the extent not paid under the Pre-Enforcement
Interest Priority of Payments due to insufficiency of Interest Available Funds;
(ii)
second, on each Interest Payment Date up to, but excluding, the First Amortisation Interest
Payment Date, to credit or retain, as the case may be, all such amounts to the Principal Account;
(iii)
third, on the First Amortisation Interest Payment Date and on each Interest Payment Date
thereafter:
(A)
if the Pro-Rata Amortisation Conditions are not met on such Interest Payment Date, in or
towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of the
Class A Notes until the Class A Notes are repaid in full;
(B)
if the Pro-Rata Amortisation Conditions are met on such Interest Payment Date, in or
towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of all
Classes of Rated Notes;
//
113
(iv)
fourth, upon repayment in full of the Class A Notes and following the occurrence of the Class B
Notes Trigger Event, in or towards satisfaction, pro rata and pari passu, of all amounts of
interest due and payable on the Class B Notes to the extent not already paid under item (vii) of
the Pre-Enforcement Interest Priority of Payments;
(v)
fifth, upon repayment in full of the Class A Notes, in or towards repayment, pro rata and pari
passu, of the Principal Amount Outstanding of the Class B Notes;
(vi)
sixth, upon repayment in full of the Class B Notes, in or towards satisfaction of all amounts of
principal due and payable to the Subordinated Loan Provider under the Subordinated Loan
Agreement, if any, to the extent not paid under items (xiii)(A)(II) or (xiii)(B)(II) of the PreEnforcement Interest Priority of Payments;
(vii)
seventh, upon repayment in full of the Class B Notes and following the occurrence of the Junior
Trigger Event or of the Class B Notes Trigger Event, in or towards satisfaction, pro rata and
pari passu, of all amounts of interest due and payable on the Junior Notes under item (xiv) of
the Pre-Enforcement Interest Priority of Payments to the extent not already paid under the same
item;
(viii) eighth, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding
of the Junior Notes until the Principal Amount Outstanding of the Junior Notes is equal to
€50,000;
(g)
(ix)
ninth, on the Final Redemption Date and on any Interest Payment Date thereafter, in or towards
repayment, pro rata and pari passu, of the Principal Amount Outstanding of the Junior Notes
until the Junior Notes are redeemed in full; and
(x)
tenth, up to but excluding the Final Redemption Date, in or towards satisfaction, pro rata and
pari passu, of the Junior Notes Additional Remuneration (if any) due and payable on the Junior
Notes.
Post-Enforcement Priority of Payments
Following the service of an Issuer Acceleration Notice, or, in the event that the Issuer opts for the early
redemption of the Notes under Condition 7(c) (Optional redemption of the Notes) or Condition 7(d)
(Optional redemption for taxation, legal or regulatory reasons), the Issuer Available Funds as
calculated on each Calculation Date will be applied by or on behalf of the Representative of the
Noteholders on the Interest Payment Date immediately following such Calculation Date in making
payments or provisions in the following order (the “Post-Enforcement Priority of Payments”) but, in
each case, only if and to the extent that payments of a higher priority have been made in full:
(i)
first, in or towards satisfaction, pro rata and pari passu, according to the respective amounts
thereof, of any and all outstanding taxes to be paid in order to preserve the corporate existence
of the Issuer, to maintain it in good standing and to comply with applicable legislation, incurred
in relation to this Securitisation (to the extent that amounts standing to the credit of the
Expenses Account are insufficient to pay such costs and to the extent not paid by BancaEtruria
under the Transaction Documents and to the extent the Issuer is not already subject to any
insolvency or analogous proceeding);
(ii)
second, in or towards satisfaction, pro rata and pari passu, according to the respective amounts
thereof, of:
(A)
any and all outstanding fees, costs, liabilities and any other expenses to be paid in order
to preserve the corporate existence of the Issuer, to maintain it in good standing, to
//
114
comply with applicable legislation and to fulfil obligations of the Issuer to third parties
(not being Other Issuer Creditors) incurred in relation to this Securitisation (to the extent
that amounts standing to the credit of the Expenses Account are insufficient to pay such
costs and to the extent not paid by BancaEtruria under the Transaction Documents and to
the extent the Issuer is not already subject to any insolvency or analogous proceeding);
(B)
any and all outstanding fees, costs, expenses and taxes required to be paid in connection
with the listing, deposit or ratings of the Notes, or any notice to be given to the
Noteholders or the other parties to the Transaction Documents (to the extent that
amounts standing to the credit of the Expenses Account are insufficient to pay such costs
and to the extent the Issuer is not already subject to any insolvency or analogous
proceeding); and
(C)
any and all outstanding fees, costs and expenses of, and all other amounts due and
payable to, the Representative of the Noteholders or any appointee thereof;
(iii)
third, in or towards satisfaction, pro rata and pari passu, according to the respective amounts
thereof, of any and all outstanding fees, costs and expenses of and all other amounts due and
payable to the Principal Paying Agent, the Listing Agent, the Agent Bank, the Computation
Agent, the Servicer, the Corporate Servicer, the Collection Account Bank and the Transaction
Bank, each under the Transaction Document(s) to which each of them is a party;
(iv)
fourth, in or towards satisfaction of all amounts due and payable to the Swap Counterparty
under the terms of the Swap Agreement other than any termination payment due to the Swap
Counterparty following the occurrence of a Swap Trigger but including, in any event, the
amount of any termination payment due and payable to the Swap Counterparty in relation to the
termination of the Swap Transactions to the extent of any premium received (net of any costs
reasonably incurred by the Issuer to find a replacement swap counterparty), if any, by the Issuer
from a replacement swap counterparty in consideration for entering into swap transactions with
the Issuer on the same terms as the Swap Transactions;
(v)
fifth, in or towards satisfaction, pro rata and pari passu, of all amounts due and payable in
respect of interest (including any interest accrued but unpaid) on the Class A Notes at such date;
(vi)
sixth, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of
the Class A Notes;
(vii)
seventh, in or towards satisfaction, pro rata and pari passu, of all amounts due and payable in
respect of interest (including any interest accrued but unpaid) on the Class B Notes at such date;
(viii) eighth, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding
of the Class B Notes;
(ix)
ninth, in or towards satisfaction of any termination payment due and payable to the Swap
Counterparty under the terms of the Swap Agreement following the occurrence of a Swap
Trigger other than the payments referred to under item (iv) above;
(x)
tenth, in or towards satisfaction of:
(a)
all amounts of interest due and payable to the Subordinated Loan Provider (including
any interest accrued but unpaid) under the Subordinated Loan Agreement; and
(b)
all amounts of principal due and payable to the Subordinated Loan Provider under the
Subordinated Loan Agreement;
//
115
(xi)
(xii)
eleventh, in or towards satisfaction, pro rata and pari passu, according to the respective
amounts thereof, of all amounts due and payable to BancaEtruria:
(A)
in connection with a limited recourse loan under the Letter of Undertaking;
(B)
in respect of Originator’s Claims (if any) under the terms of the Transaction Documents;
and
(C)
all amounts due and payable to the Servicer as Servicer’s Advance (if any) under the
terms of the Servicing Agreement;
twelfth, in or towards repayment, pro rata and pari passu, of all amounts due and payable in
respect of interest (including any interest accrued but unpaid) on the Junior Notes at such date
(but excluding all amounts due and payable in respect of the Junior Notes Additional Interest
Amount at such date);
(xiii) thirteenth, in or towards repayment, pro rata and pari passu, of the Principal Amount
Outstanding of the Junior Notes until the Principal Amount Outstanding of the Junior Notes is
equal to €50,000;
(xiv) fourteenth, on the Post-Enforcement Final Redemption Date and on any date thereafter, in or
towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of the Junior
Notes until the Junior Notes are redeemed in full; and
(xv)
fifteenth, up to but excluding the Post-Enforcement Final Redemption Date, in or towards
satisfaction, pro rata and pari passu, of all amounts due and payable in respect of the Junior
Notes Additional Interest Amount at such date,
provided, however, that if the amount of the monies at any time available to the Issuer or to the
Representative of the Noteholders for the payments above shall be less than 10 per cent. of the
Principal Amount Outstanding of all Classes of Notes, the Representative of the Noteholders may at its
discretion invest such monies in some or one of the investments authorised pursuant to the
Intercreditor Agreement. The Representative of the Noteholders at its discretion may vary such
investments and may accumulate such investments and the resulting income until the immediately
following Accumulation Date.
The Issuer is entitled, pursuant to the Intercreditor Agreement, to dispose of the Claims in order to
finance the redemption of the Notes following the service of an Issuer Acceleration Notice.
In the event that the Issuer redeems any Notes in whole or in part prior to the date which is 18 months
after the Issue Date, the Issuer will be required to pay a tax in Italy equal to 20 per cent. of all interest
accrued on such principal amount repaid early up to the relevant repayment date. This requirement will
apply whether or not the redemption takes place following an Event of Default under the Notes or
pursuant to any requirement of the Issuer to redeem Notes following the service of an Issuer
Acceleration Notice in connection with any such Event of Default. Consequently, following an Event
of Default, the Issuer may, with the consent of the Representative of the Noteholders, and shall, if so
instructed by the Representative of the Noteholders, delay the redemption of the Notes until the end of
such 18-month period.
(h)
Principal Deficiency Ledgers
The Computation Agent will record the Principal Deficiency Amounts arising in connection with the
immediately preceding Collection Period in the Principal Deficiency Ledgers by debiting any Principal
Deficiency Amount in respect of the Claims as follows:
//
116
(i)
(i)
first, to the Junior Notes Principal Deficiency Ledger so long as, and to the extent that, the debit
balance of the Junior Notes Principal Deficiency Ledger is less than or equal to the Principal
Amount Outstanding on the Junior Notes (taking into account any Principal Deficiency Amount
previously debited to such Junior Notes Principal Deficiency Ledger and in respect of which
funds have not yet been allocated in accordance with the Pre-Enforcement Interest Priority of
Payments); and
(ii)
second, to the Class B Notes Principal Deficiency Ledger so long as, and to the extent that, the
debit balance of the Class B Notes Principal Deficiency Ledger is less than or equal to the
Principal Amount Outstanding on the Class B Notes (taking into account any Principal
Deficiency Amount previously debited to such Class B Notes Principal Deficiency Ledger and
in respect of which funds have not yet been allocated in accordance with the Pre-Enforcement
Interest Priority of Payments); and
(iii)
third, to the Class A Notes Principal Deficiency Ledger so long as, and to the extent that, the
debit balance of the Class A Notes Principal Deficiency Ledger is less than or equal to the
Principal Amount Outstanding on the Class A Notes (taking into account any Principal
Deficiency Amount previously debited to such Class A Notes Principal Deficiency Ledger and
in respect of which funds have not yet been allocated in accordance with the Pre-Enforcement
Interest Priority of Payments).
Expenses
From time to time, during an Interest Period, the Issuer shall, in accordance with the Agency and
Accounts Agreement, be entitled to apply amounts standing to the credit of the Expenses Account in
respect of certain monies which properly belong to third parties, other than the Noteholders and the
Other Issuer Creditors in order to preserve the corporate existence of the Issuer or to maintain it in
good standing or to comply with applicable legislation, and in payment of sums due to third parties,
other than the Noteholders and the Other Issuer Creditors, under obligations incurred in the course of
the Issuer’s business.
4.
Note Security
As security for the discharge of the Secured Amounts, the Issuer will create, pursuant to the Italian Deed of
Pledge and the English Deed of Charge and Assignment, the following security (together, the “Note
Security”):
(i)
concurrently with the issue of the Notes, in favour of the Representative of the Noteholders for itself
and on behalf of the Noteholders and the other Issuer Secured Creditors, an Italian law pledge over all
monetary claims and rights and all the amounts (including payment for claims, indemnities, damages,
penalties, credits and guarantees) to which the Issuer is entitled from time to time pursuant to the
Transfer Agreement, the Warranty and Indemnity Agreement, the Agency and Accounts Agreement
(other than in respect of certain provisions of the Agency and Accounts Agreement which are governed
by English law), the Servicing Agreement, the Intercreditor Agreement, the Corporate Services
Agreement, the Letter of Undertaking, the Subordinated Loan Agreement, the Underwriting
Agreement and the Shareholders’ Agreement;
(ii)
concurrently with the issue of the Notes, in favour of the Representative of the Noteholders for itself
and as trustee for the Noteholders and the other Issuer Secured Creditors, (a) an English law charge
over the Transaction Accounts and the Eligible Investments from time to time owned by the Issuer; (b)
an English law assignment by way of security of all the Issuer’s rights under the Swap Agreement and
the Swap Guarantee, the provisions of the Agency and Accounts Agreement which are governed by
//
117
English law, the Transaction Bank Guarantee and all future contracts, agreements, deeds and
documents governed by English law to which the Issuer may become a party in relation to the Notes,
the Claims and the Portfolio; and (c) a floating charge over all of the Issuer’s assets which are subject
to the charge and assignments described under (a) and (b) above and not effectively assigned
thereunder.
The rights arising from the Note Security in favour of the Noteholders which are incorporated in each of the
Notes are transferred together with the transfer of any Note at the time of transfer of such Note. Each holder
of any of the Notes from time to time will have the benefit of such rights.
In addition, by operation of Italian law, the Issuer’s right, title and interest in and to the Claims is segregated
from all other assets of the Issuer and amounts deriving therefrom will be available both prior to and
following a winding-up of the Issuer only to satisfy the obligations of the Issuer to the Noteholders and the
other Issuer Creditors in accordance with the Priority of Payments.
5.
Covenants
(a)
Covenants by the Issuer
For so long as any Note remains outstanding, the Issuer, save with the prior written consent of the
Representative of the Noteholders and the Swap Counterparty or as provided in or envisaged by these
Conditions or any of the Transaction Documents, shall not, nor shall cause or permit (to the extent
permitted by Italian law), shareholders’ meetings to be convened in order to:
(i)
Negative pledge
create or permit to subsist any Security Interest whatsoever upon, or with respect to the Claims,
or any part thereof or any of its present or future business, undertaking, assets or revenues
relating to this Securitisation or undertakings (other than under the Note Security) or sell, lend,
part with or otherwise dispose of all or any part of the Claims, or any part thereof or any of its
present or future business, undertaking, assets or revenues relating to this Securitisation whether
in one transaction or in a series of transactions;
(ii)
(iii)
Restrictions on activities
(A)
without prejudice to Condition 5(b) (Further securitisations and corporate existence)
below, engage in any activity whatsoever which is not incidental to or necessary in
connection with any of the activities in which the Transaction Documents provide or
envisage that the Issuer will engage;
(B)
have any subsidiary (societá controllata) or affiliate company (societá collegata) (as
defined in article 2359 of the Italian civil code) or any employees or premises;
(C)
at any time approve or agree or consent to any act or thing whatsoever which is
materially prejudicial to the interests of the Noteholders under the Transaction
Documents or do, or permit to be done, any act or thing in relation thereto which is
materially prejudicial to the interests of the Noteholders under the Transaction
Documents; or
(D)
become the owner of any real estate asset;
Dividends or distributions
pay any dividend or make any other distribution or return or repay any equity capital to its
shareholder or increase its equity capital;
//
118
(iv)
Borrowings
without prejudice to Condition 5(b) (Further securitisations and corporate existence) below,
incur any indebtedness in respect of borrowed money whatsoever or give any guarantee in
respect of any indebtedness or of any obligation of any person;
(v)
Merger
consolidate or merge with any other person or convey or transfer any of its properties or assets
substantially as an entirety to any other person;
(vi)
Waiver or consent
permit any of the Transaction Documents (i) to be amended, terminated or discharged, if such
amendment, termination or discharge may negatively affect the interests of the holders of the
Notes of the Most Senior Class or (ii) to become invalid or ineffective or the priority of the
Security Interests created thereby to be reduced or consent to any variation thereof or exercise
any powers of consent, direction or waiver pursuant to the terms of any of the Transaction
Documents or permit any party to the Transaction Documents or any other person whose
obligations form part of the Note Security to be released from its respective obligations in a
way which may negatively affect the interests of the holders of the Notes of the Most Senior
Class;
(vii)
Mortgage Loans
agree to any request by the Servicer to change the rate of interest on any Mortgage Loan or to
waive any of its rights under any Mortgage Loan;
(viii) Bank accounts
with the exception of the Equity Capital Account and such other accounts that the Issuer may
have opened or may open in the future in the context of securitisation transactions other than
this Securitisation and without prejudice to Condition 5(b) (Further securitisations and
corporate existence) below, have an interest in any bank account other than the Accounts and
the Collateral Account (if any), unless the Representative of the Noteholders receives
confirmation from Fitch that the opening of any such account will not prejudice any of the
ratings of the Rated Notes and that the net interest or other return on any such new account is
not lower than that which is then applicable on the Accounts;
(ix)
Statutory documents
amend, supplement or otherwise modify its by-laws (statuto) or deed of incorporation (atto
costitutivo), except where such amendment, supplement or modification is required by any
compulsory provision of Italian law or by the competent regulatory authorities;
(x)
Corporate records, financial statements and books of account
permit or consent to any of the following occurring:
(i)
its books and records being maintained with or co-mingled with those of any other
person or entity;
(ii)
its bank accounts and the debts represented thereby being co-mingled with those of any
other person or entity; or
(iii)
its assets or revenues being co-mingled with those of any other person or entity;
//
119
and, in addition and without limitation to the above, the Issuer shall or shall procure that, with
respect to itself:
(xi)
(A)
separate financial statements in relation to its financial affairs are maintained;
(B)
all corporate formalities with respect to its affairs are observed;
(C)
separate stationery, invoices and cheques are used;
(D)
it always holds itself out as a separate entity; and
(E)
any known misunderstandings regarding its separate identity are corrected as soon as
possible;
Residency and centre of main interest
become resident, including without limitation for tax purposes, in any country outside Italy or
cease to be managed and administered in Italy or cease to have its centre of main interests in
Italy; or
(xii)
Compliance with corporate formalities
cease to comply with all necessary corporate formalities.
None of the covenants in this Condition 5(a) (Covenants by the Issuer) shall prohibit the Issuer from
(i) performing its obligations under the Previous Transactions Documents in accordance with their
terms or (ii) carrying out any activity which is incidental to maintaining its corporate existence and
complying with laws and regulations applicable to it.
(b)
Further securitisations and corporate existence
None of the covenants in Condition 5(a) (Covenants by the Issuer) above shall prohibit the Issuer
from:
(i)
acquiring, or financing pursuant to article 7 of the Securitisation Law, by way of separate
transactions unrelated to this Securitisation, further portfolios of monetary claims in addition to
the Claims either from the Originator or from any other entity (the “Further Portfolios”);
(ii)
securitising such Further Portfolios (each, a “Further Securitisation”) through the issue of
further debt securities additional to the Notes (the “Further Notes”);
(iii)
entering into agreements and transactions, with the Originator or any other entity, that are
incidental to or necessary in connection with such Further Securitisation including, inter alia,
the ring-fencing or the granting of security over such Further Portfolios and any right, benefit,
agreement, instrument, document or other asset of the Issuer relating thereto to secure such
Further Notes (the “Further Security”), provided that:
(A)
the Issuer confirms in writing to the Representative of the Noteholders that such Further
Security does not comprise or extend over any of the Claims or any of the other Issuer’s
Rights;
(B)
the Issuer confirms in writing to the Representative of the Noteholders that the terms and
conditions of the Further Notes contain provisions to the effect that the obligations of the
Issuer whether in respect of interest, principal, premium or other amounts in respect of
such Further Notes, are limited recourse obligations of the Issuer, limited to some or all
of the assets comprised in such Further Security;
//
120
(C)
the Issuer confirms in writing to the Representative of the Noteholders that each party to
such Further Securitisation agrees and acknowledges that the obligations of the Issuer to
such party in connection with such Further Securitisation are limited recourse
obligations of the Issuer, limited to some or all of the assets comprised in such Further
Security and that each creditor in respect of such Further Securitisation or the
representative of the holders of such Further Notes has agreed to limitations on its ability
to take action against the Issuer, including in respect of insolvency proceedings relating
to the Issuer, on terms in all significant respects equivalent to those contained in the
Intercreditor Agreement;
(D)
Fitch gives written confirmation to the Representative of the Noteholders that neither the
acquisition or financing, as the case may be, of such Further Portfolio nor the issue of
such Further Notes would adversely affect the then current rating of the Rated Notes;
(E)
the Issuer confirms in writing to the Representative of the Noteholders that the terms and
conditions of such Further Notes will include:
(F)
(I)
covenants by the Issuer in all significant respects equivalent to those covenants
provided in paragraphs (A) to (D) above; and
(II)
provisions which are the same as or, in the sole discretion of the Representative
of the Noteholders, equivalent to this proviso; and
the Representative of the Noteholders is satisfied that conditions (A) to (E) of this
proviso have been satisfied.
In giving any consent to the foregoing, the Representative of the Noteholders may require the
Issuer to make such modifications or additions to the provisions of any of the Transaction
Documents (as may itself consent thereto on behalf of the Noteholders) or may impose such
other conditions or requirements as the Representative of the Noteholders may deem expedient
(in its absolute discretion) in the interests of the Noteholders and may rely on any written
confirmation from the Issuer as to the matters contained therein.
None of the covenants in this Condition 5(b) (Further securitisations and corporate existence ) above
shall prohibit the Issuer from carrying out any activity which is incidental to maintaining its corporate
existence and complying with laws and regulations applicable to it.
6.
Interest
(a)
Interest Payment Dates and Interest Periods
Each Note bears interest on its Principal Amount Outstanding from (and including) the Issue Date at
the applicable rate determined in accordance with this Condition, payable in euro in arrear on each
Interest Payment Date subject to the applicable Priority of Payments and subject as provided in
Condition 8 (Payments). Each period beginning on (and including) an Interest Payment Date (or, in the
case of the first Interest Period, the Issue Date) and ending on (but excluding) the next (or, in the case
of the first Interest Period, the first) Interest Payment Date is herein called an “Interest Period”.
(b)
Termination of interest
Each Note shall cease to bear interest from and including its due date for final redemption, unless
payment of principal due is improperly withheld or refused or default is otherwise made in respect of
payment thereof, in which case it will continue to bear interest in accordance with this Condition (as
well after as before judgment) until whichever is the earlier of:
//
121
(c )
(i)
the date on which all amounts due in respect of such Note up to that date are received by or on
behalf of the relevant Noteholder; and
(ii)
the Cancellation Date.
Rate of interest on the Notes
The rate of interest payable from time to time in respect of the Class A Notes (the “Class A Rate of
Interest”), the Class B Notes (the “Class B Rate of Interest”) and the Junior Notes (the “Junior Rate
of Interest”) for each Interest Period will be determined by the Agent Bank on the basis of the
following provisions:
(i)
the Agent Bank will determine the EURIBOR as defined in Condition 1 (Definitions); and
(ii)
the Class A Rate of Interest for such Interest Period shall be the sum of:
(iii)
(iv)
(d)
(A)
0.20 per cent. per annum; and
(B)
the EURIBOR or (as the case may be) the arithmetic mean as determined above;
the Class B Rate of Interest for such Interest Period shall be the sum of:
(A)
(B)
the EURIBOR or (as the case may be) the arithmetic mean as determined above; and
the Junior Rate of Interest for such Interest Period shall be the sum of:
(A)
(B)
the EURIBOR or (as the case may be) the arithmetic mean as determined above.
Interest on the Junior Notes
In addition to the Junior Rate of Interest, the Junior Noteholders shall be entitled, for each Interest
Period, to the payment of an amount equal to the Junior Notes Additional Interest Amount and to the
Junior Notes Additional Remuneration calculated on each Calculation Date and which will be payable
on the next Interest Payment Date.
(e)
Calculation of Interest Amounts
The Agent Bank will, as soon as practicable after 11.00 a.m. (Brussels time) on each Interest
Determination Date in relation to each Interest Period, but in no event later than the third Business Day
thereafter, determine the amount of interest payable in respect of each Class of Notes for the relevant
Interest Period (each such amount, the “Interest Amount”). The Interest Amount shall be determined
by:
(i)
in the case of the Class A Notes, applying the Class A Rate of Interest for such Interest Period to
the Principal Amount Outstanding of the Class A Notes during such Interest Period, multiplying
the product of such calculation by the actual number of days in the Interest Period concerned
divided by 360, and rounding the resultant figure to the nearest cent (half a cent being rounded
upwards);
(ii)
in the case of the Class B Notes, applying the Class B Rate of Interest for such Interest Period
to the Principal Amount Outstanding of the Class B Notes during such Interest Period,
multiplying the product of such calculation by the actual number of days in the Interest Period
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concerned divided by 360, and rounding the resultant figure to the nearest cent (half a cent
being rounded upwards); and
(iii)
(f)
in the case of the Junior Notes, applying the Junior Rate of Interest for such Interest Period to
the Principal Amount Outstanding of the Junior Notes during such Interest Period, multiplying
the product of such calculation by the actual number of days in the Interest Period concerned
divided by 360, and rounding the resultant figure to the nearest cent (half a cent being rounded
upwards).
Calculation of Junior Notes Additional Interest Amount and Junior Notes Additional Remuneration
The Computation Agent will, on the Calculation Date immediately preceding the Interest Payment
Date, in relation to each Interest Period, calculate and communicate to the Principal Paying Agent and
the Junior Noteholders any Junior Notes Additional Interest Amount and any Junior Notes Additional
Remuneration that may be payable in respect of the Junior Notes on such Interest Payment Date.
(g)
Publication of Rate of Interest and Interest Amount
The Agent Bank will cause each Rate of Interest and each Interest Amount for each Interest Period and
the relative Interest Payment Date, to be notified to the Issuer, the Principal Paying Agent, the Listing
Agent, the Computation Agent, the Representative of the Noteholders, Monte Titoli and any stock
exchange or other relevant authority on which any Class of Notes is at the relevant time listed and (if
so required by the rules of the relevant stock exchange) to be published in accordance with Condition
17 (Notices) as soon as practicable after their determination, but in any event not later than the second
Business Day thereafter.
(h)
Amendments to publications
The Agent Bank will be entitled to recalculate any Rate of Interest or Interest Amount (on the basis of
the foregoing provisions) without notice in the event of an extension or shortening of the relevant
Interest Period.
(i)
Determination or calculation by the Representative of the Noteholders
If the Agent Bank does not at any time for any reason determine the Rate of Interest or the Interest
Amount for any Class of Notes in accordance with this Condition, the Representative of the
Noteholders shall (but without incurring, in the absence of wilful misconduct (dolo) or gross
negligence (colpa grave), any liability to any person as a result):
(j)
(i)
determine the Rate of Interest for each Class of Notes at such rate as, in its absolute discretion
(having such regard as it shall think fit to the procedures described in this Condition), it shall
deem fair and reasonable in all the circumstances; and/or (as the case may be);
(ii)
calculate the relevant Interest Amount in the manner specified in this Condition, and any
determination and/or calculation shall be deemed to have been made by the Agent Bank.
Interest Amount Arrears
Without prejudice to the right of the Representative of the Noteholders to serve to the Issuer an Issuer
Acceleration Notice pursuant to Condition 10(a)(i) (Non-payment), prior to the service of an Issuer
Acceleration Notice, in the event that on any Interest Payment Date there are any Interest Amount
Arrears, such Interest Amount Arrears shall be deferred on the following Interest Payment Date or on
the day an Issuer Acceleration Notice is served to the Issuer, whichever comes first. Any such Interest
Amount Arrears shall not accrue additional interest. A pro rata share of such Interest Amount Arrears
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123
shall be aggregated with the amount of, and treated for the purpose of this Condition as if it were,
interest due, subject to this paragraph, on each Class A Note, Class B Note or Junior Note as the case
may be, on the next succeeding Interest Payment Date.
(k)
Notification of Interest Amount Arrears
If, on any Calculation Date, the Computation Agent determines that any Interest Amount Arrears in
respect of one or more Classes of Notes will arise on the immediately succeeding Interest Payment
Date, notice to this effect shall be given or procured to be given by the Issuer to the Representative of
the Noteholders, the Principal Paying Agent, Monte Titoli, each stock exchange on which the relevant
Class of Notes is then listed, for so long as such Notes are listed on the relevant stock exchange, and (if
so required by the rules of the relevant stock exchange) to the Noteholders in accordance with
Condition 17 (Notices), specifying the amount of the Interest Amount Arrears to be deferred on such
following Interest Payment Date in respect of each Class of Notes.
7.
Redemption, purchase and cancellation
(a)
Final redemption
Unless previously redeemed in full and cancelled as provided in this Condition, the Issuer shall redeem
the Notes in full at their Principal Amount Outstanding, plus any accrued but unpaid interest, on the
Interest Payment Date falling in October 2047 (the “Maturity Date”), subject as provided in
Condition 8 (Payments).
(b)
Cancellation Date
If the Notes cannot be redeemed in full on the Maturity Date, as a result of the Issuer having
insufficient funds for application in or towards such redemption, any amount unpaid shall remain
outstanding and these Conditions shall continue to apply in full in respect of the Notes until the
Cancellation Date, at which date, in the absence of gross negligence (colpa grave) or wilful
misconduct (dolo) on the part of the Issuer, any amount outstanding, whether in respect of interest,
principal or other amounts in respect of the Notes, shall be finally and definitively cancelled.
(c)
Optional redemption of the Notes
Prior to the service of an Issuer Acceleration Notice, the Issuer may redeem the Notes of all Classes (in
whole but not in part) at their Principal Amount Outstanding (plus any accrued but unpaid interest) in
accordance with the Post-Enforcement Priority of Payments and subject to the Issuer having sufficient
funds to redeem all the Notes (or the Rated Notes only, if all the Junior Noteholders consent) and to
make all payments ranking in priority, or pari passu, thereto, starting from the First Amortisation
Interest Payment Date on any Interest Payment Date on which the Portfolio Outstanding Amount is
equal to, or less than, 10 per cent. of the lower of: (i) the Initial Portfolio Outstanding Amount; and (ii)
the Purchase Price, subject to the Issuer:
(a)
giving not more than 60 days’ nor less than 30 days’ notice to the Representative of the
Noteholders and the Noteholders, in accordance with Condition 17 (Notices), of its intention to
redeem all Classes of Notes (in whole but not in part); and
(b)
having provided, prior to giving any such notice, to the Representative of the Noteholders a
certificate signed by the chairman of the board or the sole director of the Issuer (as applicable)
to the effect that it will have the funds on such Interest Payment Date to discharge its
obligations under the Notes (or the Rated Notes only, if all the Junior Noteholders consent) and
any obligations ranking in priority, or pari passu, thereto; and
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(c)
giving not more than 60 days’ nor less than 30 days’ written notice to the Bank of Italy of its
intention to redeem all Classes of Notes (in whole but not in part),
provided, however, that:
(I)
pursuant to the Transfer Agreement, the consideration for the purchase of the Claims to be paid
by the Originator (should the Originator purchase the Claims from the Issuer) may not exceed:
(A) the outstanding principal amount of the Claims to be repurchased, provided that none of
such Claims qualify as Crediti ad Incaglio or Crediti in Sofferenza or (B) the aggregate of: (I)
the market value of the Claims which are classified as Crediti ad Incaglio or as Crediti in
Sofferenza (if any), as determined by one or more third-party experts independent from the
Originator and its banking group in accordance with the Transfer Agreement; and (II) the
outstanding principal of the Claims which are classified neither as Crediti ad Incaglio or as
Crediti in Sofferenza; and
(II)
in the event that (a) a third-party purchaser, other than the Originator, purchases the Claims
from the Issuer; (b) any Further Notes are then outstanding; and (c) such Further Notes are rated
by Fitch, Fitch, upon request from the Issuer, gives written confirmation to the Issuer and the
Representative of the Noteholders that the redemption of the Notes would not adversely affect
the then current rating of the Further Notes then outstanding.
finance the redemption of the Notes in the circumstances described above.
For so long as any of the Rated Notes are listed on the Irish Stock Exchange, the Issuer will give notice
of any optional redemption of the Notes in accordance with this Condition 7(c) (Optional Redemption
of the Notes) to the Irish Stock Exchange.
(d)
Optional redemption for taxation, legal or regulatory reasons
Prior to the service of an Issuer Acceleration Notice, the Issuer may redeem the Notes of all Classes (in
whole but not in part) at their Principal Amount Outstanding (plus any accrued but unpaid interest) in
accordance with the Post-Enforcement Priority of Payments and subject to the Issuer having sufficient
funds to redeem all the Notes (or the Rated Notes only, if all the Junior Noteholders consent) and to
make all payments ranking in priority, or pari passu, thereto, on any Interest Payment Date if, by
reason of a change in law or the interpretation or administration thereof since the Issue Date:
(a)
the assets of the Issuer in respect of this Securitisation (including the Claims, the Collections
and the other Issuer’s Rights) become subject to taxes, duties, assessments or governmental
charges of whatever nature imposed, levied, collected, withheld or assessed by the Republic of
Italy or by any political sub-division thereof or by any authority thereof or therein or by any
applicable taxing authority having jurisdiction; or
(b)
either the Issuer or any paying agent appointed in respect of the Rated Notes or any custodian
of the Rated Notes is required to deduct or withhold any amount (other than in respect of a
Decree 239 Withholding) in respect of any Class of Rated Notes, from any payment of principal
or interest on such Interest Payment Date for or on account of any present or future taxes,
duties, assessments or governmental charges of whatever nature imposed, levied, collected,
withheld or assessed by the Republic of Italy or by any political sub-division thereof or by any
authority thereof or therein or by any other applicable taxing authority having jurisdiction and
provided that such deduction or withholding may not be avoided by appointing a replacement
paying agent or custodian in respect of the Rated Notes before the Interest Payment Date
following the change in law or the interpretation or administration thereof; or
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(c)
any amounts of interest payable on the Mortgage Loans to the Issuer are required to be
deducted or withheld from the Issuer for or on account of any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed, levied, collected, withheld or
assessed by the Republic of Italy or by any political sub-division thereof or by any authority
thereof or therein or by any other applicable taxing authority having jurisdiction; or
(d)
it is or will become unlawful for the Issuer to perform or comply with any of its obligations
under or in respect of the Notes or any of the Transaction Documents to which it is a party;
(i)
giving not more than 60 days’ nor less than 30 days’ written notice (which notice shall be
irrevocable) to the Representative of the Noteholders and the Noteholders, pursuant to
Condition 17 (Notices), of its intention to redeem all (but not some only) the Notes; and
(ii)
providing to the Representative of the Noteholders:
(A)
a legal opinion (in form and substance satisfactory to the Representative of the
Noteholders) from a firm of lawyers of international repute (approved in writing by the
Representative of the Noteholders) opining on the relevant change in law or
interpretation or administration thereof;
(B)
a certificate from the chairman of the board of directors or the sole director of the Issuer
(as applicable) stating that the obligation to make such deduction or withholding or the
suffering by the Issuer of such deduction or withholding cannot be avoided or, as the
case may be, the events under paragraph (d) above will apply on the next Interest
Payment Date and cannot be avoided by the Issuer taking reasonable endeavours; and
(C)
a certificate from the chairman of the board of directors or the sole director of the Issuer
(as applicable) to the effect that it will have the funds on such Interest Payment Date to
discharge its obligations under: (i) the Notes (or the Rated Notes only, if all the Junior
Noteholders consent) and any obligations ranking in priority, or pari passu, thereto; and
(ii) any additional taxes payable by the Issuer by reason of such early redemption of the
Notes.
finance the redemption of the Notes in the circumstances described above.
For so long as any of the Rated Notes are listed on the Irish Stock Exchange, the Issuer will give notice
of any optional redemption of the Notes in accordance with this Condition 7(d) (Optional redemption
for taxation, legal or regulatory reasons) to the Irish Stock Exchange.
(e)
Mandatory redemption of the Notes
(i)
Prior to the service of an Issuer Acceleration Notice, if, on the Calculation Date immediately
preceding the First Amortisation Interest Payment Date and on each Calculation Date thereafter,
there are Principal Available Funds, the Issuer will apply such Principal Available Funds on the
immediately following Interest Payment Date in or towards the mandatory redemption of the
Notes of each Class (in whole or in part) in accordance with the Pre-Enforcement Principal
Priority of Payments.
(ii)
The principal amount redeemable in respect of each Note on any Interest Payment Date (each, a
“Principal Payment”) shall be a pro rata share of the Principal Available Funds determined in
accordance with the provisions of this Condition and the Pre-Enforcement Principal Priority of
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Payments to be available to redeem Notes of the relevant Class on such date, calculated by
reference to the ratio borne by the then Principal Amount Outstanding of such Note to the then
Principal Amount Outstanding of the Notes of such Class (rounded down to the nearest cent),
provided always that no such Principal Payment may exceed the Principal Amount Outstanding
of the relevant Note.
(f)
Calculation of Interest Available Funds, Principal Available Funds, Principal Deficiency Ledgers,
Principal Deficiency Amounts, Principal Payments, interest payments and Principal Amount
Outstanding
On each Calculation Date, the Issuer will procure that the Computation Agent determines, in
accordance (where applicable) with Condition 3 (Status, ranking and priority):
(i)
the Interest Available Funds;
(ii)
the Principal Available Funds;
(iii)
the Issuer Available Funds;
(iv)
the Principal Payments (if any) due on the Notes of each Class on the next following Interest
Payment Date;
(v)
the Principal Amount Outstanding of each Class of Notes on the next following Interest
Payment Date;
(vi)
the Principal Amount Outstanding of the Notes of all Classes on the next following Interest
Payment Date;
(vii)
the amounts payable to the Subordinated Loan Provider under the Subordinated Loan
Agreement;
(viii) the interest payable (if any) in respect of the Notes of each Class on the next following Interest
Payment Date;
(ix)
the aggregate Principal Deficiency Amounts as at such Calculation Date;
(x)
the Principal Deficiency Ledger Amount to be provisioned for on the immediately following
Interest Payment Date;
(xi)
the debit balance that will be outstanding in respect of the Class A Notes Principal Deficiency
Ledger on the next Interest Payment Date;
(xii)
the debit balance that will be outstanding in respect of the Class B Notes Principal Deficiency
(xiii) the debit balance that will be outstanding in respect of the Junior Notes Principal Deficiency
(xiv) the shortfall(s), if any, on the payments payable under items (i) to (viii) of the Pre-Enforcement
Interest Priority of Payments and how funds standing to the credit of the Cash Reserve Account
are to be used to augment the Interest Available Funds and, where applicable, the Principal
Available Funds;
(xv)
the amount equal to the portion of Principal Available Funds utilised under item (i) of the PreEnforcement Principal Priority of Payments on the preceding Interest Payment Date or, to the
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extent that such amounts have not already been credited to or retained in the Principal Account,
on any preceding Interest Payment Date;
(xvi) the Interest Amount Arrears, if any, that will arise in respect of each Class of Notes on the
immediately following Interest Payment Date;
(xvii) the Revenue Eligible Investments Amount in respect of the immediately preceding Liquidation
Date;
(xviii) the amount invested in Eligible Investments out of the Claims Transaction Account on the
immediately preceding Investment Date;
(xix) the amount invested in Eligible Investments out of the Cash Reserve Account on the
immediately preceding Investment Date;
(xx)
the amount invested in Eligible Investments out of the Principal Account on the immediately
preceding Investment Date;
(xxi) the amount to be credited to the Cash Reserve Account in accordance with the Pre-Enforcement
Interest Priority of Payments;
(xxii) the amount to be credited to the Principal Account in accordance with the Pre-Enforcement
(xxiii) the Junior Notes Additional Interest Amount (if any);
(xxiv) the Junior Notes Additional Remuneration (if any);
(xxv) the Target Cash Reserve Amount;
(xxvi) whether the Class B Notes Trigger Event has occurred;
(xxvii) whether the Junior Trigger Event has occurred;
(xxviii) whether or not the Pro-Rata Amortisation Conditions have been met; and
(xxix) the payments (if any) to be made to each of the parties to the Intercreditor Agreement under the
relevant Transaction Document,
and will determine how the Issuer’s funds available for distribution pursuant to these Conditions shall
be applied, on the immediately following Interest Payment Date, pursuant to the Pre-Enforcement
Interest Priority of Payments and the Pre-Enforcement Principal Priority of Payments, and will deliver
to the Principal Paying Agent and the Collection Account Bank a report setting forth such
determinations and amounts.
