IMPORTANT NOTICE IMPORTANT: You must read the following

IMPORTANT NOTICE
IMPORTANT: You must read the following before continuing. The following applies to the
offering circular following this page, and you are therefore advised to read this carefully before reading,
accessing or making any other use of the offering circular. In accessing the offering circular, you agree
to be bound by the following terms and conditions, including any modifications to them any time you
receive any information from us as a result of such access.
NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY THE SECURITIES OF THE ISSUER. CERTAIN OF
THE SECURITIES WILL BE OFFERED AND SOLD IN THE UNITED STATES TO A LIMITED
NUMBER OF QUALIFIED INSTITUTIONAL BUYERS (AS DEFINED IN RULE 144A ("RULE
144A") OF THE SECURITIES ACT) ("QIBS") IN RELIANCE ON RULE 144A OF THE
SECURITIES ACT. THE FOLLOWING OFFERING CIRCULAR MAY NOT BE FORWARDED OR
DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY
MANNER WHATSOEVER, AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY U.S.
PERSON OR TO ANY U.S. ADDRESS. ANY FORWARDING, DISTRIBUTION OR
REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. THE
SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE
ISSUER HAS NOT BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED (THE "1940 ACT"). FAILURE TO COMPLY WITH THIS DIRECTIVE MAY
RESULT IN A VIOLATION OF THE U.S. SECURITIES ACT OR THE APPLICABLE LAWS OF
OTHER JURISDICTIONS.
This Offering Circular has been delivered to you on the basis that you are a person into whose
possession this Offering Circular may be lawfully delivered in accordance with the laws of the
jurisdiction in which you are located. By accessing the offering circular, you shall be deemed to have
confirmed and represented to us that: (a) you have understood and agree to the terms set out herein; (b)
you consent to delivery of the offering circular by electronic transmission; (c) you are either (i) not a
U.S. person (within the meaning of Regulation S under the Securities Act) or acting for the account or
benefit of a U.S. person and the electronic mail address that you have given to us and to which this email has been delivered is not located in the United States, its territories and possessions (including
Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands) or the District of Columbia or (ii) a QIB within the meaning of Rule 144A, acting for your own
account or the account of one or more QIBs in reliance on Rule 144A; and (d) if you are a person in the
United Kingdom, then you are a person who: (i) has professional experience in matters relating to
investments; or (ii) is a high net worth entity falling within Article 49(2)(a) to (d) of the Financial
Services and Markets Act (Financial Promotion) Order 2005.
This Offering Circular has been sent to you in an electronic form. You are reminded that documents
transmitted via this medium may be altered or changed during the process of electronic transmission
and consequently neither the Issuer nor Credit Suisse nor RBC Europe Limited nor any person who
controls it nor any director, officer, employee nor agent of it or affiliate of any such person accepts any
liability or responsibility whatsoever in respect of any difference between the offering circular
distributed to you in electronic format and the hard copy version available to you on request from Credit
Suisse or RBC Europe Limited.
MAGNI FINANCE DESIGNATED ACTIVITY COMPANY
(incorporated with limited liability in Ireland with registered number 570251)
£122,800,000 Class A Commercial Mortgage Backed Floating Rate Notes due 2023
£16,600,000 Class B Commercial Mortgage Backed Floating Rate Notes due 2023
£28,000,000 Class C Commercial Mortgage Backed Floating Rate Notes due 2023
£17,199,000 Class D Commercial Mortgage Backed Floating Rate Notes due 2023
£18,500,000 Junior Commercial Mortgage Backed Fixed Rate Notes due 2023
(together, the "Notes")
This document comprises a prospectus for the purpose of Directive 2003/71/EC (as amended from time to time, the "Prospectus
Directive") in connection with the application for the Notes to be admitted to the official list of the Irish Stock Exchange (the
"Offering Circular"). References in this document to "this Offering Circular" will be taken to read "Prospectus" for the purposes of
the Prospectus Directive. This Offering Circular has been approved by the Central Bank of Ireland as competent authority under the
Prospectus Directive. The Central Bank of Ireland only approves this Offering Circular 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 Notes to be
admitted to its Official List (the "Official List") and trading on the main securities market of the Irish Stock Exchange (the "Main
Securities Market"). The Main Securities Market is a regulated market for the purposes of Directive 2004/39/EC. Subject as
described herein, the Issuer will issue the Notes on 30 December 2015 (or such later date as the Issuer, the Lead Manager and the
Co-Manager may agree).
Key characteristics of the Notes
Class A Notes
Initial
principal
amount
Issue price
Note Margin (p.a.)(1)
Reference rate(1)
Senior Loan Initial
Repayment Date(2)
Final Note Maturity
Date
Ratings(3) DBRS
Fitch
Interest
accrual
method
Note Payment Dates
First Note Payment
Date
Application
of
Principal Receipts
Class B Notes
Class C Notes
Class D Notes
£16,600,000
£28,000,000
£17,199,000
£18,500,000
100 per cent.
1.75 per cent.
3-month
LIBOR
100 per cent.
3.00 per cent.
100 per cent.
4.25 per cent.
100 per cent.
5.50 per cent.
3-month LIBOR
3-month LIBOR
3-month LIBOR
100 per cent.
N/A(4(5)
N/A(4)(5)
The Loan Payment Date falling in January 2019
January 2023
January 2023
January 2023
January 2023
January 2023
A( sf)
A- sf
BBB (low) (sf)
BBB sf
B (low) (sf)
BB+ sf
CCC (sf)
BB- sf
Actual/365
Actual/365
Actual/365
Actual/365
N/A
N/A
Actual/365
Quarterly on 20 January, 20 April, 20 July and 20 October in each year
20 January 2016
Prior to the delivery of a Note Acceleration Notice or the occurrence of a
Loan Failure Event or the Issuer Security becoming enforceable:
Junior Principal
Receipts
(a)
Cash Trap Principal shall be applied on a sequential basis to the
Class A Notes, the Class B Notes, the Class C Notes and the Class
D Notes (together, the "Senior Notes"); and
(b)
Non-Cash Trap Principal shall be applied on a pro rata basis to the
Senior Notes.
For so long as the
Senior Notes are
outstanding
no
Junior Principal
Receipts will be
applied
in
or
towards
redemption of the
Junior Notes.
Following the delivery of a Note Acceleration Notice or the occurrence of a
Loan Failure Event or the Issuer Security becoming enforceable all Available
Funds shall be applied to the Senior Notes on a sequential basis.
Business
convention
Minimum
denominations
Day
Junior Notes
£122,800,000
Modified Following
£100,000 and integral multiples of £1,000 in excess thereof
Reg S:
Reg S:
Reg S:
Reg S:
Reg S:
XS1336778953
XS1337093717
XS1337094285
XS1337094525
XS1337094954
ISIN
144A:
144A:
144A:
144A:
144A:
XS1336779092
XS1337094103
XS1337094368
XS1337094798
XS1337094871
Reg S:
Reg S:
133677895
133709371
Reg S: 133709428
Reg S: 133709452
Reg S: 133709495
Common Code
144A:
144A:
144A: 133709436
144A: 133709479
144A: 133709487
133677909
133709410
____________________
(1)
Up to and including the Senior Loan Final Repayment Date, the Class A Notes, the Class B Notes, the Class C Notes
and the Class D Notes will bear interest at (a) three-month LIBOR (or, in the case of the first Note Interest Period,
one-month LIBOR) plus (b) the relevant Note Margin specified above.
For each Note Interest Period occurring on or following the Senior Loan Final Repayment Date, when determining the
Rate of Interest in respect of the Senior Notes, the amount of interest representing the amount by which 3-month GBP
LIBOR exceeds 5 per cent. per annum (the "Note LIBOR Excess Amount") will be subordinated to, inter alia, the
payment of interest on and repayment of principal of the Senior Notes.
(2)
Pursuant to the terms of the Senior Facility Agreement, the Company has the option to once extend the Senior Loan
Initial Repayment Date by one year by delivering to the Loan Facility Agent an irrevocable notice not less than 30
days and not more than 60 days prior to the then current Senior Loan Initial Repayment Date. The right of the
Company to exercise this option is subject to certain conditions as set out in "Description of the Senior Facility
Agreement – Repayment and extension", below. If the Company exercises the Loan Extension Option, the Senior
Loan Final Repayment Date will be extended to the date which is 12 months after the Senior Loan Initial Repayment
Date. One of the conditions to be satisfied for the Company to exercise the Loan Extension Option is payment of the
Loan Extension Fee.
If the Loan Extension Option is exercised, then on the Note Payment Date immediately following the date on which
the Company pays the Loan Extension Fee under the Senior Facility Agreement, the Issuer shall be required to pay a
one-off fee in respect of each Class of Senior Notes equal to 0.25 per cent. of the Principal Amount Outstanding of
such Class of Senior Notes as at the date the Company makes the request to exercise the Loan Extension Option. Such
Senior Note Extension Fee Amount will be subordinated to, inter alia, the payment of interest on and repayment of
principal of the Senior Notes. The ratings assigned to the Senior Notes do not address the likelihood of receipt of any
Senior Note Extension Fee Amounts.
(3)
A rating has not been requested or assigned to the Junior Notes. The ratings assigned by Fitch address the likelihood
of: (a) timely payment of any interest due to the Noteholders in respect of the Senior Notes on each Note Payment
Date; and (b) full repayment of principal on the Senior Notes by a date that is not later than the Final Note Maturity
Date. The ratings assigned by DBRS address the risk of default, being the risk that the Issuer will fail to satisfy its
financial obligations relating to the Senior Notes (excluding the payment of the Senior Note Extension Fee) in
accordance with the terms under which the Senior Notes have been issued. The ratings assigned to the Senior Notes
do not address payment of any Note LIBOR Excess Amount, Senior Note Extension Fee Amounts or Note
Prepayment Fee Amounts in respect of the Senior Notes. The assignment of ratings to the Senior Notes is not a
recommendation to invest in the Senior Notes. Any credit rating assigned to the Senior Notes may be revised,
suspended or withdrawn at any time. Certain nationally recognized statistical rating organizations ("NRSROs"), as
defined in Section 3(a)(62) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that were not
hired by the Issuer may use information they receive pursuant to Rule 17g-5 under the Exchange Act ("Rule 17g-5")
to rate the Notes. We cannot assure you as to what ratings a non-hired NRSRO would assign. The Rating Agencies
have informed the Issuer that the "sf" designation in the ratings represents an identifier of structured finance product
ratings and was implemented by the Rating Agencies for ratings of structured finance products as of August 2010. For
additional information about this identifier, prospective investors can go to www.fitchratings.com and www.dbrs.com.
Each of Fitch and DBRS is established in the European Union and is registered under means Regulation (EC) No.
1060/2009 of the European Parliament and the Council of 16 September 2009 on credit rating agencies, as amended
pursuant to Regulation 513/2011/EU of the European Parliament and the Council of 11 May 2011 (the "CRA
Regulation"). As such, each of Fitch and DBRS is included in the list of credit rating agencies published by the
European Securities and Markets Authority on its website (at http://www.esma.europa.eu/page/List-registered-andcertified-CRAs) in accordance with the CRA Regulation.
(4)
Repayment of and prepayments under the Junior Notes will be made only from repayment of and prepayments under
the Junior Loan. No repayments or prepayments under the Junior Loan may be made until all the Senior Loan has
been repaid in full.
(5)
The Junior Notes will bear interest at a fixed rate of 6 per cent per annum.
Before making any decision to invest in the Notes, potential Noteholders should pay particular attention to the section herein
entitled "Risk Factors".
Arranger and Lead Manager
Credit Suisse
Co-Manager
RBC Capital Markets
The date of this Offering Circular is 23 December 2015
Closing Date
The Issuer expects to issue the Notes on or around 30 December 2015 (the
"Closing Date")
Underlying assets
The Issuer will make payments of interest on the Notes from, inter alia,
payments of interest received by the Issuer under certain loans either (i)
acquired from the Original Senior Lender, or (ii) advanced by the Issuer to
the Borrowers as at the Closing Date pursuant to the Senior Facility
Agreement (as defined below) (all such loans, together, the "Senior Loan").
Payments of principal under the Senior Loan due to the Issuer will be
allocated to the Senior Notes and applied in accordance with the applicable
Issuer Priority of Payments.
The Issuer will also make payments on the Junior Notes from payments of
interest (if any) received by the Issuer under certain loans either (i) acquired
from the Original Junior Lender, or (ii) advanced by the Issuer to the
Borrowers as at the Closing Date pursuant to the Junior Facility Agreement
(as defined below (all such loans, together, the "Junior Loan").
Payments of principal under the Junior Loan due to the Issuer will be
allocated to the Junior Notes and applied in accordance with the applicable
Issuer Priority of Payments. Payments of principal under the Junior Loan are
only permitted after the Senior Loan has been repaid in full.
The Senior Loan and the Junior Loan are together referred to as the "Loans".
The Senior Facility Agreement and the Junior Facility Agreement are
together referred to as the "Facility Agreements".
The Senior Loan will be secured by, among other things, a portfolio of
commercial properties, in each case located in the United Kingdom (each a
"Property" and collectively the "Properties" or the "Portfolio"). The Junior
Loan will be unsecured.
During the life of the Notes, the Revenue Receipts are expected to be
sufficient to pay the interest amounts payable in respect of the Notes.
See sections entitled "Description of the Senior Facility Agreement",
"Description of the Junior Facility Agreement", "The Key Characteristics of
the Loan Security" and "Description of the Portfolio" for more detail.
Use of proceeds
To acquire the Pecan Loans from the Original Senior Lender and to advance
the Titan Loans to the Titan Borrowers on the Closing Date.
Credit enhancement
Subordination of junior ranking Notes. See Condition 3 (Status and
Relationship between the Notes and Security) in the section entitled "Terms
and Conditions of the Notes" for more detail.
Redemption provisions
Information on the optional and mandatory redemption of the Notes is
summarised in the section entitled "Summary of the key provisions of the
Notes" and is set out in full in Condition 7 (Redemption) in the section
entitled "Terms and Conditions of the Notes".
Rating Agencies
Fitch and DBRS.
The ratings assigned to the Senior Notes by Fitch are based on the ability of
the Issuer to make timely payment of interest and ultimate repayment of
principal with respect to the Senior Notes in accordance with its obligations
under the Terms and Conditions of the Notes, subject to the relevant Loan
Security and the Properties and other relevant structural features of the
transaction. The ratings assigned by DBRS address the risk of default, being
the risk that the Issuer will fail to satisfy its financial obligations relating to
the Senior Notes in accordance with the terms under which the Senior Notes
have been issued.
The ratings assigned to the Senior Notes reflect only the views of the Rating
Agencies. The ratings assigned to the Senior Notes do not address the
likelihood of payment of any Note LIBOR Excess Amount or Note
Prepayment Fee Amounts in respect of the Senior Notes.
In general, European regulated investors are restricted from using a rating
for regulatory purposes other than a rating issued by a credit rating agency
established in the European Union and registered under the CRA Regulation,
unless the rating is provided by a credit rating agency that operated in the
European Union before 7 June 2010 and which has submitted an application
for registration in accordance with the CRA Regulation and such application
for registration has not been refused. As at the date of this Offering Circular,
each of the Rating Agencies is established in the European Union and has
been registered in accordance with the CRA Regulation.
Certain nationally recognized statistical rating organizations ("NRSROs"),
as defined in Section 3(a)(62) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), that were not hired by the Issuer may use
information they receive pursuant to Rule 17g-5 under the Exchange Act
("Rule 17g-5") to rate the Notes. We cannot assure you as to what ratings a
non-hired NRSRO would assign.
Listing
Irish Stock Exchange.
Limited recourse
obligations
The Notes will be limited recourse obligations of the Issuer alone and will
not be guaranteed by, or be the responsibility of, any other entity. The Notes
will not be obligations of the Arranger, the Lead Manager, the Co-Manager,
any of their respective affiliates or any other party, other than the Issuer,
named in this Offering Circular.
EU Retention undertaking
See the section entitled "Regulatory Disclosure" for information.
Risk factors
The section entitled "Risk Factors" contains details of certain risks and other
factors to which prospective investors should give particular consideration
before investing in the Notes. Prospective investors should be aware of the
issues summarised within that section. An investment in the Notes is suitable
only for sophisticated investors who are capable of evaluating the merits and
risks of such investment and who have sufficient resources to bear any loss
which may result from such investment.
Definitions
A list of the defined terms used in this Offering Circular is set out in the
section entitled "Index of Defined Terms".
If any withholding or deduction for or on account of tax is applicable to payments in respect of the Notes,
such payments will be made subject to such withholding or deduction, without the Issuer or any other
person being obliged to pay any additional amounts as a consequence.
The securities have not been registered or qualified under the Securities Act, or the securities laws of any
state or other jurisdiction, and the Issuer has not been registered under the 1940 Act. The Issuer will be
relying on an exclusion or exemption from the definition of "investment company" under the 1940 Act
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contained in Section 3(c)(5) of the 1940 Act or Rule 3a-7 under the 1940 Act, although there may be
additional exclusions or exemptions available to the Issuer. The Issuer is being structured so as not to
constitute a "covered fund" for purposes of the Volcker Rule under the Dodd-Frank Act. The Notes are
being offered only (I) to non-"U.S. persons" ("U.S. Persons") in "offshore transactions" ("Offshore
Transactions"), as such terms are defined in, and in reliance on, Regulation S under the Securities Act
("Regulation S"), and (II) to, or for the account or benefit of, persons that are "qualified institutional
buyers" ("QIBs"), as defined in Rule 144A under the Securities Act ("Rule 144A").
The Notes of each Class will initially be represented by a global note in registered form (the "Global
Note") for such Class of Notes, which Global Notes are expected to be deposited on or around the
Closing Date with a common safekeeper for Euroclear and Clearstream, Luxembourg and registered in
the name of a nominee of the common safekeeper (the "Common Safekeeper") (in the case of the
Regulation S Global Notes and in the case of the Rule 144A Global Notes). Ownership interests in the
Global Notes will be shown on, and transfers thereof will only be effected through, records maintained by
Euroclear and Clearstream, Luxembourg and their respective participants. The Global Notes will be
exchangeable for Definitive Notes in registered form only in certain limited circumstances set out herein.
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INVESTOR NOTICES
IMPORTANT NOTICES
There is no market for the Notes. Each of the Lead Manager and the Co-Manager has advised that it
intends to make a market in the Notes. None of the Lead Manager or the Co-Manager is obligated,
however, to make a market in the Notes and any such market-making may be discontinued at any time at
the sole discretion of the Lead Manager or of the Co-Manager. Accordingly, no assurance can be given as
to the liquidity of or trading market for the Notes.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR
A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE
REVISED STATUTES (THE "RSA") WITH THE STATE OF NEW HAMPSHIRE NOR THE
FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN
THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF
STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE,
COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT
AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION
MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE
MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY
PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE
MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
The distribution of this Offering Circular and the offering of the Notes in certain jurisdictions may be
restricted by law. No representation is made by the Issuer, the Note Trustee, the Issuer Security Trustee,
the Agents, the Arranger, the Lead Manager or the Co-Manager or any other person that this Offering
Circular may be lawfully distributed, or that the Notes may be lawfully offered in compliance with any
applicable registration or other requirements, in any such jurisdiction, or pursuant to an exemption
available thereunder, and none of them assumes any responsibility for facilitating any such distribution or
offering. Each offeree, by accepting delivery of this offering circular, agrees to the foregoing and agrees
not to make any photocopies of this offering circular or any documents referred to herein and, if such
offeree does not purchase the Notes or the offering is terminated, to return this offering circular and all
documents referred to herein.
No action has been or will be taken to permit a public offering of the Notes or the distribution of this
Offering Circular in any jurisdiction where action for that purpose is required. Persons into whose
possession this Offering Circular (or any part hereof) comes are required by the Issuer, the Arranger and
the Lead Manager and the Co-Manager to inform themselves about, and to observe, any such restrictions.
Neither this Offering Circular nor any part hereof constitutes an offer of, or an invitation by or on behalf
of the Issuer, the Note Trustee, the Issuer Security Trustee, the Arranger, the Lead Manager or the CoManager to subscribe for or purchase any of the Notes and neither this Offering Circular, nor any part
hereof, may be used for or in connection with an offer to, or solicitation by, any person in any jurisdiction
or in any circumstances in which such offer or solicitation is not authorised or to any person to whom it is
unlawful to make such offer or solicitation.
For a further description of certain restrictions on offers and sales of the Notes and distribution of this
Offering Circular (or any part hereof) see the sections entitled "Subscription and Sale" and "Transfer
Restrictions".
The Issuer accepts responsibility for the information contained in this Offering Circular. To the best of the
knowledge and belief of the Issuer (having taken all reasonable care to ensure that such is the case), the
information contained in this Offering Circular is in accordance with the facts and does not omit anything
likely to affect the import of such information.
Where information has been indicated to have been sourced from a third party, the Issuer confirms that
this information has been accurately reproduced and that as far as the Issuer is aware and is able to
ascertain from information published by such third party, no facts have been omitted which would render
the reproduced information inaccurate or misleading. The Issuer has not verified the figures, market data
- vii -
and other information contained in the publicly available sources and does not assume any responsibility
for the accuracy of the figures, market data or other information from the publicly available sources. The
sources of any third party information are stated where such information appears in this Offering Circular.
The Cap Provider accepts responsibility for the information contained in the section of this Offering
Circular entitled "Description of the Cap Provider", insofar as the same relates to it. To the best of the
knowledge and belief of the Cap Provider (having taken all reasonable care to ensure that such is the
case), the information contained in the section of this Offering Circular entitled "Description of the Cap
Provider" (insofar as the same relates to it) is in accordance with the facts and does not omit anything
likely to affect the import of such information.
CBRE Loan Services Limited accepts responsibility for the information contained in the section of this
Offering Circular entitled "Description of the Servicer and the Special Servicer", insofar as the same
relates to it. To the best of the knowledge and belief of CBRE Loan Services Limited (having taken all
reasonable care to ensure that such is the case), the information contained in the section of this Offering
Circular entitled "Description of the Servicer and the Special Servicer" (insofar as the same relates to it)
is in accordance with the facts and does not omit anything likely to affect the import of such information.
U.S. Bank Trustees Limited and Elavon Financial Services Limited, UK Branch both accept joint and
several responsibility for the information contained in the section of this Offering Circular entitled
"Description of the Note Trustee, the Issuer Security Trustee, the Issuer Cash Manager and the Issuer
Account Bank", insofar as the same relates to each of them respectively. To the best of the knowledge and
belief of U.S. Bank Trustees Limited and Elavon Financial Services Limited, UK Branch (each having
taken all reasonable care to ensure that such is the case), the information contained in the section of this
Offering Circular entitled "Description of the Note Trustee, the Issuer Security Trustee, the Issuer Cash
Manager and the Issuer Account Bank" (insofar as the same relates to each of them respectively) is in
accordance with the facts and does not omit anything likely to affect the import of such information.
Other than as described above in relation to the sections entitled "Description of the Cap Provider",
"Description of the Servicer and the Special Servicer" and "Description of the Note Trustee, The Issuer
Security Trustee, The Issuer Cash Manager and the Issuer Account Bank", none of the Arranger, the Lead
Manager, the Co-Manager or the Issuer Related Parties has separately verified the information contained
in this Offering Circular. Accordingly, no representation, warranty or undertaking, express or implied, is
made and no responsibility or liability is accepted by the Arranger, the Lead Manager, the Co-Manager
or the Issuer Related Parties as to the accuracy or completeness of the information contained in this
Offering Circular or any other information supplied in connection with the Notes. Each person receiving
this Offering Circular acknowledges that such person has not relied on the Arranger, the Lead Manager,
the Co-Manager or the Issuer Related Parties or on any person affiliated with any of them in connection
with its investigation of the accuracy of such information or its investment decision.
Cushman & Wakefield (formerly DTZ Debenham Tie Leung Limited) accepts responsibility for the Titan
Appraisal and Strutt & Parker accepts responsibility for the Pecan Appraisals, both of which are
incorporated by reference via the website: http://www.ise.ie/Market-Data-Announcements/Debt/. To the
best of Cushman & Wakefield's and Strutt & Parker's knowledge and belief (having taken all reasonable
care to ensure that such is the case), the information contained in their respective Appraisals is in
accordance with the facts and does not omit anything likely to affect the accuracy of such information.
The Appraisal must be read in full in order to gain a full understanding.
No person is or has been authorised in connection with the issue and sale of the Notes to give any
information or to make any representation not contained in this Offering Circular and, if given or made,
such information or representation must not be relied upon as having been authorised by or on behalf of
the Issuer or by or on behalf of the Arranger, the Lead Manager, the Co-Manager, the Issuer Related
Parties or any of their respective affiliates, associated bodies or shareholders or the shareholders of the
Issuer. Neither the delivery of this Offering Circular nor any sale or allotment made in connection with
the offering of any of the Notes will, under any circumstances, constitute a representation or create any
implication that there has been any change in the information contained herein since the date hereof or
that the information contained herein is correct as of any time subsequent to its date.
The Notes and interest thereon will not be obligations or responsibilities of any person other than the
Issuer, which obligations will be limited recourse obligations in accordance with the terms thereof. In
particular, the Notes will not be obligations or responsibilities of, or be guaranteed by, the Arranger, the
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Lead Manager, the Co-Manager, the Issuer Related Parties, any associated body of the Arranger, the Lead
Manager, the Co-Manager, the Issuer Related Parties or any of their respective affiliates or shareholders
or the shareholders of the Issuer and 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 Issuer is not, and will not be, regulated by the Central Bank of Ireland by virtue of the issuance of the
Notes. Any investment in the Notes does not have the status of a bank deposit and is not subject to the
deposit protection scheme operated by the Central Bank of Ireland.
The Notes are intended to be held in a manner which will allow Eurosystem eligibility. This means that
the Notes are intended upon issue to be deposited with one of Euroclear or Clearstream, Luxembourg as
Common Safekeeper and does not necessarily mean that the Notes will be recognised as eligible collateral
for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at
any or all times during their life. Such recognition will depend upon satisfaction of the Eurosystem
eligibility criteria.
THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR ANY STATE OR OTHER
JURISDICTION OF THE UNITED STATES SECURITIES LAWS AND THEREFORE MAY NOT BE
OFFERED OR SOLD 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)
("REGULATION S") EXCEPT PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS. THE NOTES ARE NOT TRANSFERABLE EXCEPT IN ACCORDANCE WITH
THE RESTRICTIONS DESCRIBED HEREIN UNDER THE "TRANSFER RESTRICTIONS".
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY
ANY UNITED STATES FEDERAL OR STATE SECURITIES COMMISSION OR ANY OTHER U.S.
REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT
PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR
ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENCE.
The Notes are being offered and sold outside the United States to non-U.S. persons in reliance on
Regulation S and within the United States to "qualified institutional buyers" (as defined in Rule 144A) in
reliance on Rule 144A ("Rule 144A") under the Securities Act ("QIBs"). Prospective purchasers are
hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5
of the Securities Act provided by Rule 144A. For a description of these and certain further restrictions on
offers, sales and transfers of the Notes and distribution of this Offering Circular, see "Subscription and
Sale" and "Transfer Restrictions".
Information as to Placement within the United States
The Notes of each Class offered pursuant to an exemption from registration requirements under Rule
144A will be sold only to "qualified institutional buyers" (as defined in Rule 144A). Rule 144A Notes of
each Class will each be represented on issue by beneficial interests in one or more permanent global notes
of such Class (each, a "Rule 144A Global Note" and together, the "Rule 144A Global Notes"), in each
case in fully registered form, without interest coupons or principal receipts, which will be deposited on or
about the Closing Date with, and registered in the name of, a nominee of a common safekeeper for
Euroclear and Clearstream, Luxembourg. The Notes of each Class sold outside the United States to nonU.S. Persons in reliance on Regulation S ("Regulation S") under the Securities Act will each be
represented on issue by beneficial interests in one or more permanent global notes of such Class (each, a
"Regulation S Global Note" and together, the "Regulation S Global Notes"), in each case in fully
registered form, without interest coupons or principal receipts, which will be deposited on or about the
Closing Date with, and registered in the name of, a nominee of a common safekeeper for Euroclear and
Clearstream, Luxembourg. U.S. Persons may not hold an interest in any Notes sold in reliance on
Regulation S. Ownership interests in the Regulation S Global Notes and the Rule 144A Global Notes
(together, the "Global Notes") will be shown on, and transfers thereof will only be effected through,
records maintained by Euroclear Bank S.A./N.V. ("Euroclear") and Clearstream Banking société
anonyme ("Clearstream, Luxembourg") and their respective participants. Notes in definitive certificated
form will be issued only in limited circumstances, and will be registered in the name of the holder (or a
nominee thereof). In each case, purchasers and transferees of Notes will be deemed and in certain
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circumstances will be required to have made certain representations and agreements. See "Description of
the Notes" and "Transfer Restrictions" below.
The Issuer has not been registered under the 1940 Act. The Issuer will be relying on an exclusion or
exemption from the definition of "investment company" under the 1940 Act contained in Section 3(c)(5)
of the 1940 Act or Rule 3a-7 under the 1940 Act, although there may be additional exclusions or
exemptions available to the Issuer. The Issuer is being structured so as not to constitute a "covered fund"
for purposes of the Volcker Rule under the Dodd-Frank Act. Each purchaser of an interest in the Notes
(other than a non-U.S. Person outside the U.S.) will be deemed to have represented and agreed that it is a
QIB and will also be deemed to have made the representations set out in "Transfer Restrictions" herein.
The purchaser of any Note, by such purchase, agrees that such Note is being acquired for its own account
and not with a view to distribution and may be resold, pledged or otherwise transferred only (1) to the
Issuer (upon redemption thereof or otherwise), (2) to a person the purchaser reasonably believes is a QIB
in a transaction meeting the requirements of Rule 144A, or (3) outside the United States to a non-U.S.
Person, in an offshore transaction in reliance on Regulation S in each case, in compliance with the Note
Trust Deed and all applicable securities laws of any state of the United States or any other jurisdiction.
See "Transfer Restrictions".
In making an investment decision, investors must rely on their own examination of the Issuer and the
terms of the Notes and the offering thereof described herein, including the merits and risks involved. No
dealer, salesperson or other person has been authorized to give any information or to make any
representation in connection with the issue and sale of the Notes other than those contained in this
Offering Circular and, if given or made, such information or representation must not be relied upon as
having been authorized by the Lead Manager or the Co-Manager. You should rely only on the
information contained in this document. This document may only be used where it is legal to sell
these securities. The information in this document may be accurate only on the date of this
document (or in another date specified in this document).
IMPORTANT NOTICE REGARDING THE NOTES
THE NOTES REFERRED TO IN THIS OFFERING CIRCULAR ARE SUBJECT TO
MODIFICATION OR REVISION (INCLUDING THE POSSIBILITY THAT ONE OR MORE
CLASSES OF NOTES MAY BE SPLIT, COMBINED OR ELIMINATED AT ANY TIME PRIOR
TO ISSUANCE OR AVAILABILITY OF A FINAL OFFERING CIRCULAR) AND ARE
OFFERED ON A "WHEN, AS AND IF ISSUED" BASIS. PROSPECTIVE INVESTORS
SHOULD UNDERSTAND THAT, WHEN CONSIDERING THE PURCHASE OF THESE
NOTES, A CONTRACT OF SALE WILL COME INTO BEING NO SOONER THAN THE DATE
ON WHICH THE RELEVANT CLASS OF NOTES HAS BEEN PRICED AND EACH OF THE
LEAD MANAGER AND THE CO-MANAGER HAS CONFIRMED THE ALLOCATION OF
NOTES TO BE MADE TO INVESTORS; ANY "INDICATIONS OF INTEREST" EXPRESSED
BY ANY PROSPECTIVE INVESTOR, AND ANY "SOFT CIRCLES" GENERATED BY EACH
OF THE LEAD MANAGER AND CO-MANAGER, WILL NOT CREATE BINDING
CONTRACTUAL OBLIGATIONS FOR SUCH PROSPECTIVE INVESTORS, ON THE ONE
HAND, OR EACH OF THE LEAD MANAGER AND CO-MANAGER, THE ISSUERS OR ANY
OF THEIR RESPECTIVE AGENTS OR AFFILIATES, ON THE OTHER HAND.
AS A RESULT OF THE FOREGOING, A PROSPECTIVE INVESTOR MAY COMMIT TO
PURCHASE NOTES THAT HAVE CHARACTERISTICS THAT MAY CHANGE, AND EACH
PROSPECTIVE INVESTOR IS ADVISED THAT ALL OR A PORTION OF THE NOTES
REFERRED TO IN THIS OFFERING CIRCULAR MAY BE ISSUED WITHOUT ALL OR
CERTAIN OF THE CHARACTERISTICS DESCRIBED IN THIS OFFERING CIRCULAR OR
MAY BE ISSUED WITH CHARACTERISTICS THAT DIFFER FROM THE
CHARACTERISTICS DESCRIBED IN THIS OFFERING CIRCULAR. THE LEAD
MANAGER'S AND CO-MANAGER'S OBLIGATION TO SELL NOTES TO ANY
PROSPECTIVE INVESTOR IS CONDITIONED ON THE NOTES AND THE TRANSACTION
HAVING THE CHARACTERISTICS DESCRIBED IN THIS OFFERING CIRCULAR. IF ANY
OF THE LEAD MANAGER OR THE CO-MANAGER DETERMINES THAT A CONDITION IS
NOT SATISFIED IN ANY MATERIAL RESPECT, SUCH PROSPECTIVE INVESTOR WILL
BE NOTIFIED, AND NEITHER THE ISSUER NOR THE LEAD MANAGER WILL HAVE ANY
OBLIGATION TO SUCH PROSPECTIVE INVESTOR TO DELIVER ANY PORTION OF THE
NOTES WHICH SUCH PROSPECTIVE INVESTOR HAS COMMITTED TO PURCHASE, AND
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THERE WILL BE NO LIABILITY BETWEEN THE LEAD MANAGER, THE ISSUER OR ANY
OF THEIR RESPECTIVE AGENTS OR AFFILIATES, ON THE ONE HAND, AND SUCH
PROSPECTIVE INVESTOR, ON THE OTHER HAND, AS A CONSEQUENCE OF SUCH NONDELIVERY.
EACH PROSPECTIVE INVESTOR HAS REQUESTED THAT EACH OF THE LEAD
MANAGER AND CO-MANAGER PROVIDE TO SUCH PROSPECTIVE INVESTOR
INFORMATION IN CONNECTION WITH SUCH PROSPECTIVE INVESTOR'S
CONSIDERATION OF THE PURCHASE OF THE NOTES DESCRIBED IN THIS OFFERING
CIRCULAR. THIS OFFERING CIRCULAR IS BEING PROVIDED TO EACH PROSPECTIVE
INVESTOR FOR INFORMATIVE PURPOSES ONLY IN RESPONSE TO SUCH
PROSPECTIVE INVESTOR'S SPECIFIC REQUEST. EACH OF THE LEAD MANAGER AND
THE CO-MANAGER MAY FROM TIME TO TIME PERFORM INVESTMENT BANKING
SERVICES FOR, OR SOLICIT INVESTMENT BANKING BUSINESS FROM, ANY COMPANY
NAMED IN THIS OFFERING CIRCULAR. EACH OF THE LEAD MANAGER AND
CO-MANAGER AND/OR ITS EMPLOYEES MAY ALSO FROM TIME TO TIME HAVE A
LONG OR SHORT POSITION IN ANY SECURITY OR CONTRACT DISCUSSED IN THIS
OFFERING CIRCULAR.
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OFFEREE ACKNOWLEDGEMENTS
Each person receiving this Offering Circular, by acceptance hereof, hereby acknowledges that this
Offering Circular has been prepared by the Issuer solely for the purpose of offering the Notes described
herein. Notwithstanding any investigation that the Arranger, the Lead Manager or the Co-Manager may
have made with respect to the information set out herein, this Offering Circular does not constitute, and
will not be construed as, any representation or warranty by the Arranger, the Lead Manager or the CoManager to the adequacy or accuracy of the information set out herein. Delivery of this Offering Circular
to any person other than the prospective investor and those persons, if any, retained to advise such
prospective investor with respect to the possible offer and sale of the Notes is unauthorised, and any
disclosure of any of its contents for any purpose other than considering an investment in the Notes is
strictly prohibited. A prospective investor will not be entitled to, and must not rely on this Offering
Circular unless it was furnished to such prospective investor directly by the Issuer, the Lead Manager or
the Co-Manager or the Arranger.
The obligations of the parties to the transactions contemplated herein are set out in and will be governed
by certain documents described in this Offering Circular, and all of the statements and information
contained in this Offering Circular are qualified in their entirety by reference to such documents. This
Offering Circular contains summaries, which the Issuer believes to be accurate, of certain of these
documents, but for a complete description of the rights and obligations summarised herein, reference is
hereby made to the actual documents, copies of which may (on giving reasonable notice) be obtained
from the Principal Paying Agent. All such summaries are qualified in their entirety by this reference.
EACH PERSON RECEIVING THIS OFFERING CIRCULAR ACKNOWLEDGES THAT: (A) SUCH
PERSON HAS BEEN AFFORDED AN OPPORTUNITY TO REQUEST AND TO REVIEW, AND
HAS RECEIVED, ALL ADDITIONAL INFORMATION CONSIDERED BY IT TO BE NECESSARY
TO VERIFY THE ACCURACY OF OR TO SUPPLEMENT THE INFORMATION HEREIN; (B)
SUCH PERSON HAS NOT RELIED ON THE ARRANGER OR THE LEAD MANAGER OR THE
CO-MANAGER OR ANY PERSON AFFILIATED WITH THE ARRANGER OR THE LEAD
MANAGER OR THE CO-MANAGER IN CONNECTION WITH ITS INVESTIGATION OF THE
ACCURACY OF SUCH INFORMATION OR ITS INVESTMENT DECISION; (C) NO PERSON HAS
BEEN AUTHORISED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
REGARDING THE NOTES OTHER THAN AS CONTAINED HEREIN, AND IF GIVEN OR MADE,
ANY SUCH OTHER INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON
AS HAVING BEEN AUTHORISED; AND (D) NEITHER THE DELIVERY OF THIS OFFERING
CIRCULAR NOR ANY SALE MADE HEREUNDER WILL CREATE ANY IMPLICATION THAT
THE INFORMATION HEREIN IS CORRECT AS AT ANY TIME SINCE THE DATE HEREOF.
EACH PROSPECTIVE PURCHASER SHOULD CONSULT ITS OWN BUSINESS, LEGAL AND
TAX ADVISERS FOR INVESTMENT, LEGAL AND TAX ADVICE AND AS TO THE
DESIRABILITY AND CONSEQUENCES OF AN INVESTMENT IN THE NOTES.
This offering circular does not constitute an offer of any securities other than those to which it relates, or
an offer to sell, or a solicitation of an offer to buy, to any person in any jurisdiction where such an offer or
solicitation would be unlawful.
- xii -
FORWARD-LOOKING STATEMENTS
Certain matters contained herein are forward-looking statements. Such statements appear in a number of
places in this Offering Circular, including with respect to assumptions on repayment, prepayment and
certain other characteristics of the Loans and reflect significant assumptions and subjective judgments by
the Issuer, the Borrowers, the Company and the Shareholder, that may or may not prove to be correct.
Such statements may be identified by reference to a future period or periods and the use of forwardlooking terminology such as "may", "will", "could", "believes", "expects", "projects", "anticipates",
"continues", "intends", "plans" or similar terms. Consequently, future results may differ from the
expectations of the Issuer, the Borrowers, the Company and the Shareholder generally due to a variety of
factors, including (but not limited to) the economic environment and changes in governmental
regulations, fiscal policy, planning or tax laws in Ireland, the United Kingdom and other relevant
jurisdictions. Other factors not presently known to the Issuer, the Borrowers, the Company and the
Shareholder generally or that the Issuer, the Borrowers, the Company and the Shareholder presently
believe are not material could also cause results to differ materially from those expressed in the forwardlooking statements included in this Offering Circular. Moreover, past financial performance should not be
considered a reliable indicator of future performance and prospective purchasers of the Notes are
cautioned that any such statements are not guarantees of performance and involve risks and uncertainties,
many of which are beyond the control of the Issuer, the Borrowers, the Company and the Shareholder.
Neither the Arranger, the Lead Manager nor the Co-Manager have attempted to verify any such
statements, nor does it make any representation, express or implied, with respect thereto.
Prospective investors should not therefore place undue reliance on any of these forward-looking
statements. None of the Issuer, the Borrowers, the Company and the Shareholder or the Arranger or the
Lead Manager nor the Co-Manager or any other person assumes any obligation to update these forwardlooking statements or to update the reasons for which actual results could differ materially from those
anticipated in the forward-looking statements.
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REGULATORY DISCLOSURE
EU Risk Retention Requirements
Eurynome LLC ("Eurynome" or the "Retention Holder"), will retain a material net economic interest of
not less than 5 per cent. in the securitisation in accordance with the text of each of (i) Article 405(1) of
Regulation (EU) No 575/2013 ("Capital Requirements Regulation") ("Article 405"), (ii) Article 51 of
the Regulation (EU) No 231/2013 ("AIFMR") ("Article 51") and (iii) Article 254(2) of the Commission
Delegated Regulation (EU) 2015/35 of 10 October 2014 (the "Solvency II Regulation") supplementing
Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the
business of Insurance and Reinsurance ("Solvency II") (the "Solvency II Delegated Act") ("Article
254(2)") to the extent the such regulations continue to apply and are interpreted and applied on the
Closing Date and, in each case, does not take into account any corresponding national measures).
As at the Closing Date, the retention will be comprised by the Retention Holder, acting through its wholly
owned subsidiary Magni Intermediary Funding Limited (the "Loan Seller") holding the Junior Notes as
required by each of Article 405, Article 51 and Article 254(2). Any change to the manner in which such
interest is held will be notified to Noteholders.
The Retention Holder will undertake to hold the entire share capital of the Loan Seller for the duration of
the transaction.
As to the information made available to prospective investors by the Issuer, reference is made to the
information set out herein and forming part of this Offering Circular and, after the Closing Date, to the
quarterly investor reports (a general description of which is set out in the sections entitled "Key terms of
the servicing arrangements for the Loans" and "Cash Management and Issuer Accounts").
Each prospective investor is required to independently assess and determine the sufficiency of the
information described above and in this Offering Circular generally for the purposes of complying with
each of (i) Part Five of the Capital Requirements Regulation (including Article 405), (ii) Section Five of
Chapter III of the AIFMR (including Article 51) and (iii) Chapter XIII of the Solvency II Delegated Act
(including 254(2)), including any regulatory technical standards, implementing technical standards and
any other implementing provisions in their jurisdiction (together, the "Risk Retention Requirements").
In particular, investors should be aware that at this time, save for the European Banking Authority (the
"EBA") report published on 22 December 2014, the EU authorities have not published any binding
guidance relating to whether or not a transaction of the type contemplated by this Offering Circular
constitutes a "securitisation" or whether an entity such as Eurynome would satisfy the "originator"
definition, in each case, under the Risk Retention Requirements. Furthermore, any relevant regulator's
views with regard to the Retention Requirements may not be based exclusively on technical standards,
guidance or other information known at this time.
None of the Issuer, the Lead Manager, the Co-Manager, the Retention Holder or the Arranger makes any
representation that the information described above or in this Offering Circular is sufficient in all
circumstances for such purposes.
The Retention Holder will undertake in the Subscription Agreement to:
(a)
retain a material net economic interest of not less than 5 per cent. in the Securitisation
contemplated by the Issuer Transaction Documents in accordance with each of:
(i)
Article 405(1) of the CRR ("Article 405(1)");
(ii)
Article 51(1) of the AIFMR("Article 51(1)"); and
(iii)
Article 254(2) ("Article 254(2)") of the Commission Delegated Regulation (EU)
2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European
Parliament and of the Council on the taking-up and pursuit of the business of Insurance
and Reinsurance ("Solvency II") to the extent the Article 405(1), Article 51(1) and
Article 254(2) continue to apply and are interpreted and applied on the Closing Date and
which, in each case, does not take into account any corresponding national measures,
(the "Retention Requirements");
- xiv -
(b)
subject always to any requirements of law, comply with a request to disclose information that
may be reasonably required by an investor in the Senior Notes pursuant to Article 409 of the
CRR, Article 52 (e) to (g) of the AIFMR and Article 256, paragraph 3(d) of Solvency II but only
if the relevant Senior Noteholder has confirmed in writing to Note Trustee that such information
is not readily available from the Offering Circular, the Issuer Cash Manager Quarterly Reports or
the Servicer Quarterly Reports and has also set out in clear terms with sufficient details of the
information being requested;
(c)
provide confirmation on a quarterly basis to the Servicer that it continues to retain a material net
economic interest of not less than 5 per cent. in accordance with Article 405(1), Article 51(1) and
Article 254(2), and disclose any change in the manner in which such retained interest is held
(which as at the Closing Date will be the retention by the Retention Holder of the Junior Notes),
any such change made in accordance with Article 405 of the CRR;
(d)
will not sell, hedge or otherwise mitigate its credit risk under its retained material net economic
interest, except to the extent permitted by the CRR,
provided that (i) with respect to paragraph (b) only, the Retention Holder will not be in breach of such
undertaking if the Retention Holder fails to comply due to events, actions or circumstances beyond the
Retention Holder's control and (ii) the Retention Holder is only required to so comply to the extent that
the retention and disclosure requirements under Articles 405 and 409 of the CRR or Articles 51 and 52 of
the AIFMR or Article 254(2) of the Solvency II Delegated Act (the "Existing Retention Requirements"),
or the equivalent provisions of such rules and regulations as may replace any of the Existing Retention
Requirements after the date of this Agreement (subject to any grandfathering provisions of such
replacement rules or regulations) remain in effect.
For further information on the requirements referred to above and the corresponding risks, please refer to
the risk factor entitled "Regulatory initiatives may result in increased regulatory capital requirements
and/or decreased liquidity in respect of the Notes".
CRA Regulation
The credit ratings included or referred to in this Offering Circular have (unless stated otherwise) been
issued by the Rating Agencies each of which is established in the European Union, and has been
registered in accordance with the CRA Regulation.
Volcker Rule
The Issuer is not now, and immediately following the issuance of the Notes pursuant to the Note Trust
Deed on the Closing Date will not be, an "investment company" within the meaning of the 1940 Act. In
making this determination, on the date of this Offering Circular and immediately following the issuance
of the Notes pursuant to the Note Trust Deed on the Closing Date, the Issuer will be relying on an
exemption from registration set forth in Section 3(c)(5) of the 1940 Act or Rule 3a-7 under the 1940 Act,
although the Issuer may be entitled to rely on other statutory or regulatory exclusions and exemptions
under the 1940 Act on the date of this Offering Circular, on the Closing Date or in the future. The Issuer
has been structured so as not to constitute a "covered fund" for purposes of the regulations adopted under
Section 13 of the Bank Holding Company Act of 1956, commonly referred to as the "Volcker Rule"
under the Dodd-Frank Act.
Rule 17g-5
Unsolicited Ratings and the Selection and Qualification of Rating Agencies Rating the Notes May Impact
the Value of the Notes.
It is a condition of the issuance of the Notes that they receive the ratings in this Offering Circular.
Nationally recognized statistical rating organizations that the Issuer has not engaged to rate any Class of
Notes may nevertheless issue unsolicited credit ratings on one or more Classes of Notes, and any of the
rating agencies engaged by the Issuer to rate the Notes may issue unsolicited credit ratings on one or more
classes of Notes that it ultimately did not rate, relying on information they receive pursuant to Rule 17g-5
under the Securities Exchange Act of 1934, as amended, or otherwise. If any such unsolicited ratings are
issued with respect to any particular Class of Notes, there can be no assurance that they will not be lower
than the rating(s) assigned by any of the rating agencies engaged by the Issuer to rate that Class of Notes
- xv -
on the Closing Date. The issuance of any such unsolicited ratings with respect to any particular Class of
Notes that are lower than the rating(s) assigned to it by any of the engaged rating agencies on the Closing
Date may negatively impact the liquidity, market value and regulatory characteristics of that Class of
Notes.
Furthermore, the Securities and Exchange Commission may determine that any or all of the nationally
recognized statistical rating organizations engaged by the Issuer to rate the Notes no longer qualifies as a
nationally recognized statistical rating organization, or is no longer qualified to rate the Notes, and that
determination may have an adverse effect on the liquidity, market value and regulatory characteristics of
the Notes.
The Issuer, in order to permit the Rating Agencies to comply with their obligations under Rule 17g-5, has
agreed to post on a password-protected internet website (the "Rule 17g-5 Website"), at the same time
such information is provided to the Rating Agencies, all information that the Issuer or other parties on its
behalf, including the Note Trustee, the Issuer Security Trustee, the Servicer and the Special Servicer,
provide to the Rating Agencies for the purposes of determining the initial credit rating of the Senior Notes
or undertaking credit rating surveillance of the Senior Notes. On the Closing Date, the Issuer will engage
the Corporate Services Provider, in accordance with the Master Definitions Schedule, to assist the Issuer
in complying with certain of the posting requirements under Rule 17g-5 (in such capacity, the
"Information Agent"). Any notices or requests to, or any other written communications with or written
information provided to the Rating Agencies, or any of their respective officers, directors or employees,
to be given or provided to the Rating Agencies pursuant to, in connection with or related, directly or
indirectly, to any Issuer Transaction Document, the Loans or the Notes, will be in each case furnished in
electronic format to the Information Agent for posting to the Rule 17g-5 Website.
AVAILABLE INFORMATION
Each purchaser of the Notes from the Lead Manager or the Co-Manager will be furnished with a copy of
this offering circular and any related amendments or supplements to this offering circular. Each person
receiving this offering circular acknowledges that (i) such person has been afforded an opportunity to
request, and has received, all additional information considered to be necessary to verify the accuracy and
completeness of the information herein; (ii) such person has not relied on the Lead Manager or the CoManager or any person affiliated with the Lead Manager or the Co-Manager in connection with its
investigation of the accuracy of such information or its investment decision; and (iii) except as provided
in clauses (i) and (ii) above, no person has been authorized to give any information or to make any
representation concerning the Notes other than those contained herein, and, if given or made, such other
information or representation should not be relied upon as having been authorized by the Lead Manager
or the Co-Manager.
This Offering Circular is not currently subject to the periodic reporting and other information
requirements of the Exchange Act. It will make available, upon request to any holder or prospective
purchaser of the Notes, the information required pursuant to Rule 144A(d)(4) under the Securities Act
with respect to itself during any period in which it is not subject to Section 13 or 15(d) of the Exchange
Act or not exempt by virtue of Rule 12g3-2(b) thereunder.
- xvi -
APPRAISAL DISCLAIMER
The valuations in each of the Titan Appraisal and the Pecan Appraisal (together the "Appraisals") have
been used for the purposes of this transaction and throughout this Offering Circular. The Appraisals were
prepared by Strutt & Parker, with registered office at 13 Hill Street, Berkeley Square, London W1J 5LQ
and by Cushman & Wakefield (which merged with DTZ in September 2015 and was formerly known as
DTZ Debenham Tie Leung Limited) with registered office at 125 Old Broad Street, London EC2N 1AR
in accordance with RICS Valuation - Professional Standards (published by RICS and effective from
January 2014). The Appraisals were not required to meet the requirements of the "Uniform Standards of
Professional Appraisal Practice" as adopted by the Appraisal Standards Board of the Appraisal
Foundation, or the guidelines in Title XI of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989 ("FIRREA").
The Appraisals are incorporated by reference via the website http://www.ise.ie/Market-DataAnnouncements/Debt/ and can be accessed by searching under the name of the Issuer.
Neither Cushman & Wakefield nor Strutt & Parker have any material interest in the Issuer or any member
of the Group.
Each of Cushman & Wakefield and Strutt & Parker has:
(a)
given and has not withdrawn its written consent both to the inclusion in this Offering Circular of
its Appraisal and to references to its Appraisal in the form and context in which it appears;
(b)
authorised and accepts responsibility for the contents of those sections (as applicable) of this
Offering Circular; and
(c)
provided confirmation that it is not aware of any material change in any matter relating to the
relevant Properties since the date of its Appraisal which, in its reasonable opinion, would have a
significant effect on its valuation.
Prospective investors should be aware that both Appraisals were prepared prior to the date of this
Offering Circular. Cushman & Wakefield and Strutt & Parker have not been requested to update or revise
any of the information contained therein, nor will they be asked to do so prior to the issue of the Notes.
Accordingly, the information included in each Appraisal may not reflect the current physical, economic,
competitive, market or other conditions with respect to the relevant Properties (in addition, certain
Properties included in the Titan Appraisal have been sold since the date of the Titan Appraisal). None of
the Borrowers, any member of the Group, the Arranger, the Lead Manager, the Co-Manager, the Servicer,
the Special Servicer, the Issuer Cash Manager, the Note Trustee, the Issuer Security Trustee, the Loan
Security Trustee, the Loan Facility Agent, the Corporate Services Provider, the Principal Paying Agent,
the Agent Bank, the Issuer Account Bank or the Registrar are responsible for the information contained in
the Appraisals.
The information contained in the Appraisals must be considered together with all of the information
contained elsewhere in this Offering Circular, including without limitation, the statements made in the
section entitled "Risk Factors – Considerations relating to the Properties – Limitations of valuations". All
of the information contained in the Appraisals is subject to the same limitations, qualifications and
restrictions contained in the other portions of the Offering Circular. Prospective investors are strongly
urged to read this Offering Circular in its entirety prior to accessing either Appraisal.
- xvii -
CONTENTS
Page
INVESTOR NOTICES ..............................................................................................................................vii
TRANSACTION OVERVIEW.................................................................................................................... 1
RISK FACTORS ........................................................................................................................................ 11
OVERVIEW OF THE KEY PROVISIONS OF THE NOTES .................................................................. 47
RIGHTS OF NOTEHOLDERS AND RELATIONSHIP WITH OTHER ISSUER
SECURED CREDITORS ........................................................................................................................... 58
RELEVANT DATES AND PERIODS ...................................................................................................... 64
THE ISSUER ............................................................................................................................................. 66
THE BORROWERS, THE COMPANY AND THE SHAREHOLDER ................................................... 68
THE RETENTION HOLDER .................................................................................................................... 70
THE LOAN SELLER ................................................................................................................................ 72
DESCRIPTION OF THE SERVICER AND THE SPECIAL SERVICER ............................................... 73
DESCRIPTION OF THE NOTE TRUSTEE, THE ISSUER SECURITY TRUSTEE, THE
ISSUER CASH MANAGER AND THE ISSUER ACCOUNT BANK .................................................... 75
DESCRIPTION OF THE CAP PROVIDER .............................................................................................. 76
DESCRIPTION OF THE PORTFOLIO .................................................................................................... 77
PROPERTY ACQUISITION PROCESS AND LOAN ORIGINATION .................................................. 84
MANAGEMENT AND ADMINISTRATION OF THE PROPERTIES ................................................... 93
DESCRIPTION OF THE SENIOR FACILITY AGREEMENT ............................................................... 99
THE KEY CHARACTERISTICS OF THE LOAN SECURITY............................................................. 140
DESCRIPTION OF THE JUNIOR FACILITY AGREEMENT .............................................................. 143
DESCRIPTION OF THE LOANS TRANSFER AND ADVANCE OF THE TITAN
SENIOR LOANS AND TITAN JUNIOR LOANS ................................................................................. 144
SUBORDINATION ARRANGEMENTS ............................................................................................... 145
THE STRUCTURE OF THE OBLIGOR ACCOUNTS .......................................................................... 146
DESCRIPTION OF THE CAP ARRANGEMENTS ............................................................................... 147
CASH MANAGEMENT AND ISSUER ACCOUNTS ........................................................................... 151
CASHFLOW AND ISSUER PRIORITIES OF PAYMENTS ................................................................. 155
KEY TERMS OF THE SERVICING ARRANGEMENTS FOR THE LOANS ..................................... 166
YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS....................................................... 179
DESCRIPTION OF THE NOTES ........................................................................................................... 182
DESCRIPTION OF NOTE TRUST DEED AND ISSUER DEED OF CHARGE .................................. 187
NOTEHOLDER COMMUNICATIONS ................................................................................................. 189
TERMS AND CONDITIONS OF THE NOTES ..................................................................................... 190
USE OF PROCEEDS ............................................................................................................................... 233
CERTAIN ASPECTS OF LAW .............................................................................................................. 234
IRISH TAXATION .................................................................................................................................. 247
UNITED KINGDOM TAXATION ......................................................................................................... 249
OTHER TAX CONSIDERATIONS ........................................................................................................ 250
FOREIGN ACCOUNT TAX COMPLIANCE ACT................................................................................ 251
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS AND OTHER REGULATORY
DISCLOSURES ....................................................................................................................................... 253
CERTAIN ERISA CONSIDERATIONS ................................................................................................. 258
SUBSCRIPTION AND SALE ................................................................................................................. 260
TRANSFER RESTRICTIONS ................................................................................................................ 263
GENERAL INFORMATION .................................................................................................................. 272
APPENDIX 1 TARGET LOAN AMOUNTS .......................................................................................... 274
APPENDIX 2 TARGET MINIMUM PRINCIPAL AMOUNT OUTSTANDING ................................. 275
APPENDIX 3 THE PORTFOLIO ............................................................................................................ 276
INDEX OF DEFINED TERMS ............................................................................................................... 285
TRANSACTION OVERVIEW
The information set out below is an overview of various aspects of the transaction. This overview does not
purport to be complete and should be read in conjunction with, and is qualified in its entirety by,
references to the detailed information presented elsewhere in this Offering Circular.
A
The Senior Loan
In connection with the Pecan Acquisition and refinancing of the Titan Acquisition, Eurynome LLC (the
"Original Senior Lender"), the Borrowers (as defined below), Elavon Financial Services Limited as the
facility agent (in such capacity the "Loan Facility Agent") and U.S. Bank Trustees Limited (in such
capacity the "Loan Security Trustee") entered into a senior facility agreement (such agreement the
"Senior Facility Agreement") dated 10 November 2015, as will be amended and restated on or prior to
the Closing Date.
Pursuant to the terms of the Senior Facility Agreement, three loans (the "Pecan Senior Loans") were
advanced by the Original Senior Lender to the Pecan Borrowers to finance the Pecan Acquisition.
On the Closing Date, the Issuer will issue the Senior Notes, subject to the satisfaction of the conditions
precedent set out in the subscription agreement entered into on or around the Closing Date between,
among others, the Issuer, the Lead Manager and the Co-Manager (the "Subscription Agreement"), and
will apply the proceeds of such issuance on the Closing Date, to:
(a)
acquire all the rights and obligations of the Original Senior Lender as "Lender" under the Senior
Facility Agreement in respect of the Pecan Senior Loans and all related security, which shall be
transferred by novation to the Loan Seller and from the Loan Seller to the Issuer on the Closing
Date; and
(b)
advance three further loans (the "Titan Senior Loans", and together with the Pecan Senior Loans,
the "Senior Loan") to the Titan Borrowers to refinance the Existing Indebtedness of the Titan
Borrowers.
All of the Borrowers are affiliated to one another. Pursuant to the Senior Facility Agreement, each
Borrower is severally liable to each Senior Finance Party in respect of its Senior Loan. In addition, each
Borrower and the Company jointly and severally, among other things, guarantee to each Senior Finance
Party (which will include the Issuer) punctual performance by each Borrower of all of its obligations
under the Senior Finance Documents. The Company's guarantee is limited to the assets of the Company
which are from, time to time, subject to a Loan Security Document.
The following is a summary of certain features of the Senior Loan. Investors should refer to, and carefully
consider, the further details in respect of the Senior Loan set out in the section entitled "Description of the
Senior Facility Agreement".
THE SENIOR LOAN
Purpose
Financing the Pecan Acquisition and refinancing the Titan Acquisition
pursuant to the Acquisition Agreements
Anticipated
outstanding
principal balance as at the
Closing Date
£184,599,000
Utilisation Dates
Pecan Utilisation Date, 10 November 2015
Titan Utilisation Date, the Closing Date
20 January, 20 April, 20 July and 20 October in each year and the Senior
Loan Final Repayment Date, with the first Loan Payment Date being 20
January 2016. If, however, any such day is not a Business Day, the Loan
Payment Date will instead be the next Business Day in that calendar
Month (if there is one) or the preceding Business Day (if there is not)
Loan Payment Dates
Senior
Loan
Repayment Date
Initial
The Loan Payment Date falling in January 2019.
- 1-
THE SENIOR LOAN
Senior
Loan
Repayment Date:
Final
The Loan Payment Date falling in January 2019, or, if the Loan
Extension Option is exercised, the Loan Payment falling in January 2020.
Senior Loan Margin
Weighted Average Note Margin
Interest rate
3-month Senior Loan LIBOR plus Senior Loan Margin
Governing law
English (certain of the Loan Security Documents are governed by Jersey
or Scots law (as applicable))
Loan Security
The English Security Agreements, the Jersey Security Agreements and
the Scottish Security Agreements
Pursuant to the Senior Facility Agreement, the Loan Security is held on
trust by the Loan Security Trustee on behalf of the Senior Finance Parties
(including the Issuer)
Borrowers
(i) Pecan Finance Limited, (ii) Toucan Finance Limited, and (iii) Culver
Finance Limited (the "Pecan Borrowers"), (iv) Leto Limited, (v) Perses
Limited, and (vi) Helios Limited (the "Titan Borrowers", and together
with the Pecan Borrowers, the "Borrowers")
Guarantors
The Borrowers and Cronos Investments Limited (the "Company") (in
such capacity, the "Guarantors")
Borrowers' and
Guarantor's location
Obligors
Jersey
Cash trap
A Cash Trap Event occurs if on any Loan Payment Date:
The Borrowers and the Guarantors (together the "Obligors")
(a)
the principal balance of the Senior Loan is greater than the
Maximum Target Loan Amount;
(b)
Projected Interest Cover is less than 200 per cent;
(c)
the Loan to Value is greater than 72.5 per cent; or
(d)
a Senior Loan Event of Default has occurred and is continuing.
Amortisation/prepayment
Mandatory in certain circumstances, including, among others, illegality,
change of control of the Company in certain circumstances, disposal of a
Property, compulsory purchase of a Property (see the section entitled
"Prepayments" in the section entitled "Description of the Senior Facility
Agreement" for further details)
Prepayment Fee
If on any Loan Payment Date the principal balance of Senior Loan is less
than the Minimum Target Loan Amount for that Loan Payment Date, the
Obligors are required to pay a prepayment fee in respect of the amount by
which the Minimum Target Loan Amount exceeds the principal balance
of the Senior Loan
See the section entitled "Description of the Senior Facility Agreement" for further information regarding
the Senior Loan features referred to in the table above.
Cashflow under the Senior Loan
The tenants under leases of the Properties make periodic rental payments in respect of the Properties. The
Company has established, among other accounts, a Rent Account into which net rents payable by the
tenants are to be paid (whether directly or indirectly).
Following the acquisition of the Pecan Senior Loans and advance of the Titan Senior Loans by the Issuer,
on each Loan Payment Date, the Loan Facility Agent will, as agent for the Issuer, transfer (to the extent
- 2-
funds are available for such purpose) all amounts then due to the Issuer under the Senior Facility
Agreement from the relevant Obligor Account directly to the Issuer Transaction Account.
Appendix 3 (The Portfolio) lists all of the Properties that will secure the Senior Loan on the Closing Date
and to which Appraisal each Property relates.
Senior Loan Security
The obligations of the Obligors under the Senior Finance Documents are (or will on the Closing Date be)
secured pursuant to the Loan Security Documents as follows:
(a)
English law security
Each Borrower has granted (or will grant), in favour of the Loan Security Trustee, first fixed
and/or floating security over all its property, undertaking and assets (subject to certain limitations
and exclusions; see "The key characteristics of the Loan Security" for further details).
(b)
(c)
Jersey law security
(i)
The Shareholder shall on the Closing Date grant, in favour of the Loan Security Trustee,
a security interest over its shares in the Company (and related property) and its interest
in certain intercompany loan agreements;
(ii)
The Company shall on the Closing Date grant, in favour of the Loan Security Trustee, a
security interest over its shares in each Borrower (and related property) and its interest in
certain intercompany loan agreements;
(iii)
Each Borrower and the Company shall on the Closing Date grant, in favour of the Loan
Security Trustee, a security interest over:
(A)
in relation to the Company and the Titan Borrowers, certain contract
rights;
(B)
in relation to the Company and each Borrower, their Accounts held in
Jersey; and
(C)
in relation to each Borrower, their rights in relation to certain cash
pooling arrangements.
Scots law security
Each Borrower with an interest in a Property located in Scotland shall on the Closing Date grant
a standard security and, where relevant, an assignation of rents in respect of that Property.
The Loan Security Trustee holds all such security interests on trust for the benefit of, inter alia, the Issuer.
Hedging
With a view to protecting the Obligors against interest rate increases, the Company will enter, on or
around the Closing Date, into the Initial Interest Rate Cap Transaction and the Additional Interest Rate
Cap Transaction each with the Cap Provider.
Pursuant to the Initial Interest Rate Cap Transaction and the Additional Interest Rate Cap Transaction, on
each Loan Payment Date, the Cap Provider will be obliged to pay to the Company an amount equal to:
(a)
(in respect of the Initial Interest Rate Cap Transaction) an amount equal to the excess (if any) of
the rate of interest (set by reference to three-month LIBOR) above a specified strike rate, which
strike rate is subject to increases at various intervals over the term of the Initial Interest Rate Cap
Transaction, from 1.25 per cent. in respect of the initial Calculation Period to 3 per cent. in
respect of the final Calculation Period, multiplied by the notional amount in respect of the
relevant period; and
- 3-
(b)
(in respect of the Additional Interest Rate Cap Transaction) an amount equal to the excess (if any)
of the rate of interest (set by reference to three-month LIBOR) above a specified strike rate of 5
per cent. multiplied by the notional amount in respect of the relevant period.
The termination date of the Initial Interest Rate Cap Transaction and the Additional Interest Rate Cap
Transaction is the Senior Loan Initial Repayment Date.
A condition of extending the Senior Loan Initial Repayment Date pursuant to the Loan Extension Option
is that hedging arrangements will be put in place for the relevant extension period for an aggregate
notional amount of not less than the outstanding amount of the Senior Loan (as at the date of the relevant
extension), with a strike rate which is not more than 5 per cent..
See the section entitled "Description of the Cap Arrangements" for further information.
B
The Junior Loan
In connection with the Pecan Acquisition and refinancing of the Titan Acquisition, Eurynome LLC (the
"Original Junior Lender") has entered into a junior facility agreement dated 10 November 2015 with the
Borrowers (such agreement as amended or restated on or before the Closing Date, the "Junior Facility
Agreement"). Pursuant to the terms of the Junior Facility Agreement, three loans (the "Pecan Junior
Loans") were advanced by the Original Junior Lender to the Pecan Borrowers to finance the Pecan
Acquisition.
On the Closing Date, the Issuer will issue the Junior Notes, subject to the satisfaction of the conditions
precedent set out in the Subscription Agreement and will apply the proceeds of such issuance (which may
be applied in accordance with any settlement and netting arrangements agreed between the Issuer and the
Original Junior Lender) on the Closing Date, to:
(a)
acquire all the rights and obligations of the Original Junior Lender as "Lender" under the Junior
Facility Agreement in respect of the Pecan Junior Loans, which shall be transferred by novation
to the Loan Seller and from the Loan Seller to the Issuer on the Closing Date; and
(b)
advance three further loans (the "Titan Junior Loans", and together with the Pecan Junior Loans,
the "Junior Loan") to the Titan Borrowers to refinance in part the existing indebtedness of the
Titan Borrowers.
The Junior Loan shall be fully subordinated to the Senior Loan.
THE JUNIOR LOAN
Purpose
Financing the Pecan Acquisition and refinancing the Titan Acquisition
pursuant to the Acquisition Agreements
Anticipated
outstanding
principal balance as at the
Closing Date
£18,500,000
Utilisation Dates
Pecan Utilisation Date, 10 November 2015
Titan Utilisation Date, the Closing Date
Junior Loan Termination
Date:
Unless otherwise agreed between the Borrowers and the then lender of
the Junior Loan, the date falling one month after the Senior Loan is repaid
in full
Interest rate
6 per cent. per annum
Governing law
Jersey
Loan Security
Unsecured
Borrowers
the Borrowers
- 4-
C
Payments of principal under the Senior Loan and the Junior Loan
Payments of principal under the Senior Loan received by the Issuer will be allocated towards the
redemption of the Senior Notes and will be applied in accordance with the applicable Issuer Priority of
Payments. Payments of principal under the Junior Loan received by the Issuer will be allocated towards
the redemption of the Junior Notes and will be applied in accordance with the applicable Issuer Priority of
Payments (see the section entitled "Cashflow and Issuer Priorities of Payments" for further details).
For the avoidance of doubt, no amount of principal outstanding under the Junior Loan will be repaid until
the Senior Loan is repaid in full.
D
Servicing of the Senior Loan and the Junior Loan
The Issuer, the Loan Facility Agent, the Loan Security Trustee and the Issuer Security Trustee will
appoint the Servicer to service and administer the Loans and the related Loan Security until the
occurrence of a Special Servicing Transfer Event. Following the occurrence (if any) of a Special
Servicing Transfer Event, the Issuer, the Loan Facility Agent, the Loan Security Trustee and the Issuer
Security Trustee will appoint the Special Servicer as special servicer of the Loans. Following the
occurrence of a Special Servicing Transfer Event, the Servicerʼs duties will continue with respect to
certain administrative functions.
Pursuant to a servicing agreement dated on or around the Closing Date between the Issuer, the Loan
Facility Agent, the Loan Security Trustee, the Issuer Security Trustee and CBRE Loan Services Limited
as Servicer and Special Servicer, (the "Servicing Agreement"), the Servicer and the Special Servicer will
exercise all rights, powers and discretions of the Issuer and the Loan Facility Agent with respect to the
Loans in accordance with the Servicing Standard and subject to the provisions relating to the appointment
of an Operating Advisor. The Servicer will also be required to prepare and provide the Servicer Quarterly
Report containing information with respect to the Loans, and make the same available to the Issuer Cash
Manager, which will make the same publicly available on its website.
The appointment of the Servicer and/or the Special Servicer will be capable of being terminated by the
Issuer Security Trustee (acting upon a direction from each Class of Noteholders having passed a separate
Ordinary Resolution to that effect) and in certain other circumstances.
See the section entitled "Key terms of the servicing arrangements for the Loans" for further information.
- 5-
TRANSACTION STRUCTURE DIAGRAM
The diagram below is intended to highlight the structure of this transaction including the corporate
structure of the Group and certain of its Affiliates. It is not intended to be an exhaustive description of the
same.
Prospective Noteholders should review the detailed information set out elsewhere in this Offering
Circular for a description of the transaction structure and relevant cashflows prior to making any
investment decision.
PRINCIPAL
PAYING AGENT /
ISSUER
CASH MANAGER
VÄRDE FUNDS
ISSUER
TRUSTEE / NOTE
TRUSTEE
Benefit of Issuer Security
100% Shareholding
Equity Contribution
Issuer Security
SERVICER
Senior Notes
EURYNOME LLC
(Delaware)
Senior Notes
Proceeds
ISSUER
(Ireland)
Novation of
Loans to the
Loan Seller
100%
shareholding
Intercompany
Loans
Loan Seller
(Jersey)
NOTEHOLDERS
Junior Note
Junior Note
Proceeds
JUNIOR
NOTEHOLDER
(Loan Seller)
Novation of
Loans to the
Issuer
CRONOS
INVESTMENTS
LIMITED
(Jersey)
100%
shareholding
Intercompany
Loans
PECAN FINANCE
LIMITED
(Jersey)
(Propco)
TOUCAN
FINANCE LIMITED
(Jersey)
(Propco)
CULVER FINANCE
LIMITED
(Jersey)
(Propco)
HELIOS LIMITED
(Jersey)
(Propco)
PERSES LIMITED
(Jersey)
(Propco)
Senior Loans (Pecan Senior Loans originally advanced by Eurynome, and novated to the Issuer; Titan Senior Loans advanced by
Issuer)
Junior Loans (Pecan Junior Loans originally advanced by Eurynome, and novated to the Issuer; Titan Junior Loans advanced by
Issuer)
Agency/Trustee Relationship
Corporate Ownership
Securitised Loans Obligor Group
- 6-
LETO LIMITED
(Jersey)
(Propco)
KEY TRANSACTION PARTIES
The Issuer and the Issuer Related Parties on the Closing Date
Party
Issuer
Servicer
Name
Magni Finance
Designated Activity
Company
CBRE Loan Services
Limited
Address
1 Grant's Row, Lower
Mount Street, Dublin
2, Ireland
St. Martin's Court,
10 Paternoster Row,
London EC4M 7HP,
United Kingdom
Special
Servicer
CBRE Loan Services
Limited
St. Martin's Court,
10 Paternoster Row,
London EC4M 7HP,
United Kingdom
Issuer Cash
Manager
Elavon Financial
Services Limited, UK
Branch
125 Old Broad Street,
London EC2N 1AR,
United Kingdom
Issuer Account
Bank
Elavon Financial
Services Limited, UK
Branch
125 Old Broad Street,
London EC2N 1AR,
United Kingdom
Agent Bank
and Principal
Paying Agent
Elavon Financial
Services Limited, UK
Branch
125 Old Broad Street,
London EC2N 1AR,
United Kingdom
Note Trustee
U.S. Bank Trustees
Limited
125 Old Broad Street,
London EC2N 1AR,
United Kingdom
Issuer Security
Trustee
U.S. Bank Trustees
Limited
125 Old Broad Street,
London EC2N 1AR,
United Kingdom
- 7-
Document under which
Appointed/ Further
Information
N/A. See "The Issuer" for further
information.
The Servicer will act as servicer
of the Loans pursuant to the
Servicing Agreement.
See "Key terms of the servicing
arrangements for the Senior
Loan" for further information.
The Special Servicer will act as
special servicer of the Loans
pursuant to the Servicing
Agreement.
See "Key terms of the servicing
arrangements for the Loans" for
further information.
The Issuer Cash Manager will be
appointed pursuant to the Cash
Management Agreement.
See "Cash Management and
Issuer Accounts" for further
information.
The Issuer Account Bank will be
appointed pursuant to the Issuer
Account Bank Agreement.
See "The structure of the bank
accounts" for further information.
The Principal Paying Agent will
act as paying agent in respect of
the Notes and the Agent Bank
will act as agent bank pursuant to
the Agency Agreement.
See "Terms and Conditions of the
Notes" for further information.
The Note Trustee will act as
trustee for the holders of the
Notes pursuant to the Note Trust
Deed.
See "Description of Note Trust
Deed and Issuer Deed of Charge"
for further information.
The Issuer Security Trustee will
act as security trustee and will
hold on trust for itself and the
other Issuer Secured Creditors the
security granted to it by the Issuer
pursuant to the Issuer Deed of
Charge and the Issuer Security
Agreement.
See "Terms and Conditions of the
Notes" for further information.
Party
Issuer Secured
Creditors
Registrar
Name
The Issuer Security
Trustee (and any
receiver appointed by
it) on trust for itself
and the Noteholders,
the Note Trustee, the
Servicer, the Special
Servicer, the Issuer
Cash Manager, the
Issuer Account Bank,
the Agent Bank, the
Principal Paying
Agent, the Registrar,
the Corporate Services
Provider and any other
person acceding to the
Issuer Deed of Charge
as beneficiary from
time to time.
Elavon Financial
Services Limited
Address
Document under which
Appointed/ Further
Information
Issuer Deed of Charge. See
"Description of Note Trust Deed
and Issuer Deed of Charge" and
"Cashflow and Issuer Priorities
of
Payments"
for
further
information.
Block E, Cherrywood
Business Park,
Loughlinstown,
Dublin,
Ireland
Information
Agent
Structured Finance
Management (Ireland)
Limited
1 Grant's Row, Lower
Mount Street, Dublin
2, Ireland
Corporate
Services
Provider
Structured Finance
Management (Ireland)
Limited
1 Grant's Row, Lower
Mount Street, Dublin
2, Ireland
Loan Security
Trustee
U.S. Bank Trustees
Limited
125 Old Broad Street,
London EC2N 1AR,
United Kingdom
Loan Facility
Agent
Elavon Financial
Services Limited
125 Old Broad Street,
London EC2N 1AR,
United Kingdom
- 8-
The Registrar will act as registrar
of the Notes pursuant to the
Agency Agreement.
See "Terms and Conditions of the
Notes" for further information.