(g)
Calculations final and binding
Each determination by or on behalf of the Issuer under Condition 7(f) (Calculation of Interest
Available Funds, Principal Available Funds, Principal Deficiency Ledgers, Principal Deficiency
Amounts, Principal Payments, interest payments and Principal Amount Outstanding) will in each case
(in the absence of wilful misconduct, bad faith or manifest error) be final and binding on all persons.
(h)
Notice of determination and redemption
The Issuer will cause each determination of any Interest Amounts, Principal Payments (if any) and
Principal Amount Outstanding to each Class of Notes to be notified immediately after the calculation
to the Representative of the Noteholders, the Agents, Monte Titoli and (for so long as any Rated Notes
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128
are listed on any stock exchange) each stock exchange on which any Class of Notes is then listed and
will immediately cause details of each determination of any Interest Amounts, Principal Payments (if
any) and Principal Amount Outstanding to each Class of Notes to be published in accordance with
Condition 17 (Notices) by no later than one Business Day prior to such Interest Payment Date if
required by the rules of the Irish Stock Exchange.
(i)
Notice irrevocable
Any such notice as is referred to in Condition 7(h) (Notice of determination and redemption) shall be
irrevocable and the Issuer shall, in the case of a notice under Condition 7(h) (Notice of determination
and redemption), be bound to redeem the relevant Notes to which such notice refers (in whole or in
part, as applicable) in accordance with this Condition.
(j)
Determinations by the Representative of the Noteholders
If the Issuer does not at any time for any reason determine or cause to be determined a Principal
Payment or the Principal Amount Outstanding in accordance with the preceding provisions of this
Condition, such Principal Payment and/or, as applicable, Principal Amount Outstanding shall be
determined by the Representative of the Noteholders in accordance with this Condition (but without
the Representative of the Noteholders incurring any liability to any person as a result) and each such
determination shall be deemed to have been made by the Issuer.
(k)
No purchase by the Issuer
The Issuer will not purchase any of the Notes.
(l)
Cancellation
All Notes redeemed in full will forthwith be cancelled upon redemption and accordingly may not be
reissued or resold.
8.
Payments
(a)
Payments through Monte Titoli, Euroclear and Clearstream, Luxembourg
Payments of principal and interest in respect of the Notes deposited with Monte Titoli will be credited,
according to the instructions of Monte Titoli, by or on behalf of the Issuer to the accounts with Monte
Titoli of the banks and authorised brokers whose accounts are credited with those Notes, and thereafter
credited by such banks and authorised brokers from such aforementioned accounts to the accounts of
the beneficial owners of those Notes. Payments made by or on behalf of the Issuer according to the
instructions of Monte Titoli to the accounts with Monte Titoli of the banks and authorised brokers
whose accounts are credited with those Notes will relieve the Issuer pro tanto from the corresponding
payment obligations under the Notes.
Alternatively, the Principal Paying Agent may arrange for payments of principal and interest in respect
of the Notes to be made to the Noteholders through Euroclear and Clearstream, Luxembourg to be
credited to the accounts with Euroclear and Clearstream, Luxembourg of the beneficial owners of the
Notes, in accordance with the rules and procedures of Euroclear or, as the case may be, Clearstream,
Luxembourg. Payments made by or on behalf of the Issuer to the accounts with Euroclear and
Clearstream, Luxembourg of the beneficial owners of the Notes, in accordance with the rules and
procedures of Euroclear or, as the case may be, Clearstream, Luxembourg will relieve the Issuer pro
tanto from the corresponding payment obligations under the Notes.
(b)
Payments subject to tax laws
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Payments of principal and interest in respect of the Notes are subject in all cases to any fiscal or other
applicable laws and regulations applicable in the place of payment, but without prejudice to the
provisions of Condition 9 (Taxation in the Republic of Italy).
(c)
Payments on business days
If the due date for any payment of principal and/or interest in respect of any Note is not a day on which
banks are open for general business (including dealings in foreign currencies) in the place in which the
relevant Monte Titoli Account Holder is located (in each case, the “Local Business Day”), the holder
of the relevant Note will not be entitled to payment of the relevant amount until the immediately
succeeding Local Business Day and will not be entitled to any further interest or other payment in
consequence of any such delay.
(d)
Notification to be final
All notifications, opinions, determinations, certificates, calculations, quotations and decisions given,
expressed, made or obtained for the purposes of Condition 6 (Interest) or Condition 7 (Redemption,
purchase and cancellation), whether by the Reference Banks (or any of them), the Principal Paying
Agent, the Listing Agent, the Agent Bank, the Computation Agent or the Representative of the
Noteholders, shall (in the absence of wilful default, bad faith or manifest error) be binding on the
Issuer, the Agents, all Noteholders and all Other Issuer Creditors and (in the absence of wilful default,
bad faith or manifest error) no liability to the Representative of the Noteholders, the Noteholders or the
Other Issuer Creditors shall attach to the Reference Banks, the Principal Paying Agent, the Listing
Agent, the Agent Bank, the Computation Agent or the Representative of the Noteholders in connection
with the exercise or non-exercise by any of them of their powers, duties and discretions under
Condition 6 (Interest) or Condition 7 (Redemption, purchase and cancellation).
9.
Taxation in the Republic of Italy
All payments in respect of the Notes will be made without withholding or deduction for or on account of any
present or future taxes, duties or charges of whatsoever nature other than a Decree 239 Withholding or any
other withholding or deduction required to be made by applicable law. The Issuer shall not be obliged to pay
any additional amount to any Noteholder on account of such withholding or deduction.
10. Events of Default
(a)
Events of Default
Subject to the other provisions of this Condition, each of the following events shall be treated as an
“Event of Default”:
(i)
Non-payment: the Issuer fails to repay any amount of principal in respect of the Class A Notes
or, where different, the Notes of the Most Senior Class (excluding the Junior Notes) within five
days of the due date for repayment of such principal or fails to pay any Interest Amount in
respect of the Class A Notes or, where different, the Notes of the Most Senior Class (excluding
the Junior Notes) within five days of the relevant Interest Payment Date; or
(ii)
Breach of other obligations: the Issuer fails to perform or observe any of its other obligations
under or in respect of the Rated Notes, the Intercreditor Agreement or any other Transaction
Document to which it is a party and such default is, in the sole opinion of the Representative of
the Noteholders, (A) incapable of remedy or (B) capable of remedy, but remains unremedied for
30 days or such longer period as the Representative of the Noteholders may agree (in its sole
discretion) after the Representative of the Noteholders has given written notice of such default
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130
to the Issuer, certifying that such default is, in the opinion of the Representative of the
Noteholders, materially prejudicial to the interests of the Rated Noteholders and requiring the
same to be remedied; or
(iii)
Failure to take action: any action, condition or thing at any time required to be taken, fulfilled
or done in order:
(A)
to enable the Issuer lawfully to enter into, exercise its rights and perform and comply
with its obligations under and in respect of the Rated Notes and the Transaction
Documents to which the Issuer is a party; or
(B)
to ensure that those obligations are legal, valid, binding and enforceable,
is not taken, fulfilled or done at any time and the Representative of the Noteholders has given
written notice of such default to the Issuer, certifying that such default is, in the opinion of the
Representative of the Noteholders, materially prejudicial to the interests of the Rated
Noteholders and requiring the same to be remedied; or
(b)
(iv)
Insolvency Event: an Insolvency Event occurs in relation to the Issuer or the Issuer becomes
Insolvent; or
(v)
Unlawfulness: it is or will become unlawful for the Issuer to perform or comply with any of its
obligations under or in respect of the Rated Notes or the Transaction Documents to which the
Issuer is a party.
Service of an Issuer Acceleration Notice
If an Event of Default occurs, then (subject to Condition 10(c) (Consequences of service of an Issuer
Acceleration Notice)), the Representative of the Noteholders may, at its sole discretion, and shall:
(i)
if so directed in writing by the holders of at least 60 per cent. of the Principal Amount
Outstanding of the Most Senior Class of Notes; or
(ii)
if so directed by an Extraordinary Resolution of the holders of the Most Senior Class of Notes,
give written notice (an “Issuer Acceleration Notice”) to the Issuer and to the Servicer declaring the
Notes to be due and payable, provided that:
(c)
(A)
in the case of the occurrence of any of the events mentioned in Condition 10(a)(ii) (Breach of
other obligations) and Condition 10(a)(iii) (Failure to take action), the service of an Issuer
Acceleration Notice has been approved either in writing by the holders of at least 60 per cent. of
the Principal Amount Outstanding of the Most Senior Class of Notes or by an Extraordinary
Resolution of the holders of the Most Senior Class of Notes; and
(B)
in each case, the Representative of the Noteholders shall have been indemnified and/or secured
to its satisfaction against all fees, costs, expenses and liabilities (provided that supporting
documents are delivered) to which it may thereby become liable or which it may incur by so
doing.
Consequences of service of an Issuer Acceleration Notice
Upon the service of an Issuer Acceleration Notice as described in this Condition, (i) the Notes of each
Class shall become immediately due and repayable at their Principal Amount Outstanding, together
with any interest accrued but which has not been paid on any preceding Interest Payment Date in
accordance with Condition 6(j) (Interest Amount Arrears), without further action, notice or formality;
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(ii) the Note Security shall become immediately enforceable; and (iii) the Representative of the
Noteholders may, subject to Condition 11(b) (Restrictions on disposal of Issuer’s assets) dispose of the
Claims in the name and on behalf of the Issuer by virtue of the power of attorney granted in
accordance with the Mandate Agreement. The Noteholders hereby irrevocably appoint, as from the
date hereof and with effect on and from the date on which the Notes shall become due and payable
following the service of an Issuer Acceleration Notice, the Representative of the Noteholders as their
exclusive agent (mandatario esclusivo) to receive on their behalf from the Issuer any and all monies
payable by the Issuer to the Noteholders and the Other Issuer Creditors from and including the date on
which the Notes shall become due and payable, such monies to be applied in accordance with the PostEnforcement Priority of Payments.
11. Enforcement
(a)
Proceedings
The Representative of the Noteholders may, at its discretion and without further notice, institute such
proceedings as it thinks fit at any time after the service of an Issuer Acceleration Notice to enforce
repayment of the Notes and payment of accrued interest thereon or at any time to enforce any other
obligation of the Issuer under the Notes or any Transaction Document, but, in either case, it shall not
be bound to do so unless it shall have been:
(i)
so requested in writing by the holders of at least 25 per cent. of the Principal Amount
Outstanding of the Most Senior Class of Notes; or
(ii)
so directed by an Extraordinary Resolution of the holders of the Most Senior Class of Notes;
and, in any such case, only if it shall have been indemnified and/or secured to its satisfaction against
all fees, costs, expenses and liabilities (provided that supporting documents are delivered) to which it
may thereby become liable or which it may incur by so doing.
(b)
Restrictions on disposal of Issuer’s assets
If an Issuer Acceleration Notice has been served by the Representative of the Noteholders other than
by reason of non-payment of any amount due in respect of the Notes, the Representative of the
Noteholders will not be entitled to dispose of the assets of the Issuer or any part thereof unless either:
(i)
a sufficient amount would be realised to allow payment in full of all amounts owing to the
holders of each Class of Rated Notes after payment of all other claims ranking in priority to the
Rated Notes in accordance with the Post-Enforcement Priority of Payments; or
(ii)
the Representative of the Noteholders is of the opinion, which shall be binding on the
Noteholders and the other Issuer Secured Creditors, reached after considering at any time and
from time to time the advice of a merchant or investment bank or other financial adviser
selected by the Representative of the Noteholders (and if the Representative of the Noteholders
is unable to obtain such advice having made reasonable efforts to do so, this Condition 11(b)(ii)
shall not apply), that the cash flow prospectively receivable by the Issuer will not (or that there
is a significant risk that it will not) be sufficient, having regard to any other actual, contingent or
prospective liabilities of the Issuer, to discharge in full in due course all amounts due in respect
of the Rated Notes of each Class after payment of all other claims ranking in priority to the
Rated Notes in accordance with the Post-Enforcement Priority of Payments; and
the Representative of the Noteholders shall not be bound to make the determination contained in
Condition 11(b)(ii) unless the Representative of the Noteholders shall have been indemnified and/or
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secured to its satisfaction against all fees, costs, expenses and liabilities (provided that supporting
documents are delivered) to which it may thereby become liable or which it may incur by so doing.
12. Representative of the Noteholders
(a)
Legal representative
The Representative of the Noteholders is BNP Paribas Securities Services S.A., Milan Branch at its
offices at via Ansperto, 5, I-20121 Milan, Italy, and is the legal representative (rappresentante legale)
of the Noteholders in accordance with these Conditions, the Rules of the Organisation of Noteholders
and the other Transaction Documents.
(b)
Powers of the Representative of the Noteholders
The duties and powers of the Representative of the Noteholders are set forth in the Rules of the
Organisation of Noteholders.
(c )
Meetings of Noteholders
The Rules of the Organisation of Noteholders contain provisions for convening Meetings of
Noteholders as well as the subject matter of the Meetings and the relevant quorums.
(d)
Individual action
The Rules of the Organisation of Noteholders contain provisions limiting the powers of the
Noteholders, inter alia, to bring individual actions or take other individual remedies to enforce their
rights under the Notes. In particular, such actions will be subject to the Meeting of the Noteholders
approving by way of Extraordinary Resolution such individual action or other remedy. No individual
action or remedy can be taken or sought by a Noteholder to enforce his or her rights under the Notes
before the Meeting of the Noteholders has approved such action or remedy in accordance with the
provisions of the Rules of the Organisation of Noteholders.
(e)
Resolutions binding
The resolutions passed at any Meeting of the Noteholders under the Rules of the Organisation of
Noteholders will be binding on all Noteholders whether or not they are absent or dissenting and
whether or not voting at the Meeting.
(f)
Written Resolutions
A Written Resolution will take effect as if it were an Extraordinary Resolution passed at a Meeting of
the Noteholders.
13. Modification and waiver
(a)
Modification
The Representative of the Noteholders may, without the consent of the Noteholders or any Other Issuer
Creditors and subject to the Representative of the Noteholders giving prior written notice thereof to
Fitch, concur with the Issuer and any other relevant parties in making:
(i)
any amendment or modification to these Conditions (other than in respect of a Basic Terms
Modification as defined in the Rules of the Organisation of Noteholders) or any of the
Transaction Documents which, in the opinion of the Representative of the Noteholders, it may
be economically reasonable to make and will not be materially prejudicial to the interests of the
holders of the Most Senior Class of Notes; and
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(ii)
any amendment or modification to these Conditions or to any of the Transaction Documents, if,
in the opinion of the Representative of the Noteholders, such amendment or modification is
expedient to make, is of a formal, minor or technical nature, is made to correct a manifest error
or an error which, in the opinion of the Representative of the Noteholders, is proven or is
necessary or desirable for the purposes of clarification
provided that (i) no Transaction Document may be amended without the express consent of all the
parties to the relevant Transaction Document (other than the Noteholders which are represented by the
Representative of the Noteholders) and in accordance with the provisions set out therein (if any) and
(ii) no amendment or modification may be made to these Conditions, the Priority of Payments or the
Agency and Accounts Agreement, and no waiver may be granted under these Conditions or the Agency
and Accounts Agreement, without the written consent of the Swap Counterparty.
(b)
Waiver
In addition, the Representative of the Noteholders may, without the consent of the Noteholders or any
Other Issuer Creditor (other than those which are a party to the relevant Transaction Document) and
subject to the Representative of the Noteholders giving prior written notice thereof to Fitch, authorise
or waive any proposed breach or breach of the Notes (including an Event of Default) or of the
Intercreditor Agreement or of any other Transaction Document, if, in the opinion of the Representative
of the Noteholders, the interests of the holders of the Most Senior Class of Notes will not be materially
prejudiced by such authorisation or waiver.
(c)
Restriction on power of waiver
The Representative of the Noteholders shall not exercise any powers conferred upon it by Condition
13(b) (Waiver) in contravention of any express direction by an Extraordinary Resolution (as defined in
the Rules of the Organisation of Noteholders) or of a request in writing made by the holders of not less
than 25 per cent. in aggregate Principal Amount Outstanding of the Most Senior Class of Notes (but so
that no such direction or request shall affect any authorisation, waiver or determination previously
given or made) or so as to authorise or waive any proposed breach or breach relating to a Basic Terms
Modification.
(d)
Notification
Unless the Representative of the Noteholders agrees otherwise, any such authorisation, waiver,
modification or determination shall be notified to the Noteholders, in accordance with Condition 17
(Notices), as soon as practicable after it has been made.
14. Representative of the Noteholders and Agents
(a)
Organisation of Noteholders
The Organisation of Noteholders is created by the issue and subscription of the Notes and will remain
in force and effect until full repayment and cancellation of the Notes.
(b)
Appointment of Representative of the Noteholders
Pursuant to the Rules of the Organisation of Noteholders, for as long as any Note is outstanding, there
will at all times be a Representative of the Noteholders. The appointment of the Representative of the
Noteholders, as legal representative of the Organisation of Noteholders, is made by the Noteholders
subject to and in accordance with the Rules of the Organisation of Noteholders. However, the initial
Representative of the Noteholders has been appointed at the time of issue of the Notes by the
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Underwriter pursuant to the Intercreditor Agreement. Each Noteholder is deemed to accept such
appointment.
(c)
Representative of the Noteholders
The Representative of the Noteholders shall not be deemed to be a person responsible for the
collection, cash and payment services (soggetto incaricato della riscossione dei crediti ceduti e dei
servizi di cassa e pagamento) for the purposes of article 2 paragraph 6 of the Securitisation Law and
the relevant implementing regulations from time to time in force including, without limitation, the
relevant guidelines of the Bank of Italy.
(d)
Principal Paying Agent, Listing Agent, Agent Bank, Computation Agent, Transaction Bank and
Collection Account Bank sole agent of Issuer
In acting under the Agency and Accounts Agreement and in connection with the Notes, the Principal
Paying Agent, the Computation Agent, the Listing Agent, the Transaction Bank, the Collection
Account Bank and the Agent Bank act as agents solely of the Issuer and (to the extent provided
therein) the Representative of the Noteholders and do not assume any obligations towards or
relationship of agency or trust for or with any of the Noteholders.
(e)
Initial Agents
The initial Principal Paying Agent, the Computation Agent, the Listing Agent, the Transaction Bank,
the Collection Account Bank and the Agent Bank and their Specified Offices are listed in Condition 17
(Notices) below. The Issuer reserves the right (with the prior written approval of the Representative of
the Noteholders) at any time to vary or terminate the appointment of the Principal Paying Agent, the
Computation Agent, the Listing Agent, the Transaction Bank, the Collection Account Bank and the
Agent Bank and to appoint a successor principal paying agent, computation agent, listing agent,
transaction bank, collection account bank or agent bank and additional or successor paying agents at
any time, in accordance with the terms of the Agency and Accounts Agreement and these Conditions.
(f)
Maintenance of Agents
The Issuer undertakes that it will ensure that it maintains:
(i)
a principal paying agent having its specified office in Milan, a computation agent, a collection
account bank (acting through an office or branch located in the Republic of Italy), a transaction
bank (acting through an office or branch located in the London) and an agent bank; and
(ii)
a paying agent in a Member State of the European Union that is not obliged to withhold or
deduct tax pursuant to European Council Directive 2003/48/EC or any other Directive
implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 or any
law implementing or complying with, or introduced in order to conform to, such Directive.
Notice of any termination or appointment change in any of the Principal Paying Agent, the Listing
Agent, the Agent Bank, the Computation Agent, the Collection Account Bank and the Transaction
Bank of any changes in the Specified Offices shall promptly be given to the Noteholders by the Issuer
in accordance with Condition 17 (Notices).
15. Statute of limitation
Claims against the Issuer for payments in respect of the Notes will be barred and become void unless made
within 10 years (in the case of principal) or five years (in the case of interest) from the Relevant Date in
respect thereof.
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16. Limited recourse and non-petition
(a)
Limited recourse
Notwithstanding any other provision of these Conditions, the obligation of the Issuer to make any
payment, at any given time, under the Class A Notes, the Class B Notes or the Junior Notes shall be
equal to the lesser of (i) the nominal amount of such payment which, but for the operation of this
Condition and the applicable Priority of Payments, would be due and payable at such time; and (ii) the
Issuer Available Funds which the Issuer or the Representative of the Noteholders is entitled, at such
time, to apply in accordance with the applicable Priority of Payments and the terms of the Intercreditor
Agreement, in satisfaction of such payment.
(b)
Non-petition
Without prejudice to the right of the Representative of the Noteholders to enforce the Note Security or
to exercise any of its other rights, and subject as set out in the Rules of the Organisation of the
Noteholders, no Class A Noteholder, Class B Noteholder or, as the case may be, Junior Noteholder
shall be entitled to institute against the Issuer, or join any other person in instituting against the Issuer,
any reorganisation, liquidation, bankruptcy, insolvency or similar proceedings until one year plus one
day has elapsed since the later of (A) the Cancellation Date and (B) the day on which any note issued
or to be issued by the Issuer (including the Notes) has been paid in full.
17. Notices
(a)
Valid notices
All notices to the Noteholders, as long as the Notes are held through Monte Titoli and/or by a common
depository for Euroclear and/or Clearstream, Luxembourg, shall be deemed to have been validly given
if delivered to Monte Titoli and/or Euroclear and/or Clearstream for communication by them to the
entitled accountholders and shall be deemed to be given on the date on which it was delivered to
Monte Titoli, Clearstream, Luxembourg and Euroclear, as applicable. In addition, so long as the Rated
Notes are listed on the Irish Stock Exchange and the rules of that exchange so require, all notices will
be given also in one daily newspaper published in the Republic of Ireland or on the website of the Irish
Stock Exchange (www.ise.ie). It is expected that publication on the daily newspaper will normally be
made in the Financial Times or the Irish Times.
As regards the Junior Noteholders, notice shall be deemed to have been validly given to the Junior
Noteholders if sent to the address (by delivering it by hand, or sending it by pre-paid recorded delivery
or registered post) and fax number specified in respect of the Junior Noteholders in the Underwriting
Agreement, and, in each case, marked for the attention of the Junior Noteholders. Notice shall be
deemed to have been duly given:
(i)
in the case of delivery by hand, when delivered;
(ii)
in the case of fax, at the time of transmission; and
(iii)
in the case of pre-paid recorded delivery or registered post, on the fourth Business Day
following the date of posting,
provided that in each case where delivery by hand or fax occurs after 6.00 p.m. on a Business Day or
on a day which is not a Business Day, service shall be deemed to occur at 9.00 a.m. on the next
following Business Day.
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The Issuer shall also ensure that notices are duly published in a manner which complies with the rules
and regulations of any stock exchange or other relevant authority on which the Notes are for the time
being listed.
So long as any Rated Notes are listed on the Irish Stock Exchange and the rules of that exchange so
require, all notices given to Rated Noteholders will also be given to the Irish Stock Exchange.
(b)
Date of publication
Any notice shall be deemed to have been given on the date of such publication or, if published more
than once or on different dates, on the date of the first publication in all required newspapers or on the
website of the Irish Stock Exchange (www.ise.ie), as the case may be.
(c)
Other methods
The Representative of the Noteholders shall be at liberty to sanction some other method of giving
notice to the Noteholders or to a Class or category of them, if, in its opinion, such other method is
reasonable having regard to market practice then prevailing and to the requirements of the stock
exchange on which any of the Notes are then listed, and provided that notice of such other method is
given to the Noteholders in such manner as the Representative of the Noteholders shall require.
(d)
Initial Specified Offices
The Specified Offices of the Collection Account Bank, the Principal Paying Agent, the Agent Bank,
the Computation Agent, the Listing Agent, the Transaction Bank and the Representative of the
Noteholders, are as follows:
(i)
Collection Account Bank: BancaEtruria, at its offices at via Calamandrei, 255, I-52100 Arezzo,
Italy;
(ii)
Computation Agent, Agent Bank and Principal Paying Agent: BNP Paribas Securities Services
S.A., Milan branch, at its offices at via Ansperto, 5, I-20121 Milan, Italy;
(iii)
Transaction Bank: BNP Paribas Securities Services, London Branch, at its offices at 55
Moorgate, London EC2R 6PA, United Kingdom;
(iv)
Listing Agent: BNP Paribas Securities Services, Luxembourg branch, at its offices at 33, Rue de
Gasperich Howald-Hesperange, L-2085 Luxembourg; and
(v)
Representative of the Noteholders: BNP Paribas Securities Services S.A., Milan Branch, at its
offices at via Ansperto, 5, I-20121 Milan, Italy.
18. Governing law and jurisdiction
(a)
Governing law
The Notes, these Conditions, the Rules of the Organisation of Noteholders and the Italian Law
Transaction Documents (other than certain provisions of the Agency and Accounts Agreement which
are governed by English law) are governed by, and shall be construed in accordance with, Italian law.
The English Law Transaction Documents are governed by, and shall be construed in accordance with,
English law.
(b)
Jurisdiction
(i)
The Courts of Milan are to have exclusive jurisdiction to settle any disputes that may arise out
of, or in connection with, the Notes, these Conditions, the Rules of the Organisation of
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Noteholders and (with the exception of certain disputes under the Warranty and Indemnity
Agreement which are to be resolved through arbitration) the Italian Law Transaction
Documents and, accordingly, any legal action or proceedings arising out of, or in connection
with, any Notes, these Conditions, the Rules of the Organisation of Noteholders or any Italian
Law Transaction Document may be brought in such courts. The Issuer has in each of the Italian
Law Transaction Documents (other than the Warranty and Indemnity Agreement with regard to
certain disputes) irrevocably submitted to the jurisdiction of such courts.
(c)
(ii)
The Courts of England and Wales are to have jurisdiction to settle any disputes that may arise
out of or in connection with the English Law Transaction Documents and, accordingly, any
legal action or proceedings arising out of or in connection with any English
(iii)
Law Transaction Document may be brought in such courts. The Issuer has in each of the
English Law Transaction Documents irrevocably submitted to the jurisdiction of such courts.
Process agent
The Issuer has in the English Deed of Charge and Assignment, agreed, inter alia, at all times to
maintain an agent for service of process in England. The Issuer appoints Clifford Chance Secretaries
Limited, at its office at 10 Upper Bank Street, London E14 5JJ, as such agent. Any writ, judgment or
other notice of legal process issued out of the English Courts in respect of any English Law
Transaction Document shall be sufficiently served on the Issuer if delivered to such agent at its address
for the time being. The Issuer undertakes not to revoke the authority of the above agent, and if, for any
reason, such agent no longer serves as process agent of the Issuer to receive service of process, the
Issuer shall promptly appoint another such agent and advise the Representative of the Noteholders of
the details of such new agent.
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SCHEDULE - RULES OF THE ORGANISATION OF NOTEHOLDERS
TITLE I
GENERAL PROVISIONS
Article 1
General
The Organisation of Noteholders is created by the issue and by the subscription of the Notes, and shall remain in force and in effect until
full repayment and cancellation of the Notes.
The contents of these rules are deemed to form part of each Note issued by the Issuer.
Article 2
Definitions
In these rules, the following terms shall have the following meanings:
“24 Hours” means a period of 24 hours including all or part of a day upon which banks are open for business in the place where the
Meeting of the Relevant Class Noteholders is to be held and in the place where the Principal Paying Agent has its Specified Office
(disregarding for this purpose the day upon which such Meeting is to be held) and such period shall be extended by one or, to the extent
necessary, more periods of 24 Hours until there is included as aforesaid all or part of a day upon which banks are open for business as
aforesaid;
“48 Hours” means two consecutive periods of 24 Hours;
“Basic Terms Modification” means:
(a)
a modification of the date of maturity of one or more relevant Classes of Notes;
(b)
a modification which would have the effect of cancelling or postponing any date for payment of interest in respect of one or more
Classes of Notes;
(c)
a modification which would have the effect of reducing or cancelling the amount of principal payable in respect of one or more
relevant Classes of Notes or the rate of interest applicable in respect of one or more relevant Classes of Notes;
(d)
a modification which would have the effect of altering the method of calculating the amount of interest or such other amounts
payable to one or more relevant Classes of Notes;
(e)
a modification which would have the effect of altering the majority required to pass a specific resolution or the quorum required at
any Meeting;
(f)
a modification which would have the effect of altering the currency of payment of one or more relevant Classes of Notes or any
alteration of the date or priority of payment or redemption of one or more relevant Classes of Notes;
(g)
a modification which would have the effect of altering the authorisation or consent by the Noteholders, as pledgees, to applications
of funds as provided for in the Transaction Documents;
(h)
the appointment and removal of the Representative of the Noteholders; and
(i)
an amendment of this definition;
“Blocked Notes” means the Notes which have been blocked in an account with the relevant clearing system, the Monte Titoli Account
Holder or the relevant custodian for the purposes of obtaining a Voting Certificate or a Block Voting Instruction and will not be released
until the conclusion of the Meeting;
“Block Voting Instruction” means, in relation to any Meeting, a document issued by the Principal Paying Agent:
(a)
certifying that the Blocked Notes have been blocked in an account with the relevant clearing system, the Monte Titoli Account
Holder or the relevant custodian and will not be released until the conclusion of the Meeting;
(b)
certifying that the holder of each Blocked Note or a duly authorised person on its behalf has instructed the Principal Paying Agent
that the votes attributable to such Blocked Note are to be cast in a particular way on each resolution to be put to the Meeting and
that, during the period of 48 Hours before the time fixed for the Meeting, such instructions may not be amended or revoked;
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(c)
listing the total number of the Blocked Notes, distinguishing for each resolution between those in respect of which instructions
have been given to vote for, or against, the resolution; and
(d)
appointing one or more Proxies to vote in respect of the Blocked Notes in accordance with such instructions;
“Chairman” means, in relation to any Meeting, the individual who takes the chair in accordance with Article 9 (Chairman of the
Meeting);
“Class of Notes” means (i) the Class A Notes; (ii) the Class B Notes or (ii) the Junior Notes, as the context requires;
“Extraordinary Resolution” means a resolution of a Meeting of the Relevant Class Noteholders, duly convened and held in accordance
with the provisions contained in these rules on any of the subjects covered by Article 21 (Powers exercisable by Extraordinary
Resolution), passed by a majority of at least ¾ of the votes cast;
“Issuer’s Rights ” means the Issuer’s right, title and interest in and to the Claims, any rights that the Issuer has acquired under the
Transaction Documents and any other rights that the Issuer has acquired against the Originator, any Other Issuer Creditors (including any
applicable guarantors or successors) or third parties for the benefit of the Noteholders in connection with the securitisation of the Claims;
“Meeting” means a meeting of the Relevant Class Noteholders (whether originally convened or resumed following an adjournment);
“Monte Titoli Account Holder” means any authorised institution entitled to hold accounts on behalf of their customers with Monte
Titoli (and includes any Relevant Clearing System which holds account with Monte Titoli or any depository banks appointed by the
Relevant Clearing System);“Proxy” means, in relation to any Meeting, a person appointed to vote under a Block Voting Instruction;
“Relevant Class Noteholders” means (i) the Class A Noteholders; and/or (ii) the Class B Noteholders; and/or (iii) the Junior
Noteholders or a combination of the Class A Noteholders, the Class B Noteholders, the Class C Noteholders and/or the Junior
Noteholders, as the context requires;
“Relevant Fraction” means:
(a)
for all business other than voting on an Extraordinary Resolution, one-tenth of the Principal Amount Outstanding of that Class of
Notes (in case of a meeting of a particular Class of Notes), or one-tenth of the Principal Amount Outstanding of all relevant
Classes of Notes (in case of a joint Meeting of a combination of Classes of Notes);
(b)
for voting on any Extraordinary Resolution other than one relating to a Basic Terms Modification, two-thirds of the Principal
Amount Outstanding of that Class of Notes (in case of a meeting of a particular Class of Notes), or two-thirds of the Principal
Amount Outstanding of all relevant Classes of Notes (in case of a joint Meeting of a combination of Classes of Notes); and
(c)
for voting on any Extraordinary Resolution relating to a Basic Terms Modification (which must be proposed separately to each
Class of Noteholders), three-quarters of the Principal Amount Outstanding of the Notes of the relevant Class of Notes;
provided, however, that, in the case of a Meeting which has resumed after adjournment for want of a quorum, it means:
(a)
for all business other than voting on an Extraordinary Resolution relating to a Basic Terms Modification, the fraction of the
Principal Amount Outstanding of the Notes of that Class of Notes represented or held by the Voters actually present at the
Meeting (in case of a Meeting of a particular Class of Notes), or the fraction of the Principal Amount Outstanding of the Notes of
all relevant Classes represented or held by the Voters actually present at the Meeting (in case of a joint Meeting of a combination
of Classes of Notes); and
(b)
for voting on any Extraordinary Resolution relating to a Basic Terms Modification (which must be proposed separately to each
Class of Noteholders), one-third of the Principal Amount Outstanding of the Notes of the relevant Class of Notes represented or
held by the Voters actually present at the Meeting;
“Voter” means, in relation to any Meeting, the holder of a Voting Certificate or a Proxy;
“Voting Certificate” means, in relation to any Meeting, a certificate requested by the Noteholder and issued by the relevant clearing
system, the Monte Titoli Account Holder or the relevant custodian, as the case may be, and dated, stating:
(a)
that the Blocked Notes have been blocked in an account with the relevant clearing system, the Monte Titoli Account Holder or
the relevant custodian and will not be released until the earlier of (i) the conclusion of the Meeting; and (ii) the surrender of the
certificate to the clearing system or the Monte Titoli Account Holder or the relevant custodian who issued the same;
(b)
detail of the Meeting concerned and the number of the Blocked Notes; and
(c)
that the bearer of such certificate is entitled to attend and vote at the Meeting in respect of the Blocked Notes.
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“Written Resolution” means a resolution in writing signed by or on behalf of all holders of Notes who for the time being are entitled to
receive notice of a Meeting of such holders of Notes in accordance with the Rules of the Organisation of Noteholders, whether contained
in one document or several documents in the same form, each signed by or on behalf of one or more such holders of Notes.
Capitalised terms not defined herein shall have the meanings attributed to them in the Conditions.
Article 3
Organisation purpose
Each holder of the Notes is a member of the Organisation of Noteholders.
The purpose of the Organisation of Noteholders is to co-ordinate the exercise of the rights of the Noteholders and the taking of any action
for the protection of their interests.
In these rules, any reference to Noteholders shall be considered as a reference to the Class A Noteholders and/or the Class B Noteholders
and/or the Junior Noteholders, as the case may be.
TITLE II
THE MEETING OF NOTEHOLDERS
Article 4
General
Any resolution passed at a Meeting of the Relevant Class Noteholders, duly convened and held in accordance with these rules, shall be
binding upon all the Noteholders of such Class of Notes, whether or not present at such Meeting and whether or not voting.
Subject to the proviso of Article 21 (Powers exercisable by Extraordinary Resolution):
(a)
any resolution passed at a Meeting of the Class A Noteholders, duly convened and held as aforesaid, shall also be binding upon all
the Class B Noteholders and the Junior Noteholders;
(b)
any resolution passed at a Meeting of the Class B Noteholders, duly convened and held as aforesaid, shall also be binding upon all
the Junior Noteholders;
(c)
and, in each case, all the Noteholders of the relevant Class of Notes, whether or not absent or dissenting, shall be bound by such
resolution irrespective of its effect upon such Noteholders and such Noteholders shall be bound to give effect to any such
resolution accordingly and the passing of any such resolution shall be conclusive evidence that the circumstances justify the
passing thereof.
provided however that:
(a)
no resolution of the Junior Noteholders shall be effective unless (A) the Representative of the Noteholders is of the opinion that it
will not be materially prejudicial to the interests of the Rated Noteholders (to the extent that the Rated Notes are then, respectively,
outstanding) or (B) (to the extent that the Representative of the Noteholders is not of that opinion) it is sanctioned by a resolution
of the Rated Noteholders (to the extent that the Rated Notes are then, respectively, outstanding); and
(b)
no resolution of the Class B Noteholders shall be effective unless (A) the Representative of the Noteholders is of the opinion that it
will not be materially prejudicial to the interests of the Class A Noteholders (to the extent that the Class A Notes are then
outstanding) or (B) (to the extent that the Representative of the Noteholders is not of that opinion) it is sanctioned by a resolution
of the Class A Noteholders (to the extent that the Class A Notes are then outstanding).
Notice of the result of every vote on a resolution duly passed by the Noteholders shall be published by and at the expense of the Issuer, in
accordance with the Conditions and given to the Principal Paying Agent (with a copy to the Issuer and the Representative of the
Noteholders) within 14 days of the conclusion of the Meeting, but failure to do so shall not invalidate the resolution.
Subject to the provisions of these rules and the Conditions, joint Meetings of the Class A Noteholders, the Class B Noteholders and the
Junior Noteholders may be held to consider the same resolution and/or, as the case may be, the same Extraordinary Resolution and the
provisions of these rules shall apply mutatis mutandis thereto.
The following provisions shall apply while Notes of two or more Classes of Notes are outstanding:
(a)
business which involves the passing of an Extraordinary Resolution involving a Basic Terms Modification shall be transacted at a
separate Meeting of the holders of each relevant Class of Notes;
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(b)
business which, in the opinion of the Representative of the Noteholders, affects only one Class of Notes shall be transacted at a
separate Meeting of the holders of Notes of such Class of Notes;
(c)
business which, in the opinion of the Representative of the Noteholders, affects more than one Class of Notes but does not give
rise to an actual or potential conflict of interest between the holders of one such Class of Notes and the holders of any other Class
of Notes shall be transacted either at separate Meetings of the holders of each such Class of Notes or at a joint Meeting of the
holders of each of such Classes of Notes as the Representative of the Noteholders shall determine in its absolute discretion;
(d)
business which, in the opinion of the Representative of the Noteholders, affects more than one Class of Notes and gives rise to an
actual or potential conflict of interest between the holders of one such Class of Notes and the holders of any other Class of Notes
shall be transacted at separate Meetings of the holders of each Class of Notes; and
(e)
in the case of separate Meetings of the holders of each Class of Notes, these rules shall be applied as if references to the Notes and
the Noteholders were to the Notes of the relevant Class of Notes and to the holders of such Notes and, in the case of joint
Meetings, as if references to the Notes and the Noteholders were to the Notes of each of the Classes of Notes and to the respective
holders of the Notes.
In this paragraph “business” includes (without limitation) the passing or rejection of any resolution.
Article 5
Issue of Voting Certificates and Block Voting Instructions
Noteholders may obtain a Voting Certificate from the relevant clearing system, the Monte Titoli Account Holder or the relevant
custodian, as the case may be, or require the Principal Paying Agent to issue a Block Voting Instruction by arranging for their Notes to be
blocked in an account with the relevant clearing system, the Monte Titoli Account Holder or the relevant custodian at least 48 Hours
before the time fixed for the Meeting of the Relevant Class Noteholders, providing to the Principal Paying Agent, where appropriate,
evidence that the Notes are so blocked. The Noteholders may obtain such evidence by, inter alia, requesting the relevant clearing system,
the Monte Titoli Account Holder or the relevant custodian to release a certificate in accordance with, as the case may be: (i) the practices
and procedures of the relevant clearing system; or (ii) articles 21 and 22 of the regulation issued by the Bank of Italy and CONSOB on 22
February 2008, as subsequently supplemented and amended. A Voting Certificate or Block Voting Instruction shall be valid until the
release of the Blocked Notes to which it relates. So long as a Voting Certificate or Block Voting Instruction is valid, the bearer thereof (in
the case of a Voting Certificate) or any Proxy named therein (in the case of a Block Voting Instruction) shall be deemed to be the holder
of the Blocked Notes to which it relates for all purposes in connection with the Meeting. A Voting Certificate and a Block Voting
Instruction cannot be outstanding simultaneously in respect of the same Note.
Article 6
Validity of Block Voting Instructions
A Block Voting Instruction shall be valid only if it is deposited at the Specified Office of the Representative of the Noteholders, or at
some other place approved by the Representative of the Noteholders, at least 24 Hours before the time fixed for the Meeting of the
Relevant Class Noteholders and, if not deposited before such deadline, the Block Voting Instruction shall not be valid unless the
Chairman decides otherwise before the Meeting proceeds to business. If the Representative of the Noteholders so requires, a notarised
copy of each Block Voting Instruction and satisfactory proof of the identity of each Proxy named therein shall be produced at the
Meeting, but the Representative of the Noteholders shall not be obliged to investigate the validity of any Block Voting Instruction or the
authority of any Proxy.
Article 7
Convening of Meeting
The Issuer or the Representative of the Noteholders may convene a Meeting at any time, and the Representative of the Noteholders shall
be obliged to do so upon the request in writing of Noteholders holding not less than one-tenth of the Principal Amount Outstanding of the
relevant Class of Notes.
Whenever the Issuer is about to convene any such Meeting, it shall immediately give notice in writing to the Representative of the
Noteholders of the date thereof and of the nature of the business to be transacted thereat. Every Meeting shall be held at such time and
place as the Representative of the Noteholders may designate or approve, provided that it is in a EU Member State.
Unless the Representative of the Noteholders decides otherwise pursuant to Article 4 (General), each Meeting shall be attended by
Noteholders of the relevant Class of Notes.
Article 8
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Notice
At least 21 days’ notice (exclusive of the day on which the notice is given and of the day on which the Meeting is to be held) specifying
the date, time and place of the Meeting shall be given to the Noteholders and the Principal Paying Agent (with a copy to the Issuer and to
the Representative of the Noteholders). Any notice to Noteholders shall be given in accordance with Condition 17 (Notices). The notice
shall specify the nature of the resolutions to be proposed and shall explain how Noteholders may appoint Proxies, obtain Voting
Certificates and use Block Voting Instructions and the details of the relevant time limits applicable.
Article 9
Chairman of the Meeting
Any individual (who may, but need not, be a Voter) nominated in writing by the Representative of the Noteholders may take the chair at
any Meeting but if: (i) no such nomination is made; or (ii) the individual nominated is not present within 15 minutes after the time fixed
for the Meeting; then, the Voters shall choose one of themselves to take the chair, failing which the Issuer may appoint a Chairman. The
Chairman of an adjourned Meeting need not be the same person as the Chairman of the original Meeting.
The Chairman co-ordinates matters to be transacted at the Meeting and monitors the fairness of the Meeting's proceedings.
Article 10
Quorum
The quorum at any Meeting shall be at least one Voter representing or holding not less than the Relevant Fraction relative to (i) that Class
of Notes (in case of a Meeting of one Class of Notes) or (ii) all relevant Classes of Notes (in case of a joint Meeting). No business
(except choosing a Chairman, if requested) shall be transacted at a Meeting unless quorum is present at the commencement of business.
Article 11
Adjournment for want of quorum
If within 15 minutes after the time fixed for any Meeting a quorum is not present, then:
(a)
in the case of a Meeting requested by Noteholders, it shall be dissolved; and
(b)
in the case of any other Meeting, it shall be adjourned (i) until such date (which shall be not less than 14 days and not more than
42 days later) and to such place as the Chairman determines or (ii) on the date and at the place indicated in the notice convening
the Meeting (if such notice sets out the date and place of any adjourned Meeting); provided, however, that, in any case:
(i)
the Meeting shall be dissolved if the Issuer and the Representative of the Noteholders so decide; and
(ii)
no Meeting may be adjourned by resolution of a Meeting that represents less than the Relevant Fraction applicable in the
case of Meetings which have been resumed after adjournment for want of quorum.
Article 12
Adjourned Meeting
Without prejudice to Article 11 (Adjournment for want of quorum), the Chairman may, with the consent of (and shall if directed by) any
Meeting, adjourn such Meeting from time to time and from place to place, but no business shall be transacted at any adjourned Meeting
except business which might lawfully have been transacted at the Meeting from which the adjournment took place.
Article 13
Notice following adjournment
Article 8 (Notice) shall apply to any Meeting adjourned for want of quorum save that:
(a)
at least 10 days' notice (exclusive of the day on which the notice is given and of the day on which the Meeting is to be resumed)
shall be given;
(b)
the notice shall specifically set out the quorum requirements which will apply when the Meeting resumes; and
(c)
it shall not be necessary to give notice of the convening of an adjourned Meeting (i) if the notice given in respect of the first
Meeting already sets the time and place for an adjourned Meeting and specifies the quorum requirements which will apply when
the Meeting resumes; or (ii) if the Meeting which has been adjourned for any other reason.
Article 14
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Participation
The following may attend and speak at a Meeting:
(a)
Voters;
(b)
the Issuer or its representative and the Principal Paying Agent;
(c)
the financial advisers to the Issuer;
(d)
the Representative of the Noteholders;
(e)
the legal counsel to each of the Issuer, the Representative of the Noteholders and the Principal Paying Agent; and
(f)
such other person as may be resolved by the Meeting and as may be approved by the Representative of the Noteholders.
Article 15
Passing of resolution
A resolution is validly passed when (i) in respect of an Extraordinary Resolution only, ¾ of votes cast by the Voters attending the
relevant Meeting have been cast in favour of it or (ii) in respect of any resolution other than an Extraordinary Resolution, the majority of
votes cast by the Voters attending the relevant Meeting have been cast in favour of it.
Article 16
Show of hands
Every question submitted to a Meeting shall be decided in the first instance by a show of hands. Unless a poll is validly demanded before
or at the time that the result of the show of hands is declared, the Chairman’s declaration that on a show of hands a resolution has been
passed, passed by a particular majority, rejected or rejected by a particular majority shall be conclusive, without proof of the number of
votes cast for, or against, the resolution.
Article 17
Poll
A demand for a poll shall be valid if it is made by the Chairman, the Issuer, the Representative of the Noteholders or one or more Voters
holding or representing at least 2 per cent. of (i) the Principal Amount Outstanding of that relevant Class of Notes (in case of a Meeting
of a particular Class of Notes), or (ii) the Principal Amount Outstanding of the aggregate relevant Classes of Notes (in case of a joint
Meeting). The poll may be taken immediately or after such adjournment as the Chairman directs, but any poll demanded on the election
of the Chairman or on any question of adjournment shall be taken at the Meeting without adjournment. A valid demand for a poll shall
not prevent the continuation of the Meeting for any other business.
Article 18
Votes
Every Voter shall have:
(a)
on a show of hands, one vote; and
(b)
on a poll, one vote in respect of each €1,000 in principal amount of Note(s) represented by the Voting Certificate produced by
such Voter or in respect of which he is a Proxy.
In the case of equality of votes, the Chairman shall both on a show of hands and on a poll have a casting vote in addition to the votes (if
any) to which he may be entitled as a Voter.
Unless the terms of any Block Voting Instruction state otherwise, a Voter shall not be obliged to exercise all the votes to which he is
entitled or to cast all the votes which he exercises in the same manner.
Article 19
Vote by Proxies
Any vote cast by a Proxy in accordance with the relevant Block Voting Instruction shall be valid even if such Block Voting Instruction or
any instruction pursuant to which it was given has been amended or revoked, provided that the Representative of the Noteholders or the
Issuer has not been notified by the Principal Paying Agent in writing of such amendment or revocation by the time being 24 Hours before
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the time fixed for the Meeting. Unless revoked, any appointment of a Proxy under a Block Voting Instruction in relation to a Meeting
shall remain in force in relation to any Meeting resumed following an adjournment.
Article 20
Exclusive powers of the Meeting
The Meeting shall have exclusive powers on the following matters:
(a)
to approve any Basic Terms Modification;
(b)
to approve any proposal by the Issuer for any alteration, abrogation, variation or compromise of the rights of the Representative of
the Noteholders or the Noteholders under any Transaction Document, the Notes or the Conditions or any arrangement in respect of
the obligations of the Issuer under or in respect of the Notes;
(c)
to approve the substitution of any person for the Issuer (or any previous substitute) as principal obligor under the Notes;
(d)
to direct the Representative of the Noteholders to serve an Issuer Acceleration Notice under Condition 10(b) (Service of an Issuer
Acceleration Notice);
(e)
to waive any breach or authorise any proposed breach by the Issuer of its obligations under or in respect of the Notes or any
Transaction Document or any act or omission which might otherwise constitute an Event of Default;
(f)
to direct the Representative of the Noteholders to concur in and execute and do all such documents, acts and things as may be
necessary to carry out and give effect to any resolution of the Noteholders;
(g)
to exercise, enforce or dispose of any right and power on payment and application of funds deriving from any claims on which a
pledge or other security interest is created in favour of the Noteholders, other than in accordance with the Transaction Documents;
and
(h)
to appoint and remove the Representative of the Noteholders.
Article 21
Powers exercisable by Extraordinary Resolution
Without limitation to the exclusive powers of the Meeting listed in Article 20 (Exclusive powers of the Meeting), each Meeting shall have
the following powers exercisable only by way of an Extraordinary Resolution:
(a)
approval of any Basic Terms Modification;
(b)
approval of any proposal by the Issuer for any alteration, abrogation, variation or compromise of, or arrangement in respect of, the
rights of the Representative of the Noteholders or the Noteholders against the Issuer or against any of its property or against any
other person whether such rights shall arise under these rules, the Notes, the Conditions or otherwise;
(c)
approval of any scheme or proposal for the exchange or substitution of any of the Notes for, or the conversion of the Notes into, or
the cancellation of the Notes in consideration of, shares, stock, notes, bonds, debentures, debenture stock and/or other obligations
and/or securities of the Issuer or of any other body corporate formed or to be formed, or for or into or in consideration of cash, or
partly for or into or in consideration of such shares, stock, notes, bonds, debentures, debenture stock and/or other obligations
and/or securities as aforesaid and partly for or into or in consideration of cash;
(d)
appointment and removal of the Representative of the Noteholders;
(e)
approval of the substitution of any person for the Issuer (or any previous substitute) as principal obligor under the Notes;
(f)
without prejudice to the Conditions, approval of any alteration of the provisions contained in these rules, the Notes, the Conditions,
the Intercreditor Agreement or any other Transaction Document which shall be proposed by the Issuer and/or the Representative of
the Noteholders or any other party thereto;
(g)
discharge or exoneration of the Representative of the Noteholders from any liability in respect of any act or omission for which the
Representative of the Noteholders may have become responsible under or in relation to these rules, the Notes, the Conditions or
any other Transaction Document;
(h)
giving any direction or granting any authority or sanction which, under the provisions of these rules, the Conditions or the Notes,
is required to be given by Extraordinary Resolution;
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(i)
authorisation and sanctioning of actions of the Representative of the Noteholders under these rules, the Notes, the Conditions, the
terms of the Intercreditor Agreement or any other Transaction Documents and in particular power to sanction the release of the
Issuer by the Representative of the Noteholders;
(j)
authorisation and direction to the Representative of the Noteholders to concur in and execute and do all such documents, acts and
things as may be necessary to carry out and give effect to any Extraordinary Resolution;
provided however that:
(a)
no Extraordinary Resolution involving a Basic Terms Modification passed by the Relevant Class Noteholders shall be effective
unless it is sanctioned by an Extraordinary Resolution of the Noteholders of each of the other Classes of Notes (to the extent that
Notes of each such Classes of Notes are then outstanding);
(b)
no Extraordinary Resolution of the Junior Noteholders shall be effective unless (A) the Representative of the Noteholders is of the
opinion that it will not be materially prejudicial to the interests of the Class A Noteholders and the Class B Noteholders (to the
extent that the Class A Notes and the Class B Notes are then, respectively, outstanding) or (B) (to the extent that the
Representative of the Noteholders is not of that opinion) it is sanctioned by an Extraordinary Resolution of the Class A
Noteholders and the Class B Noteholders (to the extent that the Class A Notes and the Class B Notes are then, respectively,
outstanding);
(c)
no Extraordinary Resolution of the Class B Noteholders shall be effective unless (A) the Representative of the Noteholders is of
the opinion that it will not be materially prejudicial to the interests of the Class A Noteholders (to the extent that the Class A Notes
are then outstanding) or (B) (to the extent that the Representative of the Noteholders is not of that opinion) it is sanctioned by an
Extraordinary Resolution of the Class A Noteholders (to the extent that the Class A Notes are then outstanding).
Article 22
Challenge of resolution
Any Noteholder can challenge a resolution which is not passed in conformity with the provisions of these rules.
Article 23
Minutes
Minutes shall be made of all resolutions and proceedings at each Meeting. The Chairman shall sign the minutes, which shall be
conclusive evidence of the resolutions and proceedings recorded therein. Unless and until the contrary is proved, every such Meeting in
respect of the proceedings of which minutes have been made and signed shall be deemed to have been duly convened and held and all
resolutions passed or proceedings transacted at such meeting shall be deemed to have been duly passed or transacted.
Article 24
Written Resolution
A Written Resolution shall take effect as if it were an Extraordinary Resolution passed at a Meeting of the Noteholders.
Article 25
Individual actions and remedies
The right of each Noteholder to bring individual actions or seek other individual remedies to enforce his or her rights under the Notes will
be subject to the Meeting passing an Extraordinary Resolution authorising such individual action or other remedy. In this respect, the
following provisions shall apply:
(a)
the Noteholder intending to enforce his or her rights under the Notes will notify the Representative of the Noteholders in writing
of his or her intention;
(b)
the Representative of the Noteholders will, within 30 days of receiving such notification, convene a Meeting of the Noteholders of
the relevant Class(es) of Notes, in accordance with these rules at the expense of such Noteholder;
(c)
if the Meeting does not pass an Extraordinary Resolution authorising the individual enforcement or remedy, the Noteholder will be
prevented from seeking such enforcement or remedy (provided that the same matter can be submitted again to a further Meeting
after a reasonable period of time has elapsed); and
(d)
if the Meeting does pass an Extraordinary Resolution authorising the individual enforcement or remedy, the Noteholder will be
permitted to seek such individual enforcement or remedy in accordance with the terms of the Extraordinary Resolution.
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No individual action or remedy can be sought by a Noteholder to enforce his or her rights under the Notes unless a Meeting of
Noteholders has been held to resolve on such action or remedy and in accordance with the provisions of this Article 25.
TITLE III
THE REPRESENTATIVE OF THE NOTEHOLDERS
Article 26
Appointment, removal and remuneration
Each appointment of a Representative of the Noteholders must be approved by an Extraordinary Resolution of the holders of each Class
of Notes in accordance with the provisions of this Article 26, save in respect of the appointment of the first Representative of the
Noteholders which will be BNP Paribas Securities Services S.A., Milan Branch.
Save for BNP Paribas Securities Services S.A., Milan Branch as first Representative of the Noteholders, the Representative of the
Noteholders shall be:
(a)
a bank incorporated in any jurisdiction of the European Union or a bank incorporated in any other jurisdiction, in either case
provided it is licensed to conduct banking business in Italy; or
(b)
a financial institution registered under article 107 of the Banking Act; or
(c)
any other entity which may be permitted to act in such capacity by any specific provisions of Italian law applicable to the
securitisation of monetary rights and/or by any regulations, instructions, guidelines and/or specific approvals issued by the
competent Italian supervising authorities.
It is further understood and agreed that directors, auditors, employees (if any) of the Issuer and those who fall in any of the conditions set
out in article 2399 of the Italian civil code cannot be appointed as the Representative of the Noteholders.
The Representative of the Noteholders shall be appointed for an unlimited term and can be removed by way of an Extraordinary
Resolution of the holders of each Class of Notes at any time.
In the event of a termination of the appointment of the Representative of the Noteholders for any reason whatsoever, such Representative
of the Noteholders shall remain in office until acceptance of the appointment by the Issuer of a substitute Representative of the
Noteholders designated among the entities indicated in (a), (b) or (c) above, and, provided that a Meeting of the holders of each Class of
Notes has not appointed such a substitute within 60 days of such termination, such Representative of the Noteholders may appoint such a
substitute. The powers and authority of the Representative of the Noteholders whose appointment has been terminated shall be limited to
those necessary for the performance of the essential functions which are required to be complied with in connection with the Notes.
Each of the Noteholders, by reason of holding the relevant Note(s), will recognise the power of the Representative of the Noteholders,
hereby granted, to appoint its own successor and recognise the Representative of the Noteholders so appointed as its representative.
The Issuer shall pay to the Representative of the Noteholders an annual fee for its services as Representative of the Noteholders as from
the date hereof. Such remuneration shall be payable in accordance with the Intercreditor Agreement and the Priority of Payments up to
(and including) the date when the Notes have been repaid in full and cancelled in accordance with the Conditions.
Article 27
Duties and powers
The Representative of the Noteholders is the legal representative of the Organisation of Noteholders subject to and in accordance with the
Conditions, these rules, the Intercreditor Agreement and the other Transaction Documents to which it is a party (together, the “Relevant
Provisions”).
Subject to the Relevant Provisions, the Representative of the Noteholders is responsible for implementing the directions of a Meeting of
Noteholders and for representing the interests of the Noteholders as a class vis-à-vis the Issuer. The Representative of the Noteholders has
the right to attend Meetings. The Representative of the Noteholders may convene a Meeting in order to obtain the authorisation or
directions of the Meeting in respect of any action proposed to be taken by the Representative of the Noteholders.
All actions taken by the Representative of the Noteholders in the execution and exercise of its powers and authorities and of the
discretions vested in it shall be taken by duly authorised officer(s) for the time being of the Representative of the Noteholders. The
Representative of the Noteholders may also, whenever it considers it expedient, whether by power of attorney or otherwise, delegate to
any person(s) all or any of its duties, powers, authorities or discretions vested in it as aforesaid. Any such delegation may be made upon
such terms and conditions, and subject to such regulations (including power to sub-delegate), as the Representative of the Noteholders
may think fit in the interests of the Noteholders. The Representative of the Noteholders shall not be bound to supervise the proceedings of
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any such delegate or sub-delegate and shall not be responsible for any loss, liability, cost, claim, action, demand or expense incurred by
reason of such delegate’s misconduct or default, unless the Representative of the Noteholders has been negligent in the selection of the
delegate or sub-delegate. The Representative of the Noteholders shall, as soon as reasonably practicable, give notice to the Issuer of the
appointment of any delegate and of any renewal, extension or termination of such appointment, and shall make it a condition of any such
delegation that any delegate shall also, as soon as reasonably practicable, give notice to the Issuer of any sub-delegate.
The Representative of the Noteholders shall be authorised to represent the Organisation of Noteholders in judicial proceedings, including
proceedings involving the Issuer in creditors' agreement (concordato preventivo), forced liquidation (fallimento) or compulsory
administrative liquidation (liquidazione coatta amministrativa).
The Representative of the Noteholders shall have regard to the interests of all the Issuer Secured Creditors as regards the exercise and
performance of all powers, authorities, duties and discretions of the Representative of the Noteholders under these rules, the Intercreditor
Agreement or under the Mandate Agreement (except where expressly provided otherwise), but, notwithstanding the foregoing, the
Representative of the Noteholders shall have regard to the interests only: (i) of the Most Senior Class outstanding, and (ii) subject to item
(i), of whichever Issuer Secured Creditor ranks higher in the Priority of Payments hereof for the payment of the amounts therein specified
if, in its opinion, there is or may be a conflict between all or any of the interests of one or more Classes of Noteholders or between one or
more Classes of Noteholders and any other Issuer Secured Creditors. The foregoing provision shall not affect the payment order set forth
in the applicable Priority of Payments.
Each Noteholder, by acquiring title to a Note is deemed to agree and acknowledge that:
(i)
the Representative of the Noteholders has entered into the Italian Deed of Pledge and the English Deed of Charge and Assignment
for itself and as agent in the name of and on behalf of each Noteholder from time to time and each of the other Issuer Secured
Creditors thereunder;
(ii)
by virtue of the transfer to it of the relevant Note, each Noteholder shall be deemed to have granted to the Representative of the
Noteholders, as its agent, the right (a) to exercise in such manner as the Representative of the Noteholders in its sole opinion
deems appropriate, on behalf of such Noteholder, all of that Noteholder’s rights under the Securitisation Law in respect of the
Portfolio and all amounts and/or other assets of the Issuer arising from the Portfolio and the Transaction Documents not subject to
the Note Security and (b) to enforce its rights as an Issuer Secured Creditor for and on its behalf under the Italian Deed of Pledge
and the English Deed of Charge and Assignment and in relation to the Note Security;
(iii)
the Representative of the Noteholders, in its capacity as agent in the name of and on behalf of the Noteholders of each Class, shall
be the only person entitled under the Conditions and under the Transaction Documents to institute proceedings against the Issuer
and/or to enforce or to exercise any rights in connection with the Note Security or to take any steps against the Issuer or any of the
other parties to the Transaction Documents for the purposes of enforcing the rights of the holders of each relevant Class of Notes
with respect to the other Transaction Documents and recovering any amounts owing under the Notes or under the Transaction
Documents;
(iv)
the Representative of the Noteholders shall have exclusive rights under the Italian Deed of Pledge and the English Deed of Charge
and Assignment to make demands, give notices, exercise or refrain from exercising any rights and to take or refrain from taking
any action (including, without limitation, the release or substitution of security) in respect of the Note Security;
(v)
no Noteholder shall be entitled to proceed directly against the Issuer nor take any steps or pursue any action whatsoever for the
purpose of recovering any debts due or owing to it by the Issuer or take, or join in taking, steps for the purpose of obtaining
payment of any amount expressed to be payable by the Issuer or the performance of any of the Issuer’s obligations under these
Conditions and/or the Transaction Documents or petition for or procure the commencement of insolvency proceedings or the
winding-up, insolvency, extraordinary administration or compulsory administrative liquidation of the Issuer or the appointment of
any kind of insolvency official, administrator, liquidator, trustee, custodian, receiver or other similar official in respect of the
Issuer for any, all, or substantially all the assets of the Issuer or in connection with any reorganisation or arrangement or
composition in respect of the Issuer, pursuant to the Italian Banking Act or otherwise, unless (in each case under (ii), (iii) and (iv)
above) an Issuer Acceleration Notice shall have been served or an Insolvency Event shall have occurred and the Representative of
the Noteholders, having become bound so to do, fails to do so within a reasonable period and such failure shall be continuing,
(provided that any such failure shall not be conclusive per se of a default or breach of duty by the Representative of the
Noteholders), provided that the Noteholder may then only proceed subject to the provisions of the Conditions and provided that
this proviso shall not prejudice the right of any Noteholder to prove a claim in the insolvency of the Issuer where such insolvency
follows the institution of an insolvency proceedings by a third party;
(vi)
no Noteholder shall at any time exercise any right of netting, set-off or counterclaim in respect of its rights against the Issuer such
rights being expressly waived or exercise any right of claim of the Issuer by way of a subrogation action (azione surrogatoria)
pursuant to article 2900 of the Italian civil code; and
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(vii)
the provisions of this Article 27 shall survive and shall not be extinguished by the redemption (in whole or in part) and/or
cancellation of the Notes and waives to the greatest extent permitted by law any rights directly to enforce its rights against the
Issuer.
Article 28
Resignation of the Representative of the Noteholders
The Representative of the Noteholders may resign at any time upon giving not less than three calendar months' notice in writing to the
Issuer without assigning any reason therefor and without being responsible for any costs incurred as a result of such resignation. The
resignation of the Representative of the Noteholders shall not become effective until a Meeting of the holders of each Class of Notes has
appointed a new Representative of the Noteholders provided that if a new Representative of the Noteholders has not been so appointed
within 60 days of the date of such notice of resignation, the Representative of the Noteholders may appoint a new Representative of the
Noteholders.
Article 29
Exoneration of the Representative of the Noteholders
The Representative of the Noteholders shall not assume any other obligations in addition to those expressly provided herein and in the
other Transaction Documents to which it is a party.
Without limiting the generality of the foregoing, the Representative of the Noteholders:
(a)
shall not be under any obligation to take any steps to ascertain whether a Swap Trigger, an Event of Default or any other event,
condition or act, the occurrence of which would cause a right or remedy to become exercisable by the Representative of the
Noteholders or any Noteholder hereunder or under any of the other Transaction Documents has happened and, until it shall have
actual knowledge or express notice to the contrary, the Representative of the Noteholders shall be entitled to assume that no Swap
Trigger, no Event of Default or such other event, condition or act has occurred;
(b)
shall not be under any obligation to monitor or supervise the observance or performance by the Issuer or any other party to the
Transaction Documents of the provisions of, and its obligations under, these rules, the Notes, the Conditions or any other
Transaction Document, and, until it shall have actual knowledge or express notice to the contrary, it shall be entitled to assume
that the Issuer and each such other party is observing and performing all such provisions and obligations;
(c)
shall not be under any obligation to give notice to any person of the execution of these rules, the Notes, the Conditions or any of
the Transaction Documents or any transaction contemplated hereby or thereby;
(d)
shall not be responsible for, or for investigating, the legality, validity, effectiveness, adequacy, suitability or genuineness of these
rules, the Notes, the Conditions, any Transaction Document, or any other document, or any obligation or rights created or
purported to be created hereby or thereby or pursuant hereto or thereto, and (without prejudice to the generality of the foregoing) it
shall not have any responsibility for, or have any duty to make any investigation in respect of, or in any way be liable whatsoever
for: (i) the nature, status, creditworthiness or solvency of the Issuer or any other party to the Transaction Documents; (ii) the
existence, accuracy or sufficiency of any legal or other opinions, searches, reports, certificates, valuations or investigations
delivered or obtained or required to be delivered or obtained at any time in connection herewith or with any Transaction
Document; (iii) the suitability, adequacy or sufficiency of any collection or recovery procedures operated by the Servicer or
compliance therewith; (iv) the failure by the Issuer to obtain or comply with any licence, consent or other authority in connection
with the purchase or administration of the Claims; or (v) any accounts, books, records or files maintained by the Issuer, the
Servicer, the Principal Paying Agent or any other person in respect of the Claims;
(e)
shall not be responsible for the receipt or application by the Issuer of the proceeds of the issue of the Notes or the distribution of
any of such proceeds to the persons entitled thereto;
(f)
shall have no responsibility for the maintenance of any rating of the Rated Notes by Fitch or any other credit or rating agency or
any other person;
(g)
shall not be responsible for, or for investigating, any matter which is the subject of any recitals, statements, warranties or
representations of any party, other than the Representative of the Noteholders contained herein or in any Transaction Document;
(h)
shall not be bound or concerned to examine, or enquire into, or be liable for any defect or failure in the right or title of the Issuer to
the Claims or any part thereof, whether such defect or failure was known to the Representative of the Noteholders or might have
been discovered upon examination or enquiry, or whether capable of remedy or not;
(i)
shall not be liable for any failure, omission or defect in registering or filing or procuring registration or filing of, or otherwise
protecting or perfecting, these rules, the Notes or any Transaction Document;
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(j)
shall not be under any obligation to insure the Mortgage Loans and the Claims or any part thereof;
(k)
shall not be responsible for (except as otherwise provided in the Conditions or in the Transaction Documents) making or verifying
any determination or calculation in respect of the Claims, the Notes and any other payment to be made in accordance with the
(l)
shall not have regard to the consequences of any modification or waiver of these rules, the Notes, the Conditions or any of the
Transaction Documents for individual Noteholders or any relevant persons resulting from their being for any purpose domiciled or
resident in, or otherwise connected with, or subject to, the jurisdiction of any particular territory; and
(m)
shall not (unless and to the extent ordered so to do by a court of competent jurisdiction) be under any obligation to disclose to any
Noteholder, any Other Issuer Creditor or any other person any confidential, financial, price sensitive or other information made
available to the Representative of the Noteholders by the Issuer or any other person in connection with these rules, the Notes or
any other Transaction Document, and none of the Noteholders, Other Issuer Creditors nor any other person shall be entitled to
take any action to obtain from the Representative of the Noteholders any such information.
The Representative of the Noteholders, notwithstanding anything to the contrary contained in these rules:
(a)
may, without the consent of the Noteholders or any Other Issuer Creditors and subject to the Representative of the Noteholders
giving prior written notice thereof to Fitch, concur with the Issuer and any other relevant parties in making any amendment or
modification to these rules, the Conditions (other than a Basic Terms Modification) or to any of the Transaction Documents
which, in the opinion of the Representative of the Noteholders, it is expedient to make, or is of a formal, minor or technical
nature, to correct a manifest error or an error which is, in the opinion of the Representative of the Noteholders, proven or is
necessary or desirable for the purposes of clarification. Any such amendment or modification shall be binding on the Noteholders
and, unless the Representative of the Noteholders otherwise agrees, the Issuer shall cause such amendment or modification to be
notified to the Noteholders as soon as practicable thereafter;
(b)
may, without the consent of the Noteholders, concur with the Issuer and any other relevant parties in making any amendment or
modification (other than in respect of a Basic Terms Modification) to these rules, the Conditions or to any of the Transaction
Documents which, in the opinion of the Representative of the Noteholders, it may be proper to make, provided that the
Representative of the Noteholders is of the opinion that such amendment or modification will not be materially prejudicial to the
interests of the holders of the Most Senior Class;
(c)
may, without the consent of the Noteholders or any Other Issuer Creditor, authorise or waive any proposed breach or breach of
the Notes (including an Event of Default) or of the Intercreditor Agreement or any other Transaction Document if, in the opinion
of the Representative of the Noteholders, the interests of the Most Senior Class will not be materially prejudiced by such
authorisation or waiver; provided that the Representative of the Noteholders shall not exercise any of such powers in
contravention of any express direction by an Extraordinary Resolution or of a request in writing made by the holders of not less
than 25 per cent. in aggregate Principal Amount Outstanding of the Most Senior Class (but so that no such direction or request
shall affect any authorisation, waiver or determination previously given or made) or so as to authorise or waive any proposed
breach or breach relating to a Basic Terms Modification;
(d)
may act on the advice, certificate, opinion or information (whether or not addressed to the Representative of the Noteholders)
obtained from any lawyer, accountant, banker, broker, credit or rating agency or other expert whether obtained by the Issuer, the
Representative of the Noteholders or otherwise and shall not, in the absence of gross negligence (colpa grave) or wilful
misconduct (dolo) on the part of the Representative of the Noteholders, be responsible for any loss incurred by so acting. Any
such advice, certificate, opinion or information may be sent or obtained by letter, telex, telegram, facsimile transmission or cable
and, in the absence of fraud (frode), gross negligence (colpa grave) or wilful misconduct (dolo) on the part of the Representative
of the Noteholders, the Representative of the Noteholders shall not be liable for acting on any advice, certificate, opinion or
information contained in, or purported to be conveyed by, any such letter, telex, telegram, facsimile transmission or cable,
notwithstanding any error contained therein or the non-authenticity of the same;
(e)
may call for, and shall be at liberty to accept as sufficient evidence of any fact or matter or as to the expediency of any dealing,
transaction, step or thing, a certificate duly signed by or on behalf of the sole director or the chairman of the board of directors of
the Issuer, as the case may be, and the Representative of the Noteholders shall not be bound, in any such case, to call for further
evidence or be responsible for any loss that may be occasioned as a result of acting on such certificate;
(f)
save as expressly otherwise provided herein, shall have absolute and unfettered discretion as to the exercise, or non-exercise, of
any right, power and discretion vested in the Representative of the Noteholders by these rules, the Notes, any Transaction
Document or by operation of law and the Representative of the Noteholders shall not be responsible for any loss, costs, damages,
expenses or other liabilities that may result from the exercise or non-exercise thereof except insofar as the same are incurred as a
result of its gross negligence (colpa grave) or wilful misconduct (dolo);
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(g)
shall be at liberty to leave in custody these rules, the Transaction Documents and any other documents relating thereto or to the
Notes in any part of the world with any bank, financial institution or company whose business includes undertaking the safe
custody of documents, or with any lawyer or firm of lawyers considered by the Representative of the Noteholders to be of good
reputation, and the Representative of the Noteholders shall not be responsible for, or required to insure against, any loss incurred
in connection with any such custody and may pay all sums required to be paid on account of, or in respect of, any such custody;
(h)
in connection with matters in respect of which the Representative of the Noteholders is entitled to exercise its discretion
hereunder, is entitled to convene a Meeting of the Noteholders of any or all Classes of Notes in order to obtain instructions as to
how the Representative of the Noteholders should exercise such discretion provided that nothing herein shall be construed so as to
oblige the Representative of the Noteholders to convene such a Meeting. The Representative of the Noteholders shall not be
obliged to take any action in respect of these rules, the Notes, the Conditions or any Transaction Document unless it is
indemnified and/or provided with security to its satisfaction against all actions, proceedings, claims and demands which may be
brought against it and against all costs, charges, damages, expenses and liabilities (provided that supporting documents are
delivered) which it may incur by taking such action;
(i)
in connection with matters in respect of which the Noteholders are entitled to direct the Representative of the Noteholders, the
Representative of the Noteholders shall not be liable for acting upon any resolution purported to have been passed at any Meeting
of holders of any Class of Notes in respect of which minutes have been drawn up and signed notwithstanding that subsequent to
so acting, it transpires that the Meeting was not duly convened or constituted, such resolution was not duly passed or that the
resolution was otherwise not valid or binding upon the relevant Noteholders;
(j)
may call for, and shall be at liberty to accept and place full reliance on as sufficient evidence of the facts stated therein, a
certificate or letter of confirmation certified as true and accurate and signed on behalf of any common depository as the
Representative of the Noteholders considers appropriate, or any form of record made by any such depository, to the effect that at
any particular time or throughout any particular period any particular person is, was, or will be shown in its records as entitled to a
particular principal amount of Notes;
(k)
may certify whether or not an Event of Default is, in its opinion, materially prejudicial to the interests of the Noteholders or the
holders of the Most Senior Class and any such certificate shall be conclusive and binding upon the Issuer, the Noteholders, the
Other Issuer Creditors and any other relevant person;
(l)
may determine whether or not a default in the performance by the Issuer of any obligation under the provisions of these rules, the
Notes, the Conditions or any other Transaction Document is capable of remedy and, if the Representative of the Noteholders
certifies that any such default is, in its opinion, not capable of remedy, such certificate shall be conclusive and binding upon the
Issuer, the Noteholders, the Other Issuer Creditors and any relevant person;
(m)
may assume, without enquiry, that no Notes are for the time being held by, or for the benefit of, the Issuer;
(n)
shall be entitled to call for, and to rely upon, a certificate or any letter of confirmation or explanation reasonably believed by it to
be genuine of any party to the Intercreditor Agreement, any Other Issuer Creditor or Fitch in respect of any matter and
circumstance for which a certificate is expressly provided for hereunder or under any Transaction Document or in respect of the
ratings of the Notes and it shall not be bound, in any such case, to call for further evidence or be responsible for any loss, liability,
costs, damages, expenses or inconvenience that may be incurred by its failing to do so; and
(o)
may, in determining whether the exercise of any power, authority, duty or discretion under or in relation hereto or to the Notes,
the Conditions or any Transaction Document, is materially prejudicial to the interests of the Noteholders, contact Fitch so to
assess whether the then current ratings of the Rated Notes would not be downgraded, withdrawn or qualified and have regard to
any other confirmation which it considers, in its sole and absolute discretion, as necessary and/or appropriate.
Any consent or approval given by the Representative of the Noteholders under these rules, the Notes, the Conditions or any other
Transaction Document may be given on such terms and subject to such conditions (if any) as the Representative of the Noteholders
thinks fit and, notwithstanding anything to the contrary contained herein, in the Conditions or in any Transaction Document, such consent
or approval may be given retrospectively.
No provision of these rules, the Notes, the Conditions or any Transaction Document shall require the Representative of the Noteholders
to do anything which may be illegal or contrary to applicable law or regulations, or expend or risk its own funds, or otherwise incur any
financial liability in the performance of any of its duties, or in the exercise of any of its powers or discretions, and the Representative of
the Noteholders may refrain from taking any action if it has reasonable grounds to believe that it will not be reimbursed for any funds, or
that it will not be indemnified against any loss or liability which it may incur as a result of such action.
Article 30
Note Security
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The Representative of the Noteholders shall be entitled to exercise all the rights granted by the Issuer in favour of the Representative of
the Noteholders on behalf of the Noteholders and the other Issuer Secured Creditors under the Note Security.
The Representative of the Noteholders, acting on behalf of the Issuer Secured Creditors, may:
(a)
prior to enforcement of the Note Security, appoint and entrust the Issuer to collect, in the interest of the Issuer Secured Creditors
and on their behalf, any amounts deriving from the Note Security and may instruct, jointly with the Issuer, the obligors whose
obligations form part of the Note Security to make any payments to be made thereunder to an Account of the Issuer;
(b)
acknowledge that the Accounts to which payments have been made in respect of the Note Security shall be deposit accounts for
the purpose of article 2803 of the Italian civil code and agree that such Accounts shall be operated in compliance with the
provisions of the Agency and Accounts Agreement and the Intercreditor Agreement;
(c)
agree that all funds credited to the Accounts from time to time shall be applied prior to the enforcement of the Note Security, in
accordance with the Conditions and the Intercreditor Agreement;
(d)
agree that cash deriving from time to time from the Note Security and the amounts standing to the credit of the Accounts shall be
applied prior to enforcement of the Note Security, in and towards satisfaction not only of amounts due to the Issuer Secured
Creditors, but also of such amounts due and payable to the other Issuer Creditors that rank pari passu with, or higher than, the
Issuer Secured Creditors, according to the applicable Priority of Payments and, to the extent that all amounts due and payable to
the Issuer Secured Creditors have been paid in full, also towards satisfaction of amounts due to the other Issuer Creditors that rank
below the Issuer Secured Creditors. The Issuer Secured Creditors irrevocably waive any right which they may have hereunder in
respect of cash deriving from time to time from the Note Security and amounts standing to the credit of the Accounts which is not
in accordance with the foregoing. The Representative of the Noteholders shall not be entitled to collect, withdraw or apply, or
issue instructions for the collection, withdrawal or application of, cash deriving from time to time from the Note Security, under
the Note Security, except in accordance with the foregoing, the Conditions and the Intercreditor Agreement; and
(e)
agree that (i) any amount paid by the Swap Counterparty upon termination of the Swap Transactions in respect of any termination
payment and, until a replacement swap counterparty has been found, exceeding the net amounts which would have been due and
payable by the Swap Counterparty with respect to the next Interest Payment Date, had the Swap Transactions not been terminated;
and (ii) the Collateral (if any) may be paid, prior to enforcement of the Note Security, exclusively in or towards satisfaction of
amounts that are due and payable to the Swap Counterparty pursuant to the Swap Agreement, irrespective of the order of priority
set forth in the applicable Priority of Payments. The Issuer Secured Creditors irrevocably waive any right which they may have
hereunder in respect of such amounts which is not in accordance with the foregoing.
Article 31
Indemnity
It is hereby acknowledged that the Issuer has covenanted and undertaken under the Intercreditor Agreement to reimburse, pay or
discharge (on a full indemnity basis) all costs, liabilities, losses, charges, expenses (provided, in each case, that supporting documents are
delivered), damages, actions, proceedings, claims and demands (including, without limitation, legal fees and any applicable value added
tax or similar tax) properly incurred by or made against the Representative of the Noteholders or by any person to whom the
Representative of the Noteholders has delegated any power, authority or discretion or any appointee thereof, in relation to the preparation
and execution of, the exercise or the purported exercise of, its powers, authority and discretion and performance of its duties under and in
any other manner in relation to these rules, the Notes, the Conditions, the Intercreditor Agreement or any other Transaction Document,
including but not limited to legal and travelling expenses and any stamp, issue, registration, documentary and other taxes or duties paid
by the Representative of the Noteholders in connection with any action and/or legal proceedings brought or contemplated by the
Representative of the Noteholders pursuant to these rules, the Notes, the Conditions or any Transaction Document, against the Issuer or
any other person for enforcing any obligations under these rules, the Notes or the Transaction Documents, except insofar as the same are
incurred as a result of gross negligence (colpa grave) or wilful misconduct (dolo) on the part of the Representative of the Noteholders.
TITLE IV
THE ORGANISATION OF NOTEHOLDERS UPON SERVICE OF AN ISSUER ACCELERATION
NOTICE
Article 32
Powers
It is hereby acknowledged that, upon service of an Issuer Acceleration Notice and/or failure by the Issuer to exercise its rights, the
Representative of the Noteholders shall, pursuant to the Mandate Agreement, be entitled, in its capacity as legal representative of the
Organisation of Noteholders, also in the interest and for the benefits of the Other Issuer Creditors, pursuant to articles 1411 and 1723 of
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152
the Italian civil code, to exercise certain rights in relation to the Claims. Therefore, the Representative of the Noteholders, in its capacity
as legal representative of the Organisation of Noteholders, will be authorised, also pursuant to the terms of the Mandate Agreement, to
exercise, in the name and on behalf of the Issuer and as mandatario in rem propriam of the Issuer, all and any of the Issuer's Rights,
including the right to give directions and instructions to the relevant parties to the Transaction Documents.