The Information Agent will
receive certain information under
the Issuer Transaction Documents
and make the same available to
Rating Agencies in accordance
with Rule 17g-5 of the Exchange
Act, as amended ("Rule 17g-5").
The Corporate Services Provider
will act as corporate services
provider to the Issuer pursuant to
the
Corporate
Services
Agreement.
See
"Corporate
Services
Agreement" within the section
entitled "The Issuer" for further
information.
Pursuant to the Senior Facility
Agreement, the Loan Security
Trustee acts as security trustee
under English law for the Senior
Finance Parties in respect of the
security granted by the Obligors
in favour of the Loan Security
Trustee.
See "The key characteristics of
the Loan Security".
The Loan Facility Agent is
appointed by the Senior Finance
Parties pursuant to the Senior
Facility Agreement.
See "Description of the Senior
Party
Name
Address
Shareholder /
Retention
Holder
Eurynome LLC
160 Greentree Drive,
Suite 101, Dover,
Delaware DE 19904
Loan Seller
Magni Intermediary
Funding Limited
13-14 Esplanade, St
Helier, Jersey, JE1
1BD
Company
Cronos Investments
Limited
13/14 Esplanade,
St Helier,
Jersey JE1 1BD
Borrowers
Arranger and
Lead Manager
Co-Manager
Pecan Finance Limited
Toucan
Finance
Limited
Culver
Finance
Limited
Leto Limited
Helios Limited
Perses Limited
Credit Suisse
Securities (Europe)
Limited ("Credit
Suisse")
RBC Europe Limited
("RBC Europe
Limited")
Document under which
Appointed/ Further
Information
13/14 Esplanade,
St Helier,
Jersey JE1 1BD
One Cabot Square,
London E14 4QJ,
United Kingdom
Riverbank House
2 Swan Lane
London
EC4R 3BF
- 9-
Facility Agreement".
See "The Retention Holder".
The Shareholder has entered into
certain of the Loan Security
Documents as limited recourse
security provider in respect of the
Senior Loan.
See "The key characteristics of
the
Loan
Security".
the
Shareholder is not a party to the
Senior Facility Agreement.
See "The Loan Seller".
The Company has entered into
the Senior Facility Agreement.
See "Description of the Senior
Facility Agreement".
The Company has entered into
certain of the Loan Security
Documents as limited recourse
security provider in respect of the
Senior Loan. See "The key
characteristics of the Loan
Security".
Each of the Borrowers has
entered into the Senior Facility
Agreement and the Junior Facility
Agreement as a borrower. See
"Description of the Senior
Facility
Agreement"
and
"Description of the Junior
Facility Agreement"
Each of the Borrowers has
entered into certain of the Loan
Security Documents as a security
provider in respect of the Senior
Loan.
See
"The
key
characteristics of the Loan
Security".
N/A
N/A
The ongoing fees, costs and expenses of the Issuer (excluding any fees, costs and expenses payable to the
Servicer and the Special Servicer) are estimated to be approximately £160,000 (excluding VAT) per
annum.
Other parties involved in connection with the Notes
Party
Name
Irish Stock Exchange
Arthur Cox Listing Services
Limited
Irish Stock Exchange plc
Clearing Systems
Clearstream, Luxembourg
Listing Agent
Euroclear Bank S.A./N.V.
Rating Agencies
Fitch Ratings Ltd
DBRS Ratings Limited
- 10-
Address
Earlsfort Centre, Earlsfort
Terrace, Dublin 2, Ireland
28 Anglesea Street
Dublin 2, Ireland
42 Avenue J.F. Kennedy
L-1855 Luxembourg
1 Boulevard du Roi Albert II,
B-1210 Brussels, Belgium
30 North Colonnade,
Canary Wharf,
London E14 5GN,
United Kingdom
1 Minster Court,
10th Floor, Mincing Lane,
London EC3R 7AA,
United Kingdom
E-mail for notices:
[email protected]
RISK FACTORS
An investment in the Notes involves a high degree of risk. This section sets out certain aspects of the
Issuer Transaction Documents, the Issuer, the Obligors and the Properties of which prospective
Noteholders should be aware. Prospective investors should carefully consider the following risk factors
and the other information contained in this Offering Circular before making an investment decision.
The occurrence of any of the events described below could have a material adverse impact on the
business, financial condition or results of operations of the Issuer and/or the Obligors and could lead to,
among other things:
(a)
a Senior Loan Event of Default; and/or
(b)
a Note Event of Default (as defined in Condition 10 (Note Events of Default) in the section
entitled "Terms and Conditions of the Notes" below); and/or
(c)
an inability of the Issuer to repay all amounts due in respect of the Notes.
This section of this Offering Circular is not intended to be exhaustive, and prospective Noteholders
should also read the detailed information set out elsewhere in this Offering Circular prior to making any
investment decision. The risks described below are not the only ones faced by the Obligors or the Issuer.
Additional risks not presently known to the Issuer or the Obligors or that they currently believe to be
immaterial may also adversely affect their business. If any of the following risks occurs, the Issuer, the
Obligors or the Properties could be materially adversely affected. In any of such cases, the value of the
Notes could decline, and the Issuer may not be able to pay all or part of the interest or principal on the
Notes and investors may lose all or part of their investment. Prospective Noteholders should take their
own legal, financial, accounting, tax and other relevant advice as to the structure and viability of an
investment in the Notes.
In addition, while the various structural elements described in this Offering Circular are intended to
lessen some of the risks discussed below for the Noteholders, there can be no assurance that these
measures will be sufficient to ensure that the Noteholders of any Class receive payment of interest or
repayment of principal from the Issuer on a timely basis or at all.
- 11-
A
CONSIDERATIONS RELATING TO THE NOTES
Risks relating to the sufficiency of the assets of the Issuer
Payments in respect of the Notes are dependent on, and limited to, the receipt of funds under the Loans.
There is no liquidity facility available to the Issuer to fund any payments in respect of the Notes. In turn,
recourse to the Loans is generally limited to the Borrowers and their respective assets, which consist of
the Properties and certain other assets, security over which has been created to secure the Senior Loan.
The Obligors' business activities are limited to owning, developing and managing their respective interest
in the Properties.
The ability of the Borrowers to make payments on the Loans prior to the Senior Loan Final Repayment
Date and, therefore, the ability of the Issuer to make payments on the Notes on or prior to the Final Note
Maturity Date is dependent primarily on the sufficiency of the net operating income generated in respect
of the Properties and the ability of the Borrowers to sell the Properties in accordance with the Business
Plan. Payments of principal on the Junior Loan are prohibited by the terms of the Junior Facility
Agreement until the Senior Loan has been repaid in full. Unless previously repaid, the Senior Loan will
be required to be repaid by the relevant Borrowers in full on the Senior Loan Final Repayment Date, and
the Junior Loan will be required to be repaid by the relevant Borrowers in full on the Junior Loan
Termination Date.
Pursuant to the terms of the Senior Facility Agreement, the Company may exercise, subject to satisfying
certain conditions, the Loan Extension Option, exercisable on a date which is not less than 30 and not
more than 60 days prior to the Senior Loan Initial Repayment Date. The Loan Extension Option allows
the Company to extend the Senior Loan Final Repayment Date by a period of 12 months from the Senior
Loan Initial Repayment Date.
If, following the occurrence of a Senior Loan Event of Default and following the exercise by the Servicer
or the Special Servicer of all available rights and remedies in respect of the Loans (including instructing
the Loan Security Trustee to take action in respect of the Loan Security), the Issuer and/or the Issuer
Security Trustee does not receive the full amount due from the Obligors, then it will not be possible to
pay some or all of the principal and interest due on the Notes.
Any losses on the Loans will be allocated to the holders of the Notes according to Class, as described
under "Subordination" below.
The rate and timing of delinquencies or defaults on the Loans will affect the aggregate amount of
distributions on the Notes, their yield to maturity, the rate of principal repayments and their weighted
average life.
If anticipated yields are calculated based on assumed rates of default and losses that are lower than the
default rate and losses actually experienced, and such losses are allocable to the Notes, the actual yield to
maturity will be lower than the assumed yield. Under certain extreme scenarios, such yield could be
negative. In general, the earlier a loss borne by the Notes occurs, the greater the effect on the related yield
to maturity.
Additionally, delinquencies and defaults in respect of the Loans may significantly delay the receipt of or
reduce the amount of payments on any Class of Notes, unless the credit support provided through the
subordination of another Class of Notes fully offsets the effects of any such delinquency or default.
The Notes are limited recourse obligations of the Issuer
On realisation or enforcement of the Issuer Security, in the event that the proceeds of such realisation or
enforcement are insufficient to pay all amounts due under the Notes (after payment of all other claims
ranking higher in priority to or pari passu with amounts due under the Notes), the Noteholders will have
no further claim against the Issuer in respect of such unpaid amounts.
Enforcement action under the Issuer Deed of Charge and the Issuer Security Agreement over the assets
secured under the Issuer Deed of Charge and the Issuer Security Agreement and appointment of a
receiver by the Issuer Security Trustee under the Issuer Deed of Charge is the only substantive remedy
available for the purposes of recovering amounts owed in respect of the Notes.
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Forward-looking statements
This Offering Circular includes statements that are, or may be deemed to be, forward-looking statements.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events
and depend on circumstances that may or may not occur in the future. These risks and uncertainties
include, but are not limited to, those described in this section of this Offering Circular. Such risks and
uncertainties should not be construed as exhaustive and should be read in conjunction with the other
cautionary statements in this Offering Circular.
The forward-looking statements are not guarantees of future performance and the actual results of
operations, financial condition and liquidity, and the market in which the Issuer and the Obligors operate,
may differ materially from those made in or suggested by the forward-looking statements set out in this
Offering Circular. In addition, even if the results of operations, financial condition and liquidity of the
Issuer and the Obligors, and the development of the market in which the Issuer and the Obligors operate,
are consistent with the forward-looking statements set out in this Offering Circular, those results or
developments may not be indicative of results or developments in subsequent periods. Many factors could
cause the Issuer's or the Obligors' actual results, performance or revenues to be materially different from
any future results, performance or revenues that may be expressed or implied by such forward-looking
statements including, but not limited to the other risks described in this section.
Any forward-looking statements which are made in this Offering Circular speak only as of the date of
such statements. Neither the Issuer nor the Obligors intend, and undertake no obligation, to revise or
update the forward-looking statements included in this Offering Circular to reflect any future events or
circumstances.
Risks relating to the calculation of amounts and payments
Pursuant to the Issuer Transaction Documents, the Issuer Cash Manager will rely on the Servicer and the
Special Servicer to provide it with information on the basis of which it will make the determinations
required to calculate payments due on the Notes of each Class on each Portfolio Determination Date as
described in "Cashflow and Issuer Priorities of Payments". If the Servicer or, as the case may be, the
Special Servicer fails to provide the relevant information to the Issuer Cash Manager (or fails to do so
within the required timeframe), the Issuer Cash Manager may not be able to accurately calculate amounts
due to Noteholders on the related Note Payment Date.
The Conditions of the Notes provide that if, for whatever reason, an incorrect payment is made to any
party entitled thereto (including the Noteholders of any Class) pursuant to the Pre-Enforcement Revenue
Priorities of Payments, the Pre-Enforcement Principal Allocation Rules or the Pre-Enforcement Loan
Failure Priority of Payments, the Issuer Cash Manager will rectify the same by increasing or reducing
payments to such party (including the Noteholders of any Class), as appropriate, on each subsequent Note
Payment Date or Note Payment Dates to the extent required to correct the same. Where such an
adjustment is required to be made, the Issuer Cash Manager will notify Noteholders of the same in
accordance with the terms of Condition 17 (Notice to Noteholders).
Accordingly, Noteholders should be aware that in such situations, increased or reduced payments may be
made.
Additionally, any person purchasing Notes from an existing Noteholder should make due enquiries as to
whether such Noteholder has received an incorrect payment. None of the Issuer, the Issuer Cash Manager,
the Issuer Account Bank, the Agents, the Note Trustee, the Issuer Security Trustee, the Servicer or the
Special Servicer will have any liability to any Noteholder for any losses suffered as a result of an
adjustment relating to an incorrect payment made before such Noteholder acquired the Notes.
Considerations relating to yield and prepayments
The yield to maturity on the Notes of each Class will depend, to a large extent, upon the rate and timing
of principal payments on the Loans. For this purpose, principal prepayments include both voluntary
prepayments, if permitted, and involuntary prepayments, such as, for example, prepayments resulting
from defaults and liquidations.
If any Notes of any Class are purchased at a premium, and if payments and other collections of principal
on the Loans occur at a rate faster than anticipated at the time of the purchase, then the weighted average
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period during which interest is earned on the Noteholders' investments may shorten and the actual yield to
maturity on the relevant Class of Notes may be lower than assumed at the time of the purchase.
If Notes of any Class are purchased at a discount, and if payments and other collections of principal on
the Loans occur at a rate slower than anticipated at the time of the purchase, then the actual yield to
maturity on that Class of Notes may be lower than assumed at the time of the purchase.
The investment performance of any Note may vary materially and adversely from expectations due to the
rate of payments and other collections of principal on the Loans being faster or slower than anticipated.
The rate of amortisation of the Senior Loan should reflect the rate of disposal of Properties set out in the
Business Plan. However, there is a risk that Properties will not be able to be sold at the rate set out in the
Business Plan or at all. This will affect the Borrowers' ability to make payments under the Loans and in
turn will affect the Issuer's ability to make payments on the Notes. Accordingly, the actual yield may not
be equal to the yield anticipated at the time the Note was purchased, and the expected total return on
investment may not be realised.
An independent decision should be made by prospective Noteholders as to the appropriate prepayment
assumptions to be used when deciding whether to purchase any Note.
Risks relating to final maturity of the Notes
The Loans may not be fully repaid or refinanced by the relevant Loan Termination Date. This means that
the Notes may not be repaid by such date.
Pursuant to the terms of the Senior Facility Agreement, the Company may exercise, subject to satisfying
certain conditions, the Loan Extension Option, exercisable on a date which is not less than 30 and not
more than 60 days prior to the Senior Loan Initial Repayment Date. The Loan Extension Option allows
the Company to extend the Senior Loan Final Repayment Date by a period of 12 months from the Senior
Loan Initial Repayment Date.
After the Senior Loan Final Repayment Date (including where the Senior Loan Final Repayment Date is
extended, pursuant to the Loan Extension Option), if the Senior Loan is not repaid in full, the Loan
Security relating to the Senior Loan may not be fully realised. This is most likely to arise in situations
where prevailing market conditions or refinancing options are constrained such that realisations of the
Properties made on or before the Final Note Maturity Date are likely to be lower than under current
market conditions. In any case, this might result in a failure by the Issuer to repay the Senior Notes on or
prior to the Final Note Maturity Date.
If any part of the Senior Loan remains outstanding six months prior to the Final Note Maturity Date and
all recoveries then anticipated with respect to the Senior Loan (whether by enforcement of the related
Loan Security or otherwise) are unlikely to be realised in full prior to the Final Note Maturity Date, the
Special Servicer will be required to present a Note Maturity Plan no later than 45 days after such date.
Upon receipt of the Note Maturity Plan, the Note Trustee will convene, at the Issuer's cost, a meeting of
each Class of Senior Noteholders at which the Senior Noteholders will have the opportunity to discuss the
various proposals contained in the Note Maturity Plan with the Special Servicer. Following such meeting,
the Special Servicer will have the opportunity to modify the Note Maturity Plan and will provide a final
Note Maturity Plan to the Issuer, the Noteholders, the Rating Agencies, the Note Trustee and the Issuer
Security Trustee.
Upon receipt of the final Note Maturity Plan, the Note Trustee will convene, at the Issuer's cost, a
meeting of the Most Senior Class of Noteholders at which the Noteholders of such Class will be requested
to select their preferred option among the proposals set out in the final Note Maturity Plan. The proposal
that receives the approval of the holders of the Most Senior Class of Notes then outstanding by way of
Ordinary Resolution will be implemented by the Special Servicer. If no proposal receives the approval of
the holders of the Most Senior Class of Notes then outstanding by way of Ordinary Resolution at such
meeting, then the Issuer Security Trustee will be deemed to be directed by all the Noteholders to appoint a
receiver (to the extent applicable) to realise the security created pursuant to the Issuer Deed of Charge as
soon as practicable upon such right becoming exercisable, provided that the Issuer Security Trustee will
have no obligation to do so if it shall not have been indemnified and/or secured and/or prefunded to its
satisfaction (refer to the section entitled "Key terms of the servicing arrangements for the Loans" for
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further details). Such realisation may be undertaken in unfavourable market conditions which may reduce
the amount recovered by the Issuer Security Trustee and hence the amount available to repay the Notes
and any overdue interest and other payments on the Notes.
Risks relating to the deferral of interest, Senior Note Extension Fees, Note LIBOR Excess Amount and
Note Prepayment Fee Amounts on certain Classes of Notes
If, on any Note Payment Date prior to delivery of a Note Acceleration Notice, there are insufficient funds
available to the Issuer to pay accrued Non-Excess Interest, Senior Note Extension Fees, Note LIBOR
Excess Amount or Note Prepayment Fee Amounts on any Class of Notes, other than accrued Non-Excess
Interest on the Most Senior Class of Notes then outstanding, such failure to pay interest, Senior Note
Extension Fees, Note LIBOR Excess Amount or, as the case may be, Note Prepayment Fee Amounts, will
not constitute a Note Event of Default and the Issuer's liability to pay such accrued Non-Excess Interest,
Senior Note Extension Fees, Note LIBOR Excess Amount, or, as the case may be, Note Prepayment Fee
Amounts will be deferred until the earlier of (i) the next following Note Payment Date on which the
Issuer has, in accordance with the Pre-Enforcement Revenue Priority of Payments, or, as applicable, the
Pre-Enforcement Loan Failure Priority of Payments, sufficient funds available to pay such deferred
amounts (including any interest accrued thereon), and (ii) the date on which the relevant Notes are due to
be redeemed in full.
Such deferred Non-Excess Interest, Senior Note Extension Fees, Note LIBOR Excess Amount or, as the
case may be, Note Prepayment Fee Amounts, shall itself accrue interest at the same rate as that payable in
respect of the relevant Notes.
Subordination
Payments of interest and principal will be made to Noteholders in the priorities set out in the PreEnforcement Revenue Priorities of Payments, the Pre-Enforcement Principal Allocation Rules, the PreEnforcement Loan Failure Priority of Payments, or the Post-Enforcement Priority of Payments, as
applicable. As a result of such priorities, any losses on the Loans will be borne first by the Junior Notes,
second by Class D Notes, third by Class C Notes, fourth by the Class B Notes and fifth by the Class A
Notes.
Payments of Note LIBOR Excess Amount and Senior Note Extension Fees on the Class A Notes will be
subordinated to payments of interest and/or principal on the Class B Notes, the Class C Notes and the
Class D Notes and, similarly, certain payments of Note LIBOR Excess Amount and Senior Note
Extension Fees on the Class B Notes will be subordinated to payments of interest and/or principal on the
Class C Notes and the Class D Notes, and similarly, certain payments of Note LIBOR Excess Amount
and Senior Note Extension Fees on the Class C Notes will be subordinated to payments of interest and/or
principal on the Class D Notes.
As a result of the subordination structure described above and other risks, under certain circumstances
investors in one or more Classes of Notes may not recover their initial investment.
Amounts payable by the Issuer to other Issuer Secured Creditors such as the Servicer and the Special
Servicer (the "Servicing Entities"), the Issuer Cash Manager, the Issuer Account Bank, the Agents, the
Note Trustee and the Issuer Security Trustee rank in priority to payments of principal and interest on the
Notes, both before and after an enforcement of the Issuer Security.
Absence of operating history of the Issuer; reliance on agents
The Issuer is a recently formed special purpose Irish designated activity company whose business will
consist solely of the issuance of Notes and the entering into and performance of its obligations under the
Issuer Transaction Documents and related agreements and activities, as applicable. The Issuer has no
operating history.
Certain of the business activities of the Issuer are to be carried out on behalf of the Issuer by agents
appointed by the Issuer for such purpose. Neither the Issuer nor the Corporate Services Provider will have
any role in determining or verifying the data received from the Servicer, the Special Servicer, the Issuer
Cash Manager, the Issuer Account Bank, the Agents, the Note Trustee and the Issuer Security Trustee and
any calculations derived therefrom.
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Rights of the Operating Advisor in relation to the Loans
The Operating Advisor, on behalf of the Controlling Class, will have the right to require the Issuer to
replace the person then acting as the Special Servicer and to be consulted with in relation to certain
actions with respect to the servicing and enforcement in respect of the Loans including, among other
things, certain modifications, waivers and amendments of, or consents given under, the Loans, the release
of any security and the release of any Obligor's obligations under the Facility Agreements.
Neither the Servicer nor the Special Servicer will be permitted to act upon any direction given by the
Operating Advisor, or to refrain from taking any action resulting from the consultation or approval rights
of the Operating Advisor, if so acting or refraining from acting would cause it to violate the Servicing
Standard. There can be no assurance that any advice or suggestions given or made by the Operating
Advisor and followed by the Special Servicer will ultimately maximise the recoveries on the Loans. For
further details of the Operating Advisor's consultation rights, see "Key terms of the servicing
arrangements for the Loans". The Operating Advisor may act solely in the interests of the Controlling
Class; the Operating Advisor does not have any duties to any Noteholders other than the Controlling
Class; the Operating Advisor may take or suggest actions that favour the interests of the Controlling Class
over the interests of the other Noteholders; the Operating Advisor will not be deemed to have been
negligent or reckless, or to have acted in bad faith or engaged in wilful misconduct, by reason of its
having acted solely in the interests of the Controlling Class; and the Operating Advisor will have no
liability whatsoever for having acted solely in the interests of the Controlling Class, and no holder of any
Class of Notes (other than the Controlling Class) may take any action whatsoever against the Operating
Advisor for having so acted.
Appointment of substitute Servicer or substitute Special Servicer
The termination of the appointment of the Servicer or the Special Servicer under the Servicing Agreement
will only be effective once a substitute servicer, or substitute special servicer as the case may be, has
effectively been appointed (see "Key terms of the servicing arrangements for the Loans" for further
information).
There can be no assurance that a suitable substitute servicer or substitute special servicer could be found
who would be willing to service the Loans at a commercially reasonable fee, or at all, on the terms of the
Servicing Agreement (even though such agreement provides for the fees payable to a substitute servicer
or substitute special servicer to be consistent with those payable generally at that time for the provision of
the relevant commercial mortgage administration services).
In any event, the ability of such substitute servicer or substitute special servicer to perform such services
fully would depend on the information and records then available to it. The fees and expenses of a
substitute servicer or substitute special servicer performing services in this way would be payable in
priority to payment of interest and principal under the Notes.
Conflicts between Servicing Entities and the Issuer
The Issuer has been advised by the Servicer and Special Servicer that each of them intends to continue to
service existing and new loans for third parties and its own portfolio, including loans similar to the Loans,
in the ordinary course of their respective businesses. These loans may be in the same markets or have
common ultimate owners and/or Managing Agents as the Loans and the Properties. Certain personnel of
the Servicer or Special Servicer, as applicable, may, on behalf of the Servicer or Special Servicer, as
applicable, perform services with respect to the Loans at the same time as they are performing services,
on behalf of other persons or itself, with respect to other loans in the same markets as the Properties
securing the Loans. In such a case, the interests of the Servicer or Special Servicer, as applicable, and its
affiliates and their other clients may differ from and compete with the interests of the Issuer and such
activities may adversely affect the amount and timing of collections on the relevant Loan and could
reduce receipts and recoveries under the Loan, which would reduce funds available to make payment on
amounts due under the Notes.
Although the potential for a conflict of interest exists in these circumstances, pursuant to the terms of the
Servicing Agreement, the Servicer or Special Servicer, as applicable, will be obliged to act in accordance
with the Servicing Standard which would require them to service such loans without regard to such
affiliation.
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Conflicts between the Arranger, the Lead Manager, the Co-Manager or their affiliates, and the Issuer
Conflicts of interest between affiliates of the Arranger, Lead Manager or the Co-Manager that engage in
the acquisition, development, operation, financing and disposal of commercial property, and the Arranger,
the Lead Manager and the Co-Manager, on one hand, and the Issuer, on the other hand, may arise because
such affiliates of the Arranger, the Lead Manager or the Co-Manager will not be prohibited in any way
from engaging in business activities similar to or competitive with those of the Obligors.
The Arranger, the Lead Manager, the Co-Manager and their respective affiliates, intend to continue to
actively acquire, develop, operate, finance and dispose of property-related assets in the ordinary course of
their businesses. During the course of their business activities, the Arranger, the Lead Manager, the CoManager and their respective affiliates may provide liquidity facility and swap counterparty services or
acquire, own or sell properties or finance loans secured by properties which are in the same markets as the
Properties. In such a case, the interests of such affiliates, the Arranger and/or the Lead Manager and/or
the Co-Manager may differ from and compete with the interests of the Issuer, and decisions made with
respect to such assets may adversely indirectly affect the amount and timing of distributions with respect
to the Notes.
In addition, the Arranger, the Lead Manager, the Co-Manager and their respective affiliates may have
business, lending or other relationships with, or equity investments in, obligors under loans or tenants and
conflicts of interest could arise between the interests of the Issuer and the interests of the Arranger, the
Lead Manager, the Co-Manager and such affiliates arising from such business relationships.
Also, the Arranger and any of its affiliates may have ongoing relationships with, render services to, and
engage in transactions with, the Issuer, the Loan Seller, the Servicer, the Special Servicer, the Lead
Manager or the Trustee, the borrowers, the property sponsors, and tenants at the Properties and their
respective affiliates, which relationships and transactions may create conflicts of interest between the
Arranger, on the one hand, and Noteholders, on the other hand. For example, prior to the Closing Date,
Credit Suisse AG, London Branch provides warehouse financing indirectly to the Borrowers through
repurchase facilities. Proceeds from the offering of the Senior Notes will be used by the Titan Borrowers
to refinance the Existing Indebtedness. Accordingly, a successful completion of the offering contemplated
by this Offering Circular would reduce the exposure of Credit Suisse AG, London Branch to such Titan
Existing Indebtedness. Furthermore, the Notes (including the Junior Notes which will be retained by the
Retention Holder) will be acquired by one or more of the funds advised by Varde Partners Inc (the
"Varde Funds") and are expected to be subject to a repurchase transaction, to be concluded with Credit
Suisse AG, London Branch on or following the Closing Date, for so long as the Notes are held by Varde
Funds.
Each of the foregoing relationships should be considered carefully by you before you invest in any Notes.
Ratings of Notes
The ratings assigned to each Class of Notes by the Rating Agencies are based on the characteristics of the
Loans, the related Loan Security and the Properties and other relevant structural features of the
transactions described in this Offering Circular, including, among other things, the short-term and the
long-term unsecured, unguaranteed and unsubordinated debt ratings of the Issuer Account Bank and the
Cap Provider. A downgrade, withdrawal or qualification of any of the ratings of the parties mentioned
above may impact upon the ratings of the Notes. These ratings reflect only the views of the Rating
Agencies.
The Issuer has requested a rating on the Notes from two nationally recognized statistical rating
organizations. The Issuer cannot confirm whether such rating agencies will rate each class of Notes or, if
they were to rate only certain class of Notes, what rating would be assigned to the other classes of Notes.
Additionally, the Issuer cannot confirm whether another nationally recognized statistical rating
organization will rate any class of the Notes or, if it were to rate any class of Notes, what rating would be
assigned by it. Additionally, other nationally recognized statistical rating organizations that the Issuer has
not engaged to rate the Notes may nevertheless issue unsolicited credit ratings on one or more classes of
Notes and any of the rating agencies engaged by the Issuer to rate the Notes may issue unsolicited credit
ratings on one or more classes of Notes that it ultimately did not rate, relying on information they receive
pursuant to Rule 17g-5 under the Securities Exchange Act of 1934, as amended, or otherwise. If any such
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unsolicited ratings are issued, the Issuer cannot confirm that they will not be different from the ratings
assigned by the rating agencies engaged by the Issuer.
A rating does not represent any assessment of the yield to maturity that a Noteholder may experience or
the possibility that holders of the Notes may not recover their initial investments if unscheduled receipts
of principal result from a prepayment, a default and acceleration or from the receipt of funds with respect
to, among other things, a compulsory purchase.
The Rating Agencies do not consider payment of Note LIBOR Excess Amount, Senior Note Extension
Fees or Note Prepayment Fee Amounts in assigning the ratings to the Senior Notes. The ratings assigned
by Fitch address the likelihood of timely payment of interest of the Senior Notes on each Note Payment
Date and the ultimate repayment of principal on the Final Note Maturity Date. The ratings assigned by
DBRS address the risk of default, being the risk that the Issuer will fail to satisfy its financial obligations
relating to the Senior Notes in accordance with the terms under which the Senior Notes have been issued.
There can be no assurance that any such ratings will continue for any period of time or that they will not
be reviewed, revised, suspended or withdrawn entirely by any or either of the Rating Agencies as a result
of changes in or unavailability of information or if, in the judgment of a Rating Agency, circumstances so
warrant.
Future events also, including but not limited to events affecting the Issuer Account Bank or the Cap
Provider and/or circumstances relating to the Properties and/or the property market generally, could have
an adverse impact on the rating of the Senior Notes. 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 the assigning
Rating Agency. Furthermore, there can be no assurance that the Rating Agencies will take the same view
as each other, which may affect the Borrowers' ability to adapt the structure of the transaction to changes
in the market over the long term.
Credit rating agencies review their rating methodologies on an ongoing basis and there is a risk that
changes to such methodologies will adversely affect credit ratings of the Senior Notes even where there
has been no deterioration in respect of the criteria which were taken into account when such ratings were
issued.
Credit rating agencies other than the Rating Agencies could seek to rate the Senior Notes without having
been requested to do so by the Issuer. If such unsolicited ratings are lower than the comparable ratings
assigned to the Senior Notes by the Rating Agencies, those unsolicited ratings could have an adverse
effect on the value of the Senior Notes. For the avoidance of doubt and unless the context otherwise
requires, any references to ratings or rating in this Offering Circular are to ratings assigned by the
specified Rating Agencies only.
Rating Agencies' Confirmation – exercise of discretion by the Issuer Security Trustee and the Note
Trustee
Where it is necessary for the Note Trustee or the Issuer Security Trustee to determine, in its opinion, for
the purposes of exercising any right, power, trust, authority, duty or discretion under or in relation to the
Senior Notes, the Conditions or any of the Issuer Transaction Documents, whether or not such exercise
will be materially prejudicial to the interests of the Noteholders or any Class of Noteholders, the Note
Trustee or the Issuer Security Trustee (as applicable) will be entitled, in making such a determination, to
take into account among any other things it may, in its absolute discretion, consider necessary and/or
appropriate, any Rating Agency Confirmation (if available) in respect of ratings of the Senior Notes or, as
the case may be, the Senior Notes of a particular Class, stating that the Senior Notes or the Senior Notes
of a particular Class will not be downgraded, withdrawn or qualified, and that, where any original rating
of the Senior Notes or, as the case may be, the Senior Notes of a particular Class has been and continues
to be downgraded, restoration of such original rating would not be prevented, as a result of such exercise.
In this Offering Circular, "Rating Agency Confirmation" means a written confirmation from each
Rating Agency then rating the Senior Notes that (a) the then current ratings of each (or the relevant) Class
of Notes rated thereby will not be qualified, downgraded or withdrawn as a result of certain matters; or (b)
(other than in respect of DBRS) if the original rating of the relevant Class of Notes has been downgraded
previously, that certain matters will not prevent the restoration of such original rating of such Class of
Notes, it being acknowledged that there is no obligation on any Rating Agency to provide any such
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confirmation. For the avoidance of doubt, such Rating Agency Confirmation will not be construed to
mean that any such exercise by the Note Trustee or the Issuer Security Trustee of any right, power, trust,
authority, duty or discretion under or in relation to the Senior Notes, the Conditions or any of the Issuer
Transaction Documents is not materially prejudicial to the interests of the holders of the Senior Notes or,
as the case may be, the Senior Notes of the relevant Class.
Further, the non-receipt of such Rating Agency Confirmation will not be construed to mean that any such
exercise by the Note Trustee or the Issuer Security Trustee as aforesaid is materially prejudicial to the
interests of the holders of the Senior Notes or, as the case may be, the Senior Notes of the relevant Class.
No assurance can be given that Rating Agencies will provide any Rating Agency Confirmation in respect
of the Senior Notes of the kind described herein or that, depending on the timing of the delivery of the
request and any information needed to be provided, it may be the case that the Rating Agencies cannot
provide their Rating Agency Confirmation in the time available and, in either case, the Rating Agencies
will not be responsible for the consequences thereof. However, if a Rating Agency Confirmation is
provided, it should be noted that a Rating Agency's decision to reconfirm a particular rating may be made
on the basis of a variety of factors. In particular, the Noteholders should be aware that the Rating
Agencies owe no duties whatsoever to any parties to the transaction (including the Noteholders) in
providing any Rating Agency Confirmation. No assurance can be given that a requirement to seek ratings
confirmation will not have a subsequent impact upon the business of the Obligors. In addition, it should
be noted that any confirmation of ratings:
(a)
only addresses the effect of any relevant event, matter or circumstance on the current ratings
assigned by the relevant Rating Agency to the Senior Notes or, if applicable, the Senior Notes of
a particular Class of Notes;
(b)
does not address whether any relevant event, matter or circumstance is permitted by the Issuer
Transaction Documents; and
(c)
does not address whether any relevant event, matter or circumstance is in the best interests of, or
prejudicial to, some or all of the Noteholders or other Issuer Secured Creditors.
No assurance can be given that any such confirmation will not be given in circumstances where the
relevant proposed matter would materially adversely affect the interests of Noteholders of a particular
Class.
The Rating Agencies, in assigning credit ratings, do not comment upon the interests of the holders of
securities (such as the Senior Notes).
The implementation of certain matters will, pursuant to the Issuer Transaction Documents, be subject to
the receipt of a Rating Agency Confirmation. If any Rating Agency then rating the Senior Notes either: (i)
does not respond to a request to provide a Rating Agency Confirmation within 10 Business Days after
such request is made (and does not respond to a second request to provide a Rating Agency Confirmation,
in respect of the same matter as the first request, within 5 Business Days after such second request is
made (such second request not to be made less than 10 Business Days after the first request is made)); or
(ii) provides an acknowledgement indicating its decision not to review or otherwise declining to review
the matter for which the Rating Agency Confirmation is sought, the requirement for the Rating Agency
Confirmation from the relevant Rating Agency with respect to such matter will be deemed not to apply.
Therefore, it is possible that modifications and/or amendments (including, without limitation, Basic
Terms Modifications) may be made without having obtained a Rating Agency Confirmation from the
Rating Agencies then rating the Senior Notes. However, if, in connection with any such matter, the
agreement or consent of the Issuer Security Trustee or the Note Trustee is required, it is also possible that
the Issuer Security Trustee and/or the Note Trustee, as applicable, will not provide such agreement or
consent in the absence of such Rating Agency Confirmation.
Reliance by the Issuer Security Trustee or the Note Trustee on any Rating Agency Confirmation will not
create, impose on or extend to any Rating Agency any actual or contingent liability to any person
(including, without limitation, the Issuer Security Trustee, the Note Trustee and/or any Noteholder) or
create any legal relations between any Rating Agency and the Issuer Security Trustee, the Note Trustee,
any Noteholder or any other person whether by way of contract or otherwise.
- 19-
Risks relating to the rights of Noteholders, Extraordinary Resolutions and Noteholder Meetings
The provisions of the Issuer Transaction Documents relating to the convening of meetings of Noteholders
and the passing of Extraordinary Resolutions and Ordinary Resolutions differ from the equivalent
provisions in the documentation for many comparable commercial mortgage backed securitisations,
particularly comparable securitisations which closed prior to the onset of the global financial crisis in the
summer of 2007.
In particular, notice periods for convening such meetings may be shorter and the majority required to pass
Extraordinary Resolutions and Ordinary Resolutions may be lower than those applicable in other
Commerical Mortgage Backed Securitisation ("CMBS") transactions (see "Risks relating to Noteholder
Meetings" below).
The Issuer Transaction Documents provide for Extraordinary Resolutions and Ordinary Resolutions to be
deemed to be passed by Negative Consent (see "Risks relating to Negative Consent process" below).
Noteholders should be aware that unless they have made arrangements to promptly receive notices sent to
Noteholders from any custodians or other intermediaries through which they hold their Notes and give the
same their prompt attention, meetings may be convened and Extraordinary Resolutions or Ordinary
Resolutions, including in relation to the Note Maturity Plan (see "Risks relating to final maturity of the
Notes" above), may be considered and resolved or deemed to be passed without their involvement.
Prospective investors (and particularly those considering investing in more junior Classes of Notes)
should, therefore, pay particular attention to the terms referred to above when considering whether or not
to invest in the Notes as their rights may differ from those available to them under comparable CMBS
transactions.
The holders of the Junior Notes do not have voting or consent rights other than in respect of the Junior
Note Entrenched Terms.
Rights available to holders of Notes of different Classes
In performing its duties and exercising its powers as trustee for the Noteholders, the Note Trustee will
have regard to the interests of all of the Noteholders as a whole. Where there is a conflict between the
interests of the holders of one Class of Notes and the holders of another Class of Notes, the Note Trustee
will only have regard to the interests of the holders of the more senior Class of Notes in respect of which
the conflict arises, subject as provided in the Note Trust Deed and the Conditions.
Prospective investors in more junior Classes of Notes should, therefore, be aware that conflicts with more
senior Classes of Notes will be resolved in favour of the latter Classes. This could adversely affect value
and recoveries of more junior Classes of Notes.
Risks relating to Noteholder Meetings
A meeting of the Noteholders may be held on 14 clear days' notice. The requisite quorum for such a
meeting is one or more persons holding or representing at least (in relation to an Ordinary Resolution) 25
per cent. or (in relation to an Extraordinary Resolution) 50.1 per cent. of the Principal Amount
Outstanding of the relevant Class of Notes except where the Noteholders wish to make a Basic Terms
Modification. The quorum for Basic Terms Modifications requires one or more persons holding or
representing not less than 75 per cent. of the Principal Amount Outstanding of the relevant Class of
Notes.
An adjourned meeting of the Noteholders may be held on seven clear days' notice. The requisite quorum
for such a meeting is one or more persons being or representing any Noteholders except where the
Noteholders wish to make a Basic Terms Modification. The quorum for such a modification requires one
or more persons being or representing not less than 33 1/3 per cent. of the Principal Amount Outstanding of
the relevant Class of Notes.
As a result of these requirements, it is possible that a valid Noteholder meeting may be held without the
attendance of Noteholders who may have wished to attend and/or vote.
- 20-
Risks relating to Negative Consent process
An Extraordinary Resolution (other than an Extraordinary Resolution relating to a Basic Terms
Modification, the waiver of any Note Event of Default, the acceleration of the Notes or the enforcement
of the Issuer Security) or Ordinary Resolution (other than an Ordinary Resolution relating to a Note
Maturity Plan), may be passed by the Negative Consent of the relevant Noteholders i.e. without any
Noteholders meeting having been called or Noteholders having voted in favour of such resolution as long
as holders in respect of a sufficient Principal Amount Outstanding of Notes have not voted against such
resolution.
An Extraordinary Resolution or an Ordinary Resolution, as applicable, will be deemed to have been
passed by a Class of Notes unless, within 30 days of the requisite notice being given by the Issuer, the
Note Trustee, the Issuer Cash Manager, the Servicer or the Special Servicer to such Class of Noteholders
in accordance with the provisions of Condition 17 (Notice to Noteholders) and in all cases also through
the systems of Bloomberg L.P., or in such other manner as may be approved in writing by the Note
Trustee, (i) in the case of an Extraordinary Resolution, the holders of 25 per cent. or more in aggregate of
the Principal Amount Outstanding of the Notes of such Class or (ii) in the case of an Ordinary Resolution,
the holders of 50 per cent. or more in aggregate of the Principal Amount Outstanding of the Notes of such
Class, inform the Note Trustee in the prescribed manner of their objection to such Extraordinary
Resolution or Ordinary Resolution, as applicable.
Therefore, it is possible that an Extraordinary Resolution could be deemed to be passed without the vote
of any Noteholders or even if holders of up to 24.99 per cent. in aggregate of the Principal Amount
Outstanding of the relevant Class of Notes objected to it and it is possible that an Ordinary Resolution
could be deemed to be passed without the vote of any Noteholders or even if holders of up to 49.99 per
cent. in aggregate of the Principal Amount Outstanding of the relevant Class of Notes objected to it.
Modifications to the Issuer Transaction Documents to comply with Rating Agency criteria
The Conditions of the Notes provide that if the Issuer is of the opinion (following discussions with the
applicable Rating Agencies or otherwise) that any modification is required to be made to the Issuer
Transaction Documents and/or the Conditions in order to (i) comply with any criteria of the Rating
Agencies which may be published after the Closing Date; (ii) comply with any alternative requirements of
the Rating Agencies (where it is not possible to replace the Issuer Account Bank with a replacement bank
which has the ratings required under the Issuer Account Bank Agreement); (iii) comply with any changes
in the Risk Retention Requirements after the Closing Date, including as a result of the adoption of
regulatory technical standards in relation to the Risk Retention Requirements or any other risk retention
legislation or regulations or official guidance in relation thereto; (iv) enable the Note to be (or to remain)
listed on the Irish Stock Exchange; (v) enable the Issuer or any of the other Issuer Secured Parties to
comply with FATCA (or any voluntary agreement entered into with a taxing authority in relation thereto)
or any other exchange of information regime; (vi) comply with any changes in the requirements of CRA
Regulation after the Closing Date and (vii) comply with the requirements of Rule 17g-5, including as a
result of the adoption of regulatory technical standards in relation to the CRA Regulation or regulations or
official guidance in relation thereto (each an "Additional Permitted Modification"), the Issuer shall
promptly notify all the Senior Noteholders in accordance with Condition 17 (Notice to Noteholders).
- 21-
If within 30 calendar days from service of such notice, Senior Noteholders representing at least 20 per
cent. of the then aggregate Principal Amount Outstanding of the Notes have not contacted the Issuer in
writing (or otherwise in accordance with the then current practice of any applicable clearing system
through which such Notes will be held) to reject the proposed amendments, the Noteholders will be
deemed to have consented to the modifications and the Note Trustee shall, subject to certain exceptions,
but without a requirement for the consent or sanction of any of the Noteholders or any other Issuer
Secured Creditor and irrespective of whether such modifications are or may be materially prejudicial to
the interests of the Noteholders of any Class or any other parties to any of the Issuer Transaction
Documents, concur with the Issuer and, where relevant, the Obligors, and/or direct the Issuer Security
Trustee to concur with the Issuer and, where relevant, the Obligors, in making any modification to the
Issuer Transaction Documents and/or the Conditions that are requested by the Issuer and, where relevant,
the Obligors in order to comply with such updated criteria provided that the Issuer certifies to the Note
Trustee and the Issuer Security Trustee in writing that:
(a)
such modifications are required to avoid a downgrade, withdrawal or suspension of the then
current ratings assigned by a Rating Agency to any Class of the Senior Notes;
(b)
the proposed modifications constitute an Additional Permitted Modification;
(c)
the proposed modifications do not constitute a Basic Terms Modification or a Junior Note
Entrenched Term; and
(d)
the Senior Noteholder consultation provisions set out above have been complied with and the
requisite number of Senior Noteholders have not rejected the proposed amendments within the
specified timeframe;
and provided further that the Note Trustee and the Issuer Security Trustee shall not be obliged to agree to
any modification which, in the sole opinion of the Note Trustee and the Issuer Security Trustee, as
applicable, would have the effect of:
(a)
exposing the Note Trustee and the Issuer Security Trustee, as applicable, to any liability against
which it has not been indemnified and/or secured and/or prefunded to its satisfaction; or
(b)
adding to or increasing the obligations, liabilities or duties, or decreasing the protections, of the
Note Trustee and the Issuer Security Trustee, as applicable in respect of the Notes, in the Issuer
Transaction Documents and/or the Conditions.
Therefore, such modifications could be made notwithstanding they are or may be materially prejudicial to
the interests of the Noteholders of any Class or any other parties to any of the Issuer Transaction
Documents.
Notwithstanding anything to the contrary in the Issuer Transaction Documents, the Note Trustee will not
consider the interests of any other person in agreeing to such modifications.
The Note Trustee and/or the Issuer Security Trustee, as applicable, will rely without further investigation
on any confirmation or certification provided to it in connection with the modifications (and, in relation to
any certification as to whether the modifications constitute a Basic Terms Modification, shall rely on such
certification) and will not monitor or investigate whether the Issuer is acting in a commercially reasonable
manner, nor will the Note Trustee or the Issuer Security Trustee be responsible for any liability that may
be occasioned to any person by acting in accordance with these provisions based on any written
notification or confirmation it receives from the Issuer.
Any such modification, waiver, authorisation or determination shall be binding on the Noteholders and,
unless the Note Trustee agrees otherwise, any such modification, waiver, authorisation or determination
shall be notified by the Issuer to the Noteholders as soon as practicable thereafter in accordance with
Condition 17) (Notice to Noteholders). There can be no assurance that such modifications would not
increase the costs of the Issuer or reduce the returns to Noteholders.
Absence of secondary market; limited liquidity
Application has been made to the Central Bank of Ireland, as competent authority under the Prospectus
Directive as implemented in Ireland, for this Offering Circular to be approved.
- 22-
Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List
and to trading on the Main Securities Market.
However, if granted, there can be no assurance that a secondary market in the Notes will develop or, if it
does develop, that it will provide Noteholders with liquidity of investment, or that it will continue for the
life of the Notes. Consequently, any purchaser of the Notes must be prepared to hold such Notes for an
indefinite period of time or until final redemption or maturity of such Notes. Lack of liquidity could result
in a significant reduction in the market value of the Notes.
In addition, the market value of the Notes may fluctuate with changes in prevailing rates of interest and
the performance of the Loans. 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.
The liquidity of the Notes may also be affected by present uncertainties and future unfavorable
determinations concerning legal investment in the U.S. market. No class of the Notes will constitute
"mortgage related securities" for purposes of the U.S. Secondary Mortgage Market Enhancement Act of
1984, as amended.
Absence of public market; transfer restrictions
The Notes are new issues of securities for which there is currently no existing market. No assurances can
be made regarding the liquidity of any markets that may develop for the Notes, or the ability to sell Notes
or the prices at which the Notes may be sold. If any Notes are traded after their initial issuance, they may
trade at a discount from their initial offering price, depending on many factors, such as prevailing interest
rates, general economic conditions, operating results and financial condition, any changes in the ratings of
the Notes, the market for similar securities and the liquidity of any market that may develop for the Notes.
Because the Notes are being sold pursuant to an exemption from registration under applicable U.S.
securities laws and, therefore, may not be publicly offered, sold or otherwise transferred in any
jurisdiction where such registration may be required, no public market for the Notes will develop in the
U.S.
The Notes have not been and will not be registered under the Securities Act or any applicable securities
laws of any state and, in reliance upon certain representations by prospective investors, are being sold
pursuant to applicable exemptions from such registration. The Notes may not be sold, pledged,
hypothecated or otherwise transferred without such registration except pursuant to an applicable
exemption from the registration requirements. The Issuer is not required to register the Notes under the
Securities Act and no such registration should be expected. Therefore, a holder of the Notes may be
required to bear the risk of its investment for an indefinite period. The Note Trust Deed provides for
restrictions on the initial purchase and subsequent transfer of the Notes. These restrictions may limit a
Noteholder's ability to sell or transfer Notes purchased by it. In addition, there have been times in the past
when very few buyers of asset-backed securities existed and there may be similar times in the future. As a
result, a Noteholder may be unable to sell its Notes when it wants to or may be unable to obtain the price
it wishes to receive for the Notes.
The credit crisis and downturn in the real estate market have adversely affected the value of CMBS
The Notes will be affected by market trends which affect CMBS in general. Certain events over the past
few years in the real estate and securitisation markets, and in the debt markets and the economy generally,
caused significant dislocations, illiquidity and volatility in the markets for CMBS as well as in the wider
global financial markets.
Declining real estate values, coupled with diminished availability of leverage and/or refinancing for
commercial real estate over such period resulted in increased delinquencies and defaults on commercial
mortgage loans. In addition, the downturn in the general economy affected the financial strength of many
commercial real estate tenants and resulted in increased rent delinquencies and increased vacancies. Any
renewed downturn may lead to increased vacancies, decreased rents or other declines in income from, or
the value of, commercial real estate, which would likely have an adverse effect on CMBS that are backed
by mortgages on such commercial real estate. There can be no assurance that the dislocation in the CMBS
market will not continue to occur or become more severe and even if the CMBS market does recover, the
Properties may nevertheless decline in value. The market value of the Notes may be adversely affected by
market perceptions of CMBS generally.
- 23-
The ability of the Borrowers to make payments when due on the Loans will depend on the rental value
and occupancy rates of the Properties which are also subject to local economic factors. Given the
secondary nature of the Properties, the Portfolio is particularly susceptible to declining real estate values
and any downturn in the economy. Any economic downturn may adversely affect the financial resources
of the Borrowers and may result in the inability of the Borrowers to make principal and interest payments
on, or refinance, the Loans when due. In the event of default by a Borrower under the Loans, the Issuer
may suffer a partial or total loss with respect to the Loans. Materially increased levels of delinquency or
loss on the related Properties would have an adverse effect on the payments of principal, interest and
other amounts received by holders of the Notes.
In addition to credit factors directly affecting CMBS, the potential fallout from a similar downturn in the
markets for other asset backed and structured products also affected the CMBS market by contributing to
a decline in the market value and liquidity of securitised investments such as CMBS. The deterioration of
other structured products markets may adversely affect the value of CMBS. Even if CMBS are
performing as anticipated, the value of such CMBS in the secondary market may nevertheless decline as a
result of deterioration in general market conditions or in the market for other asset backed or structured
products.
The volatile economy and credit crisis may increase loan defaults and affect the value and liquidity of
the Notes
The global economy recently experienced a significant recession and economies continue to experience
ongoing volatility. Disruption in the credit markets, including the general absence of investor demand for
and purchase of CMBS and other asset-backed securities and structured financial products may reemerge.
As described below under "Considerations relating to the Properties – Risks relating to tenants and
leases" a material worsening in economic conditions in the locations in which the Properties are situated
could increase tenant defaults at the Properties thereby adversely affecting the amounts received by the
Issuer under the Loans and consequently the amounts paid to Noteholders.
The recent lack of credit liquidity, decreases in both the sale and rental value of commercial properties,
lower occupancy rates and, in some instances, prevented certain commercial mortgage borrowers from
refinancing their loans. These circumstances increased delinquency and default rates of securitised
commercial mortgage loans, and have led to commercial mortgage defaults. In addition, the declines in
real estate values resulted in reduced borrower equity, hindering the ability of borrowers to refinance in
an environment of increasingly restrictive lending standards and giving them less incentive to cure
delinquencies and avoid enforcement. Higher loan-to-value ratios have resulted in lower recoveries on
enforcement, and an increase in loss severities above those that would have been realised had property
values remained the same or continued to increase. Another similar global downturn may result in
defaults, delinquencies and losses and decreased property values, thereby resulting in additional defaults
by commercial mortgage borrowers, further credit constraints, further declines in property values and
further adverse effects on the perception of the value of CMBS.
Many commercial mortgage lenders tightened their loan underwriting standards which reduced the
availability of mortgage credit to prospective borrowers. These developments contributed to a weakening
in the commercial real estate market as these adjustments, among other things, inhibited refinancing and
reduced the number of potential buyers of commercial real estate. The continued use or further
adjustment of these loan underwriting standards may contribute to further increases in delinquencies and
losses on commercial mortgage loans generally.
The global markets have seen an increase in volatility due to uncertainty surrounding the level and
sustainability of sovereign debt of certain countries in the Eurozone, including Greece, Cyprus, Spain,
France, Portugal, Ireland and Italy, as well as the sustainability of the euro itself. There can be no
assurance that this uncertainty will not lead to further disruption of the credit markets in Europe.
- 24-
Investors should consider that general conditions in the areas where the Properties are located may
adversely affect the performance of the Loans and accordingly the performance of the Notes and the
general availability of commercial real estate financing will directly affect the ability of the Obligors to
repay the Loans on or prior to maturity. In addition, in connection with all the circumstances described
above, investors should be aware in particular that:
(a)
such circumstances may result in substantial delinquencies and defaults on the Loans and
adversely affect the amount of proceeds arising from any sale which the Issuer would realise in
the event of enforcement and liquidation (the "Liquidation Proceeds");
(b)
the value of the Properties may decline and such declines may be substantial and may occur in a
relatively short period following the issuance of the Notes, directly affecting the ability of the
Borrowers to realise value by selling the Properties and their ability to refinance the Loans. Such
declines may or may not occur for reasons largely unrelated to the circumstances of any
particular Property;
(c)
if a Noteholder decides to sell its Notes, it may be unable to do so or may be able to do so only at
a substantial discount from the price originally paid; this may be the case for reasons unrelated to
the then current performance of the Notes or the Loans; and this may be the case within a
relatively short period following the issuance of the Notes;
(d)
if a loan default occurs, then the return on the Notes may be substantially reduced
notwithstanding that Liquidation Proceeds may be sufficient to result in the repayment of the
principal of and accrued interest on the Notes. An earlier than anticipated repayment of principal
(even in the absence of losses) in the event of a default in advance of the maturity date would
tend to shorten the weighted average period during which interest is earned on Noteholders'
investments and if any Class of Notes is purchased at a premium then in such case, the actual
yield to maturity on that Class of Notes may be lower than assumed at the time of the purchase.
A later than anticipated repayment of principal (even in the absence of losses) in the event of a
default upon the maturity date would tend to delay the receipt of principal and the interest on the
Notes may be insufficient to compensate Noteholders for that delay and if any Class of Notes is
purchased at a discount then in such case the actual yield to maturity on that Class of Notes may
be lower than assumed at the time of the purchase;
(e)
even if Liquidation Proceeds received in respect of the Loans are sufficient to cover the principal
and accrued interest on the same, the Issuer may experience costs or losses in the form of special
servicing fees and other expenses, and Noteholders may bear losses as a result of such additional
fees and other expenses the Issuer has to bear, and their return may be adversely affected by any
such losses;
(f)
the time periods within which the Loans will be repaid following the occurrence of a default may
be considerable, and those periods may be further extended because of the insolvency of an
Obligor and related litigation; and
(g)
even if Noteholders intend to hold their Notes, depending on the circumstances of particular
Noteholders, Noteholders may be required to report declines in the value of their holdings in the
Notes, and/or record losses, on their financial statements or regulatory or supervisory reports,
and/or repay or post additional collateral for any secured financing, hedging arrangements or
other financial transactions that they have entered into that are backed by or make reference to
the Notes, in each case as if the Notes were to be sold immediately.
Related parties may purchase Notes
Related parties, including the Servicer or the Special Servicer, if applicable, or any Obligor (or any of
their respective Affiliates) or Sponsor Affiliates may purchase all or part of one or more Classes of Notes.
A purchase by the Servicer or the Special Servicer, if applicable, could cause a conflict of interest
between such entity's duties pursuant to the Servicing Agreement and its interest as a holder of a Note,
especially to the extent that certain actions or events have a disproportionate effect on one or more
Classes of Notes. The Servicing Agreement provides that each Loan is required to be administered in
accordance with the Servicing Standard without regard to ownership of any Note by the Servicer or the
Special Servicer, if applicable, or any affiliate thereof.
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If any Obligor (or any of their respective Affiliates), the Shareholder, the Sponsor or a Sponsor Affiliate
became a Noteholder, such Obligor (or any of their respective Affiliates), the Shareholder, the Sponsor or
a Sponsor Affiliate would be a Disenfranchised Holder in accordance with Condition 14.11
(Disenfranchised Holder), and as a result would not be permitted to exercise any voting, objecting or
directing rights attaching to any Notes (or be counted in or towards any required quorum or majority).
The voting rights of Eurynome LLC, as Junior Noteholder, are restricted to the Junior Note Entrenched
Terms.
Definitive Notes and denominations in integral multiples
The Notes have a denomination consisting of a minimum authorised denomination of £100,000 plus
higher integral multiples of £1,000. Accordingly, it is possible that the Notes may be traded in amounts in
excess of the minimum authorised denomination that are not integral multiples of such denomination. In
such a case, if definitive Notes are required to be issued, a Noteholder who holds a principal amount less
than the minimum authorised denomination at the relevant time may not receive a definitive Note in
respect of such holding and may need to purchase a principal amount of Notes such that their holding
amounts to the minimum authorised denomination (or another relevant denomination amount).
If definitive Notes are issued, Noteholders should be aware that definitive Notes which have a
denomination that is not an integral multiple of the minimum authorised denomination may be illiquid
and difficult to trade.
Limitations of Book-Entry Registration
Holders of the Notes may hold such Notes through a clearing agency or one of its participating
organizations. The Notes may be registered in the name of a nominee of the clearing agency and physical
certificates will not be issued to individual Noteholders, except in certain limited circumstances. These
Noteholders will not be recognized directly by the Note Trustee and must exercise all of their rights and
receive any payments through the clearing agency or the participating organization, unless physical
certificates are issued. Physical certificates will only be issued in the limited circumstances.
The effect on repayment of the Notes in the event that the UK becomes a participating member state in
the European Economic and Monetary Union is uncertain
It is possible that, prior to the repayment in full of the Loans and the Notes, the United Kingdom may
become a participating member state in the European Economic and Monetary Union and that the euro
will become the lawful currency of the United Kingdom. In that event:
(a)
all amounts payable in respect of any Notes may become payable in euro;
(b)
applicable provisions of law may allow or require the Issuer to re-denominate such Notes into
euro and take additional measures in respect of such Notes; and
(c)
the introduction of the euro as the lawful currency of the United Kingdom may result in the
disappearance of published or displayed rates for deposits in sterling used to determine the
interest rate on the Notes or changes in the way those rates are calculated, quoted and published
or displayed.
The introduction of the euro could also be accompanied by a volatile interest rate environment which
could adversely affect Noteholders. It cannot be said with certainty what effect the adoption of the euro
by the United Kingdom (if it were to occur) would have on the Noteholders.
Irish insolvency proceedings – examinership
Examinership is a court procedure available under the Irish Companies Act 2014, to facilitate the survival
of Irish companies in financial difficulties.
The Issuer, the directors of the Issuer, a contingent, prospective or actual creditor of the Issuer, or
shareholders of the Issuer holding, at the date of presentation of the petition, not less than one-tenth of the
voting share capital of the Issuer are each entitled to petition the court for the appointment of an
examiner. The examiner, once appointed, has the power to set aside contracts and arrangements entered
into by the company after this appointment and, in certain circumstances, can avoid a negative pledge
- 26-
given by the company prior to this appointment. Furthermore, the examiner may sell assets that are the
subject of a fixed charge. However, if such power is exercised the examiner must account to the holders
of the fixed charge for the amount realised and discharge the amount due to the holders of the fixed
charge out of the proceeds of the sale.
During the period of protection, the examiner will formulate proposals for a compromise or scheme of
arrangement to assist the survival of the company or the whole or any part of its undertaking as a going
concern. A scheme of arrangement may be approved by the Irish High Court when at least one class of
creditors has voted in favour of the proposals and the Irish High Court is satisfied that such proposals are
fair and equitable in relation to any class of members or creditors who have not accepted the proposals
and whose interests would be impaired by implementation of the scheme of arrangement.
In considering proposals by the examiner, it is likely that secured and unsecured creditors would form
separate classes of creditors. In the case of the Issuer, if the Note Trustee represented the majority in
number and value of claims within the secured creditor class (which would be likely given the restrictions
agreed to by the Issuer in the Conditions), the Note Trustee would be in a position to reject any proposal
not in favour of the Noteholders. The Note Trustee would also be entitled to argue at the Irish High Court
hearing at which the proposed scheme of arrangement is considered that the proposals are unfair and
inequitable in relation to the Noteholders, especially if such proposals included a writing down to the
value of amounts due by the Issuer to the Noteholders. The primary risks to the holders of Notes if an
examiner were appointed to the Issuer are as follows:
(a)
the potential for a compromise or scheme of arrangement being approved (a) involving the
writing down or rescheduling of the debt due by the Issuer to the Noteholders as secured by the
Note Trust Deed;
(b)
the potential for the examiner to seek to set aside any negative pledge in the Notes prohibiting the
creation of security or the incurring of borrowings by the Issuer to enable the examiner to borrow
to fund the Issuer during the protection period; and
(c)
in the event that a scheme of arrangement is not approved and the Issuer subsequently goes into
liquidation, the examiner's remuneration and expenses (including certain borrowings incurred by
the examiner on behalf of the Issuer and approved by the Irish High Court) will take priority over
the monies and liabilities which from time to time are or may become due, owing or payable by
the Issuer to each of the secured creditors under the Notes or the Transaction Documents.
Preferred creditors under Irish law and floating charges
Under Irish law, upon an insolvency or examinership of an Irish company such as the Issuer, when
applying the proceeds of assets subject to fixed security which may have been realised in the course of a
liquidation or receivership, the claims of a limited category of preferential creditors will take priority over
the claims of creditors holding the relevant fixed security. These preferred claims include the
remuneration, costs and expenses properly incurred by any examiner of the company (which may include
any borrowings made by an examiner to fund the company's requirements for the duration of his
appointment) which have been approved by the Irish courts. (See risk factor "Irish insolvency
proceedings – examinership" above).
The interest of secured creditors in property and assets of an Irish company over which there is a floating
charge only will rank behind the claims of certain preferential creditors on enforcement of such security.
Preferential creditors include the Irish Revenue Commissioners, statutory redundancy payments due to
employees (including where those employees have been made redundant as a result of the liquidation of
the borrower) and money due to be paid by the Irish company in respect of employers' contributions
under any pension scheme.
The holder of a fixed security over the book debts of an Irish tax resident company (which would include
the Issuer) may be required by the Irish Revenue Commissioners, by notice in writing from the Irish
Revenue Commissioners, to pay to them sums equivalent to those which the holder received in payment
of debts due to it by the company.
Where the holder of the security has given notice to the Irish Revenue Commissioners of the creation of
the security within 21 days of its creation, the holder's liability is limited to the amount of certain
- 27-
outstanding Irish tax liabilities of the company (including liabilities in respect of value added tax) arising
after the issuance of the Irish Revenue Commissioners' notice to the holder of fixed security.
The Irish Revenue Commissioners may also attach any debt due to an Irish tax resident company by
another person in order to discharge any liabilities of the company in respect of outstanding tax whether
the liabilities are due on its own account or as an agent or trustee. The scope of this right of the Irish
Revenue Commissioners has not yet been considered by the Irish courts and it may override the rights of
holders of security (whether fixed or floating) over the debt in question.
In relation to the disposal of assets of any Irish tax resident company which are subject to security, a
person entitled to the benefit of the security may be liable for tax in relation to any capital gains made by
the company on a disposal of those assets on exercise of the security.
The essence of a fixed charge is that the person creating the charge does not have liberty to deal with the
assets which are the subject matter of the security in the sense of disposing of such assets or expending or
appropriating the moneys or claims constituting such assets and accordingly, if and to the extent that such
liberty is given to the Issuer, any charge constituted by the Issuer Deed of Charge may operate as a
floating, rather than a fixed charge.
In particular, the Irish courts have held that in order to create a fixed charge on receivables it is necessary
to oblige the chargor to pay the proceeds of collection of the receivables into a designated bank account
and to prohibit the chargor from withdrawing or otherwise dealing with the monies standing to the credit
of such account without the consent of the chargee.
Depending upon the level of control actually exercised by the chargor, there is therefore a possibility that
the fixed security over some or all of the charged assets and any fixed charge on all funds held from time
to time by the Principal Paying Agent to meet the payments due under the Notes would be regarded by
the Irish courts as a floating charge.
Floating charges have certain weaknesses, including the following:
(a)
they have weak priority against purchasers (who are not on notice of any negative pledge
contained in the floating charge) and the chargees of the assets concerned and against lien
holders, execution creditors and creditors with rights of set-off;
(b)
as discussed above, they rank after certain preferential creditors, such as claims of employees and
certain taxes on winding-up;
(c)
they rank after certain insolvency remuneration expenses and liabilities;
(d)
the examiner of a company has certain rights to deal with the property covered by the floating
charge; and
(e)
they rank after fixed charges.
Certain ERISA Considerations
If the ownership of any class of equity interest of the Issuer, such as a class of Notes which is
characterized as equity, by Benefit Plan Investors (as defined below) were to equal or exceed 25% of the
total value of such class, as determined under the United States Department of Labor Regulation at 29
C.F.R. Section 2510.3-101, as modified by Section 3(42) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") (such regulation as so modified, the "Plan Asset Regulation"),
assets of the Issuer would be deemed to be "plan assets" of such Benefit Plan Investors and subject to
regulatory requirements under ERISA (The Plan Asset Regulation provides that in applying such 25%
limitation, Notes held by Controlling Persons (other than Benefit Plan Investors) must be disregarded). If
for any reason the assets of the Issuer were deemed to be "plan assets", certain investments or other
transactions that the Issuer or the manager on its behalf might enter into, or may have entered into, in the
ordinary course of its business might constitute non-exempt "prohibited transactions" under Section 406
of ERISA or Section 4975 of the Code and might have to be rescinded at significant cost to the Issuer.
Moreover, if the underlying assets of the Issuer were deemed to include plan assets, (i) the assets of the
Issuer could be subject to ERISA's reporting and disclosure requirements, (ii) a fiduciary causing a
Benefit Plan Investor to make an investment in the equity of the Issuer could be deemed to have delegated
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its responsibility to manage the assets of the Benefit Plan Investor, (iii) various providers of fiduciary or
other services to the Issuer, and any other parties with authority or control with respect to the Issuer,
could be deemed to be Plan fiduciaries or otherwise Parties in Interest or Disqualified Persons by virtue of
their provision of such services, and (iv) it is not clear that Section 404(b) of ERISA, which generally
prohibits plan fiduciaries from maintaining the indicia of ownership of assets of plans subject to Title I of
ERISA outside the jurisdiction of the district courts of the United States, would be satisfied in all
instances. The term "Benefit Plan Investor" is defined in Section 3(42) of ERISA as (a) any employee
benefit plan that is subject to the fiduciary responsibility provisions of Title I of ERISA, (b) any plan to
which Section 4975 of the Code applies and (c) any entity whose underlying assets include plan assets by
reason of any such plan's investment in such entity (collectively, "Benefit Plan Investors").
An equity interest is defined under the Plan Asset Regulation as an interest other than an instrument
which is treated as indebtedness under applicable local law and which has no substantial equity features.
Although there is little guidance on how this definition applies, the Issuer believes that the Class A Notes
and the Class B Notes will be treated as indebtedness under applicable local law without substantial
equity features for purposes of the Plan Asset Regulation, although no assurance can be given in this
regard. The Class C Notes, the Class D Notes and the Junior Notes may be treated as equity interests in
the Issuer for purposes of the Plan Asset Regulation.
The Issuer intends, through the use of written or deemed representations, to restrict ownership of the
Class C Notes, the Class D Notes and the Junior Notes, by Benefit Plan Investors and Controlling Persons
so that no assets of the Issuer should be deemed to be "plan assets" subject to Title I of ERISA or Section
4975 of the Code. However, there can be no assurance that ownership of the Class C Notes, the Class D
Notes and the Junior Notes by Benefit Plan Investors will always remain below the 25% limitation
established under the Plan Asset Regulation.
See "Certain ERISA Considerations" herein for a more detailed discussion of certain ERISA and related
considerations with respect to an investment in the Notes.
Forced Transfer
Each initial purchaser of an interest in a Rule 144A Note and each transferee of an interest in a Rule 144A
Note will be deemed to represent at the time of purchase that, amongst other things, the purchaser is a
QIB. In addition each Noteholder will be deemed or in some cases required to make certain
representations in respect of ERISA and laws and regulations applicable to other plans.
The Note Trust Deed provides that if, notwithstanding the restrictions on transfer contained therein, the
Issuer determines that any holder of an interest in a Rule 144A Note is a U.S. person as defined under
Regulation S under the Securities Act (a "U.S. Person") and is not a QIB at the time it acquires an
interest in a Rule 144A Note (any such person, a "Non-Permitted Holder"), the Issuer shall, promptly
after determination that such person is a Non-Permitted Holder by the Issuer, send notice to such NonPermitted Holder demanding that such holder transfer its interest outside the United States to a non-U.S.
Person or to a person that is not a Non-Permitted Holder within 30 days of the date of such notice. If such
holder fails to effect the transfer required within such 30-day period, (a) upon direction from the Issuer on
its behalf, a Transfer Agent, on behalf of and at the expense of the Issuer, shall cause such beneficial
interest to be transferred in a commercially reasonable sale to a person or entity that certifies to such
Transfer Agent and the Issuer, in connection with such transfer, that such person or entity either is not a
U.S. Person or is a QIB and (b) pending such transfer, no further payments will be made in respect of
such beneficial interest.
In addition, the Note Trust Deed provides that if any Noteholder of an ERISA Restricted Note is
determined by the Issuer to be a Non-Permitted ERISA Holder, such Non-Permitted ERISA Holder may
be required by the Issuer to sell or otherwise transfer its Notes to an eligible purchaser within 10 days of
receipt of notice from the Issuer to such Non-Permitted ERISA Holder requiring such sale or transfer, at a
price to be agreed between the Issuer and such eligible purchaser at the time of sale, subject to the transfer
restrictions set out in the Note Trust Deed. None of the Issuer, the Note Trustee and the Registrar shall be
liable to any Noteholder having an interest in the Notes sold or otherwise transferred as a result of any
such sale or transfer. The Issuer shall be entitled to deduct from the sale or transfer price an amount equal
to all the expenses and costs incurred and any loss suffered by the Issuer as a result of such forced
transfer. The Non-Permitted ERISA Holder will receive the balance, if any.
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B
CONSIDERATIONS RELATING TO TAX
The proposed financial transactions tax ("FTT")
On 14 February 2013, the European Commission published a proposal (the "Commission's Proposal")
for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria,
Portugal, Slovenia and Slovakia (the "participating Member States").
The Commission's Proposal has very broad scope and could, if introduced, apply to certain dealings in the
Notes (including secondary market transactions) in certain circumstances. The issuance and subscription
of Notes should, however, be exempt.
Under the Commission's Proposal the FTT could apply in certain circumstances to persons both within
and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes
where at least one party is a financial institution, and at least one party is established in a participating
Member State. A financial institution may be, or be deemed to be, "established" in a participating
Member State in a broad range of circumstances, including (a) by transacting with a person established in
a participating Member State or (b) where the financial instrument which is subject to the dealings is
issued in a participating Member State.
However, the FTT proposal remains subject to negotiation between the participating Member States and
the scope and timing of any such tax is uncertain. Additional EU Member States may decide to
participate.
Prospective holders of the Notes are advised to seek their own professional advice in relation to the FTT.
Withholding Tax under the Notes, Senior Facility Agreement and Junior Facility Agreement
In the event that any withholding or deduction for or on account of any taxes is imposed in respect of
payments to Noteholders of any amounts due under the Notes, neither the Issuer nor any other person is
obliged to gross up or otherwise compensate Noteholders for the lesser amounts the Noteholders will
receive as a result of such withholding or deduction. However, in such circumstances, the Issuer will, in
accordance with Condition 7.4 (Optional redemption for tax and other reasons) of the Notes, be required
to use reasonable endeavours to prevent such an imposition. See the sections ''Irish Taxation'' and "United
Kingdom Taxation" for a discussion of Irish and United Kingdom withholding taxes, respectively, in
relation to interest payments under the Notes.
An application has been made to HM Revenue and Customs for relief from UK withholding tax in respect
of interest payable to the Issuer under the Senior Facility Agreement. If such relief is not granted or there
is a delay in such relief being granted, the Issuer may be unable to meet its payment obligations under the
Notes as they fall due.
Foreign Account Tax Compliance Act withholding may affect payments on the Notes
While the Notes are in global form and held within the clearing systems, in all but the most remote
circumstances, it is not expected that FATCA will affect the amount of any payment received by the
clearing systems. However, FATCA may affect payments made to custodians or intermediaries in the
subsequent payment chain leading to the ultimate investor if any such custodian or intermediary generally
is unable to receive payments free of FATCA withholding. It also may affect payment to any ultimate
investor that is a financial institution that is not entitled to receive payments free of withholding under
FATCA, or an ultimate investor that fails to provide its broker (or other custodian or intermediary from
which it receives payment) with any information, forms, other documentation or consents that may be
necessary for the payments to be made free of FATCA withholding. Investors should choose their
custodians or intermediaries with care (to ensure each is compliant with FATCA or other laws or
agreements related to FATCA) and provide each custodian or intermediary with any information, forms,
other documentation or consents that may be necessary for such custodian or intermediary to make a
payment free of FATCA withholding. The Issuer's obligations under the Notes are discharged once the
Principal Paying Agent has paid the clearing systems and the Issuer has therefore no responsibility for
any amount thereafter transmitted through the clearing systems and custodians or intermediaries.
Investors should consult their own tax adviser to obtain a more detailed explanation of FATCA and how
FATCA may affect them. Prospective investors should refer to the section entitled "Foreign Account Tax
Compliance Act".
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Diverted profits tax
With effect from 1 April 2015, a new tax has been introduced in the United Kingdom called the "diverted
profits tax", which is charged at a rate of 25% on any "taxable diverted profits". The tax may apply in
circumstances where arrangements are designed to ensure that a non-UK resident company does not carry
on a trade in the United Kingdom for corporation tax purposes, or where arrangements involve entities or
transactions lacking economic substance. This is a new tax and its scope and the basis upon which it will
be applied by HM Revenue & Customs remain uncertain.
Given the current uncertainty referred to above in relation to the application of the diverted profits tax,
there can be no assurance that the Borrowers will not be subject to the diverted profits tax, or that the
Borrowers will not become subject to the diverted profits tax in the future. Investors who are in any doubt
as to their position should seek their own professional advice.
Irish taxation position of the Issuer
The Issuer has been advised that it should fall within the Irish regime for the taxation of qualifying
companies as set out in Section 110 of the Taxes Consolidation Act 1997, as amended ("Section 110"),
and as such should be taxed only on the amount of its retained profit after deducting all amounts of
interest and other revenue expenses due to be paid by the Issuer. If, for any reason, the Issuer is not or
cease to be entitled to the benefits of Section 110, then profits or losses could arise in the Issuer which
could have tax effects not contemplated in the cashflows for the transaction and as such adversely affect
the tax treatment of the Issuer and consequently the payments on the Notes.
C
CONSIDERATIONS RELATING TO REGULATORY AND LEGAL ISSUES
Regulatory initiatives may result in increased regulatory capital requirements and/or decreased
liquidity in respect of the Notes
In Europe, the U.S. and elsewhere there is increased political and regulatory scrutiny of the asset-backed
securities industry. This has resulted in a raft of measures for increased regulation which are currently at
various stages of implementation and which may have an adverse impact on the regulatory capital charge
to certain investors in securitisation exposures and/or the incentives for certain investors to hold assetbacked securities, and may thereby affect the liquidity of such securities. Investors in the Notes are
responsible for analysing their own regulatory position and none of the Issuer, the Retention Holder, the
Issuer Security Trustee, the Note Trustee, the Agents, the Lead Manager, the Co-Manager or the Arranger
makes any representation to any prospective investor or purchaser of the Notes regarding the regulatory
capital treatment of their investment on the Closing Date or at any time in the future.
In particular, investors should be aware of the EU risk retention and due diligence requirements which
currently apply, or are expected to apply in the future, in respect of various types of EU regulated
investors including credit institutions, authorised alternative investment fund managers, investment firms,
insurance and reinsurance undertakings and UCITS funds. Among other things, such requirements restrict
a relevant investor from investing in asset-backed securities unless (i) that investor is able to demonstrate
that it has undertaken certain due diligence in respect of various matters including its note position, the
underlying assets and (in the case of certain types of investors) the relevant sponsor or originator and (ii)
the originator, sponsor or original lender in respect of the relevant securitisation has explicitly disclosed
to the investor that it will retain, on an ongoing basis, a net economic interest of not less than 5 per cent.
in respect of certain specified credit risk tranches or asset exposures. Failure to comply with one or more
of the requirements may result in various penalties including, in the case of those investors subject to
regulatory capital requirements, the imposition of a penal capital charge on the Notes acquired by the
relevant investor.
Aspects of the requirements and what is or will be required to demonstrate compliance to national
regulators remain unclear.
Furthermore, investors should also be aware of Article 17 of the European Union Alternative Fund
Managers Directive (Directive 2011/61/EU) ("AIFMD"), as supplemented by Section 5 of Chapter III of
the AIFMR which took effect on 22 July 2013. The provisions of Section 5 of Chapter III of the AIFMR
provide for risk retention and due diligence requirements in respect of alternative investment fund
managers that are required to become authorised under the AIFMD and which assume exposure to the
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credit risk of a securitisation on behalf of one or more alternative investment funds. While such
requirements are similar to those which apply under Part 5 of the Capital Requirements Regulation, they
are not identical and, in particular, additional due diligence obligations apply to the relevant alternative
investment fund managers.
Similar requirements also apply to investment in securitisations by EEA insurance and reinsurance
undertakings and by EEA undertakings for collective investment in transferable securities. The
requirements applicable to insurance and reinsurance companies are set out in Articles 254-257 of the
Solvency II Regulation.
Investors in the Notes are responsible for analyzing their own regulatory position and determining
whether the risk retention and due diligence requirements described above apply, or are expected to
apply, in respect of the Notes. Investors should therefore make themselves aware of such requirements
(and any corresponding implementing rules of their regulator), where applicable to them, in addition to
any other regulatory requirements applicable to them with respect to their investment in the Notes. With
respect to the commitment of the Retention Holder to retain a material net economic interest in the
securitisation and with respect to the information to be made available by the Issuer or another relevant
party (or, after the Closing Date, by the Servicer or the Issuer Cash Manager on the Issuer's behalf),
please see the statements set out in the sections entitled "Regulatory Disclosure", "Key terms of the
servicing arrangements for the Loans" and "Cash Management and Issuer Accounts".
Investors should also be aware that at this time, save for the European Banking Authority (the "EBA")
report published on 22 December 2014, the EU authorities have not published any binding guidance
relating to whether or not a transaction of the type contemplated by this Offering Circular constitutes a
"securitisation" or whether an entity such as Eurynome would satisfy the "originator" definition, in each
case, under the Risk Retention Requirements. Furthermore, any relevant regulator's views with regard to
the Retention Requirements may not be based exclusively on technical standards, guidance or other
information known at this time.
Relevant investors are required to independently assess and determine the sufficiency of the information
described above for the purposes of complying with any relevant requirements and none of the Issuer, the
Retention Holder nor the Lead Manager, nor the Co-Manager, nor the Arranger makes any representation
that the information described above is sufficient in all circumstances for such purposes.
The EU risk retention and due diligence requirements described above and any other changes to the
regulation or regulatory treatment of the Notes for some or all investors may negatively impact the
regulatory position of individual investors and, in addition, have a negative impact on the price and
liquidity of the Notes in the secondary market.
Implementation of and/or changes to the Basel III framework may affect the capital requirements
and/or the liquidity associated with a holding of the Notes for certain investors
The Basel Committee on Banking Supervision (the "Basel Committee") approved significant changes to
the Basel II regulatory capital and liquidity framework in 2011 (such changes being commonly referred to
as "Basel III").
In particular, Basel III provides for a substantial strengthening of existing prudential rules, including new
requirements intended to reinforce capital standards (with heightened requirements for global
systemically important banks) and to establish a leverage ratio "backstop" for financial institutions and
certain minimum liquidity standards (referred to as the liquidity coverage ratio and the net stable funding
ratio).
It is intended that member countries will implement the new capital standards and the new liquidity
coverage ratio as soon as possible (with provision for phased implementation, meaning that the measure
will not apply in full until January 2019) and the net stable funding ratio from January 2018.
Implementation of Basel III requires national legislation and therefore the final rules and the timetable for
their implementation in each jurisdiction may be subject to some level of national variation. The Basel
Committee has also published a consultative document setting out certain proposed revisions to the
securitisation framework, including proposed new hierarchies of approaches to calculating risk weights
and a new risk weight floor of 15 per cent (or lower, in the case of senior tranches of simple, transparent
and comparable securitisation).
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Implementation of the Basel III framework and any changes as described above may have an impact on
the capital requirements in respect of the Notes and/or on incentives to hold the Notes for investors that
are subject to requirements that follow the relevant framework and, as a result, may affect the liquidity
and/or value of the Notes.
In general, investors should consult their own advisers as to the regulatory capital requirements in respect
of the Notes and as to the consequences for and effect on them of any changes to the existing Basel
framework (including the changes described above) and the relevant implementing measures. No
predictions can be made as to the precise effects of such matters on any investor or otherwise.
Volcker Rule
The Issuer will be relying on an exclusion or exemption under the 1940 Act contained in Section 3(c)(5)
of the 1940 Act or Rule 3a-7 under the 1940 Act although there may be additional exclusions or
exemptions available to the Issuer. The Issuer is being structured so as not to constitute a "covered fund"
for the purposes of Section 619 of the Dodd-Frank Act (such statutory provision the "Volcker Rule") and
its implementing regulations. The Volcker Rule generally prohibits "banking entities" (which is broadly
defined to include U.S. banks and bank holding companies and many non-U.S. banking entities, together
with their respective subsidiaries and other affiliates) from (i) engaging in proprietary trading, (ii)
acquiring or retaining an ownership interest in or sponsoring a "covered fund" and (iii) entering into
certain relationships with such funds. The Volcker Rule became effective on 21 July 2012, and final
regulations implementing the Volcker Rule were adopted on 10 December 2013 and became effective on
1 April 2014. Conformance with the Volcker Rule and its implementing regulations was required by 21
July 2015 (extended until 21 July 2016 in respect of investments in and relationships with covered funds
that were in place prior to 31 December 2013, with the possibility of a further one-year extension); in the
interim, banking entities must make good-faith efforts to conform their activities and investments to the
Volcker Rule). Under the Volcker Rule, unless otherwise jointly determined otherwise by specified
federal regulators, a "covered fund" does not include an issuer that may rely on an exclusion or exemption
from the definition of "investment company" under the 1940 Act other than the exclusions contained in
Section 3(c)(1) and Section 3(c)(7) of the 1940 Act. The general effects of the Volcker Rule remain
uncertain. Any prospective investor in the Notes, including a U.S. or foreign bank or a subsidiary or other
affiliate thereof, should consult its own legal advisers regarding such matters and other effects of the
Volcker Rule.
Changes of law
The structure of the issue of the Notes and the ratings which are to be assigned to them are based on
English law, Jersey law, Scots law and Irish law and various regulatory, accounting and administrative
practices in effect as at the date of this Offering Circular.
Regard has also been had to the expected tax treatment of all relevant entities under the tax law and the
published practice of the tax authorities of Ireland and of the United Kingdom as at the date of this
Offering Circular.
No assurance can be given as to the impact of any possible change to law (including any change in
regulation which may occur without a change in primary legislation), or the regulatory, accounting or
administrative practice, or the interpretation or administration thereof, or the practices of the Irish tax
authorities or the United Kingdom tax authorities or the tax authorities of any other relevant taxing
jurisdiction, after the date of this Offering Circular nor can any assurance be given as to whether any such
change could adversely affect the ability of the Issuer to make payments under the Notes. Any changes to
the accounting practices of any person may also have an effect on the tax treatment of that person.
In particular, the Issuer's ability to make (and Noteholders' entitlement to receive) payments on the Notes
is therefore subject to the risk that tax law or the application of such law in any relevant jurisdiction may
change and could adversely be affected by any such change.
Changes to Accounting Standards and Regulatory Restrictions Could Have an Adverse Impact on the
Notes
The Financial Accounting Standards Board has adopted changes to the accounting standards for
structured products. These changes, or any future changes, may affect the accounting for entities such as
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the Issuer, could under certain circumstances require an investor or its owner generally to consolidate the
assets of the Issuer in its financial statements and record third parties' investments in the trust as liabilities
of that investor or owner or could otherwise adversely affect the manner in which the investor or its
owner must report an investment in commercial mortgage-backed securities for financial reporting
purposes.
None of the Issuer or Lead Manager or the Co-Manager make any representation or warranty regarding
any accounting implications related to the Notes. The Financial Accounting Standards Board has adopted
changes to the accounting standards for structured products. These changes, or any other future changes,
may impact the accounting for entities such as the trust and could require the trust to be consolidated in an
investor's financial statements. Each investor in the Notes should consult its accounting advisor to
determine the impact these accounting changes might have as a result of an investment in the Notes.
The Prospective Performance of the Loans securing the Notes should be evaluated separately from the
performance of the loans in any other transaction
As a result of the distinct nature of each pool of commercial mortgage loans, and the separate loans within
the pool, this Offering Circular does not include disclosure concerning the delinquency and loss
experience of static pools of periodic originations by the sponsor of assets of the type to be securitized
(known as "static pool data"). Because of the highly heterogeneous nature of the assets in commercial
mortgage backed securities transactions, static pool data for prior securitized pools, even those involving
the same asset types, may be misleading, since the economics of the properties and terms of the Loans
may be materially different. In particular, static pool data that may show a low level of delinquencies and
defaults would not be indicative of the performance of this pool or any other pools of loans originated by
the same sponsor or sponsors. Therefore, investors should evaluate this offering on the basis of the
information set forth in this Offering Circular with respect to the Loans, and not on the basis of any
successful performance of other pools of securitized commercial mortgage loans.
Proposed Changes to Rules with Respect to the Offering of Asset Backed Securities
On 29 March 2011, the Office of the Comptroller of the Currency of the Department of the Treasury, the
Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the SEC,
the Federal Housing Finance Agency and Department of Housing and Urban Development issued a joint
notice of proposed rulemaking proposing rules to implement the credit risk retention requirements of
section 15G of the Exchange Act, as amended by section 941 of the Dodd-Frank Act. On 21 October
2014, the foregoing agencies issued final rules requiring securitisers or originators to retain at least 5% of
the credit risk of securitized exposures, with certain exemptions. The risk retention requirements were
published in the U.S. Federal Register on 24 December 2014, became effective on 23 February 2015 and
compliance is required one year following such publication for securitization transactions collateralized
by residential mortgages and two years following such publication for all other securitization transactions.
The risk retention requirements will only apply to new securitizations created after the applicable
effective date. No assurance can be given as to whether the Dodd-Frank risk retention rules would have
any future material adverse effect on the business, financial condition or prospects or on the market value
or liquidity of the Notes. Although risk retention is not required pursuant to the Dodd-Frank Act or
Section 15G of the Exchange Act in connection with the issuance of the Notes in this offering, legislators
may decide to apply risk retention retroactively to outstanding securitizations, or such Notes may incur a
decline in marketability resulting from an increase in asset-backed securities that comply with DoddFrank risk retention.
Additionally, in April 2010 and July 2011, the SEC published proposed and re-proposed rules to
substantially revise Regulation AB, the primary regulations related to publicly registered asset-backed
securities ("Reg AB Proposals"). In September 2014, the SEC finalized rules to amend Regulation AB
(as revised, "Reg AB II Rules"). Among other things, the Reg AB II Rules require enhanced disclosure
of loan level information for residential mortgages, commercial mortgages, automobile loans and leases,
debt securities and re-securitizations of the foregoing, mandates certain filing requirements for
preliminary prospectuses and modifies eligibility for shelf registration offerings. The Reg AB Proposals
had intended that many of the proposed rules (including disclosure rules) would apply to privately-issued
asset backed securities such as the Notes. The Reg AB II Rules did not adopt this aspect of the Reg AB
Proposals and therefore do not apply to privately-issued asset backed securities; however, the SEC has
indicated that it may re-visit disclosure requirements for the private asset backed securities market in the
future. The Reg AB II Rules were published in the U.S. Federal Register on 24 September 2014, became
- 34-
effective 60 days from such publication and compliance is required commencing one year from such
effective date (except for the enhanced data disclosure for which compliance is required commencing two
years from such effective date). It cannot be predicted what effect the Dodd-Frank risk retention rules, the
Reg AB II Rules, and future actions by the SEC will have on the marketability of asset-backed securities
such as the Notes.
Not a bank deposit
Any investment in the Notes does not have the status of a bank deposit in Ireland and is not within the
scope of the deposit protection scheme operated by the Central Bank of Ireland or otherwise guaranteed
by any other government guarantee scheme. The Issuer is not regulated by the Central Bank of Ireland by
virtue of the issue of the Notes.
Borrowers
The Borrowers are incorporated under the laws of Jersey. The legal system and market practice
concerning security in Jersey may have substantially different features to those described in relation to
England and/or Scotland. Such differences may include:
(a)
limitations and restrictions on taking security, the rights and remedies available to a secured party
and the availability of security over certain classes of asset; and
(b)
procedures for enforcement of security and the exercise of remedies by a secured party.
The above differences might potentially be disadvantageous to a secured party when compared to English
law.
In relation to the Borrowers, there is a potential risk that third party creditors may commence insolvency
proceedings against them in Jersey.
No regulation of the Issuer by any regulatory authority
The Issuer is not required to be licensed or authorised under any current securities, commodities or
banking laws of its jurisdiction of incorporation. There is no assurance, however, that regulatory
authorities in one or more jurisdictions would not take a contrary view regarding the applicability of any
such laws to the Issuer. The taking of a contrary view by such regulatory authority could have an adverse
impact on the Issuer or the holders of Notes.
D
CONSIDERATIONS RELATING TO THE LOANS AND THE LOAN SECURITY
Late payment or non-payment of rent
There is a risk that sufficient rental payments will not be received in respect of the Properties on or before
the relevant Loan Payment Date.
If a significant number of tenants' rental payments are not received on or prior to the immediately
following Loan Payment Date and any resultant shortfall is not otherwise compensated for from other
resources, there may be insufficient cash available to the relevant Borrower to make payments to the
Issuer under the Loans. This will result in reduced amounts being available to the Issuer to make
payments on the Notes. This may cause a Note Event of Default unless the Issuer has or obtains other
resources. However, no assurance can be given that such resources will be available or sufficient to cover
any shortfalls in amounts available to the Issuer to make payments on the Notes.
Prepayment of the Senior Loan
The Borrowers may be obliged, in certain circumstances, to prepay the Senior Loan in whole or in part
prior to the Senior Loan Final Repayment Date.
These circumstances include, but are not limited to, a disposal of a Property, the receipt of insurance
proceeds in respect of certain insurance claims, receipt of compulsory purchase compensation and
damages proceeds, the receipt of proceeds of a claim against a vendor of a Property or a report provider in
certain circumstances, the Senior Facility Agreement requiring in certain circumstances amounts
- 35-
designated as Trapped Cash or paid into the Cure Account to be applied in prepayment, payment of a
premium in respect of any agreement to amend, waive surrender or release a Lease Document, a
misrepresentation requiring prepayment under the Senior Loan, a breach of the undertaking relating to
ownership of Properties requiring a prepayment under the Senior Loan, on a change of control of the
Company in certain cases and where it would be unlawful for a lender to perform any of its obligations
under a Senior Finance Document or to fund or maintain its share in the Senior Loan. These
circumstances are described in more detail in "Description of the Senior Facility Agreement" below.
These events may be beyond the control of the Borrowers and are beyond the control of the Issuer. Any
such prepayment may result in the Notes being prepaid earlier than anticipated. Refer to the section
entitled "Yield, prepayment and maturity considerations of Notes" for further details.
Refinancing risk
The Loans may have a substantial remaining principal balance as at their scheduled maturity. This will
especially be relevant if disposals of Properties are not made at the rate set out in the Business Plan.
Unless previously repaid, the Senior Loan will be required to be repaid by the relevant Borrowers in full
on the Senior Loan Final Repayment Date. Pursuant to the terms of the Senior Facility Agreement, the
Company may exercise, subject to satisfying certain conditions, the Loan Extension Option, exercisable
on a date which is not less than 30 and not more than 60 days prior to the Senior Loan Initial Repayment
Date. The Loan Extension Option allows the Company to extend the Senior Loan Initial Repayment Date
by a period of 12 months from the Senior Loan Final Repayment Date.
The ability of the Borrowers to repay the Senior Loan in its entirety on the Senior Loan Final Repayment
Date (as may be extended) will depend, among other things, upon its having sufficient available cash or
equity and, if the Properties have not been sold in line with the Business Plan, upon its ability to find a
lender willing to lend to the relevant Borrower (secured against some or all of the relevant Properties)
sufficient funds to enable repayment of the Senior Loan. Such lenders will generally include banks,
insurance companies and finance companies. The availability of funds in the credit market fluctuates and
during the credit crisis there has been an acute shortage of credit to refinance loans such as the Senior
Loan. In addition, the availability of assets similar to the Properties, and competition for available credit,
may have a significant adverse effect on the ability of potential purchasers to obtain financing for the
acquisition of the Properties. There can be no assurance that the Borrowers will be able to refinance the
Senior Loan prior to the Final Note Maturity Date.
If the Borrowers cannot refinance the Senior Loan, they may be forced, in unfavourable market
conditions, into selling some or all of the remaining Properties in order to repay the Senior Loan. Failure
by the Borrowers to refinance the Senior Loan or to sell the Properties on or prior to the Senior Loan
Final Repayment Date may result in the Borrowers defaulting on the Senior Loan and in their insolvency.
See also "Considerations relating to the insolvency of the Obligors". In the event of such a default or
insolvency, the Noteholders, or the holders of certain Classes of Notes, may receive by way of principal
repayment an amount less than the then Principal Amount Outstanding on their Notes and the Issuer may
be unable to pay in full interest and other amounts due on the Notes.
Security over bank accounts
The Company and each Borrower has, in accordance with the terms of the Senior Facility Agreement,
established a number of bank accounts into which, among other things, (indirectly or directly) rental
income and disposal proceeds in respect of the relevant Properties must be paid (as to which, see the
section entitled "Description of the Senior Facility Agreement"). The Company and each Borrower has,
pursuant to the terms of the relevant Loan Security Document granted security over all of its interests in
its relevant accounts, which security (in the case of the English Security Agreements) is, expressed to be a
first fixed charge and (in the case of the Jersey Security Agreements relating to Jersey bank accounts) a
first security interest. Furthermore, under the Issuer Deed of Charge, the Issuer will grant security over all
of its bank accounts (other than the Issuer Proceeds Account), which security will also be expressed to be
fixed security.
Although the various bank accounts are stated to be subject to various degrees of control (for example,
the Senior Facility Agreement provides that the Loan Facility Agent is to have sole signing rights over
each Rent Account, Collection Account, Deposit Account, Capex Contingency Reserve Account, and the
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Cure Account), there is a risk (other than in relation to the Jersey Security Agreements relating to Jersey
bank accounts) that, if the Loan Facility Agent or the Loan Security Trustee (as appropriate) do not
exercise the requisite degree of control over the relevant accounts in practice, a court could determine that
the security interests granted in respect of those accounts take effect as floating security interests only and
that the security interests granted over the assets from which the monies paid into the accounts are derived
also take effect as floating security interests only, notwithstanding that the security interests are expressed
to be fixed. In such circumstances, monies paid into accounts or derived from those assets could be
diverted to pay preferential creditors and certain other liabilities were a receiver, liquidator or
administrator to be appointed in respect of the relevant company in whose name the account is held.
Limited payment history
The Loans were partially advanced on 10 November 2015, with the remainder to be advanced on the
Closing Date. As such, the Loans do not have a substantial payment history on the date of this Offering
Circular.
English and Scots law security and insolvency considerations
The Issuer will enter into the Issuer Deed of Charge pursuant to which it will grant the Issuer Security in
respect of certain of its obligations, including its obligations under the Notes. Similarly, the Obligors have
entered into various Loan Security Documents pursuant to which each Obligor granted certain security in
respect of certain of its obligations, including its obligations under the Senior Facility Agreement (as to
which, see "The key characteristics of the Loan Security").
In certain circumstances, including the occurrence of certain insolvency events in respect of the Issuer or
an Obligor, the ability to realise the Issuer Security and/or the relevant Loan Security, respectively, may
be delayed and/or the value of the relevant security impaired. While the transaction structure is designed
to minimise the likelihood of the Issuer or any of the Obligors becoming insolvent, there can be no
assurance that the Issuer and/or one or more of the Obligors will not become insolvent and/or the subject
of insolvency proceedings and/or that the Noteholders would not be adversely affected by the application
of insolvency laws (including English and Scottish insolvency laws).
In addition, it should be noted that, to the extent that the assets of the Issuer or any Obligor are subject
only to a floating charge (including any fixed charge recharacterised by the English courts as a floating
charge), in certain circumstances under the provisions of section 176A of the Insolvency Act 1986,
certain floating charge realisations which would otherwise be available to satisfy the claims of secured
creditors under the Issuer Deed of Charge/relevant Loan Security Document may be used to satisfy any
claims of unsecured creditors. While certain of the covenants given by the Issuer and the Obligors in the
Issuer Transaction Documents/Senior Finance Documents, respectively, are intended to ensure it has no
significant creditors other than the secured creditors under the Issuer Deed of Charge/Loan Security
Documents, it will be a matter of fact as to whether the Issuer/relevant company has any other such
creditors at any time. There can be no assurance that the Noteholders will not be adversely affected by
any such reduction in floating charge realisations upon the enforcement of the Issuer Security/Loan
Security.
Further insolvency considerations given that the Issuer is an Irish company
As stated above, the Issuer will enter into the Issuer Deed of Charge pursuant to which it will grant the
Issuer Security in respect of certain of its obligations, including its obligations under the Notes. It is not
expected that the Issuer would enter into insolvency proceedings in England and Wales or Scotland on the
basis that:
(a)
the Issuer's centre of main interests should be and should remain in Ireland, and the Issuer should
have no establishment outside of Ireland (the Issuer will covenant to conduct its business and
affairs such that its centre of main interests for the purposes of the Insolvency Regulation will
remain in Ireland and that it will not have an establishment other than in Ireland); and
(b)
on the basis of (a) above, it would not be possible to have a full administration, company
voluntary arrangement, winding up through administration or liquidation of the Issuer in England
or Scotland. However, it should be noted that under section 426(4) of the Insolvency Act, the
English and Scottish courts are required to assist courts having corresponding jurisdiction in any
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"relevant country or territory". Ireland is a relevant country for these purposes. Accordingly,
there is a residual argument that section 426 would enable a court to make certain insolvency
related orders (including an administration order or winding up order) in respect of the Issuer.
Liquidation expenses
On 6 April 2008, a provision in the Insolvency Act 1986 came into force which effectively reversed by
statute the House of Lords' decision in the case of Leyland Daf in 2004. Accordingly, the costs and
expenses of a liquidation (including certain tax charges) will be payable out of floating charge assets in
priority to the claims of the floating charge-holder. In respect of certain litigation expenses of the
liquidator only, this is subject to approval of the amount of such expenses by the floating charge-holder
(or, in certain circumstances, the court) pursuant to provisions set out in the Insolvency Rules 1986.
As a result of the changes described above, upon the enforcement of the floating charge security granted
by the Issuer and/or each Obligor, respectively, floating charge realisations which would otherwise be
available to satisfy the claims of secured creditors under the Issuer Deed of Charge/relevant Loan
Security Document will be reduced by at least a significant proportion of any liquidation expenses. There
can be no assurance that the Noteholders will not be adversely affected by such a reduction in floating
charge realisations.
Risks relating to representations and warranties of the Obligors under the Senior Facility Agreement
The representations and warranties given by each Obligor under the Senior Facility Agreement are to
some extent qualified by the actual knowledge of the Obligor giving such representation or warranty.
While reliance on representations and warranties is only commercially possible to the extent that the
Obligor is factually able to indemnify the recipient of such representations and warranties, so that a
representation already in and as of itself only offers limited protection commercially, representations and
warranties which are qualified by the actual knowledge further reduce the ability of a recipient to rely on
the absence of the corresponding risks because the recipient would need to provide evidence of the
Obligor's actual knowledge of the relevant risk represented which might be difficult if not impossible to
demonstrate successfully in practice.
Risks relating to special purpose covenants of the Obligors
Special purpose entity covenants are generally designed to limit the purpose of the borrowing entity to
owning the related property, making payments on the related loan and taking such other actions as may be
necessary to carry out the foregoing in order to reduce the risk that circumstances unrelated to the Loans
and related property result in a borrower insolvency. Special purpose entities are generally used in
commercial loan transactions to satisfy requirements of institutional lenders and recognised credit rating
agencies. In order to minimise the possibility that special purpose entities will be the subject of
insolvency proceedings, provisions are generally contained in the borrower's documentation relating to
the Loans which, among other things, limit the indebtedness that can be incurred by such entities and
restrict such entities from conducting business as an operating company generally (thus limiting exposure
to outside creditors).
The Senior Facility Agreement contains provisions that require the Borrowers to conduct themselves in
accordance with certain special purpose entity covenants. Although there is no covenant preventing the
Borrowers from having any employees, on the first day of each Loan Interest Period, they each represent
that they do not have any employees and that they have not had any employees. However, there can be no
assurance that all or most of the special purpose entity covenants will be complied with by the Borrowers
(however, a breach of representation would, in certain circumstances, lead to a Senior Loan Event of
Default) and even if all or most of such restrictions have been complied with by the Borrowers there can
be no assurance that the Borrowers will not nonetheless become insolvent. The Borrowers have
undertaken not to carry on any business other than the ownership, development and management of their
respective Property or Properties.
An insolvency or bankruptcy of a Borrower would result in a Senior Loan Event of Default with respect
to the Senior Loan which may give rise to an acceleration of the Senior Loan and an enforcement of the
Loan Security. This could result in significant delays in the receipt by the Issuer of payments under the
Senior Loan which could adversely affect its ability to make all payments due on the Notes.
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No Representations and Warranties given by the Vendor
The rights and obligations of the Original Senior Lender under the Senior Facility Agreement and of the
Original Junior Lender under the Junior Facility Agreement (the "Vendor") have been transferred to the
Loan Seller by way of novation pursuant to a loans transfer agreement (the "Eurynome Loans Transfer
Agreement") and transferred from the Loan Seller to the Issuer by way of novation pursuant to a loans
transfer agreement (the "Issuer Loans Transfer Agreement", and together with the Eurynome Loans
Transfer Agreement, the "Loans Transfer Agreements" ). The Vendor has not given any warranties in
respect of the Obligors' status or the Loans under the Eurynome Loan Seller Agreement. As the Issuer
becomes by operation of the Loans Transfer Agreements the Senior Lender and the Junior Lender under
the Senior Facility Agreement and the Junior Facility Agreement, respectively, neither the Issuer nor the
Issuer Security Trustee may rely on representations or warranties being given by a third party and
consequently the Issuer will not be able to claim under any indemnity for losses or a repurchase of a Loan
in case of non-performance of the Loans as would be customary in non-agency commercial mortgagebacked securitizations.
Conflicts between the Obligors, the Original Senior Lender and the Original Junior Lender
The Loans were originated by the Original Senior Lender and Original Junior Lender which is an affiliate
of the Obligors. Noteholders should be aware that whilst the Senior Facility Agreement is based on Loan
Market Association terms, the terms of the Senior Facility Agreement have not been negotiated with a
third party lender. The interests of the Original Senior Lender and Original Junior Lender may differ
from the interest of the Issuer and the prospective investors.
E
CONSIDERATIONS RELATING TO THE INSOLVENCY OF THE OBLIGORS
Risks relating to the Obligors
The Obligors, which have been established under the laws of Jersey, are subject to the provisions of
Jersey insolvency law. The Senior Facility Agreement provides that each Obligor must maintain its
Centre of Main Interests in its jurisdiction of incorporation. Although the Obligors have been established
as limited purpose entities they may, nonetheless, become insolvent and subject to insolvency
proceedings under Jersey law.
The Loan Facility Agent or the Loan Security Trustee (as the case may be) will have certain rights under
the Senior Facility Agreement if any of the Obligors becomes insolvent and subject to insolvency
proceedings, including certain rights to accelerate the Senior Loan and enforce the Loan Security.
However, the rights of creditors of an insolvent Jersey company are limited by law (please refer to the
sections entitled "Certain matters of Jersey Law" for further information). There is no moratorium for
secured creditors in Jersey. There are usual set aside risks in relation to reviewable transactions in Jersey
such as transactions at an undervalue, preferences and extortionate credit transactions.
In the event that the Loans are not repaid in full following the enforcement of the Loans and the related
Loan Security, the Issuer may not have sufficient resources to satisfy in full its obligations under the
Notes.
Collection and enforcement monitoring procedures
Under the Servicing Agreement, the Servicer or Special Servicer is required to monitor the recovery of
amounts due from the Borrowers under the Loans. The Servicer or Special Servicer must ensure that its
default and enforcement procedures meet the requirements of the Servicing Agreement. Such procedures
may, in respect of the Loans, involve: (i) the enforcement of the Loan Security (indirectly through the
Loan Security Trustee); or (ii) the deferral of formal enforcement procedures and the restructuring of the
relevant Loan by an amendment or waiver of certain provisions, subject to any restrictions in the
Servicing Agreement; or (iii) sale of the Loans. See further "Key terms of the servicing arrangements for
the Loans – Modifications, waivers, amendments and consents" and "Risks relating to the Obligors"
above.
Limitation of recoverability of legal fees in enforcement
There can be no assurance that the Issuer will be able to recover legal fees incurred or advanced in
connection with the enforcement of a Loan or the related Loan Security from the Obligors, in particular,
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to the extent that such legal fees exceed the statutory limits provided by law. There can be no assurance
that the legal fees relating to an enforcement of the Loans or the related Loan Security will fall within the
limitation of what can be charged to a debtor under applicable law. Any amounts of legal fees in excess of
such limitation could result in a shortfall to amounts that would otherwise be distributed on the Notes.
Risks relating to litigation
There may be pending or threatened legal proceedings against an Obligor, and/or their respective
affiliates arising out of ordinary business of such Obligor.
The Obligors represent on the date of this Offering Circular and will represent again on the Closing Date
under the Senior Facility Agreement that no litigation which is reasonably likely to be adversely
determined and if so adversely determined might reasonably be expected to have a Material Adverse
Effect have (to the best of its knowledge and belief) been started or threatened against it.
F
CONSIDERATIONS RELATING TO THE PROPERTIES
Legal title in relation to the Portfolio
As of the date of this Offering Circular, 3 Properties have not yet been registered in the name of the
relevant Borrower. The Obligors' solicitors are progressing such registration, pursuant to undertakings
given. Until such time as registration has been completed, the mortgages granted in respect of these
Properties in England and Wales will take effect as equitable rather than legal mortgages. There can be no
assurances regarding the timing or success of this registration process.
Review of the Properties
As at the Cut-Off Date, the Portfolio comprised 172 properties and 3 properties have since been sold.
The summaries (prepared by the Obligor's solicitors) in relation to the Titan Properties and Pecan
Purchaser Legal Reports (prepared by the Obligor's solicitors as certificates of title) in relation to the
Pecan Properties relate to a total of 169 properties which is comprised of:
(a)
155 Titan Properties, of which 132 are in England and Wales and 23 are in Scotland. In relation
to the 133 properties in England and Wales, there are 115 freehold properties, 11 leasehold
properties and 6 properties which are part freehold and part leasehold. In relation to the 23
properties in Scotland, there are 19 freehold (heritable) properties and 2 leasehold properties and
2 properties that are part freehold (heritable) and part leasehold.
(b)
14 Pecan Properties, all of which are freehold properties located in England and Wales.
It is anticipated that up to 10 of the Properties in the Portfolio may be sold prior to the Closing Date.
Titan Properties
The summarys (prepared by the Obligor's solicitors) disclosed, inter alia, the following matters in relation
to specific Titan Properties of which prospective Noteholders should be aware:
English Properties
(a)
4 of the 11 leasehold only Titan Properties in England and Wales require the landlord's consent to
assign the headlease. In the event that the Loan Security Trustee were to exercise its power of
sale on the enforcement of the Loan Security in respect of any affected leasehold Property, the
consent of the landlord would be required. However, in each case the landlord's consent is not to
be unreasonably withheld. There are a further 3 leasehold Properties where it is not known
whether consent to assign is required because a copy of the headlease is unavailable or illegible.
(b)
8 of the 11 wholly leasehold Titan Properties in England and Wales are held pursuant to one or
more lease which contains forfeiture provisions. 5 of the 6 Titan Properties in England and
Wales which are part freehold and part leasehold are held pursuant to one or more leases which
contain forfeiture provisions. In the case of non-payment of rent and other remediable breaches
in relation to leasehold titles to Properties in England or Wales, the tenant (or the tenant's
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mortgagee such as the Loan Security Trustee) is likely (provided that it does remedy such nonpayment or other breach) to obtain relief from any attempts to terminate the lease (i.e. forfeiture)
thus preventing termination of the lease. The Borrowers have undertaken under the Facility
Agreement to comply with the terms of the headleases.
(c)
5 of the Titan Properties in England contain restrictions on title. In the event that the Loan
Security Trustee were to exercise its power of sale on the enforcement of the Loan Security in
respect of any affected Properties, the requirements of the restriction would need to be satisfied
to enable registration of the transfer at the Land Registry. In the case of all 5 of these properties,
the restriction on title can be satisfied by delivery of a deed of covenant.
(d)
The leasehold property, 39 Queens Square, Corby, MM17 1PD requires the landlord's consent to
charge the property. Consent was obtained for the previous charge over the property, and further
consent will be obtained for the new charge over the property prior to closing.
(e)
A restriction affecting the freehold property 179-181 King Street, Great Yarmouth, NR30 1LS
states that no disposition (which includes a charge) is to be registered at Land Registry without a
certificate from the transferee's solicitor confirming that a covenant (covenanting to comply with
certain maintenance covenants for the benefit of the adjoining owners contained in a transfer
dated 20 January 2003 made between (1) Electricity Supply Nominees Limited and (2) Edgehill
Portfolio No.1 Limited) has been entered into by the transferee or other person to whom the
disposition is made. The wording of the restriction is not clear, as although the restriction
captures a charge and contemplates a covenant being required from a chargee (being a person to
whom the disposition is made), in order to satisfy the restriction, it requires a certificate from the
solicitors for the transferee (rather than the registered proprietor or the disponee) confirming that
a covenant has been entered into. In the case of a disposition by way of a charge, there is no
transferee. However, there is a risk that the charge may be required to enter into a deed of
covenant in order to satisfy the restriction and enable the registration of the charge.
Scottish Properties
(a)
3 of the leasehold Titan Properties in Scotland require landlord consent to sub-let. The landlord’s
consent is not to be unreasonably withheld. Whilst this does not restrict the ability to charge the
lease nor a lender’s right on enforcement it is a curtailment upon the Borrower’s and thus a
curtailment upon a lender’s ability to dispose of the property in the event of enforcement. If
outright assignation of the tenant’s interest is not possible, sub-letting is possible but only with
consent of the head landlord. Accordingly a lender would require to also obtain landlord consent
before it could validly sub-let the borrower’s interest in the property to realise the value
underpinned by the security.
(b)
All the 4 leasehold Titan Properties in Scotland require head landlord’s consent to assign the
head lease. The head landlord’s consent is not to be unreasonably withheld. Accordingly a lender
would require to also obtain landlord consent before it could validly sell the borrower’s interest
in the property to realise the value underpinned by the security.
(c)
None of the Titan Properties in Scotland require consent to charge albeit there are 3 leasehold
properties where a precedent exists for obtaining consent albeit it is not formally required and in
respect of the existing securities granted to US Bank Trustees Limited as security for the Titan
Existing Loan no such consent was obtained.
(d)
All of the 4 leasehold Titan Properties in Scotland are held by one or more lease which contains a
landlord right to terminate (by irritancy/forfeiture) on insolvency. However only in respect of 2
properties the following provisions mitigate against termination upon insolvency as follows
(please note there is no statutory relief in Scotland from forfeiture or irritancy upon insolvency
and any relief is purely contractual if contained within the lease):
(i)
Redmoss (Property Reference 305) - if the tenant becomes insolvent, the lender must be
notified and the lender can opt to call up the charge and take possession of the
borrower’s interest and remedy the breach, instead of allowing the landlord to forfeit or
irritate the lease.
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(ii)
St Vincent Place Lanark (Property Reference 113) – if the tenant becomes insolvent the
lender must be notified and the lender can opt (without calling up the charge) to step into
the tenant's role under the lease and if they choose to do so the Landlord cannot progress
to irritancy unless the breach remains unremedied.
Pecan Properties
The Pecan Purchaser Legal Reports (prepared by the Obligor's solicitors as certificates of title) did not
disclose any matters in relation to specific Pecan Properties of which prospective Noteholders should be
aware.
Scope of the Legal Review
With regard to the Titan Properties, a limited legal review exercise was carried out prior to the acquisition
date of the Properties in connection with the Titan Acquisition as described in the "Property Acquisition
Process And Loan Origination" section below. In order to mitigate against any risk associated with the
limited legal review carried out, Title Insurance (details of which are set out in "Property Acquisition
Process And Loan Origination" section below) was taken out in respect of the Titan Properties.
The Certificates of Title in respect of the Pecan Properties are in the standard form of The City of London
Law Society (CLLS) Certificate of Title (7th edition), save that in relation to the occupational leases, the
Certificates of Title depart from the CLLS form and report only on the key lease terms (premises, lease,
agreement for lease, statutory rights, term, tenant, rent, rent review, alienation, repair, alterations, user,
insurance, service charge, forfeiture, tenancy schedule, tenant breaches and onerous provisions and
material omissions) and therefore the scope of the Certificates of Title is qualified accordingly.
Performance Risks
The repayment of the Loans may be, and the payment of interest on the Loans is, dependent on the ability
of the Properties to generate cashflow. There are two primary risks involved in relation to the Properties:
(i) that underlying Property cashflows will be insufficient to service the interest payments and principal
repayments over the life of the Loan; and (ii) that proceeds from the sale or refinancing of the Properties
will be insufficient to repay each Loan at maturity. In both cases, the relevant Borrower's ability to make
payments on the Loans may be impaired which would affect the Issuer's ability to make payments under
the Notes.
The income-producing capacity of, and accordingly the cash flow from, the Properties may be adversely
affected by a large number of factors. Some of these factors relate specifically to a Property itself, such as
the age, design and construction quality of the Property; perceptions regarding the safety, convenience
and attractiveness of the Property; the proximity and attractiveness of competing properties; the adequacy
of the Property's management and maintenance; and an increase in the capital expenditure needed to
maintain the relevant Property or make improvements. The relevant Borrowers' ability to perform will
depend upon the continuity of substantial rental payments under the leases pertaining to the Properties.
An increase of vacancy rates or delinquency of a significant number of tenants under their leases may
adversely affect such continuity. In addition, restrictions in relation to rent increases and termination
rights, such as the privatisation restrictions, could cause the Borrowers to experience delays in recovering
rental payments. Rental levels, operating expenses and available space, the quality and location of the
Properties, their amenities, transport infrastructure and the age of the Properties are also factors bearing
upon tenant demand.
Other factors which could have an impact on the value of a Property are more general in nature, such as:
national, regional or local economic conditions (including plant closures, industry slowdowns and
unemployment rates); local property conditions from time to time (such as an oversupply or under supply
of space); demographic factors; consumer confidence; consumer tastes and preferences; retrospective
changes in building codes or other regulatory changes; changes in governmental regulations, fiscal policy,
planning/zoning or tax laws; potential environmental legislation or liabilities or other legal liabilities; the
availability of refinancing; and changes in interest rate levels or yields required by investors in incomeproducing commercial properties.
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Risks relating to tenants and leases
The Borrowers will generally rely on periodic service charge payments from tenants to pay for
maintenance and other operating expenses in respect of the Properties, and periodic rental payments to
service the Loans and any other debt or obligations they have outstanding.
There can be no guarantee that tenants will renew leases upon expiry or refrain from terminating leases
early when they have the ability to do so. In respect of some lease agreements the lease term has expired
or will expire in the near future.
There can also be no guarantee that a tenant will remain solvent and able to perform its obligations
throughout the term of its lease. With regard to the Properties, income from, and the market value of, the
Properties would be adversely affected if the Properties could not be re-let, if tenants were unable to meet
their lease obligations, if a significant tenant (or a number of smaller tenants) were to become insolvent,
or if for any other reason, rental payments could not be collected.
Additional considerations could cause tenants in the Properties to cease making payments under their
leases (including, without limitation, as a result of the poor performance of a tenant's business, or as a
result of exercising rights of set-off available (where applicable) under a lease or under law).
Set-off of rental payments
It is possible that a tenant may seek to set-off part of its rent in the event that there is a dispute between a
Borrower (as landlord) and such tenant, or if a Borrower breaches the tenant's rights of quiet enjoyment,
or if the Borrower fails to meet its obligation to keep the relevant Property in repair.
The exercise of such set-off could, if exercised across a significant number of Properties, materially
reduce the amount of net rental income available, the relevant Borrower(s)' ability to make payments
under the Loans and therefore, the Issuer's ability to make payments under the Notes.
Unanticipated Property condition assessments
A Borrower could be exposed to unexpected problems or unrecognised risks, such as unanticipated delays
in the implementation of unforeseen maintenance, refurbishment or modernisation measures in
connection with the Properties which it owns. As a result of those particular circumstances, the relevant
Borrower might be unable to let a Property or implement rent increases and the Borrowers' financial
condition could deteriorate and the value of the relevant Properties could decline.
In respect of the majority of leases the tenants are responsible for the costs of repairing and maintaining
the relevant Properties either directly or through service charges or similar provisions. However, the
Borrowers may in unanticipated circumstances be required to carry out certain repairs and maintenance
on the Properties and this could be time consuming and expensive. In connection with this, risks can arise
in the form of higher costs than anticipated or unforeseen additional expenses for maintenance repair or
modernisation that cannot be passed on to tenants. Moreover, work can be delayed, for example, because
of bad weather, poor performance or insolvency of contractors or the discovery of unforeseen structural
defects.
Under the Senior Facility Agreement the Company has on the Closing Date paid £1,117,499 into the
Capex Contingency Reserve Account which is available to the Borrowers to fund capital expenditure
during the term of the Senior Loan. In the ordinary course of events the Borrowers do not anticipate
incurring substantial amounts in relation to capital expenditure. It is possible that unanticipated or
unforeseen Capital Expenditure which cannot be funded in full from the Capex Contingency Reserve
Account could lead to a diminution in the value of the relevant Properties. In turn such a scenario could
impact on the liquidation or refinancing value thereof and hence the ability to generate sufficient disposal
proceeds or refinancing proceeds. The possibility of such diminution in value could be increased if
enforcement proceedings following a Senior Loan Event of Default are protracted. Each Obligor is under
an obligation in the Senior Facility Agreement to use commercially reasonable endeavours to spend on
any Property it owns the amount paid into the Capex Contingency Reserve Account.
Risks relating to environmental laws
The Properties could be exposed to risks from residual pollution.
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It is possible that the Properties contain ground contamination, hazardous materials, other residual
pollution and/or wartime relics (including potentially unexploded ordnance). Moreover, building
components might contain hazardous substances (such as polychlorinated biphenyls or asbestos), or the
Properties could bear other environmental risks. This could result in cost intensive exercises to remove
such wartime ordnance, hazardous materials, residual pollution or contamination. The discovery of such
residual pollution, particularly in connection with the lease or sale of Properties, can also trigger claims
for rent reductions, termination of leases, damages and other claims for breach of warranty. The
remediation of any pollution and the related additional measures could involve considerable additional
costs. It may not be possible to take recourse against the polluter or the previous owners of the relevant
Properties. Moreover, the existence or even merely the suspicion of the existence of wartime ordnance,
hazardous materials, residual pollution or ground contamination can negatively affect the value of a
Property and the ability to lease or sell such a Property.
In addition, modernisation of Properties may be necessary to meet evolving legal requirements, such as
provisions relating to energy savings, particularly in relation to those Properties that have an Energy
Performance Certificate G. Such measures can be large scale and expensive and may adversely affect the
net operating income generated by the Properties.
Prospective Noteholders should be aware that a large portion of the Portfolio by market value and number
are located in high street premises and are exposed to a lesser risk of environmental liability. See the
section entitled "Description of the Portfolio" for more details.
Although at the time of origination of the Senior Loan an environmental assessment was carried out in
respect of certain of the Properties there can be no assurance that all environmental risks have been
identified. For further details please see the section entitled "Property Acquisition Process and Loans
Origination".
Limitations of valuations
Strutt & Parker has produced the Pecan Appraisal. According to the Pecan Appraisal, the aggregate
market value of the Pecan Properties was £52,585,000.00 as at 1 October 2015.
Cushman & Wakefield has produced the Titan Appraisal. According to the Titan Appraisal, the aggregate
market value of the Titan Properties was £214, 002,500 as at 31 August 2015.
There can be no assurance that the market value of the Portfolio will continue to be equal to or exceed the
valuations given to the Portfolio in the Appraisals, or that the value of the Portfolio has not changed
materially since the date of the relevant Appraisal. Assumptions often differ from the current facts
regarding such matters and are subject to various risks and contingencies, many of which are not within
the control of the Issuer, the Note Trustee, the Issuer Security Trustee or the Borrowers.
Some of the assumptions in the Appraisals might not materialise, and unanticipated events and
circumstances may occur or have occurred subsequent to the date of this valuation. As the market value
of the Portfolio fluctuates, there can be no assurance that the market value of the Portfolio will be equal to
or greater than the unpaid principal and accrued interest and any other amounts due under the Loans.
Therefore, the actual results achieved may vary from the related valuation and such variations may be
material.
In general, valuations represent the analysis and opinion of qualified valuers and are not guarantees of
present or future value. One valuer may reach a different conclusion than the conclusion that would be
reached if a different valuer were appraising the same property, even if theoretically prepared on the same
basis.
Risks relating to asset management and advisory services
The net cashflow realised from and/or the residual value of the Properties may be affected by
management decisions. The Asset Manager has wide discretions: in particular, the Asset Manager may be
responsible for monitoring the vacancy of units at the Properties and procuring compliance with tenants'
lease obligations and insurance obligations. The Asset Manager also has wide duties including
supervising the Managing Agent in the provision of its management services, providing strategic advice
to each relevant Borrower with the aim of advancing the value of each relevant Property and preparing
annual operating plans addressing matters concerning the estimate of working capital requirements and
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operating budgets for each relevant Property. The Asset Manager will also liaise with potential tenants
and submit details of such potential tenants to and the proposed terms of a tenancy to the relevant
Borrower.
While such persons are experienced in managing commercial properties, there can be no assurance that
decisions taken by them or by any future Asset Manager or advisor will not adversely affect the values
and/or cashflows of the Properties. The Asset Manager is mandated to provide services in accordance
with a business plan for the Properties. Any delays in the implementation of the business plan by the
Asset Manager may have an impact on the timing of repayment of the Loans and, consequently, payments
under the Notes.
The successful operation of a real estate project depends upon an Asset Manager's and a Managing
Agent's performance and viability. Together they are generally responsible for responding to changes in
the local market and planning and implementing the rental structure.
Property deriving revenues primarily from short-term sources, such as portfolios comprising a large
number of properties, are generally more management intensive than properties leased to creditworthy
tenants under long-term leases. Given the number of Properties and the number of Occupational Leases,
the Portfolio requires intensive management and a good relationship with tenants in order to maintain and
enhance income, minimise vacancy rates and also to ensure the Properties are kept in good order.
A good Asset Manager and a good advisor, by controlling costs, providing appropriate service to tenants
and seeing to the maintenance of improvements, can improve cashflow, reduce vacancy, leasing and
repair costs and preserve the building's value. On the other hand, management errors can, in some cases,
impair short-term cashflow and the long-term viability of an income producing property.
Under the terms of the Asset Management Agreement the Borrowers will have the right to terminate the
appointment of the Asset Manager in the event of a failure by the Asset Manager to comply with any
material provision of the Asset Management Agreement or if the Asset Manager acts outside the scope of
its authority or for certain other Asset Management Agreement Event of Defaults. See the section entitled
"Management and Administration of the Properties" for further details.
However, no representation or warranty can be made as to the skills or experience of any present or future
managers or advisors. Additionally, there can be no assurance that the Asset Manager will be in a
financial condition to fulfill their respective management responsibilities throughout the term of its
engagement.
Cashflow calculations
Cashflow figures in relation to the Portfolio contained in this Offering Circular are based on specific
assumptions which cannot be taken as an indication of any future cashflows with respect to the Properties.
Each investor should make its own determination of the appropriate assumptions to be used in
determining the cashflow to be generated in relation to the Portfolio.
Insurance
Each Obligor has undertaken in the Senior Facility Agreement that it will ensure certain insurances are in
full force and effect (for further details refer to the "Description of the Senior Facility Agreement"
section).
There is no assurance the Obligors will procure the maintenance of the insurances required under the
Senior Facility Agreement or that such insurances will be adequate. Moreover, if reconstruction or any
major repairs are required, changes in laws or planning requirements may materially affect the relevant
Borrower's ability to effect any reconstruction or major repairs or may materially increase the costs of the
reconstruction or repairs.
Certain types of risks and losses (such as losses resulting from war, terrorism, nuclear radiation,
radioactive contamination and heaving or settling of structures) may be or become either uninsurable or
not economically insurable or are not covered by the required insurance policies. Other risks might
become uninsurable (or not economically insurable) in the future. If an uninsured or uninsurable loss
were to occur, the affected Borrower might not have sufficient funds to repay in full all amounts owing
under by it under the Senior Facility Agreement.
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Compulsory purchase
Any property in the United Kingdom may at any time be compulsorily acquired by a public authority
possessing compulsory purchase powers (for instance, local authorities and statutory undertakers
(including electricity, gas, water and railway undertakers) in respect of their statutory functions) if it can
demonstrate that the acquisition is required. Any promoter of a compulsory purchase order would need to
demonstrate that the compulsory purchase was necessary or desirable for the promoter's statutory
functions and/or in the public interest. Compulsory purchase of a property can also lead to a reduction in
the rent payable under an occupational lease which is subject to the compulsory purchase.
As a general rule, if an order is made in respect of all or any part of a property, compensation would be
payable on a basis equivalent to the open market value of all the owners' and any occupational tenants'
proprietary interests in the relevant property at the time of the purchase, so far as those interests are
included in the order, taking account of diminution in value of any retained land and other adverse
impacts of the compulsory purchase. There is often a delay between the compulsory purchase of a
property and payment of the compensation, although advance interim payments of compensation may be
available where the acquiring authority takes possession before compensation has been granted. Should a
Property be subject to a compulsory purchase and should such a delay occur, then, unless the Obligors
have other funds available, a Senior Loan Event of Default may occur.
If a compulsory purchase order is made in respect of one or more of the Properties or parts of the one or
more of the Properties, there is no guarantee that the amount of compensation received in connection with
any compulsory purchase order would not have an adverse effect on the ability of the Borrowers to make
payments under the Loans (if they do not have other funds available). This means that the amount
received from the proceeds of the purchase of the freehold or leasehold estate may not be equal to the
Allocated Loan Amount for the relevant Property. Accordingly, it is possible that a compulsory purchase
order in respect of all or part of a Property may have an adverse effect on the resources available to the
Issuer to make payments on the Notes.
The asset mix and the risk profile of the Portfolio may change over time as a result of disposal of
Properties
The asset mix and the risk profile of the Portfolio is likely to change over time due to the disposal of
certain Properties in accordance with the terms of the Senior Facility Agreement. Each Property is
classified as a Tier 1 Property or a Tier 2 Property, with the release price (which determines the amount
payable on its disposal) for each Property reflecting its classification.
Competition from new shopping centres, other retail premises and other retail sales channels,
including the internet, could have an adverse effect on the Obligors' business, financial condition and
results of operations
As at the date of this Offering Circular 69 per cent. of the Portfolio comprises retail property. The
Obligors face competition from other United Kingdom and international property groups and other
commercial organisations active in the United Kingdom property market. The Properties compete with
other retail offerings within their catchment area. The amount of lettable space in the relevant area, the
quality of facilities and the nature of stores at such competing retail offerings could each have a material
adverse effect on the Obligors' ability to retain tenants, lease space and on the level of rent they can
obtain.
Further, retailers at the Properties face increasing competition from other forms of retailing including
shopping via the internet and also retail parks, supermarkets, discount shopping centres and clubs, outlet
malls, catalogues, video and home shopping networks, direct mail and telemarketing, all of which may
impact on the demand for the Obligors' retail space.
Any of the foregoing factors could have an adverse effect on the Obligors' business, financial condition
and/or results of operations resulting in an adverse effect on the Borrowers' ability to make payments
under the Loans, which in turn, would have an adverse effect on the Issuer's ability to make payments
under the Notes.
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OVERVIEW OF THE KEY PROVISIONS OF THE NOTES
Please refer to the section entitled "Terms and Conditions of the Notes" for further details in respect of
the terms of the Notes.
Ranking (interest and
principal)
The Notes constitute unconditional direct, secured and limited recourse
obligations of the Issuer. The Notes of each Class will rank pari passu
without any preference or priority among themselves as to payments of
interest and principal at all times.
With respect to the obligation of the Issuer to pay Non-Excess Interest
and principal in respect of the Notes at all times:
(a)
the Class A Notes rank pari passu without preference or priority
among themselves and senior to all other Classes of Notes as
provided in the Conditions and the Issuer Transaction
Documents;
(b)
the Class B Notes rank pari passu without preference or priority
among themselves and senior to the Class C Notes and the
Junior Notes, but junior to the Class A Notes as provided in the
Conditions and the Issuer Transaction Documents;
(c)
the Class C Notes rank pari passu without preference or priority
among themselves and senior to the Class D Notes, but junior to
the Class A Notes and the Class B Notes as provided in the
Conditions and the Issuer Transaction Documents;
(d)
the Class D Notes rank pari passu without preference or priority
among themselves and senior to the Junior Notes, but junior to
the Class A Notes, the Class B Notes and the Class C Notes as
provided in the Conditions and the Issuer Transaction
Documents; and
(e)
the Junior Notes rank pari passu without preference or priority
among themselves but junior to the Senior Notes as provided in
the Conditions and the Issuer Transaction Documents.
"Non-Excess Interest" means (i) for each Note Interest Period
commencing prior to the Senior Loan Final Repayment Date, all interest
due on the Notes, and (ii) for each Note Interest Period commencing on
or following the Senior Loan Final Repayment Date, all interest due on
the Notes other than Note LIBOR Excess Amounts (as defined below).
Interest
The Rate of Interest applicable to the Senior Notes of each Class for any
Note Interest Period will be equal to (a) Note LIBOR (or, in the case of
the first Note Interest Period, one-month LIBOR) plus (b) the relevant
Note Margin.
For each Note Interest Period occurring on or after the Senior Loan Final
Repayment Date, the Note LIBOR component of the Rate of Interest
applicable to the Senior Notes will be subject to a cap of 5 per cent. per
annum, with any excess amounts being deferred in the manner described
under "Note LIBOR Excess Amounts" below.
The Rate of Interest applicable to the Junior Notes shall be a fixed rate
of 6 per cent. per annum
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Note
LIBOR
Amounts
Excess
For each Note Interest Period commencing on or after the Loan Final
Repayment Date, the amount of interest (if any) due on each Class of
Notes which represents the amount by which Note LIBOR exceeds 5 per
cent. will be a "Note LIBOR Excess Amount" which shall be
calculated as follows:
(A×(B-C))×D
Where:
A = Principal Amount Outstanding of the Notes on such Note Payment
Date;
B = Note LIBOR;
C = 5 per cent. per annum; and
D = Day Count Fraction,
provided that the Note LIBOR Excess Amount will not be less than zero.
For each Note Interest Period commencing prior to the Senior Loan
Final Repayment Date, no amount of interest will constitute a Note
LIBOR Excess Amount.
Payment of the Note LIBOR Excess Amount will be subordinated to,
inter alia, the payment of all other amounts of interest and principal due
on each Class. The ratings assigned to the Senior Notes do not address
payment of any Note LIBOR Excess Amount in respect of the Senior
Notes.
Note Prepayment Fee
Amounts
Note Prepayment Fee Amounts will be payable by the Issuer in respect
of those Classes of Notes which have been subject to a mandatory
redemption in part by reason of a prepayment of the Senior Loan (see
"Cashflow and Issuer Priorities of Payments").
Prepayment Fees are payable by the Borrowers in accordance with the
prepayment provisions in the Senior Facility Agreement (see
"Description of the Senior Facility Agreement").
The ratings of the Senior Notes assigned by the Rating Agencies do not
address the likelihood of receipt of any Note Prepayment Fee Amounts.
Deferral
To the extent that, on any Note Payment Date, there are insufficient
Available Funds to pay the full amount of interest on any Class of Notes
(other than Non-Excess Interest on the Most Senior Class of Notes then
outstanding) or Note Prepayment Fee Amounts due on such Notes, the
amount of the shortfall in:
(a)
interest (including any interest which comprises Note LIBOR
Excess Amounts) (the "Deferred Interest"); or
(b)
Senior Note Extension Fees (the "Deferred Senior Note
Extension Fee Amount"); or
(c)
Note Prepayment Fee Amounts
Prepayment Fee Amount"),
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(the
"Deferred
Note
will not fall due on that Note Payment Date. Instead, the Issuer shall, in
respect of each affected Class of Notes, create a provision in its accounts
for the related Deferred Interest and/or Deferred Note LIBOR Excess
Amount and/or Deferred Note Prepayment Fee Amount and/or Deferred
Senior Note Extension Fee Amount on the relevant Note Payment Date.
Such Deferred Interest, Deferred Note LIBOR Excess Amount, Deferred
Note Prepayment Fee Amount and/or Deferred Senior Note Extension
Fee Amount shall accrue interest at the same rate as that payable in
respect of the related Class of Notes from the date of deferral.
Such Deferred Interest, Deferred Note LIBOR Excess Amount, Deferred
Note Prepayment Fee Amount and/or Deferred Senior Note Extension
Fee Amount shall be payable together with such accrued interest on the
earlier of: (i) any succeeding Note Payment Date when any such
Deferred Interest, Deferred Note LIBOR Excess Amount and/or
Deferred Note Prepayment Fee Amount, Deferred Senior Note
Extension Fee Amount and accrued interest thereon shall be paid, but
only if and to the extent that, on such Note Payment Date, there are
sufficient Available Funds (after allowing for the Issuer's liabilities of
higher priority in accordance with the applicable Issuer Priority of
Payments and subject to and in accordance with the Conditions); and (ii)
the date on which the relevant Notes are due to be redeemed in full,
subject to the Conditions.
"Most Senior Class" means, at any time:
Extension of the Senior
Loan
(a)
the Class A Notes or the Class A Noteholders; or
(b)
if no Class A Notes are then outstanding, the Class B Notes or
the Class B Noteholders (if at that time any Class B Notes are
then outstanding); or
(c)
if no Class A Notes or Class B Notes are then outstanding, the
Class C Notes or the Class C Noteholders (if at that time any
Class C Notes are then outstanding); or
(d)
if no Class A Notes, Class B Notes or Class C Notes are then
outstanding, the Class D Notes or the Class D Noteholders (if at
that time any Class D Notes are then outstanding); or
(e)
if no Senior Notes are then outstanding, the Junior Notes or the
Junior Noteholders (if at that time any Junior Notes are then
outstanding).
Pursuant to the terms of the Senior Facility Agreement, the Company
may, by notice to the Loan Facility Agent not more than 60 days and not
less than 30 days before the third anniversary of the date of the Senior
Facility Agreement, request that the Senior Loan Initial Repayment Date
be extended for a further period of one year to end on the Loan Payment
Date falling in January 2020 (the "Loan Extension Option")
The right of the Company to exercise the Loan Extension Option will be
subject to certain conditions as set out in "Description of the Facility
Agreement - Repayment and extension", below. The conditions include:
(a)
that no Senior Loan Event of Default is continuing or would
result from the extension of the Senior Loan Initial Repayment
Date,
(b)
hedging arrangements being in place for the further period of
one year for an aggregate notional amount of not less than the
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outstanding amount of the Senior Loan on the date of the
extension and with a strike rate which is not higher than 5 per
cent, per annum;
(c)
the Senior Loan being in an amount not exceeding 40 per cent,
of the Senior Loan utilised within the Availability Period; and
(d)
the Senior Loan Extension Fee having been paid in full.
"Senior Loan Extension Fee" means a fee in an amount equal to 0.25
per cent. of the total outstanding principal amount of the Senior Loan as
at the date of the Loan Extension Option.
If the Company wishes to exercise the Loan Extension Option, the
Senior Loan Final Repayment Date will be extended to the date which is
12 months after the Senior Loan Initial Repayment Date.
If the Loan Extension Option is exercised, then on the Note Payment
Date immediately following the date on which the Company pays the
Senior Loan Extension Fee, the Issuer shall be required to pay a fee in
respect of each Class of Senior Notes equal to 0.25 per cent, of the
Principal Amount Outstanding of such Class of Senior Notes on the date
the Company makes the request to exercise the Second Loan Extension
Option (the "Senior Note Extension Fee").
The payment of this is subordinated to, inter alia, the payment of interest
on and repayment of principal of the Senior Notes. The ratings assigned
to the Notes do not address the likelihood of receipt of any Senior Note
Extension Fee.
Issuer Security
Pursuant to the Issuer Deed of Charge and as further described in
Condition 3.2 (Security), the Issuer will grant the following security
interests to the Issuer Security Trustee (on trust for itself and for the
other Issuer Secured Creditors) to secure the obligations of the Issuer to
the Noteholders and the other Issuer Secured Creditors:
(a)
an assignment (or to the extent not assignable, a charge by way
of first fixed charge) of the Issuer's rights in respect of the Issuer
Charged Documents (including an assignation of its rights in
and to its beneficial interest in the Scottish Security
Agreements);
(b)
an assignment (or to the extent not assignable, a charge by way
of first fixed charge) of the Issuer's rights in respect of any
amount standing from time to time to the credit of the Issuer
Accounts (other than the Issuer Proceeds Account);
(c)
a first fixed charge over the Issuer's rights in respect of all
shares, stocks, debentures, bonds or other securities and
investments owned by it or held by a nominee on its behalf; and
(d)
a first ranking floating charge over (i) all of the Issuer's assets
(other than those subject to the fixed charges or assignments as
described in paragraphs (a) to (c) above and the Issuer Proceeds
Account); and (ii) all of the Issuer's assets (if any) located in
Scotland or otherwise governed by Scots law.
Pursuant to the Issuer Security Agreement and as further described in
Condition 3.2 (Security), the Issuer will grant a security interest in
respect of its rights title and interest in the Senior Facility Agreement
and the Junior Facility Agreement to the Issuer Security Trustee (on trust
for itself and for the other Issuer Secured Creditors) to secure the
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obligations of the Issuer to the Noteholders and the other Issuer Secured
Creditors.
In the event of enforcement of the Issuer Security, certain of the Issuer
Secured Creditors will rank senior to the Issuer's obligations under the
Notes in respect of the allocation of proceeds as set out in the PostEnforcement Priority of Payments.
In this Offering Circular:
"Issuer Charged Documents" means the Issuer Transaction Documents
and the Senior Finance Documents to which the Issuer is a party and all
other contracts, documents, agreements and deeds to which it is, or may
become, a party (other than the Issuer Deed of Charge, the Note Trust
Deed and the Issuer Security Agreement).
"Issuer Charged Property" means all the property of the Issuer which
is subject to the Issuer Security.
"Issuer Deed of Charge" means the deed of charge dated on or around
the Closing Date between the Issuer, the Note Trustee, the Issuer
Security Trustee and the other Issuer Secured Creditors (other than the
Noteholders).
"Issuer Proceeds Account" means a segregated bank account held by
the Issuer.
"Issuer Secured Liabilities" means all present and future monies,
obligations and liabilities (whether actual or contingent) incurred or
otherwise payable by or on behalf of the Issuer to the Issuer Secured
Creditors under the Notes and the other Issuer Transaction Documents
(including payments of interest on and repayments of principal in respect
of the Notes).
"Issuer Security" means the security interests created in favour of the
Issuer Security Trustee on trust for itself and the other Issuer Secured
Creditors pursuant to the Issuer Deed of Charge and the Issuer Security
Agreement.
"Issuer Security Agreement" means the Jersey law security interest
agreement over certain contract rights dated on or around the Closing
Date between the Issuer and Issuer Security Trustee.
"Issuer Transaction Documents" means any of the following
documents and any amendments thereto from time to time:
(a)
the Note Trust Deed;
(b)
the Issuer Deed of Charge;
(c)
the Issuer Security Agreement;
(d)
the Servicing Agreement;
(e)
the Cash Management Agreement;
(f)
the Issuer Account Bank Agreement;
(g)
the Corporate Services Agreement;
(h)
the Master Definitions Schedule;
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(i)
the Loans Transfer Agreements;
(j)
the Agency Agreement; and
(k)
any other document designated as such by the Issuer and the
Issuer Security Trustee.
Taxation
As described in Condition 8 (Taxation), all payments in respect of the
Notes by or on behalf of the Issuer will be made without withholding or
deduction for or on account of any present or future taxes, duties or
charges of whatsoever nature unless the Issuer or any relevant Paying
Agent is required by applicable law in any jurisdiction to make any
payment in respect of the Notes subject to any such withholding or
deduction. In that event, the Issuer or such Paying Agent (as the case
may be) shall make such payment after such withholding or deduction
has been made and shall account to the relevant authorities for the
amount so required to be withheld or deducted. Neither the Issuer nor
any Paying Agent or any other person will be obliged to make any
additional payments to holders of Notes in respect of such withholding
or deduction.
Final redemption
Unless previously redeemed in full and cancelled, the Issuer will redeem
the Senior Notes at their respective Principal Amount Outstanding
together with accrued interest on the Final Note Maturity Date as fully
set out in Condition 7.1 (Final redemption of the Senior Notes).
Redemption of the Junior
Notes
Immediately following the redemption of the Senior Notes in full, the
Junior Notes will be redeemed at their respective Principal Amount
Outstanding together with accrued interest on the Final Note Maturity
Date as fully set out in Condition 7.2 (Redemption of the Junior Notes).
Mandatory redemption
from Principal Receipts
On each Note Payment Date, unless previously redeemed in full and
cancelled, each Class of Senior Notes is subject to mandatory early
redemption in part:
(a)
each Class of Senior Notes is subject to mandatory early
redemption in part on each Note Payment Date
(i)
prior to the occurrence of a Loan Failure Event or the
delivery of a Note Acceleration Notice, in an amount
equal to Senior Principal Receipts received by the
Issuer; and
(ii)
on and following a Loan Failure Event or the delivery
of a Note Acceleration Notice, in an amount equal to
Available Funds received by the Issuer less all amounts
to be applied to make payments or provisions of a
higher priority in the relevant Priority of Payments,
each as more fully set out in Condition 7.3 (Mandatory
Redemption from Principal Receipts); and
(b)
Optional redemption for
Tax and other reasons
the Junior Notes will be subject to mandatory early redemption
in part on each Note Payment Date to the extent of the Junior
Principal Receipts, if any, on such Note Payment Date subject to
the relevant Priority of Payments.
As described in Condition 7.4 (Optional redemption for tax and other
reasons), if either (i) by reason of a change in the tax law of the United
Kingdom or Ireland or any other jurisdiction, the Issuer or any Paying
Agent on its behalf would be required to deduct or withhold from any
payment of principal or interest in respect of any Note for any amount or
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on account of any present or future taxes, duties, assessments or
governmental charges and such requirement cannot be avoided by the
Issuer taking reasonable measures available to it; (ii) by reason of a
change in law (or the application or official interpretation thereof) it
becomes or will become unlawful for the Issuer to make, fund or allow
to remain outstanding all or any of the Notes or advances under the
Facility Agreements; or (iii) any amount payable by the Borrowers in
respect of the Loans is reduced or ceases to be receivable (whether or not
actually received), the Issuer may in certain circumstances redeem all of
the Notes in an amount equal to the then respective aggregate Principal
Amounts Outstanding plus interest and other amounts accrued and
unpaid thereon.
Optional redemption in full
As described in Condition 7.5 (Optional redemption in full), upon giving
not more than 60 and not fewer than 30 days' written notice to the Note
Trustee, the Paying Agents and the Noteholders, the Issuer may redeem
all of the Notes in full, provided that, immediately prior to such
redemption, the then aggregate Principal Amount Outstanding of all the
Notes is less than 10 per cent, of their Principal Amount Outstanding as
at the Closing Date.
Any Note redeemed in whole or in part pursuant to the above
redemption provisions will be redeemed at an amount equal to the
Principal Amount Outstanding of the relevant Note to be redeemed
together with:
(a)
accrued (and unpaid) interest on the Principal Amount
Outstanding of; and
(b)
other accrued but unpaid amounts on,
the relevant Note up to (but excluding) the date of redemption.
Note Events of Default
The Note Events of Default are described in more detail in Condition 10
(Note Events of Default) and include (where relevant, subject to the
applicable grace period and any other applicable condition):
(a)
default in the payment of the principal of and/or Non-Excess
Interest on the Most Senior Class of Notes then outstanding in
each case when and as the same becomes due and payable in
accordance with the Conditions;
(b)
default by the Issuer in the performance or observance of any
other obligation binding upon it under the Notes of any Class,
the Note Trust Deed, the Issuer Deed of Charge or the other
Issuer Transaction Documents;
(c)
the Issuer ceases to carry on business or a substantial part of its
business or is deemed unable to pay its debts as and when they
fall due;
(d)
an order is made or an effective resolution is passed for the
winding-up of the Issuer except a winding-up for the purposes
of or pursuant to an amalgamation or reconstruction the terms of
which have previously been approved by an Extraordinary
Resolution of the Most Senior Class of Noteholders then
outstanding; or
(e)
proceedings are initiated against the Issuer under any applicable
liquidation,
insolvency,
receivership,
examinership,
composition, reorganisation or other similar laws.
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Acceleration and
enforcement
If a Note Event of Default has occurred and is continuing, the Note
Trustee at its absolute discretion may, and if so requested in writing by
either:
(a)
the holders of Notes outstanding constituting not less than 25
per cent, in aggregate of the Principal Amount Outstanding of
the Most Senior Class of Notes then outstanding; or
(b)
if so directed by or pursuant to an Extraordinary Resolution of
the Most Senior Class of Noteholders then outstanding,
shall (in each case, subject to the Note Trustee being indemnified and/or
secured and/or prefunded to its satisfaction), give a Note Acceleration
Notice to the Issuer and the Issuer Security Trustee declaring all the
Notes to be immediately due and repayable in accordance with
Condition 10 (Note Events of Default).
Upon the giving of a Note Acceleration Notice in accordance with
Condition 10.1 (Note Events of Default), all Classes of the Notes then
outstanding shall immediately become due and repayable at their
Principal Amount Outstanding together with accrued interest (including,
where applicable, Deferred Interest) and other accrued and unpaid
amounts as provided in the Note Trust Deed, as described in Condition
11 (Enforcement). The Issuer Security will become enforceable upon the
occurrence of a Note Event of Default.
Note Maturity Plan
As described in more detail in Condition 13 (Note Maturity Plan), if (a)
any of the Senior Loan remains outstanding on the date which is six
months prior to the Final Note Maturity Date, and (b) in the opinion of
the Special Servicer, all recoveries then anticipated by the Special
Servicer with respect to the Senior Loan (whether by enforcement of the
related Loan Security or otherwise) are unlikely to be realised in full
prior to the Final Note Maturity Date, the Special Servicer will be
required to prepare a draft Note Maturity Plan and present the same to
the Issuer, the Note Trustee and the Issuer Security Trustee not later than
45 days after such date. Upon receipt of the draft Note Maturity Plan, the
Note Trustee will convene, at the Issuer's cost, a meeting of all Senior
Noteholders at which the Senior Noteholders will have the opportunity
to discuss the various proposals contained in the draft Note Maturity
Plan with the Special Servicer.
Following such meeting, the Special Servicer will promptly prepare a
final Note Maturity Plan and the Note Trustee will convene, at the
Issuer's cost, a meeting of the Noteholders of the Most Senior Class of
Notes outstanding, at which the Noteholders of the Most Senior Class
will be requested to select their preferred option among the proposals set
out in the final Note Maturity Plan. The Special Servicer will,
notwithstanding any other provision of the Servicing Agreement or
requirement to act in accordance with the Servicing Standard, implement
the proposal that receives the approval of the holders of the Most Senior
Class of Notes then outstanding by way of Ordinary Resolution. If no
option receives the approval of the holders of the Most Senior Class of
Notes then outstanding by way of Ordinary Resolution at such meeting,
then the Issuer Security Trustee will be deemed to be directed by all of
the Noteholders to appoint a receiver (to the extent applicable) to realise
the Issuer Charged Property in accordance with the Issuer Deed of
Charge.
Limited recourse
As described in more detail in Condition 12 (Limit on Noteholder
Action, Limited Recourse and Non-Petition), the Notes are limited
recourse obligations of the Issuer, and, if the Notes are not repaid in full
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following the Final Note Maturity Date or realisation or enforcement of
all of the Issuer Security, the Issuer shall have no liability to make
payment of any shortfall and any claim in respect of any outstanding
payments will be extinguished and discharged.
Non-petition
As described in more detail in Condition 12 (Limit on Noteholder
Action, Limited Recourse and Non-Petition), no Noteholder shall be
entitled to proceed directly against the Issuer or any other Issuer Secured
Creditors to enforce the Issuer Security, including directing the Note
Trustee to instruct the Issuer Security Trustee, or to enforce the Issuer
Security except if the Note Trustee or the Issuer Security Trustee, as the
case may be, having become bound to do so, fails to do so within a
reasonable period and such failure shall be continuing, provided that no
Noteholder shall be entitled to take any steps or proceedings to procure
the winding up, administration, dissolution, court protection,
reorganisation, receivership, examinership, liquidation, bankruptcy or
other insolvency proceeding of the Issuer.
Cashflow and credit
structure source and
application of funds
The repayment of principal and the payment of interest by the Borrowers
in respect of the Loans will provide the principal source of funds for the
Issuer to make payments in respect of the Notes and the other Issuer
Secured Liabilities.
As described in more detail in the sections entitled "Cashflow and Issuer
Priorities of Payments" and "Cash Management and Issuer Accounts",
the Issuer Cash Manager (on behalf of the Issuer) will, inter alia, on each
Portfolio Determination Date calculate all amounts due in accordance
with the applicable Issuer Priority of Payments on the forthcoming Note
Payment Date and the amounts available to make such payments.
Prior to the service of a Note Acceleration Notice, on each Note
Payment Date, the Issuer Cash Manager will apply Available Funds,
subject to the prior payment of the Issuer Priority Payments (and subject
to the rules described in "Cashflow and Issuer Priorities of Payments")
each as determined on the immediately preceding Portfolio
Determination Date in the manner and in order of priority set out in the
Pre-Enforcement Revenue Priorities of Payments, the Pre-Enforcement
Principal Allocation Rules or, as applicable, the Pre-Enforcement Loan
Failure Priority of Payments (in each case, only if and to the extent that
payments or provisions of a higher priority have been made in full).
On each Portfolio Determination Date, prior to service of a Note
Acceleration Notice, the Issuer Cash Manager will determine the Senior
Principal Receipts and the Junior Principal Receipts and the amount
thereof to be allocated to the relevant Class of Notes.
Note Acceleration Notice
Following the service of a Note Acceleration Notice, the Issuer Cash
Manager (at the direction of the Issuer Security Trustee) will apply all
monies and receipts received by the Issuer and/or the Issuer Security
Trustee or a receiver appointed by it, in the manner and order of priority
set out in the Post-Enforcement Priority of Payments (in each case only
if and to the extent that payments provisions of a higher priority have
been made in full).
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General credit structure
The credit structure of the transaction includes the following elements.
Credit support
Junior Classes of Notes will be subordinated to more senior Classes of
Notes (only in relation to certain payments), thereby ensuring that
Available Funds are applied to the Most Senior Class of Notes in priority
to more junior Classes of Notes. See Condition 3 (Status and
Relationship between the Notes and Security) for further details.
Ancillary Support
With a view to protecting the Obligors against interest rate increases, the
Company will enter into the Interest Rate Cap Transaction with the Cap
Provider. Pursuant to the Interest Rate Cap Transaction, on each Loan
Payment Date, the Cap Provider will pay to the Company an amount
equal to the excess (if any) of the rate of interest (set by reference to
three-month LIBOR) above a specified strike rate multiplied by the
notional amount in respect of the relevant Calculation Period.
The value of the Properties (as set out in the Appraisals) exceeds the
Total Commitment under the Loans. In addition, the Senior Facility
Agreement requires that on each Loan Payment Date, the Loan to Value
does not exceed 75 per cent, and a Cash Trap Event will occur if the
Loan to Value is greater than 72.5 per cent.
Governing law
The Issuer Transaction Documents and the Notes will be governed by,
and shall be construed in accordance with, English law (other than the
Corporate Services Agreement which will be governed by Irish law and
the Issuer Security Agreement which will be governed by Jersey law).