In particular and without limiting the generality of the foregoing, following the service of an Issuer Acceleration Notice, the
Representative of the Noteholders will be entitled, until the Notes have been repaid in full or cancelled in accordance with the
Conditions:
(a)
to request the Collection Account Bank to transfer all monies standing to the credit of the Collection Account and the Expenses
Account to, respectively, a replacement Collection Account and a replacement Expenses Account opened for such purpose by the
Representative of the Noteholders with a replacement Collection Account Bank;
(b)
to request either (i) the Computation Agent to instruct the Transaction Bank to transfer or (ii) directly the Transaction Bank to
transfer all monies and/or securities standing to the credit of the Claims Transaction Account, the Principal Account and the Cash
Reserve Account to, respectively, a replacement Collection Account, a replacement Principal Account and a replacement Cash
Reserve Account opened for such purpose by the Representative of the Noteholders with a replacement Transaction Bank;
(c)
to request the Principal Paying Agent to transfer all monies standing to the credit of the Payments Account and the Eligible
Investments Securities Account to, respectively, a replacement Payments Account and a replacement Eligible Investments
Securities Account opened for such purpose by the Representative of the Noteholders with a replacement Principal Paying Agent;
(d)
to require performance by any Issuer Creditor of its obligations under the relevant Transaction Document to which such Issuer
Creditor is a party, to bring any legal actions and exercise any remedies in the name and on behalf of the Issuer that are available
to the Issuer under the relevant Transaction Document against such Issuer Creditor in case of failure to perform and generally to
take such action in the name and on behalf of the Issuer as the Representative of the Noteholders may deem necessary to protect
the interests of the Issuer, the Noteholders and the Other Issuer Creditors in respect of the Portfolio, the Claims and the Issuer's
Rights;
(e)
to instruct the Servicer in respect of the recovery of the Issuer's Rights;
(f)
to take possession, as an agent of the Issuer and to the extent permitted by applicable laws, of all Collections (by way of a power
of attorney granted hereunder in respect of the relevant Accounts) and of the Claims and to sell or otherwise dispose of the Claims
or any of them in such manner and upon such terms and at such price and such time or times as the Representative of the
Noteholders shall, in its discretion, deem appropriate and to apply the proceeds in accordance with the Post-Enforcement Priority
of Payments; provided however that if the amount of the monies at any time available to the Issuer or to the Representative of the
Noteholders for the payments above shall be less than 10 per cent. of the Principal Amount Outstanding of all Classes of Notes,
the Representative of the Noteholders may at its discretion invest such monies in some or one of the investments authorised
pursuant to the Intercreditor Agreement. The Representative of the Noteholders at its discretion may vary such investments and
may accumulate such investments and the resulting income until the immediately following Accumulation Date. Any monies,
which under the Intercreditor Agreement or the Conditions may be invested, may be invested by the Representative of the
Noteholders in the name or under the control of the Representative of the Noteholders in any investments or other assets in any
part of the world whether or not they produce income or by placing the same on deposit in the name or under the control of the
Representative of the Noteholders at such bank or other financial institution and in such currency as the Representative of the
Noteholders may think fit. The Representative of the Noteholders may at any time vary any such investments for or into other
investments or convert any monies so deposited into any other currency and shall not be responsible for any loss resulting from
any such investments or deposits, whether due to depreciation in value, fluctuations in exchange rates or otherwise, except insofar
as such loss is incurred as a result of its gross negligence (colpa grave) or wilful misconduct (dolo); and
(g)
to distribute the monies from time to time standing to the credit of the Accounts and such other accounts as may be opened by the
Representative of the Noteholders pursuant to paragraphs (a), (b) and/or (c) above to the Noteholders and the Other Issuer
Creditors in accordance with the applicable Priority of Payments and (with specific regard to payments due to the Swap
Counterparty in respect of any return of Collateral payable to it in accordance with the Swap Agreement) with clause 12.2 of the
Intercreditor Agreement. For the purposes of this Article 32, all the Noteholders and the Other Issuer Creditors irrevocably
appoint, as from the date hereof and with effect on the date on which the Notes will become due and payable following the
service of an Issuer Acceleration Notice, the Representative of the Noteholders as their exclusive agent (mandatario esclusivo) to
receive on their behalf from the Issuer any and all monies payable by the Issuer to the Noteholders and the Other Issuer Creditors
from and including the date on which the Notes will become due and payable, such monies to be applied in accordance with the
applicable Priority of Payments.
TITLE V
GOVERNING LAW AND JURISDICTION
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Article 33
Governing law and jurisdiction
These rules are governed by, and will be construed in accordance with, the laws of Italy.
All disputes arising out of or in connection with these rules, including those concerning their validity, interpretation, performance and
termination, shall be exclusively settled by the Courts of Milan.
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USE OF PROCEEDS
Monies available to the Issuer on the Issue Date consisting of:
(i)
the net proceeds from the issue of the Rated Notes, being €478,700,000; and
(ii) the amount to be drawn down by the Issuer under the Subordinated Loan Agreement on the Issue Date
in an amount equal to €10,488,000,
will be applied by the Issuer on the Issue Date:
(a)
to pay BancaEtruria the Purchase Price of the Claims pursuant to the terms of the Transfer Agreement;
(b)
to credit €50,000 to the Expenses Account; and
(c)
to credit €10,438,000 to the Cash Reserve Account.
Pursuant to the Underwriting Agreement, the Issuer and BancaEtruria (in its capacity as Underwriter) have
agreed that €497,004,000, being the proceeds from the issue of the Notes, will be offset against the Purchase
Price payable by the Issuer to BancaEtruria on the Issue Date as consideration for the purchase of the Claims
pursuant to the Transfer Agreement.
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THE ISSUER
Introduction
Mecenate S.r.l. (the “Issuer”) is a limited liability company (società a responsabilità limitata) incorporated in
the Republic of Italy under article 3 of Italian law No. 130 of 30 April 1999 (Disposizioni sulla
cartolarizzazione dei crediti), as amended from time to time (the “Securitisation Law”) on 7 December
2001.
“Mecenate S.r.l.” is currently the Issuer’s legal name and the Issuer has no commercial name. In accordance
with the Issuer’s by-laws, the corporate duration of the Issuer is limited to 31 December 2050 and may be
extended by shareholders’ resolution. The Issuer is registered with the companies’ register of Arezzo under
number 01710160514, with the general register (elenco generale) pursuant to article 106 of the Banking Act
under number 33695 and with the special register (elenco speciale) pursuant to article 107 of the Banking Act
both held by the Bank of Italy, and its tax identification number (codice fiscale) and VAT number is
01710160514. The registered office of the Issuer is at via Calamandrei, 255, I-52100 Arezzo. The telephone
number of the registered office is +39 0575 337297.
The Issuer has no employees.
Previous securitisations
The Issuer has already engaged in two securitisation transactions carried out in accordance with the
Securitisation Law, completed on 27 March 2002 and on 11 May 2007 and involving (i) the acquisition of
monetary claims and other connected rights arising from a portfolio of performing residential mortgage loans
acquired from BancaEtruria and (ii) the issue of asset-backed notes in an aggregate amount of €1,015,230,000
(the “Previous Securitisations Notes”).
The principal amount outstanding of the Previous Securitisations Notes as at 31 December 2008 is equal to
€1,015, 230,000.
In connection with the issuance of the Previous Securitisations Notes, two subordinated loans were extended
to the Issuer for an aggregate amount of €20,174,000 under two subordinated loan agreements entered into
between the Issuer and BancaEtruria as subordinated loan provider on 26 March 2002 and on 9 May 2007 and
their aggregate principal amount outstanding as at the date of this Prospectus is equal to €15,874,000.
Pursuant to the Securitisation Law the assets relating to each securitisation transaction will constitute assets
segregated for all purposes from assets of the Issuer and from the assets relating to other securitisation
transactions. The assets relating to a particular securitisation transaction will not be available to the holders of
notes issued to finance any other securitisation transaction or to the general creditors of the Issuer.
Shareholding
The authorised equity capital of the Issuer is €10,000. The issued and paid-up equity capital of the Issuer is
€10,000. No other amount of equity capital has been agreed to be issued. The shareholders of the Issuer (the
“Shareholders”) and their equity interests are as follows:
Shareholders
Shrareholding in the Issuer expressed in €
BancaEtruria
9,000, being equal to 90% of the equity capital of the Issuer
ConEtruria S.p.A.
500, being equal to 5% of the equity capital of the Issuer
Finanziaria Italiana S.p.A.
500, being equal to 5% of the equity capital of the Issuer
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156
Pursuant to a shareholders’ agreement dated the Signing Date between the Issuer, the Representative of the
Noteholders, BancaEtruria, ConEtruria S.p.A. and Finanziaria Italiana S.p.A. (the “Shareholders’
Agreement”), BancaEtruria, ConEtruria S.p.A. and Finanziaria Italiana S.p.A. have agreed certain provisions
in relation to the management of the Issuer. The Shareholders’ Agreement also provides that the Shareholders
will not approve the payment of any dividends or any repayment or return of capital by the Issuer prior to the
date on which all amounts of principal and interest on the Notes have been paid in full. The Shareholders’
Agreement is governed by Italian law.
In the context of the Previous Securitisations, pursuant to a first shareholders’ agreement dated 26 March
2002 (the “First Shareholders’ Agreement”) and a second shareholders’ agreement dated 9 May 2007 and
subsequently amended on 30 January 2009 (the “Second Shareholders’ Agreement” and, together with the
First Shareholders’ Agreement, the “Previous Shareholders’ Agreements”) between the Issuer, the
Representative of the Noteholders, BancaEtruria, ConEtruria S.p.A. and Finanziaria Italiana S.p.A., the
Shareholders of the Issuer have agreed certain obligations concerning the management of the Issuer. Pursuant
to the First Shareholders’ Agreements, each Shareholder agreed to grant to BancaEtruria an option to purchase
a participation equal to its respective shareholdings held in the equity capital of the Issuer, subject to certain
conditions. In accordance with the Shareholders’ Agreement, the exercise by BancaEtruria of the abovementioned option is subject to additional conditions.
Italian company law combined with the holding structure of the Issuer, the covenants made by the Issuer and
each of the Shareholders in the Shareholders’ Agreement and the role of the Representative of the Noteholders
are together intended to prevent any abuse of control of the Issuer. To the best of its knowledge, the Issuer is
not aware of direct or indirect ownership or control apart from the Shareholders.
Special purpose vehicle
The Issuer has been established as a special purpose vehicle for the purposes of issuing asset-backed
securities. The Issuer may carry out other securitisation transactions in addition to the one contemplated in
this Prospectus, subject to certain conditions.
Accounting treatment of the Portfolio
Pursuant to the Bank of Italy’s regulations, the accounting information relating to the securitisation of the
Claims will be contained in the explanatory notes to the Issuer’s accounts (nota integrativa). The explanatory
notes, together with the balance sheet and the profit and loss statements, form part of the financial statements
of Italian limited liability companies (società a responsabilità limitata).
Accounts of the Issuer
The fiscal year of the Issuer begins on 1 January of each calendar year and ends on 31 December of the same
calendar year with the exception of the first fiscal year which started on 7 December 2001 and ended on 31
December 2002. Consequently, the first statutory accounts of the Issuer are those relating to the fiscal year
ended in December 2002 and approved on 9 April 2003. The second statutory accounts are those relating to
the fiscal year ended in December 2003 and approved on 9 April 2004. The third statutory accounts are those
relating to the fiscal year ended in December 2004 and approved on 25 March 2005. The fourth statutory
accounts are those relating to the fiscal year ended in December 2005 and approved on 31 March 2006. The
fifth statutory accounts are those relating to the fiscal year ended in December 2006 and approved on 22
March 2007. The Issuer’s shareholders’ meeting approved the statutory accounts relating to the fiscal year
ended in December 2007 on 31 March 2008.
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157
Principal activities
The principal corporate objectives of the Issuer, as set out in article 2 of its by-laws (statuto), include the
acquisition of monetary receivables for the purposes of securitisation transactions and the issuance of assetbacked securities.
So long as any of the Notes remains outstanding, the Issuer shall not, without the consent of the
Representative of the Noteholders and as provided in the Conditions and the Transaction Documents, incur
any other indebtedness for borrowed monies, engage in any activities except pursuant to the Transaction
Documents, pay any dividends, repay or otherwise return any equity capital, have any subsidiaries, employees
or premises, consolidate or merge with any other person, convey or transfer its property or assets to any
person, or increase its equity capital.
The Issuer will covenant to observe, inter alia, those restrictions which are detailed in Condition 5
(Covenants).
Sole director of the Issuer
The sole director of the Issuer is:
Name
Address
Assuero Pieraccini
sole director
via Calamandrei, 255, 52100
Arezzo
Enterpreneur
Statutory auditors of the Issuer
The statutory auditors of the Issuer are as follows:
Name
Address
Giancarlo Francioli
Arezzo
Accountant
Arezzo
Accountant
Arezzo
Accountant
Arezzo
Accountant
Arezzo
Accountant
chairman
Fosco Berti
auditor
Carlo Polci
auditor
Luca Civitelli
deputy auditor
Mario Tanganelli
deputy auditor
Capitalisation and indebtedness statement
The capitalisation and indebtedness of the Issuer as at the date of this Prospectus, adjusted for the issue of the
Notes on the Issue Date and the execution of the Subordinated Loan Agreement, are as follows:
€
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158
€
Issued equity capital
€10,000 fully paid up
10,000
10,000
Borrowings
€24,938,000 Class D Residential Mortgage-Backed Floating Rate Notes due 2026
24,938,000
€5,200,000 Subordinated loan
900,000
€577,850,000 Class A–2007 Residential Mortgage-Backed Floating Rate Notes due 2048
410,107,888.19
€13,600,000 Class B–2007 Residential Mortgage-Backed Floating Rate Notes due 2048
13,600,000
€39,750,000 Class C–2007 Residential Mortgage-Backed Floating Rate Notes due 2048
39,750,000
€1,892,000 Class D–2007 Residential Mortgage-Backed Floating Rate Notes due 2048
1,892,000
€14,974,000 Subordinated Loan
14,974,000
€401,300,000 Class A-2009 Residential Mortgage-Backed Floating Rate Notes due 2047
401,300,000
€82,750,000 Class B-2009 Residential Mortgage-Backed Floating Rate Notes due 2047
82,750,000
€12,954,000 Class C-2009 Residential Mortgage-Backed Floating Rate Notes due 2047
12,954,000
€10,488,000 Subordinated Loan
10,488,000
1,013,653,888.
19
Total Notes and Subordinated Loans
Save for the foregoing, at the Issue Date, the Issuer will not have borrowings or indebtedness in the nature of
borrowings (including loan capital issued or created but unissued), term loans, liabilities under acceptances or
acceptance credits, mortgages, charges or guarantees, or other contingent liabilities.
Statutory financial statements of the Issuer as at 31 December 2005, 31 December 2006 and
December 2007
31/12/2005
31/12/2006
31/12/2007
54,796
50,635
10,000
43,737
52,098
56,411
Total Assets
98,533
102,733
66,411
Debt to Banks
50,397
50,400
Other Liabilities
37,907
42,078
54,132
Shareholders' equity
10,000
10,000
10,000
236
229
Due from Banks
Intangible fixed Assets
Subscribed share capital procedes to be
received
Other Assets
Accrued Income and prepaid expenses
Legal Reserve
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159
-
254
Net Income (losses)
-7
26
2,024
98,533
102,733
66,411
Interest Income and similar revenues
-1,274
-1,261
50
Other Operating Income
62,199
61,696
85,122
Total Liabilities and Shareholders' Equity
Profit and Loss
Extraordinary revenue
Administrative costs
-60,864
- 60,348
-79,461
Adjustment to intangible assets
Extraordinary expenses
Income from operating activities
Income taxes
Net Income (losses) for the year
61
87
5,711
-68
-61
-3,686
-7
26
2,025
Financial statements and auditors' report
Copy of the financial statements of the Issuer for each financial year since the Issuer’s incorporation will,
when published, be available in physical form for inspection free of charge during usual office hours on any
Business Day (excluding public holidays) at the registered office of the Issuer and the Specified Offices of,
respectively, the Representative of the Noteholders and the Principal Paying Agent and the Listing Agent (as
set forth in Condition 17 (Notices)) for the life of this Prospectus.
Deloitte & Touche S.p.A., the address of which is at corso Italia, 53, 50123 Florence, are the independent
auditors of the Issuer, they belong to ASSIREVI – Associazione Italiana Revisori Contabili and are registered
in the special register (albo speciale) for auditing companies (società di revisione) provided for by article 161
of legislative decree No. 58 of 1998. The latest two financial statements of the Issuer, in respect of the years
ended on, respectively, 31 December 2007 and 31 December 2006, were audited by Deloitte & Touche S.p.A.
The Issuer’s accounting reference date is 31 December in each year. The current financial period of the Issuer
will end on 31 December 2008.
The table below sets out the relevant page references for the financial statements of the Issuer for the financial
years ended 31 December 2006 and 31 December 2007 and the report of the auditors of the Issuer on the
financial statements of the Issuer as at 31 December 2006 and 31 December 2007. Information contained in
the documents incorporated by reference other than information listed in the table below is for information
purposes only, and does not form part of this Prospectus.
Documents
Page
4
Balance sheet
12
Income statement
12
16
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160
Auditors’ report
2006
1
Documents
Page
3
Balance sheet
10
Income statement
10
14
2007
1
Auditors’ report
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THE TRANSACTION BANK AND THE TRANSACTION BANK GUARANTOR
The BNP Paribas Group (the “Group”) (of which BNP Paribas is the parent company and BNP Paribas
Securities Services is the wholly-owned subsidiary of BNP Paribas, leading European provider of securities
services to companies, asset managers and financial institutions worldwide) is a European leader in banking
and financial services. It has approximately 162,700 employees, 126,600 of whom are based in Europe. The
Group occupies leading positions in three significant fields of activity: Corporate and Investment Banking,
Asset Management & Services and Retail Banking. It has operations in 85 countries and has a strong presence
in all the key global financial centers. Present throughout Europe, in all its business lines, France and Italy are
its two domestic retail banking markets. BNP Paribas has a significant and growing presence in the United
States and leading positions in Asia and in emerging markets.
The Group has three divisions: Retail Banking, Asset Management and Services and Corporate and
Investment Banking, the latter two of which also constitute “core businesses”. Operationally, the Retail
Banking division is itself comprised of three core businesses: French Retail Banking, International Retail
Banking and Financial Services, and Italian Retail Banking (BNL). The Group has additional activities,
including those of its listed real estate subsidiary, Klépierre, that are conducted outside of its core businesses.
At December 31, 2007, the Group had consolidated assets of €1,694.4 billion, consolidated loans and
receivables due from customers of €445.1 billion and shareholders’ equity (Group share including income for
2007) of €53.7 billion. Pre-tax net income for the year ended December 31, 2007 was €11 billion. Net
income, Group share, for the year ended December 31, 2007 was €7.8 billion. Net banking income, Group
share, for the year ended December 31, 2007 was €31 billion.
The Group currently has long term senior debt ratings of “Aa1” with stable outlook and a short term rating of
“P-1” from Moody’s, a long term rating of “AA+” with stable outlook and a short term rating of “a-1+” from
Standard & Poor’s and a long term rating of “AA” with stable outlook and a short term rating of “F1+” from
Fitch Ratings.
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THE SWAP COUNTERPARTY AND THE SWAP GUARANTOR
UBS Limited (“UBSL”) acts as Swap Counterparty and UBS AG acts as Swap Guarantor under the
Transaction Documents.
UBSL is a company limited by shares incorporated in Great Britain under the Companies Act 1985 registered
in England and Wales with number 2035362 on 9 July 1986 now having its registered office and principal
place of business at 1 Finsbury Avenue, London EC2M 2PP.
UBSL is an “authorised institution” under the FSMA regulated by the FSA and is a wholly-owned subsidiary
of UBS AG, a company incorporated with limited liability in Switzerland. As of 31 December 2008 UBSL
had an issued share capital of £63,310,000 divided into 63,310,000 ordinary shares of £1.00 each fully paid.
The information contained in the preceding two paragraphs has been provided by UBSL for use in this
Prospectus. Except for the foregoing two paragraphs, UBSL and its respective affiliates have not been
involved in the preparation of, and do not accept responsibility for, this Prospectus as a whole.
UBS AG is the guarantor for the obligations of UBSL under the Swap Agreement.
UBS AG was incorporated in Basel under the name SBC AG on 28 February 1978. On 8 December 1997,
SBC AG changed its name to UBS AG. UBS AG in its present form was created on 29 June 1998 by the
merger of Union Bank of Switzerland (founded 1862) and Swiss Bank Corporation (founded 1872). With
headquarters in Zurich and Basel, Switzerland, UBS AG operates in over 50 countries and from all major
international centres. As of 30 September 2008, UBS AG had total invested assets of CHF 2,640 billion, a
market capitalisation of CHF 54,135 million and employed 79,565 people. As at the date of this Prospectus,
UBS AG has a long-term debt credit rating of “Aa2” from Moody’s, “A+” from S&P and “A+” from Fitch.
UBS AG is publicly owned, and its shares are listed on the SIX Swiss Exchange, New York and Tokyo Stock
Exchange. The information contained herein with respect to UBSL and UBS AG relates to and has been
obtained from it. The delivery of this Prospectus shall not create any implication that there has been no
change in the affairs of UBSL or UBS AG since the date of this Prospectus, or that the information contained
or referred to herein is correct as of any time subsequent to its date.
The information contained in the preceding two paragraphs has been provided by UBS AG for use in this
Prospectus. Except for the foregoing four paragraphs, UBS AG and its respective affiliates have not been
involved in the preparation of, and do not accept responsibility for, this Prospectus as a whole.
The Swap Guarantee of UBS AG in favour of UBSL for its obligations under the Swap Agreement is dated 24
January 2003 and is valid and binding at the date of this Prospectus and UBS AG would be permitted to
terminate the Swap Guarantee by giving not less than 30 business days’ written notice to the Issuer.
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SELECTED ASPECTS OF ITALIAN LAW
The Securitisation Law
The Securitisation Law was enacted on 30 April 1999 and was conceived to simplify the securitisation
process and to facilitate the increased use of securitisation as a financing technique in the Republic of Italy. It
applies to securitisation transactions involving the “true” sale (by way of non-gratuitous assignment) of
receivables, where the sale is to a company created in accordance with article 3 of the Securitisation Law and
all amounts paid by the assigned debtors are to be used by the relevant company exclusively to meet its
obligations under notes issued to fund the purchase of such receivables and all costs and expenses associated
with the securitisation transaction.
Ring-fencing of the assets
Under the terms of article 3 of the Securitisation Law, the assets relating to each securitisation transaction
will, by operation of law, be segregated for all purposes from all other assets of the company which purchases
the receivables. Prior to and on a winding-up of such a company such assets will be available only to holders
of notes issued to finance the acquisition of the relevant receivables and to certain creditors claiming payment
of debts incurred by the company in connection with the securitisation of the relevant assets. In addition, the
assets relating to a particular transaction will not be available to the holders of notes issued to finance any
other securitisation transaction or to general creditors of the issuer company.
The assignment
The assignment of the receivables under the Securitisation Law is governed by article 58, paragraphs 2, 3 and
4 of the Banking Act. The prevailing interpretation of this provision, which view has been strengthened by
article 4 of the Securitisation Law, is that the assignment can be opposed against assigned debtors and third
party creditors by way of publication in the Italian Official Gazette of the Republic of Italy (Gazzetta Ufficiale
della Repubblica Italiana) and registration (iscrizione) with the competent companies’ register, so avoiding
the need for notification to be served on each assigned debtor.
As of the later of: (i) the date of publication of the notice of the assignment in the Italian Official Gazette of
the Republic of Italy (Gazzetta Ufficiale della Repubblica Italiana) and (ii) the date of registration (iscrizione)
of such notice in the competent companies’ register, the assignment becomes enforceable against:
(a) the assigned debtors and any creditors of the originator who have not, prior to the date of publication of
the notice, commenced enforcement proceedings in respect of the relevant receivables;
(b) the liquidator or any other bankruptcy officials of the assigned debtors (so that any payments made by an
assigned debtor to the purchasing company may not be subject to any claw-back action according to
article 67 of the Bankruptcy Law); and
(c) other permitted assignees of the originator who have not perfected their assignment prior to the date of
publication. The benefit of any privilege, guarantee or security interest guaranteeing or securing
repayment of the assigned receivables will automatically be transferred to, and perfected with the same
priority in favour of, the issuer, without the need for any formality or annotation.
As from the later of: (i) the date of publication of the notice of the assignment in the Italian Official Gazette of
the Republic of Italy (Gazzetta Ufficiale della Repubblica Italiana) and (ii) the date of registration (iscrizione)
of such notice in the competent companies’ register, no legal action may be brought against the receivables
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assigned or the sums derived therefrom other than for the purposes of enforcing the rights of the holders of
the notes issued for the purpose of financing the acquisition of the relevant receivables and to meet the costs
of the transaction.
Notice of the assignment of the Claims by the Originator pursuant to the Transfer Agreement was published in
the Italian Official Gazette (Gazzetta Ufficiale della Repubblica Italiana) No. 3 Parte II on 10 January 2009
and registered (iscritto), as integrated on 24 January 2009 in No. 9 Parte II of the Italian Official Gazette
(Gazzetta Ufficiale della Repubblica Italiana), in the companies’ register of Arezzo on 12 January 2009 and
on 27 January 2009.
Assignments executed under the Securitisation Law are subject to revocation on bankruptcy under article 67
of the Bankruptcy Law but only in the event that the assignment transaction is entered into within three
months of the adjudication of bankruptcy of the relevant party or, in cases where paragraph 1 of article 67
applies, within six months of the adjudication of bankruptcy.
Recoveries under the Mortgage Loans
Following default by a Borrower under a Mortgage Loan, the Servicer will be required to take steps to
recover the sums due under the Mortgage Loan in accordance with its servicing and collection policies and
the Servicing Agreement. See “The Servicing Agreement” and “The servicing and collection policies”, below.
The Servicer may take steps to recover the deficiency from the Borrower. Such steps could include an out-ofcourt settlement; however, legal proceedings may be taken against the Borrower if the Servicer is of the view
that the potential recovery would exceed the costs of the enforcement measures. In such event, due to the
complexity of and the time involved in carrying out legal or insolvency proceedings against the Borrower and
the possibility for challenges, defences and appeals by the Borrower, there can be no assurance that any such
proceedings would result in the payment in full of outstanding amounts under the relevant Mortgage Loan.
In the Republic of Italy, a lender which has received a judgment against a debtor in default may enforce the
judgment through a forced sale of the debtor’s (or guarantor’s) goods (pignoramento mobiliare) or real estate
assets (pignoramento immobiliare), if the lender has previously been granted a court order or injunction to
pay amounts in respect of any outstanding debt or unperformed obligation.
Forced sale proceedings are directed against the debtor’s properties following notification of an atto di
precetto to the relevant debtor together with a titolo esecutivo, i.e. an instrument evidencing the nature of the
claims and having certain characteristics.
The average length of time for a forced sale of a debtor’s goods, from the court order or injunction of payment
to the final sharing-out, is about three years. The average length of time for a forced sale of a debtor’s real
estate asset, from the court order or injunction of payment to the final sharing-out, is between six and seven
years. In the medium-sized central and northern Italian cities it can be significantly less whereas in major
cities or in southern Italy the duration of the procedure can significantly exceed the average.
However, it is to be noted that forced sale proceedings are currently subject to a wide review by the Italian
government aimed, inter alia, at speeding up and simplifying such proceedings. In fact, law decree No. 35 of
14 March 2005 converted into law by law No. 80 of 14 May 2005 as amended, has, on the one hand,
introduced certain changes in this respect which have entered into force starting from 1 March 2006 and, on
the other hand, delegates the Italian Government to issue the relevant implementing decrees (decreti
legislativi delegati).
Attachment of debtor’s credits
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Attachment proceedings may be commenced also on due and payable debts of a borrower (such as bank
accounts, salary etc.) or on a borrower’s moveable property which is located on a third party’s premises.
Insolvency proceedings
Insolvency proceedings (procedure concorsuali) conducted under Italian law may take the form of, inter alia,
a forced liquidation (fallimento), a creditors’ agreement (concordato preventivo), a restructuring arrangements
with creditors (accordi di ristrutturazione dei debiti) or a restructuring under a court-supervised
administration (amministrazione controllata). Insolvency proceedings are only applicable to businesses
(imprese) run either by companies or by individuals. An individual who is not a sole entrepreneur is not
subject to insolvency. The procedure followed will depend on factors relating to the financial status of the
debtor, the court and the creditors involved. In each case, a lender must petition the court for approval of its
claim against the debtor.
A debtor can be declared bankrupt (fallito) (either by its own initiative or upon the initiative of any of its
creditors) if it is not able to timely and duly fulfil its obligations. The debtor loses control over all its assets
and of the management of its business which is taken over by a court-appointed receiver (curatore
fallimentare).
Once a judgment has been made by the court on the basis of the evidence of the creditors and the opinion of
the curatore fallimentare, and the creditors’ claims have been approved, the sale of the borrower’s property is
conducted in a manner similar to foreclosure proceedings or forced sale of goods, as the case may be. An
insolvent creditor may avoid being declared bankrupt by proposing to its creditors a creditors’ agreement.
Such proposal must be contained in a plan which may provide for: (i) the restructuring of debts and the
satisfaction of creditors in any manner even through extraordinary transactions including the granting to
creditors and their controlled company of shares, or bonds (also convertible into shares), or other financial
instruments and securities, (ii) the assumption of the activities of the companies involved in the proposal of
concordato preventivo, (iii) the classification of creditors into classes and (iv) different treatments for
creditors belonging to different classes. See “Concordato preventivo (Composition with creditors)” and
“Accordi di ristrutturazione dei debiti (Debts’ restructuring arrangements with creditors)”, below.
In cases where a debtor is not insolvent but has difficulty in fulfilling its obligations, the supervised
administration procedure is available to hold together and try to rescue its business, provided that there is
concrete evidence that its financial condition can be improved. In this procedure, the management of the
debtor’s business and assets is subject to judicial supervision, and the payment of all debts of the debtor is
delayed for a period not exceeding two years. The lender may receive a cash payment of the approved portion
of its claim (which may be less than the total amount outstanding under the mortgage loan). This may,
however, follow lengthy negotiations and finalisation of restructuring agreements. Due to the complexity of
the insolvency proceedings, the time involved and the possibility for challenges and appeals by the debtor,
there can be no assurance that any such insolvency proceeding would result in the payment in full of
outstanding amounts under the Mortgage Loans or that such proceedings would be concluded before the
stated maturity of the Notes.
After insolvency proceedings are commenced, no legal action can be taken against the debtor and no
foreclosure proceedings or forced sale proceedings may be initiated. Moreover, all action taken and
proceedings already initiated by creditors are automatically suspended.
Court-supervised administration (amministrazione controllata) has been repealed with effect from 16 July
2006, following the entering into force of some of the provisions of the recent reform of the Bankruptcy Law.
Mutui fondiari foreclosure proceedings
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Foreclosure proceedings in respect of mutui fondiari commenced after 1 January 1994 are currently regulated
by article 38 (and following) of the Banking Act in which several exceptions to the rules applying to
foreclosure proceedings in general are provided for. In particular, mortgages securing the loans are not
capable of being challenged under actions for revocation pursuant to article 67 of the Bankruptcy Law if they
were registered at least 10 days prior to the publication of the decision declaring the bankruptcy of the debtor,
there is no requirement to serve a copy of the loan agreement directly on the borrower, and the mortgage
lender of mutui fondiari is entitled to commence or continue foreclosure proceedings after the debtor is
declared insolvent or insolvency proceedings have been commenced.
Moreover, the custodian appointed to manage the mortgaged property in the interest of the fondiario mortgage
lender pays directly to the same the revenues recovered on the mortgaged property (net of administration
expenses and taxes). After the sale of the mortgaged property, the court orders the purchaser (or the assignee
in the case of an assignment) to pay that part of the price corresponding to the mutui fondiari lender’s debt
directly to the same.
Pursuant to article 58 of the Banking Act, as amended by article 12 of legislative decree No. 342 of 4 August
1999, the Issuer will be entitled to benefit from such procedural advantages which apply in favour of a lender
of a mutuo fondiario loan.
Concordato preventivo (Composition with creditors)
The debtor in a “financial distress” (i.e. he/she is facing financial distress which does not yet amount to
insolvency) may file for concordato preventivo by submitting a plan for the composition with its creditors
which may provide for:
(i)
the restructuring of debts and the satisfaction of creditors in any manner even through assignments of
debts, novations (accollo) or extraordinary transactions, including the issue of shares, quotas, bonds
(also convertible into shares) or other financial instruments and securities;
(ii)
the appointment of a third-party manager (including the creditors);
(iii)
the division of creditors into classes; and
(iv)
different treatments for creditors belonging to different classes.
In accordance with article 177 of the Bankruptcy Law, once the competent court declares the proposal
admissible and opens the procedures, the concordato preventivo commences if approved by the majority of
the creditors entitled to vote (or, in case of different classes of creditors, by the majority of the creditors
within each class). The court may also approve the concordato preventivo (notwithstanding the circumstance
that one or more classes denied their consent) if (i) the majority of classes has approved the concordato
preventivo and (ii) the court deems that the interest of dissenting creditors would be adequately safeguarded
through the concordato preventivo compared to other practicable solutions.
The procedure of the composition with creditors (concordato preventivo) will end with a decree which is to be
issued by the competent court. If the court or the creditors reject the offer, the entrepreneur is automatically
declared bankrupt by the court.
Accordi di ristrutturazione dei debiti (Debts’ restructuring arrangements with creditors)
Law decree No. 35 of 14 March 2005 converted into law by law No. 80 of 14 May 2005, introduced the new
Article 182-bis of the Bankruptcy Law which contemplates the possibility of entering into debts’ restructuring
arrangements with creditors.
Pursuant to new Article 182-bis of the Bankruptcy Law, the debtor may file with the relevant court an
agreement for the restructuring of debts with creditors representing at least 60 per cent. of the company’s
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debts, together with an assessment made by an expert on the feasibility of the agreement and, in particular, on
its impact on the timely payment to those creditors which are not parties to it.
The agreement is published in the companies’ register and is effective as of the day of its publication.
Creditors may oppose the agreement within thirty days from the publication. The court will, after having
settled the oppositions (if any), validate the agreement by issuing a decree, which may be appealed within
fifteen days.
Accounting treatment of the Claims
Pursuant to the Bank of Italy’s regulations, the accounting information relating to the securitisation of the
Claims will be contained in the Issuer’s Nota Integrativa which, together with the balance sheet and the profit
and loss statements, form part of the financial statements of Italian limited liability companies (società a
responsabilità limitata). The position of the Bank of Italy in relation to the accounting treatment of società
per la cartolarizzazione dei crediti was confirmed in its regulations issued on 14 February 2006.
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THE AGENCY AND ACCOUNTS AGREEMENT
The description of the Agency and Accounts Agreement set out below is a summary of certain features of such
Transaction Document and is qualified in its entirety by reference to the detailed provisions of such Agency
and Accounts Agreement. Prospective Noteholders may inspect a copy of the Agency and Accounts Agreement
upon request at the Specified Offices of, respectively, the Representative of the Noteholders and the Principal
Paying Agent.
Pursuant to the Agency and Accounts Agreement, the Issuer has appointed:
(a)
the Principal Paying Agent, for the purpose of, inter alia, holding the Payments Account and providing
directions as to the payment, or making payment, of interest and the repayment of principal in respect
of the Notes;
(b)
the Agent Bank, for the purpose of, inter alia, determining the rate of interest payable in respect of the
Notes;
(c)
the Computation Agent, for the purpose of, inter alia, determining certain of the Issuer's liabilities and
the funds available to pay the same (subject to the receipt of certain information and in reliance
thereon as set forth in the Agency and Accounts Agreement) and managing certain payment and
investment services;
(d)
the Listing Agent, as listing agent in respect of the Rated Notes;
(e)
the Collection Account Bank for the purposes of, inter alia, establishing and maintaining the
Collection Account and the Expenses Account; and
(f)
the Transaction Bank for the purposes of, inter alia, establishing and maintaining the Transaction
Accounts.
The opening and managing provisions concerning the Transaction Accounts (and the duties of the Transaction
Bank in respect thereof) are governed by English law.
Duties of the Transaction Bank
Pursuant to the Agency and Accounts Agreement, the Issuer has opened and will maintain with the
Transaction Bank the Transaction Accounts.
The Transaction Accounts will be operated by the Computation Agent and the amounts and securities standing
to the credit thereof will be debited and credited by the Computation Agent, on behalf of the Issuer, in
accordance with the instructions of the Issuer, the Representative of the Noteholders, as the case may be, or in
accordance with the Agency and Accounts Agreement, the Conditions and the other Transaction Documents.
For a description of the operation of the Transaction Accounts and the cash flows through the Transaction
Accounts, see “Credit Structure – Cash flow through the Accounts” and “The Issuer’s bank accounts”, above.
In performing its obligations, the Transaction Bank may rely on the instructions and determinations of the
Issuer, Monte Titoli and the Computation Agent and will not be liable for any omission or error in so doing,
except in case of its own gross negligence (colpa grave) or wilful misconduct (dolo).
The Computation Agent has agreed to provide to the Issuer certain services in connection with account
handling in relation to the monies from time to time standing to the credit of the Transaction Accounts.
Duties of the Agent Bank
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On each Interest Determination Date, the Agent Bank will, in accordance with Condition 6 (Interest),
determine EURIBOR and the Rate of Interest applicable to the Notes during the following Interest Period, as
well as the Interest Amount and the Interest Payment Date in respect of such following Interest Period, all
subject to and in accordance with the Conditions, and will notify such amounts to the Issuer, the
Representative of the Noteholders, the Corporate Servicer, the Principal Paying Agent, the Arranger, the
Underwriter, the Computation Agent, the Servicer, the Swap Counterparty and, with exclusive regard to the
Rated Notes, the Listing Agent and the Irish Stock Exchange.
Duties of the Computation Agent
The duties of the Computation Agent include the making of certain calculations in respect of the
Securitisation. The Computation Agent will make such calculations based on:
(a)
the Statement of the Collection Account and Statement of the Expenses Account prepared by the
Collection Account Bank on the Reporting Dates;
(b)
the Statements of the Transaction Accounts prepared by the Transaction Bank on the Reporting Dates;
(c)
the Servicer Reports prepared by the Servicer on the Reporting Dates;
(d)
the determinations received from the Agent Bank concerning the Rate of Interest, Interest Amount and
Interest Payment Date;
(e)
the calculations made by Subordinated Loan Provider under the Subordinated Loan Agreement;
(f)
the calculations made by the Swap Counterparty under Swap Agreement; and
(g)
the instructions and determinations of the Issuer, Monte Titoli and the Corporate Servicer,
and the Computation Agent shall not be liable for any omission or error in so doing save as caused by its own
gross negligence (colpa grave) or wilful misconduct (dolo).