Form
The Notes of each Class will initially be represented by a Global Note
for such Class of Notes, which Global Notes are expected to be
deposited on or around the Closing Date with a Common Safekeeper and
registered in the name of a nominee of the Common Safekeeper (in the
case of the Regulation S Global Notes or of the Rule 144A Global
Notes). Ownership interests in the Global Notes will be shown on, and
transfers thereof will only be effected through, records maintained by
Euroclear and Clearstream, Luxembourg and their respective
participants. The Global Notes will be exchangeable for Definitive Notes
in registered form only in certain limited circumstances set out herein.
Denominations
Notes of each Class in the form of Regulation S Notes will be issued in
minimum denominations of £100,000 and integral multiples of £1,000 in
excess thereof. Notes of each Class in the form of Rule 144A Notes will
be issued in minimum denominations of £100,000 and integral multiples
of £1,000 in excess thereof.
Legal Investment
Noteholders where investment activities are subject to legal investment
laws and regulations, regulatory capital requirements, or review by
regulatory authorities, Noteholders may be subject to restrictions on
investment in the Notes. Noteholders should consult their own legal
advisors for assistance in determining the suitability of and
consequences of the purchase, ownership, and sale of the Notes. The
Notes will not constitute "mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act of 1984, as amended.
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The Issuer will be relying on an exclusion or exemption from the
definition of "investment company" under the 1940 Act contained in
Section 3(c)(5) of the 1940 Act or Rule 3a-7 under the 1940 Act,
although there may be additional exclusions or exemptions available to
the Issuer. The Issuer is being structured so as not to constitute a
"covered fund" for purposes of the Volcker Rule under the Dodd-Frank
Act.
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RIGHTS OF NOTEHOLDERS AND RELATIONSHIP WITH OTHER ISSUER SECURED
CREDITORS
See the section entitled "Terms and Conditions of the Notes" for a more detailed description of the rights
of Noteholders, conditions for exercising such rights and relationship with other Issuer Secured Creditors.
Convening meetings
As described in more detail in Condition 14 (Meetings of Noteholders,
Modification and Waiver, Substitution and Termination of Issuer Related
Parties), the Note Trustee shall, upon a requisition in writing signed by
the holders representing in aggregate at least 10 per cent, of the Principal
Amount Outstanding of the Senior Notes of the relevant Class or Classes
of Notes, convene a meeting or meetings of the Noteholders of such
Class or Classes of Notes.
The Issuer, the Note Trustee, the Issuer Cash Manager, the Servicer or
the Special Servicer may also convene (or require the Issuer to convene)
Noteholder meetings (at the cost of the Issuer) for any purpose,
including consideration of Extraordinary Resolutions or Ordinary
Resolutions.
The Note Trustee will, pursuant to Condition 13 (Note Maturity Plan),
be required to convene, at the Issuer's cost, meetings of (a) the
Noteholders for the purposes of considering any draft Note Maturity
Plan and (b) the Senior Noteholders of the Most Senior Class of Notes
outstanding at which Noteholders of such Class will be requested to
select their preferred option among the proposals set out in the final Note
Maturity Plan.
Noteholders meeting
provisions
Initial meeting
Adjourned meeting
Notice period
14 clear days
7 clear days
Quorum
In
accordance
with
Condition 14.7 (Quorum
at Noteholder's meeting),
one or more persons
present holding Notes or
voting certificates in
respect thereof or being
proxies representing in
the aggregate not less
than (for an Ordinary
Resolution) 25 per cent,
and (for an Extraordinary
Resolution) 50.1 per
cent, of the Principal
Amount Outstanding of
the Notes or the Notes of
such Class. A meeting to
consider a Basic Terms
Modification will require
one or more persons
present holding Notes or
voting certificates in
respect thereof or proxies
representing not less than
75 per cent, of the
Principal
Amount
Outstanding of the Notes
(or the relevant Class
thereof) for the time
In
accordance
with
Condition 14.8 (Basic
Terms Modification), one
or more persons being or
representing
Senior
Noteholders
provided
that, with respect to an
adjourned meeting to
consider a Basic Terms
Modification,
such
Senior Noteholders must
also represent at least 33
⅓ per cent, of the
Principal
Amount
Outstanding
of
the
relevant Class of Notes.
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being outstanding.
Required
majorities
The majority required for passing an Extraordinary
Resolution at any duly convened and quorate meeting
of Noteholders will be at least 75 per cent, of votes
cast.
The majority required for passing an Ordinary
Resolution at any duly convened and quorate meeting
of Noteholders will be at least 50.1 per cent, of votes
cast.
Written
resolutions
An Extraordinary Resolution passed in writing by
holders of not less than 75 per cent, of the Principal
Amount Outstanding of the relevant Class of Notes (a
"Written Extraordinary Resolution") will have the
same effect as an Extraordinary Resolution.
An Ordinary Resolution passed in writing by holders
of not less than 50.1 per cent, of the Principal
Amount Outstanding of the relevant Class of Notes (a
"Written Ordinary Resolution") will have the same
effect as an Ordinary Resolution.
The "Principal Amount Outstanding" of a Note on any date will be its
face amount less the aggregate amount of principal repayments or
prepayments made in respect of that Note since the Closing Date.
Basic Terms Modification
Any Extraordinary Resolution of any Class of Notes which would have
the effect of sanctioning:
(a)
a modification of the date of maturity of any Class of Notes or a
modification of the date of maturity of the Senior Loan to a date
which is later than the date which is 12 months after the Senior
Loan Initial Repayment Date;
(b)
a reduction in the amount of principal or the rate of interest
payable in respect of any Class of Notes;
(c)
a modification of the method of calculating the amount payable
or the date of payment in respect of any interest or principal in
respect of any Class of Notes;
(d)
any alteration of the currency of payment of any Class of Notes;
(e)
a release of the Issuer Security (or any part thereof) other than in
accordance with the provisions of the Issuer Transaction
Documents (but without prejudice to the Note Trustee's and the
Issuer Security Trustee's ability to exercise their respective
powers and discretions under the Note Trust Deed and the Issuer
Deed of Charge);
(f)
a modification to clause 11 (Operating Advisor) of the Servicing
Agreement;
(g)
a modification to the definition of "Controlling Class"; or
(h)
a modification of the definition of "Basic Terms Modification"
or the quorum or majority required to effect a Basic Terms
Modification,
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will, in each case, constitute a "Basic Terms Modification".
No Extraordinary Resolution that purports to relate to a modification of a
Junior Note Entrenched Term shall take effect unless such Extraordinary
Resolution shall have been sanctioned by an Extraordinary Resolution of
the Junior Noteholder.
"Junior Note Entrenched Term" means each or any of:
Rating Agency
Confirmation
(a)
a modification to the date of maturity of the Junior Notes;
(b)
a change in the amount of principal or the rate of interest
payable in respect of the Junior Notes;
(c)
a modification of the method of calculating the amount payable
or the date of payment in respect of any interest or principal in
respect of the Junior Notes;
(d)
any alteration of the currency of payment of the Junior Notes;
(e)
a modification of this definition of Junior Note Entrenched
Term or the quorum or majority required to effect a
modification of a Junior Note Entrenched Term; and
(f)
the right of the Junior Noteholder to exchange the Junior Notes
for interests in the Junior Loan as described in Conditions 7.2
(Redemption of the Junior Notes on surrender), 7.4 (Optional
redemption for tax or other reasons) and 7.5 (Optional
redemption in full).
Pursuant to the Issuer Transaction Documents, the implementation of
certain matters will or may (at the request of the Note Trustee or the
Issuer Security Trustee), be subject to the receipt of a Rating Agency
Confirmation.
The Issuer Transaction Documents provide that if any Rating Agency
then rating the Senior Notes either (i) does not respond to a request to
provide a Rating Agency Confirmation within ten Business Days after
such request is made (and does not respond to a second request to
provide a Rating Agency Confirmation, in respect of the same matter as
the first request, within five Business Days after such second request is
made (such second request not to be made less than ten Business Days
after the first request is made)), or (ii) provides a waiver or
acknowledgement indicating its decision not to review or otherwise
declining to review the matter for which the Rating Agency
Confirmation is sought, the requirement for the Rating Agency
Confirmation from the relevant Rating Agency with respect to such
matter will be deemed not to apply and the Note Trustee shall not be
liable for any losses Noteholders may suffer as a result. However, if, in
connection with any such matter, the agreement or consent of the Issuer
Security Trustee or the Note Trustee is required, it is also possible that
the Issuer Security Trustee and/or the Note Trustee, as applicable, will
not provide such agreement or consent in the absence of such Rating
Agency Confirmation.
For the avoidance of doubt, such Rating Agency Confirmation or nonreceipt of such Rating Agency Confirmation shall, however, not be
construed to mean that any such action or inaction (or contemplated
action or inaction) or such exercise (or contemplated exercise) by the
Note Trustee of any right, power, trust, authority, duty or discretion
under or in relation to the Note Trust Deed or any of the other Issuer
Transaction Documents is not materially prejudicial to the interest of
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holders of that Class of Notes.
Negative Consent
As described in more detail in Condition 14.16 (Negative Consent), an
Extraordinary Resolution (other than an Extraordinary Resolution
relating to (i) a Basic Terms Modification, (ii) the waiver of any Note
Event of Default, (iii) the acceleration of the Notes or (iv) the
enforcement of the Issuer Security) or an Ordinary Resolution (other
than an Ordinary Resolution relating to a Note Maturity Plan) will be
deemed to have been passed by a Class or Classes of Notes if, within 30
days of the date of a notice to such Class or Classes of Senior
Noteholders, 25 per cent, or more (in the case of an Extraordinary
Resolution) or 50 per cent, or more (in the case of an Ordinary
Resolution) in aggregate of the Principal Amount Outstanding of the
Senior Notes of such Class, as the case may be, have not informed the
Note Trustee of their objection to such Extraordinary Resolution or
Ordinary Resolution (as applicable).
Matters requiring
Extraordinary Resolution
The following matters may be passed only by way of an Extraordinary
Resolution (including by way of negative consent (other than for (a)
below)):
Matters requiring Ordinary
Resolution
Relationship between
Classes of Noteholders and
binding effect of resolutions
(a)
a Basic Terms Modification;
(b)
a modification of the Senior Notes or the Note Trust Deed
(including the Conditions) or the provisions of any of the other
Issuer Transaction Documents; and
(c)
matters relating to a Junior Note Entrenched Term.
The following matters may be passed by way of an Ordinary Resolution
(including by way of negative consent (other than for (b) below)):
(a)
the removal of the Note Trustee, the Issuer Security Trustee, the
Servicer, the Special Servicer, the Issuer Cash Manager, the
Issuer Account Bank, the Agent Bank, the Principal Paying
Agent, the Registrar or the Corporate Services Provider; and
(b)
approval of a Note Maturity Plan.
Subject to the provisions governing a Basic Terms Modification and the
Junior Note Entrenched Terms and to the provisions of the Conditions
and the Note Trust Deed governing voting generally, an Extraordinary
Resolution or an Ordinary Resolution passed at any meeting or duly
signed by the required majority of Noteholders (or any Class thereof)
shall be binding on all Noteholders (or, as the case may be, all
Noteholders of such Class) whether or not they are present at such
meeting or signed such resolution.
As described in more detail in Condition 3.1 (Status and relationship
between the Notes), for so long as any of the Notes are outstanding, the
Note Trustee is required to have regard to the interests of the holders of
the Class A Notes, the Class B Notes, the Class C Notes and the Class D
Notes equally as regards all rights, powers, trusts, authorities, duties and
discretions of the Note Trustee (except where expressly provided
otherwise in the Note Trust Deed or the Conditions).
Save in respect of:
(a)
in the case of the Senior Notes a Basic Terms Modification; and
(b)
in the case of the Junior Notes in respect of a Junior Note
- 61-
Entrenched Term,
if, in the opinion of the Note Trustee, there is a conflict between one
Class of Noteholders, on the one hand, and any other Class of
Noteholders, on the other hand, the Note Trustee shall have regard only
to the interests of the Most Senior Class of Noteholders in respect of
which the conflict arises.
Relationship between
Noteholders and other
Issuer Secured Creditors
The Issuer Deed of Charge will provide that if there is a conflict between
the interests of (a) any of the Noteholders and (b) any of the other Issuer
Secured Creditors, the Issuer Security Trustee shall be entitled to have
regard only to the interests of the Noteholders.
Disenfranchisement of
Notes held by the Obligors,
their Affiliates or any
Sponsor Affiliates
As described in more detail in Condition 14.11 (Disenfranchised
Holder), for the purposes of determining: (i) the quorum at any meeting
of Noteholders considering an Extraordinary Resolution or an Ordinary
Resolution or the majority of votes cast at such meeting; (ii) the holders
of Notes for the purposes of giving any direction to the Note Trustee (or
any other party); or (iii) the majorities required for any Written
Resolution, the voting, objecting or directing rights attaching to any
Note held by (or in relation to which the exercise of the right to vote is
directed or otherwise controlled by) a Disenfranchised Holder shall not
be exercisable by such Disenfranchised Holder, and such Notes shall be
treated as if they were not outstanding and shall not be counted in or
towards any required quorum or majority.
Provision of information to
the Noteholders
Information in respect of the Loans and the Properties will be provided
to Noteholders (and made public) on a quarterly basis in the Servicer
Quarterly Report. See "Key terms of the servicing arrangements for the
Loans - Reporting" for further details.
Reports
Pursuant to the Cash Management Agreement, the Issuer Cash Manager
will make available on its website (currently located at
www.usbank.com/abs):
(a)
the Servicing Agreement and any amendment thereto;
(b)
all Servicer Quarterly Reports made available to the holders of
the Notes since the Closing Date; and
(c)
all Issuer Cash Manager Quarterly Reports made available to
holders of the Notes since the Closing Date.
Communication with
Noteholders
All notices to be given by the Issuer, the Servicer, the Special Servicer,
the Issuer Cash Manager or the Note Trustee to Noteholders may be
given in accordance with the provisions of Condition 17 (Notice to
Noteholders) (or the provisions of Condition 14.16 (Negative Consent)
in respect of the matters referred to in that Condition).
Communications between
Noteholders
As described in more detail in Condition 17 (Notice to Noteholders),
following receipt of a request for the publication of a notice from a
Noteholder (the "Initiating Noteholder") which has satisfied the Issuer
Cash Manager that it is a Noteholder (a "Verified Noteholder"), the
Issuer Cash Manager shall publish such notice on its investor reporting
website provided that such notice contains no more than:
(a)
an invitation to other Verified Noteholders (or any specified
Class or Classes of the same) to contact the Initiating
Noteholder;
(b)
the name of the Initiating Noteholder and the address, phone
number, website or email address at which the Initiating
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Noteholder can be contacted; and
(c)
the date(s) from, on or between which the Initiating Noteholder
may be so contacted.
In this Offering Circular:
"Extraordinary Resolution" means in respect of the Noteholders or any Class or Classes of Noteholders
means:
(a)
a resolution passed at a meeting duly convened and held in accordance with the Note Trust Deed
by a majority consisting of not less than 75 per cent, of the persons voting thereat upon a show of
hands or, if a poll is duly demanded, by a majority consisting of not less than 75 per cent, of the
votes cast on such poll; or
(b)
writing signed by or on behalf of the Noteholders of not less than 75 per cent, in aggregate
Principal Amount Outstanding of the Notes which resolution may be contained in one document
or in several documents in like form each signed by or on behalf of one or more of the
Noteholders),
and in the circumstances set out in Condition 14.16 (Negative Consent) an Extraordinary Resolution
(other than in respect of a Basic Terms Modification, the waiver of any Note Event of Default, the
acceleration of the Notes or the enforcement of the Issuer Security) will be deemed to have been passed
unless the holders of Notes outstanding constituting 50 per cent, or more in aggregate of the Principal
Amount Outstanding of the Notes or, as the case may be, the Notes of the relevant Class or Classes have
informed the Note Trustee in the prescribed manner of their objection to such Extraordinary Resolution
within 30 days after the date on which a notice containing the text of such Extraordinary Resolution
which acts as an invitation to the Noteholders or, as the case may be, the Noteholders of such Class or
Classes to object to the same and details the manner in which such objections should be made has been
given to the Noteholders or, as the case may be, such Class or Classes in accordance with the provisions
of Condition 17 (Notice to Noteholders).
"Ordinary Resolution" means, in respect of the Noteholders or any Class or Classes of Noteholders:
(a)
a resolution passed at a meeting duly convened and held in accordance with the Note Trust Deed
by a clear majority consisting of not less than 50.1 per cent, of the of the persons voting thereat
on a show of hands or, if a poll is duly demanded, by a simple majority of the votes cast on such
poll; or
(b)
a Written Ordinary Resolution (being, a resolution in writing signed by or on behalf of the
Noteholders of not less than a clear majority consisting of not less than 50.1 per cent, in
aggregate Principal Amount Outstanding of Notes or of the Notes outstanding of such Class or
Classes, which resolution may be contained in one document or in several documents in like
form each signed by or on behalf of one or more of the Noteholders),
and in the circumstances set out in Condition 14.16 (Negative Consent) an Ordinary Resolution (other
than an Ordinary Resolution relating to a Note Maturity Plan) will be deemed to have been passed unless
the holders of Notes outstanding constituting 25 per cent, or more in aggregate Principal Amount
Outstanding of the Notes of such Class have informed the Note Trustee in the prescribed manner of their
objection to such Ordinary Resolution within 30 days after the date on which a notice containing the text
of such Ordinary Resolution which acts as an invitation to Noteholders of such Class or Classes to object
to the same and details the manner in which such objections should be made has been given to such Class
or Classes in accordance with the provisions of Condition 17 (Notice to Noteholders).
"Written Extraordinary Resolution" means an Extraordinary Resolution passed in writing by holders of
not less than 75 per cent, of the Principal Amount Outstanding of the relevant Class of Notes.
"Written Ordinary Resolution" means an Ordinary Resolution passed in writing by holders of not less
than 50.1 per cent, of the Principal Amount Outstanding of the relevant Class of Notes.
"Written Resolution" means a Written Extraordinary Resolution or a Written Ordinary Resolution.
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RELEVANT DATES AND PERIODS
Closing Date
The date of initial issuance for the Notes is expected to be 30 December
2015 (or such other date as the Issuer, Lead Manager and the CoManager may agree).
Cut-Off Date
Where used in this Offering Circular in respect of certain information
relating to the Properties, 30 September 2015 (the "Cut-Off Date").
Final Note Maturity Date
Unless previously redeemed in full, the Issuer will redeem the Senior
Notes in full (together with all accrued interest thereon) on the Note
Payment Date falling in January 2023 (the "Final Note Maturity
Date").
Note Payment Dates
20 January, 20 April, 20 July and 20 October in each year or, if any such
day is not a Business Day, the Note Payment Date will instead be the
next Business Day in that calendar Month (if there is one) or the
preceding Business Day (if there is not) (each such day being a "Note
Payment Date"). The first Note Payment Date in respect of the Notes
will fall on or around 20 January 2016.
Loan Payment Date
20 January, 20 April, 20 July and 20 October in each year and the Senior
Loan Final Repayment Date or, if any such day is not a Business Day
under the Senior Facility Agreement and the Junior Facility Agreement,
the Loan Payment Date will instead be the next Business Day in that
calendar Month (if there is one) or the preceding Business Day (if there
is not) (each such day being a "Loan Payment Date").
Loan Interest Period
Each period by reference to which interest on the Loans is calculated.
Each interest period for a Loan will start on the last day of its preceding
Loan Interest Period and will end on the next Loan Payment Date. If a
Loan Interest Period would otherwise end on a day which is not a
Business Day, that Loan Interest Period will instead end on the next
Business Day in that calendar month (if there is one) or the preceding
Business Day (if there is not).
Business Day
"Business Day" means a day (other than a Saturday or Sunday) on
which banks are open for general business in London, Jersey and Dublin.
Portfolio Determination
Date
The second Business Day prior to the Closing Date and each Note
Payment Date (the "Portfolio Determination Date").
The Portfolio Determination Date is the date on which:
Note Interest Period
(a)
the Servicer will be required to identify (based on information
provided by the Loan Facility Agent on such date), among other
things, the source and allocation of the amounts received in
respect of the Loans; and
(b)
the Issuer Cash Manager will be required to calculate, (i) in
respect of the Portfolio Determination Date falling on the
Closing Date the Weighted Average Note Margin, and (ii) in
respect of each Portfolio Determination Date falling thereafter,
among other things, the amounts required to be paid as interest,
principal and/or other amounts in respect of the Notes on the
relevant Note Payment Date, together with the Weighted
Average Note Margin.
Each of the successive interest periods by reference to which interest on
the Notes is payable. The first Note Interest Period will commence on
(and include) the Closing Date and end on (but exclude) the next
following Note Payment Date. Each successive Note Interest Period will
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commence on (and include) the next (or first) Note Payment Date and
end on (but exclude) the following Note Payment Date (each, a "Note
Interest Period"). If a Note Interest Period would otherwise end on a
day which is not a Business Day, that Note Interest Period will instead
end on the next Business Day in that calendar month (if there is one) or
the preceding Business Day (if there is not).
Interest Determination Date
The Closing Date and each Note Payment Date (the "Interest
Determination Date").
The Interest Determination Date is the date on which the Agent Bank
determines:
(a)
Note LIBOR; and
(b)
the Rate of Interest applicable to, and calculates the amount of
interest payable on each of the Notes for the Note Interest
Period commencing on such Interest Determination Date.
On the Interest Determination Date, the Agent Bank shall also calculate
the rate of interest payable of the Senior Loan, which shall be the
aggregate of the applicable:
(a)
Weighted Average Note Margin (based on the calculation of the
same by the Issuer Cash Manager on the Specified Note
Payment Date (such calculation for such Interest Period, the
"Senior Loan Margin"); and
(b)
Note LIBOR for the Note Interest Period commencing
immediately following the relevant Interest Determination Date
(such rate, "Senior Loan LIBOR", and together with the
relevant Senior Loan Margin, the "Senior Loan Interest
Rate"),
and shall promptly notify the Loan Facility Agent of the Senior Loan
Interest Rate on such date.
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THE ISSUER
The Issuer was incorporated in Ireland as a designated activity company on 16 October 2015, with
registration number 570215, under the name Magni Finance Designated Activity Company, under the
Irish Companies Act. The registered office of the Issuer is at 1 Grant's Row, Lower Mount Street, Dublin
2, Ireland. The telephone number of the Issuer's registered office is + 353 1 697 5350. The Issuer has no
subsidiaries. The authorized share capital of the Issuer is EUR 100,000,000 divided into 100,000,000
Ordinary Shares of EUR 1 each (''Shares''). The Issuer has issued 3 Shares all of which are fully paid.
The issued Shares are held directly by Structured Finance Management Corporate Services (Ireland)
Limited of 1 Grant's Row, Lower Mount Street, Dublin 2, Ireland.
Principal activities
The principal activities of the Issuer are set out in clause 2 of its memorandum of association and include,
among other things, carrying on the business of financing and refinancing of any assets whatsoever and in
any currency.
Since the date of its incorporation, the Issuer has not commenced operations and no accounts have been
made up as at the date of this Offering Circular. The activities in which the Issuer has engaged, or will
engage in, are those incidental to its incorporation and registration as a designated activity company under
the Irish Companies Act, the authorisation of the issue of the Notes, the matters referred to or
contemplated in this Offering Circular and the authorisation, execution and delivery of and performance
of obligations under the other documents referred to in this Offering Circular to which it is a party and
matters which are incidental or ancillary to the foregoing.
The Issuer will covenant that its directors will remain independent and to observe certain restrictions on
its activities which are detailed in Condition 4.1 (Restrictions) of the Notes, the Issuer Deed of Charge
and the Note Trust Deed and, as such, the Issuer is a special purpose vehicle established for the purpose
of issuing asset-backed securities.
The Issuer's Profit is expected to equal £1,000 per annum.
Directors and Company secretary
(a)
The directors of the Issuer and their other principal activities are:
Name
Principal Activities
Jonathan Hanly
Director
Fiona de Lacy Murphy
Accountant
The business address of each of the Directors is 1 Grant's Row, Lower Mount Street, Dublin 2, Ireland.
The Company Secretary is Structure Finance Management (Ireland) Limited of 1 Grant's Row, Lower
Mount Street, Dublin 2, Ireland.
(a)
At a board meeting of the Issuer held on 11 November 2015, the following were each appointed
as permanent alternate directors for each of Jonathan Hanly and Fiona de Lacy Murphy:
(i)
Áine Kingston; and
(ii)
Ian Garvan.
(b)
The business address for the directors is 1 Grant's Row, Lower Mount Street, Dublin 2, Ireland.
The company secretary of the Issuer is Structured Finance Management (Ireland) Limited whose
principal address is at 1 Grant's Row, Lower Mount Street, Dublin 2, Ireland.
(c)
The directors do not, and it is not proposed that they will, have service contracts with the Issuer.
No director has entered into any transaction on behalf of the Issuer which is or was unusual in its
nature of conditions or is or was significant to the business of the Issuer since its incorporation.
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(d)
At the date of this Offering Circular there were no loans granted or guarantees provided by the
Issuer to any director.
(e)
The articles of association of the Issuer provide that:
(i)
any director may vote on any proposal, arrangement or contract in which he is interested
provided he has disclosed the nature of his interest; and
(ii)
subject to the provisions of the articles of association, a director will hold office until
such time as he is removed from office by resolution of the Issuer in a general meeting
or is otherwise removed or becomes ineligible to act as a director in accordance with the
articles of association.
Auditors
The auditors of the Issuer are Ernst & Young, Dublin, who are chartered accountants and are members of
the Institute of Chartered Accountants of Ireland and registered auditors qualified to practice in Ireland.
Shareholder
The authorised share capital of the Issuer is €100,000,000 divided into 100,000,000 ordinary shares of €1
each (the "Shares"). The Issuer has issued three shares, which are fully paid up and are held on trust by
the Share Trustee under the terms of a declaration of trust dated 21 October 2015, under which the Share
Trustee holds the Shares on trust for charitable purposes. The Share Trustee has no beneficial interest in
and derives no benefit (other than its fees for acting as Share Trustee) from its holding of the Shares of
the Issuer. The Share Trustee will apply any income derived from the Issuer solely for the above
purposes.
Corporate Services Agreement
Pursuant to the terms of the Corporate Services Agreement, the Corporate Services Provider will perform
various management functions on behalf of the Issuer, including the provision of certain clerical,
reporting, accounting, administrative and other services until termination of the Corporate Services
Agreement. The Issuer will engage the Corporate Services Provider to assist the Issuer in complying with
certain of the posting requirements under Rule 17g-5 (in such capacity, the "Information Agent"). In
consideration of the foregoing, the Corporate Services Provider receives various fees and other charges
payable by the Issuer at rates agreed upon from time to time plus expenses. The terms of the Corporate
Services Agreement provide that either party may terminate the Corporate Services Agreement upon the
occurrence of certain stated events, including any material breach by the other party of its obligations
under the Corporate Services Agreement which is not cured within 30 days from the date on which it was
notified of such breach.
In addition, either party may terminate the Corporate Services Agreement at any time by giving not less
than 90 days' written notice to the other party. Such termination will not take effect, however, until a
replacement corporate services provider has been appointed.
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THE BORROWERS, THE COMPANY AND THE SHAREHOLDER
A
The Company
Cronos Investments Limited (the "Company") is the sole shareholder of each Borrower. The Company is
a private limited liability company incorporated under the laws of Jersey on 28 October 2014 under
registered number 116957.
B
The Shareholder
Eurynome LLC (the "Shareholder") is the sole shareholder of the Company. The Shareholder is a limited
liability company incorporated under the laws of the State of Delaware on 13 January 2015 under
registered number 5673604.
C
The Borrowers
Each Borrower is a private limited liability company incorporated under the laws of Jersey on 7
November 2014 (other than the Pecan Borrowers which were incorporated on 18 August 2015) and
registered with the following number:
Leto Limited ................................................................................................................................................................
Perses Limited .............................................................................................................................................................
Helios Limited .............................................................................................................................................................
Pecan Finance Limited .................................................................................................................................................
Toucan Finance Limited ..............................................................................................................................................
Culver Finance Limited ...............................................................................................................................................
117033
117032
117031
119258
119257
119259
The registered office of each Jersey Borrower is 13/14 Esplanade, St Helier, Jersey JE1 1BD.
General
The sole shareholder of each of the Borrowers is the Company and each of the Borrowers is indirectly
majority owned and controlled by the Shareholder.
Each Borrower is a limited purpose entity whose business consists primarily of owning, developing and
managing the Properties in which such Borrower holds an interest, for its own account.
None of the Borrowers has any employees.
Each Borrower has represented in the Senior Facility Agreement that no litigation, arbitration or
administrative proceedings which are reasonably likely to be adversely determined and, if so adversely
determined, might reasonably be expected to have a Material Adverse Effect (as qualified in the Senior
Facility Agreement) have (to the best of its knowledge and belief) been started or threatened against it.
Principal activities of the Borrowers
The principal activities of each Borrower are (i) collective capital investment in property, real property
rights (including real property rights resulting from property leasing agreements with title and from
concession relationships); (ii) managing, improving, purchasing and selling real estate assets of its own
property or entrusted to it by third parties, acting directly or through third party contractors and, more
generally, exercising any kind of real estate activities, mainly linked to the construction, purchase, sale,
lease and improvement of real estate assets having a commercial purpose; and (iii) opening, selling,
leasing and/or managing, directly or indirectly, businesses involved in the sale of goods and services
sector, including supermarket shops even inside malls.
Pursuant to the Senior Facility Agreement, each Borrower has confirmed that since the date of its
establishment, that Borrower has not traded or carried on any business other than conducting the business
of (as applicable) acquiring, managing, letting, leasing, owning and operating the Titan Properties or
Additional Properties and entry by that Borrower into the Senior Facility Agreement and the documents
referred to therein.
Each Borrower has covenanted to observe certain restrictions on their activities which are detailed in "The
Senior Facility Agreement" below.
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Auditors and Financial Statements
As at the date hereof, none of the Borrowers or the Company is required, under Jersey law, to appoint an
auditor or publish its financial statements and therefore no auditors have been appointed by any Borrower
or the Company.
Each of the Borrowers and the Company must however, keep accounting records that are sufficient to
show and explain its transactions. Such accounting records must be kept at such place as the directors
think fit and be open at all times to inspection by the relevant company's officers and its secretary but are
not published.
Material Contracts
As at the Closing Date, none of the Borrowers is party to any material agreement other than the Borrower
Transaction Documents.
No Material Adverse Change
There have been no material adverse changes in the prospects of any Borrower and no significant changes
in the financial or trading position of any Borrower since the date of its incorporation.
Legal and Arbitration Proceedings
There are no governmental, legal or arbitration proceedings (including any such proceedings which are
pending or threatened of which the Issuer is aware) which may have or have had in the past 12 months a
significant effect on any Borrower's financial position and profitability.
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THE RETENTION HOLDER
General
Eurynome LLC (the "Retention Holder"), was formed in the State of Delaware under the Delaware
Limited Liability Company Act (the "Act") on 13 January 2015 as a limited liability company (with
registered number 5673604). The registered office of the Retention Holder is 160 Greentree Drive, Suite
101, Dover, Delaware DE 199904.
Members
Pursuant to a limited liability company agreement (the "Limited Liability Company Agreement") dated
13 January 2015 the membership interests of the Retention Holder are held by:
•
The Värde Fund VI-A, L.P.
•
The Värde Fund X (Master), L.P
•
Värde Investment Partners, L.P.
•
The Värde Europe Master Fund L.P.
•
The Värde Fund XI (Master) L.P.
•
Värde Investment Partners (Offshore) Master, L.P.
(together, the “Members”).
Business Strategy
The Retention Holder has pursued a strategy of investing the proceeds of its capital contributions through
its affiliates in real estate assets. The affiliates of the Retention Holder currently own a portfolio of 172
retail, office and industrial commercial real estate assets in the United Kingdom.
The Retention Holder is the sole shareholder of the Company. In turn the Company is the shareholder of
the Borrowers. See the section "The Borrowers, the Company and the Shareholder" for more details.
Principal Activities and Transactions
The purpose of the Retention Holder is to engage in any lawful acts or activities for which limited
liability companies may be organised under the Act.
Since its incorporation the Retention Holder together with its affiliates have entered into a series of
transactions in connection with the following:
(a)
the acquisition of the Titan Properties by the Titan Borrowers on 22 January 2015; and
(b)
the acquisition of the Pecan Properties by the Pecan Borrowers on 10 November 2015.
With regard to the above property acquisitions the Retention Holder and it affiliates have entered into
senior and junior financing arrangements and related ancillary documentation.
The Pecan Senior Loan and the Pecan Junior Loan originated by the Retention Holder in order to
facilitate the financing of the Properties will be transferred by it to the Loan Seller and from the Loan
Seller to the Issuer pursuant to the Loans Transfer Agreements. See the section entitled "Transaction
Overview" for further details regarding the loans originated by the Retention Holder.
As a condition to the drawdown of funds on the Closing Date by the Titan Borrowers under the Senior
Facility Agreement the Retention Holder will grant security in favour of the Loan Security Trustee over
its shares in the Company and the Retention Holder's interest in certain shareholder loans pursuant to a
Jersey law security agreement.
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On or about the Closing Date the Retention Holder will enter into the Subscription Agreement for the
purposes of subscribing, through the Loan Seller, to the Junior Notes and giving the undertakings and
indemnity and making (in respect of itself and the Obligors) the representations and warranties in favour
of the Managers as set out in that agreement.
See the sections entitled "Regulatory Disclosure" and "Subscription and Sale" for further details in
relation to the Retention Holder's ongoing obligation to retain a material net economic interest in the
securitisation contemplated by this Offering Circular and the Retention Holder's related undertakings.
The Retention Holder has been established for an indefinite period of time. As at the date of this Offering
Circular it has not published any financial accounts.
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THE LOAN SELLER
The Loan Seller is a private limited liability company (registered number 119323) incorporated under the
laws of Jersey on 26 August 2015. The registered office of the Loan Seller is 13-14 Esplanade, St Helier,
Jersey, JE1 1BD.
The sole shareholder of the Loan Seller is the Retention Holder (see the section "The Retention Holder"
for further details).
The Loan Seller is a special purpose vehicle whose business consists primarily of financing and
refinancing of any assets whatsoever and in any currency. The Loan Seller has no employees.
On or about the Closing Date, the Loan Seller will enter into the Issuer Loans Transfer Agreement
pursuant to which it will transfer the Loans to the Issuer.
Under the laws of Jersey the Loan Seller is not required to publish and as at the date of this Offering
Circular has not published any financial accounts.
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DESCRIPTION OF THE SERVICER AND THE SPECIAL SERVICER
CBRE Loan Services Limited ("CBRELS") (which changed its name from "CBRE Loan Servicing
Limited" on 18 December 2015) will act as the primary and special servicer for the Loans (in such
capacity, the "Servicer"). CBRELS is a loan servicer organized under the laws of England and Wales,
and is an indirect, wholly-owned subsidiary of CBRE Group, Inc. The principal offices of CBRELS are
located at Henrietta House, Henrietta Place, London W1G 0NB.
CBRELS has been primary and special servicing securitized commercial mortgage backed loans in excess
of ten years. CBRELS primary servicing system runs on Cassiopae. CBRELS reports to trustees and
certificate administrators in the CREFC format. The following table sets forth information about
CBRELS portfolio of primary serviced commercial mortgage loans (including loans in securitization
transactions and loans owned by other investors) as of the dates indicated:
Commercial Mortgage Loans
By Approximate Number:..........................................
By Approximate Aggregate Unpaid Principal
Balance (in billions): ..............................................
As of
12/31/2012
99
As of
12/31/2013
218
As of
12/31/2014
276
As of
10/31/2015
337
£9.36
£12.09
£16.94
£17.14
Within this portfolio, as of October 31, 2015, are approximately 14 primary serviced commercial
mortgage loans with an unpaid principal balance of approximately £1.86 billion related to commercial
mortgage-backed securities and 6 specially serviced commercial backed loans with an unpaid principal
balance of approximately £0.9 billion related to commercial mortgage-backed securities. CBRELS is also
named special servicer on all its primary servicing mandates. In addition to servicing loans related to
commercial mortgage-backed securities, CBRELS also services whole loans for itself and a variety of
investors. The properties securing loans in CBRELS’s servicing portfolio, as of October 31, 2015, were
located in the UK, France, Germany, Spain, Netherlands, Austria, Italy, Greece, Ireland, Turkey,
Hungary, Belgium and Poland and include retail, office, industrial, hotel and other types of incomeproducing properties.
In its primary servicing activities, CBRELS utilises a mortgage-servicing technology platform with
multiple capabilities and reporting functions. This platform allows CBRELS to process mortgage
servicing activities including, but not limited to: (i) performing account maintenance; (ii) tracking
borrower communications; (iii) tracking interest and principal payments; (iv) entering and updating
transaction data; and (v) generating various reports.
CBRELS is rated by Fitch and S&P as a primary and special servicer of commercial mortgage loans as
outlined below:
Fitch
CPS2
CSS2
Primary Servicer: .......................................................
Special Servicer: ........................................................
S&P
Strong
Above Average
CBRELS has developed policies, procedures and controls relating to its servicing functions to maintain
compliance with applicable servicing agreements and servicing standards, including procedures for
handling delinquent loans during the period prior to the occurrence of a special servicing transfer event.
CBRELS servicing policies and procedures are updated periodically to keep pace with the changes in the
commercial mortgage-backed securities industry and have been generally consistent for the last three
years in all material respects. There have not been any significant events requiring significant changes in
CEBRELS policies and procedures.
CBRELS may perform any of its obligations under the Servicing Agreement through one or more thirdparty vendors, affiliates or subsidiaries. Notwithstanding the foregoing, the Servicer will remain
responsible for its duties thereunder. CBRELS may engage third-party vendors to provide technology or
process efficiencies. CBRELS monitors its third-party vendors in compliance with its internal procedures
and applicable law. CBRELS has entered into contracts with third-party vendors for the provision of the
Cassiopae software (mortgage servicing system)
CBRELS will not have primary responsibility for custody services of original documents evidencing the
Loans. On occasion, CBRELS may have custody of certain of such documents as are necessary for
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enforcement actions involving the Loans or otherwise. To the extent CBRELS performs custodial
functions as a servicer; documents will be maintained in a manner consistent with the Servicing Standard.
CBRE Group, Inc. files reports with the SEC as required under the Exchange Act. Such reports include
information regarding Wells Fargo and may be obtained at the website maintained by the SEC at
www.sec.gov.
There are no legal proceedings pending against CBRELS, or to which any property of CBRELS is
subject, that are material to the Noteholders, nor CBERLS have actual knowledge of any proceedings of
this type contemplated by governmental authorities.
No securitization transaction in which CBRELS was acting as special servicer has experienced a servicer
event of default as a result of any action or inaction of CBRELS as special servicer. CBRELS has not
been terminated as special servicer in any securitization, either due to a servicing default or to application
of a servicing performance test or trigger. There has been no previous disclosure of material
noncompliance with the applicable servicing criteria by CBRELS in connection with any securitization in
which CBRELS was acting as special servicer.
The information set forth in this section, "The Servicer and Special Servicer" has been provided by the
Servicer and Special Servicer.
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DESCRIPTION OF THE NOTE TRUSTEE, THE ISSUER SECURITY TRUSTEE, THE
ISSUER CASH MANAGER AND THE ISSUER ACCOUNT BANK
U.S. Bank Trustees Limited
U.S. Bank Trustees Limited is a limited liability company incorporated under the laws of England and
Wales with its office at 125 Old Broad Street, London, EC2N 1AR, United Kingdom.
U.S. Bank Trustees limited, as part of the U.S. Bancorp group and in combination with Elavon Financial
Services Limited (the legal entity through which European agency and banking appointments are
conducted) and U.S. Bank National Association, (the legal entity through which the Corporate Trust
Division conducts business in the United States), is one of the world’s largest providers of trustee services
with more than $4 trillion in assets under administration in municipal, corporate, asset-backed and
international bonds. The division provides a wide range of trust and agency services such as
calculation/paying agent, collateral administration and document custody through its network of 48 U.S.based offices, an Argentinean office and European offices in London and Dublin.
U.S. Bancorp (NYSE: USB), with $364 billion in assets as of Dec. 31, 2013, is the parent company of
U.S. Bank, the 5th largest commercial bank in the United States. The company operates 3,081 banking
offices in 25 states and 4,906 ATMs and provides a comprehensive line of banking, brokerage, insurance,
investment, mortgage, trust and payment services products to consumers, businesses and institutions.
Elavon Financial Services Limited, UK Branch
U.S. Bank Global Corporate Trust Services, which is a trading name of Elavon Financial Services
Limited (a U.S. Bancorp group company), is an integral part of the worldwide Corporate Trust business
of U. S. Bank. U.S. Bank Global Corporate Trust Services in Europe conducts business primarily
through the U.K. Branch of Elavon Financial Services Limited from its offices in London at 125 Old
Broad Street, London EC2N 1AR, United Kingdom.
Elavon Financial Services Limited is a bank incorporated in Ireland and a wholly owned subsidiary of
U.S. Bank National Association. Elavon Financial Services Limited is authorised by the Central Bank of
Ireland and the activities of its U.K. Branch are also subject to the limited regulation of the U.K. Financial
Conduct Authority and Prudential Regulation Authority.
U.S. Bank Global Corporate Trust Services in combination with U. S. Bank National Association, the
legal entity through which the Corporate Trust Division conducts business in the United States, is one of
the world’s largest providers of trustee services with more than $4 trillion in assets under administration
in municipal, corporate, asset-backed and international bonds. The division provides a wide range of trust
and agency services such as calculation/paying agent, collateral administration and document custody
through its network of 48 U.S.-based offices, an Argentinean office and European offices in London and
Dublin.
U.S. Bancorp (NYSE: USB), with $410 billion in assets as of March 31, 2015, is the parent company of
U.S. Bank National Association, the 5th largest commercial bank in the United States. The Company
operates 3,172 banking offices in 25 states and 5,016 ATMs and provides a comprehensive line of
banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers,
businesses and institutions. Visit U.S. Bancorp on the web at usbank.com.
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DESCRIPTION OF THE CAP PROVIDER
Royal Bank of Canada (referred to in this section as "Royal Bank") is a Schedule I bank under the Bank
Act (Canada), which constitutes its charter and governs its operations. Royal Bank’s corporate
headquarters are located at Royal Bank Plaza, 200 Bay Street, Toronto, Ontario M5J 2J5, Canada, and its
head office is located at 1 Place Ville Marie, Montreal, Quebec H3C 3A9, Canada.
Royal Bank is Canada's largest bank, and one of the largest banks in the world, based on market
capitalization. Royal Bank is one of North America’s leading diversified financial services companies
and provides personal and commercial banking, wealth management, insurance, investor services and
capital markets products and services on a global basis. Royal Bank and its subsidiaries employ
approximately 78,000 full- and part-time employees who serve more than 16 million personal, business,
public sector and institutional clients through offices in Canada, the U.S. and 37 other countries.
Royal Bank had, on a consolidated basis, as at October 31, 2015, total assets of C$1,074.2 billion
(approximately US$821.6 billion*), equity attributable to shareholders of C$62.1 billion (approximately
US$47.5 billion*) and total deposits of C$697.2 billion (approximately US$533.3 billion*). The
foregoing figures were prepared in accordance with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board (IASB) and have been extracted and derived
from, and are qualified by reference to, Royal Bank’s audited Consolidated Financial Statements included
in Royal Bank’s Annual Report for the fiscal year ended October 31, 2015.
The senior long-term unsecured debt of Royal Bank has been assigned ratings of AA (negative outlook)
by Standard & Poor’s Ratings Services, Aa3 (negative outlook) by Moody’s Investors Service and AA
(stable outlook) by Fitch Ratings. Royal Bank’s common shares are listed on the Toronto Stock
Exchange, the New York Stock Exchange and the Swiss Exchange under the trading symbol “RY.” Its
preferred shares are listed on the Toronto Stock Exchange.
On written request, and without charge, Royal Bank will provide a copy of its most recent publicly filed
Annual Report on Form 40-F, which includes audited Consolidated Financial Statements, to any person to
whom this Offering Circular is delivered. Requests for such copies should be directed to Investor
Relations, Royal Bank of Canada, by writing to 200 Bay Street, 4th Floor, North Tower, Toronto, Ontario
M5J 2W7, Canada, or by calling (416) 955-7802, or by visiting rbc.com/investorrelations**.
The delivery of this Offering Circular does not imply that there has been no change in the affairs of Royal
Bank since the date hereof or that the information contained or referred to herein is correct as at any time
subsequent to its date.
__________________
*As at October 31, 2015: C$1.00 = US$0.764818
** This website URL is an inactive textual reference only, and none of the information on the website is
incorporated in this Offering Circular.
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DESCRIPTION OF THE PORTFOLIO
All of the information in this "Description of the Portfolio" section is current as at the Cut-Off Date.
Since that date, certain of the Properties have been sold and are no longer part of the Portfolio or the
Loan Security (however, such Properties are included in the information included in this "Description of
the Portfolio" section).
The below description of the Portfolio is largely based on information obtained from the Group, the
Sponsor and the Initial Valuation. Though parts of the information have been audited by external
advisors, it cannot be excluded that minor discrepancies may exist, for example, as a result of rounding of
numbers.
As at the Cut-Off Date:
(a)
the Portfolio comprised of 172 assets across the UK ranging in value from £55,000 for a small
industrial property in Radcliffe to £11,720,000 for an office property in Luton;
(b)
the aggregate value of the Portfolio was £263,670,000, which represents an average capital value
of £90.86/sqft. The Portfolio produces a net passing rent of £22.5m, which represents a net initial
yield of 8.5 per cent. and an average rent of £8.04/sqft;
(c)
the average physical occupancy of the Portfolio is 88.2% per cent. with 113 properties fully
occupied and 11 properties entirely vacant. The weighted average unexpired lease term to first
break of the Portfolio was 4.25 years (weighted by contracted rent), ranging from 0 years in
Kitson Way, Harlow to 25.3 years in Cheapside, Barnsley within the top 20 assets (by market
value). The tenant base was granular comprising 453 tenants across 649 units. The top 10 tenants
account for approximately 24.8 per cent. of the income profile (gross rent), with the largest tenant,
Corporate Services Group Ltd, contributing only 4.2 per cent. of the total gross rent.
The portfolio is mixed in nature but predominantly high street retail. Geographically, the portfolio is
diversified across the UK with a concentration in the Midlands. The charts below show the portfolio
breakdowns (by market value) by property type and location.
Property by Sector
Portfolio by Location
High Street Retail
There are 142 high street retail assets in the Portfolio, ranging in value from £8,511,000 to £140,000. The
largest five high street retail assets by market value have an aggregate value of £34,681,000 (13.2 per
cent. of the Portfolio by value), with a WAULT of 8.85 years and a physical occupancy of 97.3 per cent.
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PROPERTY NAME
The Grand Buildings, 66-100 Jameson Street, HU1 3JX
34/ 50 Cheapside & 6-14 Albert Street East, S70 1RQ
33-39 Gallowtree Gate
12 Culver Street West & 22/ 24 High Street, CO1 1XJ
St Vincent Place Lanark
CITY
PROPERTY LOCATION
HULL
BARNSLEY
Leicester
COLCHESTER
Lanark
UK Yorkshire/ Humber (Metropolitan)
UK Yorkshire/ Humber (Metropolitan)
UK East Midlands (Metropolitan)
UK East Anglia (Regional)
UK Scotland (Regional)
FLOOR
Physical
AREA (M2) occupancy
5,162
3,596
3,408
1,443
2,113
96.0%
100.0%
93.4%
100.0%
100.0%
WAULT
TO
BREAK
5.4
25.3
1.3
8.6
-
Market
Value
8,511,000
7,985,000
6,590,000
6,180,000
5,415,000
GROSS
PASSING
RENT
(ANNUAL)
ERV
731,501
595,405
608,850
395,475
295,000
665,233
530,354
536,900
387,198
335,400
The biggest asset, the Grand Buildings on Jameson Street in Hull comprises 9 units and is 96% let with a
WAULT to break of 5.4 years. The second largest asset, located in Cheapside in Barnsley is 100% let to
8 tenants with WAULT of 25 years. The largest two tenants are Lloyds Bank and Boots Properties Ltd.
Industrial
There are 17 industrial assets in the Portfolio, ranging in value from £7,015,000 to £55,000. The largest
five industrial assets have an aggregate value of £26,025,000 (9.9 per cent. of the Portfolio by value),
with a WAULT of 2.60 years and a physical occupancy of 92.3 per cent.
PROPERTY NAME
Halesfield 11 Halesfield Industrial Estate
Trackside Business Park Abbot Close, Oyster Lane
Oldfield Business Park
Mastrick Industrial Estate Whitemyres Avenue
Royal Elizabeth Yard Dalmeny
CITY
Telford
West Byfleet
Stoke on Trent
Aberdeen
Dalmeny
PROPERTY LOCATION
UK West Midlands (Regional)
UK South East (Regional)
UK West Midlands (Metropolitan)
UK Scotland (Metropolitan)
UK Scotland (Regional)
FLOOR
Physical
AREA (M2) occupancy
16,947
5,891
9,640
3,646
17,442
100.0%
100.0%
100.0%
100.0%
76.4%
WAULT
TO
BREAK
0.7
1.4
2.5
8.9
3.2
Market
Value
7,015,000
6,600,000
5,580,000
3,630,000
3,200,000
GROSS
PASSING
RENT
(ANNUAL)
724,701
384,502
505,203
269,800
302,174
ERV
605,201
546,300
507,800
275,100
317,139
The largest industrial asset is in Telford and is fully let to CeDo Ltd, with 0.7 years unexpired term.
Trackside Business Park is the second largest industrial property and is fully let to 5 tenants.
Office
There are 11 office assets in the Portfolio, ranging in value from £11,720,000 to £290,000. The largest
five office assets by market value have an aggregate value of £34,590,000 (13.1 per cent. of the Portfolio
by value), with a WAULT of 4.0 years and a physical occupancy of 98.5 per cent.
PROPERTY NAME
800 The Boulevard Capability Green
Unit 2 Framewood Road Wexham
Sovereign House The Headrow
Mitre Building Kitson Way
Cedar House Spa Road
CITY
Luton
Slough
Leeds
Harlow
Gloucester
PROPERTY LOCATION
UK East Midlands (Regional)
UK South East (Regional)
UK Yorkshire/ Humber (Metropolitan)
UK East Anglia (Regional)
UK South West (Regional)
FLOOR
Physical
AREA (M2) occupancy
4,826
3,474
3,377
2,788
3,570
100.0%
100.0%
91.9%
100.0%
100.0%
WAULT
TO
BREAK
5.3
3.7
7.8
2.5
Market
Value
11,720,000
11,050,000
5,570,000
3,400,000
2,850,000
GROSS
PASSING
RENT
(ANNUAL)
972,000
916,680
443,882
537,330
300,000
ERV
960,900
748,000
480,600
375,100
325,000
The largest office by market value is 800 Boulevard Capability Green in Luton, which is 100% let to
Corporate Services Group Ltd with a WAULT to break of 5.3 years.
Other
There are 2 assets in other category, the larger asset with a market value of £2,375,000 is a mixed asset
with residential and retail. The smaller asset, valued at £345,000 is let to Cheeky Disco Bars, a leisure
tenant.
PROPERTY NAME
St Pauls Chambers Norfolk Street Sheffield
Midland House Trinity Street
CITY
Sheffield
Hanley
PROPERTY LOCATION
UK Yorkshire/ Humber (Metropolitan)
UK West Midlands (Regional)
FLOOR
Physical
AREA (M2) occupancy
851
1,343
100.0%
100.0%
WAULT
TO
BREAK
8.6
2.3
Market
Value
GROSS
PASSING
RENT
(ANNUAL)
2,375,000
199,600
345,000
35,000
ERV
Sales
Since the Cut-Off Date, 3 Properties have now been sold. The total sales proceeds of these Properties was
£4,550,000 and a total gross rental income of £257,126. It is anticipated that up to 10 of the Properties in
the Portfolio may be sold prior to the Closing Date.
- 78-
190,300
50,000
The amount outstanding under the Loan, as at the date of this Offering Circular, is £176.6m. The
Borrowers will fund the Deposit Account in an amount equal to £4,250,000 on the Closing Date and such
amount will be applied as Net Disposal Proceeds to prepay the Loans on the first Loan Payment Date.
The amount outstanding under the Loan, as at the date of this Offering Circular, is £185m.
Portfolio Stratifications
Top Assets

10 largest properties represent 29.1% by aggregate market value and 26.9% of income (based on
the day 1 passing rent)

20 largest properties represent 44.0 % by aggregate market value and 40.7% of income (based
on the day 1 passing rent)
Top 10 tenants and Lease Rollover Schedule
- 79-
Geographical Distribution of Asset Types
Retail
Region Presentation
Yorkshire/ Humberside
North West
East Anglia
South East
Other
Total
Number of
Properties
18
34
15
14
61
142
% of Number of
% of Market
Properties Market Value
Value
12.68%
34,119,000
18.78%
23.94%
35,423,000
19.50%
10.56%
20,295,000
11.17%
9.86%
19,752,000
10.87%
42.96%
72,046,000
39.67%
100.00% 181,635,000
100.00%
Gross Rent
3,170,041
3,396,672
1,655,401
1,425,161
6,543,573
16,190,848
% of Gross
Rent
ERV % of ERV
19.58% 2,748,227
16.73%
20.98% 3,591,094
21.87%
10.22% 1,561,102
9.51%
8.80% 1,457,490
8.87%
40.42% 7,064,816
43.02%
100.00% 16,422,729 100.00%
Number of
Properties
1
0
3
3
4
11
% of Number of
% of Market
Properties Market Value
Value
9.09%
5,570,000
13.27%
0.00%
0.00%
27.27%
15,720,000
37.45%
27.27%
12,755,000
30.39%
36.36%
7930000
18.89%
100.00%
41,975,000
100.00%
Gross Rent
443,882
1,553,730
1,071,180
713599
3,782,391
% of Gross
Rent
11.74%
0.00%
41.08%
28.32%
18.87%
100.00%
ERV % of ERV
480,600
13.29%
0.00%
1,387,400
38.36%
894,600
24.74%
854,102
23.62%
3,616,702 100.00%
Number of
Properties
0
1
0
0
16
17
% of Number of
% of Market
Properties Market Value
Value
0.00%
0.00%
5.88%
55,000
0.15%
0.00%
0.00%
0.00%
0.00%
94.12%
37,285,000
99.85%
100.00%
37,340,000
100.00%
Gross Rent
3,124,163
3,124,163
% of Gross
Rent
0.00%
0.00%
0.00%
0.00%
100.00%
100.00%
ERV % of ERV
0.00%
1
0.00%
0.00%
0.00%
3,338,892 100.00%
3,338,893 100.00%
Number of
Properties
1
0
0
0
1
2
% of Number of
% of Market
Properties Market Value
Value
50.00%
2,375,000
87.32%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
50.00%
345,000
12.68%
100.00%
2,720,000
100.00%
Gross Rent
199,600
35,000
234,600
% of Gross
Rent
85.08%
0.00%
0.00%
0.00%
14.92%
100.00%
ERV % of ERV
190,300
79.19%
0.00%
0.00%
0.00%
50,000
20.81%
240,300 100.00%
Office
Region Presentation
Yorkshire/ Humberside
North West
East Anglia
South East
Other
Total
Industrial
Region Presentation
Yorkshire/ Humberside
North West
East Anglia
South East
Other
Total
Other
Region Presentation
Yorkshire/ Humberside
North West
East Anglia
South East
Other
Total
Tier 1/Tier 2
- 80-
Magni Portfolio Tier 1 and Tier 2 by
Market Value
Tier 2
49.89%
Tier 1
50.11%
Magni Portfolio Tier 1 and Tier
2 by ALA
Tier 2
46.32
%
Tier 1
53.68
%
Tier 1
Tier 1
Tier 2
Tier 1 Assets
Top 10 Tenants
- 81-
Tier 2
Tier 2 Assets
Selected pictures of Properties within the Portfolio
JLL 139: Audley House
- 82-
The market values detailed in this section "Description of the Portfolio" have been extracted from the
Pecan Appraisal produced by Strutt & Parker as at 1 October 2015 as detailed in their report dated 26
October 2015 and the Titan Appraisal produced by Cushman & Wakefield as at 31 August 2015 as
detailed in their report dated 21 October 2015.
Both Appraisals can be fully accessed via website: http://www.ise.ie/Market-Data-Announcements/Debt/.
In considering the analysis detailed in this section "Description of the Portfolio" reference must be made
to the full Pecan Appraisal and Titan Appraisal.
- 83-
PROPERTY ACQUISITION PROCESS AND LOAN ORIGINATION
A.
Titan Properties
Titan Acquisition
The Titan Borrowers entered into the following sale and purchase agreements relating to the acquisition
of the Titan Properties (the "Titan Acquisition") (such agreements together the "Titan Acquisition
Agreements"):
(a)
a sale and purchase agreement dated 11 November 2014 between Omaha Nominees (A) Limited
and Omaha Nominees (B) Limited; Brentwood Investments Limited, Huxley Investments
Limited, Vivienne Properties Limited, Ringstead Two Limited, Remor Investments Limited,
Ringstead Four Limited and First Tower Trustees Limited and Fortis Reads Trustees Limited
(now Intertrust Trustees Limited; (as the sellers) and (2) Perses Limited, Leto Limited and Helios
Limited (as the buyer);
(b)
a sale and purchase agreement dated 11 November 2014 between Landmaster Properties Limited,
72 The Moor Sheffield (No. 1) Limited and 72 The Moor Sheffield (No.2) Limited, Brookwide
Limited, Topland Portfolio No 1 Limited, Headstates Limited and Agra Limited (acting by the
Administrative Receivers) (the Sellers) (2) Robert Coxen and Mark Firmin (as the Administrative
Receivers) and (3) Perses Limited, Leto Limited and Helios Limited (as the Buyer);
(c)
a sale and purchase agreement dated 11 November 2014 between Tokenplain Limited,
Stripescene Limited and Miller Limited; (acting by the Administrators) (2) Nicholas Guy
Edwards and Philip Stephen Bowers (as the Administrators) and (3) Perses Limited, Leto
Limited and Helios Limited (as the Buyer);
(d)
a sale and purchase agreement dated 11 November 2014 between Strongpark Limited, Croskeep
Limited, Bedell Corporate Trustees Limited and Atrium Trustees Limited and Rainlex Limited
(acting by the LPA Receivers) ((the Sellers) (2) Jemma Kathleen McAndrew and Richard James
Stanley (as joint LPA receivers of Croskeep Limited), Shay Bannon and Sarah Rayment (as joint
LPA receivers of Bedell Corporate Trustees Limited and Atrium Trustees Limited) and Robert
Croxen and Mark Firmin (as joint LPA receivers of Strongpark Limited and Rainlex Limited (as
the LPA Receivers) and (3) Perses Limited, Leto Limited and Helios Limited (as the Buyer);
(e)
a sale and purchase agreement dated 11 November 2014 between Cabri (Three) Limited and
Cabri (Five) Limited (as the Sellers) and (2) Perses Limited, Leto Limited and Helios Limited (as
the Buyer);
(f)
a sale and purchase agreement dated 11 November 2014 between Miller Limited and Tokenplain
Limited (acting by the Administrators) (the Sellers) (2) Nichola Guy Edwards and Philip Stephen
Bowers (as the Administrators) and (3) Perses Limited, Leto Limited and Helios Limited (as the
Buyer); and
(g)
a sale and purchase agreement dated 11 November 2014 between Remor Investments Limited,
First Tower Trustees Limited, Omaha GP Limited, Brentwood Investments Limited and Huxley
Investments Limited (the Sellers) and (2)) Perses Limited, Leto Limited and Helios Limited (the
Buyer),
each seller pursuant to a Titan Acquisition Agreement, a "Titan Seller").
Limited warranties
The Titan Properties were purchased by the relevant Titan Borrower from the Titan Sellers (acting by
receivers, administrators or administrative receivers, as applicable). As such, very limited warranties and
representations were provided to the relevant Titan Borrower in relation to the Titan Properties under the
Titan Acquisition Agreements (as compared to the representations and warranties that would normally be
provided in a non-distressed sale of similar properties).
- 84-
Real Estate Information
Property-Level Information
In connection with the Titan Acquisition and origination of the Titan Existing Loan, the following
property-level information was produced in respect of the Titan Properties:
(a)
an environmental report prepared by Delta Simons Environmental Limited for 41 Titan
Properties;
(b)
83 building survey reports dated between 8 September 2014 and 16 October 2014 prepared by
Jones Lang LaSalle in respect of certain of the Titan Properties;
(c)
8 verification surveys of the Delta Simons reports prepared by Clarke Bond,
(together, the "Property-Level Information").
Delta-Simons Environmental Consultants in October 2014 prepared an environmental risk register in
respect of 25 Titan Properties. This register summarised significant site features, site history, geological
sensitivity, hydrological sensitivity, fluvial/tidal flood risk and regulatory setting features in respect of
each of the relevant Titan Properties.
The Company and Credit Suisse Securities (Europe) Limited have also instructed Cushman & Wakefield
to value each of the Titan Properties (the "Titan Appraisal").
Real Estate Title Insurances and Title Summaries
In connection with the Titan Acquisition and origination of the Titan Existing Loan, a very limited legal
review process was undertaken in respect of the Titan Properties due to the distressed nature of the
transaction, in particular, the transaction timeframe, the bid process and the quantity of properties.
However, in order to mitigate against any risk associated with the limited representations and warranties
provided under the Titan Acquisition Agreements and the limited legal review carried out, a title
insurance policy (the "Owner's Title Insurance") and a no search indemnity policy (the "No Search
Insurance", and together with the Owner's Title Insurance, the "Title Insurance") have been taken out in
respect of the Titan Properties. The limit of indemnity under the Owner's Title Insurance and under the
No Search Insurance in each case is, in respect of any individual Titan Property, the amount detailed in
the schedule of properties at Appendix 1 of the relevant policy document. There is also an aggregate limit
of cover, which was £251,600,000 as at 10 October 2014 in respect of the Owner's Title Insurance and
£251,600,000 as at 12 November 2014 in respect of the No Search Insurance.
Please refer below to the section entitled "Title Insurances" for further information.
The Obligors instructed English legal counsel and Scottish legal counsel to undertake the following
exercise in order to prepare a summary of the specified information in respect of the Titan Properties:
(a)
in relation to all Titan Properties, except those in Scotland:
(i)
a review of the Land Registry official copy entries for each title number comprising the
Titan Properties to extract the following factual information:
(A)
description of the property;
(B)
title number;
(C)
whether the property is freehold or leasehold;
(D)
the quality of title;
(E)
the registered proprietor of the registered estate;
(F)
the registered proprietor of any charge;
- 85-
(ii)
(b)
(G)
details of any restrictions on title (other than relating to a charge in favour of the
loan security agent pursuant to the Existing Indebtedness);
(H)
whether there have been any changes to the registered titles since completion of
the Titan Acquisition (save for occupational leases which have been added or
removed); and
a review of the headlease documents in relation to the leasehold Titan Properties to
extract the following factual information:
(A)
the headlease rent;
(B)
payment terms;
(C)
rent review mechanism;
(D)
whether the landlord's consent is required to assign the headlease and if so,
whether there is any reasonableness requirement;
(E)
whether the landlord's consent is required to charge the headlease and if so,
whether there is any reasonableness requirement;
(F)
whether there are any forfeiture provisions and if so, if they applied in the event
of tenant insolvency and if there were any mortgage protection provisions;
in relation to the Titan Properties in Scotland,
(i)
(ii)
a review of the title deeds and where available Register Direct Title Sheets, for each title
number comprising the Titan Properties to extract the following factual information:
(A)
description of the property;
(B)
title number;
(C)
whether the property is heritable (being the Scottish equivalent of freehold) or
leasehold;
(D)
the registered proprietor;
(E)
details of any standard security;
(F)
details of any rights of pre-emption or redemption;
(G)
details of any exclusion of indemnities in respect of any registered title;
(H)
whether there have been any changes to the registered titles since completion of
the Titan Acquisition (save for occupational leases which have been added or
removed); and
a review of the headlease documents in relation to the leasehold Titan Properties in
Scotland to extract the following factual information:
(A)
the headlease rent;
(B)
payment terms;
(C)
rent review mechanism;
(D)
whether the landlord's consent is required to assign the headlease and if so,
whether there is any reasonableness requirement;
(E)
whether the landlord's consent is required to charge the headlease and if so,
whether there is any reasonableness requirement;
- 86-
(F)
whether there are any irritancy provisions and if so, if they applied in the event
of tenant insolvency and if there were any mortgage protection provisions.
Title Insurances
Title insurances have been taken out in respect of Titan Properties in order to mitigate against the risk of
any of those properties not having good and marketable title or being affected by any matter which might
be expected to affect the value of the relevant Titan Property or its future marketability.
As with all insurance policies, if a valid claim is made under the title insurance, the beneficiaries of the
insurance will be dependent upon the insurer's ability to pay out, as to which no assurances can be given.
The insurer in respect of both the Owner's Title Insurance and the No Search Insurance is ERGO
Versicherung AG, UK Branch (the "Title/ No Search Insurer")
Owner's Title Insurance
The Owner's Title Insurance policy is dated 10 October 2014. The insured under the policy include the
then current owners of the Titan Properties at the time the policy was put in place (the "First Insured")
and any purchaser at arm's length together with any lessee or mortgagee during the period of insurance
(the "Second Insured") (the First Insured and the Second Insured together being the "Title Insurance
Insured"). The period of insurance is from 10 October 2014 (the "Title Insurance Inception Date") and
continuing for the period of ownership of each individual Titan Property by the First Insured and/or the
Second Insured. The Title/ No Search Insurer also agrees to provide cover at terms commercially
available in the title insurance market in respect of any further increase required to the limit of indemnity
required by the Second Insured in respect of any individual Titan Property. The Loan Security Trustee, as
mortgagee of the Titan Properties, is a Second Insured under the Owner's Title Insurance. The Original
Borrowers, as purchasers from the First Insured, are also Second Insured under the Owner's Title
Insurance.
Under the Owner's Title Insurance, the Title/ No Search Insurer indemnifies the First Insured and the
Second Insured against Loss (as defined below) sustained directly as a result of an individual Titan
Property being subject to a Defect in Title. Defect in Title is broadly defined and includes any one or
more of the following affecting any individual Titan Property:
(a)
the title is other than good and marketable;
(b)
the enforcement or attempted enforcement by any third party of any known or unknown
restrictive covenant, burden, condition, restrictive obligation, servitude or other right, restriction,
encroachment charge or encumbrance affecting the freehold, heritable or superior title or breach
of a covenant on the part of the lessee contained in a lease of the property other than an
occupational lease;
(c)
the enforcement by any third party of any known or unknown right, easement, servitude right of
access, covenant, provision, condition, and/or stipulation to which the property is subject and
which is still subsisting and capable of taking effect;
(d)
the absence of a legal grant of right of way to and from a property, to and from the adopted
highway for pedestrians and/or vehicles in connection with the Insured Use (as defined below) of
the property, or the same being temporary or personal or requiring payment or being subject to
onerous or unusual conditions, or such rights being enjoyed on terms enabling any person to
terminate it or curtail it, or the rights not being held for the same estate or interest as the First
Insured's or Second Insured's estate or interest in the property;
(e)
the absence of a legal easement or servitude for services to and drainage from a property or the
right being subject to onerous or unusual conditions or such rights being enjoyed on terms
enabling any person to terminate it or curtail it, or the rights not being held for the same estate or
interest as the First Insured's or Second Insured's estate or interest in the property;
(f)
the absence of legal documentary evidence of title;
(g)
the attempt by any third party to extract or excavate minerals over or under the property;
- 87-
(h)
the failure to obtain planning permission and/or building regulations approval, listed building
consent or conservation area consent or to comply with any conditions to which any of the same
are subject or any section 106 agreement, or there being any challenge to the validity of any
consent for existing works carried out prior to the Title Insurance Inception Date or for the
Insured Use or the same being temporary or personal or being subject to other onerous or unusual
conditions or any missing documents relating to any approval;
(i)
the inadequacy of or lack of insurance provision or repairing obligations in the lease of a property
and any building to which it forms part of any part thereof;
(j)
the lessor under the lease of the property exercising or attempting to exercise a legal right of reentry under the determination clause in the lease directly due to breach of the covenants
contained in the lease or the failure of the lessee to pay ground rent or other monies payable
under the terms of the lease or any other ground;
(k)
the lessor under the lease of a property refusing to acknowledge notice serve of the First Insured's
and/or the Second Insured's interest in the property;
(l)
the vendor failing to produce ground rent receipts up to the Title Insurance Inception Date due to
an absentee landlord;
(m)
the breach of any terms contained in the lease of a property relating to the assignment or
assignation of the lease which could not be complied with due to an absent landlord;
(n)
any outstanding rent charge which has not been paid by virtue of not having been demanded prior
to the Title Insurance Inception Date by the rent charge owner who is absent;
(o)
any material breach of any requirements of any statute or legal requirement capable of
enforcement which affects the property;
(p)
the absence of any rights of support, protection or shelter, or access to neighbouring land
necessary to support or protect or repair, maintain, alter or redevelop the property, access or
services thereto, or to comply with any obligations, statute or legal requirement in respect of the
property; and
(q)
the property being subject to any historic rent charge or similar liability.
In relation to paragraph (a) above 'good and marketable' means that:
(i)
the title to an individual Titan Property is free from any rights of pre-emption, options or
contracts for sale in respect of the relevant Titan Property, restrictions, covenants,
agreements, obligations, burdens, conditions, easements, rights, servitudes, inhibitions,
encroachments, overriding interests or other interest of any nature, charges, mortgages,
standard securities, liens or encumbrances, which at the Title Insurance Inception Date
might reasonably be expected adversely to affect the value of the Titan Property or its
future marketability;
(ii)
no previous owner of any individual Titan Property had (A) no or only limited title
(including possessory or good leasehold title) or (B) no authority or no capacity to
dispose of the Titan Property;
(iii)
there are no rights of reverter or other like claims to the Titan Property; and
(iv)
if any easement, servitude or other benefit requires protection by registration or caution,
such protection has been properly effected.
Loss includes:
(a)
damages or compensation (including costs and expenses) awarded against the First Insured
and/or Second Insured by an order of the court and the cost of complying with any order;
- 88-
(b)
the adverse difference in the market value of the Titan Property calculated on the assumption that
the Titan Property is not affected by the Defect in Title and at the date the order is granted
upholding the Defect in Title or the Defect in Title is established to the satisfaction of the Title/
No Search Insurer; and
(c)
the cost of any settlement made out of court with the prior consent of the Title/ No Search Insurer.
The Owner's Title Insurance is provided on the basis that full disclosure of all material facts has been
made available by or on behalf of the First Insured and/or the Second Insured, whether or not requested.
The policy contains an acknowledgement that all of the documents and information in the Titan Property
Seller's Virtual Data Room in relation to each Titan Property have been made available and disclosed to
the Title/ No Search Insurer.
The limit of indemnity under the Owner's Title Insurance is the amount as detailed in the property
schedule attached to the policy document in respect of any individual Titan Property and subject to an
aggregate limit of £251,600,000.00 (as at 10 October 2014) in respect of the Titan Properties. As such,
once a Titan Property is sold by the relevant Borrower it will no longer be covered by the Owner's Title
Insurance and therefore the aggregate limit of the policy will decrease.
The Title/ No Search Insurer will not be liable to indemnify the First Insured and Second Insured in
respect of:
(a)
any Titan Property which at the Title Insurance Inception Date the First Insured and/or the
Second Insured was aware was being used otherwise than in accordance with the continued use
of each Titan Property at the Title Insurance Inception Date as disclosed by the First Insured to
the Second Insured at the date of exchange of contracts for the purchase of the Properties (the
"Insured Use") and/or situated other than in England, Wales or Scotland;
(b)
any loss sustained relating to a Titan Property:
(i)
in respect of any matter which is the responsibility of the tenant under an occupational
lease unless that matter cannot be performed because of a defect in title;
(ii)
in respect of any Defect in Title created after the Title Insurance Inception Date unless
pursuant to an obligation or other circumstance existing before the Inception Date or
pursuant to any statutory or other legal requirement;
(iii)
arising directly or indirectly from subsidence;
(iv)
in respect of the cost of remediation of any contamination required pursuant to the
provisions of the Environmental Act 1990 and/or the Water Resources Act 1991; and
(v)
should the property cease to be used in accordance with the Insured Use following the
Title Insurance Inception Date other than due to a Defect in Title;
(c)
any loss arising from a consequential loss of whatever nature; and
(d)
any loss arising from the financial failure, insolvency or bankruptcy of the First Insured and/or
the Second Insured.
No Search Insurance
The No Search Insurance policy is dated 12 November 2014. The insured parties under the policy are the
Titan Borrowers together with any lessee or mortgagee during the period of insurance (the "No Search
Insured"). The Loan Security Trustee therefore, as a mortgagee of the relevant Titan Properties, will be
insured under the No Search Insurance.
The period of insurance is from 11 November 2014 (the "No Search Inception Date") and continues for
the period of ownership of each individual Titan Property by the No Search Insured. The Title/ No Search
Insurer agrees to provide cover at terms commercially available in the title insurance market in respect of
any of any increase in the limit of indemnity required by the No Search Insured in respect of any
individual Titan Property.
- 89-
The Title/ No Search Insurer indemnifies the No Search Insured against any Loss (as defined below)
suffered directly as a result of any adverse matter, being any entry or matter that would have been
revealed by certain specified searches including a local authority search and utilities and other usual
searches a prudent purchaser would make in any publicly maintained register (excluding the Land
Registry or the Registers of Scotland), a chancel repair search (in respect of Properties in England and
Wales) or an environmental desktop search, had one been carried out at the No Search Inception Date and
which adversely affects the Titan Property.
Loss includes:
(a)
(b)
in relation to a search (excluding a chancel repair search):
(i)
liability for any financial charge on the Titan Property;
(ii)
the difference in market value of the Titan Property calculated on the basis of certain
assumptions;
(iii)
the cost of any settlement made out of court with the prior consent of the Title/ No
Search Insurer;
(iv)
costs and expenses incurred with the prior consent of the Title/ No Search Insurer, such
consent not to be unreasonably withheld or delayed, in taking or defending any action at
law, or otherwise incurred; and
(v)
loss of rent or other income, and
in relation to a chancel repair search, costs and expenses solely and directly resulting from any
liability for chancel repair and other costs incurred.
The policy is provided on the basis that full disclosure of all material facts has been made available by or
on behalf of the No Search Insured, whether or not requested. The policy contains an acknowledgement
that all of the documents and information in the Titan Seller's Virtual Data Room in relation to each Titan
Property have been made available and disclosed to the Title/ No Search Insurer.
The Title/ No Search Insurer will not be liable to indemnify the No Search Insured in respect of:
(a)
any Titan Property which at the No Search Inception Date the No Search Insured was aware was
being used otherwise than in accordance with the Insured Use;
(b)
loss sustained:
(i)
in respect of any adverse matter known to the No Search Insured at the No Search
Inception Date, unless the Title/ No Search Insurer agrees in writing to provide specific
additional cover under the policy at terms agreed;
(ii)
in respect of any adverse matter which was entered in the relevant registers after the No
Search Inception Date;
(iii)
arising directly or indirectly from subsidence;
(iv)
in respect of the cost of remediation of any contamination required pursuant to the
provisions of the Environmental Act 1990 and/or the Water Resources Act 1991; and
(v)
should the Titan Property cease to be used in accordance with the Insured Use following
the No Search Inception Date other than due to an adverse matter;
(c)
any loss arising from a consequential loss of whatever nature; and
(d)
any loss arising from the financial failure, insolvency or bankruptcy of the No Search Insured.
The limits of indemnity under the policy for each individual Titan Property in respect of a local authority
search and other usual searches and an environmental search, is the amount as detailed in the property
schedule attached to the policy document in respect of the relevant Titan Property (the limit of indemnity
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for loss in respect of a chancel search is in addition to the limit of indemnity in respect of loss for a local
authority search or environmental search, subject to the aggregate limit of indemnity).
B
Pecan Properties
Pecan Acquisition
The Pecan Borrowers entered into a sale and purchase agreement dated 24 September 2015 between (1)
The Royal London Mutual Insurance Society Limited (as the seller, the "Pecan Seller") and (2) Toucan
Finance Limited (3) Pecan Finance Limited and (4) Culver Finance Limited (as the buyers) relating to the
acquisition of the Pecan Properties (the "Pecan Acquisition") (the "Pecan Acquisition Agreement", and
such agreement together with the Titan Acquisition Agreements, the "Acquisition Agreements")
In this Offering Circular, "Acquisition Documents" means the Acquisition Agreements and any other
document designated as an Acquisition Document by the Loan Facility Agent and the Company.