The Computation Agent will calculate, inter alia, on each Calculation Date:
(i)
the Interest Available Funds;
(ii)
the Principal Available Funds;
(iii)
the Issuer Available Funds;
(iv)
the Principal Payments (if any) due on the Notes of each Class on the next following Interest Payment
Date;
(v)
the Principal Amount Outstanding of each Class of Notes on the next following Interest Payment Date;
(vi)
the Principal Amount Outstanding of the Notes of all Classes on the next following Interest Payment
Date;
(vii)
the amounts payable to the Subordinated Loan Provider under the Subordinated Loan Agreement;
(viii) the interest payable (if any) in respect of the Notes of each Class on the next following Interest
Payment Date;
(ix)
the aggregate Principal Deficiency Amounts as at such Calculation Date;
(x)
the Principal Deficiency Ledger Amount to be provisioned for on the immediately following Interest
Payment Date;
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(xi)
the debit balance that will be outstanding in respect of the Class A Notes Principal Deficiency Ledger
on the next Interest Payment Date;
(xii)
the debit balance that will be outstanding in respect of the Class B Notes Principal Deficiency Ledger
on the next Interest Payment Date;
(xiii) the debit balance that will be outstanding in respect of the Junior Notes Principal Deficiency Ledger on
the next Interest Payment Date;
(xiv) the shortfall(s), if any, on the payments payable under items (i) to (x) of the Pre-Enforcement Interest
Priority of Payments and how funds standing to the credit of the Cash Reserve Account are to be used
to augment the Interest Available Funds and, where applicable, the Principal Available Funds;
(xv)
the amount equal to the portion of Principal Available Funds utilised under item (i) of the PreEnforcement Principal Priority of Payments on the preceding Interest Payment Date or, to the extent
that such amounts have not already been credited to or retained in the Principal Account, on any
preceding Interest Payment Date;
(xvi) the Interest Amount Arrears, if any, that will arise in respect of each Class of Notes on the immediately
following Interest Payment Date;
(xvii) the Revenue Eligible Investments Amount in respect of the immediately preceding Liquidation Date;
(xviii) the amount invested in Eligible Investments out of the Claims Transaction Account on the immediately
(xix) the amount invested in Eligible Investments out of the Cash Reserve Account on the immediately
(xx)
the amount invested in Eligible Investments out of the Principal Account on the immediately preceding
Investment Date;
(xxi) the amount to be credited to the Cash Reserve Account in accordance with the Pre-Enforcement
(xxii) the amount to be credited to the Principal Account in accordance with the Pre-Enforcement Interest
(xxiii) the Junior Notes Additional Interest Amount (if any);
(xxiv) the Junior Notes Additional Remuneration (if any);
(xxv) the Target Cash Reserve Amount;
(xxvi) whether the Class B Notes Trigger Event has occurred;
(xxvii) whether the Junior Trigger Event has occurred;
(xxviii)
whether or not the Pro-Rata Amortisation Conditions have been met; and
(xxix) the payments (if any) to be made to each of the parties to the Intercreditor Agreement under the
relevant Transaction Document,
and will determine how the Issuer’s funds available for distribution pursuant to the Conditions shall be
applied, on the immediately following Interest Payment Date, pursuant to the Pre-Enforcement Interest
Priority of Payments and the Pre-Enforcement Principal Priority of Payments, and will deliver to the Principal
Paying Agent and the Collection Account Bank a report setting forth such determinations and amounts.
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The Computation Agent will deliver the Payments Report to, inter alia, the Issuer, the Principal Paying Agent,
the Collection Account Bank, Fitch, the Corporate Servicer and the Servicer.
In addition to the above, the Computation Agent has agreed to prepare and deliver (by no later than 7 (seven)
days immediately following each Interest Payment Date) to, inter alia, the Issuer, the Representative of the
Noteholders, the Irish Stock Exchange, the Underwriter and Fitch, a report substantially in the form set out in
the Agency and Accounts Agreement (the “Investor Report”) containing details of, inter alia, the Portfolio,
amounts received by the Issuer from any source during the preceding Collection Period, amounts paid by the
Issuer during such Collection Period and amounts paid by the Issuer on the immediately preceding Interest
Payment Date. The first Investor Report will be available by no later than five calendar days immediately
following the Interest Payment Date falling in April 2009. The Investor Report will also be available on the
website of the Computation Agent, currently at https://gctabsreporting.bnpparibas.com.
Duties of the Principal Paying Agent
The Principal Paying Agent will keep a record of all Notes and of their redemption, purchase, cancellation
and repayment and will make such records available for inspection during normal business hours by the
Issuer, the Representative of the Noteholders and the Computation Agent.
In performing its obligations, the Principal Paying Agent may rely on the instructions and determinations of
the Issuer, Monte Titoli and the Computation Agent, and will not be liable for any omission or error in so
doing save as caused by their own gross negligence (colpa grave) or wilful misconduct (dolo).
the Issuer will open the Eligible Investments Securities Account with the Principal Paying Agent and the
Computation Agent (I) shall, if so instructed by the Originator, in the name and on behalf of the Issuer,
instruct the Transaction Bank to withdraw:
(a)
the balance of the Cash Reserve Account may be invested in Eligible Investments on the Business Day
immediately following each Interest Payment Date;
(b)
the balance of the Principal Account may be invested in Eligible Investments on the Business Day
immediately following each Interest Payment Date; and
(c)
the balance of the Claims Transaction Account may be invested in Eligible Investments on a weekly
basis on the last Business Day of each week,
each such date, an “Investment Date” that are necessary to execute the above-mentioned instructions, to
invest in the above mentioned Eligible Investments and to execute the purchase of the same Eligible
Investments in the name and on behalf of the Issuer and (II) shall, in the name and on behalf of the Issuer,
credit or deposit, as applicable, the financial instruments constituting or underlying the Eligible Investments
thus purchased for the account of the Issuer to the Eligible Investments Securities Account.
If the Issuer resolves to invest in Eligible Investments and to open the Eligible Investments Securities
Account, the Issuer will enter into appropriate documentation. As a result, the Agency and Accounts
Agreement may be subject to amendment and revision.
Termination provisions
If the Transaction Bank (or any successor Transaction Bank) ceases to be an Eligible Institution, the Issuer
will, by no later than 30 (thirty) calendar days from the date when the Transaction Bank (or any successor
Transaction Bank) ceases to be an Eligible Institution: (i) terminate the appointment of the Transaction Bank
(or any successor Transaction Bank); (ii) close the Claims Transaction Account, the Cash Reserve Account
and the Principal Account opened with the Transaction Bank; and, simultaneously (iii) open a replacement
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Claims Transaction Account, a replacement Principal Account and a replacement Cash Reserve Account with
a substitute transaction bank which is an Eligible Institution and the Issuer will notify the Representative of
the Noteholders and Fitch.
If the Principal Paying Agent (or any successor Principal Paying Agent) ceases to be an Eligible Institution,
the Issuer will, by no later than 30 (thirty) calendar days from the date when the Principal Paying Agent (or
any successor Principal Paying Agent) ceases to be an Eligible Institution: (i) terminate the appointment of the
Principal Paying Agent (or any successor Principal Paying Agent); (ii) close the Payments Account and the
Eligible Investments Securities Account (if any) opened with the Principal Paying Agent; and, simultaneously
(iii) open a replacement Payments Account and a replacement Eligible Investments Securities Account with a
substitute principal paying agent which is an Eligible Institution and the Issuer will notify the Representative
of the Noteholders and Fitch.
If the Collection Account Bank (or any successor Collection Account Bank) ceases to be rated at least as high
as “F2” by Fitch (in respect of short-term debt), the Issuer will, by no later than two Business Days from the
date when the Collection Account Bank (or any successor Collection Account Bank) ceases to be rated at least
as high as “F2” by Fitch, either (A) (i) terminate the appointment of the Collection Account Bank (or any
successor Collection Account Bank); (ii) close the Collection Account and the Expenses Account opened with
the Collection Account Bank (or any successor Collection Account Bank); and, simultaneously (iii) open a
replacement Collection Account and a replacement Expenses Account with a substitute collection account
bank the long-term unsecured and unsubordinated debt obligations of which are rated “F1” or above by Fitch
and the Issuer will notify the Representative of the Noteholders and Fitch or (B) take such other action in line
with Fitch’s criteria.
General provisions
The Principal Paying Agent, the Agent Bank, the Computation Agent, the Collection Account Bank and the
Transaction Bank (collectively referred to as the “Agents”) will act as agents solely of the Issuer and will not
assume any obligation towards, or relationship of agency or trust for or with, any of the Noteholders. Each of
the Issuer and the Representative of the Noteholders has agreed that it will not consent to any amendment to
the Conditions that materially affects the obligations of any of the Agents without such Agent’s prior written
consent (such consent not to be unreasonably withheld).
The Issuer has undertaken to indemnify each of the Agents and its respective directors, officers, employees
and controlling persons against all losses, liabilities, costs, claims, actions, damages, expenses or demands
which any of them may incur or which may be made against any of them as a result of or in connection with
the appointment of or the exercise of the powers and duties by any Agent, except as may result from its wilful
misconduct or negligence, or that of its directors, officers, employees or controlling persons or any of them, or
breach by it of the terms of the Agency and Accounts Agreement.
In return for the services so provided, the Agents will receive commissions in respect of the services of such
Agents agreed on or about the Signing Date between the Issuer and the Agents, payable by the Issuer in
accordance with the Priority of Payments, except that certain fees may be paid up-front on or around the Issue
Date.
The appointment of any Agent may be terminated by the Issuer (with the prior written approval of the
Representative of the Noteholders) upon 45 days’ written notice or upon the occurrence of certain events of
default or insolvency or of similar events occurring in relation to such Agent.
If any of the Agents will resign or be removed, the Issuer will promptly and in any event within 30 (thirty)
days appoint a successor approved by the Representative of the Noteholders. If the Issuer fails to appoint a
successor within such period, the Principal Paying Agent may select a leading bank approved by the
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Representative of the Noteholders to act as the relevant Agent and the Issuer will appoint that bank as the
successor Agent.
The Agency and Accounts Agreement, save for certain provisions which are governed by English law, is
governed by Italian law.
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THE TRANSFER AGREEMENT
The description of the Transfer Agreement set out below is a summary of certain features of such Transaction
Document and is qualified in its entirety by reference to the detailed provisions of such Transfer Agreement.
Prospective Noteholders may inspect a copy of the Transfer Agreement upon request at the Specified Offices
of, respectively, the Representative of the Noteholders and the Principal Paying Agent.
Transfer of the Claims
On 7 January 2009 (the “Initial Execution Date”) and subsequently amended on 30 January 2009 (the
“Signing Date”), the Issuer, on the one hand, and the Originator, on the other hand, entered into a transfer
agreement (the “Transfer Agreement”), pursuant to which the Originator assigned and transferred without
recourse (pro soluto), in accordance with the Securitisation Law, all of its rights, title and interests in and to
the Claims.
Under the Transfer Agreement, the Originator passed title to the Claims to the Issuer on the Initial Execution
Date but with economic effect as of the Valuation Date (excluded). Schedule 1 to the Transfer Agreement
contains a list of the Mortgage Loans and the Claims arising thereunder which have been transferred under
the Transfer Agreement.
The information concerning the Mortgage Loans and the Claims (e.g. the outstanding balance, accrued
interest etc.) contained in schedule 1 to the Transfer Agreement reflect the composition of the Portfolio as at
the Valuation Date. The information and statistical data contained in certain tables in the section headed “The
Portfolio and the Provisional Portfolio” above, on the other hand, do not necessarily reflect the composition
of the Portfolio on the Issue Date.
Pursuant to the Transfer Agreement, the Claims comprise all and only the monetary claims arising from
mortgage loans (including mortgage loans which are medium-long term loans secured by mortgages on real
estate in accordance with the provisions of article 38 and following of the Banking Act) which, as at the
Valuation Date, were owned by BancaEtruria and met, as at the Valuation Date (unless otherwise provided),
the following objective criteria (to be deemed cumulative unless otherwise provided) (the “Criteria”):
(I)
(II)
mortgage loans:
(a)
disbursed by BancaEtruria between 1 January 1997 (inclusive) and 28 November 2008
(inclusive); or
(b)
initially originated by:
(i)
Istituto Italiano di Credito Fondiario S.p.A. and subsequently acquired by
BancaEtruria Società Cooperativa on 8 June 2000 according to the terms of a
transfer agreement pursuant to article 58 of the Banking Act whose notice of
assignment was published in the Italian Official Gazette (Gazzetta Ufficiale della
Repubblica Italiana) No. 144 on 22 June 2000; and
(ii)
Credit Fonciér de France S.A., Italian branch, and subsequently acquired by
BancaEtruria on 29 December 1999 according to the terms of a transfer agreement
pursuant to article 58 of the Banking Act whose notice of assignment was
published in the Italian Official Gazette (Gazzetta Ufficiale della Repubblica
Italiana) No. 6 on 10 January 2000;
mortgage loans whose principal debtors are (also in case of novation (accollo liberatorio) of the
relevant mortgage loan) one or more individuals who are domicilied in Italy;
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(III)
mortgage loans which are entirely disbursed and in relation to which there is no obligation or
possibility to make additional disbursements;
(IV)
mortgage loans which are denominated in Euro (or originally disbursed in a different currency and
subsequently re-denominated in Euro);
(V)
mortgage loans which are secured by an economically first-ranking priority voluntary mortgage
(ipoteca di primo grado economico), being:
(VI)
(a)
(b)
al primo) provided that (A) the request for the cancellation of the mortgages ranking in priority
thereto has been filed with the competent land register and (B) the debts secured by the priorranking mortgages have been fully repaid; or
(c)
a second-ranking priority voluntary mortgage (ipoteca volontaria di secondo grado legale) or a
voluntary mortgage with subordinate ranking provided that (a) (A) all the mortgages are in
favour of the Originator in relation to the mortgage loans granted to the same borrower; and (B)
the mortgage loans secured by mortgages which have priority are included in the Portfolio; and
(b) in case of a mortgage in favour of a third party and which has priority with respect to one or
more mortgages in favour of BancaEtruria (A) a cancellation request has been filed with the
competent office (Conservatoria dei Registri Immobiliari) with respect to such mortgage which
has priority in favour a third party and (B) the secured obligations guaranteed by such mortgage
which has priority in favour of a third party have been discharged;
mortgage loans which, as of 2 January 2009, have all due instalments paid in full;
(VII) mortgage loans having a principal amount originally disbursed comprised between Euro 13,000
(inclusive) and Euro 1,800,000,000 (inclusive);
(VIII) mortgage loans having a principal outstanding amount comprised between Euro 5,062.40 (inclusive)
and Euro 1,712,850.76 (inclusive);
(IX)
mortgage loans having at least one instalment (which includes a principal component) fallen due and
paid;
(X)
mortgage loans which are governed by Italian law;
(XI)
mortgage loans secured by a mortgage created over real estate assets located in the Republic of Italy
and having residential features. Such criterion No. (XI) will be satisfied if the mortgage loan belongs
to one of the category applied by BancaEtruria having a reference number comprised between 101000
and 122800 and the relevant borrower was made aware of such category by virtue of either (i) the
relevant mortgage loan agreement or (ii) a notice sent (or to be sent) to such borrower;
(XII) mortgage loans providing for the repayment of principal in several instalments in accordance with one
of the following methods as agreed either on the relevant execution date of the relevant mortgage loan
or in relevant agreement concerning the amortisation plan applicable to the relevant mortgage loan:
(a)
the so-called “French method”, whereby the instalments in respect of each mortgage loan
include a principal component, which was predetermined on the date of disbursement of the
relevant mortgage loan and which increases throughout the duration of the mortgage loan, and a
variable interest component; or
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(b)
the so-called “constant instalment” method, whereby the relevant instalments are constant
throughout the duration of the relevant mortgage loans and include a principal component and
an interest component both of which may vary in accordance with the increase or decrease, as
the case may be, of the applicable rate of interest; any increase or decrease of the applicable rate
of interest determines, respectively, the extension or the reduction of the duration of the relevant
mortgage loan;
(XIII) mortgage loans having the last instalment falling due – and, in relation to the so-called mortgage loans
with “constant instalments”, contractually providing for a maximum expiry date which falls – between
28 February 2009 (inclusive) and 31 July 2049 (inclusive);
(XIV) mortgage loans providing for monthly, quarterly or semi-annual instalments falling due on the last
calendar day of the relevant month;
(XV) mortgage loans belonging to one of the four categories:
(a)
fixed rate loans, being those mortgage loans in respect of which interest accrues at a fixed rate
applicable as at 2 January 2009 and the rate of interest of which remains unchanged throughout
the whole duration of such mortgage loans;
(b)
floating rate loans, being those mortgage loans of which interest accrues at a floating rate
which, as at 2 January 2009, is linked to one of the following rates of interest: (a) 1-month
Euribor; (b) 3- month Euribor; (c) 6-month Euribor; (d) 12-month Euribor; (e) Ribor; (f) IRS;
or (g) TUR (Tasso Ufficiale di Riferimento) and which does not provide for any amendment of
either the applicable index or the applicable spread throughout the whole duration of such
mortgage loans;
(c)
“modular rate” loans, being those mortgage loans in respect of which interest accrues at a fixed
rate for a specified period of time determined by contract and at a floating rate thereafter, the
interest rate of which is, as at 2 January 2009, linked to one of the following rates of interest:
(a) 1-month Euribor; (b) 3-month Euribor; (c) 6-month Euribor; (d) 12-month Euribor; (e)
Ribor; (f) IRS; or (g) TUR (Tasso Ufficiale di Riferimento) and providing for a “switch” from a
fixed rate to a floating rate which became effective before 2 January 2009;
(d)
“optional rate” loans, being those mortgage loans which contemplate the right, that can be
exercised one or more times during the duration of the mortgage loan, of the relevant borrower
to switch from a floating rate to a fixed rate, the interest rate of which is, as at 2 January 2009, a
floating rate linked to Euribor and which provides that:
(i)
the borrower can exercise the right to switch from a floating rate to a fixed rate after 2
January 2009; and
(ii)
if the borrower elects to exercise the right to switch from a floating rate to a fixed rate
after 2 January 2009, such fixed rate will apply throughout the remaining duration of the
relevant mortgage loan.
The Claims do not comprise those claims arising out of mortgage loans meeting, at 2 January 2009, the
criteria set out above but which also meet at 2 January 2009 (unless otherwise provided) one or more
of the following criteria:
(XVI) mortgage loans advanced, under any applicable law (even regional) or regulation in force in the
Republic of Italy providing for financial support (mutui agevolati and convenzionati) of any kind with
regard to principal and/or interest to the relevant borrower;
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(XVII) mortgage loans entered into after 1 January 2008 (exclusive) with borrowers different from employees
of any company belonging to BancaEtruria Banking Group and in relation to which the ratio between
(i) the original amount of the loan and (ii) the value of the immovable asset on which the mortgage has
been granted is higher than 80%;
(XVIII) mortgage loans entered into on 20 December 2006 and 2 October 2008 and disbursed at
BancaEtruria branch of Figline Valdarno (Arezzo) (code 41);
(XIX) mortgage loans entered into on 10 May 2007 and disbursed at BancaEtruria branch of Vermicino
(Roma) (code 155);
(XX) mortgage loans entered into on 30 September 2002 and on 12 December 2003 and disbursed at
BancaEtruria branch of Montepulciano (Siena) (code 90); and
(XXI) mortgage loans in relation to which the borrowers have adhered through an adhesion letter mailed or
filed with a branch (filiale) of BancaEtruria, to the renegotiation proposal pursuant to Law Decree
dated 27 May 2008 No. 93 converted into law dated 24 July 2008 No. 126 and the Framework
agreement (convenzione) between the Ministry of Economy and Finance and the Associazione
Bancaria Italiana.
Purchase Price
The individual purchase price for each Claim (the “Individual Purchase Price”) is equal to the outstanding
principal amount under the relevant Mortgage Loan, as at the Valuation Date, and is listed in schedule 1 to the
Transfer Agreement.
The purchase price payable by the Issuer, pursuant to the Transfer Agreement, for all the Claims (the
“Purchase Price”), as at the Initial Execution Date, is equal to €497,004,971.21 calculated as the aggregate of
the Individual Purchase Prices (rounded down according to the minimum denomination of the Junior Notes).
The Purchase Price is required to be paid in full to BancaEtruria, on the Issue Date or, if subsequent to the
Issue Date, on the later of (i) the date of publication in the Italian Official Gazette (Gazzetta Ufficiale della
Repubblica Italiana) of the notice of assignment as described in the Transfer Agreement and (ii) the date of
registration (iscrizione) with the competent companies’ register of the notice of assignment as described in the
Transfer Agreement.
The payment of the Purchase Price will be financed by, and will be limited recourse to, the net proceeds of the
issue of the Notes.
Economic effects
Under the Transfer Agreement, BancaEtruria passed title to the Claims to the Issuer on the Initial Execution
Date. However, the Originator and the Issuer have agreed that the economic effects of the Transfer Agreement
will take effect as of (but excluding) the Valuation Date. Accordingly, the Originator will pay to the Issuer
within the third day preceding the Issue Date, an amount equal to the sum of the following:
(i)
any amount received by the Originator in respect of the Claims before (and including) the Valuation
Date, if such amount was not correctly deducted when the outstanding principal amount of the Claims
was calculated as at the Valuation Date, plus any interest accrued on such amount from (and including)
the Valuation Date to the date on which such amount will be effectively paid to the Issuer at a rate
equal to 2.50 per cent. on a yearly basis (calculated on ACT/360 basis); and
(ii)
any amount received by the Originator in respect of the Claims from (but excluding) the Valuation
Date to the Initial Execution Date, plus any interest on such amount at a rate equal to 2.50 per cent. on
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178
a yearly basis (calculated on ACT/360 basis) accrued from the relevant collection date to the date on
which those amounts are credited on the Collection Account, if such amount is not already credited to
the Issuer pursuant to the Transfer Agreement.
Purchase Price adjustment
The Transfer Agreement provides that if, at any time after the Initial Execution Date, it transpires that any
Mortgage Loan does not meet the Criteria and was therefore erroneously transferred to the Issuer, then the
Claim relating to such Mortgage Loan (the “Excluded Claim”) will be deemed not to have been assigned and
transferred to the Issuer pursuant to the Transfer Agreement, and the Originator will pay to the Issuer an
amount equal to the sum of:
(i)
the Individual Purchase Price of the Claim relating to such Mortgage Loan (as specified in schedule 1
of the Transfer Agreement); plus
(ii)
the interest accrued on such Individual Purchase Price from (but excluding) the Valuation Date to the
Interest Payment Date on which principal on the Notes may be paid immediately succeeding the day
on which the parties agree on the existence of such Excluded Claim at a rate equal to interest rate
applicable to such Excluded Claim; minus
(iii)
an amount equal to the aggregate of all the Collections recovered or collected by the Issuer (also
through the Originator) after the Valuation Date in relation to such Excluded Claims; minus
(iv)
an amount equal to the interests accrued on the amount set out in (iii) above from the relevant
collection date to the date on which those amounts related to the relevant Excluded Claim are paid to
the Issuer at a rate equal to the rate of interest from time to time applicable to the Collection Account,
net of any withholding provided by any applicable law.
The Transfer Agreement further provides that if, at any time after the Initial Execution Date, it transpires that
a mortgage loan which met the Criteria was not included in the Portfolio then the claims under such mortgage
loan (the “Additional Claim”) shall be deemed to have been assigned and transferred to the Issuer by the
Originator on the Initial Execution Date. In respect of such Additional Claims, the Issuer shall pay to the
Originator, in accordance with the Priority of Payments, an amount equal to:
(i)
the purchase price of the Additional Claim, calculated adopting the same method used to calculate the
Individual Purchase Price of the Claims (including reference to the Valuation Date); minus
(ii)
any principal amount collected from (and excluding) the Valuation Date onwards by the Originator
under the relevant Additional Claim; minus
(iii)
interest accrued on the amount under (ii) above, at a rate equal to the rate of interest paid on the date of
collection on the mortgage loan from which the relevant Additional Claim derives, from the date of
collection of any such amount to the date of the collection of the amount under (i) above,
(each such amount, at any time due to the Originator, the “Additional Mortgage Claims Purchase Price”).
Settlement expenses
The Transfer Agreement further provides for an out-of-court settlement procedure in the case of a dispute
arising between the Issuer and the Originator concerning the qualification of certain claims as Excluded
Claims or as Additional Claims. In such circumstance, the costs and fees of the deciding arbitrator, appointed
pursuant to the Transfer Agreement, shall be borne by the Originator even if the Issuer is the succumbent.
Should the Issuer succumb, the Originator shall advance to the latter the fees and costs of the deciding panel
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(the “Settlement Expenses Amount”). The Issuer shall then reimburse the Settlement Expenses Amount on
the next subsequent Interest Payment Date, in accordance with the Priority of Payments.
Additional provisions
The Transfer Agreement contains certain representations and warranties made by the Originator in respect of
the Claims and the Mortgage Loans. The principal representations and warranties given by the Originator to
the Issuer in connection with the transfer of the Claims in relation to the Portfolio are contained in the
Warranty and Indemnity Agreement (see “The Warranty and Indemnity Agreement”, below).
The Transfer Agreement provides that the representations and warranties made by the Originator in respect of
the Claims are deemed to be given and repeated on the Initial Execution Date and on the Issue Date.
Under the terms of the Transfer Agreement, the Originator has agreed to indemnify and keep harmless the
Issuer in respect of any reduction in the interest components received by the Issuer in respect of the Portfolio
as a result of the application of the Law Decree 185.
The Transfer Agreement also contains a number of undertakings by the Originator in respect of its activities
relating to the Claims. The Originator has undertaken, inter alia, to refrain from carrying out activities with
respect to the Claims which may prejudice the validity or recoverability of any Claims or the relevant related
security and to not assign or transfer the Claims to any third party or to create any security interest, charge,
lien or encumbrance or other right in favour of any third party in respect of the Claims in the period of time
between the Initial Execution Date and the later of (i) the date of publication of the notice of the transfer in
the Italian Official Gazette (Gazzetta Ufficiale della Repubblica Italiana) and (ii) the date of registration
(iscrizione) with the competent companies’ register of the notice of assignment as described in the Transfer
Agreement.
Insurance policies
In connection with the Insurance Policies, BancaEtruria has, inter alia, undertaken to ensure, with reference
to the insurance policies executed by the relevant Borrowers and in respect of which the Borrowers have
undertaken to pay to the relevant insurance company the relevant premia, that the real estate assets will
continue to have the benefit of the insurance coverage until the related Mortgage Loan is fully repaid. Thus,
should a Borrower fail to pay the insurance premia as they fall due, BancaEtruria will (upon becoming aware
of the Borrower’s failure) make the relevant payment (the “Insurance Premia”) to the relevant insurance
company in lieu of the relevant Borrower.
The Originator will be entitled to a reimbursement from the Issuer of the Insurance Premia thus paid by it in
accordance with the applicable Priority of Payments.
Repurchase of the Claims
Pursuant to the Transfer Agreement, BancaEtruria has been given the right on any Interest Payment Date on
which the Portfolio Outstanding Amount is less than, or equal to, 10 per cent. of the lower of (i) the Initial
Portfolio Outstanding Amount and (ii) the Initial Portfolio Purchase Price and on which the Issuer will redeem
the Notes in accordance with Condition 7(c) (Optional redemption) to purchase from the Issuer the Claims.
The purchase price payable by the Originator to the Issuer for the repurchase of the Claims may not exceed
(A) the outstanding principal amount of the Claims to be repurchased, provided that none of such Claims
qualify as Crediti ad Incaglio or Crediti in Sofferenza or (B) the aggregate of: (I) the market value of the
Claims which are classified as Crediti ad Incaglio or as Crediti in Sofferenza (if any), as determined by one or
more third-party experts independent from the Originator and its banking group in accordance with the
Transfer Agreement; and (II) the outstanding principal of the Claims which are classified neither as Crediti ad
Incaglio or as Crediti in Sofferenza.
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Subrogation (surrogazione)
Under the Transfer Agreement, should a Borrower request the amendment of the terms and/or conditions of
the relevant Mortgage Loan, the Originator may unilaterally subrogate (i.e. replace) the Issuer in accordance
with article 1202 of the Italian civil code and the provisions of the law decree No. 7, later converted into law
by law No. 40 of 2 April 2007 as subsequently amended, by granting to the relevant Borrower a mortgage
loan for the purpose of repayment in full of the original Mortgage Loan, provided that:
(A)
the Borrower’s request to amend the terms and/or conditions of the relevant Mortgage Loan has been
formalised in writing or the Borrower has submitted to the Originator a written statement issued by a
bank different for the Originator showing the latter’s intention to unilaterally subrogate the Originator
in accordance with article 1202 of the Italian civil code and with the provisions of Be decree No. 7,
later converted into law by law No. 40 of 2 April 2007 as subsequently amended; and
(B)
the mortgage loan granted by the Originator for the purpose of repaying the original Mortgage Loan is
extended at current market conditions.
Should the Originator intend to consent to any one of such requests, and upon all the above conditions being
satisfied, the Originator will quarterly communicate in writing to the Issuer and to the Servicer, if different
from the Originator, the Claim arising from the Mortgage Loan in relation to which a Borrower has requested
such amendment.
Payments by the Issuer
The Additional Mortgage Claims Purchase Price (if ever due), the Settlement Expenses Amount, the
Insurance Premia and any other amount owed to BancaEtruria from time to time by the Issuer pursuant to the
terms of the Transfer Agreement, with the exception of the Purchase Price, will be treated as “Originator’s
Claims” will be paid by the Issuer to BancaEtruria accordingly under the applicable Priority of Payments and
subject to the Intercreditor Agreement commencing from the first Interest Payment Date.
The Transfer Agreement is governed by Italian law.
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THE SERVICING AGREEMENT
The description of the Servicing Agreement set out below is a summary of certain features of such Transaction
Document and is qualified in its entirety by reference to the detailed provisions of such Servicing Agreement.
Prospective Noteholders may inspect a copy of the Servicing Agreement upon request at the Specified Offices
of, respectively, the Representative of the Noteholders and the Principal Paying Agent.
On the Initial Execution Date, the Issuer and BancaEtruria (in such capacity, the “Servicer”) entered into a
servicing agreement subsequently amended on the Signing Date (the “Servicing Agreement”), pursuant to
which the Servicer has agreed to administer and service the Mortgage Loans, including the collection of the
related Claims, on behalf of the Issuer and, following the service of an Issuer Acceleration Notice, the
Representative of the Noteholders.
Duties of the Servicer
The Servicer is responsible for the receipt of cash collections in respect of the Mortgage Loans and related
Claims and for cash and payment services (soggetto incaricato della riscossione dei crediti ceduti e dei
servizi di cassa e pagamento) pursuant to the Securitisation Law. Within the limits of article 2, paragraph 6 of
the Securitisation Law, the Servicer is responsible for verifying that the transactions to be carried out in
connection with the Securitisation comply with applicable laws and are consistent with the contents of the
Prospectus.
The Servicer has undertaken in relation to each of the Mortgage Loans and related Claims, inter alia:
(a)
to collect the Collections and to credit them into the Collection Account by 10:00 a.m. (Milan time) of
the Business Day immediately following the day of receipt, for value the relevant receipt date,
provided that, in the case of exceptional circumstances causing an operational delay in the transfer, the
Collections are required to be transferred to the Collection Account by 10:00 a.m. (Milan time) of the
Business Day immediately following the day on which the operational delay in the transfer has been
solved and, in any case, within 10 Business Days from the date in which the exceptional circumstance
has been verified. The Servicing Agreement provides that if monies already transferred to the
Collection Account are identified as having not been paid, in whole or in part, by the relevant
Borrower, following the verification activity carried out by the Servicer, the Servicer may deduct those
unpaid amounts from the Collections not yet transferred to the Issuer;
(b)
to strictly comply with the Servicing Agreement and the servicing and collection policy described in
“The servicing and collection policies” above (the “Collection Policy”);
(c)
to carry out the administration and management of such Claims and to manage any possible legal
proceedings (procedura giudiziale) against the relative Borrower or related guarantor in respect
thereof, if any (the “Judicial Proceedings”), and any possible bankruptcy or insolvency proceedings
against any Borrower (“Debtor Insolvency Proceedings”, and, together with Judicial Proceedings, the
“Proceedings”);
(d)
to initiate any Proceedings in respect of such Claims, if necessary;
(e)
to comply with any requirements of laws and regulations applicable in the Republic of Italy in carrying
out activities under the Servicing Agreement;
(f)
to maintain effective accounting and auditing procedures so as to ensure compliance with the
provisions of the Servicing Agreement;
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(g)
save where otherwise provided for in the Collection Policy or other than in certain limited
circumstances specified in the Servicing Agreement, not to consent to any waiver or cancellation of or
other change prejudicial to the Issuer’s interests in or to such Claims, the mortgage and any other real
or personal security or remedy under or with respect to such Mortgage Loan unless it is ordered to do
so by an order of a competent judicial or other authority or authorised to do so by the Issuer and the
Representative of the Noteholders;
(h)
on behalf of the Issuer, operate an adequate supervision and information disclosure system with respect
to the Claims and an adequate database maintenance system as provided for under any laws relating to
money laundering, by keeping and maintaining any books, records, documents, magnetic media and IT
systems as may be useful for, or relevant to, the implementation of a data disclosure system to permit
the Issuer to operate in full compliance with all applicable laws and regulations in matters of
supervision, reporting procedures or money laundering;
(i)
interpret, consider and manage autonomously any issue arising out of the application of the Usury Act
from time to time. The Servicer has undertaken, in carrying out such tasks and its functions pursuant to
the Servicing Agreement, and in particular in the collection of the Claims, not to breach the Usury Act;
(j)
maintain and implement administrative and operating procedures (including, without limitation,
copying recordings in case of destruction thereof), keep and maintain all books, records and all the
necessary or advisable documents (i) in order to collect all the Claims and all the other amounts which
are to be paid for any reason whatsoever in connection with the Claims (including, without limitation,
records which make it possible to identify the nature of any payment and the precise allocation of
payment and collected amounts to capital and interest), and (ii) in order to check the amount of all the
Collections received; and
(k)
communicate, within the expiration date of the instalment of each Mortgage Loan, to the Originator,
the Representative of the Noteholders, the Computation Agent and the Issuer, the difference between
the amount of the instalment provided in the relevant Moartgage Loan and the amount of the
instalment due by the Borrower pursuant to the application of Law Decree 185.
Pursuant to the Servicing Agreement, as far as it results in an advantage for the Noteholders and subject to the
prior written approval of the Representative of the Noteholders and provided the conditions set forth in the
Servicing Agreement are met, the Servicer may sell to third parties, on behalf and in the name of the Issuer,
one or more Claims which have become Defaulted Claims.
The Issuer and the Representative of the Noteholders have the right to inspect and copy the documentation
and records relating to the Claims in order to verify the activities undertaken by the Servicer pursuant to the
Servicing Agreement, provided that the Servicer has been informed at least five Business Days in advance of
any such inspection.
Pursuant to the terms of the Servicing Agreement, the Servicer will indemnify the Issuer from and against any
and all damages and losses incurred or suffered by the Issuer as a consequence of a default by the Servicer of
any obligation of the Servicer under the Servicing Agreement. The Servicer has acknowledged and accepted
that, pursuant to the terms of the Servicing Agreement, it will not have any recourse against the Issuer for any
damages, claims, liabilities or costs incurred by it as a result of the performance of its activities under the
Servicing Agreement except as may result from the Issuer’s wilful default (dolo) or gross negligence (colpa
grave).
Other provisions
Under certain circumstance and within the limits of two per cent. of the aggregate Purchase Price, the
Servicer may agree to enter into accollo liberatorio arrangements with the Borrowers.
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Following the classification of a Claim as Credito in Sofferenza, the Servicer, subject to certain conditions set
out in the Servicing Agreement, may also enter into settlement agreements (as an alternative to the judicial
proceedings against the Borrower) in the context of which it may modify the original amortising plan and
discharge the Borrower in relation to a portion of the amount still due.
Ultimately, the Servicer may, if the sale of Crediti in Sofferenza procures an advantage to the Noteholders, sell
the Crediti in Sofferenza at a price indicated under the Servicing Agreement subject however to certain other
conditions set out in the same Servicing Agreement.
Reporting requirements
The Servicer has undertaken to prepare and submit to the Computation Agent, the Swap Counterparty, Fitch,
the Representative of the Noteholders, the Arranger, the Corporate Servicer and the Issuer by no later than
each Reporting Date quarterly reports (each, a “Servicer Report”) in the form set out in the Servicing
Agreement and containing information as to the Portfolio and any Collections in respect of the preceding
Collection Period. Further, the Servicer has undertaken to the Issuer to prepare a performance report to be
submitted to Fitch and the Arranger in electronic form starting from the Interest Payment Date falling in July
2009 and on each Interest Payment Date thereafter, substantially in the form set out in the Servicing
Agreement.
The Servicer is obliged to appoint a firm of internationally recognised auditors acceptable to the Issuer, or the
same auditors auditing the financial statements of the Servicer which will, by the date set for the approval of
the Issuer’s annual accounts, issue a report on the auditing procedure carried out as agreed with the Servicer.
Such procedure will be carried out for the purposes of verifying that the information and the figures contained
in two Servicer Reports chosen by the appointed auditors out of the last four Servicer Reports prepared,
accurately reflect the accounting records of the Issuer and that the procedures applied by it in administering
and monitoring the collections are such as to ensure that the collections are properly and accurately recorded
and applied in accordance with the Servicing Agreement.
Moreover, the Servicer has undertaken to furnish, in a reasonable lapse of time taking into consideration the
nature of the relevant request, to the Issuer, to Fitch, to the Corporate Servicer, to the Representative of the
Noteholders and to the Computation Agent such further information as the Issuer and/or the Computation
Agent and/or Fitch and/or the Corporate Servicer and/or the Representative of the Noteholders may
reasonably request with respect to the relevant Claims and/or the related Proceedings.
Remuneration of the Servicer
In return for the services provided by the Servicer in relation to the ongoing management of the Portfolio, on
each Interest Payment Date and in accordance with the Priority of Payments, the Issuer will pay to the
Servicer the following servicing fees:
(a)
an annual fee equal to 0.07 per cent. of the Collections received in respect of the Claims (other than
Crediti in Sofferenza) in the immediately preceding Collection Period (including VAT or other taxes
where applicable) for the collection activity of the Claims (other than Crediti in Sofferenza);
(b)
an annual fee equal to 0.08 per cent. of the Collections received in respect of the Claims (other than
Crediti in Sofferenza) in the immediately preceding Collection Period (including VAT or other taxes
where applicable) for the administration activity of the Claims (other than Crediti in Sofferenza);
(c)
an annual fee equal to 3 per cent. of the Collections received in respect of Crediti in Sofferenza
collected in the immediately preceding Collection Period (including VAT where applicable) for the
collection activity of Crediti in Sofferenza; and
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(d)
a quarterly fee of €1,000 (excluding VAT or other taxes where applicable and including expenses
sustained by the Servicer) payable quarterly in arrear on each Interest Payment Date, in connection
with certain compliance and consultancy services to be provided by the Servicer pursuant to the
Servicing Agreement,
(the “Servicing Fees”).
Pursuant to the Servicing Agreement, the Servicing Fees set out in paragraph (a), (b) and (d) above are
inclusive of the expenses and costs borne by the Servicer in connection with its servicing activities whilst the
Servicing Fee set out in paragraph (c) above does not comprise the expenses and costs borne by the Servicer
in connection with its such activities. Such expenses and costs will be reimbursed by the Issuer in accordance
with the Servicing Agreement up to a cap equal to €200,000.
Subordination and limited recourse
The Servicer has agreed that the obligations of the Issuer under the Servicing Agreement are subordinated and
limited recourse obligations and will be payable only in accordance with the applicable Priority of Payments.
Back-up Servicer
The Issuer may appoint a back-up servicer which shall be:
(a)
a bank operating for at least three years and having one or more branches in the territory of the
Republic of Italy; or
(b)
a financial intermediary registered pursuant to article 107 of the Banking Act operating and having one
or more branches in the territory of the Republic of Italy, which has software that is compatible with
the management of the Mortgage Loans and adequate assets to ensure that its activities are carried out
effectively and on a constant basis; or
(c)
a bank whose appointment does not adversely affect the rating assigned to the Rated Notes by Fitch,
(the “Back-up Servicer”)
within 30 (thirty) Business Days after the occurrence of one of any of the following events:
(a)
the Bank of Italy has proposed to the Minister of Finance to admit the Servicer to any insolvency
proceeding or a request for the judicial assessment of the insolvency of the Servicer has been filed with
the competent office or the Servicer has been admitted to the procedures set out in articles 74 and 76 of
the Banking Act, or a resolution is passed by the Servicer with the intention of applying for such
proceedings to be initiated;
(b)
failure on the part of the Servicer to deliver and pay any amount due under the Servicing Agreement
within ten Business Days from the date of receipt of a notice claiming that such amount became due
and payable and has not been duly paid;
(c)
failure on the part of the Servicer to deliver a certificate issued by the competent companies’ register
by the end of each Collection Period.
Under the Servicing Agreement the Issuer has undertaken to appoint the Back-up Servicer in the event that
the long-term unsecured, unsubordinated debt obligations of BancaEtruria are rated below “BBB-“ by Fitch.
The appointment shall occur within 90 days from downgrading. Notice of the occurrence of BancaEtruria’s
rating downgrade below “BBB-“ by Fitch shall be given to the Representative of the Noteholders.
The Issuer shall procure that the Back-up Servicer undertakes, in case of termination of the Servicing
Agreement before the repayment of the Notes, to:
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185
(i)
execute a servicing agreement substantially in the same form of the Servicing Agreement;
(ii)
undertake the obligations to be borne by the Servicer pursuant to the Transaction Documents;
(iii)
adhere to the Intercreditor Agreement;
(iv)
notify its appointment to the relevant Borrowers.
Rating downgrade provisions
If BancaEtruria as Servicer ceases to be rated at least as high as “F2” by Fitch (in respect of short-term debt),
BancaEtruria as Servicer will either (i) communicate in writing to the Borrowers to change their payment
instructions in respect of the Mortgage Loans so that payments in respect of the Claims are made to a new
Collection Account opened by the Issuer with the substitute Collection Account Bank, or (ii) take such other
action in line with Fitch’s criteria at the time of the downgrade.
Termination and resignation of the Servicer and withdrawal of the Issuer
The Issuer may terminate the appointment of the Servicer (revocare il mandato), pursuant to article 1725 of
the Italian civil code, or withdraw from the Servicing Agreement (recesso unilaterale), pursuant to article
1373 of the Italian civil code, upon the occurrence of one of any of the following events:
(a)
the Bank of Italy has proposed to the Minister of Finance to admit the Servicer to any insolvency
proceeding or a request for the judicial assessment of the insolvency of the Servicer has been filed with
the competent office or the Servicer has been admitted to the procedures set out in articles 74 and 76 of
the Banking Act, or a resolution is passed by the Servicer with the intention of applying for such
proceedings to be initiated;
(b)
failure on the part of the Servicer to deliver and pay any amount due under the Servicing Agreement
within ten Business Days from the date of receipt of a notice claiming that such amount became due
and payable and has not been duly paid;
(c)
failure on the part of the Servicer, once a 10-day notice period has elapsed, to observe or perform in
any respect any of its obligations under the Servicing Agreement, the Warranty and Indemnity
Agreement, the Transfer Agreement or any of the Transaction Documents to which the Servicer is a
party which could affect the fiduciary relationship between the Servicer and the Issuer;
(d)
the representations and warranties given by the Servicer pursuant to the terms of the Servicing
Agreement are verified to be false or misleading and this could have a material negative effect on the
Issuer and/or the Securitisation;
(e)
the Servicer changes significantly the departments and/or the resources in charge of the management
of the Claims and the Proceedings and such change could have a material negative effect on the Issuer
and/or the Securitisation;
(f)
the Servicer does not meet the requirements provided by law or by the Bank of Italy for the entities
appointed as servicer in a securitisation transaction or the Servicer does not meet any further
requirement which may be requested in the future by either the Bank of Italy or any other competent
authority.
The Issuer is obliged to notify the Servicer of its intention to terminate the Servicing Agreement with prior
written notice to the Representative of the Noteholders, to Fitch and the Arranger, after having selected the
substitute servicer.
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Moreover, the Servicer is entitled to resign from the Servicing Agreement at any time after a 12-month period
has elapsed from the Initial Execution Date by giving at least 12 months’ prior written notice to that effect to
the Issuer, the Representative of the Noteholders, Fitch and the Arranger. Following the resignation of the
Servicer, the Issuer shall promptly commence procedures necessary to appoint a substitute servicer.
The termination and the resignation of the Servicer shall become effective after fifteen Business Days have
elapsed from the date specified in the notice of the termination or of the resignation, or from the date, if
successive, of the appointment of the substitute servicer.
The Issuer may appoint a substitute servicer, only with (i) the prior written approval of the Representative of
the Noteholders, (ii) prior written notice to Fitch and (iii) following confirmation from Fitch that such
substitute servicer will not adversely affect the rating then assigned to the Rated Notes. The substitute servicer
shall be:
(a)
a bank operating for at least three years and having one or more branches in the territory of the
Republic of Italy; or
(b)
a financial intermediary registered pursuant to article 107 of the Banking Act operating and having one
or more branches in the territory of the Republic of Italy, which has software that is compatible with
the management of the Mortgage Loans and adequate assets to ensure that its activities are carried out
effectively and on a constant basis; or
(c)
the Back-up Servicer (if any).
The Servicing Agreement further provides for an out-of-court settlement procedure in the case of a dispute
arising between the Issuer and the Servicer concerning the termination of the appointment of BancaEtruria as
Servicer. In such circumstance, the costs and fees of the deciding arbitrator, appointed pursuant to the
Servicing Agreement, shall be borne by the succumbent. Should the Issuer succumb, the Servicer shall
advance to the latter the fees and costs of the deciding arbitrator (the “Servicing Settlement Expenses
Amount”), in case there are no funds available for such purpose in the Expenses Account. The Issuer shall
reimburse the Settlement Expenses Amount on the next subsequent Interest Payment Date in accordance with
the Priority of Payments.
The substitute servicer must execute a servicing agreement with the Issuer substantially in the form of the
Servicing Agreement and must accept all the provisions and obligations set out in the Intercreditor
Agreement.
The Servicing Agreement is governed by Italian law.
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THE WARRANTY AND INDEMNITY AGREEMENT
The description of the Warranty and Indemnity Agreement set out below is a summary of certain features of
such Transaction Document and is qualified in its entirety by reference to the detailed provisions of such
Warranty and Indemnity Agreement. Prospective Noteholders may inspect a copy of the Warranty and
Indemnity Agreement upon request at the Specified Offices of, respectively, the Representative of the
Noteholder and the Principal Paying Agent.
On the Initial Execution Date, the Issuer, on the one hand, and BancaEtruria, on the other hand, entered into a
warranty and indemnity agreement, which was amended on the Signing Date (the “Warranty and Indemnity
Agreement”), pursuant to which BancaEtruria has made certain representations and warranties and agreed to
give certain indemnities in favour of the Issuer in relation to the Portfolio.
The Warranty and Indemnity Agreement contains representations and warranties by BancaEtruria in respect
of, inter alia, the following categories:
1.
the Mortgage Loans, the Claims, Mortgages and any collateral security related thereto and transferred
to the Issuer pursuant to the Transfer Agreement (the “Related Security”);
2.
the real estate assets which have been mortgaged to secure the Claims (the “Real Estate Assets”);
3.
the disclosure of information; and
4.
the Securitisation Law and article 58 of the Banking Act.
In addition to the terms defined elsewhere in this Prospectus, the following terms have the following
meanings:
“Arranger” means UBS Limited in its capacity as arranger of the Securitisation;
“Bankruptcy Law” means the Italian royal decree No. 267 of 16 March 1942, as subsequently amended,
integrated or replaced;
“Borrower” has the meaning ascribed to the word Beneficiario in the Transfer Agreement which term
identifies any person who is a borrower under a Mortgage Loan;
“Claims” has the meaning ascribed to the word Crediti in the Transfer Agreement and which term identifies
the claims transferred by BancaEtruria to the Issuer pursuant to the Transfer Agreement;
“Credit Policies” means the credit policies set out in schedule 2 to the Warranty and Indemnity Agreement;
“Criteria” means the criteria specified in schedule 2 to the Transfer Agreement;
“Collection Account” means the account opened in the name of the Issuer with the Collection Account Bank
for the deposit of all amounts received by the Issuer from the Servicer in connection with the Claims pursuant
to the Servicing Agreement;
“Fondiario Mortgage Loan” means each Mortgage Loan which has been classified as “mutuo fondiario” in
the list of the Mortgage Loans attached as schedule 1 to the Transfer Agreement and the Claims arising from
which have been transferred to the Issuer pursuant to the Transfer Agreement;
“Individual Purchase Price” means the price of the Claims relating to each Mortgage Loan, as indicated in
schedule 1 to the Transfer Agreement;
“Initial Outstanding Amount” means the principal amount outstanding of the relevant Mortgage Loan as of
the Valuation Date;
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“Insurance Policies” means any insurance policies taken out by the Borrowers insuring certain Real Estate
Assets against, inter alia, any damage deriving from lightning, explosion and fire;
“Ipotecario Mortgage Loan” means each Mortgage Loan which has been classified as “mutuo ipotecario” in
the list of the Mortgage Loans attached as schedule 1 to the Transfer Agreement and the Claims arising from
which have been assigned and transferred to the Issuer pursuant to the Transfer Agreement;
“Loan to Value” means the ratio between the original amount of the Mortgage Loan and the appraisal value
of the Real Estate Asset as determined before the entering into of the Mortgage Loan;
“Mortgage” means a mortgage (ipoteca) created on the Real Estate Assets as real security interest (diritto
reale di garanzia) of the Claims;
“Mortgagor” means any person, including a Borrower and/or an Obligor, who has granted a Mortgage to
BancaEtruria to secure the payment or repayment of any amount payable in respect of a Mortgage Loan as
well as any successor or assignee thereof;
“Obligor” means any person, including a Borrower, who has granted any Related Security to BancaEtruria or
is liable, directly or indirectly, for the payment or reimbursement of a Claim, including any person who is
liable, for instance, under an accollo arrangement;
“Real Estate Asset” means each real estate asset that has been mortgaged to secure the Claims;
“Related Security” means the Mortgages and any security, including real security or personal security,
including any agreement creating a security, including the accollo arrangements (if any)– but excluding the
Mortgages and the fideiussioni omnibus which have been granted in connection with a Mortgage Loan or to
secure or ensure the payment and/or the repayment of the Mortgage Loans or the Claims;
“Valuation Date” means 2 January 2009, at 23.59
Specifically, BancaEtruria has represented and warranted, inter alia, as follows:
(1)
Mortgage Loans, Claims, Mortgages and Related Security
(a)
Each party to a Mortgage Loan, a Mortgage or a Related Security and, in any case, each signatory of
any agreement, deed or other relevant document relating to a Mortgage Loan, a Mortgage or a Related
Security, at the date of execution thereof, had full power and authority to enter into and execute the
relevant agreement, deed or document relating to such Mortgage Loan, Mortgage or Related Security.
(b)
Each Mortgage Loan and each Mortgage was executed by way of either a public deed (atto pubblico)
drawn up by an Italian notary public or a private deed authenticated by a notary public (scrittura
privata autenticata da un notaio). Each Mortgage was and is registered in accordance with article 2827
of the Italian civil code.
(c)
Each Mortgage was registered not before 1 January 1989.
(d)
Each Mortgage is registered for at least 175 per cent. (one hundred and seventy five per cent.) of the
principal amount originally disbursed under the relevant Mortgage Loan.
(e)
Each Claim under the Mortgage Loans derives from one or more agreements, deeds or other relevant
documents which were duly and validly executed and entered into by the parties thereto. Each
Mortgage Loan, each Mortgage, each Related Security and each agreement, deed or document relating
thereto is valid and enforceable in accordance with its terms, constitutes a valid and legal obligation
binding on each party thereto and, where applicable, creates the security interest that it purports to
create.
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(f)
Each Mortgage Loan, each Mortgage and each Related Security has been entered into, executed and
performed and the advance of each Mortgage Loan has been made in compliance with all applicable
laws, rules and regulations, including, without limitation, all laws, rules and regulations concerning the
credito fondiario (as defined in the Banking Act and the implementing regulations) in relation to the
Fondiario Mortgage Loans, consumers protection, usury, personal data protection, as well as in
accordance with the Credit Policies.
(g)
Each authorisation, approval, consent, license, registration, recording, presentation or attestation or any
other action and each relevant agreement, deed or document, which is required or desirable to ensure
the validity, legality or enforceability of each Mortgage Loan, Mortgage and Related Security and any
other related agreement, deed or document was duly and unconditionally obtained, made, taken or
executed by the time of the execution of each Mortgage Loan or at the time of execution or perfection
of each Mortgage or Related Security and the making of any advances thereunder or when otherwise
required by law.
(h)
No Mortgage Loan was executed or entered into, nor was any Mortgage Loan advanced, under any
applicable law (even regional) or regulation in force in the Republic of Italy providing for financial
support (mutui agevolati) of any kind, statutory discounts, interest rate caps or any other provisions
granting benefits or discounts to Borrowers, Mortgagors and/or Obligors in respect of either principal
or interest.
(i)
Each Mortgage Loan has been executed with, fully advanced and disbursed directly to the relevant
Borrower (or – in relation to Mortgage Loans in respect of which an accollo liberatorio occurred – to
the relevant assignor) or on his account and there is no obligation on the part of BancaEtruria to
advance or disburse further amounts in connection therewith.
(j)
Each Mortgage Loan was entered into substantially in the form of BancaEtruria’s standard form
agreement as adopted from time to time, with the exception of the mortgage loans purchased by
BancaEtruria from third parties. Following the execution date of the relevant Mortgage Loan or the
purchase date, no Mortgage Loan has been amended so that it is not consistent with BancaEtruria’s
standard form agreement or the Credit Policies.
(k)
Each Mortgage Loan, each Mortgage, each Related Security and any other related agreement, deed or
document was entered into and executed without any fraud or misrepresentation or undue influence by
or on behalf of the Originator or any of its directors (amministratori), managers (dirigenti), officers
(funzionari) and/or employees (impiegati) so that the Borrower(s), the Mortgagor(s) and the Obligor(s)
have no ground to suit the Originator for fraud or misrepresentation or undue influence or challenge
the validity of one or more obligations concerning the Mortgage Loan, the Mortgage and the Related
Security, as well as other relevant agreement, deed or document.
(l)
Each Mortgage Loan was granted on the basis of an accurate, conservative appraisal of the relevant
Real Estate Assets carried out for the purposes of disbursement of the relevant Mortgage Loan in
accordance with the Credit Policies:
with reference to Mortgage Loans disbursed before 19 October 2004:
(i)
in relation to the Mortgage Loans having an original amount equal to or lower than Euro
150,000, by an appraiser enrolled, as the case may be, in the official list of geometri, ingegneri
or architetti (1) who was not necessarily, at the time of the appraisal, either an employee of
BancaEtruria or of any other company of the BancaEtruria Banking Group, (2) who in no case,
at the time of the appraisal, had an interest, direct or indirect, in the relevant Real Estate Assets
//
190
and/or Mortgage Loans and (3) whose remuneration didn’t depend on the approval of the
Mortgage Loan; or
(ii)
in relation to the Mortgage Loans having an original amount higher than Euro 150,000, by an
appraiser (1) who was enrolled, at the time of the appraisal, in the official list of geometri,
ingegneri or architetti and was an employee of Etruria Immobili e Servizi S.p.A., a company
belonging to the BancaEtruria Banking Group, (2) who in no case, had at all times an interest,
direct or indirect, in the relevant Real Estate Assets or Mortgage Loans and (3) whose
remuneration didn’t depend on the approval of the Mortgage Loan. In such case the appraiser
could have rendered its assessment to confirm the existing one, broader in scope, carried out by
an appraiser holding the requirements under the preceding point (i).
With reference to Mortgage Loans disbursed from 19 October 2004 to 10 January 2007:
(iii)
in relation to the Mortgage Loans having an original amount equal or lower than Euro 150,000,
if available at the time of the application for the Mortagage Loan: by an appraiser enrolled in
the official list of geometri, ingegneri or architetti (1) who not necessarily was, at the time of
the appraisal, an employee of BancaEtruria or of any other company of the BancaEtruria
Banking Group, (2) who however had not at all times an interest, direct or indirect, in the
Relevant Real Estate Assets or in Mortgage Loans and (3) however, whose remuneration didn’t
depend on the approval of the Mortgage Loan; or
(iv)
in relation to the Mortgage Loans having an original amount equal or lower than Euro 150,000,
if the appraisal of the preceding point (iii) was not available at the time of the application for
the Mortgage Loan: by the borrower through certification (autocertificazione) of the value
subject to the prior verification by the bank of the existence of the following documents,
precautionary and prudential parameters: (1) cadastral certificate (2) identification and visibility
of the real estate asset (3) Loan to Value not higher than 75% (4) check with the amount
indicated in the deed of sale (5) absence of restructuring measures involving demolitions (6)
check of the provided appraisal with valuations provided by the competent office (Agenzia del
Territorio/ Osservatorio Immobiliare); or
(v)
with reference to the Mortgage Loans having an original amount higher than Euro 150,000 or
whose features do not meet the parameters set out in point (iv) above; by an appraiser (1) who
was, at the time of the appraisal, an appraiser enrolled in the official list of geometri, ingegneri
or architetti and an employee of Etruria Immobili e Servizi S.p.A., a company belonging to the
BancaEtruria Banking Group, (2) who had not at all times an interest, direct or indirect, in the
Real Estate Assets and/or in the relevant Mortgage Loans and (3) whose remuneration didn’t
depend on the approval of the Mortgage Loan. In such case the appraiser could have rendered
its assessment to confirm the existing one, broader in scope, carried out by an appraiser holding
the requirements under the preceding point (iii).
With reference to Mortgage Loans disbursed from 10 January 2007 to 11 September 2008:
(vi)
with reference to the Mortgage Loans having an original amount equal or lower than Euro
200,000 with Loan to Value lower than or equal to 70%: by an appraiser enrolled in the official
list of geometri, ingegneri or architetti (1) who not necessarily was, at the time of the appraisal
an employee of BancaEtruria or of any other company belonging to the BancaEtruria Banking
Group (2) who however had not at all times an interest, direct or indirect, in the Real Estate
Assets and/or in the relevant Mortgage Loans and (3) however, whose remuneration didn’t
//
191
(vii)
with reference to the Mortgage Loans having an original amount equal or lower than Euro
200,000 with Loan to Value higher than 70%: by an appraiser (1) who was, at the time of the
appraisal, enrolled in the official list of geometri, ingegneri or architetti and an employee of
Etruria Immobili e Servizi S.p.A., a company belonging to the BancaEtruria Banking Group,
(2) who has not had at all times, an interest, direct or indirect, in the real estate assets and/or in
the relevant Mortgage Loan and (3) however, whose remuneration didn’t depend on the
approval of the Mortgage Loan. In such case the appraiser could have rendered its assessment
to confirm the existing one, broader in scope, carried out by an appraiser holding the
requirements under the preceding point (vi); or
(viii) with reference to Mortgage Loans having an original amount higher than Euro 200,000 and
however not higher than or equal to Euro 1,200,000 with Loan to Value lower than or equal to
40%: by an appraiser enrolled in the official list of geometri, ingegneri or architetti (1) who was
not necessarily, at the time of the appraisal, an employee of BancaEtruria or of any other
company belonging to the BancaEtruria Banking Group, (2) who however had not at all times
an interest, direct or indirect in the Real Estate Assets and/or in the relevant Mortgage Loans
and (3) however, whose remuneration didn’t depend on the approval of the Mortgage Loan; or
(ix)
with reference to Mortgage Loans having an original amount higher than Euro 200,000 and
however not higher than or equal to Euro 1,200,000 with Loan to Value higher than 40%: by an
appraiser (1) who was, at the time of the appraisal, enrolled in the official list of geometri,
ingegneri or architetti and an employee of Etruria Immobili e Servizi S.p.A., a company
belonging to the BancaEtruria Banking Group, (2) who had not at all times an interest, direct or
indirect, in the Real Estate Assets and/or in the relevant Mortgage Loans and (3) whose
an appraiser holding the requirements under the preceding point (viii); or
(x)
with reference to Mortgage Loans having an original amount higher than Euro 1,200,000, apart
from the Loan to Value: by an appraiser (1) who was, at the time of the appraisal, enrolled in the
official list of geometri, ingegneri or architetti and an employee of Etruria Immobili e Servizi
S.p.A., a company belonging to BancaEtruria Banking Group, (2) who had not at all times an
interest, direct or indirect, in the Real Estate Assets and/or in the relevant Mortgage Loans and
(3) whose remuneration didn’t depend on the approval of the Mortgage Loan. In such case the
appraiser could have rendered its assessment to confirm the existing one, broader in scope,
carried out by an appraiser holding the requirements under the preceding points (vi) and (viii).
For the Mortgage Loans disbursed starting from 12 September 2008:
(xi)
with reference to the Mortgage Loans having an original amount equal to or lower than Euro
200,000 with Loan to Value lower than or equal to 70%: by an appraiser enrolled in the official
list of geometri, ingegneri or architetti (1) who was not necessarily, at the time of the appraisal,
an employee of BancaEtruria or of any other company belonging to the BancaEtruria Banking
Group or of CRIF – Valutazione Immobili S.p.A., (2) who however had not, at all times, an
interest, direct or indirect in the Real Estate Assets and/or in the relevant Mortgage Loans and
(3) however, whose remuneration didn’t depend on the approval of the Mortgage Loan; or
(xii)
with reference to the Mortgage Loans having an original amount equal to or lower than Euro
200,000 with Loan to Value higher than 70%: by an appraiser (1) who was, at the time of the
appraisal, enrolled in the official list of geometri, ingegneri or architetti and employee of
Etruria Immobili e Servizi S.p.A., a company belonging to the BancaEtruria Banking Group, or
//
192
of CRIF- Valutazione Immobili S.p.A. (2) who had not, at all times, an interest, direct or
indirect, in the Real Estate Assets and/or in the relevant Mortgage Loans and (3) whose
an appraiser holding the requirements under the preceding point (xi); or
(xiii) with reference to Mortgage Loans having an original amount higher than Euro 200,000 and
however not higher than or equal to Euro 1,200,000 with Loan to Value lower than or equal to
40%: by an appraiser enrolled in the official list of geometri, ingegneri or architetti (1) who was
not necessarily, at the time of the appraisal an employee of BancaEtruria or of any other
company belonging to the BancaEtruria Banking Group, or of CRIF – Valutazione Immobili
S.p.A. (2) who however had not at all times an interest, direct or indirect in the Real Estate
Assets and/or in the relevant Mortgage Loans and (3) however, whose remuneration didn’t
(xiv) with reference to Mortgage Loans having an original amount higher than Euro 200,000 and
however not higher than or equal to Euro 1,200,000 with Loan to Value higher than 40%: by an
appraiser (1) who was, at the time of the appraisal enrolled in the official list of geometri,
ingegneri or architetti and employee of Etruria Immobili e Servizi S.p.A., a company belonging
to the BancaEtruria Banking Group, or of CRIF – Valutazione Immobili S.p.A., (2) who had not
at all times an interest, direct or indirect in the Real Estate Assets and/or in the relevant
Mortgage Loans and (3) however, whose remuneration didn’t depend on the approval of the
Mortgage Loan. In such case the appraiser could have rendered its assessment to confirm the
existing one, broader in scope, carried out by an appraiser holding the requirements under the
preceding point (xiii); or
(xv)
with reference to Mortgage Loans having an original amount higher than Euro 1,200,000, apart
from the Loan to Value: by an appraiser (1) who was, at the time of the appraisal, enrolled in the
official list of geometri, ingegneri or architetti and an employee of Etruria Immobili e Servizi
S.p.A., a company belonging to the BancaEtruria Banking Group or of CRIF – Valutazione
Immobili S.p.A, (2) who had not at all times an interest, direct or indirect in the Real Estate
Assets and/or in the relevant Mortgage Loan and (3) whose remuneration didn’t depend on the
approval of the Mortgage Loan. In such case the appraiser could have rendered its assessment
to confirm the existing one, broader in scope, carried out by an appraiser holding the
requirements under the preceding points (xi) and (xiii).
(m)
Each Mortgage was duly granted, created, perfected, extended and preserved (also pursuant to articles
2827 et subs. of the Italian civil code) and remains valid and enforceable in accordance with its terms
and meets all requirements under all applicable laws or regulations and is not vitiated so that such
Mortgage may not be challenged pursuant to any applicable law or regulation. Each Mortgage has
been created concurrently with the granting of the relevant Mortgage Loan.
(n)
Each Mortgage is a security for the full amount of principal and interest (pursuant to article 2855 of the
Italian civil code) and of any other accessory amounts of the relevant Mortgage Loan.
(o)
The “hardening” period (periodo di consolidamento) applicable to each Mortgage has expired and the
relevant security interest created thereby is not capable of being successfully challenged by claw-back
(azione revocatoria) pursuant to article 67 of the Bankruptcy Law.
(p)
Each Mortgage may not be clawed-back pursuant to article 2901 et subs. of the Italian civil code,
lacking BancaEtruria the necessary subjective conditions.
//
193
(q)
Each Related Security was granted, created and preserved, is valid and enforceable in accordance with
its terms, meets all requirements under all applicable laws or regulations and is not vitiated so that such
Related Security may not be challenged pursuant to any applicable law or regulation. Each Related
Security has been created concurrently with the granting of the relevant Mortgage Loan.
(r)
Each Mortgage is economically a first ranking priority voluntary mortgage (ipoteca di primo grado
economico), that is:
(i)
(ii)
al primo) provided that (A) the request for the cancellation of the mortgages ranking in priority
thereto has been filed with the competent land register or (B) the debts secured by the priorranking mortgages have been fully repaid; or
(iii)
a second-ranking priority voluntary mortgage (ipoteca volontaria di secondo grado legale)
provided that (A) both the first-ranking mortgage and the second-ranking mortgage are in
favour of the Originator in relation to two mortgage loans granted to the same borrower; and
(B) the mortgage loan secured by the first-ranking mortgage is included in the Portfolio.
The Mortgages do not secure any loans other than the Mortgage Loans. No other mortgages having the
same ranking have been created over the Real Estate Asset in favour of third parties.
(s)
The Originator has not cancelled, apportioned, reduced, released or restricted (even partially) any
security constituting Related Security, existing as of the Initial Execution Date and listed in schedule 1
to the Transfer Agreement and has not agreed to the reduction, waiver or cancellation of the relevant
Related Security, except when the relevant Mortgage Loan has been repaid in full.
(t)
In relation to either any Fondiari Mortgage Loans or any Ipotecari Mortgage Loans, BancaEtruria has
not (whether in whole or in part) cancelled, apportioned, reduced, released or restricted (even partially)
any of the Mortgages, as applicable, except when requested by the relevant Borrower or Mortgagor in
circumstances where the right to such cancellation, apportionment, release, restriction (frazionamento)
or reduction (riduzione) is granted by any applicable laws. In relation to either any Fondiari Mortgage
Loans or any Ipotecari Mortgage Loans, BancaEtruria has not (whether in whole or in part) released
the Real Estate Asset from the respective Mortgages, except when requested by the relevant Borrower
or Mortgagor (as applicable) in circumstances where the right to such release is granted by any
applicable laws. No Mortgage Loan contains any clause which gives to the relevant Borrower or
Mortgagor (as applicable) the right to the cancellation, apportionment, release, restriction or reduction
unless in those circumstances where any applicable laws provide for such right. All Mortgages are
currently valid and enforceable and the corresponding registration has not been renewed because the
20-year term from the relevant registration has not expired yet in accordance with article 2847 of the
Italian civil code.
(u)
With particular regard to the Fondiari Mortgage Loans, no Borrower and/or Mortgagor has the right to
obtain any cancellation (cancellazione), release (restrizione), reduction (riduzione) or apportionment
(frazionamento) of any Mortgage and/or the parcelling of the relevant loan in quotas, other than in
accordance with, and within the limits set out in, article 39 of the Banking Act.
(v)
With particular regard to the Ipotecari Mortgage Loans, no Borrower or Mortgagor has the right to
obtain any cancellation or reduction (riduzione) of any Mortgage with the exception of those
circumstances provided by article 2873 of the Italian civil code. With reference to the Ipotecario
Mortgage Loans, no Borrower or Mortgagor has the right to obtain any release (restrizione) of any
Mortgage and/or the parcelling of the relevant loan in quotas.
//
194
(w)
With reference to any Mortgage Loan, no Borrower, and/or Mortgagor and/or Obligor has the right to
obtain any novation of their relevant debt (accollo liberatorio).
(x)
Each Claim is fully and unconditionally owned by and available to BancaEtruria and is not subject to
any lien (pignoramento), seizure (sequestro) or other charge in favour of any third party and is freely
transferable to the Issuer. BancaEtruria holds sole and unencumbered legal title to each of the Claims
and the Mortgage Loans and has not assigned (whether absolutely or by way of security), participated,
transferred, pledged, charged or created any security interest in or otherwise disposed of any of the
Mortgage Loans or the Claims or otherwise created or allowed the creation or constitution of any lien,
pledge, encumbrance, security interest, arrangement or other right, claim or beneficial interest of any
third party on any of the Claims or the Mortgage Loans. There are no clauses or provisions in the
Mortgage Loans or in any other agreement, deed or document to which the Originator is a party, (i)
pursuant to which BancaEtruria is prevented from transferring, assigning or otherwise selling the
Claims or of any of them or (ii) which would conflict with and would prohibit or otherwise limit the
terms of, the Transaction Documents or the matters contemplated thereby, including for the avoidance
of doubt and without limitation:
(i)
the assignment of the Claims, the Mortgages, the Related Security and the benefits of the
Insurance Policies to the Issuer; and
(ii)
the obligations of BancaEtruria in its capacity as Servicer pursuant to the Servicing Agreement.
(y)
Each Individual Purchase Price, as set forth in schedule 1 to the Transfer Agreement, has been
correctly calculated by BancaEtruria and represents, in relation to each Mortgage Loan, the Initial
Outstanding Amount.
(z)
The list of Mortgage Loans attached as schedule 1 to the Transfer Agreement is an accurate list of all
Mortgage Loans and all information contained therein is true and correct.
(aa)
Without prejudice to the representations and warranties under (t) above, BancaEtruria has not, up to
the Initial Execution Date, relieved or discharged any Borrower (except for the circumstance se out in
the following paragraph) and/or any Mortgagor of its obligations, or subordinated its rights to claims
of those of other creditors thereof, or granted reductions or restrictions, or waived any of its rights,
save for the payments carried out for the corresponding amount as reimbursement of the claims.
(bb)
Before the Initial Execution Date, the Originator had not, save as in accordance with the Credit
Policies, entered into any accollo arrangements with the relevant Borrower, the relevant Mortgagor
and or the relevant Obligor in relation to the relevant Mortgage Loans.
(cc)
With respect to each Mortgage Loan, each Mortgage, each Related Security, no Borrower, no
Mortgagor and/or no Obligor thereunder is entitled, to the Originator’s knowledge who represents to
have used all suitable procedures so to ensure that this is the case, to exercise any right of termination
(except for early termination rights contractually provided for in case of prepayment), rescission or
termination, and no such right, claim or action has been asserted or threatened in writing against the
Originator.
(dd)
Each Mortgage Loan, Mortgage, Related Security, any other related document or any internal
instruction of the Originator does not contain any provisions restricting the Originator from selling,
transferring or otherwise assigning the Claims or limiting the possibility to sell, transfer or otherwise
assign such Claims. By virtue of the transfer of the Claims to the Issuer pursuant to the Transfer
Agreement, the Issuer will be the sole owner of such Claims and will be the sole beneficiary of those
rights originally attributed to BancaEtruria vis-à-vis the Borrowers, the Mortgagor and the Obligors
concerning the Claims, the Mortgages and the Related Security.
//
195
(ee)
Each Mortgage Loan and each Claim exists and is denominated in Euro (or disbursed in a different
currency and then re-denominated in Euro).
(ff)
Each Mortgage Loan, each Claim and each Related Security is governed by the laws of Italy.
(gg)
The Related Security and the Mortgages related to each Claim has been transferred to the Issuer
(hh)
None of the Borrowers, Mortgagors and/or Obligors is a public entity or a clerical entity (ente
ecclesiastico) or a company (società di capitali) or a partnership (società di persone).
(ii)
No Mortgage Loan can be qualified as a mutuo agrario pursuant to article 43 of the Banking Act.
(jj)
With the exception of the Servicing Agreement, no servicing or syndicate agreement has been entered
into by the Originator in relation to any of the Mortgage Loans and/or any of the Claims which will be
binding on the Issuer.
(kk)
As at the Valuation Date, each Mortgage Loan is duly classified as a performing mortgage loan
(credito in bonis) under the Bank of Italy’s guidelines (Istruzioni di Vigilanza).
(ll)
Each Mortgage Loan derives from the exercise of the ordinary banking business of the Originator, has
been fully disbursed by the Originator or by Istituto Italiano di Credito Fondiario S.p.A. or by Credit
Fonciér de France S.A., Italian branch and, as at the Valuation Date (unless otherwise provided), met
the following Criteria (to be deemed cumulative unless otherwise provided):
(I)
mortgage loans:
(a)
disbursed by BancaEtruria between 1 January 1997 (inclusive) and 28 November 2008
(inclusive); or
(b)
initially originated by:
(i)
Istituto Italiano di Credito Fondiario S.p.A. and subsequently acquired by
BancaEtruria on 8 June 2000 according to the terms of a transfer agreement
pursuant to article 58 of the Banking Act whose notice of assignment was
published in the Italian Official Gazette (Gazzetta Ufficiale della Repubblica
Italiana) No. 144 on 22 June 2000; and
(ii)
Credit Fonciér de France S.A., Italian branch, and subsequently acquired by
BancaEtruria on 29 December 1999 according to the terms of a transfer
agreement pursuant to article 58 of the Banking Act whose notice of assignment
was published in the Italian Official Gazette (Gazzetta Ufficiale della Repubblica
Italiana) No. 6 on 10 January 2000;
(II)
mortgage loans whose principal debtors are (also in case of novation (accollo liberatorio) of the
relevant mortgage loan) one or more individuals who are domiciled in Italy;
(III)
mortgage loans which are entirely disbursed and in relation to which there is no obligation or
possibility to make additional disbursements;
(IV)
mortgage loans which are denominated in Euro (or originally disbursed in a different currency
and subsequently re-denominated in Euro);
(V)
mortgage loans which are secured by an economically first-ranking priority voluntary mortgage
(ipoteca di primo grado economico), being:
//
196
(VI)
(a)
a first-ranking priority voluntary mortgage (ipoteca volontaria di primo grado legale);
or
(b)
a voluntary mortgage with subordinate ranking (ipoteca volontaria di grado legale
successivo al primo) provided that (A) the request for the cancellation of the mortgages
ranking in priority thereto has been filed with the competent land register and (B) the
debts secured by the prior-ranking mortgages have been fully repaid; or
(c)
a second-ranking priority voluntary mortgage (ipoteca volontaria di secondo grado
legale) or a voluntary mortgage with subordinate ranking provided that (a) (A) all the
mortgages are in favour of the Originator in relation to the mortgage loans granted to the
same borrower; and (B) the mortgage loans secured by mortgages which have priority
are included in the Portfolio; and (b) in case of a mortgage in favour of a third party and
which has priority with respect to one or more mortgages in favour of BancaEtruria (A)
a cancellation request has been filed with the competent office (Conservatoria dei
Registri Immobiliari) with respect to such mortgage which has priority in favour a third
party and (B) the secured obligations guaranteed by such mortgage which has priority in
favour of a third party have been discharged;
mortgage loans which, as of 2 January 2009, have all due instalments paid in full;
(VII) mortgage loans having a principal amount originally disbursed comprised between Euro 13,000
(inclusive) and Euro 1,800,000,000 (inclusive);
(VIII) mortgage loans having a principal outstanding amount comprised between Euro 5,062.40
(inclusive) and Euro 1,712,850.76 (inclusive);
(IX)
mortgage loans having at least one instalment (which includes a principal component) fallen
due and paid;
(X)
mortgage loans which are governed by Italian law;
(XI)
mortgage loans secured by a mortgage created over real estate assets located in the Republic of
Italy and having residential features. Such criterio No. (XI) will be satisfied if the mortgage
loan belongs to one of the category applied by BancaEtruria having a reference number
comprised between 101000 and 122800 and the relevant borrower was made aware of such
category by virtue of either (i) the relevant mortgage loan agreement or (ii) a notice sent (or to
be sent) to such borrower;
(XII) mortgage loans providing for the repayment of principal in several instalments in accordance
with one of the following methods as agreed either on the relevant execution date of the
relevant mortgage loan or in relevant agreement concerning the amortisation plan applicable to
the relevant mortgage loan:
(a)
the so-called “French method”, whereby the instalments in respect of each mortgage
loan include a principal component, which was predetermined on the date of
disbursement of the relevant mortgage loan and which increases throughout the duration
of the mortgage loan, and a variable interest component; or
(b)
the so-called “constant instalment” method, whereby the relevant instalments are
constant throughout the duration of the relevant mortgage loans and include a principal
component and an interest component both of which may vary in accordance with the
increase or decrease, as the case may be, of the applicable rate of interest; any increase
//
197
or decrease of the applicable rate of interest determines, respectively, the extension or
the reduction of the duration of the relevant mortgage loan;
(XIII) mortgage loans having the last instalment falling due – and, in relation to the so-called
mortgage loans with “constant instalments”, contractually providing for a maximum expiry date
which falls – between 28 February 2009 (inclusive) and 31 July 2049 (inclusive);
(XIV) mortgage loans providing for monthly, quarterly or semi-annual instalments falling due on the
last calendar day of the relevant month;
(XV) mortgage loans belonging to one of the four categories:
(a)
fixed rate loans, being those mortgage loans in respect of which interest accrues at a
fixed rate applicable as at 2 January 2009 and the rate of interest of which remains
unchanged throughout the whole duration of such mortgage loans;
(b)
floating rate loans, being those mortgage loans of which interest accrues at a floating
rate which, as at 2 January 2009, is linked to one of the following rates of interest: (a) 1month Euribor; (b) 3-month Euribor; (c) 6-month Euribor; (d) 12-month Euribor; (e)
Ribor; (f) IRS; or (g) TUR (Tasso Ufficiale di Riferimento) and which does not provide
for any amendment of either the applicable index or the applicable spread throughout the
whole duration of such mortgage loans;
(c)
“modular rate” loans, being those mortgage loans in respect of which interest accrues at
a fixed rate for a specified period of time determined by contract and at a floating rate
thereafter, the interest rate of which is, as at 2 January 2009, linked to one of the
following rates of interest: (a) 1-month Euribor; (b) 3-month Euribor; (c) 6-month
Euribor; (d) 12-month Euribor; (e) Ribor; (f) IRS; or (g) TUR (Tasso Ufficiale di
Riferimento) and providing for a “switch” from a fixed rate to a floating rate which
became effective before 2 January 2009;
(d)
“optional rate” loans, being those mortgage loans which contemplate the right, that can
be exercised one or more times during the duration of the mortgage loan, of the relevant
borrower to switch from a floating rate to a fixed rate, the interest rate of which is, as at
2 January 2009, a floating rate of interest linked to the Euribor and which provides that:
(i)
the borrower can exercise the right to switch from a floating rate to a fixed rate
after 2 January 2009; and
(ii)
if the borrower elects to exercise the right to switch from a floating rate to a fixed
rate after 2 January 2009, such fixed rate will apply throughout the remaining
duration of the relevant mortgage loan.
The Claims do not comprise those claims arising out of mortgage loans meeting, at 2 January 2009,the
criteria set out above but which also meet at 2 January 2009 (unless otherwise provided) one or more
of the following criteria:
(I)
mortgage loans advanced, under any applicable law (even regional) or regulation in force in the
Republic of Italy providing for financial support (mutui agevolati and convenzionati) of any
kind with regard to principal and/or interest to the relevant borrower;
(II)
mortgage loans executed after 1 January 2008 (exclusive) with borrowers different from
employees of any company belonging to BancaEtruria Banking Group and in relation to which
//
198
the loan to value ratio (i.e. the ratio between (i) the original amount of the loan and (ii) the
value of the real estate on which the mortgage has been created) is higher than 80%;
(III)
mortgage loans entered into on 20 December 2006 and 2 October 2008 and disbursed at
BancaEtruria branch of Figline Valdarno (Arezzo) (code 41);
(IV)
mortgage loans entered into on 10 May 2007 and disbursed at BancaEtruria branch of
Vermicino (Roma) (code 155);
(V)
mortgage loans entered into on 30 September 2002 and on 12 December 2003 and disbursed at
BancaEtruria branch of Montepulciano (Siena) (code 90); and
(VI)
mortgage loans in relation to which the borrowers have adhered through an adhesion letter
mailed or filed with a branch (filiale) of BancaEtruria, to the renegotiation proposal pursuant to
Law Decree dated 27 May 2008 No. 93 converted into law dated 24 July 2008 No. 126 and the
Framework agreement (convenzione) between the Ministry of Economy and Finance and the
Associazione Bancaria Italiana.