Pecan Property-Level Information
In connection with the Pecan Acquisition and origination of the Loans, the following information was
produced in respect of the Pecan Properties:
(a)
City of London Law Society (CLLS) Certificates of Title (Seventh Edition) prepared by legal
counsel to the Obligors Mayer Brown International LLP;
(b)
a valuation of each of the Pecan Properties by Strutt & Parker (the "Pecan Appraisal");
(c)
Paragon building survey reports dated 14 August 2015 in respect of the Pecan Properties; and
(d)
Clarkebond summary building reports prepared on 7 August 2015 in respect of the Pecan
Properties,
(the matters referred to in paragraph (b), (c) and (d) the "Property-Level Information").
The Certificates of Title
The Certificates of Title in respect of the Pecan Properties are in the standard form of The City of London
Law Society (CLLS) Certificate of Title (7th Edition), save that in relation to the occupational leases, the
Certificates of Title depart from the CLLS form and report only on the key lease terms (premises, lease,
agreement for lease, statutory rights, term, tenant, rent, rent review, alienation, repair, alterations, user,
insurance, service charge, forfeiture, tenancy schedule, tenant breaches and onerous provisions and
material omissions) and therefore the scope of the Certificates of title is qualified accordingly.
Building Reports
Paragon building survey reports dated 14 August 2015 and Clarkebond summary building reports
prepared on 7 August 2015 in respect of the Pecan Properties.
C
Senior Loan origination process
The Senior Loan was originated by the Original Senior Lender on 10 November 2015 and will be
amended and restated on or prior to the Closing Date. The Senior Facility Agreement is based on Loan
Market Association based documentation for the commercial real estate finance market. The Borrowers
are affiliates of the Original Senior Lender (See the section entitled "Description of the Senior Facility
Agreement" for more details).
The Retention Holder has directly and, in relation to the on-sale of the Loans, via its subsidiary, the Loan
Seller, entered into contracts in relation to the initial advance of the Pecan Loans and servicing of the
Loans. As a consequence certain criteria, policies and procedures will be followed or have been followed
regarding the selection and administration of the Loans:
(a)
no further advances will be granted under the Loans by the Retention Holder. The Issuer shall on
the Closing Date make a further advance to the Titan Borrowers. All responsibilities, powers and
authorities of the Issuer as a Lender under the Loans will be delegated to the Servicer and the
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Special Servicer who will have in place processes for approving, amending or reviewing such
credit in accordance with the terms of the Servicing Agreement;
(b)
the Servicer, on behalf of, inter alia, the Issuer will have in place and operate effective systems to
manage the ongoing administration and monitoring of the Loans, including for identifying and
managing any Loan Event of Default (please see "Key Terms of the Servicing Arrangements for
the Loans");
(c)
the Retention Holder originated the Pecan Loans having regard to the diversification of the
Properties based on the credit profile of the Portfolio (please see "Description of the Portfolio").
The Retention Holder has advanced the Pecan Loans as part of its strategy of investing the
proceeds of its capital contribution through affiliates in real estate assets; and
(d)
the Servicer will have certain contractual duties in accordance with the terms of the Servicing
Agreement with respect to the management, restructuring and work-out of Loans in arrears or
which have becoming defaulted or are otherwise Specially Serviced Loans (please see "Key
Terms of the Servicing Arrangements for the Loans").
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MANAGEMENT AND ADMINISTRATION OF THE PROPERTIES
A
Asset Management
Introduction
Apam Limited (the "Asset Manager") was appointed by the Borrowers pursuant to an asset management
agreement entered into between the Asset Manager and the Borrowers dated on or about the Closing Date
(the "Asset Management Agreement") to provide certain asset management services in relation to the
Properties.
The Asset Manager has also entered into a duty of care agreement dated on or about the Closing Date
with the Borrowers, the Company and the Loan Security Trustee (the "Asset Manager Duty of Care
Agreement").
Asset Manager Duties
Asset Management Agreement
The asset management services provided by the Asset Manager relate to Leases and all related matters.
The Asset Manager is responsible for ensuring that all rent is collected and that service charges are
collected and paid. The Asset Manager shall also oversee matters relating to the Leases such as dealing
with renewals, surrenders, forfeiture and termination, advising a Borrower on any potential disposal of a
Property by that Borrower and supervising the Properties and other administrative duties in relation to any
Lease.
The Asset Manager is mandated to provide development management services to a Borrower where the
relevant Borrower may develop or convert the whole of a Property (which, for the avoidance of doubt,
does not include any tenant improvements or improvements required to re-lease space) in accordance
with the relevant business plans for the Properties (each a "Business Plan"). The Asset Manager is
mandated to make recommendations in relation to any proposals for refurbishment of all or part of a
Property and the budget and programme for the development work, appoint third party advisors such as
architects and surveyors and the co-ordinate and monitor such third party advisors.
The Asset Manager also has an advisory role, assisting the Borrowers to identify and implement value
enhancing asset management opportunities. These opportunities may include advising a Borrower on a
possible addition to any Property or the disposal of a Property and the divestment and re-investment of
the Property portfolio. As part of their advisory services, the Asset Manager also assists with the
coordination of third party advisors and assists with Property analysis, market and economic surveys and
preparing/annually updating the relevant Business Plan(s).
The final function of the Asset Manager is to provide general corporate services including (but not limited
to) authorising and requesting payment of all Landlord invoices, undertaking cashflow analysis and
reconciling bank accounts on a monthly basis, the bookkeeping and maintenance of financial records,
preparing quarterly management accounts and filing VAT returns with HMRC. The Asset Manager will
also perform ad-hoc tasks such as filing company returns and managing each Borrower's relationship with
the Lender.
Asset Manager Duty of Care Agreement
Pursuant to the Asset Manager Duty of Care Agreement, the Asset Manager agrees to (among other
things), comply with and carry out its obligations under the Asset Management Agreement with the skill,
care and diligence as would be expected from a reasonably qualified and competent asset manager. It
agrees not to make any material amendments to the Asset Management Agreement without the prior
consent of the Loan Security Trustee and must notify the Loan Security Trustee of any breach (other than
an immaterial breach) by the Borrowers or itself (as the case may be) of its obligations under the Asset
Management Agreement. The Asset Manager also confirms that it has professional and business
indemnity insurance with a limit of not less than £10 million and further that it will maintain such
insurance during its appointment and for a period of at least three years after the termination of the Asset
Management Agreement.
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Asset Manager Remuneration
The Asset Manager is paid a management fee, a corporate services fee, an acquisition fee and an incentive
fee for carrying out the asset management services (each term as defined below and together, the "Asset
Manager Fees"). The Asset Manager Fees are payable, together with VAT, quarterly in arrears. An
acquisition fee under the Titan Asset Management Agreement was paid by the Titan Borrowers to the
Asset Manager on the date of acquisition of the Titan Properties.
Termination of the Asset Management Arrangement
Asset Management Agreement
A Borrower will cease to be a party to the Asset Management Agreement if it disposes all of its interest in
the Properties. The Asset Management Agreement will terminate automatically when the last of the
Properties is disposed of (unless otherwise agreed between the Borrowers and the Asset Manager).
The Borrowers are entitled to terminate the Asset Management Agreement at any time with immediate
effect by giving notice in writing to the Asset Manager in any of the following events:
(a)
if the Asset Manager commits any material breach under the Asset Management Agreement and
fails to remedy such material breach (which is capable of remedy) within 30 Business Days of
receipt of written notification of the material breach from the Borrowers to the Borrowers'
reasonable satisfaction;
(b)
if the Asset Manager is fraudulent in connection with its obligations under the Asset
Management Agreement; or
(c)
if a receiver is appointed in respect of the Asset Manager's business or material part of its assets,
if it is insolvent and if any action is taken for the purpose of winding up or appointing a
liquidator or receiver for the Asset Manager (and such action is not withdrawn/rescinded within
30 Business Days and is not frivolous or vexatious), unless any such event is happening for the
purpose of a solvent amalgamation or reconstruction.
The Borrowers may also terminate the appointment of the Asset Manager at any time when each of the
following events (each an "Asset Management Agreement Event of Default") has occurred and is
continuing:
(a)
if the Asset Manager fails to implement the Business plan in any material respect (such
materiality to be considered in the context of the Property portfolio as a whole), provided
however that no Asset Management Agreement Event of Default will occur if the failure to
implement the Business Plan is connected to the non-performance of a tenant, force majeure
event, or other circumstances or events that are determined to be outside of the Asset Manager's
reasonable control, or the non-performance by or on behalf of the Borrowers of their obligations
under the Asset Management Agreement or acts contemplated by the Business Plan;
(b)
if the Asset Manager fails to comply with any material provision of the Asset Management
Agreement and fails to remedy such material breach (which is capable of remedy) within 30
Business Days of receipt of written notification of the material breach by the Borrowers or acts
outside the scope of its authority under the Asset Management Agreement; or
(c)
if the Asset Manager takes any action or omits to take any action, in each case, constituting the
gross negligence, willful misconduct or fraud.
The Asset Manager shall have the right to terminate the Asset Management Agreement at any time by
giving notice in writing if any of the following events occur:
(a)
if required to do so by any regulatory body;
(b)
if a Borrower commits any material breach under the Asset Management Agreement and fails to
remedy (if such breach is capable of remedy) the same within 30 Business Days of receipt of
notice from the Asset Manager of the breach;
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(c)
if, in connection with its performance under the Asset Management Agreement, the relevant
Borrower commit any act or omission which is fraudulent;
(d)
if the Asset Manager would breach any applicable law or regulation that is not in force at the date
of the Asset Management Agreement, by performing its obligations under the Asset Management
Agreement; or
(e)
if (i) an encumbrancer takes possession of, or a receiver is appointed in respect of, all or any part
of the business or assets of the Borrower, or any mortgage, standard security or charge; (ii) a
Borrower has a receiver, examiner or other similar officer of the whole or any material part of its
assets or undertaking appointed; (iii) if the Borrower is unable to pay or deemed to be unable to
pay its debts as the fall due pursuant to Section 123 of the Insolvency Act 1986; (iv) if a petition
is presented or any corporate action, legal proceedings or other step is taken for the purpose of
winding up, or appointing a liquidator (and such step is not withdrawn within 30 Business Days
and cannot reasonably be shown to be frivolous, vexatious or an abuse of the process of the court
or to relate to a claim to which the relevant Borrower has a good defense and which is being
contested in good faith by the relevant Borrower); (v) an order is made or resolution is passed for
the winding up of the relevant person; (vi) a petition is presented for the appointment of a
receiver of the Borrower; or (vii) the Borrower suffers or undergoes any procedure analogous to
any of the events in (i) to (vi) (inclusive) and including any procedure in the Borrower's
jurisdiction other than, in each case of (i) to (vii) (inclusive) an event happening for the purpose
of a solvent amalgamation or reconstruction,
and the termination in respect of one relevant Borrower shall not affect the continuance of the
Asset Management Agreement in relation to the remaining relevant Borrowers.
Asset Manager Duty of Care Agreement
Pursuant to the Asset Manager Duty of Care Agreement, the Asset Manager may not suspend the
performance of its obligations under, or terminate, the Asset Management Agreement unless it has given
the Loan Security Trustee at least 21 days' notice in writing of its intention to do so, setting out reasonable
details of the reasons for the intended suspension or termination and allowing a reasonable opportunity to
remedy the causes of the suspension or termination.
If the Loan Security Trustee has given notice to the Borrowers, the Company and the Asset Manager that
certain security has become enforceable, the Loan Security Trustee may immediately terminate the Asset
Management Agreement, without prejudice to any amounts due and payable to the Asset Manager under
the Asset Management Agreement before the date of termination.
B
Property Management
Lee Baron Limited (the "Titan Managing Agent") was appointed by the Asset Manager pursuant to an
property management agreement between the Asset Manager and the Titan Managing Agent dated 22
January 2015 (the "Titan Property Management Agreement") to provide certain property management
services in relation to the Titan Properties.
MJ Mapp Limited (the "Pecan Managing Agent", and together with the Titan Managing Agent the
"Managing Agents") was appointed by the Asset Manager pursuant to an property management
agreement between the Asset Manager and the Pecan Managing Agent dated 10 November 2015 (the
"Pecan Property Management Agreement", and together with the Titan Property Management
Agreement the "Property Management Agreements") to provide certain property management services
in relation to the Pecan Properties.
The Titan Managing Agent has entered into a duty of care agreement dated on or about the Closing Date
and the Pecan Managing Agent has entered into a duty of care agreement dated 11 November 2015
between, among others the relevant Borrowers, the Company and the Loan Security Trustee (each a
"Managing Agent Duty of Care Agreement").
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Managing Agent Duties
Property Management Agreement
The primary role of the Managing Agents pursuant to the relevant Property Management Agreement is an
administrative role, managing all Lease-related matters for the Properties. This includes collecting rent,
service charges, insurance refunds and all other sums due from tenants pursuant to any Lease. All monies
collected by the Managing Agents in accordance with the Property Management Agreements, are to be
remitted at weekly intervals, subject to the terms of the relevant Managing Agent Duty of Care
Agreement.
The Managing Agents also attend to administrative matters relating to the tenants, including dealing with
management enquiries from tenants, visiting the Properties to monitor tenants' compliance with their
Lease obligations and insurance and reporting to the Asset Manager on any significant events affecting
any Property. The Managing Agents may receive applications from tenants for landlord consent to assign,
sub-let or other matters requiring consent under the terms of any Lease.
The Managing Agents will keep records in respect of the Properties, including a database of estate
management records (including, for example, activities conducted by the relevant Managing Agent,
keeping evidence of compliance of the relevant Property with any applicable laws, VAT records and
copies of insurance contracts), keeping a diary of critical dates relating to any Lease and copies of all
agreements, Leases, deeds and essential drawings supplied to the relevant Managing Agent. The relevant
Managing Agent will also assist the Asset Manager with the preparation of notices and supporting
documentation relating to the liabilities of the Borrowers to tax, liabilities for and claims for
reimbursement or credit in respect of VAT and the recovery of any VAT from HMRC.
Throughout the term of the relevant Property Management Agreement, at the reasonable request of the
Asset Manager, the relevant Managing Agent will also provide to the Asset Manager an arrears schedule
in relation to rent and service charge and any such other information relating to the relevant Properties as
the Asset Manager may reasonably request. The Managing Agent is required to act on any notices it
receives from any tenant or occupier or from any third party (including, for example, fire certificates,
planning consents and maintenance contracts) and to maintain all accounting records in accordance with
generally accepted accounting principles.
Each Managing Agent are authorised under its Property Management Agreement to (without the Asset
Manager's consent) enter into contracts for the maintenance and supply of services for and on behalf of
the Asset Manager and may undertake maintenance and purchase supplies for the relevant Properties,
however the general rule (with some exceptions, such as monthly or recurring charges, or emergency
repairs) is that in each case, the contract value or cost of any one item (as applicable) does not exceed
£5,000 per annum. Each Property Management Agreement also permits the relevant Managing Agent to
(without the prior consent of the Asset Manager) expend monies as are reasonably required to ensure
compliance with all statutory obligations.
Managing Agent Duty of Care Agreement
Pursuant to the relevant Managing Agent Duty of Care Agreement, each Managing Agent agrees to
(among other things), comply with and carry out their obligations under its relevant Property
Management Agreement with the skill, care and diligence as would be expected from a reasonably
qualified and competent Managing Agent. Each Managing Agent also undertakes to each of the relevant
Borrowers and the Loan Security Trustee in the relevant Managing Agent Duty of Care Agreement that it
will, inter alia:
(a)
promptly collect and pay all Rental Income immediately on receipt into the relevant bank account
maintained by the relevant Managing Agent for each relevant Borrower, which has been
acknowledged by the Lender and the credit balance of which is held on trust for the relevant
Borrower (the "Client Account");
(b)
at least weekly following receipt of Rental Income into the relevant Client Account (and, if a
Loan Payment Date is pending, at least 10 Business Days' prior to such Loan Payment Date),
without withholding, set-off or counterclaim, pay all Net Rental Income (less any Lease
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Prepayment Proceeds or any amount paid into a Rent Deposit Account) into the relevant
Borrower's account designated as a Collection Account,
and confirms that it has professional and business indemnity insurance with a limit of not less than £10
million and further that it will maintain such insurance during its appointment and for a period of at least
three years after the termination of the Asset Management Agreement.
Each Managing Agent and the Asset Manager together agree under the relevant Managing Agent Duty of
Care Agreement that (among other things), they will not make any material amendments to the relevant
Property Management Agreement without the prior consent of the Loan Security Trustee and must notify
the Loan Security Trustee of any breach (other than an immaterial breach) by the Borrowers, the Asset
Manager or relevant Managing Agent (as the case may be) of its obligations under the relevant Property
Management Agreement.
Managing Agent Remuneration
The fee payable to each Managing Agent for its services under the relevant Property Management
Agreement (as set out in that Property Management Agreement) is comprised of:
(a)
2.5% of all Net Rental Income collected in respect of commercial tenancies;
(b)
10% of all Net Rental Income collected in respect of residential tenancies; and
(c)
together with various other additional fees and charges that are specified in that Property
Management Agreement, including (but not limited to): (i) a reasonable fee will be payable for
assignments/sublettings where recoverable from the tenant; (ii) each Managing Agent takes a fee
for preparing and handling insurance claims (a fee of 10% is payable on claims and (iii)
employment advice, an hourly fee is payable.
All fees are payable weekly in arrears prior to the payment of rents and are payable together with all VAT
and reasonable out of pocket expenses and disbursements.
Termination of the Property Management Arrangements
Property Management Agreements
Either party to a Property Management Agreement may terminate that agreement:
(a)
(b)
without notice in the following events:
(i)
if the other party becomes insolvent or bankrupt, subject to a winding-up order, or enters
into any arrangement with its creditors; or
(ii)
if the other party purports to assign the burden or benefit, or to charge the benefit, of the
agreement without the consent of the other party; or
at any time by giving the other party not less than three months' notice.
The appointment of the relevant Managing Agent may be terminated by the Asset Manager on 14
Business Days' notice in the event of the Managing Agent's material failure to perform its duties under the
relevant Property Management Agreement, gross negligence or misconduct, unless that Managing Agent
rectifies any such material failure to the reasonable satisfaction of the Asset Manager within the notice
period.
The Asset Manager may also terminate the relevant Property Management Agreement if a Borrower sells
its interest in a Property to any entity other than a holding company or subsidiary of the relevant
Borrower, or a subsidiary of any such holding company.
Managing Agent Duty of Care Agreements
Pursuant to the Managing Agent Duty of Care Agreement, neither the relevant Managing Agent nor the
Asset Manager may suspend the performance of its obligations under, or terminate, the relevant Property
Management Agreement unless it has given the Loan Security Trustee at least 21 days' notice in writing
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of its intention to do so, setting out reasonable details of the reasons for the intended suspension or
termination and allowing a reasonable opportunity to remedy the causes of the suspension or termination.
If the Loan Security Trustee has given notice to the relevant Borrowers and the relevant Managing Agent
that certain security has become enforceable, the Loan Security Trustee may immediately terminate the
relevant Property Management Agreement, without prejudice to any amounts due and payable to the
relevant Managing Agent under such Property Management Agreement before the date of termination.
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DESCRIPTION OF THE SENIOR FACILITY AGREEMENT
Overview
The Senior Facility Agreement is governed by English law. A summary of the principal terms of the
Senior Facility Agreement is set out below. To the extent that any reference is made to the Loan Facility
Agent or the Loan Security Trustee giving consent, making calculations or exercising any other discretion
under the Senior Facility Agreement in respect of the Issuer as Lender, that consent or other discretion
will be given on behalf of the Issuer by the Servicer or, if the Loan is specially serviced, the Special
Servicer.
Principal Definitions
For the purposes of this Offering Circular:
"Account" means the General Account, the Deposit Account, the Rent Account, each Collection Account,
any Cure Account, the Capex Contingency Reserve Account, each Rent Deposit Account and each Senior
Borrower General Account;
"Acquisition Agreement" means each of the Titan Acquisition Agreement and the Pecan Acquisition
Agreement;
"Administrative Party" means the Loan Facility Agent, the Loan Security Trustee or a Servicer;
"Allocated Loan Amount" means with respect to any Property, the amount set opposite that Property in
Part 2 of Schedule 1 of the Senior Facility Agreement;
"Approved Replacement Managing Agent" means any of CBRE, JLL, Capita Symonds, Colliers CRE,
Drivers Jonas Deloitte, FPD Savills, Knight Frank or Cushman & Wakefield;
"Assignation of Rents" means each assignation of rental income arising under an Occupational Lease of
Property located in Scotland entered or to be entered into in favour of the Loan Security Trustee;
"Authorisations" means an authorisation, consent, approval, resolution, permit, licence, exemption, filing,
notarisation or registration;
"Business Plan Expenses" means the Operating Expenditure to be incurred in the Loan Interest Period
following the Loan Payment Date together with:
(a)
a contingency amount equal to 10 per cent. of such Operating Expenditure provided that when
calculating such contingency amount the Company will not take into account the amount of the
fees of the Asset Manager or each Managing Agent; and
(b)
an amount equal to any Tax to be paid by a member of the Group in that Loan Interest Period,
in each case as shown in the then current Business Plan;
"Cap Provider" means any entity which has:
(a)
the Requisite Rating; or
(b)
its obligations under the relevant Hedging Agreement unconditionally guaranteed by another
person which has the Requisite Rating.
"Capex Contingency Reserve Account" means the account designated as such under the accounts
provisions of the Senior Facility Agreement ‎and includes any replacement of that Account;
"Capex Expenditure" means any expenditure of a capital nature (including any deferred maintenance
capital expenditure) in relation to a Property as detailed in the Business Plan and which is not recoverable
as a Tenant Contribution;
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"Cash Trap Event" means, on any Loan Payment Date, that:
(a)
the Loans are greater than the Maximum Target Loan Amount;
(b)
Projected Interest Cover is less than 200 per cent.;
(c)
the Loan to Value is greater than 72.5 per cent.; or
(d)
a Loan Event of Default has occurred and is continuing;
"Centre of Main interests" means the "centre of main interests" of a Senior Obligor for the purposes of
Council Regulation (EC) No 1346/2000 of 29 May 2000;
"Compensation Prepayment Proceeds" means the proceeds of all compensation and damages for the
compulsory purchase of, or any blight or disturbance affecting, a Property paid to an Obligor after
deduction of:
(a)
any proportion of such proceeds properly due to third parties; and
(b)
all reasonable third party costs and expenses incurred by a Senior Obligor in relation to such
proceeds;
"Environmental Report" means the environmental reports dated between 2 - 6 October 2014 prepared
by Delta Simons Environmental Consultants Limited in respect of certain Titan Properties;
"Establishment" means any place of operations where a Senior Obligor carries on non-transitory
economic activity with human means and goods;
"Excluded Recovery Proceeds" means any proceeds of a Recovery Claim which the Company notifies
the Loan Facility Agent are, or are to be, applied:
(a)
to satisfy (or reimburse a Senior Obligor which has discharged) any liability, charge or claim
upon an Obligor by a person which is not a Senior Obligor or an Affiliate of a Senior Obligor;
(b)
in the replacement, reinstatement and/or repair of assets of a Senior Obligor which have been
lost, destroyed or damaged; or
(c)
in the case of Escrow Monies, in accordance with the Escrow Monies provisions of the Senior
Facility Agreement,
in each case as a result of the events or circumstances giving rise to that Recovery Claim, if those
proceeds are so applied as soon as possible (but in any event within 90 days, or such longer period as the
Majority Lenders may agree) after receipt;
"Facility Fee" means the fee payable under the facility fee provisions of the Senior Facility Agreement;
"FATCA Deduction" means a deduction or withholding from a payment under a Finance Document
required by FATCA;
"Fee Letter" means any letter entered into by reference to the Senior Facility Agreement between one or
more Administrative Parties and the Company setting out the amount of any fees referred to in the Senior
Facility Agreement;
"Financial Indebtedness" means any indebtedness for or in respect of:
(a)
moneys borrowed;
(b)
any acceptance under any acceptance credit facility (including any dematerialised equivalent);
(c)
any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar
instrument;
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(d)
any lease, hire purchase contract or other agreement which would, in accordance with GAAP, be
treated as a finance or capital lease;
(e)
receivables sold or discounted (other than any receivables to the extent they are sold on a nonrecourse basis);
(f)
any derivative transaction entered into in connection with protection against or benefit from
fluctuation in any rate or price (and, when calculating the indebtedness in respect of any
derivative transaction, only the marked to market value will be taken into account);
(g)
any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or
documentary letter of credit or any other instrument issued by a bank or financial institution;
(h)
the acquisition cost of any asset or service to the extent payable before or after its acquisition or
possession by the party liable where the advance or deferred payment:
(i)
is arranged primarily as a method of raising finance or of financing the acquisition or the
construction of that asset or service; or
(j)
is due to be made more than six months before or after the date of acquisition or supply;
(k)
any other transaction (including any forward sale or purchase agreement) having the commercial
effect of a borrowing; or
(l)
any guarantee, indemnity or similar assurance against financial loss of any person in respect of
any item referred to in paragraphs ‎(a) to ‎(k) above;
"Group" means the Company and its Subsidiaries for the time being;
"Headlease" means a lease under which an Obligor holds title to the whole or any part of a Property;
"Hedging Agreements" any master agreement, confirmation, schedule or other agreement in each case
entered into by the Company for the purpose of hedging interest payable under the Senior Facility
Agreement;
"Hedging Collateral Accounts" means the Hedging Cash Collateral Account and the Hedging Securities
Collateral Account;
"Hedging Collateral Proceeds" means any collateral transferred by the Cap Provider in accordance with
the terms of the relevant Hedging Agreement;
"Hedging Prepayment Proceeds" means any amount payable to the Company as a result of termination
or closing out under a Hedging Agreement;
"Insurance Prepayment Proceeds" means any proceeds of Insurances required to be paid into the
Deposit Account in accordance with the insurance provisions of the Senior Facility Agreement;
"Insurances" means any contract of insurance required under the insurance provisions of the Senior
Facility Agreement and will not for the avoidance of doubt include the Titan Title Insurances;
"Jersey Security Agreement" means:
(a)
a Jersey law governed security interest agreement creating security over the shares in each
Borrower, and over certain contractual rights of the Company in certain intercompany loan
arrangements entered into or to be entered into by the Company in favour of the Loan Security
Trustee (the "Borrower Shares SIA");
(b)
a Jersey law governed security interest agreement creating security over Accounts held in Jersey,
by which each Borrower and the Company grant security:
(i)
in relation to the Company and the Titan Borrowers, certain contractual rights;
(ii)
in relation to the Company and the each Borrower, their accounts held in Jersey;
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(iii)
in relation to each Borrower their rights in relation to certain cash pooling arrangements,
entered into by each Borrower (and the Company in its capacity as trustee for the relevant
Borrower) in favour of the Loan Security Trustee (the "Accounts SIA"; and
(c)
a Jersey law governed security interest agreement creating security over the shares in, and the
shareholder loans made to, the Company entered into or to be entered into by the Shareholder in
favour of the Loan Security Trustee (the "Company Shares SIA");
"Lease Document" means in respect of the Pecan Properties and the Titan Properties:
(a)
an agreement for lease;
(b)
an Occupational Lease; or
(c)
any other document designated as such by the Loan Facility Agent and the Company;
"Lease Prepayment Proceeds" means any premium paid to a Senior Obligor in respect of any agreement
to amend, waive, surrender, renounce or release a Lease Document;
"Loan Interest Period" means each period determined under the Senior Facility Agreement by reference
to which interest on a Loan or an Unpaid Sum is calculated;
"Loan Legal Reservations" means:
(a)
the principle that equitable or discretionary remedies may be granted or refused at the discretion
of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and
other laws generally affecting the rights of creditors;
(b)
the time barring of claims under the Limitation Acts or as principles of Jersey Customary Law,
the possibility that an undertaking to assume liability for or indemnify a person against nonpayment of UK stamp duty may be void and defences of set-off or counterclaim;
(c)
the limitation of the enforcement of the terms of leases of real or heritable property by laws of
general application to those leases;
(d)
similar principles, rights and remedies under the laws of any Relevant Jurisdiction; and
(e)
any other matters which are set out as qualifications or reservations as to matters of law of
general application in any legal opinions supplied to the Loan Facility Agent as a condition
precedent under the Senior Facility Agreement on or before the first Utilisation Date;
"Loan Perfection Requirements" means the making or the procuring of the appropriate registrations,
filings, acceptances, endorsements, notarisations, stampings and/or notifications of each Security
Document and/or the Senior Security Interests created thereunder;
"Loan Security Documents" means:
(a)
a Security Agreement;
(b)
a Jersey Security Agreement;
(c)
a Scottish Security Agreement;
(d)
any other document entered into by a Loan Transaction Obligor evidencing or creating security
over any asset to secure any obligation of any Senior Obligor to a Loan Secured Party under the
Senior Finance Documents; or
(e)
any other document designated as such by the Loan Facility Agent and the Company;
"Loan Tax" means any tax, levy, impost, duty or other charge or withholding of a similar nature
(including any penalty or interest payable in connection with any failure to pay or any delay in paying any
of them);
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"Loan to Value" means, at any time, the Loans less so much of the amounts standing to the credit of any
Cure Account or the Deposit Account and any Trapped Cash (in each case) as are, on the applicable date
at which Loan to Value is being tested, required to be applied in prepayment of the Loans, as a percentage
of the aggregate market value of the Properties (determined in accordance with the most recent Valuation
of the Properties at that time);
"Loan Transaction Documents" means:
(a)
a Senior Finance Document;
(b)
the Junior Facility Agreement;
(c)
an Acquisition Document;
(d)
a Lease Document;
(e)
a Headlease;
(f)
a document appointing an Asset Manager;
(g)
a document appointing an Managing Agent;
(h)
the Titan Title Insurances; or
(i)
any other document designated as such by the Loan Facility Agent and the Company;
"Loan Transaction Obligor" means:
(a)
an Obligor; or
(b)
a Subordinated Creditor;
"Majority Lenders" means:
(a)
if there is no Loan then outstanding, Lender(s) whose commitments then aggregate 66 and ⅔ per
cent. or more of the Total Commitments;
(b)
if there is no Loan then outstanding and the Total Commitments have been reduced to zero,
Lender(s) whose commitments aggregated 66 and ⅔ per cent. or more of the Total
Commitments immediately before the reduction; or
(c)
at any other time, Lender(s) whose participation in the outstanding Loans and whose Available
Commitments then aggregate 66 and ⅔ per cent. or more of the aggregate of all the outstanding
Loans and the Available Commitments of all the Lenders.
"Managing Agent" means:
(a)
in respect of the Titan Properties, Lee Baron Limited; and
(b)
in respect of the Pecan Properties, MJ Mapp Limited,
or any other managing agent appointed by a Borrower or the Asset Manager in respect of a Property in
accordance with the Managing Agents provisions of the Senior Facility Agreement.
"Material Adverse Effect" means a material adverse effect on:
(a)
the business, assets or financial condition of the Senior Obligors taken as a whole;
(b)
the ability of the Senior Obligors taken as a whole to perform their payment or other material
obligations under any Senior Finance Document;
(c)
the validity or enforceability of, or the effectiveness or ranking of any Security Interest granted
or purported to be granted pursuant to, any Senior Finance Document; or
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(d)
any right or remedy of a Senior Finance Party in respect of a Senior Finance Document;
"Minimum Target Loan Amount" means the amount set out for each Loan Payment Date under that
heading in ‎a schedule to the Senior Facility Agreement (and Appendix 1 to this Offering Circular);
"Net Disposal Proceeds" means the consideration received by any member of the Group (including in the
case of a disposal of shares in a Borrower any amount received in repayment of debt due to another
member of the Group) for any disposal of a Property or shares in a Senior Borrower in accordance with
the disposal provisions of the Senior Facility Agreement and after deducting (i) any reasonable expenses
incurred by any member of the Group with respect to that disposal to persons who are not members of the
Group and (ii) any Tax incurred on an actual or contingent basis by any member of the Group in
connection with that disposal (as reasonably determined by the seller, on the basis of existing rates and
taking account of any available credit, deduction or allowance);
"Net Rental Income" means Rental Income other than Tenant Contributions;
"Non Opted Property" means the Properties listed in a schedule to the Senior Facility Agreement;
"Occupational Lease" means any lease or licence or other right of occupation or right to receive rent to
which a Property may at any time be subject and includes any guarantee of a tenant's obligations under
the same;
"Operating Expenditure" means corporate costs, audit costs, amounts due under a Headlease, void costs,
leasing commissions, tenant improvements, amounts payable for repairs and maintenance and any fee
payable to the Asset Manager or a Managing Agent as detailed in the Business Plan and which is not
recoverable as a Tenant Contribution;
"Pecan Certificates of Title" means each certificate on title, in respect of the Pecan Properties, dated on
or about the date of the Senior Facility Agreement prepared by Mayer Brown International LLP and
addressed to or capable of being relied upon by the Reliance Parties, including any updates or
supplements thereto;
"Percentage Reduction in Value" means in relation to a Property and a prepayment of a Loan, the
difference between:
(a)
the market value of the affected Property (as determined by the Valuer or, in the absence of any
such determination by the Valuer, by the Loan Facility Agent (acting reasonably) and on the
same basis as the most recent Valuation) at or around the date of the relevant prepayment (such
"market value" not taking into account any circumstances giving rise to the misrepresentation,
breach of warranty or misstatement under the provisions of the Senior Facility Agreement (or in
the case of the compulsory purchase provisions of the Senior Facility Agreement the compulsory
purchase or compulsory purchase order) (the "unimpaired value") and
(b)
such market value taking those circumstances (or as applicable such compulsory purchase or
compulsory purchase order) into account,
expressed as a percentage of the unimpaired value;
"Projected Interest Cover" means, at any date, Projected Net Rental Income as a percentage of finance
costs at that date. For the purposes of this definition:
(a)
calculation period means a period of 12 months from the date as at which the relevant
calculation is made;
(b)
finance costs means the aggregate amount of interest and periodic fees payable to the Senior
Finance Parties under the Senior Facility Agreement during any calculation period in respect of
which Projected Net Rental Income has been calculated;
(c)
in calculating finance costs, it shall be assumed that:
(i)
LIBOR during the relevant calculation period is equal to the lowest cap rate specified
under the Hedging Agreements and the forward curve LIBOR rate, in each case, for the
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relevant calculation period in which the date of determination of finance costs falls and
that the hedging effected thereunder remains in place until the end of the calculation
period; and
(ii)
(d)
the facility does not mature before the end of the calculation period; and
the Company must, at the request of the Loan Facility Agent, calculate Projected Interest Cover
but if the Company does not provide a calculation when requested by the Loan Facility Agent or
the Loan Facility Agent disagrees (acting reasonably) with the calculation provided, then the
Loan Facility Agent may calculate Projected Interest Cover and that calculation of the Loan
Facility Agent will prevail over any calculation by the Company;
"Projected Net Rental Income" means, as at any relevant date (such date, a "Test Date"), the passing
net rental income (calculated in the terms set out in the Senior Facility Agreement) that will be received
on a regular periodical basis by the Senior Obligors under the Lease Documents during the period of 12
months from the relevant Test Date.
"Property Protection Loan" means a loan made by a Senior Lender to a Senior Borrower to finance:
(a)
the payment of rent or any other amount, or any costs or expense, under or in connection with a
Headlease;
(b)
the payment of any premium for insurance, or any cost or expense required to keep any
insurances in force, in accordance with the Senior Facility Agreement; or
(c)
the payment of any amount which, in the opinion of the Lender concerned, is required to
preserve or protect any Security Asset,
in circumstances where a Senior Obligor is obliged under a Senior Finance Document but has failed to
pay the relevant amount;
"Property Reports" means, in respect of any Property, the Purchaser Property Reports and the Titan
Seller Legal Report;
"Protected Party" has the meaning given to it in the tax gross up and indemnities provisions of the
Senior Facility Agreement;
"Purchaser Property Reports" means each of the Titan Purchaser Legal Reports and the Pecan
Certificates of Title;
"Qualifying Lender" means has the meaning given to it in the tax gross up and indemnity provisions of
the Senior Facility Agreement;
"Quarterly report" means a quarterly report substantially in the form of the draft quarterly report which
is to be delivered by the Company as a condition precedent to the Utilisation of the Titan Loans with any
amendments that the Asset Manager and Loan Facility Agent agree may reasonably be required for the
purpose of:
(a)
complying with market practice or industry guidelines insofar as they relate to investor reporting
requirements; or
(b)
complying with applicable regulatory or legal reporting standards.
"Quotation Day" means, in relation to any period for which an interest rate is to be determined, the first
day of that period unless market practice differs in the Relevant Interbank Market in which case the
Quotation Day will be determined by the Loan Facility Agent in accordance with market practice in the
Relevant Interbank Market (and if quotations would normally be given on more than one day, the
Quotation day will be the last of those days);
"Recovery Prepayment Proceeds" means the proceeds of a claim (a Recovery Claim) against:
(a)
the vendor of any Property or any of its Affiliates (or any employee, officer or adviser); or
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(b)
the provider of any Property Report or the provider of any other report (in its capacity as
provider of the same) in connection with the acquisition, development, financing or refinancing
of any Property,
except for Excluded Recovery Proceeds, and after deducting:
(i)
any reasonable expenses incurred by a Senior Obligor to a person who is not a Senior
Obligor or Affiliate of a Senior Obligor; and
(ii)
any Tax incurred on an actual or contingent basis by any member of the Group in
connection with that Recovery Claim (as reasonably determined by that Obligor on the
basis of existing rates and taking into account any available credit, deduction or
allowance),
in each case in relation to that Recovery Claim;
"Relevant Jurisdictions" means in relation to an Obligor:
(a)
its jurisdiction of incorporation;
(b)
any jurisdiction where any asset subject to or intended to be subject to a Security Document is
situated;
(c)
the jurisdiction whose laws govern the perfection of any Security Document entered into by it;
and
(d)
any jurisdiction where it conducts its business;
"Reliance Parties" means the Senior Finance Parties (but not the Servicer), the Lead Manager, the Issuer
Security Trustee and the Note Trustee;
"Rental Income" means the aggregate of all amounts paid or payable to or for the account of any Senior
Obligor in connection with the letting, licence or grant of other rights of use or occupation of any part of a
Property, including each of the following amounts:
(a)
rent, licence fees and equivalent amounts paid or payable;
(b)
income from car parks, kiosks and any other commercialisation income;
(c)
any sum received or receivable (once released) from any deposit held as security for
performance of a tenant's obligations;
(d)
a sum equal to any apportionment of rent allowed in favour of any Senior Obligor;
(e)
any other moneys paid or payable in respect of occupation and/or usage of that Property and any
fixture and fitting on that Property including any fixture or fitting on that Property for display or
advertisement, on licence or otherwise;
(f)
any sum paid or payable under any policy of insurance in respect of loss of rent or interest on
rent;
(g)
any sum paid or payable, or the value of any consideration given, for the grant, amendment,
waiver, surrender, renounce or release of any Lease Document;
(h)
any sum paid or payable by or distribution received or receivable by any guarantor of any tenant
under any Lease Document;
(i)
any Tenant Contributions; and
(j)
any interest paid or payable on, and any damages, compensation or settlement paid or payable in
respect of, any sum referred to above less any related fees and expenses incurred (which have
not been reimbursed by another person) by any Senior Obligor;
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"Rent Deposit Account" means any account designated as such under the accounts provision of the
Senior Facility Agreement and includes any replacement of that Account;
"Report" means:
(a)
each Environmental Report;
(b)
each Technical Due Diligence Report;
(c)
the Tax Report;
(d)
each Titan Seller Legal Report; or
(e)
each Purchaser Property Report;
"Required Release Amount" means,
(a)
in respect of the disposal of a Tier 1 Property, or the shares in a Senior Borrower that owns such
a Property, an amount equal to the greater of 120 per cent, of the Allocated Loan Amount for
that Tier 1 Property and 78 per cent, (or, if a Loan Event of Default is continuing, 100 per cent.)
of the Net Disposal Proceeds derived from the disposal of that Tier 1 Property or those shares;
(b)
in respect of the disposal of a Tier 2 Property, or the shares in a Senior Borrower that owns such
a Property, an amount equal to the greater of 115 per cent, of the Allocated Loan Amount for
that Tier 2 Property and 62 per cent, (or, if a Loan Event of Default is continuing, 100 per cent.)
of the Net Disposal Proceeds derived from the disposal of that Tier 2 Property or those shares;
and
(c)
where there is a partial disposal of a Property, an amount equal to the Net Disposal Proceeds for
that partial disposal shall:
(i)
reduce the Required Release Amount for the remainder of the relevant Property; and
(ii)
be applied in full in prepayment of the Loan in accordance with Clause 7.3 (Mandatory
Prepayment) of the Senior Facility Agreement.
"Requisite Rating" means that:
(a)
in relation to a bank at which an Account is held or at which a Managing Agent's trust account
into which Net Rental Income is to be paid is held, that bank has short term or long term (as
specified below) unsecured debt instruments in issue that:
(i)
are neither subordinated nor guaranteed; and
(ii)
has at least two of the following ratings:
(1)
in respect of Fitch:
(A)
(B)
F2 (or better) (short term) and BBB+ (long term) (or better); or
such lower debt rating from Fitch as is commensurate with the rating
assigned to the Notes from time to time as set out in the table below:
Current Rating of the Notes
AA+sf
A+sf
BBB+sf
BB+sf
B+sf and below
(2)
in respect of DBRS:
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Fitch Minimum Ratings
'A-' with a short-term rating of 'F2'
'BBB+' with a short-term rating of 'F2'
'BBB-' with a short-term rating of 'F3'
At least as high as the Notes' rating
At least as high as the Notes' rating
(A)
(B)
BBB (high); or
such lower private or public debt rating from DBRS as is commensurate
with the rating assigned to the Notes from time to time as set out in the
table below:
Current Rating of the Notes
AAA (sf)
AA (high) (sf)
AA (sf)
AA (low) (sf)
A (high) (sf)
A (sf)
A (low) (sf)
BBB (high) (sf)
BBB (sf)
BBB (low) (sf)
DBRS Minimum Ratings
A
A
A
A
BBB (high)
BBB
BBB (low)
BBB (low)
BBB (low)
BBB (low)
or
(3)
(b)
(c)
such other rating as the relevant Rating Agencies determine will not cause a
downgrade of the Notes.
in relation to a Cap Provider or a person guaranteeing the obligations of a Cap Provider, that Cap
Provider or person has long term unsecured debt instruments in issue that:
(i)
are neither subordinated nor guaranteed; and
(ii)
has at least two of the following ratings:
(A)
BBB+ (or better) by Fitch; or
(B)
BBB by DBRS;
in relation to an insurance company or underwriter, that insurance company or underwriter has
long term unsecured debt instruments in issue that:
(i)
are neither subordinated nor guaranteed; and
(ii)
has at least two of the following ratings:
(A)
BBB+ (or better) by Fitch; or
(B)
if DBRS rates any instruments which are referable to the obligations under the
Finance Documents, such rating as may be required by DBRS provided that
such rating is not higher than BBB;
"Restricted Person" means any person that is:
(a)
listed on, or owned or controlled by a person listed on, a Sanctions List;
(b)
the government of a Sanctioned Country;
(c)
an agency or instrumentality of, or an entity directly or indirectly owned or controlled by, a
government of a Sanctioned Country
(d)
resident or located in, operating from, or incorporated under the laws of, a Sanctioned Country or
owned or (directly or indirectly) controlled by, or acting on behalf of, a person located in or
organised under the laws of a country that is the target of country-wide or territory-wide
Sanctions;
(e)
located in or incorporated under the laws of any Sanctioned Country; or
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(f)
to the best of the knowledge of any Senior Obligor (acting with due care and enquiry), otherwise
a target of Sanctions;
"Sanctioned Country" means a country or territory which is subject to:
(a)
general trade, economic or financial sanctions or trade embargoes imposed, administered or
enforced by (i) the US government and administered by OFAC, (ii) The United Nations Security
Council, (iii) the European Union, or (iv) Her Majesty's Treasury of the United Kingdom; and
(b)
general trade, economic or financial sanctions or trade embargoes imposed, administered or
enforced by the US State Department, the US Department of Commerce or the US Department
of the Treasury.
"Sanctions" means economic or financial sanction or trade embargoes imposed, administered or enforced
from time to time by any Sanctions Authority.
"Sanctions Authority" means:
(a)
the United States of America;
(b)
the United Nations Security Council;
(c)
the European Union;
(d)
Switzerland;
(e)
Hong Kong;
(f)
Singpaore;
(g)
the United Kingdom; or
(h)
the respective governmental institutions of any of the foregoing including, without limitation, the
Swiss State Secretariat for Economic Affairs, the Monetary Authority of Singapore ("MAS"), the
Hong Kong Monetary Authority ("HKMA"), Her Majesty’s Treasury, the Office of Foreign
Assets Control of the US Department of the Treasury, the US Department of Commerce, the US
Department of State and any other agency of the US government.
"Sanctions List" means any of the lists of specifically designated nationals or designated or sanctioned
individuals or entities (or equivalent) issued by any Sanctions Authority, each as amended, supplemented
or substituted from time to time.
"Scottish Security Agreement" means:
(a)
each Standard Security; and
(b)
each Assignation of Rents.
"Security Agreement" means each English law security agreement entered or to be entered into by each
Senior Obligor in favour of the Loan Security Trustee.
"Security Asset" means each asset of a Loan Transaction Obligor which from time to time is, or is
intended to be, subject to a Security Document.
"Security Interests" means a mortgage, standard security, charge, pledge, lien, assignment or assignation
by way of security, hypothecation or other security interest securing any obligation of any person or any
other agreement or arrangement having a similar effect;
"Senior Borrower" means the Pecan Borrowers and the Titan Borrowers;
"Senior Finance Documents" means each of:
(a)
the Senior Facility Agreement;
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(b)
a Loan Security Document;
(c)
a Hedging Agreement;
(d)
a Subordination Agreement;
(e)
a Duty of Care Agreement;
(f)
a Fee Letter;
(g)
a Subordination Accession Agreement; and
(h)
any other document designated as such by the Loan Facility Agent and the Company;
"Senior Finance Parties" means a Senior Lender or an Administrative Party;
"Senior Lender" means:
(a)
Eurynome LLC; or
(b)
any other person which has become a Party in accordance with the provisions of the Senior
Facility Agreement that deal with Changes to the Finance Parties,
which in each case has not ceased to be a party in accordance with the terms of the Senior Facility
Agreement;
"Senior Loan Default" means:
(a)
a Loan Event of Default; or
(b)
an event or circumstance specified in the loan events of default provisions of the Senior Facility
Agreement which would (with the expiry of a grace period, the giving of notice, the making of
any determination under the Finance Documents or any combination of any of them) be a Loan
Event of Default;
"Senior Loan Event of Default" means any event or circumstance specified as such in the loan events of
default provisions of the Senior Facility Agreement;
"Senior Loan Extended Repayment Date" means the Senior Loan Payment Date falling in January
2020.
"Senior Loan Extension Fee" means a fee in an amount equal to 0.25 per cent. of the total outstanding
principal amount of the Senior Loan as at the date of the Loan Extension Option.
"Senior Loan Final Repayment Date" means the Senior Loan Initial Repayment Date or if each of the
conditions for an extension is satisfied as set out in the Senior Facility Agreement, the Senior Loan
Extended Repayment Date;
"Senior Loan Initial Repayment Date" means the Loan Payment Date falling in January 2019;
"Senior Loan Margin " means the Weighted Average Note Margin.
"Senior Obligor" means a Senior Borrower or a Guarantor;
"Standard Security" means a standard security in terms of the Conveyancing and Feudal Reform
(Scotland) Act 1970 securing a Property located in Scotland entered or to be entered into in favour of the
Loan Security Trustee;
"Subordinated Creditor" means:
(a)
the Company;
(b)
any Obligor; or
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(c)
any other person (other than the Issuer) who becomes a Subordinated Creditor in accordance
with the Senior Facility Agreement or a Subordination Agreement.
"Subordination Accession Agreement" has the meaning given to Accession Agreement in a
Subordination Agreement;
"Subsidiary" means an entity of which a person has direct or indirect control or owns directly or
indirectly more than 50 per cent. of the voting capital or similar right of ownership and control for this
purpose means the power to direct the management and the policies of the entity whether through the
ownership of voting capital, by contract or otherwise;
"Tax Deduction" means a deduction or withholding for or on account of Loan Tax from a payment under
a Finance Document other than a FATCA Deduction;
"Tax Report" means the tax report dated on or around the Effective Date prepared by KPMG in respect
of the Properties, the holding structure for those Properties and the related tax implications of the
financing contemplated by the Senior Facility Agreement and the tax opinion to be dated on or about the
Effective Date prepared by Matheson in respect of the tax implications of certain of the transactions
contemplated by the Senior Facility Agreement and, in each case, (i) expanded as necessary to
comprehensively cover the Titan Borrowers and the Pecan Borrowers at the Effective date, and (ii)
addressed to or capable of being relied upon by the Reliance Parties;
"Tenant Contributions" means any amount paid or payable to a Senior Obligor by any tenant or
guarantor of a tenant under a Lease Document or any other occupier of a Property, by way of:
(a)
(b)
contribution to:
(i)
ground rent;
(ii)
insurance premia;
(iii)
the cost of an insurance valuation;
(iv)
a service or other charge in respect of a Senior Obligor's (or superior landlord's or estate
landlord's or owner's) costs under or in connection with any management, repair,
maintenance or similar obligation or in providing services to a tenant of, or with respect
to, a Property or the estate of which it forms part;
(v)
the cost of dilapidations; or
(vi)
a reserve or sinking fund; or
VAT.;
"Tier 1 Property" means each Property designated as a "Tier 1 Property" in ‎a schedule to the Senior
Facility Agreement and, where the context so requires, includes buildings on that Tier 1 Property.
"Tier 2 Property" means each Property designated as a "Tier 2 Property" in a schedule to the Senior
Facility Agreement and, where the context so requires, includes buildings on that Tier 2 Property.
"Titan Existing Lender" means Asteria Finance Limited;
"Titan Existing Loan" means the loan made under the Titan Existing Facility Agreement;
"Titan Existing Facility Agreement" means the £167,700,000 term loan advanced by the Titan Existing
Lender to the Titan Borrowers on or around 22 January 2015.
"Titan Existing Indebtedness" means all or part of the Financial Indebtedness arising as a result of the
Titan Existing Facility Agreement and all or part of the Financial Indebtedness arising or incurred under
any related finance document;
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"Titan Purchaser Legal Reports" means the purchaser legal reports in respect of the Titan Properties,
prepared by Nabarro LLP and Brodies LLP and addressed to or capable of being relied upon by the
Reliance Parties, including an updates or supplements thereto;
"Titan Seller Legal Report" means each vendor legal report in respect of the Titan Properties prepared
by DLA Piper LLP addressed to or capable of being relied upon by the Reliance Parties, including an
updates or supplements thereto;
"Titan Title Insurances" means:
(a)
the owner's title insurance policy in respect of the Titan Properties dated 10 October 2014 and
provided by ERGO Versicherung AG, UK Branch with policy number EGO14002304 (the
"Owner's Title Insurance"); and
(b)
the no search indemnity policy in respect of the Titan Properties dated 12 November 2014 and
provided by ERGO Versicherung AG, UK Branch with policy number EGNSP14002408 (the
"No Search Insurance").
"Titan Title Insurance Proceeds" means to the extent not required to be paid to a third party in
settlement of any claim or liability, the proceeds of a claim under the Titan Title Insurances or either of
them in respect of a Titan Property (a "Title Insurance Claim") received by a Senior Obligor after
deducting:
(a)
any reasonable expenses incurred by a Senior Obligor to a person who is not a Senior Obligor or
Affiliate of a Senior Obligor;
(b)
any Tax incurred on an actual or contingent basis by any member of the Group in connection
with that Title Insurance Claim (as reasonably determined by that Obligor on the basis of
existing rates and taking into account any available credit, deduction or allowance),
in each case in relation to that Title Insurance Claim, provided that Titan Title Insurance Proceeds will
not include any such proceeds received under a Title Insurance Claim by a Borrower in respect of a Titan
Property in relation to which it has paid the Allocated Loan Amount pursuant to the provisions of the
Senior Facility Agreement;
"Total Commitments" means the aggregate of the commitments under the Senior Facility Agreement,
being £184,599,000;
"Valuation" means a valuation of a Property or, as the context requires, the Properties by the Valuer,
supplied at the request of the Loan Facility Agent, addressed to, or capable of being relied on by, the
Reliance Parties and prepared on the basis of the market value as that term is defined in the then current
Statements of Asset Valuation Practice and Guidance Notes issued by the Royal Institution of Chartered
Surveyors;
"Valuer" means CBRE, JLL, Cushman & Wakefield (Knight Frank, Savills, Colliers International, Strutt
and Parker or (if none of them is available to act by reason of conflict or otherwise) any other surveyor or
valuer appointed by the Loan Facility Agent;
"Vendor" means a Seller as defined in an Acquisition Agreement;
"Virtual Data Room" means:
(a)
in respect of the Titan Acquisition, the Project Titan data site maintained by Merrill Data Site as
at 11.59p pm on 7 November 2014; and
(b)
in respect of the Pecan Acquisition, the Project Pecan data site maintained by Pinsents LLP and
DAB Beachcroft as at 11.59 pm on 24 September 2015.
Purpose and application
Each Pecan Borrower undertook to apply all amounts borrowed under the Senior Facility Agreement in or
towards financing in part the Pecan Acquisition, and not otherwise.
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Each Titan Borrower undertook to apply all amounts borrowed under the Senior Facility Agreement
towards re-financing all or part of the Titan Existing Indebtedness, and not otherwise.
Loan amount and drawdown
The maximum amount of borrowing under the Senior Facility Agreement was £184,599,000. As at the
Closing Date, the Senior Loan will be drawn in an amount equal to £184,599,000 and the remaining
commitment will be cancelled. The Senior Facility Agreement does not place an obligation on the Issuer
to make any further advances to the Senior Borrowers.
A Lender may, with the consent of the Majority Lenders, make a Property Protection Loan whether
requested by a Senior Obligor or not. The Loan Facility Agent (on behalf of the applicable Lenders) shall
give not less than two Business Days' advance notice of the intended making of a Property Protection
Loan unless, in the absolute discretion of the Loan Facility Agent, the matter in respect of which the
Property Protection Loan is to be made is urgent and a delay in making the Property Protection Loan
would be prejudicial to the interests of the Lenders. Each Property Protection Loan (i) is repayable on
demand made by the relevant Lender with the consent of the Majority Lenders and in any event on the
Senior Loan Final Repayment Date and (ii) bears interest in accordance with the default interest
provisions of the Senior Facility Agreement as if it were an overdue amount.
Payment of interest
Under the Senior Facility Agreement, the Borrowers must pay accrued interest on each Loan Payment
Date.
From the first Utilisation Date to the date on which the Issuer becomes a Lender (the "Effective Date"),
the rate of interest for each Loan Interest Period will be 3.4 per cent. per annum. From the Effective Date,
the rate of interest for each Loan Interest Period is the percentage rate per annum which is the aggregate
of the (i) Senior Loan Margin and (ii) Senior Loan LIBOR. If any rate used to calculate Loan LIBOR is
below zero, Loan LIBOR will be deemed to be zero.
Default interest will apply on any unpaid sums which an Senior Obligor fails to pay from the due date up
to the date of actual payment in accordance with the Senior Facility Agreement at a rate of two per cent.
per annum plus the rate of interest which would have been payable if the unpaid sum had, during the
period of non-payment, constituted a loan in the currency of the overdue amount for successive Loan
Interest Periods, each with a duration and Quotation Day selected by the Loan Facility Agent.
Repayment and extension
Each Borrower must repay each Loan made to it in full on the Senior Loan Final Repayment Date. The
Company has the option to once extend the Senior Loan Final Repayment Date by one year by delivering
to the Loan Facility Agent an irrevocable notice not less than 30 days and not more than 60 days prior to
the then Senior Loan Initial Repayment Date. If the Company exercises the option, the Senior Loan Final
Repayment Date will be extended to the date which is 12 months after the Senior Loan Initial Repayment
Date. The conditions to be satisfied for the Company to exercise the Loan Extension Option include
payment of the Loan Extension Fee and hedging arrangements being in place for the further period of one
year for an aggregate notional amount of not less than the outstanding amount of the Senior Loan on the
date of the extension and with a strike rate which is not higher than 5 per cent, per annum.
Prepayments
Mandatory prepayment – illegality
If it becomes unlawful in any applicable jurisdiction for a Senior Lender to perform any of its obligations
under any Senior Finance Document or to fund or maintain its participation in the Senior Loan or it
becomes unlawful in any applicable jurisdiction for an Affiliate of a Senior Lender to do so, that Senior
Lender must promptly notify the Loan Facility Agent promptly upon becoming aware of that event and
the Loan Facility Agent must notify the Company and each Senior Borrower must repay or prepay the
participation to that Senior Lender on the earlier of the last day of any applicable grace period permitted
by law or the last day of the last Loan Interest Period of that Senior Loan which ends prior to any such
applicable grace period.
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Mandatory prepayment – change of control
Under the Senior Facility Agreement, a change of control occurs if Värde Partners Inc. (the "Sponsor")
ceases to own and control (directly or indirectly) all of the issued share capital of, and to control, the
Company. The Company must promptly notify the Loan Facility Agent upon becoming aware of any
change of control and the Loan Facility Agent must promptly notify the Senior Lenders.
Following a change of control no Senior Lender will be obliged to fund a Senior Borrower Loan and the
Total Commitments will be automatically cancelled and the outstanding Senior Loan, together with
accrued interest and all other amounts accrued under the Senior Finance Documents (including all
applicable prepayment fees) will be immediately due and payable.
Mandatory prepayment
The Senior Facility Agreement also provides that the Senior Borrowers must apply the following amounts
in prepayment of the Senior Loan at the time and in the order of application as set out below:
(a)
the sums required to be applied in prepayment of the Senior Loan from the Rent Account (the
"Trapped Cash") and the Cure Account;
(b)
the amount of the Net Disposal Proceeds;
(c)
the amount of Lease Prepayment Proceeds;
(d)
the amount of Insurance Prepayment Proceeds;
(e)
the amount of Titan Title Insurance Proceeds;
(f)
the amount of Compensation Prepayment Proceeds;
(g)
the amount of Recovery Prepayment Proceeds;
(h)
as required by clause 21.17 (Ownership of Properties) of the Senior Facility Agreement as is set
out in more detail at paragraph (q) (Ownership of Properties) under the heading "General
undertakings"; and
(i)
as required by clause 23.5 (Misrepresentation) of the Senior Facility Agreement as is set out in
more detail at paragraph (d) (Misrepresentation) under the heading "Loan Events of Default".
An amount referred to in paragraph (a) above: (i) as Trapped Cash must be applied in prepayment on each
Loan Payment Date if there is a Senior Loan Event of Default which is continuing or on the Loan
Payment Date falling on the expiry of two consecutive Loan Interest Periods after an amount was
designated as Trapped Cash, a Cash Trap Event remains outstanding at the end of each such Loan Interest
Period; or (ii) standing to the credit of the Cure Account must be applied in prepayment on the Loan
Payment Date immediately following the end of the 12-month period following the payment of an amount
into the Cure Account provided it has not previously been paid to the General Account or a Borrower
General Account during such period as result of the Company being in compliance with the financial
covenants without taking into account any amount standing to the credit of the Cure Account. Any
amounts so applied in prepayment of the Senior Loan will be applied first in prepayment of the Senior
Loan made to the relevant Senior Borrower and thereafter in prepayment of the other Senior Loans pro
rata.
Net Disposal Proceeds must be applied in prepayment of the Senior Loan (i) first (A) in an amount equal
to the Required Release Amount in or towards prepayment of the Senior Loan made to the Senior
Borrower that owned that Property and thereafter the other Senior Loans pro rata and (B) in or towards
payment of prepayment fees and any other amount payable as a result of the prepayment; and (ii) second
in payment of any surplus to the General Account, unless a Cash Trap Event is outstanding in which case
the balance shall be transferred to and retained on the Rent Account and shall be designated as Trapped
Cash.
An amount referred to in paragraphs (c) to (i) above must be applied in prepayment on each Loan
Payment Date in the following order: (i) (A) first in prepayment of the Senior Loan made to the relevant
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Senior Borrower and (B) secondly after prepayment of that Senior Loan, prepayment of the other Senior
Loans pro rata; and (ii) in or towards prepayment fees and any other amount that is or will become due as
a result of those repayments.
For the purposes of the above, the references to the "relevant Borrower" means: (i) insofar as the
relevant amount to be applied in prepayment is derived from or relates to a Senior Borrower or the assets
of or the shares in a Senior Borrower, that Senior Borrower; and (ii) otherwise such Senior Borrower or
Senior Borrowers as the Company (or, in the absence of an election by the company prior to the
applicable Loan Payment Date, the Majority Lenders) elects.
Voluntary prepayment
A Senior Borrower to which an Senior Loan has been made may, if it gives the Loan Facility Agent not
less than five Business Days' prior notice, prepay the whole or any part of a Senior Loan (but, if in part,
subject to minimum repayment of £500,000).
Right of repayment and cancellation in relation to a single lender
If:
(a)
a sum payable to any Senior Lender by a Senior Obligor is required to be increased under the tax
gross up provisions of the Senior Facility Agreement; or
(b)
any Senior Lender claims indemnification from any Senior Obligor under the tax indemnity or
increased costs provisions of the Senior Facility Agreement,
the Company may, whilst the circumstances giving rise to the requirement for that increase or
indemnification continue, give notice to the Loan Facility Agent requesting prepayment and cancellation
in respect of that Senior Lender. The date for the repayment or prepayment of such a Senior Lender's
participation will be the earlier of the date specified by the Company in the notice it gives to the Loan
Facility Agent and the last day of the current Loan Interest Period for that Senior Loan.
Amount of prepayments
Any prepayment under the Senior Facility Agreement will be made together with accrued interest on the
amount prepaid. No premium or penalty is payable in respect of any prepayment or cancellation under the
Senior Facility Agreement except for any prepayment fee payable under the Senior Facility Agreement.
Effect of prepayments on Facility
No Senior Borrower may reborrow all or any part of the senior facility which is prepaid and no amount of
the total commitments cancelled under the Senior Facility Agreement may be subsequently reinstated.
Fees and prepayment fee
(a)
Loan Facility Agent's fee
The Borrowers must pay to the Loan Facility Agent (for its own account) an agency fee in the
amount and in the manner agreed with Loan Facility Agent.
(b)
Loan Security Trustee's fee
The Borrowers must pay to the Loan Security Trustee (for its own account) a security agency fee
in the amount and in the manner agreed with the Loan Security Trustee.
(c)
Prepayment fee
In the event of a prepayment (other than a prepayment for illegality, as a result of a right of
prepayment and cancellation of a single senior lender, a prepayment of Compensation
Prepayment Proceeds or as a result of compulsory purchase) a prepayment fee is payable
calculated as follows (the "Prepayment Fee").
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If on a Loan Payment Date the amount outstanding under the Senior Loan (after taking into
account any prepayments to be made on that Loan Payment Date, but disregarding any
prepayments for illegality, as a result of a right of prepayment and cancellation for a single
lender, a prepayment of Compensation Prepayment Proceeds or as a result of a compulsory
purchase) is less than the Minimum Target Loan Amount for that Loan Payment Date ("LPD0"),
the Senior Borrowers shall pay a prepayment fee on LPD0 calculated by reference to LPD0 and
each Loan Payment Date after LPD0 on which such amount outstanding under the Senior Loan is
less than the Minimum Target Loan Amount (each a "relevant LPD"), using the following
formula:

 B
n
i 1
i
 A  C 
Di 

365 
Where:
A is the amount outstanding under the Senior Loan on LPD0 (taking into account any
prepayment to be made on LPD0 but disregarding any prepayments for illegality, as a result of a
right of prepayment and cancellation for a single lender, a prepayment of Compensation
Prepayment Proceeds or as a result of a compulsory purchase).
Bi is the Minimum Target Loan Amount for the relevant LPD.
C is the Senior Loan Margin payable on the Senior Loan.
Di is the number of days in the relevant Loan Interest Period commencing on the relevant LPD.
indicates each relevant LPD (commencing with LPD0 and each subsequent relevant LPD being
identified in ascending numerical order).
i
n indicates the total number of relevant LPDs on which A is less than B.
Following payment of any Prepayment Fee on a Loan Payment Date, for the purpose of
calculating the Minimum Target Loan Amount for any Loan Payment Date thereafter where the
Minimum Target Loan Amount exceeds A (calculated as at the relevant Portfolio Determination
Date immediately preceeding such Loan Payment Date) (such lower amount referred to as the
"Adjusted Minimum Target Loan Amount"), the Minimum Target Loan Amount above shall
be reduced so that the Minimum Target Loan Amount is equal to the Adjusted Minimum Target
Loan Amount.
(d)
Facility Fee
The Senior Obligors must pay to the Loan Facility Agent Agent for the account of the Issuer for
so long as it is a Lender on each Loan Payment Date a facility fee in an amount of:
(i) all the fees or other remuneration of (and amounts payable in respect of indemnities) and any
costs, charges, liabilities and expenses incurred by and any other amounts due and payable to the
Note Trustee and the Issuer Security Trustee, respectively, and, in each case, any attorney,
manager, agent, delegate, nominee, custodian or other person appointed by the Note Trustee
under the Note Trust Deed or any examiner, attorney, manager, receiver, agent, delegate,
nominee, custodian or other person appointed by the Issuer Security Trustee under the Issuer
Deed of Charge (together the "Appointees") thereof pursuant to the Issuer Transaction
Documents, excluding any Tax imposed on or calculated by reference to net income received or
receivable and any amount representing VAT in respect of which there is an entitlement to a
credit or repayment from the relevant tax authority;
(ii) an amount (including, but not limited to, tax adviser fees, costs of tax compliance, legal fees,
all auditors' fees, anticipated winding-up costs, fees and expenses associated with the liquidation
of the Issuer, fees due to the stock exchange where the Notes are then listed, fees due to Rating
Agencies and company secretarial expenses), which is payable by the Issuer to third parties
under obligations incurred in the ordinary course of the Issuer's business and incurred without
breach by the Issuer of the Note Trust Deed or the Issuer Deed of Charge and not provided for
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payment elsewhere in this Pre-Enforcement Revenue Priority of Payments, and to provide for
any such amount expected to become due and payable by the Issuer after that Loan Payment
Date but prior to the next Loan Payment Date, and (but only to the extent that the same cannot be
paid or provided for by funds standing to the credit of the Issuer Proceeds Account) to provide
for the Issuer's liability or potential liability for corporation tax;
(iii) an amount equal to one quarter of the Issuer's Profit to the Issuer Proceeds Account (to be
retained as profit by the Issuer;
(iv) all amounts due and payable to (i) the Corporate Services Provider under the Corporate
Services Agreement, (ii) the Servicer or the Special Servicer, as applicable under the Servicing
Agreement (including, without limitation, the reimbursement of any Property Protection Advance
made utilising the Servicer's or the Special Servicer's own funds), (iii) the Issuer Account Bank
under the Issuer Account Bank Agreement (including without limitation any additional charge,
costs, fees or expenses due and payable to the Issuer Account Bank as a result of the rate of
LIBOR payable on the amounts credited to the Issuer Transaction Account being less than zero
per. cent), (iv) the Issuer Cash Manager under the Cash Management Agreement, (v) the Agents
under the Agency Agreement and (vi) the Registrar under the Agency Agreement;
(v) an amount equal to the amount by which the aggregate amount payable by the Issuer on the
immediately following Note Payment Date of (A) interest in respect of the Notes; and (B) any
default interest in respect of the Notes exceeds the aggregate amount of interest payable by the
Obligors in respect of the Loans on that Loan Payment Date, provided that the aggregate
amount of the Facility Fee payable on any Loan Payment Date will not exceed the amount equal
to:
(A)
the aggregate of all amounts payable by the Lender under items (a) to (m) of the
Pre Enforcement Revenue Priority of Payments or, as applicable, items (a) to (r)
of the Pre-Enforcement Loan Failure Priority of Payments on the Note Payment
Date coinciding with or immediately following the relevant Loan Payment Date;
less
(B)
the amount of interest payable by the Obligors under this Agreement on that
Loan Payment Date; and less
(C)
the amount of any income, payment or distribution (including, without
limitation, interest income in respect of any cash deposits held in a bank account
of the Lender or Note Prepayment Fee Amounts) received by the Lender to the
extent that the Lender is not required to pass on such income, payment or
distribution under the terms of any Issuer Transaction Documents on a date
other than a Note Payment Date.
Tax gross up and indemnities
Subject to certain conditions as set out in the Senior Facility Agreement, if a Tax Deduction is required by
law to be made by a Senior Obligor, the amount of the payment due from that Senior Obligor must be
increased by an amount (after making any Tax Deduction) that leaves an amount equal to the payment
which would have been due if no Tax Deduction had been required.
Subject to certain conditions as set out in the Senior Facility Agreement, the Company must pay to a
Protected Party an amount equal to the loss, liability, or cost which that Protected Party determines will
be or has been (directly or indirectly) suffered for or on account of Loan Tax by that Protected Party in
respect of a payment received or receivable (or any payment deemed to be received or receivable) under a
Senior Finance Document.
For the purposes of the above, a "Protected Party" means a Senior Finance Party which suffers (or will
suffer) any loss or cost or is or will be subject to any liability, or required to make any payment, for or on
account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to
be received or receivable) under a Senior Finance Document.
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Each party to the Senior Facility Agreement may make any FATCA Deduction it is required to make by
FATCA, and any payment required in connection with that FATCA Deduction, and no party to the Senior
Facility Agreement shall be required to increase any payment in respect of which it makes such a FATCA
Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction
Bank accounts
Designation of Obligor Accounts
The Company has opened and is required to maintain the following accounts in its name (on behalf of
itself and on trust for the Borrowers):
(a)
a rent account designated the Rent Account;
(b)
a deposit account designated the Cure Account;
(c)
a deposit account designated the Deposit Account;
(d)
a deposit account designated the Capex Contingency Reserve Account;
(e)
a current account designated the General Account; and
(f)
a deposit account designated the Hedging Cash Collateral Account.
The Company must, within 30 days of receipt of notice from the Cap Provider requiring the Company to
open a securities account, open such securities account in the name of the Company designated the
Hedging Securities Collateral Account.
Each Borrower may maintain in its name a deposit account designated a Collection Account, a sterling
current account designated Borrower General Account and deposit accounts in its name designated as
Rent Deposit Accounts.
No Senior Obligor may, without the prior consent of the Loan Facility Agent, maintain any other bank
account.
Account Bank
Each Account (other than the General Account or a Borrower General Account) must be held with a bank
in Jersey or London. The General Account or a Borrower General Account may be held in Jersey.
The Company must promptly notify the Loan Facility Agent upon becoming aware if a bank at which an
Account is held does not have the Requisite Rating and the Loan Facility Agent may require that Account
to be moved, within 30 calendar days, to a bank which does have the Requisite Rating.
Collection Accounts
The Loan Facility Agent has sole signing rights in respect of the Collection Accounts.
The Senior Borrowers must ensure that all Rental Income to which they are entitled (save to the extent it
represents arrears to which a Vendor is entitled to under the relevant Acquisition Documents) and is paid
into its Collection Account and that any amounts payable to the Senior Borrowers under any Hedging
Agreements are paid into the Rent Account save for the Hedging Prepayment Proceeds; Hedging
Collateral Proceeds; the Lease Prepayment Proceeds; or any amount paid into a Rent Deposit Account.
Each Senior Borrower may satisfy its obligations above by ensuring that: (i) a Managing Agent promptly
collects all Rental Income and at least weekly and also 10 Business Days before each Loan Payment Date
pays all Net Rental Income (less any Lease Prepayment Proceeds and any amount paid into a Rent
Deposit Account and save to the extent it represents arrears to which a Vendor is entitled to under the
relevant Acquisition Documents) received by it into its Collection Account; and (ii) pending payment into
a Senior Borrower's Collection Account, the Managing Agent holds that Rental Income in a trust account
in the name of the Managing Agent, into which only amounts representing Rental Income are paid, with a
bank with a Requisite Rating.
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On any day on which an amount is due under a Headlease, the Loan Facility Agent may withdraw from
any Collection Account an amount necessary to meet that due amount.
Four Business Days before each Loan Payment Date the Loan Facility Agent shall procure the transfer of
all amounts standing to the credit of the Collection Accounts to the Rent Account.
Rent Account
The Loan Facility Agent has sole signing rights in respect of the Rent Account.
The Company must ensure that all amounts standing to the credit of the Collection Account are
transferred to the Rent Account at least four Business Days before each Loan Payment Date.
Except as provided in the section entitled "Partial payments" below and provided that no Senior Loan
Event of Default is continuing, on each Loan Payment Date the Loan Facility Agent must withdraw from
the Rent Account and apply amounts standing to the credit of the Rent Account in the following order:
(i)
first, in or towards payments:
(a)
of ground rent, leasing commissions and other sums payable under any Headleases, rates
and insurance premia;
(b)
in respect of costs and expenses incurred in complying with applicable laws and
regulations relating to any Property;
(c)
in respect of management, maintenance, repair or similar fees, costs and expenses in
relation to any Property;
(d)
in respect of the provision of services relating to any Property;and
(e)
any administrative expenses related to the Borrower and the management of the
Borrower as contemplated by the Business Plan;
to the extent that any of those items are not funded by either (i) the tenants, by way of Tenant
Contributions or otherwise, under the Lease Documents or (ii) Escrow Monies applied or to be
applied in accordance with Clause 22.15 (Escrow Monies) and excluding, for the avoidance of
doubt, the Capital Expenditure and tenant improvements contemplated by the Business Plan;
(ii)
secondly, in or towards payment pro rata of any unpaid amount owing to the Administrative
Parties due but unpaid under the Senior Finance Documents;
(iii)
thirdly, in or towards payment pro rata to the Loan Facility Agent for the relevant Senior
Lenders of any accrued interest on any Property Protection Loan due but unpaid under the Senior
Facility Agreement;
(iv)
fourthly, in or towards payment pro rata to the Loan Facility Agent for the relevant Senior
Lenders of any principal of any Property Protection Loan due but unpaid under the Senior
Facility Agreement;
(v)
fifthly, in or towards payment pro rata to the Loan Facility Agent for the account of the Issuer of
the Facility Fee due but unpaid under the Senior Facility Agreement;
(vi)
sixthly, in or towards payment pro rata to the Loan Facility Agent for the Senior Lenders of any
accrued interest and fees due but unpaid under the Senior Facility Agreement;
(vii)
seventhly, in or towards payment pro rata to the Loan Facility Agent for the Senior Lenders of
any principal due but unpaid under the Senior Facility Agreement;
(viii)
eighthly, in or towards payment pro rata of any other sum due but unpaid to the Senior Finance
Parties under the Senior Finance Documents;
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(ix)
ninthly, if a Cash Trap Event is outstanding, any remaining amounts standing to the credit of the
Rent Account shall be retained on the Rent Account and shall be designated as Trapped Cash and
applied in accordance with the Senior Facility Agreement;
(x)
tenthly, payment of any surplus into the General Account.
Deposit Account
The Loan Facility Agent has sole signing rights in respect of the Deposit Account.
The Senior Obligors must ensure that all Lease Prepayment Proceeds, Insurance Prepayment Proceeds,
Compensation Prepayment Proceeds, Recovery Prepayment Proceeds, Net Disposal Proceeds and Title
Insurance Proceeds are promptly on receipt paid into the Deposit Account. Except as provided in the
section entitled "Partial payments" below and provided that no Senior Loan Event of Default is
continuing, on each Loan Payment Date the Loan Facility Agent must withdraw from, and apply,
amounts standing to the credit of the Deposit Account in prepayment of the Senior Loan in accordance
with the provisions of the Senior Facility Agreement relating to mandatory prepayment.
Trapped Cash
If there is (i) a Loan Event of Default which is continuing or (ii) on the Loan Payment Date falling on the
expiry of two consecutive Loan Interest Periods after an amount was designated as Trapped Cash, a Cash
Trap Event remains outstanding at the end of each such Loan Interest Period, apply (in the case of (i))all
Trapped Cash or (in the case of (ii)) the applicable Trapped Cash in accordance with the mandatory
prepayment provisions of the Senior Facility Agreement.