(mm) No Mortgage Loan has been disbursed by Banca Federico Del Vecchio S.p.A. or by Banca Popolare
Lecchese S.p.A.
(nn)
No Mortgage Loan is qualified as “restructuring claim” (credito ristrutturato) under the Bank of Italy’s
guidelines (Istruzioni di Vigilanza) and the Originator has not entered into any amendment of the
scheduled amortisation plan which determined a reduction of the due instalment with a corresponding
extension of the duration of the relevant Mortgage Loan.
(oo)
No Mortgage Loan has been subject to any litigation or is currently subject to formal challenge
regarding its validity, existence, groundness or its amount due by any Borrower, Mortgagor, Obligor or
any third party. No Mortgage Loan has been subject to any litigation which caused the Originator to
indemnify any Borrower, Mortgagor or Obligor and no formal challenge has been threatened by any
Borrower, Mortgagor or Obligor or is reasonably expected by the Originator.
(pp)
The Real Estate Assets are, as of the Valuation Date, completely constructed.
(qq)
The Originator has maintained in all material respects complete, proper and up-to-date books, records,
data and documents relating to the Mortgage Loans, the Mortgages and the Related Security, all
instalments and any other amounts to be paid or repaid thereunder, and all such books, records, data
and documents are kept by the Originator.
(rr)
The disbursement, management, administration and collection procedures adopted and employed by
the Originator with respect to each of Mortgage Loan, Mortgage, Related Security and Claim have
been in all respects conducted in compliance with all applicable laws and regulations and with care,
skill and diligence and in a prudent manner and in accordance with the Credit Policies as well as in
accordance with all customary banking practices.
(ss)
All taxes, duties and fees of any kind due by the Originator under or in connection with any Mortgage
Loan, any Mortgage and Related Security from the time when the relevant Mortgage Loan was
disbursed up to Initial Execution Date (including taxes, duties and fees concerning the creation and
preservation of each Mortgage and Related Security and the execution of any other agreement, deed or
document or the performance and fulfilment of any action or formalities relating thereto), have been
duly and timely paid by the Originator.
(tt)
Each rate of interest applicable to the relevant Mortgage Loans as at the Valuation Date and the spread
and parameters applicable to the relevant Mortgage Loans following the Valuation Date indicated next
//
199
to each Mortgage Loan in schedule 1 to the Transfer Agreement is true and correct and the relevant
Mortgage Loans do not permit the interest rate to be subject to reductions of either the relevant spread
or to be subject to amendments to the computing method in relation to the rate of interests throughout
the term of the relevant Mortgage Loan. No Borrower (with the exception of the Borrowers who
entered into a so-called “optional” Mortgage Loan (being that Mortgage Loan which contemplates the
right, that can be exercised one or more times during the duration of the mortgage loan, of the relevant
borrower to switch from a floating rate to a fixed rate and which provides that: (i) the borrower can
exercise the right to switch from a floating rate to a fixed rate after the Valuation Date; and (ii) if the
borrower elects to exercise the right to switch from a floating rate to a fixed rate after the Valuation
Date, such fixed rate will apply throughout the remaining duration of the relevant Mortgage Loan)) has
the right, in accordance with the relevant Mortgage Loan, to amend the calculation method of the
interest and, in particular, to opt for a fixed rate.
(uu)
Each rate of interest indicated next to the relevant Mortgage Loan in schedule 1 to the Transfer
Agreement has at all times been applied, agreed and received in full compliance with the laws
applicable at any given time (including, in particular, the Usury Act, to the extent applicable) and are,
as of today, therefore in compliance with the Usury Act.
(vv)
Following the classification of a Mortgage Loan as either Credito in Sofferenza or Credito ad Incaglio,
the Originator will refrain from disbursing further loans to the relevant Borrower unless such further
loan will be utilised for the refinancing of such Mortgage Loan.
(ww) None of the Borrowers of the Mortgagors are subject to Proceedings and none of the Real Estate
Assets are subject to lien (pignoramento), seizure (sequestro) or other attachments (procedure
esecutive).
(xx)
The Mortgage Loans are not subject to consumer credit legislation (including but not limited to article
121 et subs. of the Banking Act).
(yy)
To the Originator’s knowledge, there are no objective circumstances which may cause any failure of
repayment of any Mortgage Loan.
(zz)
No Mortgage Loan is qualified, as at the Valuation Date, as “defaulted claim” (credito in sofferenza) or
“arrear claim” (credito ad incaglio) in accordance with the Bank of Italy’s guidelines (Istruzioni di
Vigilanza).
(aaa) Each Fondiario Mortgage Loan was disbursed for a maximum amount equal to 80 per cent. loan-tovalue ratio prescribed by the Bank of Italy’s guidelines (Istruzioni di vigilanza) as at the date of
execution and disbursement of such Fondiario Mortgage Loan and complies with the limits set out by
the Bank of Italy relating to proportion between the amount of each Fondiario Mortgage Loan and the
value of the corresponding Real Estate Asset.
(bbb) Each Ipotecario Mortgage Loan was disbursed for a maximum amount comprised between 80.01 per
cent. and 100 per cent. loan-to-value ratio of the relevant Real Estate Asset as at the date of execution
and disbursement of such Ipotecario Mortgage Loan
(ccc) The prepayment fee provisions, if included in each Mortgage Loan entered into prior to 2 February
2007, as modified and/or reduced pursuant to the agreement entered into on 2 May 2007 between the
Italian banking association (ABI – Associazione Bancaria Italiana) and the national consumers’
associations pursuant to article 7, paragraph 5 of the Bersani Decree, are valid and enforceable for the
full amount therein contemplated, as modified and/or reduced as indicated above, under all applicable
legislation and regulations, including but not limited to article 40 of the Banking Act (for Fondiario
Mortgage Loan) and implementing regulations thereof. The Originator has complied with all
//
200
disclosure, publicity and contents requirements requested by law in respect of prepayment fees. The
prepayment fees set out in the relevant Mortgage Loans were agreed in compliance with article 1384
of the Italian civil code. With reference to the prepayment fees provided in each Mortgage Loan
entered into prior to 2 February 2007, the Originator has implemented all the information and the
publicity activities in accordance with the provisions of the agreement entered into on 2 May 2007
between the Italian banking association (ABI – Associazione Bancaria Italiana) and the national
consumers’ associations pursuant to article 7, paragraph 5 of the Bersani Decree.
(ddd) As at the Valuation Date, the payments by the Borrowers are exclusively made (i) through the direct
debit of the Borrower’s bank account, (ii) through inter-banking direct debit (RID) and (iii) by cash, in
a percentage equal to 93.52 per cent. (for payments made through direct debit of the Borrower’s bank
account and RID), in a percentage equal to 6.48 per cent. of the aggregate Mortgage Loans (for
payments by cash) calculated with reference to the Initial Outstanding Amount of the Mortgage Loans.
(eee) No Mortgage Loan has never been classified as defaulted (“sofferenza”) in accordance with the Bank
of Italy’s guidelines (Istruzioni di Vigilanza).
(fff)
All Mortgage Loans were extended to individuals and are classified, as of the Valuation Date, as
residential mortgage loans (crediti ipotecari su immobili residenziali) in accordance with the Bank of
Italy’s guidelines (Istruzioni di Vigilanza).
(ggg) Each Mortgage Loan complies with the provisions set forth in articles 1283 and 1346 of the Italian
civil code.
(hhh) Each Fondiario Mortgage Loan is a “mutuo fondiario” pursuant to articles 38 et subs. of the Banking
Act.
(iii)
A percentage not lower than 80 per cent. of the Mortgage Loans has been granted with reference to
immovable assets qualified as “first home” (so called “prima casa”) of the Borrowers (the “First
Home Loans”). More specifically: (a) a percentage not lower than 70% of the First Home Loans has
been granted with the aim to purchase immovable assets qualified as “first home” of the Borrowers
and (b) a percentage not higher than 30 per cent. of the First Home Loans has been granted with the
aim to restructure immovable assets qualified as “first home” of the Borrowers;
(jjj)
a percentage not higher than 20 per cent. of the Mortgage Loans has been granted with reference to
immovable assets qualified as “second home” (so called “seconda casa”) of the Borrowers (the
“Second Home Loans”). More specifically: (a) a percentage not lower than 90% of the Second Home
Loans has been granted with the aim to purchase immovable assets qualified as “second home” of the
Borrowers and (b) a percentage not higher than 10 per cent. of the Second Home Loans has been
granted with the aim to restructure immovable assets qualified as “second home” of the Borrowers;
(kkk) a percentage not higher than 0.29 per cent. of the Mortgage Loans has been granted to individuals not
resident in Italy;
(lll)
a percentage not lower than 99.71 per cent. of the Mortgage Loans has been granted to individuals
resident in Italy, of which a percentage equal to 97.73 per cent. is represented by Italian individuals;
(mmm)
at the Valuation Date, a percentage equal to 0.069 per cent. of the Borrowers is represented by
individuals who were employees or corporate officers (pursuant to article 136 of the legislative decree
No. 385 of 1 September 1993) of BancaEtruria or of any other company of the Banca Etruria Banking
Group;
(nnn) with reference to the Mortgage Loans granted to Borrowers whose name has been indicated to
BancaEtruria by brokers and/or by credit intermediaries, the Mortgage Loan has been granted only
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further affirmative verification by BancaEtruria of the borrowers’ creditworthiness in compliance with
the criteria and the provisions in force for the credit granting.
(ooo) With reference to each Loan in relation to which the tranching of the financing was carried out and the
subsequent severance of the Mortgage, the Originator has accepted the novation (accollo liberatorio)
agreement within the Valuation Date.
(2)
Real Estate Assets
(a)
Each of the Real Estate Assets was exclusively owned by the relevant Mortgagor on the date of
registration of the relevant Mortgage.
(b)
There are no prejudicial registrations, annotations (iscrizioni or trascrizioni pregiudizievoli) or formal
claims by any third party (including usucapione) in relation to any of the Real Estate Assets which
may impair, affect or jeopardise in any substantial manner the relevant Mortgages, their enforceability
or their ranking as represented in schedule 1 to the Transfer Agreement.
(c)
Each Real Estate Asset has been and is currently insured against risks arising from lightning, fires and
explosions with the Insurance Policies for an amount at least equal to the value of the relevant Real
Estate Asset as assessed as at the disbursement of the relevant Mortgage Loan. The insurance premia
have been duly and timely paid and the other obligations arising therefrom have been duly performed
until the Initial Execution Date. Each Insurance Policy provides for a loss payable clause in favour of
the Originator and the benefits arising from such loss payable clause has been assigned to the Issuer
(d)
To the Originator’s knowledge, none of the Real Estate Assets is vitiated or has substantial damages
and each Real Estate Asset is in good conditions and none of the Real Estate Assets is subject to any
pending or, to the Originator’s knowledge, threatened judicial proceedings which may result in the
attachment or seizure of the whole or any part thereof.
(e)
At the time of the disbursement of the Mortgage Loans and at the time of the execution of the
Mortgages, the relevant Real Estate Assets were duly registered or the correct registration were
pending with the competent registration offices (Agenzia del Territorio and Ufficio del Catasto Urbano
e dei Terreni).
(f)
The Originator is not aware of the presence of any harmful or dangerous material with respect to any
environmental and security laws, nor of any form of dissimilarity of any Real Estate, as at the Initial
Execution Date, from any health and environmental security laws or regulations.
(g)
To the Originator’s knowledge, each Real Estate Asset as residential buildings complies with any
applicable laws and any applicable regulations concerning building matters (destinazione urbanistica).
(h)
Each Real Estate Asset is located in Italy.
(i)
The values set out in schedule 1 to the Transfer Agreement as the commercial values of the relevant
Real Estate Assets are the values thereof as obtained in the evaluation process of the Mortgage Loan
based on the appraisals carried out in respect thereof in accordance with the Credit Policies and the
Warranty and Indemnity Agreement or are the values updated on the basis of the revaluation ratios
furnished by specialised providers; and
(j)
Each Insurance Policy was entered into between the relevant Borrower and the relevant insurance
company and, as a consequence of a binding clause, the Originator is beneficiary of each Insurance
Policy.
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(3)
Disclosure of information
The information supplied by the Originator to the Arranger and the Issuer and their respective
affiliates, agents and advisors, in connection with the Warranty and Indemnity Agreement, the Transfer
Agreement or any transaction contemplated herein or therein, or in connection with, the Securitisation,
the Mortgage Loans, the Claims, the Mortgages, the Real Estate Assets, the Related Security and with
respect to the application of the Criteria, is true, accurate and complete in every material respect and
no material information available to the Originator has been omitted.
(4)
Securitisation Law and article 58 of the Banking Act
(a)
The assignment and transfer of the Claims to the Issuer is in accordance with the Securitisation Law
and article 58 of the Banking Act.
(b)
The Claims have specific objective common elements so as to constitute homogenous monetary rights
(crediti pecuniari individuabili in blocco) to be grouped pursuant to the Securitisation Law and the
ministerial decree dated 4 April 2001 and the Criteria properly identify the monetary claims also
towards third parties.
(c)
BancaEtruria has selected the Claims on the basis of, and in accordance with, the Criteria. There are (i)
no mortgage loans in respect of which BancaEtruria holds legal title which meet the Criteria and
should, accordingly, have been included in the Mortgage Loans listed in Schedule 1 to the Transfer
Agreement and have not been included therein and (ii) no Mortgage Loans listed in Schedule 1 to the
Transfer Agreement which do not meet the Criteria.
(d)
All Mortgage Loans were identified on the basis of, and are in complete accordance with, the Criteria
and are listed in schedule 1 to the Transfer Agreement.
(5)
Other Representations
(a)
BancaEtruria is a bank incorporated and existing as a cooperative company (società cooperativa),
validly operating under the laws of the Republic of Italy and has full corporate powers and
authorisations to enter into under the Warranty and Indemnity Agreement, the Transfer Agreement and
all other Transaction Documents to which it is a party and to perform its obligations thereto.
(b)
BancaEtruria has taken all corporate, shareholding and other actions required, and obtained all
necessary authorisations, consents and licenses required, if any, to: (i) enter into, deliver, and perform
its obligations under the Warranty and Indemnity Agreement, the Transfer Agreement and all other
Transaction Documents to which it is a party, including, without limitation, the assignment and transfer
of the Claims; and (ii) ensure that the obligations to be assumed by it in the Warranty and Indemnity
Agreement, the Transfer Agreement and all other Transactions Documents to which it is or will be a
party are legal, valid and binding on it.
(c)
The execution and performance by BancaEtruria of the Warranty and Indemnity Agreement, the
Transfer Agreement and all other Transaction Documents to which it is a party do not (or will not at
the time of execution thereof) contravene or constitute a default under: (i) its atto costitutivo and
statuto; (ii) any law, rule or regulation applicable to it; (iii) any contract, deed, agreement document or
other instrument binding on it; or (iv) any order, writ, judgement, award, injunction or decree binding
on or affecting it or its assets.
(d)
The Warranty and Indemnity Agreement, the Transfer Agreement and all other Transaction Documents
to which BancaEtruria is a party constitute (or will, upon execution, and, where applicable, delivery,
constitute) legal, valid and binding obligations of BancaEtruria and are (or will, upon execution, and,
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203
where applicable, delivery, be) fully and immediately enforceable against it in accordance with their
terms and conditions.
(e)
The claims vis-à-vis BancaEtruria under the Warranty and Indemnity Agreement, the Transfer
Agreement and all other Transaction Documents to which it is a party constitute (or will, upon
execution, and, where applicable, delivery, constitute) claims against it which rank (or will, upon
execution, and, where applicable, delivery, rank) at least pari passu with the claims of all the other
unsecured unsubordinated creditors of BancaEtruria under the laws of the Republic of Italy or an
agreement, save for those claims which are preferred solely to the extent provided for by such laws and
without prejudice to the provisions of the Transaction Documents.
(f)
There are no litigation, arbitration or administrative proceedings or actions in progress, pending or
threatened against BancaEtruria before any courts or competent authority or formally expected by
BancaEtruria, which may adversely affect BancaEtruria’s ability to transfer absolutely, irrevocably and
without possibility of claw-back (azione revocatoria) or voidance, the Claims under the Transfer
Agreement or which could affect BancaEtruria’s ability to perform its obligations under the Warranty
and Indemnity Agreement, the Transfer Agreement or the other Transaction Documents.
(g)
BancaEtruria is solvent and there is no fact or matter, to the Originator’s knowledge, which might
render BancaEtruria insolvent or unable to perform its obligations or subject to any Insolvency
Proceedings, nor has BancaEtruria taken any corporate action for its winding-up or dissolution, nor has
any other action been taken against or in respect of it which might jeopardise its ability to effect the
sale and transfer of the Claims or to perform its obligations under the Warranty and Indemnity
Agreement, nor will it be rendered insolvent as a consequence of entering into the Warranty and
Indemnity Agreement, the Transfer Agreement and/or any other Transaction Document to which it is a
party.
(h)
In the administration and the management of the Claims, BancaEtruria has fully complied with all
applicable law and rules on data protection and privacy protection, including, but not limited to, all of
the provisions of Law No. 196 of 30 June 2003, as amended and all implementing decrees and
regulations related thereto.
(i)
BancaEtruria has not appointed any agent or similar person for the management and/or disposal of
assets or interests in connection with the subject (including the underlying real property or other
assets) of the Warranty and Indemnity Agreement, the Transfer Agreement or the other Transaction
Documents to which it is a party (except in accordance with any such agreements or documents).
Time for making representations and warranties
All representations and warranties set forth in the Warranty and Indemnity Agreement shall be deemed to be
given or repeated:
(a)
on the date of the Warranty and Indemnity Agreement;
(b)
on the Initial Execution Date; and
(c)
on the Issue Date;
with reference to the facts and circumstances then existing, as if made at each such time, provided, however,
that the representations and warranties referring to a Transaction Document executed after the date hereof
shall be deemed to be made or repeated at the time of the execution of such Transaction Document and on the
Issue Date, in each case with reference to the facts and circumstances then existing as if made at each such
time.
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Pursuant to the Warranty and Indemnity Agreement, the Originator has agreed to indemnify and hold harmless
the Issuer, its officers, agents or employees or any of its permitted assignees and the Representative of the
Noteholders from and against any and all damages, losses, claims, liabilities, costs and expenses (including,
without limitation, fees and legal expenses as well as any VAT if applicable) awarded against or incurred by
the Issuer or any of the other foregoing persons arising from, amongst others:
(i)
any default by the Originator in the performance of any of its obligations under the Warranty and
Indemnity Agreement or any of the other Transaction Documents or any representations and/or
warranties made by the Originator thereunder or being false, incomplete or incorrect; or
(ii)
the application of the Usury Law to any interest accrued on any Mortgage Loans as of the Initial
Execution Date. If the contractual provisions obliging the Borrower to pay interest on any Mortgage
Loan at any time become null and void as a result of a breach of the provisions of the Usury Law, then
the Originator’s obligation to indemnify the Issuer shall also cover the amount of any interest
(including default interest) which would have accrued on such Mortgage Loans (in any case within the
limits set by the Usury Law) up to full repayment of the same.
Moreover, the Warranty and Indemnity Agreement provides that, in the event of a misrepresentation or a
breach of any of the representations and warranties made by the Originator under the Warranty and Indemnity
Agreement, which materially and adversely affects the value of one or more Claims or the interest of the
Issuer in such Claims, and such misrepresentation or breach is not cured, whether by payment of damages or
indemnification or otherwise, by the Originator within a period of 30 (thirty) days from receipt of a written
notice from the Issuer to that effect (the “Cure Period”), the Issuer has the option, pursuant to article 1331 of
the Italian civil code, to assign and transfer to the Originator all of the Claims affected by any such
misrepresentation or breach (the “Affected Claims”). The Issuer will be entitled to exercise the put option by
giving to the Originator, at any time during the period commencing on the Business Day immediately
following the last day of the Cure Period and ending on the day which is 180 days after such Business Day,
written notice to that effect (the “Put Option Notice”).
The Originator will be required to pay to the Issuer, within 30 Business Days from the date of receipt by the
Originator of the Put Option Notice, an amount equal to:
(i)
the Individual Purchase Price of the Claim relating to such Mortgage Loan (as specified in schedule 1
of the Transfer Agreement); plus
(ii)
the interest accrued on such Individual Purchase Price from (but excluding) the Valuation Date to the
Interest Payment Date on which principal on the Notes may be paid immediately succeeding the day
on which the parties agree on the existence of such Excluded Claim at a rate equal to interest rate
applicable to such Excluded Claim; minus
(iii)
an amount equal to the aggregate of all the Collections recovered or collected by the Issuer (also
through the Originator) after the Valuation Date in relation to such Excluded Claims; minus
(iv)
an amount equal to the interests accrued on the amount set out in (iii) above from the relevant
collection date to the date on which those amounts related to the relevant Excluded Claim are paid to
the Issuer at a rate equal to the rate of interest from time to time applicable to the Collection Account,
bet of any withholding provided by any applicable law.
The Warranty and Indemnity Agreement provides that, notwithstanding any other provision of such
agreement, the obligations of the Issuer to make any payment thereunder shall be equal to the lesser of the
nominal amount of such payment and the amount which may be applied by the Issuer in making such
payment in accordance with the Priority of Payments. The Originator acknowledges that the obligations of the
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Issuer contained in the Warranty and Indemnity Agreement will be limited to such sums as aforesaid and that
it will have no further recourse to the Issuer in respect of such obligations.
The Warranty and Indemnity Agreement is governed by Italian law.
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THE OTHER TRANSACTION DOCUMENTS
The description of the Transaction Documents set out below is a summary of certain features of such
Transaction Documents and is qualified in its entirety by reference to the detailed provisions of such
Transaction Documents. Prospective Noteholders may inspect a copy of such Transaction Documents upon
request at the Specified Offices of, respectively, the Representative of the Noteholders and the Principal
Paying Agent.
The Corporate Services Agreement
Under an agreement denominated “Corporate Services Agreement” dated the Signing Date between the
Issuer, the Corporate Servicer and the Representative of the Noteholders (the “Corporate Services
Agreement”), the Corporate Servicer has agreed to provide certain corporate administration and management
services to the Issuer. The services will include the safekeeping of the documents pertaining to the meetings
of the Issuer’s shareholders, directors and auditors and of the Noteholders, maintaining the shareholders’
register, preparing tax and accounting records, preparing the Issuer’s annual financial statements and liaising
with the Representative of the Noteholders.
Under the terms of the Corporate Services Agreement in the event of a termination of the appointment of the
Corporate Servicer for any reason whatsoever, the Issuer shall appoint a substitute Corporate Servicer.
In the context of the Previous Securitisations, the Issuer, pursuant to two separate agreements both
denominated “Corporate Services Agreement” dated, respectively, 26 March 2002 and dated 9 May 2007, had
already appointed BancaEtruria as “Corporate Services Provider” to provide, inter alia, certain corporate
administration and secretarial services to the Issuer.
The Corporate Services Agreement is governed by Italian law.
The English Deed of Charge and Assignment
Pursuant to an English law deed of charge to be executed on or around the Issue Date (the “English Deed of
Charge and Assignment”), the Issuer will grant in favour of the Representative of the Noteholders for itself
and as security trustee for the Noteholders and the other Issuer Secured Creditors, inter alia, (a) an English
law charge over the Transaction Accounts; (b) an English law assignment by way of security of all the
Issuer’s rights under the Swap Agreement and the Swap Guarantee, the provisions of the Agency and
Accounts Agreement which are governed by English law, the Transaction Bank Guarantee and all future
contracts, agreements, deeds and documents governed by English law to which the Issuer may become a party
in relation to the Notes, the Claims and the Portfolio; and (c) a floating charge over all of the Issuer’s assets
which are subject to the charge and assignments described under (a) and (b) above and not effectively
assigned thereunder.
The Intercreditor Agreement
Pursuant to an intercreditor agreement dated the Signing Date between the Issuer, the Principal Paying Agent,
the Listing Agent, the Agent Bank, the Computation Agent, the Collection Account Bank, the Transaction
Bank, the Swap Counterparty, BancaEtruria (in any capacity), the Corporate Servicer, the Subordinated Loan
Provider, the Servicer and the Underwriter (the “Intercreditor Agreement”), provision has been made as to
the application of the proceeds of collections in respect of the Claims and as to the circumstances in which the
Representative of the Noteholders will be entitled to exercise certain rights in relation to the Claims. The
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Intercreditor Agreement also sets out the order of priority for payments to be made by the Issuer in connection
with the securitisation transaction.
Pursuant to the Intercreditor Agreement, the Other Issuer Creditors have agreed that, until one year and one
day after the later of (A) the Cancellation Date and (B) the day on which any note issued or to be issued by
the Issuer (including the Notes) has been paid in full, no Other Issuer Creditor shall be entitled to institute
against the Issuer, or join any other person in instituting against the Issuer, any reorganisation, liquidation,
bankruptcy, insolvency or similar proceedings.
Pursuant to the Intercreditor Agreement, following the service of an Issuer Acceleration Notice, the
Representative of the Noteholders will be entitled (as an agent of the Issuer and to the extent permitted by
applicable laws), until the Notes have been repaid in full or cancelled in accordance with the Conditions, to
take possession of all Collections and of the Claims and to sell or otherwise dispose of the Claims or any of
them in such manner and upon such terms and at such price and such time or times as the Representative of
the Noteholders shall, in its absolute discretion, deem appropriate and to apply the proceeds in accordance
with the Post-Enforcement Priority of Payments.
The Intercreditor Agreement is governed by Italian law.
The Italian Deed of Pledge
Pursuant to a deed of pledge (the “Italian Deed of Pledge”) to be executed on or around the Issue Date
between the Issuer and the Representative of the Noteholders (acting on its own behalf and on behalf of the
other Issuer Secured Creditors), the Issuer will grant in favour of the Issuer Secured Creditors, concurrently
with the issue of the Notes, an Italian law pledge over all monetary claims and rights and all the amounts
(including payment for claims, indemnities, damages, penalties, credits and guarantees) to which the Issuer is
entitled from time to time pursuant to the Transfer Agreement, the Warranty and Indemnity Agreement, the
Agency and Accounts Agreement (other than in respect of certain provisions of the Agency and Accounts
Agreement which are governed by English law), the Servicing Agreement, the Intercreditor Agreement, the
Corporate Services Agreement, the Letter of Undertaking, the Subordinated Loan Agreement, the
Underwriting Agreement and the Shareholders’ Agreement.
The Italian Deed of Pledge will be governed by Italian law.
The Mandate Agreement
Pursuant to the terms of a mandate agreement dated the Signing Date between the Issuer and the
Representative of the Noteholders (the “Mandate Agreement”), the Representative of the Noteholders is
empowered to take such action in the name of the Issuer, inter alia, following the service of an Issuer
Acceleration Notice, as the Representative of the Noteholders may deem necessary to protect the interests of
the Noteholders and the Other Issuer Creditors.
The Mandate Agreement is governed by Italian law.
The Shareholders’ Agreement
The shareholders’ agreement dated the Signing Date between the Issuer, the Representative of the
Noteholders, BancaEtruria, Etruria Servizi Finanziari S.p.A. and Finanziaria Italiana S.p.A. (the
“Shareholders’ Agreement”) contains, inter alia, provisions in relation to the management of the Issuer.
The Shareholders’ Agreement also provides that BancaEtruria, Etruria Servizi Finanziari S.p.A. and
Finanziaria Italiana S.p.A., in their capacities as shareholders of the Issuer, will not approve the payment of
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any dividends or any repayment or return of capital by the Issuer prior to the date on which all amounts of
principal and interest on the Notes have been paid in full. Pursuant to the Shareholders’ Agreement
BancaEtruria is entitled to sell to any third party its participation in the equity capital of the Issuer without the
prior written consent of neither Fitch nor the Representative of the Noteholders.
In the context of the Previous Securitisations, pursuant to a first shareholders’ agreement dated 26 March
2002 (the “First Shareholders’ Agreement”) and a second shareholders’ agreement dated 9 May 2007 and
subsequently amended on the Signing Date (the “Second Shareholders’ Agreement” and, together with the
First Shareholders’ Agreement, the “Previous Shareholders’ Agreements”) between the Issuer, the
Representative of the Noteholders, BancaEtruria, ConEtruria S.p.A. and Finanziaria Italiana S.p.A., the
Shareholders of the Issuer have agreed certain obligations concerning the management of the Issuer. Pursuant
to the First Shareholders’ Agreements, each Shareholder agreed to grant to BancaEtruria an option to purchase
a participation equal to its respective shareholdings held in the equity capital of the Issuer, subject to certain
conditions. In accordance with the Shareholders’ Agreement, the exercise by BancaEtruria of the abovementioned option is subject to additional conditions.
The Shareholders’ Agreement is governed by Italian law.
The Subordinated Loan Agreement
Pursuant to the terms of a subordinated loan agreement dated the Signing Date (the “Subordinated Loan
Agreement”) between the Issuer, the Representative of the Noteholders and BancaEtruria (in such capacity,
the “Subordinated Loan Provider”), the Subordinated Loan Provider has agreed to grant to the Issuer a
subordinated loan in an amount equal to €10,488,000 (the “Subordinated Loan”).
The Subordinated Loan will be repaid in accordance with the applicable Priority of Payments. The
Subordinated Loan will be drawn down by the Issuer on the Issue Date and immediately credited to the Cash
Reserve Account, except for €50,000 which will be credited to the Expenses Account.
The Subordinated Loan Agreement is governed by Italian law.
The Letter of Undertaking
Pursuant to a letter of undertaking dated the Signing Date (the “Letter of Undertaking”) between the Issuer,
the Representative of the Noteholders and BancaEtruria (in such capacity, the “Financing Bank”), the
Financing Bank has undertaken to provide the Issuer with all necessary monies (in any form of financing
deemed appropriate by the Representative of the Noteholders, for example by way of a subordinated loan, the
repayment of which is to be made in compliance with item (xvi)(C) of the Pre-Enforcement Interest Priority
of Payments or, as the case may be, item (xi)(A) of the Post-Enforcement Priority of Payments) in order for
the Issuer to pay any losses, costs, expenses or liabilities in respect of:
(a)
any tax expenses or tax liability which the Issuer is at any time obliged to pay other than: (i) any
withholding tax at any time applicable in respect of the Notes; (ii) any withholding tax applicable in
respect of interest accruing on the Accounts and in respect of the Eligible Investments (other than by
reason of a change in law or the interpretation or administration thereof since the Issue Date and
provided that it cannot be avoided by the Issuer at no cost); (iii) any VAT due in respect of the
Transaction Documents or the purchase of services or goods by the Issuer (other than by reason of a
change in law or the interpretation or administration thereof since the Issue Date); (iv) any tax
applicable in respect of the Transaction Documents; and (v) any court tax applicable to the Issuer,
other than those provided for by the Servicing Agreement;
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(b)
any other costs, charges or liabilities arising in connection with regulatory or supervisory requirements
(including as a result of any change of law or regulation or interpretation or administration thereof
since the Issue Date) but excluding any amounts payable by the Issuer under the Transaction
Documents (including, for the avoidance of doubt, any amount due and payable under the Notes); and
(c)
any other costs, charges or liabilities which may affect the Issuer (other than losses, costs, expenses or
liabilities in respect of the normal day to day operating costs of the Issuer) and which are not directly
related to the Securitisation;
but, in each case, with the exception of any losses, costs, expenses or liabilities borne by the Issuer as a
consequence of events or situations caused by the fraudulent or negligent conduct of the Issuer or of any other
third party (other than the Originator and the Subordinated Loan Provider) who provides any services in
relation to any of the Transaction Documents.
Prospective Noteholders’ attention is drawn to the fact that the Letter of Undertaking does not and will not
constitute a guarantee by BancaEtruria or any of the shareholders of the Issuer of any obligation of a
Borrower or the Issuer.
The Letter of Undertaking is governed by Italian law.
The Transaction Bank Guarantee
Under a guarantee dated the Signing Date, BNP Paribas S.A. in its capacity as Transaction Bank Guarantor
has, amongst others, (i) irrevocably and unconditionally guaranteed to the Issuer the due and punctual
payment of all payment obligations of BNP Paribas Securities Services S.A. (“BPSS”) to the Issuer in respect
of the Agency and Accounts Agreement and (ii) undertaken to pay to the Issuer on its first written demand all
sums from time to time due and payable (but unpaid) by BPSS in respect of such liabilities.
Under the Transaction Bank Guarantee, the maximum amount guaranteed by the Transaction Bank Guarantor
is equal to €497,004,000 plus the amount of interest, charges, costs and expenses incurred or accrued in
respect of any of the above-mentioned liabilities up to the date of demand.
Under the Transaction Bank Guarantee, if the direct or indirect participation held by the Transaction Bank
Guarantor in the issued share capital of BPSS falls below 50%, the Transaction Bank Guarantor shall have the
right, at BPSS’ expenses, to replace or procure replacement of the Transaction Bank Guarantee by means of a
substitute guarantee.
In addition to the above, if the rating of the Transaction Bank Guarantor falls below “F1” by Fitch (the
“Required Guarantor Rating”), then the Transaction Bank Guarantor shall, promptly and without any cost
on the Issuer, use its best endeavours to procure the replacement of the Transaction Bank Guarantee by a
substitute guarantee. If the Transaction Bank Guarantor fails to procure a substitute guarantee within 30 days,
a replacement Transaction Bank Guarantor may be appointed by the Issuer of the Representative of the
Noteholders.
Upon the substitute guarantee becoming effective in those circumstances set out above, the Transaction Bank
Guarantor shall have the right to terminate the Transaction Bank Guarantee.
The Transaction Bank Guarantee will be also terminated upon BPSS being granted by Fitch a ratings
equivalent to the Required Guarantor Rating.
The Transaction Bank Guarantee is governed by English law.
The other Transaction Documents
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For a description of the Swap Agreement, see “Credit structure – The Swap Agreement”, above. For a
description of the Transfer Agreement, see “The Transfer Agreement”, above. For a description of the
Servicing Agreement, see “The Servicing Agreement”, above. For a description of the Warranty and Indemnity
Agreement, see “The Warranty and Indemnity Agreement”, above. For a description of the Agency and
Accounts Agreement, see “The Agency and Accounts Agreement”, above.
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ESTIMATED WEIGHTED AVERAGE LIFE OF THE RATED NOTES AND
ASSUMPTIONS
The estimated weighted average life of the Rated Notes cannot be predicted as the actual rate and timing at
which amounts will be collected in respect of the Portfolio and a number of other relevant facts are unknown.
Weighted average life refers to the average amount of time that will elapse from the date of issuance of a
security to the date of distribution to the investor of amounts distributed in net reduction of principal of such
security (assuming no losses).
The following table shows the weighted average life of the Rated Notes and was prepared based on the
characteristics of the Claims included in the Portfolio as at the Valuation Date and on the following additional
assumptions (the “Modelling Assumptions”):
(i)
no Event of Default occurs in respect to the Notes;
(ii)
the Rated Notes will commence amortisation on the Interest Payment Date falling in October 2010;
(iii)
the Notes are not redeemed in accordance with Condition 7(d) (Optional redemption for taxation, legal
or regulatory reasons);
(iv)
the Issuer will exercise the option to redeem the Notes as soon as the conditions set out in Condition
7(c) (Optional redemption of the Notes) are met;
(v)
the Pro-Rata Amortisation Conditions are met;
(vi)
the Claims are fully performing at all times;
(vii)
the Claims are subject to a constant annual prepayment at the rates set out in the table below;
(viii) the Notes are issued on the February 2nd 2009
Estimated weighted average life
(in years)
Class A Notes
Constant prepayment rate
Class B Notes
(in years)
0%
9.11
16.10
2%
7.72
13.70
4%
6.64
11.97
6%
5.83
10.35
8%
5.15
9.24
10%
4.63
8.29
The actual characteristics and performance of the Claims are likely to differ from the Modelling Assumptions
used in constructing the table set forth above, which is hypothetical in nature and is provided only to give a
general sense of how the principal cash flows might behave. Any difference between such assumptions and
the actual characteristics and performance of the Claims will cause the weighted average life and the expected
maturity of the Rated Notes to differ (which difference could be material) from the corresponding information
in the table.
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The expected maturity and the estimated weighted average lives of the Rated Notes are subject to
factors largely outside the control of the Issuer and consequently no assurance can be given that the
assumptions and estimates in this section will prove in any way to be realistic and they must therefore
be viewed with considerable caution.
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TAXATION IN THE REPUBLIC OF ITALY
The statements herein regarding taxation are based on the laws in force in Italy as of the date of this
Prospectus and are subject to any changes in law occurring after such date, which changes could be made on
a retroactive basis. The following summary does not purport to be a comprehensive description of all the tax
considerations which may be relevant to a decision to subscribe for, purchase, own or dispose of the Rated
Notes and does not purport to deal with the tax consequences applicable to all categories of investors, some
of which (such as dealers in securities or commodities) may be subject to special rules. Prospective
purchasers of the Rated Notes are advised to consult their own tax advisers concerning the overall tax
consequences of their ownership of the Rated Notes.
Tax treatment of the Rated Notes
Italian legislative decree No. 239 of 1 April 1996, as subsequently amended (“Decree 239”), provides for the
applicable regime with respect to the tax treatment of interest, premium and other income (including the
difference between the redemption amount and the issue price) from notes falling within the category of
bonds (obbligazioni) or debentures similar to bonds (titoli similari alle obbligazioni) issued, inter alia, by
Italian companies incorporated pursuant to law No. 130 of 30 April 1999, provided that the notes are issued
for an original maturity of not less than 18 months.
Italian resident Rated Noteholders
Where an Italian resident Rated Noteholder is (i) an individual not engaged in an entrepreneurial activity to
which the Rated Notes are connected (unless he has opted for the application of the risparmio gestito regime
– see under “Capital gains tax” below); (ii) a non-commercial partnership; (iii) a non-commercial private or
public institution; or (iv) an investor exempt from Italian corporate income taxation, interest, premium and
other income relating to the Rated Notes, accrued during the relevant holding period, are subject to a
withholding tax, referred to as imposta sostitutiva, levied at the rate of 12.5 per cent. If the Rated Noteholders
described under (i) or (iii) above are engaged in an entrepreneurial activity to which the Rated Notes are
connected, the imposta sostitutiva applies as a provisional tax.
Where an Italian resident Rated Noteholder is a company or similar commercial entity or a permanent
establishment in Italy, to which the Rated Notes are effectively connected, of a non-Italian resident entity and
the Rated Notes are deposited with an authorised intermediary, interest, premium and other income from the
Rated Notes will not be subject to imposta sostitutiva, but must be included in the relevant Rated
Noteholder’s income tax return and are therefore subject to ordinary Italian corporate taxation (and, in certain
circumstances, depending on the “status” of the Rated Noteholder, also to IRAP – the regional tax on
productive activities).
Under the current regime provided by law decree No. 351 of 25 September 2001 converted into law with
amendments, by law No. 410 of 23 November 2001, as clarified by the Italian Revenue Agency through
circular No. 47/E of 8 August 2003, payments of interests, premiums or other proceeds in respect of the
Notes, deposited with an authorised intermediary, made to Italian resident real estate investment funds
established pursuant to article 37 of legislative decree No. 58 of 24 February 1998 or pursuant to article 14bis of law No. 86 of 25 January 1994 set up starting from 26 September 2001, as well as real estate funds
incorporated before 26 September 2001, the managing company of which has so requested by 25 November
2001, are subject neither to substitute tax nor to any other income tax in the hands of the real estate
investment fund. Certain Italian resident real estate investment funds may be subject to a 1% patrimonial tax,
which is calculated on the net asset value of the fund.
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Where an Italian resident Rated Noteholder is an open-ended or a closed-ended investment fund (“Fund”) or
a SICAV and the Rated Notes are deposited with an authorised intermediary, interest, premium and other
income relating to the Rated Notes and accrued during the holding period will not be subject to imposta
sostitutiva, but to 12.5 per cent. annual substitute tax (each the “Collective Investment Fund Tax”), which is
calculated on the net result accrued at the end of each tax period (and which includes interest accrued on the
Rated Notes).
Where an Italian resident Rated Noteholder is a pension fund (subject to the regime provided for by article 17
of Italian legislative decree No. 252 of 5 December 2005, as subsequently amended) and the Rated Notes are
deposited with an authorised intermediary, interest, premium and other income relating to the Rated Notes
and accrued during the holding period will not be subject to imposta sostitutiva, but must be included in the
result of the relevant portfolio accrued at the end of the tax period, to be subject to an 11 per cent. substitute
tax.
Pursuant to Decree 239, imposta sostitutiva is applied by banks, società d’intermediazione mobiliare
(“SIMs”), fiduciary companies, società di gestione del risparmio (“SGRs”), stockbrokers and other entities
identified by a decree of the Ministry of Finance (each an “Intermediary”).
An Intermediary must (i) be resident in Italy or be a permanent establishment in Italy of a non-Italian resident
financial intermediary; and (ii) intervene, in any way, in the collection of interest or in the transfer of the
Rated Notes. For the purpose of the application of the imposta sostitutiva, a transfer of Rated Notes includes
any assignment or other act, either with or without consideration, which results in a change in the ownership
of the relevant Rated Notes or in a change of the Intermediary with which the Rated Notes are deposited.
Where the Rated Notes are not deposited with an Intermediary, the imposta sostitutiva is applied and withheld
by the intermediary paying interest to a Rated Noteholder (or by the Issuer should the interest be paid directly
by this latter).
Non-Italian resident Rated Noteholders
Where the Rated Noteholder is a non-Italian resident without a permanent establishment in Italy to which the
Rated Notes are effectively connected, an exemption from the imposta sostitutiva applies provided that the
non-Italian resident beneficial owner is either (i) resident, for tax purposes, in a country which allows for a
satisfactory exchange of information with Italy; or (ii) an international body or entity set up in accordance
with international agreements which have entered into force in Italy; or (iii) a Central Bank or an entity which
manages, inter alia, the official reserves of a foreign State; or (iv) an institutional investor which is
incorporated in a country which allows for a satisfactory exchange of information with Italy, even if it does
not possess the status of a taxpayer in its own country of residence.
For the purpose of the application of the exemption, the countries which allow for a satisfactory exchange of
information with Italy are at present listed in ministerial decree dated 4 September 1996. According to article
168-bis of Presidential Decree No. 917 of 22 December 1986, as introduced by Law No. 244 of 24 December
2007, a new list will be issued by the Ministry of Economic and Finance, which will enter into force from the
tax period starting after it is published in the Italian Official Gazette. The actual provision will continue to
apply up to the former tax period.
In order to ensure gross payment, non-Italian resident Rated Noteholders must be the beneficial owners of the
payments of interest, premium or other income and (i) deposit, directly or indirectly, the Rated Notes with a
resident bank or SIM or a permanent establishment in Italy of a non-Italian resident bank or SIM or with a
non-Italian resident entity or company participating in a centralised securities management system which is in
contact, via computer, with the Ministry of Economy and Finance; and (ii) file with the relevant depository,
prior to or concurrently with the deposit of the Rated Notes, a statement of the relevant Rated Noteholder,
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which remains valid until withdrawn or revoked and in which the Rated Noteholder declares itself to be
eligible to benefit from the applicable exemption from imposta sostitutiva. Such statement, which is requested
neither for the international bodies or entities set up in accordance with international agreements which have
entered into force in Italy, nor in the case of foreign Central Banks or entities which manage, inter alia, the
official reserves of a foreign State, must comply with the requirements set forth by ministerial decree dated 12
December 2001. In case of institutional investors which do not possess the status of taxpayers in their own
country, the institutional investor is considered the beneficial owner and the statement under (ii) above shall
be issued by the relevant management body.
The imposta sostitutiva will be applicable at the rate of 12.5 per cent. (or at the reduced rate provided for by
the applicable double tax treaty, if any) to interest, premium and other income paid to Rated Noteholders
which are resident, for tax purposes, in countries which do not allow for a satisfactory exchange of
information with Italy or for which the above mentioned provisions are not met.
Early redemption
Without prejudice to the above provisions, in the event that the Notes are redeemed in whole or in part prior
to 18 months from the Issue Date, the Issuer will be required to pay a tax equal to 20 per cent. in respect of
the interest and other amounts accrued from the date of the issue up to the time of the early redemption. Such
payment will be made by the Issuer and will not affect the amounts to be received by the Noteholder by way
of interest or other amounts, if any, under the Notes.
Capital gains tax
Any gain obtained from the sale or redemption of the Rated Notes would be treated as part of taxable income
(and, in certain circumstances, depending on the “status” of the Rated Noteholder, also as part of the net value
of production for IRAP purposes) if realised by an Italian company or a similar commercial entity (including
the Italian permanent establishment of foreign entities to which the Rated Notes are connected) or Italian
resident individuals engaged in an entrepreneurial activity to which the Rated Notes are connected.
Where an Italian resident Rated Noteholder is an individual not holding the Rated Notes in connection with
an entrepreneurial activity and certain other persons, any capital gain realised by such Rated Noteholder from
the sale or redemption of the Rated Notes would be subject to an imposta sostitutiva, levied at the current rate
of 12.5 per cent. Rated Noteholders may set off losses with gains.
In respect of the application of the imposta sostitutiva, taxpayers may opt for one of the three regimes
described below.
Under the tax declaration regime (regime della dichiarazione), which is the default regime for Italian resident
individuals not engaged in entrepreneurial activity to which the Rated Notes are connected, the imposta
sostitutiva on capital gains will be chargeable, on a cumulative basis, on all capital gains, net of any incurred
capital loss, realised by the Italian resident individual Rated Noteholder holding Rated Notes not in
connection with an entrepreneurial activity pursuant to all sales or redemptions of the Rated Notes carried out
during any given tax year. Italian resident individuals holding Rated Notes not in connection with an
entrepreneurial activity must indicate the overall capital gains realised in any tax year, net of any relevant
incurred capital loss, in the annual tax return and pay imposta sostitutiva on such gains together with any
balance of income tax due for such year. Capital losses in excess of capital gains may be carried forward
against capital gains realised in any of the four succeeding tax years.
As an alternative to the tax declaration regime, Italian resident individual Rated Noteholders holding the
Rated Notes not in connection with an entrepreneurial activity may elect to pay the imposta sostitutiva
separately on capital gains realised on each sale or redemption of the Rated Notes (the risparmio
amministrato regime). Such separate taxation of capital gains is allowed subject to (i) the Rated Notes being
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deposited with Italian banks, SIMs or certain authorised financial intermediaries; and (ii) an express election
for the risparmio amministrato regime being made punctually in writing by the relevant Rated Noteholder.
The depository is responsible for accounting for imposta sostitutiva in respect of capital gains realised on each
sale or redemption of the Rated Notes (as well as in respect of capital gains realised upon the revocation of its
mandate), net of any incurred capital loss, and is required to pay the relevant amount to the Italian tax
authorities on behalf of the taxpayer, deducting a corresponding amount from the proceeds to be credited to
the Rated Noteholder or using funds provided by the Rated Noteholder for this purpose. Under the risparmio
amministrato regime, where a sale or redemption of the Rated Notes results in a capital loss, such loss may be
deducted from capital gains subsequently realised, within the same securities management, in the same tax
year or in the following tax years up to the fourth. Under the risparmio amministrato regime, the Rated
Noteholder is not required to declare the capital gains in its annual tax return.
Any capital gains realised by Italian resident individuals holding the Rated Notes not in connection with an
entrepreneurial activity who have entrusted the management of their financial assets, including the Rated
Notes, to an authorised intermediary and have opted for the so-called “risparmio gestito” regime will be
included in the computation of the annual increase in value of the managed assets accrued, even if not
realised, at year end, subject to a 12.5 per cent. substitute tax, to be paid by the managing authorised
intermediary. Under the risparmio gestito regime, any depreciation of the managed assets accrued at year end
may be carried forward against increase in value of the managed assets accrued in any of the four succeeding
tax years. Under the risparmio gestito regime, the Rated Noteholder is not required to declare the capital
gains realised in its annual tax return.
Any capital gains realised by a Rated Noteholder which is an Italian resident real estate investment fund
concurs to the year-end appreciation of the managed assets, which is exempt from any income tax according
to the real estate investment fund tax treatment described above. Certain Italian residential real estate
investment funds may be subject to a 1% patrimonial tax, which is calculated on the net asset value of the
fund. Any capital gains realised by a Rated Noteholder which is an Italian open-ended or a closed-ended
investment fund or a SICAV will be included in the result of the relevant portfolio accrued at the end of the
tax period, to be subject to Collective Investment Fund Tax.
Any capital gains realised by a Rated Noteholder which is an Italian pension fund (subject to the regime
provided for by article 17 of Italian legislative decree No. 252 of 5 December 2005, as subsequently
amended) will be included in the result of the relevant portfolio accrued at the end of the tax period, to be
subject to the 11 per cent. substitute tax.
Capital gains realised by non-Italian resident Rated Noteholders without a permanent establishment in Italy to
which the Rated Notes are effectively connected from the sale or redemption of Rated Notes traded on
regulated markets are not subject to the imposta sostitutiva.
Capital gains realised by non-Italian resident Rated Noteholders without a permanent establishment in Italy to
which the Rated Notes are effectively connected from the sale or redemption of the Rated Notes not traded on
regulated markets are not subject to the imposta sostitutiva, provided that the effective beneficiary: (i) is
resident in a country which allows for a satisfactory exchange of information with Italy; or (ii) is an
international entity or body set up in accordance with international agreements which have entered into force
in Italy; or (iii) is a Central Bank or an entity which manages, inter alia, the official reserves of a foreign
State; or (iv) is an institutional investor which is incorporated in a country which allows for a satisfactory
exchange of information with Italy, even if it does not possess the status of a taxpayer in its own country of
residence. In order to benefit of said exemption, non-Italian resident Rated Noteholders are required to file
appropriate documentation stating their entitlement to it.
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For the purpose of the application of the exemption, the countries which allow for a satisfactory exchange of
information with Italy are at present listed in ministerial decree dated 4 September 1996. According to article
168-bis of Presidential Decree No. 917 of 22 December 1986, as introduced by Law No. 244 of 24 December
2007, a new list will be issued by the Ministry of Economic and Finance, which will enter into force from the
tax period starting after it is published in the Italian Official Gazette. The actual provision will continue to
apply up to the former tax period.
If the conditions above are not met, capital gains realised by non-Italian resident Rated Noteholders from the
sale or redemption of the Rated Notes not traded on regulated markets are subject to the imposta sostitutiva at
the current rate of 12.5 per cent. unless more favourable double taxation treaty provisions apply.
Italian inheritance and gift tax
Under Law Decree No. 262 of 3 October 2006 (converted with amendments into Law No. 286 of 24
November 2006), as subsequently amended transfers of the Rated Notes by reason of death or gift or
gratuities to (i) spouses, ascendants or descendants will be subject to inheritance and gift tax at the rate of 4
per cent. on the value of the inheritance or gift exceeding 1,000,000 Euros per person, (ii) relatives within the
fourth degree, ascendants or descendants relatives in law or other relatives in law within the third degree will
be subject to inheritance and gift tax at the rate of 6 per cent. (the inheritance and gift tax will apply only on
the value of the inheritance or gift exceeding 100,000 Euros per person if the donee is a brother or sister of the
donor), (iii) persons other than the ones mentioned in (i) and (ii) above will be subject to inheritance and gift
tax at the rate of 8 per cent.
Moreover, an anti-avoidance rule is provided for in case of gift of assets, such as the Notes, whose sale for
consideration would give rise to capital gains to be subject to the imposta sostitutiva provided for by
legislative decree No. 461 of 21 November 1997, as subsequently amended. In particular, if the donee sells
the Notes for consideration within 5 years from their receipt as a gift, the donee is required to pay the relevant
imposta sostitutiva as if the gift had never taken place.
Transfer tax
Transfer tax has been repealed by Law Decree No. 248 of 31 December 2007, converted in law by Law No.
31 of 28 February 2008.
EU Savings Directive
Legislative decree No. 84 of 18 April 2005 implemented in Italy, as of 1 July 2005, the European Council
Directive No. 2003/48/EC on the taxation of savings income. Under the Directive Member States, if a number
of important conditions are met, are required to provide to the tax authorities of another Member State details
of payments of interest (or similar income) paid by a person within their jurisdiction to an individual resident
in that other Member State. However, for a transitional period, Belgium, Luxembourg and Austria will instead
be required (unless during that period they elect otherwise) to operate a withholding system in relation to such
payments (the ending of such transitional period being dependent upon the conclusion of certain other
agreements relating to information exchange with certain other countries). Same details of payments of
interest (or similar income) shall be provided to the tax authorities of a number of non-EU countries and
territories, which have agreed to adopt similar measures with effect from the same date.
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SUBSCRIPTION AND SALE
BancaEtruria Società Cooperativa (the “Underwriter”) has, pursuant to an underwriting agreement dated the
Signing Date between the Issuer, the Arranger, the Underwriter and the Representative of the Noteholders (the
“Underwriting Agreement”), agreed to subscribe and pay for, or procure the subscription and payment for,
each class of Notes at the issue price of 100 per cent. of the aggregate principal amount of Notes.
BancaEtruria will pay to the Arranger an arrangement fee. Pursuant to the terms of the Underwriting
Agreement, the Issuer and BancaEtruria have agreed to indemnify the Arranger against certain liabilities in
connection with the issue and offering of the Notes.
The Underwriting Agreement is subject to a number of conditions and may be terminated in certain
circumstances prior to payment to the Issuer for the Notes.
United States of America
The Notes have not been and will not be registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, a U.S. person except in certain transactions
exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the
meanings given to them by Regulation S under the Securities Act.
The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the
United States or its possessions or to a United States person, except in certain transactions permitted by U.S.
tax regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue
Code of 1986 and regulations thereunder.
The Underwriter has represented and agreed that it has not offered or sold the Notes and will not offer or sell
any Notes constituting part of its allotment within the United States or to, or for the benefit of, a U.S. person
except in accordance with Rule 903 of Regulation S under the Securities Act. Terms used in this paragraph
have the meanings given to them by Regulation S under the Securities Act.
In addition, until the expiration of 40 days after the commencement of the offering, an offer or sale of the
Notes within the United States by any dealer, distributor or other person (whether or not participating in this
offering) may violate the requirements of the Securities Act if such offer or sale is made otherwise than in
accordance with an available exemption from registration under the Securities Act. Terms used in this
paragraph have the meaning given to them by Regulation S under the Securities Act.
Republic of Italy
The offering of the Notes has not been registered with Commissione Nazionale per le Società e la Borsa
(“CONSOB”) (the Italian securities and exchange commission) pursuant to Italian securities legislation and,
accordingly, the Underwriter has represented and agreed pursuant to the Underwriting Agreement executed on
the Signing Date, that it has not offered, sold or distributed, and will not offer, sell or distribute any Notes or
any copy of this Prospectus or any other offer document in the Republic of Italy in an offer to the public of
financial products under the meaning of Article 1, paragraph 1, letter t) of Italian legislative decree No. 58 of
24 February 1998 (the “Financial Services Act”), unless an exemption applies. Accordingly, the Notes shall
only be offered, sold or delivered and copies of this Prospectus or of any other offering material relating to the
Notes may only be distributed in Italy:
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(a)
to “qualified investors” (investitori qualificati), pursuant to article 100 of Financial Services Act and
the implementing Consob Regulation, as amended and restated from time to time and article 2.1(e) of
Directive 2003/71/EC (the “Prospectus Directive”); or
(b)
in any other circumstances where an express exemption from compliance with the restrictions on
offers to the public applies, as provided under the Financial Services Act or CONSOB Regulation No.
11971 of 14 May 1999, as amended.
Moreover, and subject to the foregoing, any offer, sale or delivery of the Notes or distribution of copies of the
Prospectus or any other document relating to the Notes in the Republic of Italy under letters a) or b) above
must be:
(a)
made by an investment firm, bank or financial intermediary permitted to conduct such activities in the
Republic of Italy in accordance with the Financial Services Act, the Banking Act and CONSOB
Regulation 16190 of 29 October 2007, all as amended;;
(b)
in compliance with article 129 of the Banking Act and the implementing instructions of Bank of Italy,
as amended from time to time, pursuant to which the Bank of Italy may request post-offering
information on the offering or issue of securities in the Republic of Italy in the Republic of Italy; and
(c)
in accordance with any other applicable laws and regulations, including all relevant Italian securities,
tax and exchange controls laws and regulations and any limitations may be imposed from time to time
by CONSOB or the Bank of Italy.
Notwithstanding the above, in no event may the Junior Notes be sold or offered for sale (on the Issue Date or
at any time thereafter) to individuals (persone fisiche) residing in the Republic of Italy.
United Kingdom
The Underwriter has represented and agreed with the Issuer that:
(a)
it has complied and will comply with all applicable provisions of the Financial Services and Markets
Act 2000 (the “FSMA”) with respect to anything done by it in relation to the Notes in, from or
otherwise involving the United Kingdom; and
(b)
it has only communicated or caused to be communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment activity (within the meaning of
Section 21 of the FSMA) received by it in connection with the issue or sale of the Notes in
circumstances in which Section 21(1) of the FSMA does not apply to the Issuer.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus
Directive (each, a “Relevant Member State”), the Underwriter has represented and agreed that with effect
from and including the date on which the Prospectus Directive is implemented in that Relevant Member State
(the “Relevant Implementation Date”) it has not made and will not make an offer of Notes which are the
subject of the offering contemplated by this Prospectus to the public in that Relevant Member State other than
the offers contemplated in the Prospectus in the Relevant Member State from the time the Prospectus has been
approved by the competent authority in the Relevant Member State and published and notified to the relevant
competent authorities in accordance with the Prospectus Directive as implemented in the Relevant Member
State until twelve months after the date of publication of this Prospectus, except that it may, with effect from
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and including the Relevant Implementation Date, make an offer of such Notes to the public in that Relevant
Member State:
(a)
to legal entities which are authorised or regulated to operate in the financial markets or, if not so
authorised or regulated, whose corporate purpose is solely to invest in securities;
(b)
to any legal entity which has two or more of (1) an average of at least 250 employees during the last
financial year; (2) a total balance sheet of more than EUR 43,000,000 and (3) an annual net turnover of
more than EUR 50,000,000, as shown in its last annual or consolidated accounts;
(c)
to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus
Directive); or
(d)
in any other circumstances falling within article 3(2) of the Prospectus Directive,
provided that no such offer of Notes shall require the Issuer or the Underwriter to publish a prospectus
pursuant to article 3 of the Prospectus Directive or supplement a prospectus pursuant to article 16 of the
Prospectus Directive
For the purposes of this provision, the expression an “offer of Notes to the public” in relation to any Notes in
any Relevant Member State means the communication in any form and by any means of sufficient
information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to
purchase or subscribe the Notes, as the same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means
Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
General
Each of the Underwriter and the Issuer have represented that no action has been taken by them that would, or
is intended to, permit a public offer of the Notes or possession or distribution of the Prospectus or any other
offering or publicity material relating to the Notes in any country or jurisdiction where any such action for
that purpose is required. Accordingly, pursuant to the Underwriting Agreement to which it is a party, the
Underwriter has undertaken that it will not, directly or indirectly, offer or sell any Notes or have in its
possession, distribute or publish the Prospectus or any prospectus, form of application, advertisement or other
document or information in any country or jurisdiction except under circumstances that will, to the best of its
knowledge and belief, result in compliance with any applicable laws and regulations and all offers and sales
of Notes by it will be made on the same terms.
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GENERAL INFORMATION
Authorisation
The issue of the Notes has been authorised by resolutions of the shareholders’ meeting of the Issuer passed on
12 December 2008.
The Issuer has obtained all necessary consents, approvals and authorisations in connection with the issue and
performance of the Notes.
Funds available to the Issuer
The principal source of funds available to the Issuer for the payment of interest and the repayment of principal
on the Notes will be from collections made in respect of the Portfolio.
Listing
This Prospectus has been approved by the Financial Regulator, as competent authority under Directive
2003/71/EC (the “Prospectus Directive”). The Financial Regulator only approves this Prospectus as meeting
the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. Application has been
made to the Irish Stock Exchange for the Rated Notes to be admitted to the Official List and trading on its
regulated market. Approval by the Financial Regulator relates only to the Rated Notes which are to be
admitted to trading on the regulated market of the Irish Stock Exchange or other regulated markets for the
purposes of Directive 2004/39/EC or which are to be offered to the public in any Member State of the
European Economic Area. No application has been made to list the Junior Notes on any stock exchange.
Clearing systems
The Rated Notes have been accepted for clearance through Monte Titoli by Euroclear and Clearstream,
Luxembourg. Monte Titoli shall act as depository for Euroclear and Clearstream, Luxembourg. The ISINs and
the Common Codes for the Rated Notes are as follows:
Class A Notes
Class B Notes
Common Code:
040735666
040735771
ISIN:
IT0004446602
IT0004446909
Class C Notes
IT0004446917
No significant change
Save as disclosed in this Prospectus, there has been no significant change in the financial or trading position
of the Issuer since 31 December 2007.
No material contracts or arrangements, other than those disclosed in this Prospectus, have been entered into
by the Issuer since the date of its incorporation.
Legal and arbitration proceedings
The Issuer is not involved in any legal, governmental or arbitration proceedings (including any proceedings
which are pending or threatened of which the Issuer is aware) which may have, or have had, since its
incorporation significant effects on the financial position or profitability of the Issuer.
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Conflicts of Interest
There are no restrictions on the Underwriter, inter alia, acquiring the Rated Notes and/or financing to or for
third parties. Consequently, conflicts of interest may exist or may arise as a result of the Underwriter having
different roles in this transaction and/or carrying out other transactions for third parties.
Accounts
The Issuer will produce, and will make available at its registered office, proper accounts (ordinata contabilità
interna) and audited (to the extent required) financial statements in respect of each financial year
(commencing on 1 January and ending on 31 December, the next such accounts to be prepared being those in
respect of the financial year ending on 31 December 2008) but will not produce interim financial statements.
PricewaterhouseCoopers S.p.A., the address of which is at viale Gramsci, 15, I-50121 Florence, are the
independent auditors of the Issuer, they belong to ASSIREVI – Associazione Italiana Revisori Contabili and
are registered in the special register (albo speciale) for auditing companies (società di revisione) provided for
by article 161 of legislative decree No. 58 of 1998.
Borrowings
Save as disclosed in this Prospectus, as at the date of this Prospectus, the Issuer has no outstanding loan
capital, borrowings, indebtedness or contingent liabilities, nor has the Issuer created any mortgages or charges
or given any guarantees.
Post issuance reporting
Under the terms of the Agency and Accounts Agreement, the Computation Agent has agreed to prepare and
deliver (by no later than seven Business Days immediately following each Payment Date) to, inter alia, the
Issuer, the Representative of the Noteholders, the Irish Stock Exchange, the Arranger and Fitch, a report
containing details of, inter alia, the Claims, amounts received by the Issuer from any source during the
preceding Collection Period and amounts paid by the Issuer during such Collection Period (including any
payment received from any of the Swap Counterparty) as well as on the immediately preceding Interest
Payment Date (the “Investor Report”).
Documents
As long as the Rated Notes are listed on the Irish Stock Exchange, copies of the following documents (and,
with regard to the documents listed under (a), (b) and (c) below, the English translations thereof) will, when
published, be available in physical form for inspection free of charge during usual office hours on any
Business Day (excluding public holidays) at the registered office of the Issuer and the Specified Offices of,
respectively, the Representative of the Noteholders and the Principal Paying Agent (as set forth in Condition
17 (Notices)) for the life of this Prospectus:
(a)
the by-laws (statuto) and the deed of incorporation (atto costitutivo) of the Issuer;
(b)
the annual audited (to the extent required) financial statements of the Issuer. The next annual financial
statements will relate to the financial year ending on 31 December 2008 and will be available not later
than April 2009. The previous financial report related to the financial year ended on 31 December
2007. The financial statements and the financial reports are drafted in Italian;
(c)
the Investor Reports;
//
223
(d)
the Servicer Report setting forth the performance of the Claims and Collections made in respect of the
Portfolio prepared by the Servicer; and
(e)
copies of the following documents:
(i)
the Underwriting Agreement;
(ii)
the Agency and Accounts Agreement;
(iii)
the Mandate Agreement;
(iv)
the Subordinated Loan Agreement;
(v)
the Swap Agreement;
(vi)
the Intercreditor Agreement;
(vii)
the English Deed of Charge and Assignment;
(viii) the Italian Deed of Pledge;
(ix)
the Corporate Services Agreement;
(x)
the Shareholders’ Agreement;
(xi)
the Letter of Undertaking;
(xii)
the Transfer Agreement;
(xiii) the Servicing Agreement;
(xiv) the Warranty and Indemnity Agreement;
(xv)
the amendment to the Transfer Agreement;
(xvi) the amendment to the Servicing Agreement;
(xvii) the amendment to the Warranty and Indemnity Agreement;
(xviii) the Swap Guarantee;
(xix) the Transaction Bank Guarantee;
(xx)
the Prospectus; and
(xxi) the Rules of the Organisation of the Noteholders in the form in which they are included in this
Prospectus.
Any references to websites and website addresses (and the contents thereof) do not form part of this
Prospectus.
Notes freely transferable
The Rated Notes shall be freely transferable.
Annual fees
The estimated annual fees and expenses payable by the Issuer in connection with the transaction described
herein (inclusive of the total expenses related to the admission to trading, being equal to approximately
//
224
€5,032.40) amount to approximately €70,000, excluding all fees payable to the Servicer under the Servicing
Agreement, plus any VAT if applicable.
//
225
INDEX OF DEFINED TERMS
(B)
€ ......................................................................... iv, 98
Cash Reserve Account ................................18, 90, 94
24 Hours .............................................................. 143
Cash Reserve Excess ..................................38, 64, 94
48 Hours .............................................................. 143
Chairman ............................................................. 144
Account .................................................................. 94
Claims ...................................................1, 14, 94, 192
Accounts ...........................................................91, 94
Claims Transaction Account .......................18, 90, 95
Accumulation Date ................................................ 94
Class....................................................................... 93
Additional Claim ................................................. 183
Class A Noteholders .......................................... 11, 93
Additional Mortgage Claims Purchase Price ....... 183
Class A Notes ..................................................1, 7, 92
Affected Claims ................................................... 209
Class A Notes Principal Deficiency Ledger 24, 64, 95
Agency and Accounts Agreement .......................5, 92
Class A Rate of Interest...................................95, 125
Agent Bank .........................................................7, 92
Class B Noteholders ...............................................11
Agents .............................................................92, 177
Class B Notes..................................................1, 7, 92
Arranger ..................................................... ii, 94, 192
Class B Notes Principal Deficiency Ledger 24, 64, 95
Back-up Servicer ................................................. 189
Class B Notes Trigger Event ...........................31, 109
BancaEtruria ...................................................1, 4, 94
Class B Rate of Interest ..................................95, 125
BancaEtruria Banking Group................................... 4
Class of Notes ...................................................... 144
Banking Act ......................................................... 1, 3
Clearstream, Luxembourg.................................. 1, 95
Bankruptcy Law..............................................53, 192
Collateral ............................................................... 95
Basic Terms Modification ...............................94, 143
Collateral Account ................................................. 95
Bersani Decree ....................................................... 54
Collection Account .............................17, 90, 95, 192
Block Voting Instruction ...................................... 143
Collection Account Bank ................................... 6, 92
Blocked Notes...................................................... 143
Collection Date ................................................ 15, 95
Borrower ...................................................14, 94, 192
Collection Period ............................................. 15, 95
Borrower Payment Suspension Right .................... 56
Collection Policies ................................................. 95
Borrowers .............................................................. 94
Collection Policy ................................................. 186
BPSS .................................................................... 214
Collections ....................................................... 14, 95
Business Day ....................................................10, 94
Collective Investment Fund Tax .......................... 219
Calculation Date ...............................................20, 94
Computation Agent ............................................ 5, 92
Cancellation Date.............................................. 11, 94
Condition ................................................................. 1
Cash Reserve ..............................................37, 63, 94
Conditions .......................................................1, 8, 92
//
226
CONSOB ........................................ 1, 8, 95, 111, 223
Extraordinary Resolution ................................98, 144
Corporate Servicer ..............................................5, 96
Final Redemption Date .......................................... 98
Corporate Services Agreement ................... 5, 96, 211
Financial Regulator .................................................. 1
Credit Policies...................................................... 192
Financial Services Act ......................................... 223
Credit Support Annex ............................................ 65
Financing Bank ...............................................98, 213
Crediti ad Incaglio ............................................17, 96
First Amortisation Interest Payment Date .............. 98
Crediti in Sofferenza .........................................17, 96
First Shareholders’ Agreement ............................. 161
Criteria ....................................................69, 179, 192
First Subsequent Fitch Rating Event..................... 111
Cure Period .......................................................... 209
Fitch ................................................................... 1, 99
Debtor Insolvency Proceedings ........................... 186
Fitch’s First Trigger Required Ratings ................... 68
Decision 1153/1969 ............................................... 54
Fixed Rate Mortgage Loans ................................... 70
Decision 4842/2002 ............................................... 53
Floating Rate Mortgage Loans............................... 70
Decree 239 ................................................57, 96, 218
Fondiari Mortgage Loans ................................ 14, 69
Decree 239 Withholding ................................... 11, 96
Fondiario Mortgage Loan ................................... 192
Defaulted Claims ..............................................16, 96
FSMA .................................................................. 224
Delinquent Claims ............................................17, 96
Fund ..................................................................... 219
Delinquent Instalment .......................................17, 96
Funds Provisioned for Amortisation ................ 24, 99
Eligible Institution ............................................19, 96
Further Notes ....................................................... 124
Eligible Investments .............................................. 96
Further Portfolios ................................................. 124
Eligible Investments Securities Account ....18, 90, 97
Further Securitisation ......................................60, 124
English Deed of Charge and Assignment . 12, 97, 211
Further Security ................................................... 124
English Law Transaction Documents .................... 97
Group ................................................................... 166
Equity Capital Account ...............................18, 91, 97
holders ................................................................... 93
EURIBOR ...........................................................1, 97
Implementing Regulation ...................................... 56
euro .................................................................... iv, 98
Individual Purchase Price .............................182, 193
Euro ................................................................... iv, 98
Initial Execution Date .................................4, 99, 179
Euroclear .............................................................1, 98
Initial Fitch Rating Event ..................................... 109
euro-zone ............................................................... 98
Initial Outstanding Amount ................................. 193
Event of Default ..............................................98, 134
Initial Portfolio Outstanding Amount .............. 35, 99
Excess Swap Collateral.......................................... 98
Insolvency Event ................................................. 109
Excluded Claim ................................................... 183
Insolvent ................................................................ 99
Expenses Account .......................................17, 90, 98
Instalment ........................................................ 23, 99
//
227
Insurance Policies ................................................ 193
Junior Notes Principal Deficiency Ledger 24, 64, 102
Insurance Premia ......................................25, 99, 184
Junior Rate of Interest .......................................... 126
Intercreditor Agreement ............................ 13, 99, 211
Junior Trigger Event ....................................... 31, 110
Interest Amount ..............................................99, 126
Law 244/2007 ........................................................ 56
Interest Amount Arrears ......................................... 99
Law Decree 185 ..................................................... 56
Interest Available Funds....................................21, 99
Law No. 342 .......................................................... 53
Interest Cap ............................................................ 56
Letter of Undertaking..............................39, 102, 213
Interest Components .......................................23, 100
Liquidation Date .................................................. 102
Interest Determination Date ................................. 100
Liquidity Ledger .................................................. 102
Interest Payment Date .................................1, 10, 101
Liquidity Reserve................................................. 102
Interest Period ...........................................1, 101, 125
Listing Agent ..................................................... 7, 92
Intermediary......................................................... 219
Loan to Value ....................................................... 193
Investment Date ........................................39, 63, 176
Local Business Day ......................................102, 133
Investor Report .......................................20, 176, 227
LTV ........................................................................ 71
Ipotecari Mortgage Loans ................................14, 69
Mandate Agreement ................................13, 102, 212
Ipotecario Mortgage Loans ................................. 193
Maturity Date ...................................... 1, 11, 103, 128
Irish Stock Exchange ........................................... 101
Meeting .........................................................103, 144
ISDA ...................................................................... 65
Modelling Assumptions ....................................... 216
Issue Date ...........................................................7, 92
Modular Rate Mortgage Loans .............................. 70
Issuer............................................... 1, 3, 92, 101, 160
Monte Titoli ..................................................... 1, 103
Issuer Acceleration Notice ............................101, 135
Monte Titoli Account Holder ........................103, 144
Issuer Available Funds ....................................23, 101
Monte Titoli Account Holders ................................. 1
Issuer Creditors ............................................... 11, 101
Mortgage .............................................................. 193
Issuer Secured Creditors ...................................... 101
Mortgage Loan..................................................... 103
Issuer’s Rights ..............................................101, 144
Mortgage Loans ........................................14, 69, 103
Italian Deed of Pledge.............................12, 101, 212
Mortgagor ............................................................ 193
Italian Law Transaction Documents .................... 101
Most Senior Class ................................................ 103
Judicial Proceedings ............................................ 186
Note Security ..........................................12, 103, 121
Junior Noteholders ............................................ 11, 93
Noteholder ............................................................. 93
Junior Notes ....................................................1, 7, 92
Noteholders ............................................................ 93
Junior Notes Additional Interest Amount ............ 102
Noteholders .............................................................11
Junior Notes Additional Remuneration ............... 102
Noteholders ............................................................ 93
//
228
Noteholders ............................................................ 93
Principal Deficiency Amount....................25, 64, 106
Notes ...............................................................1, 7, 92
Principal Deficiency Ledger ................................ 106
Obligor ................................................................. 193
Principal Deficiency Ledger Amount .......39, 64, 106
Optional Rate Mortgage Loans .............................. 70
Principal Deficiency Ledgers....................24, 64, 106
Organisation of Noteholders ................................ 103
Principal Paying Agent ...................................... 6, 92
Originator......................................................1, 4, 103
Principal Payment ................................................ 130
Originator’s Claims.........................................25, 103
Principal Payments .............................................. 106
Other Issuer Creditors .....................................13, 103
Priority of Payments ............................................ 106
Outstanding Balance .......................................31, 103
Proceedings .......................................................... 186
Outstanding Principal ...............................25, 64, 104
Pro-Rata Amortisation Conditions .................. 30, 110
Payments Account ....................................18, 90, 104
Prospectus Directive .................................1, 224, 226
Payments Report .................................................... 20
Provisional Portfolio .............................................. 69
Portfolio ....................................................14, 69, 104
Proxy.................................................................... 144
Portfolio Outstanding Amount ........................35, 104
Purchase Price ...............................................106, 182
Post-Enforcement Final Redemption Date .......... 104
Put Option Notice ................................................ 209
Post-Enforcement Priority of Payments.. 31, 104, 118
Rate of Interest ..................................................... 106
Pre-Enforcement Interest Priority of Payments .... 25,
104, 114
Rated Noteholders ............................................ 11, 93
Rated Notes.....................................................1, 7, 92
Pre-Enforcement Principal Priority of Payments .. 29,
104, 117
Rateo Amounts................................................25, 106
Real Estate Asset.................................................. 193
Pre-Enforcement Priority of Payments ........... 29, 117
Real Estate Assets ................................................ 192
Preliminary Valuation Date .................................... 69
Reference Banks .................................................. 106
Prepayment Fees .............................................23, 104
Related Security ............................................192, 193
Previous Portfolios................................................. 60
Relevant Class Noteholders ................................. 144
Previous Securitisation Notes .............................. 160
Relevant Date....................................................... 106
Previous Securitisations ..................................60, 104
Relevant Fraction ................................................. 144
Previous Securitisations Notes................................. 3
Relevant Implementation Date ............................ 224
Previous Shareholders’ Agreement ...................... 161
Relevant Member State .................................... ii, 224
Previous Transactions Documents ....................... 104
Relevant Provisions ............................................. 151
Principal Account......................................18, 90, 104
Reporting Date ................................................15, 106
Principal Amount Outstanding........................10, 104
Representative of the Noteholders ..................... 4, 92
Principal Available Funds ...............................22, 105
Required Guarantor Rating .................................. 214
Principal Components .....................................23, 105
//
229
Retention Amount .....................................17, 90, 106
Swap Guarantor ............................................... 7, 108
Revenue Eligible Investments Amount ................ 107
Swap Transaction ............................................65, 108
Rules of the Organisation of Noteholders .............. 92
Swap Transactions ..........................................65, 108
Screen Rate ............................................................ 97
Swap Trigger........................................................ 108
Second Shareholders’ Agreement ........................ 161
Target Cash Reserve Amount....................37, 63, 108
Second Subsequent Fitch Rating Event ................ 111
TARGET Settlement Day .................................... 108
Secured Amounts ................................................. 107
TARGET System ................................................. 109
Securities Act .......................................................... iv
Tax Credit .............................................................. 67
Securitisation ..................................................... iv, 93
Transaction Account ............................................ 109
Securitisation Law ..................................1, 3, 93, 160
Transaction Accounts ........................................... 109
Security Interest ................................................... 107
Transaction Bank ............................................... 6, 92
Servicer .....................................................5, 107, 186
Transaction Bank Guarantee ............................ 6, 109
Servicer Report .......................................15, 107, 188
Transaction Bank Guarantor ............................ 6, 109
Servicer’s Advance .........................................25, 107
Transaction Documents ....................................... 109
Servicing Agreement ................................5, 107, 186
Transfer Agreement ..................................4, 109, 179
Servicing Fees.................................................16, 189
UBSL ................................................................... 167
Servicing Settlement Expenses Amount .............. 191
Underwriter ...................................................109, 223
Settlement Expenses Amount .............................. 184
Underwriting Agreement ..................................... 223
SGRs .................................................................... 219
Unpaid Instalment ...........................................17, 109
Shareholders ........................................................ 160
Usury Law ............................................................. 52
Shareholders’ Agreement ......................107, 161, 212
Usury Law Decree ................................................. 52
Signing Date ...............................................4, 92, 179
Usury Rates............................................................ 52
SIMs .................................................................... 219
Usury Regulations ................................................. 52
Specified Offices ................................................. 107
Valuation Date ..............................................109, 193
Subordinated Loan ....................................5, 107, 213
Voter..................................................................... 144
Subordinated Loan Agreement .................5, 107, 213
Voting Certificate ................................................. 144
Subordinated Loan Provider .....................5, 107, 213
Warranty and Indemnity Agreement .......14, 109, 192
Swap Agreement .............................................65, 107
Written Resolution ............................................... 145
Swap Counterparty ...........................................7, 107
Δ Amount ............................................................... 56
Swap Guarantee ................................................7, 108
//
230
ISSUER
Mecenate S.r.l.
via Calamandrei, 255
I-52100 Arezzo
Italy
ORIGINATOR AND SERVICER
BancaEtruria Società Cooperativa
via Calamandrei, 255
I-52100 Arezzo
Italy
REPRESENTATIVE OF THE NOTEHOLDERS
BNP Paribas Securities Services S.A., Milan Branch
via Ansperto, 5
I-20123 Milan
Italy
TRANSACTION BANK
PRINCIPAL PAYING AGENT, COMPUTATION AGENT
AND AGENT BANK
BNP Paribas Securities Services, London Branch
55, Moorgate
London EC2R 6PA
United Kingdom
BNP Paribas Securities Services S.A., Milan Branch
via Ansperto, 5
I-20123 Milan
Italy
SWAP COUNTERPARTY
UBS Limited
1, Finsbury Avenue
London EC2M 2PP
United Kingdom
LISTING AGENT
AUDITORS TO THE ISSUER
BNP Paribas Securities Services, Luxembourg Branch
33, Rue de Gasperich Howald-Hesperange
L-2085 Luxembourg
Grand-Duchy of Luxembourg
PricewaterhouseCoopers S.p.A.
viale Gramsci, 15
I-50121 Florence
Italy
LEGAL ADVISERS
To the Arranger and the Underwriter as to Italian law and
English law
To the Arranger and the Underwriter as to Italian tax law
Studio Legale Associato in associazione con Linklaters LLP
via Santa Margherita, 3
I-20121 Milan
Italy
Pedersoli e Associati
via Monte di Pietà, 15
//
231
I-20121 Milan
Italy

Prospectus Mecenate 2009

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