At the request of the Company if it gives the Loan Facility Agent not less than two Business Days' prior
written notice, provided no Cash Trap Event has been outstanding or occurred during the two consecutive
Loan Interest Periods commencing on or after the Loan Payment Date on which an amount was
designated Trapped Cash, the Loan Facility Agent shall transfer that amount standing to the credit of the
Rent Account to the General Account.
The Company may at any time elect that all or part of any Trapped Cash are applied in prepayment of the
Senior Loan in accordance with the voluntary prepayment provisions of the Senior Facility Agreement.
Cure Account
The Loan Facility Agent has sole signing rights in respect of the Cure Account.
The Company may pay amounts into the Cure Account in accordance with the provisions of the Senior
Facility Agreement in relation to cure payments as set out in more detail in paragraph (b) (Cure rights)
under the heading "Financial covenants".
Provided no Senior Loan Default is continuing, if on two consecutive Loan Payment Dates during the 12month period following the payment of the relevant cure amount into the Cure Account the Company is
in compliance with the financial covenants without taking into account any amount standing to the credit
of the Cure Account, the Company may request that the Loan Facility Agent withdraws, and following
such request the Loan Facility Agent must withdraw, all amounts standing to the credit of the Cure
Account and transfers such amounts to the General Account or a Borrower General Account.
If the paragraph above does not apply during the relevant 12-month period, the Loan Facility Agent must,
on the Loan Payment Date immediately following the end of that 12-month period, withdraw all amounts
standing to the credit of the Cure Account and apply them, on behalf of the Borrowers, in prepayment of
the Senior Loan in accordance with the voluntary prepayment provisions of the Senior Facility
Agreement.
The Company may at any time elect that all or part of any amounts standing to the credit of the Cure
Account are applied in prepayment of the Senior Loan in accordance with the voluntary prepayment
provisions of the Senior Facility Agreement.
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Capex Contingency Reserve Account
On the Closing Date the Borrowers will pay £1,117,499 into the Capex Contingency Reserve Account.
The Company may request the Loan Facility Agent to withdraw monies from the Capex Contingency
Reserve Account to pay for Capital Expenditure in respect of which the sum was paid into the Capex
Contingency Reserve Account, and following such request, the Loan Facility Agent must withdraw, for
so long as no Loan Event of Default is continuing, this amount and transfer this amount into the General
Account.
If, at any time, the amount standing to the credit of the Capex Contingency Reserve Account exceeds the
amount required to fund the Capital Expenditure, the Company may request the Loan Facility Agent
withdraws, and following such request the Loan Facility Agent must withdraw, for so long as no Loan
Event of Default is continuing, such excess amount from the Capex Contingency Reserve Account and
transfer such amount to the General Account.
Rent Deposit Accounts
Except when a Loan Event of Default is continuing, a Senior Borrower has signing rights in relation its
Rent Deposit Accounts. At any time when a Loan Event of Default is continuing, the Loan Facility Agent
may operate the Rent Deposit Account and withdraw from, and apply amounts standing to the credit of,
the Rent Deposit Account in or towards any purpose for which moneys in any Account may be applied.
A Senior Borrower must ensure that all amounts paid to it by a tenant under an Occupational Lease as an
assurance for such tenant's obligations under that Occupational Lease if so required by such Occupational
Lease are paid into the relevant Rent Deposit Account.
A Senior Borrower may withdraw any amount from the Rent Deposit Account to pay or apply amounts it
is required to pay or apply to or on behalf of a tenant under, and in accordance with, its Occupational
Lease.
General Account and Borrower General Accounts
Except when a Loan Event of Default is continuing, the Company has signing rights in relation to the
General Account and a Borrower has signing rights in relation its Borrower General Account.
The Company must ensure that:
(a)
all Tenant Contributions, unless held in a trust account in the name of the relevant Managing
Agent, are paid into the General Account;
(b)
any other amount received or receivable by it, other than any amount specifically required under
the Senior Facility Agreement to be paid into any other Obligor Account, is paid into the General
Account; and
(c)
any Hedging Prepayment Proceeds are used to procure any replacement Hedging Agreement if,
and to the extent, so required in accordance with the terms of the Senior Facility Agreement
relating to hedging. Any Hedging Prepayment Proceeds not so required may be paid to the
General Account.
The Loan Facility Agent will transfer amounts from the Rent Account to the General Account in
accordance with the provisions of the Senior Facility Agreement relating to the Rent Account.
Except when a Loan Event of Default is continuing and subject to any restrictions in any Subordination
Agreement and the requirement that amounts paid into the General Account or a Borrower General
Account for a particular purpose be used for that purpose, a Senior Obligor may withdraw any amount
from the General Account and any Borrower General Account for any purpose.
Hedging Collateral Accounts
The Company has signing rights in relation to the Hedging Collateral Accounts. The Company must
ensure that all Hedging Collateral Proceeds are promptly paid into the Hedging Collateral Accounts. The
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Company may withdraw an amount of Hedging Collateral Proceeds from the Hedging Collateral
Accounts equal to the amount required by the terms of the relevant Hedging Agreement to be returned,
repaid or transferred to the Cap Provider (including, for the avoidance of doubt, any obligation of the
Company to pay an amount to the Cap Provider under Section 6(e) of the Hedge Agreement) and any
security over any such part of Hedging Collateral Proceeds shall be automatically released in accordance
with the terms of the relevant Security Document.
Miscellaneous Accounts provisions
Each Senior Obligor must ensure that no Obligor Account goes into overdraft.
Any amount received or recovered by a Senior Obligor otherwise than by credit to an Obligor Account
must be held subject to the security created by the Senior Finance Documents and immediately be paid to
the relevant Obligor Account or to the Loan Facility Agent in the same funds as received or recovered.
The monies standing to the credit of an Obligor Account may be applied by the Loan Facility Agent in
payment of any amount due but unpaid to a Senior Finance Party under the Senior Finance Documents.
Guarantee
Each Guarantor has irrevocably and unconditionally, jointly and severally guaranteed to each Senior
Finance Party punctual performance by each Senior Borrower of all that Senior Borrower's obligations
under the Senior Finance Documents and further undertaken that, if any Senior Borrower does not pay
any amount when due in connection with a Senior Finance Document it will immediately on demand pay
that amount as if it were the primary Senior Obligor and further agrees to indemnify each Senior Finance
Party if any obligation guaranteed becomes unenforceable, invalid or illegal.
Each Guarantor irrevocably and unconditionally abandons and waives any right which it may have at any
time under the laws of Jersey whether by virtue of the droit de discussion or the droit de division or
otherwise. The Company's guarantee is limited to the assets of the Company which are from, time to time,
subject to a Loan Security Document.
Representations and warranties
The representation and warranties given by each Senior Obligor or (if the Senior Facility Agreement so
states) one or more of them on the date of the Senior Facility Agreement, the date of each Utilisation
Request and the first day of each Loan Interest Period:
(a)
Status: (i) it is a limited liability company, duly incorporate and validly existing under the law of
its jurisdiction of original incorporation; and (ii) it has the power to own its assets and carry on its
business as it is being conducted;
(b)
Binding obligations: subject to the Loan Legal Reservations, the obligations assumed by it in
each Loan Transaction Document to which it is party are legal valid and binding obligations and
each Loan Transaction Document to which it is party is in the proper form for its enforcement in
the jurisdiction of its incorporation;
(c)
Non-conflict: the entry into and performance by it of, and the transactions contemplated by, the
Loan Transaction Documents do not and will not conflict which any law or regulation applicable
to it, its constitutional documents or any agreement or instrument binding upon it or any of its
assets in any material respect;
(d)
Power and authority: it has the power to enter into and perform, and has taken all necessary
action to authorise its entry into and performance of the Loan Transaction Documents to which it
is a party and the transaction contemplated by those Loan Transaction Documents and no limit its
powers will be exceeded as a result of the borrowing, grant of security or giving of guarantees or
indemnities contemplated by the Loan Transaction Documents to which it is party;
(e)
Validity and admissibility in evidence: subject to the Loan Legal Reservations and the Loan
Perfection Requirements all Authorisations required (i) to enable it lawfully to enter into,
exercise its rights and comply with its obligations in the Loan Transaction Documents to which it
is a party and (ii) to make the Loan Transaction Documents to which it is a party admissible in
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evidence in its jurisdiction of incorporation have been obtained and are in full force and effect.
All Authorisations necessary for the conduct of the business, trade and ordinary activities of the
Obligors have been obtained or effected and are in full force and effect;
(f)
Governing law and enforcement: subject to the Loan Legal Reservations any: (i) irrevocable
submission under the Senior Finance Documents to the jurisdiction to which it is stated to be
subject, agreement as to the governing law of any Senior Finance Document and agreement not
to claim any immunity to which it or its assets may be entitled is legal, valid and binding under
the laws of its Relevant Jurisdictions; and (ii) any judgment obtained in England or any decree
obtained in Scotland in relation to a Senior Finance Document will be recognised and be
enforceable by the courts of its Relevant Jurisdictions;
(g)
Deduction of Tax: (i) it is not required to make any Tax Deduction from any payment it may
make under any Senior Finance Document to a Senior Lender provided that that Senior Lender
is a Qualifying Lender (provided that in the case of UK Lenders which fall within paragraph (b)
of that definition that no notice is given by HMRC to that that Senior Lender under section 931
of the ITA and in the case of a Treaty Lender that a direction is given by HMRC in relation to the
payment under Regulation 2 of the Double Taxation Relief (Taxes on Income) (General)
Regulations 1970 (SI 1970/488)); and (ii) no Rental Income payable to any Senior Borrower is
subject to a requirement to make a deduction or withholding for or an account of Loan Tax from
that Rental Income;
(h)
No filing or stamp taxes: under the laws of its Relevant Jurisdiction it is not necessary that the
Senior Finance Documents be registered, filed, recorded or enrolled with any court or other
authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation
to the Senior Finance Documents or the transactions contemplated by the Senior Finance
Documents (except stamp duty land tax in respect of the Properties pursuant to the Acquisition
Agreements), except: (i) registration of a financing statement in respect of each Jersey Security
Agreement pursuant to the Security Interests (Jersey) Law 2012 and (ii) registration or recording
of each English Security Agreement at the Land Registry in England and Wales and each
Standard Security with the Registers of Scotland and payment of associated fees. Any disclosure
required to be made by it to any relevant taxing authority in relation to stamp duty land tax
payable on any transactions contemplated by or being financed by the Loan Transaction
Documents has been made;
(i)
VAT: (i) it is not a member of a value added tax group; and (ii) each Senior Borrower has applied
to be registered for value added tax and has exercised a valid option to tax for VAT purposes in
respect of each Property it owns which is not a Non Opted Property;
(j)
Tax: (i) it has paid and discharged all material taxes imposed on it or its assets within the time
period allowed without incurring interest or penalties save in the circumstances described in the
Senior Facility Agreement; (ii) there are no claims against it with respect to taxes which if
adversely determined would have a Material Adverse Effect; (iii) it is not materially overdue in
the filing of any Tax returns; (iv) it is and has at all times been solely resident for tax purposes
solely in its jurisdiction of incorporation; (v) it does not carry on and has not carried on any trade
through a permanent establishment outside its jurisdiction of incorporation or the United
Kingdom; (vi) to the best of its knowledge, each Pecan Borrower and each Titan Borrower
qualifies as an industrial or commercial enterprise for the purposes of the UK/Jersey Double Tax
Convention of 24 June 1952 (as amended); (vii) it is zero rated for the purposes of the Income
Tax (Jersey) Law 1961, as amended, and therefore is not required to pay Jersey Tax on its
income, and is not subject to Jersey Tax on gains arising outside of Jersey; (viii) it has never been
party to a transaction in respect of which it is required to make a notification under Part 7 of the
Finance Act 2004 (disclosure of tax avoidance schemes) or Schedule 11A of VAT (disclosure of
avoidance schemes) and no notice under paragraph 12 of Schedule 43 to Finance Act 2013
(notice of final decision to counteract under the general anti-abuse rule) has been given in
relation to any arrangements entered into by it;
(k)
No default: no Loan Event of Default and on the date of the Senior Facility Agreement and the
first Utilisation Date no Loan Default is continuing or is reasonably likely to result from the
making of any Utilisation or the entry into of, or the performance of, or any transaction
contemplated by, any Loan Transaction Document and no other event or circumstance is
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continuing which constitutes (or, with the expiry of a grace period, the giving of notice, the
making of any determination or any combination of any of the foregoing, would constitute) a
default or termination event (however described) under any other agreement or instrument which
is binding on it or to which any of its assets are subject which has or is reasonably likely to have
a Material Adverse Effect (and for these purposes the reference in paragraphs (a) and (b) of the
definition of Material Adverse Effect to "any Obligor" shall be construed as referring to the
"Group taken as a whole");
(l)
Information: so far as any Senior Obligor is aware: (i) all information supplied by it or on its
behalf to any Senior Finance Party in connection with the Loan Transaction Documents was true
and accurate in all material respects as at the date it was provided or as at the date at which it is
stated to be given; (ii) the financial projections supplied to the Loan Facility Agent have been
prepared on the basis of recent historical information and on the basis of reasonable assumptions;
(iii) it has not omitted to supply any information which, if disclosed, would make the information
referred to in (i) and (ii) untrue or misleading in any material respect as at the stated date of such
information; and (iv) as at the Pecan Utilisation Date, nothing has occurred since the date of the
information referred to in paragraphs (i) and (ii) which, if disclosed would make that information
untrue or misleading in any material respect;
(m)
Financial statements: its financial statements most recently delivered to the Loan Facility Agent
have been prepared in accordance with GAAP applicable as at the date of such financial
statements, consistently applied and give a true and fair view of (if audited) or fairly represent (if
unaudited) its financial condition and operations (consolidated, if applicable) as at the date to
which they were drawn up;
(n)
Pari passu ranking: its payment obligations under the Senior Finance Documents rank at least
pari passu with the claims of all its other unsecured and unsubordinated creditors, except for
obligations mandatorily preferred by law applying to companies generally;
(o)
No proceedings pending or threatened: no litigation, arbitration or administrative proceedings of
or before any court, arbitral body or agency which, are reasonably likely to be adversely
determined and if so adversely determined, might reasonably be expected to have a Material
Adverse Effect (and for these purposes the reference in paragraphs (a) and (b) of the definition of
Material Adverse Effect to "any Obligor" shall be construed as referring to the "Group taken as
a whole") have (to the best of its knowledge and belief) been started or threatened against it;
(p)
No Insolvency Proceedings: it is not subject to any insolvency proceedings of the typo described
in paragraph (g) of the section "Loan Events of Default" below.
(q)
Valuation: (i) all information in the Virtual Data Room supplied to the Valuer for the purposes of
each Valuation was true and accurate in all material respects as at its date or (if appropriate) as at
the date (if any) at which it is stated to be given; (ii) any financial projections contained in the
information referred to in (i) have been prepared as at their date, on the basis of recent historical
information and on the basis of reasonable assumptions; (iii) it has not, so far as it is aware,
omitted to supply any information to the Valuer which, if disclosed, would materially adversely
affect the Valuation; and (iv) as at the relevant Utilisation Date, nothing has occurred since the
date on which the information referred to in (i) was supplied which, if it had occurred prior to the
Initial Valuation, would have materially adversely affected the Initial Valuation;
(r)
Title to Property:
(i)
A Senior Borrower will from the date of purchase of a Property (subject to registration
of the relevant transfer under the Land Registration Act 2002) be the legal and beneficial
owner of that Property or under the Land Registration (Scotland Act 1979) be registered
as heritable proprietor or longlease holder without exclusion of indemnity.
(ii)
Subject to the awareness provisions of the Senior Facility Agreement, such legal and
beneficial ownership is (except as disclosed in any Property Report relating to that
Property) free from Security Interests (other than those created by pursuant to the Loan
Security Documents).
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(iii)
Subject to the awareness provisions of the Senior Facility Agreement, a Senior Borrower
will (except as disclosed in any Property Report relating to that Property) from the date
of purchase of a Property, have good and marketable title to that Property, free from
Security Interests (other than those created by or pursuant to the Loan Security
Documents).
(iv)
Subject to the awareness provisions of the Senior Facility Agreement, from the date of
purchase of a Property except as disclosed in a Property Report relating to that Property:
(A)
no breach of covenant, obligation or undertaking is continuing which adversely
affects or might reasonably be expected to adversely affect the value, saleability
or use of that Property in any material respect;
(B)
there is no covenant, obligation, undertaking or agreement, stipulation,
reservation, condition, interest, right, easement, servitude or other matter
whatsoever adversely affecting that Property in any material respect;
(C)
all facilities necessary for the current enjoyment and use of that Property
(including those necessary for the carrying on of its business at that Property)
are enjoyed by that Property;
(D)
none of the facilities referred to in paragraph (C) above are enjoyed on terms:
(E)
I.
entitling any person to terminate or curtail its current use of that
Property; or
II.
which conflict with or restrict its current use of that Property in any
material respect; and
the relevant Borrower has not received any notice of any adverse claim by any
person in respect of the ownership of that Property or any interest in it which
might reasonably be expected to be determined in favour of that person, nor has
any acknowledgement been given to any such person by or on behalf of the
Borrower in respect of that Property.
(v)
So far as it is aware, from the date of purchase of a Property except as disclosed in a
Property Report relating to that Property no breach of any law or regulation is continuing
which adversely affects or might reasonably be expected to adversely affect the value,
saleability or use of that Property in any material respect.
(vi)
All deeds and documents provided by the Property Sellers will from the purchase of the
Property be:
(A)
in possession of the Loan Security Trustee;
(B)
held at the applicable land registry or land register of Scotland to the order of
the Loan Security Trustee; or
(C)
held to the order of the Loan Security Trustee by a firm of solicitors approved
by the Loan Security Trustee for that purpose;
(s)
Information for Property Reports: so far as the Senior Obligors are aware as the relevant
Utilisation Date, the Property Reports are true and accurate in all material respects;
(t)
No other business: no Senior Obligor has traded or carried on any business since the date of its
incorporation except for the ownership, development and management of its interests in the
Property or Properties in which that Senior Obligor has an interest, as at the date a Senior Obligor
becomes a party, it is not party to any material agreement other than the Loan Transaction
Documents and documents entered into pursuant to the Acquisition Documents (including the
licenses to assign (as defined therein) and ancillary documents entered into or to be entered into
in respect of certain of the Properties under the Acquisition Documents). As at the date of the
Senior Facility Agreement, the Company does not have any Subsidiaries other than the Titan
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Borrowers and no Borrower has any Subsidiaries, and no Obligor has, or has had, any employees
and has any obligations in respect of any retirement benefit or occupational pension scheme;
(u)
Centre of Main Interests: (i) its Centre of Main Interests is situated in its jurisdiction of
incorporation; and (ii) it has no Establishment in any jurisdiction other than its jurisdiction of
incorporation or the United Kingdom;
(v)
Ranking of Security: subject to the Loan Legal Reservations, the Loan Perfection Requirements
and any other Loan Security Document, the security conferred by each Loan Security Document
constitutes a first priority security interest of the type described, over the assets referred to, in that
Loan Security Document and those assets are not subject to any prior or pari passu Security
Interest;
(w)
Ownership: the Company's entire issued share capital is legally and beneficially owned and
controlled by the Shareholder, each of the Senior Borrowers' entire issued share capital is legally
and beneficially owned and controlled by the Company and the shares in the capital of each
Senior Obligor are fully paid and are not subject to any option to purchase or similar rights;
(x)
Immunity: the entry into by it of each Senior Finance Document constitutes, and the exercise by
it of its rights and performance of its obligations under each Senior Finance Document will
constitute, private and commercial acts performed for private and commercial purposes and it
will not be entitled to claim immunity from suit, execution, attachment or other legal process in
any proceedings taken in its jurisdiction of incorporation in relation to any Senior Finance
Document;
(y)
No adverse consequences: subject to the Loan Legal Reservations: (i) it is not at the date of the
Senior Facility Agreement necessary under the laws of its jurisdiction of original incorporation in
order to enable any Senior Finance Party to enforce its rights under any Senior Finance
Document or by reason of the entry into of any Senior Finance Document or the performance by
it of its obligations under any Senior Finance Document, that any Senior Finance Party should be
licensed, qualified or otherwise entitled to carry on business in that jurisdiction; and (ii) as at the
date of the Senior Facility Agreement no Senior Finance Party is or will be deemed to be resident,
domiciled or carrying on business in that jurisdiction by reason only of the entry into,
performance and/or enforcement of any Senior Finance Document;
(z)
Titan Title insurances: the Titan Title Insurances are in full force and effect and all premiums
for the Titan Title Insurances have been paid in full, all disclosures required to be made to the
insurers under the Titan Title Insurances and which, if not made, would entitle an insurer as
against a Senior Borrower as insured to cancel or revoke, or refuse to make a payment under, a
Titan Title Insurance have been made and each Senior Borrower that owns a Property is a
beneficiary of the Titan Title Insurances insofar as they relate to that Property;
(aa)
Financial Indebtedness: No Senior Obligor has any Financial Indebtedness outstanding other
than as permitted by the Senior Facility Agreement.
(bb)
Environmental laws: subject to the awareness provisions in the Senior Facility Agreement (i) it
is in compliance with the environmental matters set out in the Senior Facility Agreement and, to
the best of its knowledge (having made due and careful enquiry), no circumstances have occurred
which would prevent that performance or observation where failure to do so would have a
Material Adverse Effect and (ii) no Environmental Claim is current, or to the best of its
knowledge (having made due and careful enquiry), pending or threatened against it which if
adversely determined would have a Material Adverse Effect.
(cc)
Acquisition Documents: The Acquisition Documents contain all the material terms of the
Acquisition and include no disclosure which has or may have a material adverse effect on any of
the information, opinions, intentions, forecasts and projections contained or referred to in the
information provided to the Loan Facility Agent.
(dd)
Sanctions compliance: Each Senior Obligor has conducted its business in all material respects in
compliance with applicable anti-corruption laws and has instituted and maintained policies and
procedures designed to promote and achieve compliance with such laws. No Senior Obligor nor
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any member of the group or any of their respective directors or officers or, to their best
knowledge (after due and careful inquiry), any of such Senior Obligor or member of the group's
employees, affiliates, agents or representatives: (i) is a Restricted Person; (ii) has been engaged in
any transaction, activity or conduct that could reasonably be expected to result in it being
designated as a Restricted Person; and/or (iii) has received notice of, or is otherwise aware of,
any claim, action, suit, proceedings or investigation involving it with respect to Sanctions.
(ee)
Sanctions: No Senior Obligor shall (i) contribute or otherwise make available all or any part of
the proceeds of the facilities, directly or indirectly, to, or for the benefit of, any person (whether
or not related to any Obligor) for the purpose of financing the activities or business of, other
transactions with, or investments in, any Restricted Party; (ii) directly or indirectly fund all or
part of any repayment or prepayment of the facilities out of proceeds derived from any
transaction with or action involving a Restricted Party; or (iii) engage in any transaction, activity
or conduct that would violate Sanctions, that would cause any Senior Finance Party to be in
breach of any Sanctions or that could reasonably be expected to result in its or any Senior
Obligor’s or any Senior Finance Party’s being designated as a Restricted Party.
Where any representation and warranty is expressed to be subject to the "awareness provisions" of the
Senior Facility Agreement then (i) insofar as the subject matter of that representation and warranty is a
matter which is insured pursuant to the terms of the Titan Title Insurances or either of them (an "Insured
Information Matter") and (ii) the Titan Title Insurances remain in full force and effect, then the
representation and warranty given in relation to the Insured Information Matter shall be deemed to be
qualified by reference to the awareness of the Senior Obligors. For this purpose, awareness shall be
construed on a basis that is consistent with the construction provisions of the Senior Facility Agreement
which provide that whenever in the Senior Facility Agreement a senior obligor confirms anything to the
best of its knowledge and belief or so far as it is aware or to the best of its knowledge or actions are
required upon becoming aware of any event or circumstance, the Senior Obligor shall not be deemed to
have knowledge or awareness of the contents of the Property Seller's Virtual Data Room or of the deeds
and documents relating to the Property, save to the extent it has actual knowledge thereof and that the
Senior Obligors are deemed to have actual knowledge of each Report, including (without limitation) the
material terms of each Headlease and of each Lease Document (or part thereof) reviewed to prepare each
Property Purchaser Report. For this purpose, awareness or knowledge of a Senior Obligor shall mean the
actual or deemed awareness or knowledge of each director of each Obligor and certain other named
individuals.
Undertakings
Each Obligor has given various undertakings under the Senior Facility Agreement which remain in force
so long as any amount is outstanding under the Senior Finance Documents or the commitment is in force.
These undertakings generally include, among other things, the following undertakings (subject, in each
case, to the specific terms and concessions in the Senior Facility Agreement):
Information undertakings
(a)
Financial statements: an undertaking by the Senior Obligors to provide to the Loan Facility
Agent (in sufficient copies for all the Senior Lenders) as soon as the same become available, but
in any event within 120 days after the end of each of its financial years, its audited consolidated
(if applicable) financial statements for that financial year and as soon as the same become
available, but in any event within 60 days after the end of each financial quarter of each of its
financial years, its unaudited consolidated (if applicable) financial statements for that financial
quarter;
(b)
Compliance certificate: an undertaking by the Company to provide to the Loan Facility Agent a
Compliance Certificate with each set of its financial statements delivered under the Facility
Agreement and with each Quarterly Report;
(c)
Requirements as to Financial statements: The Company must ensure that each set of financial
statements delivered under the Senior Facility Agreement gives (if audited) a true and fair view
of, or (if unaudited) fairly represents, the financial condition (consolidated or otherwise) of the
relevant person as at the date to which those financial statements were drawn up;
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(d)
Business Plan: Each Senior Obligor must supply to the Loan Facility Agent, in sufficient copies
for all the Senior Lenders, as soon as the same become available, but in any event (i) within 20
days before the start of each of its financial years, and (ii) as a condition precedent to the Titan
Utilisation, an updated business plan which once approved by the Majority Lenders shall become
the then current Business Plan. If any Senior Obligor wishes to update or change the Business
Plan in a manner that may be materially adverse to the interests of the Senior Finance Parties it
must provide a written explanation of the main updates or changes;
(e)
Monitoring of Property: an undertaking by the Company to provide on or before the the date five
Business Days before each Loan Payment Date (each such date being a "Reporting Date") to the
Loan Facility Agent a Quarterly Report;
(f)
Miscellaneous: an undertaking by the Obligors to supply to the Loan Facility Agent various
documents (in sufficient copies for all the Lenders if the Loan Facility Agent so requests)
including (i) copies of all non-routine documents dispatched by to its creditors generally (or any
class of them), (ii) details of any litigations, arbitration or administrative proceedings which are
current, threatened or pending against any member of the Group which have or night have, if
adversely determined, reasonably be expected to have a Material Adverse Effect, and (iii) further
information regarding the financial condition, business and operations of any member of the
Group as any Finance Party may reasonably request;
(g)
Notification of Loan Default: an undertaking by each Senior Obligor to notify the Loan Facility
Agent of any Loan Default (and the steps, if any, being taken to remedy it) promptly upon
becoming aware of its occurrence (unless that Senior Obligor is aware that a notification has
already been provided by another Senior Obligor);
(h)
Use of websites: the Company may satisfy its obligation under the Senior Facility to deliver any
information in relation to those Senior Lenders (the "Website Lenders") who accept this method
of communication by posting this information onto an electronic website designated by the
Company and the Loan Facility Agent (the "Designated Website") and any Website Lender may
request one paper copy of any information which is posted onto the Designated Website which
shall be provided within 10 Business Days;and
(i)
"Know your customer" checks: an undertaking by each obligor to supply such documentation and
evidence as is reasonably requested by the Loan Facility Agent or a Senior Finance Party to carry
out all necessary "know you customer" or other similar checks under all applicable laws and
regulations.
Financial covenants
(a)
Scope of financial covenants
The Company is required to ensure compliance with the following financial covenants:
(b)
(i)
on each Loan Payment Date, Projected Interest Cover is at least 180 per cent.; and
(ii)
on each Loan Payment Date, Loan to Value does not exceed 75 per cent.
Cure rights
If Projected Interest Cover or Loan to Value is not met the Company may within 15 Business
Days of the relevant Loan Payment Date establish a Cure Account and then deposit into the Cure
Account an amount calculated by the Loan Facility Agent to ensure compliance or prepay the
Senior Loan in an amount to ensure compliance. For the purpose of calculating the finance cost
element of Projected Interest Cover any amount deposited in the Cure Account for these purposes
will be treated as if applied in prepayment of the Senior Loan. The cure rights may only be
exercised a maximum of two times during the life of the Senior Facility.
General undertakings
(a)
Authorisations: an undertaking by each Senior Obligor to obtain, comply with and do all that is
necessary to maintain in full force and effect and supply certified copies to the Loan Facility
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Agent of any Authorisation required under any applicable law or regulation to enable it to
perform its obligations under the Loan Transaction Documents and to ensure the legality, validity,
enforceability or admissibility in evidence in each relevant jurisdiction of any Loan Transaction
Document to which it is a party or own its assets and carry on its business as it is being
conducted;
(b)
Compliance with laws: an undertaking by each Senior Obligor to comply in all respects with all
laws to which it may be subject, if failure to comply would materially impair its ability to
perform its obligations under the Senior Finance Documents;
(c)
Pari passu ranking: an undertaking by each Senior Obligor to ensure that its payment obligations
under the Senior Finance Documents at all times rank at least pari passu with the claims of all
unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law
applying to companies generally;
(d)
Negative pledge: an undertaking by each Senior Obligor not to create or allow to exist any
Security Interest over any of its assets or permit to subsist any related obligation except for:
(e)
(i)
any Security Interest constituted by the Loan Security Documents;
(ii)
any lien arising by operation of law and in the ordinary course of trading;
(iii)
any Security Interest affecting a Property that is release on or before the purchase of that
Property;
(iv)
any Security Interest over a rent deposit provided by a Senior Obligor as security for its
obligations under a Headlease; or
(v)
any Security Interest existing at the date of the Senior Facility Agreement which is not
registered in the title of any Property and of which the Senior Obligors are not aware at
the date of the Senior Facility Agreement, with awareness construed on the basis
consistent with the construction provisions in the Senior Facility Agreement;
Disposals: an undertaking by each Senior Obligor not to enter into any transaction to dispose or
all or any part of any asset except for any disposal:
(i)
permitted under the provisions of the Senior Facility Agreement relating to Occupational
Leases;
(ii)
of a Property as set out in more detail under the heading "Disposal of a Property or
shares in a Guarantor";
(iii)
of any part of a Property if no Loan Default is continuing, that disposal is on arm's
length terms to a party which is not a related party and the Net Disposal Proceeds for any
partial disposals of Property do not exceed £1,500,000 in aggregate;
(iv)
of a Property in respect of which the Allocated Loan Amount has been paid (or is paid
simultaneously with such disposal) pursuant to the provisions of the Senior Facility
Agreement relating to ownership of the properties, misrepresentation, compulsory
purchase, major damage, forfeiture of headleases and material adverse change;
(v)
of cash by way of payment out of a Obligor Account in accordance with the Senior
Facility Agreement;
(vi)
made in the ordinary course of trading of any asset subject to the floating charge created
under an English Security Agreement;
(vii)
made pursuant to a compulsory purchase order;
(viii)
made pursuant to an order of the court or mandatory law;
(ix)
of any termination or novation of a hedging agreement pursuant to the terms of the
Senior Facility Agreement; or
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(x)
(f)
made pursuant to any contractual commitment under any Lease Document prior to the
date of the Senior Facility Agreement of which the Senior Obligors are not aware at the
date of the Senior Facility Agreement and for these purposes awareness will be
construed on a basis consistent with the construction provisions of the Senior Facility
Agreement;
Financial indebtedness: an undertaking by each Senior Obligor not to incur or permit to be
outstanding any Financial Indebtedness except for:
(i)
any Financial Indebtedness incurred under the Senior Finance Documents;
(ii)
any Financial Indebtedness repaid prior to the first Utilisation; or
(iii)
any Subordinated Debt (subject to the relevant Subordinated Creditor having executed a
Loan Security Document in respect of such Subordinated Debt);
(g)
Lending and guarantees: an undertaking that no Senior Obligor may be the creditor in respect of
any loan or any form of credit to any person except Subordinated Debt (subject to the relevant
Subordinated Creditor having executed a Loan Security Document in respect of such
Subordinated Debt) and that no Senior Obligor may give or allow to be outstanding any
guarantee or indemnity to or for the benefit of any person in any obligation of any other person
except under the Senior Finance Documents, under the Acquisition Documents and documents
entered into pursuant to the Acquisition Documents or under any Headlease or Lease Document
in existence at the date of the Senior Facility Agreement;
(h)
Mergers: an undertaking that no obligor may enter into any amalgamation, demerger, merger or
corporate reconstruction;
(i)
Conduct of business: an undertaking that no Senior Obligor may carry on any business other than
the ownership, development and management of its interests in the Property or Properties in
which it has an interest and an undertaking from the Company that it must not have any
Subsidiary other than the Senior Borrowers and that no Guarantor may have any Subsidiary;
(j)
Acquisition Documents: an undertaking from each Senior Obligor to pay all amounts payable to
the Vendor under the Acquisition Documents as and when they become due (except to the extent
they are being contested in good faith and where adequate reserves are set aside) and each Senior
Obligor to take all reasonable and practical steps to preserve and enforce its rights and pursue any
claims and remedies arising under any Acquisition Document or in respect of any Report except
that an original obligor will not be required to take any action which it determines is not in the
best commercial interests of the Group;
(k)
Centre of Main Interests: an undertaking from each Senior Obligor that it must not cause or allow
its registered office or Centre of Main Interests to be in any jurisdiction other than its jurisdiction
of incorporation and must not maintain an Establishment in any other jurisdiction other than its
jurisdiction of incorporation or the United Kingdom;
(l)
Acquisitions: Other than the Acquisition, no Senior Obligor may make any acquisition or
investment other than those which are necessary for the performance of its obligations or
otherwise permitted under the Senior Finance Documents
(m)
Other agreements: an undertaking from a senior obligor not to enter into any agreement without
the consent of the Loan Facility Agent (such consent not to be unreasonably withheld) except for
the Loan Transaction Documents or any document entered into pursuant to the Acquisition
Documents, any other agreements entered into in the ordinary course of the management and
ownership of the Properties and any other agreement expressly allowed under any other term of
the Senior Facility Agreement;
(n)
Shares, dividends and share redemption: an undertaking from each Senior Obligor that it will not
(i) issue any further shares or alter any rights attaching to its issued shares as at the date of the
Senior Facility Agreement and (ii) declare, make or pay any divided, charge, fee or other
distribution on or in respect of its share capital (or any class of its share capital), repay or
distribute any dividend or share premium reserve, pay any management, advisory or other fee or
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redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so except for
a Permitted Payment;
(o)
VAT: an undertaking from each Senior Obligor that (i) it shall remain registered for UK VAT; (ii)
it will not (without prior written consent of the Majority Lenders) be a member of a value added
tax group; (iii) it will not (without prior written consent of the Majority Lenders) transfer or
otherwise dispose of (whether pursuant to the exercise of any option, election, discretion or
otherwise) any part of any right to credit or repayment in respect of any VAT from any relevant
Tax Authority and (iv) it will not (without prior written consent of the Loan Facility Agent take
any steps (whether by act, omission or otherwise) by which any option to tax which it has
exercised pursuant to Part 1 of Schedule 10 to the Value Added Tax Act 1994 in respect of the
Property could be revoked or cease to have effect;
(p)
Loan Taxes: an undertaking from each Senior Obligor that (i) it will pay all Loan Taxes due and
payable before any fine or penalty for late payment accrues unless (and only to the extent that)
payment of those taxes is being contested in good faith, adequate reserves are being maintained
for those Loan Taxes and the costs required to contest them and failure to pay those Loan Taxes
is not reasonably likely to have a Material Adverse Effect; (ii) it will comply in all material
respects with all Tax laws of the relevant jurisdiction; (iii) it will comply with all requirements to
make, deliver or amend returns (including company tax returns) required; (iv) it will ensure that
at all times its residence for Loan Tax purposes is solely the jurisdiction of its incorporation; (v)
it will ensure that at all times each Pecan Borrower qualifies as an industrial or commercial
enterprise for the purposes of the UK/Jersey Double Tax Convention of 24 June 1952 (as
amended); (vi) it will ensure that at all times it does not carry on any trade through a permanent
establishment outside its jurisdiction of incorporation or the United Kingdom and (vii) all stamp
duty land tax payable in connection with the Acquisition is paid and all stamp duty land tax
returns are filed, in each case, within applicable statutory time limits;
(q)
Ownership of Properties: an undertaking of each Senior Obligor to notify the Loan Facility
Agent within five Business Days of becoming aware if for any reason it is not the legal and
beneficial owner or registered proprietor of a Property or the security conferred by the relevant
Loan Security Document does not constitute a first priority or first ranking security interest over
a Property and within 15 Business Days of giving such notice (i) prepay the Senior Loan in an
amount equal to the Allocated Loan Amount for the affected Property (ii) dispose of the affected
Properties (or shares in the relevant Senior Borrower) pursuant to the relevant provisions of the
Senior Facility Agreement or (iii) ensure that the circumstances giving rise to an event are
remedied to the satisfaction of the Senior Lenders; and
(r)
Syndication and securitization: an undertaking from each Senior Obligor that all or part of any
Senior Loan or Commitment, or any Lender's interest therein or under any Finance Document
may be syndicated and/or securitised.
Property undertakings
(a)
Title: undertaking by each Senior Obligor that: (i) subject to the provisions of the Senior Facility
Agreement relating to Headleases and clean-up, it must in all material respects exercise its rights
and comply with any covenant, stipulation, restriction, undertaking or obligation at any time
affecting its Property subject to an consistent with the principles of good estate management; (ii)
it will not, save to the extent permitted by the provisions in the Senior Facility Agreement
relating to Occupational Leases, without the consent of the Loan Facility Agent (acting
reasonably), agree to an amendment, supplement, waiver, surrender, renunciation or release if
any legally binding covenant, stipulation or obligation affecting its Property; and (iii) it will
promptly take all such steps as may be necessary or desirable to enable the security created by
the Loan Security Documents to be registered at the appropriate land registry;
(b)
Occupational Leases: undertaking by each Senior Borrower:
(i)
not, without the consent of the Majority Lenders (acting reasonably), to (A) enter into
any Agreement for Lease, (B) grant or agree to grant any new Occupational Lease, (C)
agree to any amendment (save for an upwards rent review), waiver, surrender or
renunciation in respect of any Lease Document, (D) exercise any right to break,
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determine or extend any Lease Document, (E) commence any forfeiture or irritancy
proceedings in respect of any Lease Document, (F) grant any licence or right to use or
occupy any part of any Property, (G) consent to any sublease or assignment or
assignation of any tenant's interest under any Lease Document, (H) agree to any change
of use under or rent review (save for any upwards rent review) or (I) serve any notice on
any former tenant which would entitle it to a new lease or tenancy except for any lease,
licence or lettable unit with a passing rent or licence fee below £10,000 per annum or if
above if threshold, the rental income following the renewal or variation is more than 95%
of the total rental income due in respect of the Lease Document as shown under the then
current Business Plan, provided no Loan Event of Default is continuing or any action
required by any Headlease, Lease Document or other agreement as in force at the date of
the Senior Facility Agreement or any mandatory law;
(ii)
use all commercially reasonable endeavours to diligently collect or procure to be
collected all Rental Income;
(iii)
subject to the provisions of the Senior Facility Agreement relating to clean-up, exercise
its rights and comply with its obligations under each Lease Document in all material
respects;
(iv)
use all commercially reasonably endeavours to ensure that each tenant complies with its
obligations under each Lease Document save where to do so would not be in the
interests of good estate management;
(v)
if requested by the Loan Facility Agent, to supply to the Loan Facility Agent each Lease
Document, each amendment to a Lease Document and each document recording any rent
review in respect of a Lease Document; and
(vi)
to use their reasonable endeavours, consistent with the Business Plan, and the principles
of good estate management, to find tenants for any vacant lettable space in the Properties;
(c)
Headleases: an undertaking from each Senior Borrower to (i) subject to the provisions of the
Senior Facility Agreement relating to clean-up, exercise its material rights and comply with its
obligations under each Headlease, (ii) use its reasonable endeavours to ensure that each landlord
complies with its obligations under each Headlease, (iii) if so required by the Loan Security
Trustee, apply for relief against forfeiture or irritancy of any Headlease, (iv) not to amend,
supplement, waiver, surrender, renounce or release any Headlease, (v) exercise any right to break,
determine or extend and Headlease, (vi) agree to any rent review in respect of any Headlease, or
(vii) subject to the provisions of the Senior Facility Agreement relating to clean-up, do or allow
to be done any act as result of which any Headlease may become liable to forfeiture or irritancy
or otherwise be terminated;
(d)
Maintenance: an undertaking from each Senior Borrower so far as the law and the terms of any
Headlease or Lease Document allow and subject to the provisions of the Senior Facility
Agreement relating to clean-up and as is consistent with the Business Plan and the principles of
good estate management, to ensure that all buildings, plant, machinery, fixtures and fittings on its
Property are in and maintained in good and substantial repair and condition and, where
appropriate, in good working order and such repair, condition and order as to enable them to let
in accordance with all applicable laws and regulations;
(e)
Rental Income tax authorisation: an undertaking from each Senior Borrower to maintain, as far
as it is able, any authorisation necessary to ensure that any Rental Income may be paid to each
relevant Senior Borrower without any withholding or deduction on account of tax and comply
with any conditions of the same;
(f)
Capital expenditure: an undertaking from each Senior Obligor to use commercially reasonable
endeavours to ensure that it spends on any Property it owns the amount paid into the Capex
Contingency Reserve Account;
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(g)
Development: an undertaking from each Senior Borrower:
(i)
not to carry out or allow to be carried out, any demolition, construction, structural
alterations or additions, development or other similar operations in respect of any part of
its Property without the consent of the Loan Facility Agent (acting reasonably) except
for (A) the repair and maintenance of buildings, plant, machinery, fixtures and fittings,
(B) the carrying out of non-structural improvements or alterations, (C) alterations
undertaken by a tenant as permitted or required by the terms of a Lease Document,
Headlease or mandatory law, (D) any works to be undertaken using monies held in
escrow or reserve pursuant to an Acquisition Agreement ("Escrow Monies") or (E) any
other works undertaking where the projected cost does not exceed £100,000 (excluding
VAT); and
(ii)
so far as the law and the terms of any Headlease and Lease Document allow and subject
to the provisions of the Facility Agreement relating to clean-up, comply in all material
respects with all planning laws, permissions, agreement and conditions to which its
Property may be subject;
(h)
Notices: an undertaking by each Senior Borrower (within 14 days after receipt) to deliver to the
Loan Security Trustee a copy of any application, requirement, order or notice served or given by
any public or local or any other authority or landlord and to inform the Loan Security Trustee of
the steps taken or proposed to be taken to comply with the relevant requirement, order or notice;
(i)
Investigation of title: an undertaking by each Senior Borrower to grant the Loan Security Trustee
or its lawyers all reasonable facilities within the power of the Senior Borrower so they can carry
out investigations of title to any Property and make such enquiries in relation to any part of the
property as a prudent mortgagee might carry out which will be at the cost of the Senior Lenders
unless a Senior Loan Event of Default has occurred and provided that the Loan Security Trustee
will not take any action which would vitiate or prejudice the Title Insurance or adversely affect
any claim or amount payable thereunder;
(j)
Power to remedy: if a Senior Borrower fails to perform any obligations under the Senior Finance
Documents affecting a Property, the Loan Security Trustee may (following not less than 15
Business Days' notice from the Loan Facility Agent) enter any part of a Property, comply with or
object to any notice served on a Borrower and take any action which the Loan Security Trustee
may consider reasonably necessary or desirable to prevent or remedy any breach of any term or
to comply with or object to any such notice provided that the Loan Security Trustee will not
take any action which would vitiate or prejudice the Title Insurance or adversely affect any claim
or amount payable thereunder;
(k)
Asset Manager: an undertaking from each Senior Borrower (i) not to appoint an Asset Manager,
amend or waive the terms of appointment of any Asset Manager (other than an immaterial
amendment) or terminate the appointment of any Asset Manager which has been appointed in
accordance with the provisions of the Senior Facility Agreement (ii) to ensure that the Asset
Manager of any Property on being appointed enters into a Duty of Care Agreement; has a
professional indemnity insurance at a level acceptable to the Loan Facility Agent and agrees to
maintain such insurance in place and acknowledges that it has notice of the Security Interests
created by the Loan Security Documents and (iii) to terminate the appointment of an Asset
Manager which is in default of its obligations under the terms of its appointment and an
Administrative Party so requires;
(l)
Managing Agent: an undertaking from each Senior Borrower (i) not to appoint a Managing Agent,
amend or waive the terms of appointment of a Managing Agent (other than an immaterial
amendment) or terminate the appointment of any Managing Agent which has been appointed in
accordance with the provisions of the Senior Facility Agreement provided that this does not
apply to the termination of the appointment of a Managing Agent as long as the terminated
Managing Agent is replaced by an Approved Replacement Managing Agent, and (ii) if a
Managing Agent is in default of its obligations under its management agreement and if the Loan
Facility Agent so required the Senior Borrower will promptly use all reasonable endeavours to
terminate that management agreement and appoint a new Managing Agent in accordance with
the provisions of the Senior Facility Agreement;
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(m)
Insurance - cover: undertaking from the Company to effect and maintain insurances with one or
more insurance offices or underwriters in each case having a Requisite Rating and otherwise
acceptable to the Loan Facility Agent and in form and amount acceptable to the Loan Facility
Agent:
(i)
insurance in respect of each Property and the plant and machinery on each Property for
their full replacement value against loss or damage by fire, storm, tempest, flood,
earthquake, lighting, explosion, impact, aircraft and other aerial devices and articles
dropped from them, riot, civil commotion and malicious damage, bursting or
overflowing of water tanks, apparatus or pipes and all other normally insurable risks of
loss or damage including cover for site clearance, shoring or propping up, against acts of
terrorism (if available in the UK market) and cover for loss of rent (in respect of a period
of not less than three years or, if longer, the minimum period required under the Lease
Documents);
(ii)
including public liability and third party liability insurance; and
(iii)
insure such other risks as a prudent company in the same business as such Borrower
would insure;
(n)
Insurance – Loan Security Trustee: an undertaking by the Company (i) to procure that the
insurable interests of the Loan Security Trustee are insured under each of the Insurances (other
than professional indemnity, public liability and third party liability insurances), (ii) to procure
that the Insurances (other than the professional indemnity insurances) contain a non-invalidation
and non-vitiation clause, a waiver of the rights of subrogation of the insurer as against each
Senior Borrower, the Senior Finance Parties and the tenants of each Property and a mortgage/loss
payee clause in respect of insurance claim payments (excluding any payments made pursuant to
third party liability claims) in excess of £150,000 otherwise payable to any Senior Borrower, and
(iii) promptly notify the Loan Facility Agent of the proposed terms of any future renewal of any
of the Insurances, any amendment, termination, avoidance or cancellation of any of the
Insurances made or, to its knowledge, threatened or pending, any claim an any actual or
threatened refusal of any claim where the claim is in excess of £50,000 and any event which has
lead or may reasonably be expected to lead to a breach by any Borrower of the insurance
provisions of the Senior Facility Agreement;
(o)
Insurance – compliance: undertaking by each Senior Borrower to (i) comply with the terms of
the Insurances, not do or permit anything to be done which may make void or voidable any of the
Insurances and comply with all reasonable risk improvement requirements of its insurers where
failure to do so would result in Insurances being withdrawn and (ii) ensure each premium is paid
promptly within the period prescribed for payment all other things are done so as to keep each of
the Insurances in force;
(p)
Environmental compliance: undertaking by each Senior Borrower to comply with all
Environmental Law applicable to a Property, obtain, maintain and ensure compliance with all
requisite Environmental Permits applicable to a Property and implement procedures to monitor
compliance with an to limit liability under any Environmental Law applicable to a Property in
each case where failure to do so would have or would be reasonably likely to have a Material
Adverse Effect result in any liability for a Senior Finance Party;
(q)
Environmental claims: undertaking by each Senior Borrower to notify the Loan Facility Agent if
any Environmental Claim started, or to its knowledge, threatened, any circumstances likely to
result in an Environmental Claim or any suspension, revocation or notification of any material
Environmental Permit;
(r)
Environmental indemnity: undertaking from each Senior Borrower to indemnify each Senior
Finance Party against any loss or liability which that Senior Finance Party incurs as a result of
any actual or alleged breach of any Environmental Law by any person and would not have arisen
if a Senior Finance Document has not been entered into unless it is caused by that Senior Finance
Party's gross negligence or wilful misconduct;
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(s)
Escrow monies: an undertaking from each Borrower to use Escrow Monies only to meet the cost
or liability, or for the purpose, provided for by the applicable Acquisition Agreement;
(t)
Clean-up: where a provision of the Senior Facility Agreement requires a Senior Obligor to
comply with the terms of the Headlease, Lease Document, covenant, stipulation or other
agreement and is expressed to be subject to the clean-up provisions of the Senior Facility
Agreement and at the date of the Senior Facility Agreement there is a breach of such Headlease,
Lease Document, covenant, stipulation or other agreement then there will be no breach provided
that such breach is remedied within 30 days or such other period as may reasonably be required;
and
(u)
Title Insurance claims: an undertaking from each Senior Obligor to (i) notify the Loan Facility
Agent upon becoming aware of any matter giving rise to a Title Insurance Claim, (ii) use
reasonable endeavours to make and pursue such Title Insurance Claim, (iii) keep the Loan
Facility Agent regularly informed of the progress of any such Title Insurance Claim, and (iv)
ensure that all Title Insurance Proceeds are paid into the Deposit Account.
Loan Events of Default
The Senior Facility Agreement contains the following events of default:
(a)
Non-payment: failure to pay by any Senior Obligor on the due date an amount then due and
payable under the Senior Finance Documents (subject to certain exceptions);
(b)
Financial covenants: breach by any Senior Obligor of the financial covenants;
(c)
Other obligations: (i) breach by a Senior Obligor of the provisions of the Senior Facility
Agreement relating to notification of Senior Loan Default, disposals, ownership of properties and
conditions subsequent and (ii) breach by a transaction obligor of the other provisions of the
Finance Documents (except for provisions in relation to capital expenditure which shall not cause
a Loan Event of Default), subject to a grace period of 15 Business Days.
(d)
Misrepresentation: any representation, warranty or statement made or deemed to be made by a
Senior Obligor in the Senior Finance Documents or in any other document delivered by or on
behalf of any Senior Obligor under or in connection with any Senior Finance Document is or
proves to have been incorrect or misleading in any material respect when made or deemed to be
made unless:
(i)
capable of remedy and remedied with 15 Business Days;
(ii)
in the case of a breach of certain of the provisions of the Senior Facility Agreement
relating to title to Property and ranking of security, the Senior Obligor complies with the
provisions of the Senior Facility Agreement relating to the ownership of the Properties;
(iii)
in the case of a breach of certain of the provisions of the Senior Facility Agreement
relating to title to Property, if:
(A)
the circumstances are insured pursuant to the Title Insurances and the Senior
Obligor complies with the provisions of the Senior Facility Agreement relating
to the Title Insurances;
(B)
the circumstances are not insured, within 15 Business Days the Senior Obligor
does one of the following:
I.
prepays the Senior Loan in an amount equal to the Allocated Loan
Amount for the affected Property;
II.
prepays the Senior Loan in an amount equal to the Allocated Loan
Amount for the Property multiplied by the Percentage Reduction in
Value; or
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III.
(iv)
disposes of the Property or shares in the relevant Senior Obligor in
accordance with the disposals provisions of the Senior Facility
Agreement; or
in the case of breach of certain provisions of the Senior Facility Agreement relating to
title to the Property or relating to the information provided for the Property Reports:
(A)
prepays the Senior Loan in an amount equal to the Allocated Loan Amount for
the affected Property;
(B)
prepays the Senior Loan in an amount equal to the Allocated Loan Amount for
the Property multiplied by the Percentage Reduction in Value; or
(C)
disposes of the Property or shares in the relevant Senior Obligor in accordance
with the disposals provisions of the Senior Facility Agreement;
(e)
Cross-default: (i) any Financial Indebtedness of any Senior Obligor is not paid when due (after
the expiry of any originally applicable grace period) or is declared to be or otherwise becomes
due and payable before its specified maturity as a result of an event of default (however
described), (ii) any commitment for any Financial Indebtedness of any Senior Obligor is
cancelled or suspended by a creditor of a Senior Obligor as a result of an event of default
(however described); or (iii) any creditor of any Senior Obligor becomes entitled to declare any
Financial Indebtedness of a Senior Obligor due and payable before its specified maturity as a
result of any event of default (however described), unless (in each case) the aggregate amount of
Financial Indebtedness or commitment for Financial Indebtedness is less than £100,000 or its
equivalent in any other currency or currencies;
(f)
Insolvency: any Senior Obligor: (i) is unable or admits inability to pay its debts as they fall due;
(ii) (ignoring any Subordinated Debt and in the case of the Shareholder any liabilities to its
shareholders) is deemed or is declared to be unable to pay its debts under applicable law; (iii)
becomes bankrupt as defined in Article 8 of the Interpretation (Jersey) Law 1954; (iv) suspends
or threatens to suspend making payments on any of its debts; (v) by reason of actual or
anticipated financial difficulties, commences negotiations with one or more of its creditors
(excluding any Senior Finance Party in its capacity as such) with a view to rescheduling any of
its indebtedness; (vi) the value of the assets of any Senior Obligor is less than its liabilities
(taking into account contingent and prospective liabilities but ignoring any Subordinated Debt)
and (vii) a moratorium is declared in respect of any indebtedness of any Senior Obligor;
(g)
Insolvency proceedings: a Senior Obligor is subject to: (i) the suspension of payments, a
moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by
way of voluntary arrangement, scheme of arrangement or otherwise); (ii) a composition,
compromise, assignment or arrangement with any creditor by reason of actual or anticipated
financial difficulties; (iii) the appointment of a liquidator, receiver, administrative receiver,
administrator, compulsory manager or other similar officer in respect of itself or any of its assets;
(iv) enforcement of any Security Interest over any assets of a Senior Obligor or (v) any analogous
procedure or step is taken in any jurisdiction (subject to a carve out for frivolous or vexatious
petitions for winding-up which is discharged, dismissed or stayed within 14 days or solvent
liquidation of a member of the Group which has ceased to be a Senior Obligor);
(h)
Creditors' process: any expropriation, attachment, sequestration, distress, diligence, execution or
analogous event affects any asset or assets of a Senior Obligor and is not discharged within 14
days;
(i)
Cessation of business: a Senior Obligor ceases, or threatens to cease, to carry on business except,
in the case of the Company, as a result of any disposal allowed under the Senior Facility
Agreement;
(j)
Unlawfulness: (i) it is or becomes unlawful for a Senior Obligor to perform any of its obligations
under the Senior Finance Documents; (ii) subject to the Loan Legal Reservations, any Senior
Finance Document is not effective in accordance with its terms or is alleged by a Senior Obligor
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to be ineffective in accordance with its terms for any reason; or (iii) subject to the Loan Legal
Reservations, a Loan Security Document does not create a Security Interest it purports to create;
(k)
Repudiation: a Senior Obligor repudiates a Loan Transaction Document or evidences an intention
to repudiate a Loan Transaction Document;
(l)
Compulsory purchase: any part of any Property is compulsorily purchased or the applicable local
or other authority makes an order for the compulsory purchase of all or any part of any Property
and (i) in the opinion of the Majority Lenders, taking into account the amount and timing of any
compensation payable and any Title Insurance Proceeds payable, the compulsory purchase has or
will have a Material Adverse Effect and (ii) the Senior Obligors do not within 15 Business Days
do one of the following:
(A)
prepay the Senior Loan in an amount equal to the Allocated Loan Amount for the
affected Property;
(B)
prepay the Senior Loan in an amount equal to the Allocated Loan Amount multiplied by
the Percentage Reduction in Value;
(in each case, less any amount of Compensation Prepayment Proceeds, Insurance Prepayment
Proceeds or Title Insurance Proceeds which are received by a Senior Obligor and are applied
pursuant to the terms of the Senior Facility Agreement); or
(C)
(m)
(n)
dispose of the affected Property or shares in the relevant Senior Obligor in accordance
with the disposals provisions of the Senior Facility Agreement;
Major damage: any part of any Property is destroyed or damaged and (i) in the opinion of the
Majority Lenders, taking into account the amount and timing of receipt of the proceeds of
insurance effected in accordance with the terms of the Senior Facility Agreement, has or will
have a Material Adverse Effect and (ii) the Senior Obligors do not within 15 Business Days do
one of the following:
(A)
prepay the Senior Loan in an amount equal to the Allocated Loan Amount for the
affected Property (less any amount of Compensation Prepayment Proceeds, Insurance
Prepayment Proceeds or Title Insurance Proceeds which are received by a Senior
Obligor and are applied pursuant to the terms of the Senior Facility Agreement); or
(B)
dispose of the affected Property or shares in the relevant Senior Obligor in accordance
with the disposals provisions of the Senior Facility Agreement;
Headlease: forfeiture or irritancy proceedings with respect to a Headlease are commenced (other
than in relation to a breach first occurring prior to the first Utilisation Date) or a Headlease is
forfeited or irritated and the Senior Obligors do not within 15 Business Days thereof either:
(A)
prepay the Senior Loan in an amount equal to the Allocated Loan Amount for the
affected Property; or
(B)
dispose of the affected Property or shares in the relevant Senior Obligor in accordance
with the disposals provisions of the Senior Facility Agreement;
(o)
Ownership of the Senior Obligors: the Shareholder ceases to own, legally and beneficially, the
entire issued share capital of the Company; a Senior Borrower is not or ceases to be a legally and
beneficially wholly-owned Subsidiary of the Company, other than pursuant to a disposal
permitted under the Senior Facility Agreement;
(p)
Material adverse change: any event or series of events occurs which, in the opinion of the
Majority Lenders (acting reasonably including without limitation taking into account the amount
and timing of any Title Insurance Proceeds payable), has or is reasonably likely to have a
Material Adverse Effect and the Senior Obligors do not within 15 Business Days either:
(A)
prepay the Senior Loan in an amount equal to the Allocated Loan Amount for the
affected Property; or
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(B)
dispose of the affected Property or shares in the relevant Senior Obligor in accordance
with the disposals provisions of the Senior Facility Agreement; and
Acceleration
The Senior Facility Agreement provides that if a Loan Event of Default is continuing, the Loan Facility
Agent may, and must do so if instructed by the Majority Lenders, by notice to the Company: (i) cancel all
or part of the Total Commitments; and/or (ii) declare that all or part of the Senior Loan, together with
accrued interest, and all other amounts accrued or outstanding under the Senior Finance Documents (other
than any Hedging Agreement) be immediately due and payable; (iii) declare that all or part of the Senior
Loan, together with accrued interest, and all other amounts accrued or outstanding under the Senior
Finance Documents (other than any Hedging Agreement) be payable on demand by the Loan Facility
Agent acting on the instructions of the Majority Lenders; and/or (iv) exercise or direct the Loan Security
Trustee to exercise any or all of its rights, remedies, powers or discretions under the Senior Finance
Documents.
Partial payments
(a)
If the Loan Facility Agent receives a payment that is insufficient to discharge all the amounts
then due and payable by a Senior Obligor under the Senior Finance Documents, the Loan Facility
Agent must apply that payment towards the obligations of that Senior Obligor under the Senior
Finance Documents in the following order:
(i)
first, in or towards payment pro rata of any unpaid amount owing to the Administrative
Parties, and Receiver or Delegate under the Senior Finance Documents;
(ii)
secondly, in or towards payment pro rata of any accrued interest on any Property
Protection Loan due but unpaid under the Senior Facility Agreement;
(iii)
thirdly, in or towards payment pro rata of the Facility Fee due under the Senior Facility
Agreement;
(iv)
fourthly, in or towards payment pro rata of any principal of any Property Protection
Loan due but unpaid under the Senior Facility Agreement;
(v)
fifthly, in or towards payment pro rata of any accrued interest or fee due but unpaid
under the Facility Agreement;
(vi)
sixthly, in or towards payment pro rata of any principal due but unpaid under the Senior
Facility Agreement; and
(vii)
seventhly, in or towards payment pro rata of any other sum due but unpaid under the
Senior Finance Documents.
The Loan Facility Agent must, if so directed by the Majority Lenders, vary the order as set out in
paragraphs (a) - (g) above. Any such variation may include the reordering of obligations set out in any of
the above paragraphs.
The above overrides an appropriation made by a Senior Obligor.
Amendments and waivers
The Senior Facility Agreement provides that any term of the Senior Finance Documents may be amended
or waived only with the consent of the Company and the Majority Lenders (any such amendment or
waiver to be binding on all the parties), subject to certain amendments or waivers set out in the Senior
Facility Agreement which cannot be made without the prior consent of all the Senior Lenders. Such allparty consent amendments and waivers generally relate to the following:
(a)
any change to the definition of Majority Lenders;
(b)
an extension to the date of payments of amounts under the Senior Finance Documents;
(c)
a release of any Loan Security Document;
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(d)
a reduction in Loan Margin or other pricing provisions;
(e)
an increase to the Commitment of a Senior Lender;
(f)
the release of a Senior Obligor;
(g)
any change to the nature or scope of the guarantee or indemnity; and
(h)
certain boiler plate provisions.
In addition, an amendment or waiver relating to the rights or obligations of an Administrative Party or a
Counterparty can only be made with the consent of that Administrative Party or Counterparty,
respectively.
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THE KEY CHARACTERISTICS OF THE LOAN SECURITY
A
Creation of security
The obligations of the Obligors under the Senior Finance Documents will be secured by the following
security interests created under the Loan Security Documents:
(a)
English law security
The following English law security agreements have been (or shall be) entered into:
(i)
a security agreement to be dated the Closing Date between the Company and the Loan
Security Trustee. The recourse of the Senior Finance Parties to the Company under this
agreement is limited to the assets of the Company which from time to time are, or are
intended to be, subject to a Loan Security Document;
(ii)
a security agreement dated 10 November 2015 between each Pecan Borrower and the
Loan Security Trustee as supplemented by the supplemental security agreement to be
dated the Closing Date; and
(iii)
a security agreement to be dated the Closing Date between each Borrower and the Loan
Security Trustee,
(each, an "English Security Agreement" and, together, the "English Security Agreements").
Under the English Security Agreements, the Pecan Borrowers have granted, and the Company
and the Titan Borrowers shall grant, the following security:
(i)
a first legal mortgage or first legal charge, as applicable, over all its estates or interests in
any freehold or leasehold property owned by it as at the date of the relevant English
Security Agreement or subsequently owned by it;
(ii)
other than the company, a first fixed charge over its interests in all shares, stocks,
debentures or other bonds, securities or investments owned by it or held by any nominee
on its behalf;
(iii)
a first fixed charge over all plant and machinery owned by it and its interest in any plant
or machinery in its possession;
(iv)
a first fixed charge over all of its rights in respect of any amount standing to the credit of
any account it has with any person and the debt represented by it;
(v)
a first fixed charge over all of its book and other debts, all other monies due and owing
to it and the benefit of all rights, securities or guarantees of any nature enjoyed or held
by it in relation to any of the foregoing;
(vi)
an absolute assignment, subject to a proviso for re-assignment on redemption, of all of
its rights under any contract of insurance taken out by it or on its behalf or in which it
has an interest and all monies payable and all monies paid to it under or in respect of all
such contracts of insurance;
(vii)
an absolute assignment, subject to a proviso for re-assignment on redemption, of all its
rights under any Hedging Agreements (without prejudice to, and after giving effect to,
any set-off or netting provisions contained in any such Hedging Agreement);
(viii)
an absolute assignment, subject to a proviso for re-assignment on redemption, of all its
rights under each Lease Document, in respect of all Rental Income, under any guarantee
of Rental Income contained in or relating to any Lease Document, under each
appointment of a Managing Agent, under each Acquisition Document and any other
agreement relating to the purchase of a Property by a chargor, in respect of the
Subordinated Debt and under any other agreement to which it is a party except to the
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extent that it is subject to any fixed security created under any other term of this
provision;
(b)
(ix)
a first fixed charge over any beneficial interest, claim or entitlement it has in any pension
funds, its goodwill, the benefit of any authorisation, consent, approval, resolution,
permit, licence, exemption, filing, notarisation or registration (each, an "Authorisation")
held in connection with its use of any Security Asset, the right to recover and receive
compensation which may be payable to it in respect of any such Authorisation and its
uncalled capital; and
(x)
a first floating charge over all its assets not otherwise effectively mortgaged, charged or
assigned by way of a first mortgage, charge or assignment under the relevant English
Security Agreement and all its assets located in Scotland or otherwise governed by Scots
law.
Jersey law security
The following Jersey law security agreements shall be entered into:
(i)
a security agreement to be dated the Closing Date granted by the Shareholder, in favour
of the Loan Security Trustee, over its shares in the Company (and related property) and
its interest in certain intercompany loan agreements.
(ii)
a security agreement to be dated the Closing Date granted by the Company, in favour of
the Loan Security Trustee, over its shares in each Borrower (and related property) and its
interest in certain inter-company loan agreements; and
(iii)
a security agreement to be dated the Closing Date granted by each Borrower (and the
Company in its own capacity as trustee for the Borrowers), in favour of the Loan
Security Trustee, over:
(A)
in relation to the Company and each Borrower, their Accounts held in Jersey;
(B)
in relation to the Company and the Titan Borrowers, certain contractual rights;
(C)
in relation to each Borrower their rights in relation to certain cash pooling
arrangements,
(each, a "Jersey Security Agreement" and, together, the "Jersey Security Agreements").
(c)
Scots law security
Each Borrower with an interest in a Property located in Scotland has granted (or in the case of the
Titan Borrowers, shall grant) a Standard Security and, where appropriate, an assignation of rents
in respect of that Property (each, a "Scottish Security Agreement" and, together, the "Scottish
Security Agreements").
The English Security Agreements, the Jersey Security Agreements and the Scottish Security
Agreements are together the "Loan Security Documents").
B
Trust arrangements
Pursuant to the Senior Facility Agreement, the Loan Security Trustee holds security created by a Loan
Security Document in its favour on trust for the Secured Parties on the terms of the Senior Facility
Agreement.
C
Enforceability
The security under the English Security Agreements is expressed to be immediately enforceable if a
Senior Loan Event of Default occurs and is continuing.
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The security under the Jersey Security Agreements is expressed to be enforceable if a Senior Loan Event
of Default occurs and is continuing and the Loan Security Trustee has served a notice on the relevant
Obligor (or the Shareholder, if applicable) specifying such Senior Loan Event of Default.
The security under the Scottish Security Agreements is expressed to be enforceable if a Senior Loan
Event of Default occurs and is continuing.
Refer to the sections entitled "Certain matters of Jersey law", "Certain matters of English law" and
"Certain matters of Scots law" as to the enforceability generally of security in each of those jurisdictions.
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DESCRIPTION OF THE JUNIOR FACILITY AGREEMENT
The Junior Facility Agreement will be governed by Jersey law. A summary of the principal terms of the
Junior Facility Agreement is set out below.
A
Purpose and application
The Borrowers are entitled to use all amounts borrowed by them under the Junior Facility Agreement for
the purposes of financing in part the Pecan Acquisition and refinancing the Titan Existing Indebtedness,
as permitted by the terms of the Junior Facility Agreement.
B
Loan Amount and drawdown
The initial aggregate principal amount of the Junior Loan as at the Closing Date is £18,500,000.
C
Prepayment and Repayment
The Borrowers will be required to repay the Junior Loan in full on the Junior Loan Maturity Date, unless
otherwise agreed between the entity that is then the Junior Lender and the Company. The Borrowers may
not prepay or repay the Junior Loan (in whole or in part) before the date on which the Senior Loan has
been repaid in full.
D
Interest
The rate of interest payable on the Junior Loan is 6 per cent. per annum, accruing from day to day while
the Junior Loan is outstanding and calculated on the basis of Actual / 365 and rounding the resulting
figure downward to the nearest penny. Pursuant to the Junior Facility Agreement, the Borrowers may pay
accrued interest on any Loan Payment Date and must pay accrued interest on the Junior Loan Maturity
Date. Notwithstanding the foregoing, the Borrowers may pay accrued interest (in whole or in part) on the
Junior Loan on any Loan Payment Date from free cash standing to the credit of the General Account or a
Borrower General Account.
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DESCRIPTION OF THE LOANS TRANSFER AND ADVANCE OF THE TITAN SENIOR
LOANS AND TITAN JUNIOR LOANS
A
Loans Transfer
Consideration
On the Closing Date the Original Senior Lender will transfer by novation to the Loan Seller by way of
novation pursuant to a loans transfer agreement (the "Eurynome Loans Transfer Agreement") and the
Loan Seller will transfer by novation to the Issuer, the Pecan Senior Loans and the Original Senior
Lender's interest in the Loan Security (its beneficial interests in the Security Trusts created over the Loan
Security). Consequently, as and from the Closing Date the Issuer will be a Lender under the Senior
Facility Agreement pursuant to a Loans transfer agreement dated on or around the Closing Date (the
"Issuer Loans Transfer Agreement" and, together with the Eurynome Loans Transfer Agreement, the
"Loans Transfer Agreements").
On the Closing Date the Original Junior Lender will transfer by novation to the Loan Seller and the Loan
Seller will transfer by novation to the Issuer the Pecan Junior Loans. Consequently, as and from the
Closing Date the Issuer will be a Lender under the Junior Facility Agreement pursuant to the Loans
Transfer Agreements.
The initial transfer consideration payable on the Closing Date by the Issuer to the Loan Seller and by the
Loan Seller to Eurynome LLC as Original Senior Lender and Original Junior Lender will be
approximately £203,099,000 (an amount equal to the principal balance of the Senior Loan and the Junior
Loan as at the Closing Date).
See further "Cashflow and Issuer Priorities of Payments" below.
Registration/Legal title
The Loan Facility Agent will undertake to Eurynome LLC as Original Senior Lender that it will, in
accordance with the terms of the Senior Facility Agreement, execute the Transfer Certificate on the
Closing Date and that it will send a copy of the same to the Company.
B
Titan Senior Loans and Titan Junior Loans
Upon becoming the Lender under the Senior Facility Agreement and the Junior Facility Agreement on the
Closing Date, the Issuer shall advance the Titan Senior Loans and the Titan Junior Loans to the Titan
Borrowers.
Receipts
The Issuer will use receipts of principal and interest due to it under the Loans to make payments of,
among other things, principal and interest due in respect of the Notes.
- 144-
SUBORDINATION ARRANGEMENTS
A
Inter-company lending arrangements
The Subordinated Creditors are able to advance loans to the Obligors pursuant to several inter-company
loan agreements between certain Obligors and certain Subordinated Creditors.
"Subordinated Creditor" means
(a)
the Shareholder;
(b)
any Obligor; or
(c)
any other person who becomes a Subordinated Creditor in accordance with the Senior Facility
Agreement or a Subordination Agreement.
B
Subordination Agreement
Pursuant to the terms of the subordination agreement entered into on 10 November 2015 and the
Accession Agreement dated on or around the Closing Date between, inter alios, each Obligor, each
Subordinated Creditor, the Loan Security Trustee and the Loan Facility Agent (the "Subordination
Agreement"), the Subordinated Creditors agree that all liabilities payable or owing to a Subordinated
Creditor by an Obligor (all such liabilities, the "Subordinated Debt") are subordinate in right of payment
to all liabilities payable or owing by any Obligor to a Senior Finance Party under or in connection with
the Senior Finance Documents (the "Senior Debt"). Payment of any amount of Subordinated Debt
(except in the case of a Permitted Payment) is conditional upon the Obligors having irrevocably paid in
full all of the Senior Debt.
A permitted payment is (i) a payment by an Obligor to the Company or (ii) a payment by the Company to
its shareholder, in all cases out of moneys standing to the credit of a General Account or Borrower
General Account in circumstances where:
(a)
no Senior Loan Default is continuing and no Senior Loan Default would result from the payment;
and
(b)
no Cash Trap Event is continuing or would result from making the payment,
(a "Permitted Payment").
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THE STRUCTURE OF THE OBLIGOR ACCOUNTS
In this Offering Circular, "Borrower General Account", "Capex Contingency Reserve Account",
"Borrower Collection Account", "Cure Account", "Deposit Account" , "General Account" and "Rent
Account" each means the account(s) designated as such under the Senior Facility Agreement and
includes any replacement of such account(s).
The Company has opened and is obliged to maintain the following accounts in its name:
(a)
Rent Account: the Loan Facility Agent has sole signing rights in respect of this account. Net
Rental Income, amounts payable to the Company under any Hedging Agreement or relevant
subsequent hedging transactions are to be paid into the Rent Account. The Loan Facility Agent
may withdraw amounts from the Rent Account to (i) any unpaid amount owing to the
Administrative Parties due but unpaid under the Senior Finance Documents, (ii) make certain
payments on each Loan Payment Date;
(b)
Cure Account: the Loan Facility Agent has sole signing rights in respect of this account. Cure
payments are to be paid to the Cure Account in accordance with the Senior Facility Agreement.
Depending on the circumstances at the relevant time, certain amounts standing to the credit of the
Cure Account are either to be transferred to the General Account or a Borrower General Account,
or used to prepay the Senior Loan;
(c)
Deposit Account: the Loan Facility Agent has sole signing rights in respect of this account. All
Lease Prepayment Proceeds, Insurance Prepayment Proceeds, Compensation Prepayment
Proceeds, Recovery Prepayment Proceeds, Title Insurance Proceeds and Net Disposal Proceeds
are to be deposited into the Deposit Account. On each Loan Payment Date such amounts are to
be applied in prepayment of the Senior Loan in accordance with the Senior Facility Agreement;
(d)
Capex Contingency Reserve Account: the Loan Facility Agent has sole signing rights in respect
of this account. On the Closing Date, the Borrowers will pay £1,117,499 into the Capex
Contingency Reserve Account. In certain circumstances, the Company can use amounts standing
to the credit of the Capex Contingency Reserve Account to pay for Capital Expenditure and can
transfer any excess amount in the Capex Contingency Reserve Account to the General Account;
and
(e)
General Account: except when a Senior Loan Event of Default is continuing, the Company has
signing rights in relation to this account. All Tenant Contributions (unless held in a trust account
in the name of the Managing Agent), any other amount received by the Company not required to
be paid into another Obligor Account and certain hedging proceeds are to be paid into the
General Account. The Loan Facility Agent will transfer certain amounts to the General Account
from the Rent Account. Except when a Senior Loan Event of Default is continuing and subject to
certain restrictions, an Obligor may withdraw any amount from the General Account and any
Borrower General Account for any purpose (including, without limitation, making a Permitted
Payment).
Each Borrower must maintain a collection account (each a "Borrower Collection Account") (for which
the Loan Facility Agent has sole signing rights) and a Borrower General Account (each a "Borrower
General Account") (for which the Borrower has sole signing rights). Net Rental Income and amounts
payable to a Borrower under any Hedging Agreement are to be paid into the relevant Borrower Collection
Account or Rent Account. Each Borrower may also maintain Borrower Rent Deposit Accounts, for which
(except when a Senior Loan Event of Default is continuing) the Borrower has sole signing rights. All
amounts paid by a tenant under an Occupational Lease as an assurance for such tenant's obligations under
that Occupational Lease are to be paid into the relevant Borrower Rent Deposit Account. A Borrower can
use such amounts to pay or apply amounts it is required to pay or apply on behalf of a tenant under its
Occupational Lease.
No Obligor may, without the prior consent of the Loan Facility Agent, maintain any other bank account.
See the section entitled "Bank accounts" within the "Description of the Senior Facility Agreement" for
further details on the Borrowers' and the Company's bank accounts.
- 146-
DESCRIPTION OF THE CAP ARRANGEMENTS
The Company and the Cap Provider will, on or before the Closing Date, enter into (i) an interest rate cap
transaction (the "Initial Interest Rate Cap Transaction") evidenced by a confirmation to be dated on or
about the Closing Date (the "Initial Interest Rate Cap Confirmation") and (ii) a further interest rate cap
transaction (the "Additional Interest Rate Cap Transaction") to be evidenced by a confirmation to be
dated on or about the Closing Date (the "Additional Interest Rate Cap Confirmation").
The Initial Interest Rate Cap Confirmation and the Additional Interest Rate Cap Confirmation will form
part of, and are subject to, a 2002 ISDA master agreement (including the schedule thereto and credit
support annex to the schedule) dated as of the Closing Date between the Cap Provider and the Company
(together with the Initial Interest Rate Cap Confirmation, and the Additional Interest Rate Cap
Confirmation, the "Loan Hedging Agreement").
A
The Initial Interest Rate Cap Transaction
Pursuant to the Initial Interest Rate Cap Transaction, on each Loan Payment Date, the Cap Provider will
be required to pay (the "Initial Cap Amount") equal to the excess (if any) of the rate of interest (set by
reference to three-month LIBOR) above a specified strike rate (as set out below) multiplied by the
notional amount in respect of the relevant Calculation Period (the "Initial Cap Notional Amount"). The
Company paid an initial fixed amount to the Cap Provider on or about the Closing Date. The termination
date of the Initial Interest Rate Cap Transaction is the Senior Loan Initial Repayment Date. A condition of
the Senior Loan Initial Repayment Date being extended pursuant to the Loan Extension Option is that
hedging arrangements are put in place for the relevant extension period for an aggregate notional amount
of not less than the outstanding amount of the Senior Loan on the date of the extension and with a strike
rate which is not more than 5 per cent. per annum.
The Initial Cap Amount in respect of a given Calculation Period will be calculated by reference to the
Initial Cap Notional Amount in respect of such Calculation Period (set out below). The Initial Cap
Notional Amount shall amortise in accordance with the predicted amortisation profile set out below. The
strike rate is subject to increases at various intervals over the term of the Initial Interest Rate Cap
Transaction, from 1.25 per cent. in respect of the initial Calculation Period to 3 per cent. in respect of the
final Calculation Period.
Initial Interest Rate Cap
Calculation Period1
From and
including
To but excluding
Closing Date
20/01/2016
20/04/2016
20/07/2016
20/10/2016
20/01/2017
20/04/2017
20/07/2017
20/10/2017
20/01/2018
20/04/2018
20/07/2018
20/10/2018
20/01/2016
20/04/2016
20/07/2016
20/10/2016
20/01/2017
20/04/2017
20/07/2017
20/10/2017
20/01/2018
20/04/2018
20/07/2018
20/10/2018
20/01/2019
Notional
amount (£)
184,599,000
146,634,204
119,870,499
88,707,358
59,581,954
49,573,282
30,145,886
11,177,356
0
0
0
0
0
Cap rate
1.25%
1.25%
1.25%
2.00%
2.00%
2.25%
2.25%
2.50%
2.50%
2.50%
2.50%
3.00%
3.00%
Floating Rate
Payer Payment
Date
20/01/2016
20/04/2016
20/07/2016
20/10/2016
20/01/2017
20/04/2017
20/07/2017
20/10/2017
20/01/2018
20/04/2018
20/07/2018
20/10/2018
20/01/2019
_______________
1
B
Each date in the columns above is subject to adjustment in accordance with the modified following business day
convention (disregarding (if applicable) any unscheduled adjustments occurring between any Floating Rate Payer
Payment Date and the subsequent related Floating Rate Payer Period End Date).
The Additional Interest Rate Cap Transaction
Pursuant to the Additional Interest Rate Cap Transaction, on each Loan Payment Date under the Senior
Facility Agreement, the Cap Provider will pay to the Company an amount equal to the excess (if any) of
- 147-
the rate of interest (set by reference to three-month LIBOR) above a specified strike rate of 5 per cent.
multiplied by the notional amount in respect of the relevant Calculation Period as set out in below.
Additional Interest Rate Cap
Calculation Period
From and
including
To but excluding
Closing Date
20/01/2016
20/04/2016
20/07/2016
20/10/2016
20/01/2017
20/04/2017
20/07/2017
20/10/2017
20/01/2018
20/04/2018
20/07/2018
20/10/2018
20/01/2016
20/04/2016
20/07/2016
20/10/2016
20/01/2017
20/04/2017
20/07/2017
20/10/2017
20/01/2018
20/04/2018
20/07/2018
20/10/2018
20/01/2019
C
Notional
amount (£)
0
37,964,796
64,728,501
95,891,642
125,017,046
135,025,718
154,453,114
173,421,644
184,599,000
184,599,000
184,599,000
184,599,000
184,599,000
Cap rate
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
Floating Rate
Payer Payment
Date
20/01/2016
20/04/2016
20/07/2016
20/10/2016
20/01/2017
20/04/2017
20/07/2017
20/10/2017
20/01/2018
20/04/2018
20/07/2018
20/10/2018
20/01/2019
Interest Rate Cap credit support annex
On or about the Closing Date, the Cap Provider and the Company will enter into a collateral agreement in
the form of a 1995 ISDA Credit Support Annex (Bilateral Form – Transfer) (the "CSA"). The CSA
provides that, from time to time, subject to the conditions specified in the CSA, the Cap Provider will
make transfers of collateral to the Company in support of its obligations under the Loan Hedging
Agreement and the Company will be obliged to return such collateral in accordance with the terms of the
CSA.
Collateral amounts that may be required to be posted by the Cap Provider pursuant to the CSA may be
delivered in the form of cash or securities. Cash amounts and securities will be transferred into an account
designated a Hedging Collateral Account.
The Company has agreed to pay to the Cap Provider the amount of any interest which the Company
actually receives on any swap collateral held in the Hedging Collateral Account.
D
Consequences of a Rating Downgrade of the Cap Provider
Fitch Requirements
For so long as the Most Senior Class of Notes are rated "A" by Fitch, if the Cap Provider (or its
replacement) and any support provider under the CSA both fail to maintain a rating at least as high as
"BBB+" (or its equivalent) for its long-term issuer default rating ("IDR") and "F2" (or its equivalent) for
its short-term IDR by Fitch (the "Cap Provider Fitch Required Rating") (an "Initial Fitch Downgrade
Event"), the Loan Hedging Agreement will require the Cap Provider, at its own cost and expense, to
either:
(a)
within 14 days of the occurrence of such Initial Fitch Downgrade Event, post collateral in support
of its obligations under the Cap Agreement in accordance with the CSA; or
(b)
within 30 days of the occurrence of such Initial Fitch Downgrade Event:
(i)
transfer its rights and obligations under the Loan Hedging Agreement to a replacement
third party with at least the Cap Provider Fitch Required Rating, subject to certain
conditions, including that such replacement contracts with the Company on identical
terms as to payment or delivery and in all other material respects, are on terms no less
beneficial for the Company than the terms of the Initial Interest Rate Cap Transaction
and the Additional Interest Rate Cap Transaction; or
- 148-
(ii)
procure another person to become co-obligor or guarantor in respect of its obligations
under the Loan Hedging Agreement with at least the Cap Provider Fitch Required Rating,
provided that, in all cases, such action does not result in any requirement for deduction
or withholding for or on account of any tax,
(such actions referred to in this paragraph (b), the "Fitch Downgrade Remedial Actions"). If the
Cap Provider takes any Fitch Downgrade Remedial Actions, it will no longer be required to take
the actions described in paragraph (a) above.
Additionally, if the Cap Provider and any support provider under the CSA each fail to maintain a rating at
least as high as "BB+-" (or its equivalent) for its long-term IDR by Fitch (a "Subsequent Fitch Rating
Event") then the Cap Provider will be required, at its own cost and expense:
(i)
within 14 days of the occurrence of such Subsequent Fitch Rating Event, to post collateral in
accordance with the terms of the CSA; and
(ii)
to take any of the Fitch Downgrade Remedial Actions within 30 calendar days of the occurrence
of such Subsequent Fitch Rating Event.
If the Cap Provider takes any Fitch Downgrade Remedial Actions, it will no longer be required to take the
actions set out in paragraph (i) immediately above. Failure by the Cap Provider to take measures
described above following an Initial Fitch Downgrade Event or a Subsequent Fitch Rating Event will
constitute an Additional Termination Event (as defined in the Loan Hedging Agreement) under the Loan
Hedging Agreement.
DBRS Requirements
If at any time the long term issuer default rating of the Cap Provider (or its replacement) and any Credit
Support Provider (as defined in the Loan Hedging Agreement) from time to time in respect of the Cap
Provider ceases to be at least "BBB" (or its equivalent) by DBRS (such rating downgrade a "DBRS
Rating Event") the Loan Hedging Agreement will require the Cap Provider (at its own cost) to:
(a)
post collateral on the terms set out in the CSA within 30 Business Days of the occurrence of such
downgrade; and
(b)
use commercially reasonable efforts;
(i)
to the extent permitted by the Loan Hedging Agreement, to transfer all of its rights and
obligations in respect of the Loan Hedging Agreement to a replacement entity whose
long-term unsecured, unsubordinated debt obligations are rated at least as high as "BBB"
by DBRS or the obligations of such entity under the Cap Agreement are guaranteed by
an entity whose long term unsecured, unsubordinated debt obligations are rated at least
"BBB" by DBRS; or
(ii)
to procure an entity whose long-term unsecured, unsubordinated debt obligations are
rated at least as high as "A" by DBRS or the obligations of such entity under the Cap
Agreement are guaranteed by an entity whose long term unsecured, unsubordinated debt
obligations are rated at least "A" by DBRS, to provide a guarantee which complies with
the "Legal Criteria for European Structured Finance Transactions" (and any subsequent
publication amending, integrating or replacing the same from time to time), published by
DBRS or which DBRS has otherwise approved (a "DBRS Compliant Guarantee") in
respect of the obligations of the Cap Provider under the Loan Hedging Agreement; or
(iii)
to take such other action (which may include taking no action) as may be agreed with
DBRS as will result in the rating of the Senior Notes by DBRS following the taking of
such action (or inaction) being maintained at, or restored to, the level at which it was
immediately prior to such Subsequent DBRS Rating Event,
in each case until the date on which the Cap Provider, its replacement or the relevant Credit
Support Provider (as defined in the Loan Hedging Agreement) is rated at least "BBB" by DBRS.
- 149-
If the Cap Provider satisfies any of the requirements described under paragraph (b)(i) to (b)(iii) above, it
will not be required to transfer additional collateral in respect of the Subsequent DBRS Rating Event.
Failure by the Cap Provider to take measures described above following a DBRS Rating Event will
constitute an Additional Termination Event (as defined in the Loan Hedging Agreement) under the Loan
Hedging Agreement.
E
Transfers by the Cap Provider
The Cap provider or the Company may transfer its rights in relation to any payment which is due to it by
the Defaulting Party (as defined in the Loan Hedging Agreement) following the early termination of the
Initial Interest Rate Cap Transaction or the Additional Interest Rate Cap Transaction.
- 150-
CASH MANAGEMENT AND ISSUER ACCOUNTS
A
Issuer Cash Manager
Cash Management Agreement
Pursuant to the cash management agreement to be entered into on the Closing Date by, among others, the
Issuer, the Servicer, the Special Servicer, the Issuer Cash Manager and the Issuer Security Trustee (the
"Cash Management Agreement"), the Issuer will appoint the Issuer Cash Manager to be its agent to
provide certain cash management services in relation to the Issuer Transaction Account, in certain
circumstances, the Issuer Proceeds Account and any other Issuer Accounts. The Issuer Cash Manager will
undertake to perform its obligations under the Cash Management Agreement in accordance with general
practice according to market standard so as to ensure that amounts received are maintained, allocated,
transferred and paid out in accordance with the Pre-Enforcement Revenue Priority of Payments, the PreEnforcement Principal Allocation Rules, the Pre-Enforcement Loan Failure Priority of Payments or the
Post-Enforcement Priority of Payments, as applicable (each an "Issuer Priority of Payments" and
together the "Issuer Priorities of Payments").
The Issuer Cash Manager will also undertake to comply with any directions, orders and instructions
which the Issuer or, following the delivery of a Note Acceleration Notice, the Issuer Security Trustee,
may from time to time give to the Issuer Cash Manager in accordance with the Cash Management
Agreement.
Calculation of amounts and payments
On the relevant Portfolio Determination Date, the Issuer Cash Manager is required to determine all
amounts due in accordance with the applicable Issuer Priority of Payments on the next Note Payment
Date. In addition, the Issuer Cash Manager will calculate (i) the Principal Amount Outstanding and the
Note Factor for each Class of Notes for the Note Interest Period commencing on the next following Note
Payment Date, and (ii) the Weighted Average Note Margin (as defined below).
If the Servicer or, as the case may be, the Special Servicer fails to supply the Issuer Cash Manager with
any information it requires to make the relevant determinations, the Issuer Cash Manager will make its
determinations based on the information it does have in connection with payments due on the Notes on
the relevant Note Payment Date. If the Issuer Cash Manager does not have sufficient information to make
such determinations it can make its determinations based on information provided to it by the Servicer or,
as the case may be, the Special Servicer, on the three preceding Portfolio Determination Dates and will
not be liable to any person (in the absence of gross negligence, fraud or wilful default) for the accuracy of
such determinations.
Furthermore, if for whatever reason, an incorrect payment is made to any party entitled thereto (including
the Noteholders of any Class) pursuant to the Issuer Priorities of Payments, the Issuer Cash Manager will
rectify the same by increasing or reducing payments to such party (including the Noteholders of any
Class), as appropriate, on each subsequent Note Payment Date or Note Payment Dates (if applicable) to
the extent required to correct the same. Neither the Issuer nor the Issuer Cash Manager will have any
liability to any person for making any such correction.
Issuer Cash Manager Quarterly Report
The Issuer Cash Manager will, after each Note Payment Date, make available electronically via its
website (as at the date of this Offering Circular, located at www.usbank.com/abs) a statement to the
Noteholders in respect of such Note Payment Date in which it will notify the recipients of, among other
things, all amounts received in the Issuer Transaction Account and payments made with respect thereto
(the "Issuer Cash Manager Quarterly Report").
It is not intended that the Issuer Cash Manager Quarterly Reports will be made available in any other
format, save in certain limited circumstances with the Cash Management Agreement. The Issuer Cash
Manager's website does not form part of the information provided for the purposes of this Offering
Circular and disclaimers may be posted with respect to the information posted thereon.
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Delegation by the Issuer Cash Manager
Subject to the terms of the Cash Management Agreement, the Issuer Cash Manager will not be permitted
to sub-contract or delegate the performance of any of its obligations under the Cash Management
Agreement to any sub-contractor, agent, representative or delegate without the prior written consent of
the Issuer, such consent not to be unreasonably withheld. In any event, any delegated or sub-contracted
obligations, when the necessary consent is given, will not relieve the Issuer Cash Manager from any
liability under the Cash Management Agreement.
Fees
Pursuant to the Cash Management Agreement, the Issuer will pay to the Issuer Cash Manager on each
Note Payment Date a cash management fee as agreed between the Issuer Cash Manager and the Issuer
and will reimburse the Issuer Cash Manager for all reasonably incurred costs and expenses in the
performance of the cash management services.
Termination of Appointment of the Issuer Cash Manager
The appointment of the Issuer Cash Manager under the Cash Management Agreement may be terminated
by virtue of its resignation or its removal by the Issuer or the Issuer Security Trustee. The Issuer (prior to
a Note Acceleration Notice being given) or the Issuer Security Trustee (following the delivery of a Note
Acceleration Notice) may terminate the Issuer Cash Manager's appointment upon not fewer than 90 days'
written notice or immediately upon the occurrence of a termination event as prescribed under the Cash
Management Agreement, including, among other things:
(a)
provided there are sufficient funds available, a failure by the Issuer Cash Manager to make when
due a payment required to be made by the Issuer Cash Manager in accordance with the Cash
Management Agreement and such default continues unremedied for three Business Days;
(b)
a failure by the Issuer Cash Manager to maintain all appropriate licenses, consents, approvals and
authorisations required to perform its obligations under the Cash Management Agreement;
(c)
a default by the Issuer Cash Manager in the performance of any of its other duties under the Cash
Management Agreement which in the opinion of (prior to a Note Acceleration Notice being
given) the Issuer or (following the delivery of a Note Acceleration Notice) the Issuer Security
Trustee is materially prejudicial to the interests of the Issuer Secured Creditors, which default
continues unremedied for ten Business Days (or 20 Business Days where the relevant default
occurs as a result of a default by any person to whom the Issuer Cash Manager has subcontracted
or delegated its obligations to pursuant to the Cash Management Agreement); or
(d)
the occurrence of an insolvency event in respect of the Issuer Cash Manager.
The termination of the appointment of the Issuer Cash Manager will become effective upon the
appointment of a suitably experienced replacement Issuer Cash Manager.
The Issuer Cash Manager may resign as Issuer Cash Manager, upon not fewer than 90 days' written notice
of resignation to each of the Issuer, the Servicer or the Special Servicer, as applicable, the Issuer Account
Bank and the Issuer Security Trustee, provided that a suitably qualified replacement Issuer Cash
Manager has been appointed.
The Noteholders (acting as a single class) may by an Ordinary Resolution require the Issuer Cash
Manager to resign (provided that a suitably experienced replacement Issuer Cash Manager has been
appointed).
B
Issuer Account Bank
Issuer Transaction Account
Pursuant to the account bank agreement to be entered into on or around the Closing Date between, among
others, the Issuer and the Issuer Account Bank (the "Issuer Account Bank Agreement"), the Issuer
Account Bank will open and maintain a transaction account (the "Issuer Transaction Account") in the
name of the Issuer into which all collections in respect of the Loans will be paid. The Issuer and the Issuer
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Cash Manager will make payments out of the Issuer Transaction Account in accordance with the terms of
the Issuer Deed of Charge, the Issuer Account Bank Agreement and the Cash Management Agreement.
The Issuer Account Bank has agreed to comply with any direction of the Issuer Cash Manager (prior to
the delivery of a Note Acceleration Notice) or the Issuer Security Trustee (following the delivery of a
Note Acceleration Notice) to effect payments from the Issuer Accounts if such direction is made in
accordance with the Cash Management, the Issuer Account Bank Agreement and the mandate governing
the applicable account.
If at any time the Issuer Account Bank no longer maintains any of the Issuer Account Bank Minimum
Ratings, the Issuer (prior to the delivery of a Note Acceleration Notice) or the Issuer Security Trustee
(following the delivery of a Note Acceleration Notice) may by notice to the Issuer Account Bank
terminate the appointment of the Issuer Account Bank under the Issuer Account Bank Agreement with
effect from a date (not earlier than the date of such notice) specified in such notice but without prejudice
to any of the then existing rights and liabilities of the parties. Such termination shall not take effect until
a substitute has been duly appointed or some other arrangement is made which will not result in a
downgrade, withdrawal or suspension of the then current ratings assigned by a Rating Agency to the
Senior Notes.
"Issuer Account Bank Minimum Ratings" means:
(a)
in respect of Fitch:
(i)
F2 (or better) (short term) and BBB+ (long term) (or better); or
(ii)
such lower debt rating from Fitch as is commensurate with the rating assigned to the
Notes from time to time as set out in the table below:
Current Rating of the Notes
Fitch Minimum Ratings
AA+sf
'A-' with a short-term rating of 'F2'
A+sf
'BBB+' with a short-term rating of 'F2'
BBB+sf
'BBB-' with a short-term rating of 'F3'
BB+sf
At least as high as the Notes' rating
B+sf and below
At least as high as the Notes' rating
and
(b)
in respect of DBRS:
(i)
BBB (high); or
(ii)
such lower debt rating from DBRS as is commensurate with the rating assigned to the
Notes from time to time as set out in the table below:
Current Rating of the Notes
DBRS Minimum Ratings
AAA (sf)
A
AA (high) (sf)
A
AA (sf)
A
AA (low) (sf)
A
A (high) (sf)
BBB (high)
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A (sf)
BBB
A (low) (sf)
BBB (low)
BBB (high) (sf)
BBB (low)
BBB (sf)
BBB (low)
BBB (low) (sf)
BBB (low)
or
(c)
such other rating as the relevant Rating Agencies determine will not cause a downgrade of the
Notes.
C
Other Issuer Accounts
The Issuer Proceeds Account
The Issuer will maintain the Issuer proceeds account (the "Issuer Proceeds Account" and together with
the Issuer Transaction Account, the "Issuer Accounts") for the sole purpose of holding the proceeds of its
share capital (€3) and payments representing Issuer's profit (being an amount equal to £1,000 per annum
(the "Issuer's Profit")) and interest thereon (if any) and making or receiving certain payments (if any)
from the Irish Revenue Commissioners in accordance with the Issuer Transaction Documents. The Issuer
Proceeds Account will not be held with the Issuer Account Bank.
Other accounts
The Issuer will maintain such other accounts as the Issuer Cash Manager may be required to open for or
on behalf of the Issuer and in which the Issuer may at any time acquire any right, title, interest or benefit
or otherwise place and hold its cash or securities.
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CASHFLOW AND ISSUER PRIORITIES OF PAYMENTS
A
Portfolio Determination Date calculations
On each date which is two Business Days prior to each Note Payment Date (each, a "Portfolio
Determination Date"), the Issuer Cash Manager will be required, inter alia, to calculate, based on
information provided to it by the Servicer (where applicable) on such Portfolio Determination Date, the
following:
(a)
Revenue Receipts: in respect of the Note Payment Date immediately following such Portfolio
Determination Date (the "Specified Note Payment Date"), the amount of Revenue Receipts
(broken down by category) during the Note Interest Period then ending (other than on the Note
Payment Date falling at the start of such period), and expected to be received on or prior to the
Specified Note Payment Date;
(b)
Senior Principal Receipts: in respect of the Specified Note Payment Date, the amount of Senior
Principal Receipts (and determination as to the amounts of Non-Cash Trap Principal and (if any)
Cash Trap Principal) during the Note Interest Period then ending (other than on the Note
Payment Date falling at the start of such period), and expected to be received on or prior to the
Specified Note Payment Date;
(c)
Junior Principal Receipts: in respect of the Specified Note Payment Date, the amount of Junior
Principal Receipts during the Note Interest Period then ending (other than on the Note Payment
Date falling at the start of such period), and expected to be received on or prior to the Specified
Note Payment Date;
(d)
Available Funds: the "Available Funds" referable for the Specified Note Payment Date (being
the Revenue Receipts and Principal Receipts determined for the Specified Note Payment Date as
described in paragraphs (a) - (c) above);
(e)
Principal allocation: the aggregate Class A Principal Redemption Amount, Class B Principal
Redemption Amount, Class C Principal Redemption Amount, Class D Principal Redemption
Amount and Junior Note Principal Redemption Amount for the Specified Note Payment Date,
calculated in accordance with the Cash Management Agreement and as further described below
under "Pre-Enforcement Principal Allocation Rules";
(f)
Application: all amounts due and payable (or for which a provision is to be properly made)
according to the Pre-Enforcement Revenue Priority of Payments, the Pre-Enforcement Principal
Allocation Rules, the Pre-Enforcement Loan Failure Priority of Payments, or, as applicable, the
Post-Enforcement Priority of Payments on the Specified Note Payment Date; and
(g)
Weighted Average Note Margin: the weighted average Note Margin on the Specified Note
Payment Date expressed as a percentage, weighted based on the Principal Amount Outstanding
of each Senior Class of Notes as at the Specified Note Payment Date assuming for the purpose of
such calculation that all amounts to be paid in accordance with the applicable Priority of Payment
(as detailed in (e) immediately above) have been paid in full on the Specified Note Payment Date
(such calculation the "Weighted Average Note Margin").
For these purposes:
"Junior Principal Receipts" means all payments and repayments of principal received or recovered by
or on behalf of the Issuer in connection with the Junior Facility Agreement.
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"Loan Tax Credit" means any credit against, relief or remuneration for, or repayment received by the
Issuer in respect of Loan Tax from the authorities of any jurisdiction relating to any increase in payment
made by an Obligor to the Issuer pursuant to the Senior Facility Agreement attributable to an increased
payment of which that Tax Payment forms part, that Tax Payment or a Tax Deduction in consequence of
which that Tax Payment was required and which the Issuer has obtained and utilised.
"Revenue Receipts" means:
(a)
all amounts of whatever nature received by or on behalf of the Issuer in respect of the Loans,
whether by way of interest (including overdue interest), fees (including Prepayment Fees and
Senior Loan Extension Fees), commissions, costs and indemnities, including amounts allocated
to the same in respect of any distributions made on any enforcement of the Loans and the Loan
Security, other than (in all cases) Principal Receipts and Loan Tax Credits;
(b)
amounts determined to represent the same and received by or on behalf of the Issuer on any sale
of the Loans undertaken at the instigation of the Special Servicer (or at the direction of the
relevant Noteholders pursuant to a Note Maturity Plan) as an alternative to directing enforcement
of the Loan Security; and
(c)
the amount of any other income, payment or distribution (including, without limitation, interest
income in respect of any cash deposits held in a bank account of the Issuer) received during such
period by the Issuer, to the extent that the Issuer is not required to pass on such income, payment
of distribution to a specified party under the terms of any Issuer Transaction Documents.
"Principal Receipts" means all Senior Principal Receipts and Junior Principal Receipts.
"Senior Principal Receipts" means:
(a)
all amounts of principal received by or on behalf of the Issuer in respect of any repayment or
prepayment of the Senior Loan whether as a result of a voluntary or mandatory repayment or
prepayment (including any prepayment arising as a result of the disposal of a Property),
including amounts allocated to the same in respect of any distributions made on any enforcement
of the Senior Loan and the Loan Security; and
(b)
amounts determined to represent the same and received by or on behalf of the Issuer in respect of
any sale of the Senior Loan undertaken at the instigation of the Special Servicer (or at the
direction of the relevant Noteholders pursuant to a Note Maturity Plan) as an alternative to
directing enforcement of the Loan Security.
"Cash Trap Principal" means Senior Principal Receipts which are received or receivable as a result of
the provisions of the Senior Facility Agreement requiring, in certain circumstances, funds standing to the
credit of the Cash Trap Account (which is an Obligor Account) to be applied in prepayment of the Senior
Loan.
"Non-Cash Trap Principal" means Senior Principal Receipts other than Cash Trap Principal.
B
Transfer of funds to the Issuer Transaction Account and application by the Issuer
On each Loan Payment Date, the Servicer will transfer (or procure the transfer) from the relevant Obligor
Account to the Issuer Transaction Account an amount equal to the aggregate amounts in respect of
interest, principal, fees, prepayment fees and other amounts, if any, then payable to the Issuer under the
Senior Facility Agreement and the Junior Facility Agreement (to the extent that such funds are available
in such Obligor Account(s)), such funds to be utilised by or on behalf of the Issuer to make payments to,
among others, the Noteholders in accordance with, as applicable, the Pre-Enforcement Revenue Priority
of Payments, the Pre-Enforcement Principal Allocation Rules, the Pre-Enforcement Loan Failure Priority
of Payments (as applicable) or (following the service of a Note Acceleration Notice) in accordance with
the Post-Enforcement Priority of Payments, in each case as further described below.
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C
Application of Prepayment Fees - payment of Note Prepayment Fee Amounts to
Noteholders
As described in Condition 7.3 (Mandatory Redemption from Principal Receipts), if any Class of Senior
Notes is subject to mandatory early redemption in part due to the receipt by the Issuer of a prepayment
under the Senior Loan, the relevant Class(es) of Senior Noteholders will be entitled to receive a portion of
the Prepayment Fee (if any) that has been received by or on behalf of the Issuer in connection with such
prepayment.
On each Note Payment Date, Prepayment Fees (if any) will be allocated to each Class of Senior Notes
that is subject to prepayment on such Note Payment Date in an amount equal to the Note Prepayment Fee
Amount calculated for that Class of Senior Notes by reference to each such Note Payment Date. Subject
to the below, an Note Prepayment Fee Amount will be payable if on a Note Payment Date the Principal
Amount Outstanding of the relevant Class of Senior Notes (after taking into account any prepayments to
be made on that Note Payment Date but disregarding any prepayments utilising funds from a prepayment
under the Senior Loan for illegality, as a result of a right of prepayment and cancellation for a single
lender or for market disruption or as a result of a compulsory purchase, each under the Senior Facility
Agreement) is less than the Minimum Target Principal Amount Outstanding for the relevant Class of
Senior Notes for that Note Payment Date ("NPD0"), an Note Prepayment Fee Amount will be payable on
NPD0 and each Note Payment Date after NPD0 on which such Principal Amount Outstanding of the
relevant Class of Senior Notes is less than the Minimum Target Principal Amount Outstanding for the
relevant Class of Senior Notes (each a "relevant NPD") using the below formula.
"Note Prepayment Fee Amount" means, in the case of prepayment of each Class of Senior Notes:

 B
n
i 1
i
 A  C 
Di 

365 
Where:
(a)
A is the Principal Amount Outstanding for the relevant Class of Senior Notes on NPD0 (taking
into account any prepayment to be made on the NPD0 but disregarding any prepayments utilising
funds from a prepayment under the Senior Loan for illegality, as a result of a right of prepayment
and cancellation for a single lender or for market disruption or as a result of a compulsory
purchase, each under the Senior Facility Agreement).
(b)
Bi is the Minimum Target Principal Amount Outstanding for the relevant Class of Senior Notes
on the relevant NPD.
(c)
C is the Note Margin for each Class of Senior Notes.
(d)
Di is the number of days in the relevant Note Interest Period commencing on the relevant NPD.
(e)
i
(f)
indicates each relevant NPD (commencing with NPD0 and each subsequent relevant NPD being
identified in ascending numerical order).
n indicates the total number of relevant NPDs on which A is less than B (as at NPD0 and
therefore disregarding the adjustment made subsequent to the payment of any Note Prepayment
Fee Amount on NPD0 to the Minimum Target Principal Amount Outstanding for the relevant
Class of Senior Notes referred to in the paragraph immediately below).
"Minimum Target Principal Amount Outstanding" with respect to each Class of Senior Notes, the
amount set out for each Note Payment Date under that heading in Appendix 3 (Target Minimum Principal
Amount Outstanding) as such amount may be reduced on a Note Payment Date by the Adjusted Minimum
Target Principal Amount Outstanding for the relevant Class of Senior Notes.
Following payment of any Note Prepayment Fee Amount on a Note Payment Date, if the Minimum
Target Principal Amount Outstanding for the relevant Class of Senior Notes in relation to the immediately
following Note Payment Date is higher than A above (calculated as at the relevant Portfolio
Determination Date immediately preceding such Note Payment Date) (such lower amount referred to as
the "Adjusted Minimum Target Principal Amount Outstanding") the Minimum Target Principal
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Amount Outstanding will be reduced so that the Minimum Target Principal Amount Outstanding for each
of the relevant Class of Senior Notes is equal to the Adjusted Minimum Target Principal Amount
Outstanding.
However, it should be noted that:
(a)
no Note Prepayment Fee Amount will be payable in any circumstance where there is no
Prepayment Fee payable pursuant to the terms of the Senior Finance Documents; and
(b)
the aggregate Note Prepayment Fee Amount payable for all Classes of Notes on any Note
Payment Date will never be greater than the Prepayment Fee payable to the Issuer under the
Senior Facility Agreement on the corresponding Loan Payment Date.
D
Issuer Priority Payments
The Issuer (or the Issuer Cash Manager on behalf of the Issuer) will be authorised and instructed to pay
any amounts described in paragraph (b) of the Pre-Enforcement Revenue Priority of Payments (other than
amounts payable to Issuer Related Parties) (such payments together referred to as, the "Issuer Priority
Payments") from any amounts constituting Revenue Receipts standing to the credit of the Issuer
Transaction Account in priority to all other payments required to be made by the Issuer on any day, other
than a Note Payment Date, on which such Issuer Priority Payments are payable.
E
Loan Tax Credits
If it is determined under the Senior Facility Agreement that the Issuer has received a Loan Tax Credit
then the Issuer will pay the relevant amount to the relevant Obligor as soon as is reasonably practicable
after the same is determined.
F
Corporation tax
Any amount payable by the Issuer in respect of corporation tax shall be payable out of funds standing to
the credit of the Issuer Proceeds Account to the extent of amounts standing to the credit of the Issuer
Proceeds Account. Any amounts payable by the Issuer in respect of corporation tax in excess of such
amount shall be payable from Revenue Receipts in accordance with the applicable Issuer Priority of
Payments.
G
Issuer Priorities of Payments
Pre-Enforcement Revenue Priority of Payments
Prior to (i) the service of a Note Acceleration Notice, (ii) the Issuer Security becoming enforceable or (iii)
the occurrence of a Loan Failure Event, on each Note Payment Date, the Issuer Cash Manager will apply
Revenue Receipts comprised in Available Funds for that Note Payment Date (subject to the prior payment
of the Issuer Priority Payments as described above), in the manner and in order of priority set out as
follows (such priority, the "Pre-Enforcement Revenue Priority of Payments"), together with (if
payable) VAT thereon, but, in each case, only if and to the extent that payments or provisions of a higher
priority have been made in full:
(a)
first
in or towards satisfaction on a pro rata and pari passu basis, according to the
respective amounts thereof, of the fees or other remuneration of (and amounts
payable in respect of indemnities) and any costs, charges, liabilities and
expenses incurred by and any other amounts due and payable to the Note
Trustee and the Issuer Security Trustee, respectively, and, in each case, any
attorney, manager, agent, delegate, nominee, custodian or other person
appointed by the Note Trustee under the Note Trust Deed or any examiner,
attorney, manager, receiver, agent, delegate, nominee, custodian or other person
appointed by the Issuer Security Trustee under the Issuer Deed of Charge
(together, the "Appointees") thereof pursuant to the Issuer Transaction
Documents;
(b)
second
in or towards satisfaction on a pro rata and pari passu basis, according to the
respective amounts thereof, of the amounts (including, but not limited to, tax
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adviser fees, costs of tax compliance, legal fees, all auditors' fees, anticipated
winding-up costs, fees and expenses associated with the liquidation of the
Issuer, fees due to the stock exchange where the Notes are then listed, fees due
to Rating Agencies and company secretarial expenses), which are payable by
the Issuer to third parties under obligations incurred in the ordinary course of the
Issuer's business and incurred without breach by the Issuer of the Note Trust
Deed or the Issuer Deed of Charge and not provided for payment elsewhere in
this Pre-Enforcement Revenue Priority of Payments, and to provide for any such
amounts expected to become due and payable by the Issuer after that Note
Payment Date but prior to the next Note Payment Date, and (but only to the
extent that the same cannot be paid or provided for by funds standing to the
credit of the Issuer Proceeds Account) to provide for the Issuer's liability or
potential liability for corporation tax;
(c)
third
to transfer an amount equal to one quarter of the Issuer's Profit to the Issuer
Proceeds Account (to be retained as profit by the Issuer);
(d)
fourth
in or towards satisfaction on a pro rata and pari passu basis, according to the
respective amounts thereof, of (i) all amounts due to the Corporate Services
Provider under the Corporate Services Agreement, (ii) all amounts due to the
Servicer or the Special Servicer, as applicable under the Servicing Agreement
(including, without limitation, the reimbursement of any Property Protection
Advance made utilising the Servicer's or the Special Servicer's own funds), (iii)
all amounts due to the Issuer Account Bank under the Issuer Account Bank
Agreement, (iv) all amounts due to the Issuer Cash Manager under the Cash
Management Agreement, (v) all amounts due to the Agents under the Agency
Agreement and (vi) all amounts due to the Registrar under the Agency
Agreement;
(e)
fifth
in or towards satisfaction of interest (excluding any Note LIBOR Excess
Amount) due or overdue on, and Note Prepayment Fee Amounts (including any
Deferred Note Prepayment Fee Amounts) in relation to, the Class A Notes;
(f)
sixth
in or towards satisfaction of interest (including Deferred Interest) due or
overdue on, and Note Prepayment Fee Amounts (including any Deferred Note
Prepayment Fee Amounts) in relation to, the Class B Notes;
(g)
seventh
in or towards satisfaction of interest (including Deferred Interest) due or
overdue on, and Note Prepayment Fee Amounts (including any Deferred Note
Prepayment Fee Amounts) in relation to, the Class C Notes;
(h)
eighth
in or towards satisfaction of interest (including Deferred Interest) due or
overdue on, and Note Prepayment Fee Amounts (including any Deferred Note
Prepayment Fee Amounts) in relation to, the Class D Notes;
(i)
ninth
in or towards satisfaction of Senior Note Extension Fee Amounts (including any
Deferred Senior Note Extension Fee Amounts) due or overdue in relation to the
Class A Notes;
(j)
tenth
in or towards satisfaction of Senior Note Extension Fee Amounts (including any
Deferred Senior Note Extension Fee Amounts) due or overdue in relation to the
Class B Notes;
(k)
eleventh
in or towards satisfaction of Senior Note Extension Fee Amounts (including any
Deferred Senior Note Extension Fee Amounts) due or overdue in relation to the
Class C Notes;
(l)
twelfth
in or towards satisfaction of Senior Note Extension Fee Amounts (including any
Deferred Senior Note Extension Fee Amounts) due or overdue in relation to the
Class D Notes;
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(m)
thirteenth
in or towards satisfaction of interest (including Deferred Interest) due or
overdue on the Junior Notes; and
(n)
fourteenth
the surplus, if any:
(a)
to repay any excess Facility Fee (including amounts paid in relation to
default interest) paid by the Obligors; and thereafter
(b)
to the Issuer.
Pre-Enforcement Principal Allocation Rules
Prior to (i) the service of a Note Acceleration Notice, (ii) the Issuer Security becoming enforceable or (iii)
the occurrence of a Loan Failure Event, on each Note Payment Date, the Issuer Cash Manager will
determine the Class A Principal Redemption Amount, the Class B Principal Redemption Amount, the
Class C Principal Redemption Amount, the Class D Principal Redemption Amount and the Junior Note
Principal Redemption Amount. In the determination of the Class A Principal Redemption Amount, the
Class B Principal Redemption Amount, the Class C Principal Redemption Amount, the Class D Principal
Redemption Amount, Non-Cash Trap Principal comprised in Senior Principal Receipts will be applied, in
effect to the relevant Notes first on a pro rata basis; and Cash Trap Principal will be applied, in effect, to
the relevant Notes secondly sequentially, as follows.
In respect of a Note Payment Date:
(a)
(b)
the "Class A Principal Redemption Amount" shall be (if there are then Class A Notes
outstanding; otherwise it shall be zero) the aggregate of:
(i)
a pro rata share (according to the aggregate Principal Amount Outstanding of each Class
of Notes as determined prior to the application of any Cash Trap Principal on the Class
A Notes) of the Non-Cash Trap Principal determined by the Issuer Cash Manager as
available for distribution in respect of that Note Payment Date; and
(ii)
all Cash Trap Principal so determined up to an amount equal to (A) the Principal
Amount Outstanding of the Class A Notes less (B) the Non-Cash Trap Principal referred
to in (a)(i) above.
the "Class B Principal Redemption Amount" shall be (if there are Class B Notes outstanding;
otherwise it shall be zero) the aggregate of:
(i)
a pro rata share (according to the aggregate Principal Amount Outstanding of each Class
of Notes as determined prior to the application of any Cash Trap Principal on the Class B
Notes) of the Non-Cash Trap Principal determined by the Issuer Cash Manager as
available for distribution in respect of that Note Payment Date; and
(ii)
all Cash Trap Principal (less any payable to the Class A Noteholders as determined in
accordance with paragraph (a)(ii) above) so determined up to the amount equal to (A)
the Principal Amount Outstanding of the Class B Notes less (B) the Non-Cash Trap
Principal referred to in (b)(i) above.
For the avoidance of doubt, any allocation of Cash Trap Principal to the Class B Notes
shall only be made after the allocation of the Cash Trap Principal to the Class A Notes as
referred to in (a)(ii) above and the Principal Amount Outstanding of the Class A Notes is
reduced to zero.
(c)
the "Class C Principal Redemption Amount" shall be (if there are Class C Notes outstanding;
otherwise it shall be zero) the aggregate of:
(i)
a pro rata share (according to the aggregate Principal Amount Outstanding of each Class
of Notes as determined prior to the application of any Cash Trap Principal on the Class C
Notes) of the Non-Cash Trap Principal determined by the Issuer Cash Manager as
available for distribution in respect of that Note Payment Date and;
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(ii)
all Cash Trap Principal (less any payable to the Class A Noteholders and the Class B
Noteholders as determined in accordance with paragraph (a)(ii) or (b)(ii) above, as
applicable) so determined up to the amount equal to (A) the Principal Amount
Outstanding of the Class C Notes less (B) the Non-Cash Trap Principal referred to in
(c)(i) above.
For the avoidance of doubt, any allocation of Cash Trap Principal to the Class C Notes
shall only be made after the allocation of the Cash Trap Principal to the Class A Notes as
referred to in (a)(ii) above and the Class B Notes as referred to in (b)(ii) above and the
Principal Amount Outstanding of the Class A Notes and the Class B Notes is reduced to
zero.
(d)
The "Class D Principal Redemption Amount" shall be (if there are Class D Notes outstanding;
otherwise it shall be zero) the aggregate of:
(i)
a pro rata share (according to the aggregate Principal Amount Outstanding of each Class
of Notes as determined prior to the application of any Cash Trap Principal on the Class
D Notes) of the Non-Cash Trap Principal determined by the Issuer Cash Manager as
available for distribution in respect of that Note Payment Date and;
(ii)
all Cash Trap Principal (less any payable to the Class A Noteholders, the Class B
Noteholders and the Class C Noteholders as determined in accordance with
paragraph (a)(ii), (b)(ii) or (c)(ii) above, as applicable) so determined up to the amount
equal to (A) the Principal Amount Outstanding of the Class D Notes less (B) the NonCash Trap Principal referred to in (d)(i) above.
For the avoidance of doubt, any allocation of Cash Trap Principal to the Class D Notes
shall only be made after the allocation of the Cash Trap Principal to the Class A Notes as
referred to in (a)(ii) above, the Class B Notes as referred to in (b)(ii) above, the Class C
Notes referred to in (c)(ii) above and the Principal Amount Outstanding of the Class A
Notes, the Class B Notes and the Class C Notes is reduced to zero.
(e)
The "Junior Note Principal Redemption Amount" shall be (if there are Junior Notes
outstanding; otherwise it shall be zero) the lesser of the Junior Principal Receipts on such Note
Payment Date and the Principal Amount Outstanding of the Junior Notes until the Junior Notes
have been redeemed in full.
Prior to the service of a Note Acceleration Notice or the occurrence of a Loan Failure Event or the Issuer
Security becoming enforceable, the allocation of Cash Trap Principal and Non-Cash Trap Principal
comprising Senior Principal Receipts and Junior Principal Receipts received or expected to be received
by or on behalf of the Issuer on a Note Payment Date (in respect of the related Note Interest Period) in
accordance with the above priority of payments is referred to as the "Pre-Enforcement Principal
Allocation Rules".
Pre-Enforcement Loan Failure Priority of Payments
If:
(a)
a Loan Failure Event occurs (but no Note Acceleration Notice has yet been served (even if the
Issuer Security is then enforceable)); or
(b)
the Issuer Security is enforceable, but no Loan Failure Event has occurred and no Note
Acceleration Notice has been served,
then the Issuer Cash Manager will not apply Available Funds in accordance with the Pre-Enforcement
Revenue Priority of Payments, the Pre-Enforcement Principal Allocation Rules or the Post-Enforcement
Priority of Payments, but will instead be required to apply Available Funds in accordance with the PreEnforcement Loan Failure Priority of Payments.
For these purposes, "Loan Failure Event" means either or both of the following events: (a) the
occurrence of a Senior Loan Event of Default and/or (b) on the Senior Loan Final Repayment Date (as the
same may have been extended) the Senior Loan has not been (or is not (based upon information received
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by the Issuer Cash Manager from the Servicer or the Special Servicer) expected to be) repaid in full by
the Borrowers.
In these circumstances, on each Note Payment Date, the Issuer Cash Manager will apply Available Funds
in the manner and in order of priority set out below (the "Pre-Enforcement Loan Failure Priority of
Payments") (together with, if payable, VAT thereon), in each case, only if and to the extent that
payments or provisions of a higher priority have been made in full:
(a)
first
in or towards satisfaction on a pro rata and pari passu basis, according to the
respective amounts thereof, of the fees or other remuneration of (and amounts
payable in respect of indemnities) and any costs, liabilities and expenses incurred
by and any other amounts due and payable to the Note Trustee and the Issuer
Security Trustee and, in each case, the Appointees thereof pursuant to the Issuer
Transaction Documents;
(b)
second
in or towards satisfaction on a pro rata and pari passu basis, according to the
respective amounts thereof, of the amounts (including, but not limited to, tax
adviser fees, costs of tax compliance, legal fees, all auditors' fees, anticipated
winding-up costs, fees and expenses associated with the liquidation of the Issuer,
fees due to the stock exchange where the Notes are then listed, fees due to Rating
Agencies and company secretarial expenses), which are payable by the Issuer to
third parties under obligations incurred in the ordinary course of the Issuer's
business and incurred without breach by the Issuer of the Note Trust Deed or the
Issuer Deed of Charge and not provided for payment elsewhere in this PreEnforcement Loan Failure Priorities of Payments, and to provide for any such
amounts expected to become due and payable by the Issuer after that Note
Payment Date but prior to the next Note Payment Date, and (but only to the
extent that the same cannot be paid or provided for by funds standing to the credit
of the Issuer Proceeds Account) to provide for the Issuer's liability or potential
liability for corporation tax;
(c)
third
in or towards satisfaction on a pro rata and pari passu basis, according to the
respective amounts thereof, of: (i) all amounts due to the Corporate Services
Provider under the Corporate Services Agreement; (ii) all amounts due to the
Servicer or the Special Servicer, as applicable, under the Servicing Agreement
(including, without limitation, the amount of any Property Protection Advance
made utilising the Servicer's or the Special Servicer's own funds); (iii) all
amounts due to the Issuer Account Bank under the Issuer Account Bank
Agreement; (iv) all amounts due to the Issuer Cash Manager under the Cash
Management Agreement; (v) all amounts due to the Agents under the Agency
Agreement; and (vi) all amounts due to the Registrar under the Agency
Agreement;
(d)
fourth
in or towards satisfaction of one quarter of the Issuer's Profit (by payment to the
Issuer Proceeds Account);
(e)
fifth
in or towards satisfaction of all interest (excluding any Note LIBOR Excess
Amount) due or overdue and any Note Prepayment Fee Amounts (including any
Deferred Note Prepayment Fee Amounts) in respect of the Class A Notes;
(f)
sixth
in or towards satisfaction of all interest (including Deferred Interest, but
excluding any Note LIBOR Excess Amount) due or overdue and any Note
Prepayment Fee Amounts (including any Deferred Note Prepayment Fee
Amounts) in respect of the Class B Notes;
(g)
seventh
in or towards satisfaction of all interest (including Deferred Interest, but
excluding any Note LIBOR Excess Amount) due or overdue and any Note
Prepayment Fee Amounts (including any Deferred Note Prepayment Fee
Amounts), in respect of the Class C Notes;
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(h)
eighth
in or towards satisfaction of all interest (including Deferred Interest, but
excluding any Note LIBOR Excess Amount) due or overdue and any Note
Prepayment Fee Amounts (including any Deferred Note Prepayment Fee
Amounts), in respect of the Class D Notes;
(i)
ninth
in or towards redemption of the Class A Notes until the Class A Notes have been
redeemed in full;
(j)
tenth
in or towards redemption of the Class B Notes until the Class B Notes have been
redeemed in full;
(k)
eleventh
in or towards redemption of the Class C Notes until the Class C Notes have been
redeemed in full;
(l)
twelfth
in or towards redemption of the Class D Notes until the Class D Notes have been
redeemed in full;
(m)
thirteenth
in or towards satisfaction of any Senior Note Extension Fee Amount, Note
LIBOR Excess Amount (including any Deferred Note LIBOR Excess Amount or
Deferred Senior Note Extension Fee Amount) due or overdue on the Class A
Notes;
(n)
fourteenth
in or towards satisfaction of any Senior Note Extension Fee Amount, Note
LIBOR Excess Amount (including any Deferred Note LIBOR Excess Amount or
Deferred Senior Note Extension Fee Amount) due or overdue on the Class B
Notes;
(o)
fifteenth
in or towards satisfaction of any Senior Note Extension Fee Amount, Note
LIBOR Excess Amount (including any Deferred Note LIBOR Excess Amount or
Deferred Senior Note Extension Fee Amount) due or overdue on the Class C
Notes;
(p)
sixteenth
in or towards satisfaction of any Senior Note Extension Fee Amount, Note
LIBOR Excess Amount (including any Deferred Note LIBOR Excess Amount or
Deferred Senior Note Extension Fee Amount) due or overdue on the Class D
Notes;
(q)
seventeenth
in or towards satisfaction of interest (including Deferred Interest) due or overdue
on the Junior Notes;
(r)
eighteenth
in or towards redemption of the Junior Notes in an amount equal to the Junior
Note Principal Redemption Amount; and
(s)
nineteenth
the surplus, if any:
(a)
to the Obligors, pro rata as a rebate of the Facility Fee (including
amounts paid in relation to default interest); and thereafter
(b)
to the Issuer.
Post-Enforcement Priority of Payments
Following the service of a Note Acceleration Notice, the Issuer Security Trustee will apply all monies and
receipts received by the Issuer and/or the Issuer Security Trustee or a receiver appointed by it (whether of
principal or interest or otherwise) in the manner and order of priority set out below under the PostEnforcement Priority of Payments) (in each case only if and to the extent that payments provisions of a
higher priority have been made in full and in each case together with (if payable and due under the
relevant document) VAT thereon):
(a)
first
in or towards satisfaction on a pro rata and pari passu basis, according to the
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respective amounts thereof, of the costs, expenses, fees or other remuneration and
indemnity payments (if any) payable to the Note Trustee or any of its Appointees
and the Issuer Security Trustee or any of its Appointees (including any receiver
appointed by the Issuer Security Trustee) and any costs, charges, liabilities and
expenses incurred by either the Note Trustee or the Issuer Security Trustee or any
of its Appointees (including any receiver) pursuant to the Issuer Transaction
Documents;
(b)
second
in or towards satisfaction on a pro rata and pari passu basis, according to the
respective amounts thereof, of the amounts (including, but not limited to, the
legal fees, all auditors' fees, anticipated winding-up costs of the Issuer, fees due to
the stock exchange where the Notes are then listed, fees due to Rating Agencies
and company secretarial expenses), which are payable by the Issuer to third
parties under obligations incurred in the ordinary course of the Issuer's business
and incurred without breach by the Issuer of the Note Trust Deed or the Issuer
Deed of Charge and not provided for payment elsewhere in this PostEnforcement Priority of Payments, and to provide for any such amounts expected
to become due and payable by the Issuer after that Note Payment Date;
(c)
third
in or towards satisfaction on a pro rata and pari passu basis, according to the
respective amounts thereof, of: (i) all amounts due to the Corporate Services
Provider under the Corporate Services Agreement; (ii) fees and expenses of the
directors of the Issuer and any advisers appointed by them, if any; (iii) all
amounts due to the Servicer or the Special Servicer, as applicable, under the
Servicing Agreement (including, without limitation, the reimbursement of any
Property Protection Advance made utilising the Servicer's or the Special
Servicer's own funds); (iv) all amounts due to the Issuer Account Bank under the
Issuer Account Bank Agreement; (v) all amounts due to the Issuer Cash Manager
under the Cash Management Agreement; (vi) all amounts due to the Agents under
the Agency Agreement; and (vii) all amounts due to the Registrar under the
Agency Agreement;
(d)
fourth
in or towards satisfaction of all interest (including Deferred Interest, but
excluding any Note LIBOR Excess Amount), unpaid Note Prepayment Fee
Amounts (including any Deferred Note Prepayment Fee Amounts) and principal
due or overdue in respect of the Class A Notes;
(e)
fifth
in or towards satisfaction of all interest (including Deferred Interest, but
excluding any Note LIBOR Excess Amount), unpaid Note Prepayment Fee
Amounts (including any Deferred Note Prepayment Fee Amounts) and principal
due or overdue in respect of the Class B Notes;
(f)
sixth
in or towards satisfaction of all interest (including Deferred Interest, but
excluding any Note LIBOR Excess Amount), unpaid Note Prepayment Fee
Amounts (including any Deferred Note Prepayment Fee Amounts) and principal
due or overdue in respect of the Class C Notes;
(g)
seventh
in or towards satisfaction of all interest (including Deferred Interest, but
excluding any Note LIBOR Excess Amount), unpaid Note Prepayment Fee
Amounts (including any Deferred Note Prepayment Fee Amounts) and principal
due or overdue in respect of the Class D Notes;
(h)
eighth
in or towards satisfaction of one quarter of the Issuer's Profit (by payment to the
Issuer Proceeds Account);
(i)
ninth
in or towards satisfaction of all Note LIBOR Excess Amount due or overdue and
any Senior Note Extension Fees, in respect of the Class A Notes;
(j)
tenth
in or towards satisfaction of all Note LIBOR Excess Amount due or overdue and
any Senior Note Extension Fees, in respect of the Class B Notes;
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(k)
eleventh
in or towards satisfaction of all Note LIBOR Excess Amount due or overdue and
any Senior Note Extension Fees, in respect of the Class C Notes;
(l)
twelfth
in or towards satisfaction of all Note LIBOR Excess Amount due or overdue and
any Senior Note Extension Fees, in respect of the Class D Notes;
(m)
thirteenth
in or towards satisfaction of interest (including Deferred Interest) due or overdue
on the Junior Notes;
(n)
fourteenth
in or towards redemption in full of the Junior Notes; and
(o)
fifteenth
the surplus, if any:
(a) to the Obligors, pro rata as a rebate of the Facility Fee (including
amounts paid in relation to default interest); and thereafter
(b) to the Issuer.
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KEY TERMS OF THE SERVICING ARRANGEMENTS FOR THE LOANS
Servicing and Special
Servicing of the Loans
Pursuant to the Servicing Agreement, the Issuer, the Loan Facility
Agent, the Loan Security Trustee and the Issuer Security Trustee will
appoint CBRE Loan Services Limited as the Servicer and as the
Special Servicer to provide certain services in relation to the Loans
and the related Loan Security.
The Issuer, the Loan Facility Agent and the Loan Security Trustee
will delegate to the Servicer, and for so long as the Loans are
Specially Serviced Loans, the Special Servicer, the exercise of all
their rights, powers and discretions in relation to the Senior Loan and
the Loan Security and the Junior Loan, other than, in the case of the
Loan Security Trustee, those which may only be exercised by the
legal owner of the Loan Security (which the Loan Security Trustee
will agree only to exercise in accordance with the instructions of the
Servicer or, in certain circumstances, the Special Servicer). When
exercising the rights, powers and discretions of the Issuer, the Loan
Facility Agent and/or the Loan Security Trustee, the Servicer or, for
so long as the Loans are Specially Serviced Loans, the Special
Servicer, must act in accordance with, among other things, the terms
of the Servicing Standard.
Directions by the Issuer
Security Trustee
Pursuant to the Servicing Agreement, following the delivery of a
Note Acceleration Notice, each of the Servicer and the Special
Servicer must act (or refrain from acting), in respect of the Loans, in
accordance with the written directions of the Issuer Security Trustee
notwithstanding that such actions or refraining may be contrary to the
Servicing Standard but neither the Servicer nor the Special Servicer
will have any liability to any person for losses or liabilities it may
suffer as a result of any actions it may take or refrain from taking in
strict accordance with such instructions.
Servicing Standard
Subject to the previous paragraph and save as otherwise provided in
the Servicing Agreement, each of the Servicer and the Special
Servicer is required to perform its duties on behalf of and for the
benefit of the Issuer, the Loan Facility Agent the Loan Security
Trustee and/or the Issuer Security Trustee in accordance with and
subject to the following (the "Servicing Standard"). The Servicer
and the Special Servicer must act:
(a)
in accordance
requirements;
with
applicable
legal
and
regulatory
(b)
in accordance with the terms of the Finance Documents;
(c)
in accordance with the terms of the Servicing Agreement;
(d)
in the best interests and for the benefit of the Issuer, using
reasonable judgment and as determined in good faith by the
Servicer or the Special Servicer (as the case may be);
(e)
to a standard of care which is the higher of:
(i)
the standard of care and with the same skill, care and
diligence it applies to servicing similar loans for
third parties; and
(ii)
the standard of care which it applies when it services
commercial mortgage loans beneficially owned by it
and/or its Affiliates,
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in each case giving due consideration to the customary and
usual standards of practice of prudent commercial mortgage
lenders which service loans similar to the Loans, with a view
to: (A) the prudent and timely exercise of the rights of the
Issuer under the Senior Finance Documents and the Junior
Facility Agreement; (B) the timely collection of all sums due
to the Issuer in respect of the Loans; and (C) if a Senior Loan
Event of Default occurs and is continuing, maximising
recoveries in respect of the Loans on or before the Final Note
Maturity Date (provided always that the Servicer or Special
Servicer shall, in the event of a conflict, give priority to the
interests of the Issuer as lender under the Senior Loans, over
the interests of the Issuer as lender under the Junior Facility
Agreement and disregard the interests of the Issuer as lender
under the Junior Loans until the Senior Loans are repaid in
full which may result in the Issuer suffering no loss or a
lesser loss under the Senior Loan than under the Junior
Loan);
(f)
without regard to ownership of any Note by the Servicer or
the Special Servicer, if applicable, or any affiliate thereof,
and, if there is a conflict between any of the requirements set out in
paragraphs (a) to (f) (inclusive) above, giving priority to those
provisions which appear earlier in such paragraphs.
Rights of delegation
The Servicer or, in the case of the Specially Serviced Loan, the
Special Servicer may, in certain circumstances, without the consent of
any other person (including, without limitation, the Issuer),
subcontract or delegate their respective obligations under the
Servicing Agreement. Save in relation to any appointment of
professional advisers, notwithstanding any sub-contracting or
delegation of the performance of any of its obligations under the
Servicing Agreement, the Servicer or for so long as the Loans are
Specially Serviced Loans, the Special Servicer, as the case may be,
will not be released or discharged from any liability thereunder and
each will remain responsible for the performance of its obligations
under the Servicing Agreement.
Other responsibilities of the
Servicer and the Special
Servicer
In addition to its obligations described above, the Servicer or, if the
Loans are Specially Serviced Loans, the Special Servicer will have
certain obligations with respect to managing the interests of the
Issuer, the Loan Facility Agent, the Loan Security Trustee and the
Issuer Security Trustee, as applicable, including with respect to any
modification, waiver, amendment and/or consent relating to the Loans
and taking any actions to realise upon the Loan Security. See
"Modifications, waivers, amendments and consents".
Special Servicing Transfer
Event
The Servicer will have the sole responsibility to service and
administer the Loans until the occurrence of a Special Servicing
Transfer Event in relation to the Loans.
Subject to the provisions of the Servicing Agreement, the Loans will
become subject to a Special Servicing Transfer Event if any of the
following events occurs (each a "Special Servicing Transfer
Event"):
(a)
a Senior Loan Event of Default is existing on the Senior
Loan Final Repayment Date (as the same may have been
extended under the terms of the Senior Facility Agreement);
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(b)
any Obligor becomes subject to insolvency or insolvency
proceedings;
(c)
the occurrence of a Senior Loan Event of Default arising as a
result of any creditors' process or cross-default; and
(d)
any other Senior Loan Event of Default occurs or is, in the
Servicer's opinion, imminent and in either case not likely (in
the Servicer's opinion) to be cured within 21 days of its
occurrence and which is likely, in the Servicer's opinion, to
have a material adverse effect in respect of the Issuer.
Promptly upon becoming aware of the occurrence of a Special
Servicing Transfer Event, the Servicer will notify details of the same
to the Issuer, the Loan Facility Agent, the Loan Security Trustee the
Issuer Security Trustee, the Note Trustee, the Rating Agencies, the
Operating Advisor (if appointed) and the Noteholders. The Special
Servicer will then automatically assume all of its duties, obligations
and powers and each Loan will become a "Specially Serviced Loan".
Servicing of each Loan after it has become a Specially Serviced Loan
will be retransferred to the Servicer and it will become a "Corrected
Loan" upon the discontinuance of any event which would constitute a
monetary Special Servicing Transfer Event for two consecutive
interest periods and the facts giving rise to any other Special
Servicing Transfer Event ceasing to exist, provided that no other
matter exists which would give rise to either Loan becoming a
Specially Serviced Loan.
Notwithstanding the appointment of the Special Servicer, the Servicer
shall continue to service the Loans in all respects as provided for in
the Servicing Agreement and will, among other things and without
limitation, continue to collect information, prepare reports and
perform administrative functions, subject to receipt by it of the
required information from the Special Servicer (but will not be
subject to any of the duties and obligations of the Special Servicer
and shall not be entitled to receive the Special Servicing Fee with
respect thereto). Neither the Servicer nor the Special Servicer will
have responsibility for the performance by the other of its obligations
and duties under the Servicing Agreement.
Asset Status Report
Pursuant to the Servicing Agreement, if a Special Servicing Transfer
Event occurs, the Special Servicer will be required to prepare an asset
status report with respect to the Loans and the Properties not later
than 60 days after the occurrence of such Special Servicing Transfer
Event (the "Asset Status Report").
The Servicing Agreement will provide that the Asset Status Report
should contain (to the extent practicably possible) among other
things:
(a)
a description of the status of the Loans and the Properties,
details of any strategy with respect to the same and any
negotiations with the Obligors;
(b)
a consideration of the effect on net present value (as
determined from time-to-time by the Servicer or Special
Servicer (as appropriate) with reference to the sterling midswaps rate based upon time to maturity of the Loans (taking
into account any effected extensions thereof in accordance
with the terms of the Senior Facility Agreement) of the
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various courses of action with respect to the Loans including,
without limitation, a work-out of the Loans; and
(c)
a summary of the Special Servicer's recommended actions
and strategies with respect to the Loans which, subject to the
terms of the Servicing Agreement, shall be the course of
action that the Special Servicer has determined would
maximise recovery on the Loans on a net present value basis.
Promptly after the Asset Status Report has been prepared or modified
in accordance with the Servicing Agreement, the Special Servicer
shall deliver a copy of such Asset Status Report to the Rating
Agencies and the Servicer.
The Special Servicer will also be required to deliver to the Issuer and
the Note Trustee a draft form of a proposed notice to the Noteholders
that will include a summary of the current Asset Status Report (which
will be a brief summary of the current status of the Properties and
current strategy with respect to the Loans, with information redacted
if and to the extent the Special Servicer determines, in its reasonable
discretion, that it may compromise the position of the Issuer, as
lender, not to do so), and the Issuer will be required to publish such
summary in a companies announcement, filing or equivalent filing, if
any, that complies with the requirements of the relevant exchange on
which the Notes are listed and applicable law (a "Regulatory
Information Service").
The Special Servicer may, from time to time, modify any Asset Status
Report that it has previously delivered and shall modify any such
Asset Status Report to reflect any changes in strategy that it considers
are required from time to time by the Servicing Standard and shall
promptly deliver the modified report to the Rating Agencies and the
Servicer and shall deliver a revised summary of the same to the Issuer
and the Note Trustee, which the Issuer shall publish in compliance
with the rules of the relevant exchange.
Reviews
The Servicer, and following any Special Servicing Transfer Event,
the Special Servicer shall inspect, or cause to be inspected (including
by way of the use of professional advisors), the applicable Properties
whenever the Servicer or Special Servicer, as applicable, becomes
aware that such Properties have been materially damaged, left vacant,
or abandoned, or if waste is being committed there or otherwise at
their discretion in accordance with the Servicing Standard (an "Ad
Hoc Review"). The Servicer or for so long as the Loans are
designated Specially Serviced Loans, the Special Servicer, is
authorised to conduct an Ad Hoc Review more frequently, to the
extent permitted by applicable law, if the Servicer or, following a
Special Servicing Transfer Event, the Special Servicer, acting in
accordance with the Servicing Standard, has cause for concern as to
the ability of any Obligors to meet their financial obligations under
the Senior Finance Documents or the Junior Facility Agreement. An
Ad Hoc Review may include an inspection of a sample of the
Properties and a consideration of the quality of the cashflow arising
from the Properties (in the opinion of the Servicer or the Special
Servicer, as applicable) and a compliance check of each Obligor's
covenants under the Senior Finance Documents. All Ad Hoc Reviews
will be performed in such manner as is consistent with the Servicing
Standard and will be at the cost and expense of the Issuer.
Insurance
The Servicer or (after the occurrence of a Special Servicing Transfer
Event) the Special Servicer shall, on behalf of the Loan Security
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Trustee and the Issuer, establish and administer procedures for
monitoring compliance by the Obligors with their obligations under
the Senior Finance Documents and the Junior Facility Agreement in
respect of the maintenance of insurances (including without limitation
the insurances required to be maintained in respect of the Properties)
at all times. Pursuant to the terms of the Servicing Agreement, the
Servicer or the Special Servicer (as applicable) will use all reasonable
efforts to monitor the compliance of, and to the extent reasonably
practicable, to cause the Obligors to comply with the requirements in
respect thereof as set out in the Senior Finance Documents.
If the Servicer or the Special Servicer, as applicable, becomes aware
that either: (a) the Properties are not covered by a buildings insurance
policy; (b) a buildings insurance policy may lapse in relation to the
Properties due to the non-payment of any premium; (c) the Properties
are not covered by the Owner's Title Insurance policy or (d) the
Owner's Title Insurance policy (or any of them) may lapse in relation
to the Properties for any reason, the Servicer or the Special Servicer,
as applicable, shall use reasonable efforts (using, if necessary, the
proceeds of a Property Protection Advance, but without any
obligation to advance its own funds), to procure that buildings
insurance is maintained for the Properties in the form required under
the Senior Finance Documents. If any Obligor does not comply with
its obligations in respect of any insurance policy, the Servicer or
Special Servicer will (without any obligation or requirement to
expend their own funds to do so) to the extent reasonably practicable,
effect or renew any such insurance policy or instruct the Loan Facility
Agent to do so (and not in any way for the benefit of the Obligor
concerned) and, to the extent permitted under the Senior Finance
Documents, the Servicer or the Special Servicer, as applicable, shall
make claim for the monies expended by the Servicer or Special
Servicer, as applicable, for so effecting or renewing any such
insurance from the Obligors. However, neither the Servicer nor the
Special Servicer is required to pay or instruct payment of any amount
described above if, in its reasonable opinion, to do so would not be in
accordance with the Servicing Standard.
Power to raise funds
Each of the Servicer or (after the occurrence of a Special Servicing
Transfer Event) the Special Servicer will have full power and
authority to raise funds on behalf of the Issuer from third parties in
such manner and on such terms as it may see fit (including the ability
to cause such funds and the cost of such funds to be reimbursed in
priority to payments due in respect of the Notes by virtue of such
sums being reimbursed to the Servicer and/or Special Servicer
pursuant to the applicable Issuer Priority of Payments) in order to
fund expenses relating to preserving the rights and interest of the
Issuer (as lender) in the Senior Loan and the Loan Security that
pertains to the same where such expenses cannot be funded through
funds otherwise available to the Issuer. Such right to raise funds
includes any right of the Issuer, as lender, to authorise any
administrator (or analogous official) of any Obligor to raise funds in
order to preserve the value or permit the continued operation of the
Properties.
In determining whether to cause any funds to be raised, the Servicer
or the Special Servicer, as applicable, shall, as a condition to the
same, first have determined in good faith that:
(a)
raising such amounts would be consistent with the Servicing
Standard; and
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(b)
Property protection
it would be in the better interest of the Issuer, as lender, that
such amounts were raised as opposed to such amounts not
being raised, taking into account the relevant circumstances
(which will include, but not be limited to, the related risks to
which the Issuer would be exposed if such amounts were not
raised and whether any such amounts would ultimately be
recoverable from the Obligors).
The Senior Finance Documents oblige the Obligors to pay certain
amounts to third parties, such as insurers and persons providing
services in connection with the operation of the Properties.
If an Obligor fails to do so and:
(a)
the amounts standing to the credit of the Obligor Accounts in
respect of which the Loan Facility Agent has sole signing
rights are insufficient or not available or able to be applied
for such purpose; and/or
(b)
the Servicer or (after the occurrence of a Special Servicing
Transfer Event) the Special Servicer determines that it would
be in the better interest of the Issuer, as lender, that such
amounts were paid as opposed to such amounts not being
paid, taking into account the relevant circumstances, which
will include, but not be limited to, the related risks that the
Issuer would be exposed to if such amounts were not paid
and whether any payments made by or on behalf of the Issuer
would ultimately be recoverable from the Obligors,
then the Servicer or, if the Loans are then designated Specially
Serviced Loans, the Special Servicer may make the relevant third
party payment (each such payment by the Servicer or Special Servicer
being a "Property Protection Advance") utilising (x) funds (if any)
available to the Issuer for such purpose, (y) the Servicer's or the
Special Servicer's own funds and/or (z) funds raised from third parties
for this purpose as described in "Power to raise funds" above.
Although not obliged to do so, if the Servicer or the Special Servicer,
as applicable, makes a Property Protection Advance from its own
funds, it will be repaid, subject to the Issuer Priorities of Payments
(together with interest thereon at the rate then applicable to the Class
A Notes) on the Note Payment Date immediately following the date
on which such Property Protection Advance was made.
Modifications, waivers,
amendments and consents
Subject to the terms of the Servicing Agreement, the Servicer (if no
Special Servicing Transfer Event has occurred and is continuing) or
the Special Servicer (if a Special Servicing Transfer Event has
occurred and is continuing) may amend or waive, or grant consent in
respect of, any term of the Senior Finance Documents or the Junior
Facility Agreement on behalf of the Issuer, the Loan Facility Agent
and/or the Loan Security Trustee if such amendment, consent or
waiver is in accordance with the Servicing Standard and subject to
certain additional limitations.
The Servicer or, for so long as the Loans are Specially Serviced
Loans, the Special Servicer, is required to give: (a) prior written
notice of any such amendment or variation to the Rating Agencies;
and (b) written notice of any such amendment or variation to the
Servicer or Special Servicer, as applicable, the Issuer, the Issuer
Security Trustee, the Loan Facility Agent, the Note Trustee, the
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Noteholders and the Operating Advisor (if appointed).
Note Maturity Plan
If any part of the Senior Loan remains outstanding six months prior to
the Final Note Maturity Date, the Special Servicer shall be required to
prepare a draft Note Maturity Plan and present the same to the Issuer,
the Note Trustee and the Issuer Security Trustee not later than 45
days after the date falling six months prior to the Final Note Maturity
Date together with a statement of whether, in the opinion of the
Special Servicer, all recoveries then anticipated by the Special
Servicer with respect to the Loans (whether by enforcement of the
Loan Security, sale of the Loans, or otherwise) are reasonably likely
to be realised in full prior to the Final Note Maturity Date. The Issuer,
with the assistance of the Special Servicer, will publish the Note
Maturity Plan with the Regulatory Information Service.
Upon receipt of the draft Note Maturity Plan, the Note Trustee shall
convene, at the cost of the Issuer, a meeting of all Senior Noteholders
at which the Senior Noteholders will have the opportunity to discuss
the various proposals contained in the draft Note Maturity Plan with
the Special Servicer. Following such meeting, if the Special Servicer
is of the opinion that the Senior Loan is unlikely to be realised in full
prior to the Final Note Maturity Date, the Special Servicer shall
reconsider the Note Maturity Plan and make modifications thereto to
address the views of the Senior Noteholders (subject to the Servicing
Standard) following which it will promptly provide a final Note
Maturity Plan to the Issuer, the Noteholders, the Rating Agencies, the
Note Trustee and the Issuer Security Trustee.
Upon receipt of the final Note Maturity Plan, the Note Trustee shall
convene, at the cost of the Issuer, a meeting of the Noteholders of the
Most Senior Class of Notes then outstanding at which the
Noteholders of the Most Senior Class of Notes will be requested to
select their preferred option among the proposals set out in the final
Note Maturity Plan. The Special Servicer shall, notwithstanding any
other provision of the Servicing Agreement or requirement to act in
accordance with the Servicing Standard, implement the proposal that
receives the approval of the Noteholders of the Most Senior Class of
Notes by way of Ordinary Resolution and shall have no liability to
any person for seeking to implement and subsequently implementing
such proposal with no regard to the Servicing Standard. If no option
presented to Noteholders receives the approval of the Noteholders of
the Most Senior Class of Notes at such meeting, then, if the Issuer
Security is then enforceable, the Issuer Security Trustee shall be
deemed to be directed by all the Noteholders to appoint a receiver in
order to realise the Issuer Charged Property pursuant to the Issuer
Deed of Charge, provided that it will have no obligation to do so if it
shall not have been indemnified and/or secured and/or prefunded to
its satisfaction.
"Note Maturity Plan" means the selection of proposals prepared by
the Special Servicer and presented to the Issuer, the Noteholders, the
Note Trustee and the Issuer Security Trustee relating to the final
disposal or other resolution of the Loans, which assumes that the
Notes are not repaid on the Final Note Maturity Date, and of which at
least one proposal provided by the Special Servicer must be that the
Issuer Security Trustee, at the cost of the Issuer, will engage an
independent financial adviser or a receiver to advise the Issuer
Security Trustee as to the enforcement of the Issuer Security.
Servicing Fee
On each Note Payment Date, the Issuer shall pay to the Servicer a fee
(exclusive of VAT, if applicable) in respect of the Loans equal to
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£65,000 per annum (the "Servicing Fee"). The Servicing Fee will
continue to be paid notwithstanding the fact that the Loans may have
been designated Specially Serviced Loans. Following any termination
of the Servicer's appointment as Servicer, the Servicing Fee will be
paid to any substitute servicer appointed, provided that the Servicing
Fee may be payable to any substitute servicer at a higher rate agreed
in writing by the Issuer (but which does not exceed the rate then
commonly charged by providers of loan servicing services in relation
to commercial properties).
Special Servicing Fee
On each Note Payment Date, the Issuer shall pay to the Special
Servicer the Special Servicing Fee (exclusive of VAT, if applicable)
equal to 0.17 per cent. per annum of the aggregate outstanding
principal balance of the Loans for each day that the Loans are
designated as Specially Serviced Loans (the "Special Servicing
Fee"). The Special Servicing Fee will be payable in addition to the
Servicing Fee. The Special Servicing Fee shall cease to accrue if (i) a
liquidation event occurs in respect of the Loans or (ii) the Loans are
designated as Corrected Loans.
Modification Fee
In addition to the Servicing Fee, the Servicer will also be entitled to
receive a fee, in an amount which it agrees with the Obligors, as
remuneration for any action taken by the Servicer in respect of any
request for an amendment, consent or waiver made or given in respect
of the Loans, the Senior Finance Documents and the Junior Facility
Agreement prior to the occurrence of a Special Servicing Transfer
Event and subject to certain conditions.
Liquidation Fee
On each Note Payment Date in relation to a Specially Serviced Loan,
the Special Servicer will be entitled to be paid by the Issuer a
liquidation fee (the "Liquidation Fee") equal to 0.70 per cent. of the
proceeds of sale, net of costs and expenses of sale, if any, arising
from the sale of the Specially Serviced Loan or any Borrower or all or
any part of the Properties provided that, in the case of a sale of any
Properties, the Special Servicer had a material role in the sale
(whether directly or indirectly) following the enforcement of the Loan
Security in respect of the Loan (such proceeds, "Liquidation
Proceeds"), which will be payable in accordance with the terms of
the Senior Facility Agreement provided that no Liquidation Fee will
be payable in respect of Liquidation Proceeds (i) where the relevant
Loan was a Specially Serviced Loan for a period of fewer than 30
days; or (ii) where the relevant Loan or any part of the Properties
(whether directly or indirectly) is sold to an affiliate of the Special
Servicer.
Servicing expenses
By way of further consideration for the performance of the Servicer's
and Special Servicer's duties under this Agreement, the Issuer must
pay to the Servicer and the Special Servicer an amount equal to outof-pocket costs, fees, expenses and charges properly incurred by them
in the performance of their servicing obligations. Such costs and
expenses are payable by the Issuer on the Note Payment Date
following the Loan Interest Period during which they are incurred by
the Servicer or the Special Servicer and without prejudice to any
other right to payment or, in the case of fees, costs and expenses
which are paid directly by an Obligor immediately on the date which
such fees, costs and expenses are collected from an Obligor.
Liability of Servicer and
Special Servicer
Neither the Servicer nor the Special Servicer will be responsible for
any loss or liability to the Issuer and/or the Issuer Security Trustee
other than those losses caused by its negligence, fraud or wilful
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misconduct.
Reporting
Subject to any limitation imposed by applicable law or any
confidentiality agreement, the Servicer must deliver to the Issuer, the
Issuer Cash Manager, the Special Servicer, the Rating Agencies, the
Operating Advisor (if appointed) and the Issuer Security Trustee
during each Loan Interest Period (and, with respect to the CREFC EIRP Loan Setup File, the Servicer shall, in addition, provide such
information prior to the first Note Payment Date), the following
reports with respect to the Loans, each of which shall provide the
required information in respect of the Loan Interest Period
immediately preceding the immediately ended Loan Interest Period
(in the case of item (a) below and information fields based on
information provided by the relevant Borrowers) or in respect of the
immediately ended Loan Interest Period (in the case of the other
items listed below) in each case based on information provided by the
Special Servicer if the Loans are designated Specially Serviced Loans
the following reports:
(a)
a report setting out certain loan-level information including,
cut-off balance, original mortgage rate, maturity date and
general payment information, as well as financial data (as set
out in the "CREFC E-IRP Loan Set-up File");
(b)
a report setting out quarterly remittances on the Loans as
well as the tracking of both scheduled and unscheduled
payments in respect thereof (as set out in the "CREFC E-IRP
Loan Periodic Update File");
(c)
a report setting out information regarding the Properties
including, property name, address and identification number
(as set out in the "CREFC E-IRP Property File"); and
(d)
a report setting out, among other things, details of any event
that would cause the Loans to be included on the servicer
watchlist (as set out in the "CREFC E-IRP Servicer Watchlist
Criteria and Servicer Watchlist File").
The reports specified above are referred to as the "CREFC
European Investor Reporting Package" shall be in the form
prescribed in the standard European Investor Reporting Package
published by the Commercial Real Estate Finance Council Europe
from time to time (formally and commonly known as the "CREFC
European Investor Reporting Package").
In addition to the above, the Servicer will report the following
additional information on each Portfolio Determination Date:
(a)
financial covenant compliance calculated in accordance with
the methodologies for determining compliance in the Facility
Agreements;
(b)
portfolio summary by region;
(c)
portfolio summary by property type; and
(d)
current and historical property disposals.
Such additional information provided by the Servicer may be
modified from time to time in the Servicer's sole discretion.
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To the extent not otherwise provided, the Servicer shall also provide,
in respect of each Loan Interest Period, a report based, where
necessary, on information provided to the Servicer by the Special
Servicer, containing the following information regarding the Loans
and the Properties:
(a)
a report setting out the information provided by the Obligors
pursuant to the information covenants contained in the Senior
Finance Documents;
(b)
a report setting out, among other things, general information
in relation to the Loans (including cut-off balance, original
mortgage rate, maturity date and general payment
information, as well as financial data); and
(c)
a report setting out, among other things, information
regarding the Properties,
(such reports, together with the CREFC European Investor Reporting
Package, the "Servicer Quarterly Report").
The Servicer Quarterly Report will be made publicly available by the
Issuer Cash Manager, on behalf of the Servicer, at
www.usbank.com/abs which website does not form part of this
Offering Circular.
Enforcement of the Loans
The Special Servicer shall determine and is authorised by the Issuer,
the Loan Security Trustee and the Issuer Security Trustee, as
applicable, to determine the best strategy for exercising the rights,
powers and discretions of the Issuer and the exercise of procedures to
enforce those rights, powers and discretions following the occurrence
of a Senior Loan Event of Default to implement such strategy.
At any time after the occurrence of a Special Servicing Transfer
Event, the Special Servicer may, if it determines that the most
appropriate course of action would be to sell the Loans (instead of
taking enforcement action in respect thereof), dispose of the Loans on
behalf of the Issuer to a third party purchaser on arms' length terms
and for a consideration which the Special Servicer determines (taking
such advice as it may seek from professional advisers) is the best
price achievable in the market at the time.
If the Special Servicer determines that the most appropriate course of
action consistent with the Servicing Standard would be to sell the
Loans, then the Issuer Security Trustee must at the request of the
Special Servicer release and discharge the Issuer Security to the
extent that it relates to the Loans and Loan Security that pertains to
the same in order to allow such sale to proceed.
If the Loans have become Specially Serviced Loans, the Special
Servicer must document its proposed strategy with the delivery of an
Asset Status Report.
As soon as reasonably practicable after the Special Servicer makes a
determination (acting in accordance with the Servicing Standard) that
there has been a recovery of all amounts or recoveries that, in the
Special Servicer's judgment will ultimately be recoverable with
respect to the Loans (such judgment to be exercised in accordance
with the Servicing Standard) (a "Final Recovery Determination"), it
shall promptly notify the Servicer, the Issuer, the Rating Agencies,
the Issuer Cash Manager and, if appointed, the Operating Advisor of
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the amount of such Final Recovery Determination. The Special
Servicer shall maintain an accurate record of the basis of the
determination of the Final Recovery Determination.
Each of the Servicer and the Special Servicer shall procure that if,
after enforcement of the Loan Security, an amount in excess of all
sums due from the Obligors under the Senior Finance Documents is
recovered, the balance (after discharge of all such sums) is paid to the
persons entitled thereto pursuant to the terms of the Senior Finance
Documents.
The Servicer or the Special Servicer, as applicable, shall (to the extent
it has such relevant information) provide to the Loan Security Trustee
all information that the Loan Security Trustee may require to enable
the Loan Security Trustee to commence enforcement action under,
and in accordance with the provisions of, the Loan Security
Documents.
Controlling Class and
Operating Advisor
The Controlling Class will be able to appoint an Operating Advisor.
The Servicer or Special Servicer must not, for at least five Business
Days after notifying the Operating Advisor of its intention to do so,
agree to amend or waive any provision of the Senior Finance
Documents and/or the Junior Facility Agreement if the effect of such
waiver or amendment would be (among other things):
(a)
to change the date on which any amount is due to be paid by
an Obligor or the timing of any payment;
(b)
to release any Obligor from any of its material obligations
under or in respect of the Senior Finance Documents or the
Junior Facility Agreement other than in accordance with the
terms thereof;
(c)
to waive any Senior Loan Event of Default; or
(d)
to approve a restructuring plan in insolvency of an Obligor.
If within five Business Days of having been notified of any such
action proposed to be taken by the Servicer or the Special Servicer,
the Operating Advisor has not confirmed in writing to the Servicer or
the Special Servicer whether it agrees or disagrees with the proposed
course of action, the Operating Advisor will be deemed to have
agreed thereto. If the Operating Advisor notifies the Servicer or the
Special Servicer that it disagrees with the proposed course of action,
the parties will follow the steps set out in the Servicing Agreement to
come to a conclusion as to what proposed course of action should be
taken. If there is any conflict between any action which the Special
Servicer would be required to take in order to comply with the advice
and/or representations of the Operating Advisor, and the Servicing
Standard, the Servicing Standard should prevail.
Termination for cause of the
appointment of the Servicer or
Special Servicer
The following constitute Servicing Termination Events under the
Servicing Agreement:
(a)
in respect of the Servicer only, failure by the Servicer to
remit funds to or for the account of the Issuer where the same
are required to be remitted by any such entity under the
Servicing Agreement, the Senior Finance Documents or the
Junior Facility Agreement by 11.00 a.m. (London time) on
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the Business Day following the date on which the same were
required to be remitted, but only where there are sufficient
funds available in the account from which such funds were
required to be remitted;
Rights upon Servicing
Termination Event;
replacement of Servicer and
Special Servicer
(b)
failure by the Special Servicer to remit funds to or for the
account of the Issuer where the same are required to be
remitted by it under the Servicing Agreement or the Issuer
Transaction Documents by 11.00 a.m. (London time) on the
Business Day following the date on which the same were
required to be remitted, but only where there are sufficient
funds available in the account from which such funds were
required to be remitted;
(c)
failure by the Servicer or Special Servicer, as applicable, to
observe or perform in any material respect any of its other
obligations under the Servicing Agreement (whether failure
of a specific obligation or failure to observe or act according
to the Servicing Standard) and such failure continues
unremedied for a period of 30 days after the earlier to occur
of (A) the date on which the Servicer or Special Servicer, as
applicable, becomes aware of such failure and (B) the date on
which written notice of such failure is given to the Servicer
or Special Servicer, as applicable, by the Issuer and/or the
Issuer Security Trustee;
(d)
material breach by the Servicer or Special Servicer, as
applicable, of any representation or warranty given by it
under the Servicing Agreement in any material respect, and
the circumstances giving rise to such material breach are not
remedied by the earlier to occur of (A) the date on which the
Servicer or Special Servicer, as applicable, becomes aware of
such breach and (B) the date on which written notice of such
breach is given to the Servicer or Special Servicer, as
applicable, by the Issuer and/or the Issuer Security Trustee;
(e)
except in connection with a Permitted Reorganisation, the
Servicer or Special Servicer, as applicable, becomes subject
to insolvency or insolvency proceedings;
(f)
it becomes unlawful for the Servicer or Special Servicer, as
applicable, to perform any material part of its obligations
under the Servicing Agreement except in circumstances
where no other person could perform such material part of
the obligations lawfully; and
(g)
the Servicer or Special Servicer, as applicable, pays or has
paid any part of its remuneration under the Servicing
Agreement to any person (including any Noteholder person
related thereto) in connection with securing its appointment
(or keeping such appointment) under the Servicing
Agreement.
Upon the occurrence of any Servicing Termination Event the Issuer
or the Issuer Security Trustee, as applicable, may by notice in writing
to the Servicer or the Special Servicer (with a copy to each of the
Rating Agencies), as the case may be, terminate the appointment of
the Servicer (if the Servicing Termination Event is in respect of the
Servicer) or the Special Servicer (if the Servicing Termination Event
is in respect of the Special Servicer).
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Termination without cause
If the Issuer Security Trustee is notified by the Note Trustee that each
class of Noteholders (acting by Ordinary Resolution) has directed that
the Servicer and/or the Special Servicer be replaced, then the Issuer
Security Trustee must (by written notice to the Servicer or Special
Servicer, as applicable) terminate the appointment of the Servicer or
Special Servicer, as applicable.
If (a) the Loans have been (and remain) designated Specially Serviced
Loans; and (b) the Issuer is so instructed by the Operating Advisor,
on behalf of the Controlling Class, then the Issuer must give notice to
the Special Servicer to terminate the appointment of that person as
Special Servicer.
Appointment of substitute
No termination of the appointment of the Servicer or the Special
Servicer, as applicable, will be effective until (among other
conditions) a replacement servicer or special servicer, as the case may
be, has been appointed.
Resignation of the Servicer or
Special Servicer
Each of the Servicer and the Special Servicer may resign from its
appointment as such by giving to the Issuer and the Issuer Security
Trustee at least three months' written notice to this effect (no such
resignation will be effective until a replacement servicer or special
servicer, as the case may be, has been appointed).
General
Neither the Servicer nor the Special Servicer will be liable for any
failure by the Issuer to make any payment due by it under the Notes
or any of the other Issuer Transaction Documents unless such failure
by the Issuer results from a failure by the Servicer or the Special
Servicer with respect to its obligations under the Servicing
Agreement.
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YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS
The yield to maturity on any Class of Notes will depend upon the price paid by the Noteholders, the
interest rate thereof from time to time, the rate and timing of the distributions in reduction of the Principal
Amount Outstanding of such Class and the rate, timing and severity of losses on the Loans, as well as
prevailing interest rates at the time of payment or loss realisation.
The distributions of principal that Noteholders receive in respect of the Notes are derived from principal
repayments on the Loans.
The rate of distributions of principal in reduction of the Principal Amount Outstanding of any Class of
Notes, the aggregate amount of distributions in principal on any Class of Notes and the yield to maturity
on any Class of Notes will be directly related to the rate of payments of principal on the Loans, the
amount and timing of Borrower defaults and the severity of losses occurring upon a default.
Losses with respect to the Loans may occur in connection with a default on the Loans and/or the
liquidation of all or part of the Properties.
Noteholders will only receive distributions of principal or interest when due to the extent that the related
payments under the Issuer Assets are actually received. Consequently, any defaulted payment, will, to the
extent of the principal portion thereof, tend to extend the weighted average lives of the Notes. "Issuer
Assets" means the Loans and the related Loan Security and interest of the Issuer, as beneficiary, in
respect of the relevant Loan Security and all monies derived therefrom from time to time, held by the
Issuer on, or at any time following, the Closing Date.
The rate of payments (including voluntary and involuntary prepayments) on the Loans is influenced by a
variety of economic, geographic, social and other factors, including the level of interest rates, the amount
of prior refinancing effected by the Borrowers and the rate at which the Borrowers default on the Loans.
The terms of the Loans and, in particular, the extent to which any Borrower is entitled to prepay the
Loans, the ability of the Borrowers to realise income from the Properties in excess of that required to
meet scheduled payments of interest on the Loans, the obligation of the Borrowers to ensure that certain
debt service coverage tests are met as a condition to the disposal of the Properties, the risk of compulsory
purchase of the Properties and the risk that payments by the Borrowers may become subject to Loan Tax
or result in an increased cost for the Issuer may affect the rate of principal payments on the Loans and,
consequently, the yield to maturity of the Classes of Notes.
The timing of changes in the rate of prepayment on the Loans may significantly affect the actual yield to
maturity experienced by an investor, even if the average rate of principal payments experienced over time
is consistent with such investor's expectation. In general, the earlier a prepayment of principal on the
Loans, the greater the effect on such investor's yield to maturity. As a result, the effect on such investor's
yield of principal payments occurring at a rate higher (or lower) than the rate anticipated by the investor
during the period immediately following the issuance of the Notes would not be fully offset by a
subsequent like reduction (or increase) in the rate of principal payments.
No representation is made as to the rate of principal payments on the Loans or as to the yield to maturity
of any Class of Notes. An investor is urged to make an investment decision with respect to any Class of
Notes based on the anticipated yield to maturity of such Class of Notes resulting from its purchase price
and such investor's own determination as to anticipated prepayment rates in respect of the Loans under a
variety of scenarios. The extent to which any Class of Notes is purchased at a discount or a premium and
the degree to which the timing of payments on such Class of Notes is sensitive to prepayments will
determine the extent to which the yield to maturity of such Class of Notes may vary from the anticipated
yield. An investor should carefully consider the associated risks, including, in the case of any Notes
purchased at a discount, the risk that a slower than anticipated rate of principal payments on the Loans
could result in an actual yield to such investor that is lower than the anticipated yield and, in the case of
any Notes purchased at a premium, the risk that a faster than anticipated rate of principal payments could
result in an actual yield to such investor that is lower than the anticipated yield.
An investor should consider the risk that rapid rates of prepayments on the Loans, and therefore of
amounts distributable in reduction of the principal balance of the Notes may coincide with periods of low
prevailing interest rates. During such periods, the effective interest rates on securities in which an investor
may choose to reinvest such amounts distributed to it may be lower than the applicable rate of interest on
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the Notes. Conversely, slower rates of prepayments on the Loans, and therefore, of amounts distributable
in reduction of the principal balance of the Notes entitled to distributions of principal, may coincide with
periods of high prevailing interest rates. During such periods, the amount of principal distributions
resulting from prepayments available to an investor in Notes for reinvestment at such high prevailing
interest rates may be relatively small.
Weighted average life of the Notes
The weighted average life of a Note refers to the average amount of time that will elapse from the date of
its issuance until each pound allocable to principal of such Note is distributed to the investor. For the
purposes of this Offering Circular, the weighted average life of a Note is determined by (a) multiplying
the amount of each principal distribution thereon by the number of years from the Closing Date to the
related Note Payment Date, (b) summing the results and (c) dividing the sum by the aggregate amount of
the reductions in the Principal Amount Outstanding of such Note. Accordingly, the weighted average life
of any such Note will be influenced by, among other things, the rate at which principal of the Loans is
paid or otherwise collected or advanced and the extent to which such payments, collections or advances
of principal are in turn applied in reduction of the Principal Amount Outstanding of the Class of Notes to
which such Note belongs.
For the purposes of preparing the following table, it was assumed that:
(a)
all principal is paid pro rata and no principal prepayments are made from the Cash Trap Account;
(b)
in no scenario is there a Senior Loan Event of Default;
(c)
there are no delinquencies or losses in respect of the Senior Loan and there are no compulsory
purchases affecting the Properties;
(d)
other than assumed in the scenarios, there are no prepayments on the Senior Loan;
(e)
the Closing Date is 18 December 2015;
(f)
All properties available for the notes are those present at 30 September 2015;
(g)
the payments are made on the 20th of every January, April, July and October with the first Note
Payment Date falling on 20 January 2016;
(h)
the weighted average lives of the Senior Notes have been calculated on a ACT/365 basis;
(i)
the Clean-up Call with a 10% threshold is exercised.
Assumptions (a) through (i) above are collectively referred to as, the "Modelling Assumptions".
Scenario 1: the properties are disposed of in accordance with the Business Plan, with the full exit value
achieved. The greater of the Allocated Loan Amount multiplied by the appropriate release premium and
the sale release percentage multiplied by the exit sale value (net of sales costs) will form the principal
repayments.
Scenario 2: the properties are disposed of in accordance with the Business Plan, however the full exit
value is not achieved. In this scenario, the Allocated Loan Amount multiplied by the appropriate release
price (net of sales costs) will form the only principal repayments.
Scenario 3: the properties are disposed of one year later than the Business Plan states. However, the full
exit value is achieved. This scenario is essentially Scenario 1 with a delay of one year.
Scenario 4: the properties are disposed of one year later than the Business Plan states. Like Scenario 2,
the full exit value is not achieved and so the Allocated Loan Amount multiplied by the appropriate release
price will form the only principal repayments. This scenario is essentially Scenario 2 with a delay of 1
year.
Scenario 5: the principal repayments are such that the balance outstanding of the Senior Loan on each
Loan Payment Date is the same as described in the column entitled "Minimum Target Loan Amount" in
Appendix 1 (Target Loan Amounts).
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Scenario 6: the principal repayments are such that the balance outstanding of the Senior Loan on each
Loan Payment Date is the same as described in the column entitled "Maximum Target Senior Loan
Amount" in Appendix 1 (Target Loan Amounts).
Based on the Modelling Assumptions, the following table indicates the resulting weighted average lives
of the Senior Notes.
Weighted Average Life (years) of the Senior Notes for each designated Scenario
Scenario
Class
A. .................................................................................................
B .................................................................................................
C .................................................................................................
D .................................................................................................
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1
2
3
4
5
6
0.76
0.76
0.76
0.76
0.85
0.85
0.85
0.85
1.76
1.76
1.76
1.76
1.85
1.85
1.85
1.85
0.39
0.39
0.39
0.39
1.84
1.84
1.84
1.84
DESCRIPTION OF THE NOTES
The information set out below has been obtained from sources that the Issuer believes to be reliable and
the Issuer accepts responsibility for correctly reproducing this information, but prospective investors are
advised to make their own enquiries as to such procedures. In particular, such information is subject to
any change in or reinterpretation of the rules, regulations and procedures of the Clearing Systems
currently in effect, and investors wishing to use the facilities of any of the Clearing Systems are therefore
advised to confirm the continued applicability of the rules, regulations and procedures of the relevant
Clearing System. None of the Issuer, the Registrar, the Note Trustee, the Issuer Security Trustee, the
Issuer Cash Manager, the Issuer Account Bank, or any Agent party to the Agency Agreement (or any
Affiliate of any of the above, or any person by whom any of the above is controlled) will have any
responsibility for the performance by the Clearing Systems or their respective direct or indirect
participants or account holders of their respective obligations under the rules and procedures governing
their operations or for the sufficiency for any purpose of the arrangements described below.
A
General
Each Class of Notes offered for sale to non-U.S. Persons in offshore transactions outside of the United
States in reliance on Regulation S (the "Regulation S Notes") (which will each be in the denomination of
£100,000 and integral multiples of £1,000 in excess thereof) will be represented initially by a Regulation
S Global Note in registered form. The Regulation S Global Notes will be deposited with a common
safekeeper and registered in the name of a nominee of the common safekeeper, on or around the Closing
Date. Upon deposit of the Regulation S Global Notes, Euroclear and/or Clearstream, Luxembourg will
credit each subscriber with a principal amount of Notes in the Class and equal to the principal amount
thereof for which each such subscriber has subscribed and paid.
Interests in any Regulation S Note may not at any time be held by any U.S. Person. By acquisition of a
beneficial interest in a Regulation S Global Note, the purchaser thereof will be deemed to represent,
among other things, that it is not a U.S. Person and that, if in the future it determines to transfer such
beneficial interest, it will transfer such interest only to a person whom the seller reasonably believes (a) to
be a non-U.S. Person, in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S
or (b) in respect of the Class A Notes, Class B Notes, Class C Notes and Class D Notes only, to be a
person who takes delivery in the form of an interest in a Rule 144A Global Note.
Each Class of Notes offered for sale within the United States or to U.S. Persons in reliance on Rule 144A
(the "Rule 144a Notes") will be represented initially by a Rule 144a Global Note in registered form. The
Rule 144a Global Notes will be deposited on or about the Closing Date either a common safekeeper for
both Euroclear and Clearstream, Luxembourg and will be registered in the name of a nominee of the
Common Safekeeper.
The Notes are intended to be held in a manner which will allow Eurosystem eligibility. This means that
the Notes that are Regulation S Notes are intended upon issue to be deposited with one of Euroclear or
Clearstream, Luxembourg as Common Safekeeper and does not necessarily mean that the Notes will be
recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the
Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon
satisfaction of the Eurosystem eligibility criteria.
Any beneficial interest in a Regulation S Global Note that is transferred to a person who takes delivery in
the form of an interest in a Rule 144A Global Note will, upon transfer, cease to be an interest in such
Regulation S Global Note and become an interest in the Rule 144A Global Note, and, accordingly, will
thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in a
Rule 144A Global Note for as long as it remains such an interest. Any beneficial interest in a Rule 144A
Global Note that is transferred to a person who takes delivery in the form of an interest in a Regulation S
Global Note will, upon transfer, cease to be an interest in a Rule 144A Global Note and become an
interest in the Regulation S Global Note and, accordingly, will thereafter be subject to all transfer
restrictions and other procedures applicable to beneficial interests in a Regulation S Global Note for so
long as it remains such an interest. No service charge will be made for any registration of transfer or
exchange of Notes, but the Transfer Agent may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
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Except in the limited circumstances described below, Notes in definitive, certificated, fully registered
form ("Definitive Notes") will not be issued in exchange for beneficial interests in either the Regulation S
Global Notes or the Rule 144A Global Notes.
Each investor in an ERISA Restricted Note will be deemed to represent, among other things, that (i) for
so long as it holds such Notes or interest herein, it is not, or is not acting on behalf of, a Benefit Plan
Investor, and (ii) that if it is a governmental, church, non-U.S. plan or other plan (other than a Benefit
Plan Investor), its acquisition, holding and disposition of such Notes or interest therein will not constitute
or result in a non-exempt violation of any Similar Law, and such investors will be deemed to agree to
certain transfer restrictions regarding their interest in such Notes.
Each investor in a Class A Note and a Class B Note will be deemed to represent, among other things, that
(i) if it is, or is acting on behalf of, a Benefit Plan Investor, its acquisition, holding and disposition of such
Notes will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of
the Code, and (2) if it is a governmental, church, non-U.S. or other plan (other than a Benefit Plan
Investor), its acquisition, holding and disposition of such Notes will not constitute or result in a nonexempt violation of any Similar Law.
Transfers of interests in the Notes are subject to certain restrictions and must be made in accordance with
the procedures set forth in the Note Trust Deed. Each purchaser of Notes in making its purchase will be
required to make, or will be deemed to have made, certain acknowledgements, representations and
agreements. See "Transfers and Transfer Restrictions".
B
Holding of beneficial interests in Global Notes
Ownership of beneficial interests in respect of Regulation S Global Notes will be limited to persons that
have accounts with Euroclear or Clearstream, Luxembourg (direct participants) or persons that hold
beneficial interests in the Regulation S Global Notes through participants (indirect participants) and,
together with direct participants, "participants", including, as applicable, banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with Euroclear or Clearstream,
Luxembourg either directly or indirectly. Indirect participants will also include persons that hold
beneficial interests through such indirect participants. Beneficial interests in Regulation S Global Notes
will not be held in definitive form. Instead, Euroclear and Clearstream, Luxembourg, as applicable, will
credit the participants' accounts with the respective interests beneficially owned by such participants on
each of their respective book-entry registration and transfer systems. Ownership of beneficial interests in
Regulation S Global Notes will be shown on, and transfers of beneficial interests therein will be effected
only through, records maintained by Euroclear or Clearstream, Luxembourg (with respect to the interests
of their participants) and on the records of participants or indirect participants (with respect to the
interests of their participants). The laws of some jurisdictions or other applicable rules may require that
certain purchasers of securities take physical delivery of such securities in definitive form. The foregoing
limitations may therefore impair the ability of persons within such jurisdictions or otherwise subject to the
laws thereof to own, transfer or pledge beneficial interests in the Regulation S Global Notes.
Beneficial interests in a Rule 144A Global Note may at any time only be held through and transfers
thereof will only be effected through, records maintained by Euroclear or Clearstream, Luxembourg. By
acquisition of a beneficial interest in a Rule 144A Global Note, the purchaser thereof will be deemed to
represent, amongst other things, that it is a QIB and that, if in the future it determines to transfer such
beneficial interest, it will transfer such interest in accordance with the procedures and restrictions
contained in the Note Trust Deed.
Except as set out below under "Issuance of Definitive Notes", participants or indirect participants will not
be entitled to have Notes registered in their names, will not receive or be entitled to receive physical
delivery of Notes in definitive registered form and will not be considered the holders thereof under the
Note Trust Deed. Accordingly, each person holding a beneficial interest in a Global Note must rely on the
rules and procedures of Euroclear or Clearstream, Luxembourg, and indirect participants must rely on the
procedures of the participant or indirect participants through which such person owns its beneficial
interest in the relevant Global Note to exercise any rights and obligations of a holder of Notes under the
Note Trust Deed.
Unlike legal owners or holders of the Notes, holders of beneficial interests in the Global Notes will not
have the right under the Note Trust Deed to act upon solicitations by the Issuer of consents or requests by
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the Issuer for waivers or other actions from Noteholders. Instead, a holder of a beneficial interest in a
Global Note will be permitted to act only to the extent it has received appropriate proxies to do so from
Euroclear or Clearstream, Luxembourg and, if applicable, their participants. There can be no assurance
that procedures implemented for the granting of such proxies will be sufficient to enable holders of
beneficial interests in Global Notes to vote on any requested actions on a timely basis. Similarly, upon the
occurrence of a Note Event of Default under the Notes, holders of beneficial interests in the Global Notes
will be restricted to acting through Euroclear and Clearstream, Luxembourg unless and until Definitive
Notes are issued in accordance with the Conditions. There can be no assurance that the procedures to be
implemented by Euroclear, and Clearstream, Luxembourg under such circumstances will be adequate to
ensure the timely exercise of remedies under the Note Trust Deed.
Purchasers of beneficial interests in a Global Note will hold such beneficial interests in the Global Note
relating thereto. Investors may hold their beneficial interests in respect of a Global Note directly through
Euroclear or Clearstream, Luxembourg, if they are account holders in such systems, or indirectly through
organisations which are account holders in such systems. Euroclear and Clearstream, Luxembourg will
hold beneficial interests in each Global Note on behalf of their account holders through securities
accounts in the respective account holders' names on Euroclear's and Clearstream, Luxembourg's
respective book-entry registration and transfer systems.
For further information regarding the purchase of beneficial interests in Global Notes, see "Transfer
Restrictions".
Although Euroclear and Clearstream, Luxembourg have agreed to certain procedures to facilitate transfer
of beneficial interests in the Global Notes among account holders of Euroclear and Clearstream,
Luxembourg, they are under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Issuer, the Note Trustee, the Issuer Security
Trustee, the Agents or any of their respective agents will have any responsibility for the performance by
Euroclear or Clearstream, Luxembourg or their respective participants or account holders of their
respective obligations under the rules and procedures governing their operations.
C
Payments on Global Notes
Each payment of interest on and repayment of principal of the Notes will be made in accordance with the
Agency Agreement.
Payments of any amounts owing in respect of the Global Notes will be made by the Issuer following
receipt of any principal or interest on the Global Notes, in sterling as follows: payments of such amounts
to be made to or to the order of Euroclear or Clearstream, Luxembourg, or its nominee which will
distribute such payments to Euroclear or Clearstream, Luxembourg participants who hold beneficial
interests in the Regulation S Global Notes or in the in the Rule 144a Global Notes in accordance with the
procedures of Euroclear or Clearstream, Luxembourg.
Under the terms of the Note Trust Deed, the Issuer and the Note Trustee will treat the registered holders
of Global Notes as the owners thereof for the purposes of receiving payments and for all other purposes.
Consequently, none of the Issuer, the Issuer Security Trustee, the Note Trustee, any Agent or any other
agent of the Issuer, the Issuer Security Trustee or the Note Trustee has or will have any responsibility or
liability for:
(a)
any aspect of the records of Euroclear or Clearstream, Luxembourg or any participant or indirect
participant relating to or payments made on account of a beneficial interest or bookentry interest
in a Global Note or for maintaining, supervising or reviewing any of the records of Euroclear or
Clearstream, Luxembourg or any participant or indirect participant relating to or payments made
on account of a beneficial interest in a Global Note; or
(b)
Euroclear or Clearstream, Luxembourg or any participant or indirect participant.
The Note Trustee is entitled to rely on any certificate or other document issued by Euroclear or
Clearstream, Luxembourg for determining the identity of the several persons who are for the time being
the beneficial holders of any beneficial interest in a Global Note.
All such payments will be distributed without deduction or withholding for any taxes, duties, assessments
or other governmental charges of whatever nature except as may be required by law. If any such
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deduction or withholding is required to be made, then neither the Issuer nor any other person will be
obliged to pay additional amounts in respect thereof.
In accordance with the rules and procedures for the time being of Euroclear or Clearstream, Luxembourg,
after receipt of any payment by Euroclear or Clearstream, Luxembourg or their nominees, the respective
systems will promptly credit their participants' accounts with payments in amounts proportionate to their
respective ownership of beneficial interests in the Global Notes as shown in the records of Euroclear or of
Clearstream, Luxembourg. The Issuer expects that payments by participants to owners of beneficial
interests in Global Notes held through such participants or indirect participants will be governed by
standing customer instructions and customary practices, as is now the case with the securities held for the
accounts of customers in bearer form or registered in "street name" or in the names of nominees for such
customers. Such payments will be the responsibility of such participants or indirect participants. None of
the Issuer, the Note Trustee, the Issuer Security Trustee, the Agents or any other agent of the Issuer, the
Note Trustee, the Issuer Security Trustee or the Registrar will have any responsibility or liability for any
aspect of the records of Euroclear or Clearstream, Luxembourg relating to or payments made by
Euroclear or Clearstream, Luxembourg on account of a participant's ownership of beneficial interests in
Global Notes or for maintaining, supervising or reviewing any records relating to a participant's
ownership of beneficial interests in the Global Notes.
D
Book-entry ownership
Each Regulation S Global Note will have an ISIN and a Common Code and each Rule 144a Global Note
will have a Common Code and will be deposited with a common safekeeper for Euroclear and
Clearstream, Luxembourg and registered in the name of a nominee of the common safekeeper.
E
Information regarding Euroclear and Clearstream, Luxembourg
Euroclear and Clearstream, Luxembourg have informed the Issuer as follows:
Custodial and depositary links have been established between Euroclear and Clearstream, Luxembourg to
facilitate the initial issue of the Global Notes and secondary market trading of beneficial interests in the
Global Notes.
Clearstream, Luxembourg and Euroclear each hold securities for their customers and facilitate the
clearance and settlement of securities transactions by electronic book-entry transfer between their
respective account holders. Clearstream, Luxembourg and Euroclear provide various services including
safekeeping, administration, clearance and settlement of internationally traded securities and securities
lending and borrowing. Clearstream, Luxembourg and Euroclear also deal with domestic securities
markets in several countries through established depositary and custodial relationships. Clearstream,
Luxembourg and Euroclear have established an electronic bridge between their two systems across which
their respective participants may settle trades with each other.
Clearstream, Luxembourg and Euroclear customers are world-wide financial institutions, including
underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Indirect
access to Clearstream, Luxembourg and Euroclear is available to other institutions that clear through or
maintain a custodial relationship with an account holder of either system.
As Euroclear and Clearstream, Luxembourg act on behalf of their respective account holders only, who in
turn may act on behalf of their respective clients, the ability of beneficial owners who are not account
holders with Euroclear or Clearstream, Luxembourg to pledge interests in the Global Notes to persons or
entities that are not account holders with Euroclear or Clearstream, Luxembourg, or otherwise take action
in respect of interests in the Global Notes, may be limited.
The Issuer understands that under existing industry practices, if either the Issuer or the Note Trustee
requests any action of owners of beneficial interests in Global Notes or if an owner of a beneficial interest
in a Global Note desires to give instructions or take any action that a holder is entitled to give or take
under the Note Trust Deed, Euroclear or Clearstream, Luxembourg, as the case may be, would authorise
the direct participants owning the relevant beneficial interests to give instructions or take such action, and
such direct participants would authorise indirect participants to give or take such action or would
otherwise act upon the instructions of such indirect participants.
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F
Redemption
For any redemptions of a Global Note in part, selection of the book-entry interests relating thereto to be
redeemed will be made by a nominee of a Common Safekeeper (in the case of the Regulation S Global
Notes and the Rule 144a Global Notes) on a pro rata basis (or on such other basis as the Common
Safekeeper deems fair and appropriate) provided that only bookentry interests in the original principal
amount of £100,000 (and integral multiples of £1,000 in excess thereof) or integral multiples of such
original principal amount will be redeemed. Upon any redemption in part, the Registrar will record in the
register maintained by the Registrar in accordance with the Agency Agreement listing, among other
things, the registered owners of the Global Notes and the Definitive Notes (the "Register") the principal
amount so redeemed.
G
Transfer and Transfer Restrictions
All transfers of beneficial interests in Global Notes will be recorded in accordance with the bookentry
systems maintained by Euroclear or Clearstream, Luxembourg, as applicable, pursuant to customary
procedures established by each respective system and its participants.
Each Global Note will bear a legend substantially identical to that appearing in paragraph 2 (Legends on
Global Note) under "Transfer Restrictions". Until and including the 40th day after the later of the
commencement of the offering of the Notes and the closing date for the offering of the Notes, beneficial
interests in a Global Note may be held only through Euroclear or Clearstream, Luxembourg, as
applicable.
H
Transfer of Global Notes
The Global Notes may be transferred respectively by the common safekeeper to a replacement common
safekeeper.
I
Issuance of Definitive Notes
Holders of beneficial interests in a Global Note will be entitled to receive Definitive Notes representing
Notes of the relevant Class in registered form in exchange for their respective holdings of beneficial
interests only if:
(a)
either Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14
days (other than by reason of holiday, statutory or otherwise) or announces an intention
permanently to cease business or does in fact do so and in either case no alternative clearing
system acceptable to the Note Trustee is in existence; or
(b)
as a result of any amendment to, or change in, the laws or regulations of the United Kingdom,
Ireland or any other jurisdiction (or of any political sub-division thereof) or of any authority
therein or thereof having power to tax or in the interpretation or administration of such laws or
regulations which becomes effective on or after the Closing Date, the Issuer or the Principal
Paying Agent is or will be required to make any deduction or withholding from any payment in
respect of the Notes which would not be required were the Notes in definitive registered form.
In order to receive a Definitive Note a person having an interest in a Global Note must provide the
Registrar with (a) a written order containing instructions and such other information as the Issuer and the
Registrar may require to complete, execute and deliver such Definitive Certificates and (b) in the case of
the Rule 144A Global Note only, a fully completed, signed certification substantially to the effect that the
exchanging holder is not transferring its interest at the time of such exchange or, in the case of
simultaneous sale pursuant to Rule 144A, a certification that the transfer is being made in compliance
with the provisions of Rule 144A. Definitive Certificates issued in exchange for a beneficial interest in
the Rule 144A Global Note shall bear the legends applicable to transfers pursuant to Rule 144A, as set out
under "Transfer and Transfer Restrictions" above.
Any Definitive Notes issued in exchange for beneficial interests in a Global Note will be registered by the
Registrar in such name or names as instructed by Euroclear or Clearstream, Luxembourg, as applicable. It
is expected that such instructions will be based upon directions received by Euroclear or Clearstream,
Luxembourg, as applicable from their participants with respect to ownership of the relevant beneficial
interests. In no event will Definitive Notes be issued in bearer form.
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DESCRIPTION OF NOTE TRUST DEED AND ISSUER DEED OF CHARGE
A
Note Trust Deed
The Note Trustee will be appointed pursuant to the Note Trust Deed to represent the interests of the
Noteholders. The Note Trustee will agree to hold the benefit of the covenants of the Issuer contained in
the Note Trust Deed on behalf of itself and on trust for the Noteholders.
Among other things, the Note Trust Deed:
(a)
sets out when, and the terms upon which, the Note Trustee will be entitled or obliged, as the case
may be, to take steps to enforce the Issuer's obligations under the Notes (or certain other Issuer
Transaction Documents);
(b)
contains various covenants of the Issuer relating to repayment of principal and payment of
interest in respect of the Notes, to the conduct of its affairs generally and to certain ongoing
obligations connected with its issuance of the Notes;
(c)
provides for the remuneration of the Note Trustee, the payment of expenses incurred by it in the
exercise of its powers and performance of its duties, provides for the indemnification of the Note
Trustee against, among other things, liabilities, losses and costs arising out of the Note Trustee's
exercise of its powers and performance of its duties and provides for the Note Trustee to be
indemnified, secured or pre-funded to its satisfaction before exercising certain powers and
discretions;
(d)
sets out whose interests the Note Trustee should have regard to when there is a conflict between
the interests of the different Classes of Noteholders;
(e)
provides that the determinations of the Note Trustee will be conclusive and binding on the
Noteholders;
(f)
sets out the extent of the Note Trustee's powers and discretions, including its rights to delegate
the exercise of its powers or duties to agents, to seek and act upon the advice of certain experts
and to rely upon certain documents without further investigation;
(g)
sets out the scope of the Note Trustee's liability for any fraud, negligence or wilful default in
connection with the exercise of its duties;
(h)
sets out the terms upon which the Note Trustee may, without the consent of the Noteholders,
waive or authorise any breach or proposed breach of covenant by the Issuer or determine that a
Note Event of Default or an event which will become a Note Event of Default with the giving of
notice or the passage of time will not be treated as such;
(i)
sets out the terms upon which the Note Trustee may, without the consent of the Noteholders,
make or sanction any modification to the Conditions or to the terms of the Note Trust Deed or
certain other Issuer Transaction Documents; and
(j)
sets out the requirements for the organisation of Noteholder meetings.
The Note Trust Deed also contains provisions governing the retirement or removal of the Note Trustee
and the appointment of a replacement Note Trustee. The Note Trustee may at any time and for any reason
resign as Note Trustee upon giving not fewer than three months' prior written notice to the Issuer. The
holders of the Notes of each Class acting as a single class by Ordinary Resolution may together remove
the Note Trustee from office provided that all provisions of the Note Trust Deed with respect to such
removal (and subsequent replacement and appointment of a replacement Note Trustee) are complied with
in full. No retirement or removal of the Note Trustee (or any replacement Note Trustee) will be effective
until a trust corporation has been appointed to act as replacement Note Trustee.
The appointment of a replacement Note Trustee will be made by the Issuer or, where the Note Trustee has
given notice of its resignation and the Issuer has failed to make any such appointment by the expiry of the
applicable notice period, by the Note Trustee itself.
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B
Issuer Deed of Charge
The Issuer will create security (the "Issuer Security") over all of its assets and undertakings, in favour of
the Issuer Security Trustee pursuant to the Issuer Deed of Charge including:
(a)
an assignment (and, to the extent not assignable, charge) of its rights in respect of the Issuer
Charged Documents (including an assignation of its rights in and to its beneficial interest in the
Scottish Security Agreements);
(b)
an assignment (or, to the extent not assignable, charge) if its rights in respect of any amount
standing from time to time to the credit of the Issuer Accounts (other than the Issuer Proceeds
Account);
(c)
a charge of its rights in respect of all shares, stocks, debentures, bonds or other securities and
investments owned by it or held by a nominee on its behalf; and
(d)
a first floating charge of its assets not otherwise mortgaged, charged or assigned under the Issuer
Deed of Charge (excluding the Issuer Proceeds Account) (but extending over all of its assets
located in Scotland or governed by Scots law).
The Issuer Security is held on trust by the Issuer Security Trustee for itself and the other Issuer Secured
Creditors in respect of any and all monies, obligations and liabilities incurred or otherwise payable by or
on behalf of the Issuer to the Issuer Secured Creditors under the Notes and the other Issuer Transaction
Documents.
The Issuer Deed of Charge:
(a)
regulates the relationships between the various Issuer Secured Creditors (including the Note
Trustee on behalf of the Noteholders) and sets out the Issuer Priorities of Payments (refer to the
section entitled "Cashflow and Issuer Priorities of Payments" for further information);
(b)
incorporates market standard provisions whereby all Issuer Secured Creditors agree that the
Issuer Security Trustee alone may enforce the Issuer Security; and
(c)
includes market standard limited recourse and non-petition provisions.
C
Issuer Security Agreement
The Issuer will create security over certain contract rights, in favour of the Issuer Security Trustee
pursuant to the Issuer Security Agreement.
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NOTEHOLDER COMMUNICATIONS
Any Verified Noteholder will be entitled from time to time to request the Issuer Cash Manager to request
other Noteholders of any Class or Classes to contact it subject to and in accordance with the following
provisions.
For these purposes "Verified Noteholder" means a Noteholder which has satisfied the Issuer Cash
Manager in accordance with Condition 14.22 (Notes being held through Euroclear or Clearstream,
Luxembourg).
Following receipt of a request for the publication of a notice from a Verified Noteholder (being the
Initiating Noteholder), the Issuer Cash Manager will publish such notice on its investor reporting website
and as an addendum to any Issuer Cash Manager Quarterly Report or other report to Noteholders due for
publication within five Business Days of receipt of the same (or, if there is no such report, through a
special notice for such purpose as soon as is reasonably practical after receipt of the same) provided that
such notice contains no more than:
(a)
an invitation to other Verified Noteholders (or any specified Class or Classes of the same) to
contact the Initiating Noteholder;
(b)
the name of the Initiating Noteholder and the address, phone number, website or email address at
which the Initiating Noteholder can be contacted; and
(c)
the date(s) from, on or between which the Initiating Noteholder may be so contacted.
The Issuer Cash Manager will not be permitted to publish any further or different information through
this mechanism.
The Issuer Cash Manager will have no responsibility or liability for the contents, completeness or
accuracy of any such published information and will have no responsibility (beyond publication of the
same in the manner described above) for ensuring Noteholders receive the same.
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TERMS AND CONDITIONS OF THE NOTES
The following are the Terms and Conditions of the Notes in the form (subject to amendment) in which
they will be set out in the Note Trust Deed. The terms and conditions set out below will apply to the Notes
in global form.
The £122,800,000 Class A Commercial Mortgage Backed Floating Rate Notes due 2023 (the "Class A
Notes"), the £16,600,000 Class B Commercial Mortgage Backed Floating Rate Notes due 2023 (the
"Class B Notes"), £28,000,000 Class C Commercial Mortgage Backed Floating Rate Notes due 2023 (the
"Class C Notes"), £17,199,000 Class D Commercial Mortgage Backed Floating Rate Notes due 2023 (the
"Class D Notes") and the £18,500,000 Junior Commercial Mortgage Backed Fixed Rate Notes due 2023
(the "Junior Notes" and, together with the Class A Notes, the Class B Notes, the Class C Notes and the
Class D Notes the "Notes") in each case of Magni Finance Designated Activity Company (the "Issuer")
are constituted by a note trust deed dated on or around 30 December 2015 (the "Closing Date") (the
"Note Trust Deed", which expression includes such note trust deed as from time to time modified in
accordance with the provisions therein contained and any deed or other document expressed to be
supplemental thereto, as from time to time so modified) and made between the Issuer and U.S. Bank
Trustees Limited (the "Note Trustee", which expression includes its successors or any other trustees
under the Note Trust Deed) as trustee for the holders for the time being of the Notes.
The respective holders of the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and
the Junior Notes (each a "Noteholder" and, collectively, the "Noteholders") are referred to in these terms
and conditions (the "Conditions") as the "Class A Noteholders", the "Class B Noteholders", the "Class
C Noteholders", the "Class D Noteholders" and the "Junior Noteholders" respectively, and the
respective holders of the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes are
collectively referred to in these Conditions as the "Senior Noteholders".
Any reference in these Conditions to a "Class" of Notes or of Noteholders shall be a reference to any, or
all of, the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes or the Junior Notes, as
the case may be, or to the respective holders thereof, other than where reference is made to the Classes of
the "Senior Notes", meaning the Class A Notes, the Class B Notes, the Class C Notes and the Class D
Notes or to "Senior Class", meaning any Class of the Senior Notes.
The security for the Notes is constituted by a deed of charge dated on or around the Closing Date (the
"Issuer Deed of Charge", which expression includes such deed of charge as from time to time modified
in accordance with the provisions therein contained and any deed or other document expressed to be
supplemental thereto, as from time to time modified) and made between, among others, the Issuer and
U.S. Bank Trustees Limited (the "Issuer Security Trustee", which expression includes its successors or
any other trustees under the Issuer Deed of Charge) and the Issuer Security Agreement.
By an agency agreement dated on or around the Closing Date (the "Agency Agreement", which
expression includes such agency agreement as from time to time modified in accordance with the
provisions therein contained and any agreement, deed or other document expressed to be supplemental
thereto, as from time to time so modified) and made between, among others, the Issuer, the Note Trustee
and Elavon Financial Services Limited, UK Branch in its separate capacities under the same agreement as
principal paying agent (the "Principal Paying Agent", which expression includes its successors or any
other principal paying agent appointed in respect of the Notes) and the agent bank (the "Agent Bank",
which expression includes its successors or any other agent bank appointed in respect of the Notes) (the
Principal Paying Agent being together with any other paying agents, if any, appointed from time to time
pursuant to the Agency Agreement, the "Paying Agents") and Elavon Financial Services Limited as
registrar (the "Registrar", which expression includes its successors or any other registrar appointed in
respect of the Notes and, together with the Paying Agents and the Agent Bank, the "Agents"), provision
is made for, among other things, the payment of principal and interest in respect of the Notes of each
Class.
The Noteholders and all persons claiming through them or under the Notes are entitled to the benefit of,
are bound by and are deemed to have notice of the provisions of the Note Trust Deed, the Issuer Deed of
Charge, the Agency Agreement and the other Issuer Transaction Documents applicable to them.
The statements in these Conditions include summaries of, and are subject to, the detailed provisions of the
Note Trust Deed, the Issuer Deed of Charge, the Agency Agreement, the Loans Transfer Agreement and
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the master definitions schedule entered into by, among others, the Issuer, the Note Trustee, the Issuer
Security Trustee and the Agents (the "Master Definitions Schedule") dated on or around the Closing
Date.
Copies of the Senior Facility Agreement, the Note Trust Deed, the Issuer Deed of Charge, the Issuer
Security Agreement, the Agency Agreement and the Master Definitions Schedule are available for
inspection during normal business hours at the specified office for the time being of each of the Paying
Agents.
Capitalised terms not otherwise defined in these Conditions shall bear the meanings given to them in the
Master Definitions Schedule available as described above. These Conditions shall be construed in
accordance with the principles of construction set out in the Master Definitions Schedule.
1.
FORM, DENOMINATION AND TITLE
1.1
Form and denomination
1.2
(a)
Each Class of Notes initially offered and sold outside the United States to non U.S.
persons pursuant to Regulation S ("Regulation S") under the United States Securities
Act of 1933, as amended (the "Securities Act") is represented by one or more global
registered notes in fully registered form (the "Regulation S Global Notes") without
coupons attached. Each Class of Notes initially offered and sold within the United States
to persons who are "qualified institutional buyers" as defined in, and in reliance on, Rule
144A under the Securities Act ("Rule 144A") is represented by one or more global
registered notes in fully registered form (the "Rule 144A Global Notes" and, together
with the Regulation S Global Notes, the "Global Notes") without coupons attached.
References herein to the "Notes" shall include (i) in relation to any Notes of a class
represented by a Global Note, units of the Minimum Denomination of such class, (ii) any
Global Note and (iii) any Definitive Note issued in exchange for a Global Note.
(b)
For so long as any of the Notes are represented by a Global Note, transfers and
exchanges of beneficial interests in such Global Note and entitlement to payments
thereunder will be effected subject to and in accordance with the rules and procedures
from time to time of Euroclear Bank S.A./N.V. ("Euroclear") or Clearstream Banking,
société anonyme ("Clearstream, Luxembourg"), as appropriate. Each Global Note will
be deposited with and registered in the name of a nominee of a common safekeeper for
Euroclear and Clearstream, Luxembourg.
(c)
For so long as any Notes are represented by a Global Note, transfers and exchanges of
beneficial interests in Global Notes and entitlement to payments thereunder will be
effected subject to and in accordance with the rules and procedures from time to time of
Euroclear Bank S.A./N.V. or Clearstream Banking, société anonyme, as appropriate.
(d)
For so long as the Notes are represented by a Global Note, and for so long as Euroclear
and Clearstream, Luxembourg so permit, the Notes shall be tradable only in the
minimum nominal amount of £100,000 and higher integral multiples of £1,000.
Title
(a)
Title to the Notes passes only by and upon registration in the register of Noteholders (the
"Register") which the Issuer shall procure be kept by the Registrar. The registered
holder of any Note will (except as otherwise required by law) be treated as its absolute
owner for all purposes (whether or not it is overdue and regardless of any notice of
ownership, trust or any interest or any writing on, or the theft or loss of, the Global Note
issued in respect of it) and no person will be liable for so treating the holder.
(b)
Ownership of interests in respect of the Global Notes will be limited to persons who
have accounts with Euroclear and/or Clearstream, Luxembourg or persons who hold
interests through such participants. Interests will be shown on, and transfers thereof will
be effected only through, records maintained in book-entry form by Euroclear and
Clearstream, Luxembourg (as applicable) and their participants.
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1.3
(c)
If the Issuer determines at any time that a U.S. holder of Rule 144A Notes is not a QIB
(any such person, a "Non-Permitted Holder"), the Issuer shall, as soon as reasonably
practicable after determination that such person is a Non-Permitted Holder by the Issuer
send, or procure that a Transfer Agent sends, notice to such Non-Permitted Holder
demanding that such holder transfers its Notes outside the United States to a non-U.S.
Person or within the United States to a U.S. Person that is a QIB within 30 days
following receipt of such notice. If such holder fails to sell or transfer its Rule 144A
Notes within such period (a) upon direction from the Issuer, a Transfer Agent, on behalf
of and at the expense of the Issuer, shall cause such Rule 144A Notes to be transferred in
a sale to a person or entity that certifies to such Transfer Agent and the Issuer, in
connection with such transfer, that such person or entity either is not a U.S. Person or is
a QIB and (b) pending such transfer, no further payments will be made in respect of such
Rule 144A Notes. The Issuer may select the purchaser by soliciting one or more bids
from one or more brokers or other market professionals that regularly deal in securities
similar to the Rule 144A Notes and selling such Rule 144A Notes to the highest such
bidder. However, the Issuer may select a purchaser by any other means determined by it
in its sole discretion. Each Noteholder and each other person in the chain of title from
the permitted Noteholder to the Non-Permitted Holder by its acceptance of an interest in
the Rule 144A Notes agrees to cooperate with the Issuer and the Transfer Agent to effect
such transfers. The proceeds of such sale, net of any commissions, expenses and taxes
due in connection with such sale shall be remitted to the selling Noteholder. The terms
and conditions of any sale hereunder shall be determined in the sole discretion of the
Issuer, subject to the transfer restrictions set out herein, and neither the Issuer nor the
Transfer Agent shall be liable to any person having an interest in the Notes sold as a
result of any such sale or the exercise of such discretion. The Issuer and the Transfer
Agent reserve the right to require any holder of Notes to submit a written certification
substantiating that it is a QIB or a non-U.S. Person. If such holder fails to submit any
such requested written certification on a timely basis, the Issuer and the Transfer Agent
have the right to assume that the holder of the Notes from whom such a certification is
requested is not a QIB or a non-U.S. Person. Furthermore, the Issuer and the Transfer
Agent reserve the right to refuse to honour a transfer of beneficial interests in a Rule
144A Note to any Person who is not either a non-U.S. Person or a U.S. Person that is a
QIB.
(d)
If any Noteholder of an ERISA Restricted Note is determined by the Issuer to be a
Noteholder who has made or is deemed to have made a representation pertaining to
ERISA, its status as a Benefit Plan Investor or Controlling Person, or Similar Law that is
subsequently shown to be false or misleading (any such Noteholder a "Non-Permitted
ERISA Holder"), the Non-Permitted ERISA Holder may be required by the Issuer to
sell or otherwise transfer its Notes to an eligible purchaser within 10 days of receipt of
notice from the Issuer to such Non-Permitted ERISA Holder requiring such sale or
transfer, at a price to be agreed between the Issuer and such eligible purchaser at the time
of sale, subject to the transfer restrictions set out in the Note Trust Deed. Each
Noteholder and each other Person in the chain of title from the Noteholder, by its
acceptance of an interest in such Notes, agrees to cooperate with the Issuer, to the extent
required to effect such transfers. None of the Issuer, the Trustee and the Registrar shall
be liable to any Noteholder having an interest in the Notes sold or otherwise transferred
as a result of any such sale or transfer. The Issuer shall be entitled to deduct from the
sale or transfer price an amount equal to all the expenses and costs incurred and any loss
suffered by the Issuer as a result of such forced transfer. The Non-Permitted ERISA
Holder will receive the balance, if any.
Global Notes
(a)
Upon deposit of the Global Notes, Euroclear or Clearstream, Luxembourg, as applicable,
will credit the account of each Accountholder (as defined below) with the principal
amount of Notes for which it has subscribed and paid.
(b)
References in these Conditions to Euroclear and/or Clearstream, Luxembourg shall,
wherever the context so admits, be deemed to include reference to any additional or
alternative clearing system approved by the Issuer and the Note Trustee.
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(c)
Each of the persons shown in the records of Euroclear and/or Clearstream, Luxembourg
and/or any other relevant clearing system, as the case may be, as being entitled to an
interest in a Global Note (each an "Accountholder") must look solely to Euroclear
and/or Clearstream, Luxembourg and/or such other relevant clearing system (as the case
may be) for such Accountholder's share of each payment made by the Issuer to such
Accountholder and in relation to all other rights arising under the Global Note. The
extent to which, and the manner in which, Accountholders may exercise any rights
arising under a Global Note will be determined by the respective rules and procedures of
Euroclear and Clearstream, Luxembourg and any other relevant clearing system (as the
case may be) from time to time. For so long as the relevant Notes are represented by a
Global Note, Accountholders shall have no claim directly against the Issuer.
2.
DEFINITIVE NOTES
2.1
Issue of Definitive Notes
(a)
A Global Note will be exchangeable for definitive Notes of the relevant Class in
registered form ("Definitive Notes") in an aggregate principal amount equal to the
Principal Amount Outstanding (as defined in Condition 7.6 (Principal Amount
Outstanding and Note Factor)) of the relevant Global Note only if any of the following
circumstances apply:
(i)
in the case of a Global Note held by or on behalf of a Common Safekeeper,
either Euroclear or Clearstream, Luxembourg:
(A)
is closed for business for a continuous period of 14 days (other than by
reason of holiday, statutory or otherwise); or
(B)
announces an intention permanently to cease business or does in fact do
so,
and in either case no alternative clearing system acceptable to the Note Trustee
is in existence; or
(ii)
as a result of any amendment to, or change in, the laws or regulations of the
United Kingdom, Ireland or of any other jurisdiction (or any political subdivision thereof) or of any authority therein or thereof having the power to tax,
or in the interpretation or administration of such laws or regulations, which has
become effective on or after the Closing Date, the Issuer or the Principal Paying
Agent is or will be required to make any deduction or withholding from any
payment in respect of the Notes which would not be required if the Notes were
in definitive registered form.
(b)
If Definitive Notes are issued in respect of Notes originally represented by a Global Note,
the beneficial interests represented by such Global Note shall be exchanged by the Issuer
for the relevant Notes in registered definitive form. The aggregate principal amount of
the Definitive Notes of the relevant Class shall be equal to the Principal Amount
Outstanding of the Notes at the date on which notice of exchange is given of the Global
Note for such Class, subject to and in accordance with the detailed provisions of these
Conditions, the Agency Agreement, the Note Trust Deed and the relevant Global Note.
(c)
Definitive Notes (which, if issued, will be in the denomination set out below) will be
serially numbered and will be issued in registered form only.
(d)
Each Definitive Note will have a minimum original principal amount of £100,000 and
will be serially numbered.
(e)
Definitive Notes, if issued, will be available at the offices of any Paying Agent. If the
Issuer fails to meet obligations to issue Notes in definitive form in exchange for a Global
Note, then that Global Note shall remain in full force and effect.
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(f)
2.2
For the purposes of these Conditions references herein to Notes shall include the Global
Notes and the Definitive Notes. These Conditions and the Issuer Transaction Documents
will be amended in such manner as the Note Trustee and Issuer Security Trustee require
to take account of the issue of Definitive Notes.
Title to and transfer of Definitive Notes
(a)
Title to a Definitive Note will pass upon registration in the Register. A Definitive Note
may be transferred in whole or in part provided that any partial transfer relates to an
original principal amount of at least £100,000 upon surrender of such Definitive Note, at
the specified office of the Registrar.
(b)
In the case of a transfer of part only of a Definitive Note, a new Definitive Note in
respect of the balance not transferred (subject to such balance not being less than
£100,000) will be issued to the transferor. All transfers of Definitive Notes are subject to
any restrictions on transfer set out in such Definitive Notes and the Transfer Regulations.
3.
STATUS AND RELATIONSHIP BETWEEN THE NOTES AND SECURITY
3.1
Status and relationship between the Notes
(a)
(b)
The Notes constitute unconditional (subject as provided in Condition 11 (Enforcement)),
direct, secured and limited recourse obligations of the Issuer. The Notes of each Class
will rank pari passu without any preference or priority among themselves as to payments
of Non-Excess Interest and principal, so that:
(i)
The Class A Notes rank pari passu without preference or priority among
themselves and senior to all other Classes of Notes as provided in the
Conditions and the Issuer Transaction Documents.
(ii)
The Class B Notes rank pari passu without preference or priority among
themselves, and senior to the Class C Notes and the Junior Notes, but junior to
the Class A Notes as provided in the Conditions and the Issuer Transaction
Documents.
(iii)
The Class C Notes rank pari passu without preference or priority among
themselves, and senior to the Class D Notes, but junior to the Class A Notes and
the Class B Notes as provided in the Conditions and the Issuer Transaction
Documents.
(iv)
The Class D Notes rate pari passu without preference or priority among
themselves, and senior to the Junior Notes but junior to the Class A Notes, the
Class B Notes and the Class C Notes as provided in the Conditions and the
Issuer Transaction Documents.
(v)
The Junior Notes rank pari passu without preference or priority among
themselves but junior to the Class A Notes, the Class B Notes and the Class C
Notes as provided in the Conditions and the Issuer Transaction Documents.
The Note Trust Deed contains provisions requiring the Note Trustee to have regard to
the interests of the Class A Noteholders, the Class B Noteholders, the Class C
Noteholders and the Class D Noteholders equally as regards all rights, powers, trusts,
authorities, duties and discretions of the Note Trustee (except where expressly provided
otherwise), but requiring the Note Trustee in any such case to have regard only to:
(i)
the interests of the Class A Noteholders (for so long as there are any Class A
Notes outstanding) if, in the Note Trustee's opinion, there is a conflict between
the interests of:
(A)
the Class A Noteholders; and
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(B)
(ii)
(iii)
3.2
the Class B Noteholders and/or the Class C Noteholders and/or the
Class D Noteholders; or
subject to paragraph (i) above, the interests of the Class B Noteholders (for so
long as there are any Class B Notes outstanding) if, in the Note Trustee's
opinion, there is a conflict between the interests of:
(A)
the Class B Noteholders; and
(B)
the Class C Noteholders and/or the Class D Noteholders;
Subject to paragraphs (i) and (ii) above, the interests of the Class C Noteholders
(for so long as there are any Class C Notes outstanding) if, in the Note Trustee's
opinion there is a conflict between the interests of:
(A)
the Class C Noteholders; and
(B)
the Class D Noteholders.
(c)
The Note Trust Deed contains provisions limiting the powers of: (i) the Class B
Noteholders among other things, to request or direct the Note Trustee to take any action
or to pass any Extraordinary Resolution or Ordinary Resolution (as defined in the Note
Trust Deed) according to the effect thereof on the interests of the Class A Noteholders,
(ii) the Class C Noteholders among other things, to request or direct the Note Trustee to
take any action or to pass any Extraordinary Resolution or Ordinary Resolution (as
defined in the Note Trust Deed) according to the effect thereof on the interests of the
Class A Noteholders or the Class B Noteholders and (iii) the Class D Noteholders
among other things to request or direct the Note Trustee to take any action or to pass any
Extraordinary Resolution or Ordinary Resolution (as defined in the Note Trust Deed)
acceding to the effect thereof on the interests of the Class A Noteholders, Class B
Noteholders and Class C Noteholders. Save as set out in Condition 15 (Indemnification
and exoneration of the Note Trustee and the Issuer Security Trustee), the Junior
Noteholders will not have the right to request or direct the Note Trustee to take any
action or pass an Extraordinary Resolution at any time for so long as any of the Senior
Notes are outstanding.
(d)
Except in certain circumstances as set out in the Note Trust Deed, the Note Trust Deed
contains no such limitation on the powers of the Class A Noteholders or, by reference to
the effect on the interests of the Class C Noteholders, the Class B Noteholders and the
Class D Noteholders the exercise of which powers will be binding on the Class B
Noteholders /or the Class C Noteholders or the Class D Noteholders irrespective of the
effect thereof on their interests, in each case, subject as provided below in Condition 14
(Meetings of Noteholders, modification and waiver, substitution and termination of
Issuer Related Parties).
(e)
Nothing in the Note Trust Deed or the Notes shall be construed as giving rise to any
relationship of agency or partnership between the Noteholders and any other person and
each Noteholder shall be acting entirely for its own account in exercising its rights under
the Note Trust Deed or the Notes.
Security
As security for its obligations under, inter alia, the Notes, the Issuer has granted the following
security (the "Issuer Security") in favour of the Issuer Security Trustee on trust for itself and the
Noteholders and the Issuer Related Parties (the Issuer Security Trustee and all of such persons
being collectively, the "Issuer Secured Creditors")
(a)
pursuant to the Issuer Deed of Charge:
(i)
an assignment (or to the extent not assignable, a charge by way of a first fixed
charge over) of the Issuer's rights in respect of the Issuer Charged Documents
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(including an assignation of its rights in and its beneficial interest in the Scottish
Security Agreements);
3.3
(ii)
an assignment (or to the extent not assignable, a charge by way of a first fixed
charge over) of the Issuer's rights in respect of any amount standing from time
to time to the credit of the Issuer Accounts (other than the Issuer Proceeds
Account);
(iii)
a first fixed charge over the Issuer's rights in respect of all shares, stocks,
debentures, bonds or other securities and investments owned by it or held by a
nominee on its behalf; and
(iv)
a first floating charge over (A) all of the Issuer's assets (other than those subject
to the fixed charges or assigned as set out in paragraphs (i) to (iii) above and the
Issuer Proceeds Account) and (B) all of the Issuer's assets (if any) located in
Scotland or otherwise governed by Scots law,
(b)
pursuant to the Issuer Security Agreement a security interest in respect of its rights title
and interest in the Senior Facility Agreement and the Junior Facility Agreement to the
Issuer Security Trustee (on trust for itself and for the other Issuer Secured Creditors) to
secure the obligations of the Issuer to the Noteholders and the other Issuer Secured
Creditors.
(c)
The Noteholders and the other Issuer Secured Creditors will share in the benefit of the
security constituted by the Issuer Deed of Charge and the Issuer Security Agreement,
upon and subject to the terms and conditions of the Issuer Deed of Charge and the Issuer
Security Agreement, as applicable.
Restrictions on disposal of Issuer Security
(a)
The Issuer Deed of Charge contains provisions regulating the priority of application of
the Issuer Security (and the proceeds thereof) by the Issuer Cash Manager among the
persons entitled thereto prior to the service of a Note Acceleration Notice and provisions
regulating such application by the Issuer Security Trustee after the service of a Note
Acceleration Notice.
(b)
If the Issuer Security has become enforceable otherwise than by reason of a default in
payment of any amount due on the Notes, the Issuer Security Trustee will not be entitled
to dispose of the undertaking, property or assets secured under the Issuer Security or any
part thereof or otherwise realise the Issuer Security unless:
(i)
a sufficient amount would be realised to allow discharge in full of all amounts
owing to the Senior Noteholders and any amounts required under the Issuer
Deed of Charge to be paid pari passu with, or in priority to, the Senior Notes; or
(ii)
the Issuer Security Trustee is of the opinion, which shall be binding on the
Noteholders and the Issuer Secured Creditors, reached after considering at any
time and from time to time the advice of such professional advisers as are
selected by the Issuer Security Trustee (at the cost of the Issuer), upon which the
Issuer Security Trustee shall be entitled to rely without liability, that the
cashflow 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 owing to (A) the Senior Noteholders and any amounts
required under the Issuer Deed of Charge to be paid pari passu with, or in
priority to, the Senior Notes; and (B) once all the Senior Noteholders (and all
such higher ranking persons) have been repaid, to the remaining Issuer Secured
Creditors in the order of priority set out in the Post-Enforcement Priority of
Payments; or
(iii)
the Issuer Security Trustee considers, in its discretion, that to not effect such
disposal or realisation would place the Issuer Security in jeopardy,
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and in each case, the Issuer Security Trustee has been indemnified and/or secured and/or
prefunded to its satisfaction.
(c)
(d)
Security Interests created pursuant to the Issuer Deed of Charge will be released in,
among others, the following circumstances:
(i)
all amounts which the Issuer Cash Manager, on behalf of the Issuer and the
Issuer Security Trustee (if applicable), is permitted to withdraw from the Issuer
Account(s), in accordance with the Issuer Deed of Charge, any such release to
take effect immediately upon the relevant withdrawal being made; or
(ii)
a sale of the Loans and any Loan Security pertaining to it by the Special
Servicer pursuant to the Servicing Agreement.
The Security Interest created pursuant to the Issuer Security Agreement will be released
in, among others, the following circumstances, a sale of the Loans and any Loan
Security pertaining to it by the Special Servicer pursuant to the Servicing Agreement
4.
COVENANTS
4.1
Restrictions
(a)
The Issuer has given certain covenants to the Note Trustee and the Issuer Security
Trustee in the Note Trust Deed and the Issuer Deed of Charge, respectively. In particular,
save with the prior written consent of the Note Trustee or the Issuer Security Trustee, as
applicable, or unless otherwise permitted under these Conditions or the Issuer
Transaction Documents, the Issuer shall not, so long as any Note remains outstanding:
(i)
Negative pledge: create or permit to subsist any encumbrance (unless arising by
operation of law or permitted under any of the Issuer Transaction Documents)
or other security interest whatsoever over any of its assets or undertaking;
(ii)
Restrictions on activities: (A) engage in any activity whatsoever which is not
incidental to or necessary in connection with any of the activities in which the
Issuer Transaction Documents provide or envisage that the Issuer will engage;
or (B) have any subsidiaries (as defined in the Companies Act 2006), any
subsidiary undertakings (as defined in the Companies Act 2006) or any
employees or premises;
(iii)
Disposal of assets: transfer, sell, lend, part with or otherwise dispose of, or deal
with, or grant any option or present or future right to acquire any of its assets or
undertakings or any interest, estate, right, title or benefit therein;
(iv)
Dividends or distributions: pay any dividend or make any other distribution to
its shareholders or issue any further shares;
(v)
Indebtedness: incur any financial indebtedness or give any guarantee in respect
of any financial indebtedness or of any other obligation of any person;
(vi)
Merger: consolidate or merge with any other person or convey or transfer its
properties or assets substantially as an entirety to any other person;
(vii)
No modification or waiver: permit any of the Issuer Transaction Documents to
which it is a party to become invalid or ineffective or permit the priority of the
security interests created or evidenced thereby or pursuant thereto to be varied
or agree to any modification of, or grant any consent, approval, authorisation or
waiver pursuant to, or in connection with, any of the Issuer Transaction
Documents to which it is a party or permit any party to any of the Issuer
Transaction Documents to which it is a party to be released from its obligations
or exercise any right to terminate any of the Transaction Documents to which it
is a party (in each case, without prejudice to the Servicing Agreement and the
express provisions of the Issuer Transaction Documents);
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(b)
4.2
(viii)
Purchase of Notes: not purchase any of the Notes (other than the purchase of the
Junior Notes) in connection with any exchange of the Junior Notes for the
Junior Loan following redemption in full of the Senior Notes; and
(ix)
Bank accounts: have an interest in any bank account other than the Issuer
Transaction Account and the Issuer Proceeds Account (the "Issuer Accounts"),
unless such account or interest therein is charged to the Issuer Security Trustee
on terms acceptable to it.
In giving any consent to the foregoing, the Note Trustee may require the Issuer to make
such modifications or additions to the provisions of any of the Issuer Transaction
Documents or may impose such other conditions or requirements as the Note Trustee
may deem expedient (in its absolute discretion) in the interests of the Noteholders but
subject to the terms of the Issuer Transaction Documents.
Save with the prior written consent of the Note Trustee or unless otherwise permitted under any
of the Issuer Transaction Documents, the Issuer shall, so long as any Note remains outstanding:
(a)
maintain its books and records, accounts and financial statements separate from any
other person or entity and use separate stationery, invoices and cheques;
(b)
hold itself out as a separate entity, conduct its business in its own name and maintain an
arm's length relationship with its affiliates (if any);
(c)
pay its own liabilities out of its own funds;
(d)
not commingle its assets with those of any other entity; and
(e)
observe all formalities required by its memorandum and articles of association
(including maintaining adequate capital for its operations).
4.3
The Issuer will provide the Principal Paying Agent with copies of the Note Trust Deed, the
Agency Agreement, the Issuer Deed of Charge, the Issuer Security Agreement, the Master
Definitions Schedule, the Subscription Agreement, the Servicing Agreement, the Cash
Management Agreement, the Issuer Account Bank Agreement, the Corporate Services
Agreement and the memorandum and articles of association of the Issuer, which will be available
for collection during normal business hours at the specified office for the time being of the Issuer
or the Paying Agents.
4.4
Cash Manager and Servicer
So long as any of the Notes remains outstanding, the Issuer will procure that there will at all
times be a cash manager in respect of the monies from time to time standing to the credit of the
Issuer Accounts and a servicer in respect of the Issuer Assets. Neither the Issuer Cash Manager
nor the Servicer will be permitted to terminate its appointment unless a replacement cash
manager or servicer, as the case may be, has been appointed in accordance with the terms of the
Cash Management Agreement and the Servicing Agreement, respectively.
4.5
Dealings with the Rating Agencies
The Issuer shall not engage in any communication (whether written, oral, electronic or otherwise)
with any of the Rating Agencies unless it:
(a)
has given at least two Business Days' notice of the same to the Note Trustee, the Issuer
Security Trustee, the Issuer Cash Manager, the Servicer and the Special Servicer;
(b)
permits such parties (or any of them) to participate in such communications; and
(c)
summarises any information provided to the Rating Agencies in such communication in
writing to the Note Trustee, the Issuer Security Trustee, the Issuer Cash Manager, the
Servicer and the Special Servicer.
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5.
INTEREST
5.1
Period of accrual
5.2
5.3
(a)
Each Note bears interest on its Principal Amount Outstanding from (and including) the
Closing Date.
(b)
Each Note (or, in the case of the redemption of part only of a Note, that part only of such
Note) will cease to bear interest from its due date for redemption unless payment of the
relevant amount of principal or any part thereof is improperly withheld or refused.
(c)
Where such payment of principal is improperly withheld or refused on any Note, interest
will continue to accrue thereon (before as well as after any judgment) at the rate
applicable to such Note up to (but excluding) the date on which payment in full of the
relevant amount of principal, together with the interest accrued thereon, is made or (if
earlier) the seventh day after notice is duly given to the holder thereof (either in
accordance with Condition 17 (Notice to Noteholders) or individually) that, upon
presentation thereof being duly made, in the case of a Global Note, or otherwise in the
case of a Definitive Note, such payment will be made, provided that upon presentation
thereof being duly made, payment is in fact made.
(d)
Whenever it is necessary to compute an amount of interest for any period (including any
Note Interest Period (as defined below)), such interest shall be calculated on the basis of
actual days elapsed and a 365 day year (the "Day Count Fraction").
Note Payment Dates and Note Interest Periods
(a)
Interest on the Notes is, subject as provided below in relation to the first Note Payment
Date, payable quarterly in arrears on the twentieth day of January, April, July and
October in each year (or, if such day is not a Business Day, the next following Business
Day in that calendar Month (if there is one) or the preceding Business Day (if there is
not)) (each, a "Note Payment Date") in respect of the Note Interest Period ending
immediately prior thereto. The first Note Payment Date in respect of each Class of Notes
is the Note Payment Date falling in January 2016 in respect of the period from (and
including) the Closing Date to (but excluding) that Note Payment Date.
(b)
In these Conditions, "Note Interest Period" shall mean the period from (and including)
a Note Payment Date to (but excluding) the next following Note Payment Date provided
that the first Note Interest Period shall be the period from (and including) the Closing
Date to (but excluding) the Note Payment Date falling in January 2016. If a Note Interest
Period would otherwise end on a day which is not a Business Day, that Note Interest
Period will instead end on the next Business Day in that calendar month (if there is one)
or the preceding Business Day (if there is not).
Deferral of Interest, Senior Note Extension Fee Amounts and Note Prepayment Fee Amounts
(a)
To the extent that, on any Note Payment Date there are insufficient Available Funds to
pay the full amount of interest on any Class of Notes (other than Non-Excess Interest on
the Most Senior Class of Notes then outstanding), Senior Note Extension Fee Amount or
Note Prepayment Fee Amount but for this paragraph then the amount of the shortfall in
interest (including any interest which comprises Note LIBOR Excess Amounts)
("Deferred Interest") and/or the unpaid Note Prepayment Fee Amount (the "Deferred
Note Prepayment Fee Amount") and/or the unpaid Senior Note Extension Fee Amount
(the "Deferred Senior Note Extension Fee Amount") will not fall due on that Note
Payment Date. Instead, the Issuer shall, in respect of each affected Class of Notes, create
a provision in its accounts for the related Deferred Interest and/or Deferred Note
Prepayment Fee Amount and/or Deferred Senior Note Extension Fee Amount on the
relevant Note Payment Date.
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(b)
Such Deferred Interest and/or Deferred Note Prepayment Fee Amount and/or Deferred
Senior Note Extension Fee Amount will:
(i)
in the case of the Senior Notes, accrue interest at the same rate as that payable in
respect of the related Class of Senior Notes from the date of deferral; and
(ii)
in the case of the Junior Notes (as applicable), accrue interest at the same rate as
that payable in respect of the Junior Notes from the first anniversary of the date
of deferral,
and shall be payable on the earlier of (i) any succeeding Note Payment Date when any
such Deferred Interest and/or Deferred Note Prepayment Fee Amounts and/or Deferred
Senior Note Extension Fee Amount shall be paid, but only if and to the extent that, on
such Note Payment Date, there are sufficient Available Funds, after deducting amounts
ranking in priority to the relevant Class of Notes in accordance with the PreEnforcement Revenue Priority of Payments, the Pre-Enforcement Loan Failure Priority
of Payments or, as applicable, the Post-Enforcement Priority of Payments and (ii) the
date on which the relevant Class of Notes is redeemed in full.
"Non-Excess Interest" means (i) for each Note Interest Period commencing prior to the
Senior Loan Final Repayment Date, all interest due on the Senior Notes, and (ii) for each
Note Interest Period commencing on or after the Senior Loan Final Repayment Date, all
interest due on the Senior Notes other than Note LIBOR Excess Amounts.
5.4
Rate of Interest
(a)
The rate of interest payable from time to time in respect of each Class of Notes (each, a
"Rate of Interest" and together, the "Rates of Interest") will be determined by the
Agent Bank on the basis of the following provisions.
(b)
The Rate of Interest applicable to each Class of the Senior Notes for any Note Interest
Period will be equal to (a) three-month LIBOR (or, in the case of the first Note Interest
Period, one-month LIBOR deposits) (subject to a floor of zero) ("Note LIBOR") plus (b)
the relevant Note Margin. For each Note Interest Period commencing on or after the
Senior Loan Final Repayment Date, the amount of interest payable on the Senior Notes
which represents the amount (if any) by which LIBOR exceeds 5 per cent. calculated in
accordance with the following formula (such amount, the "Note LIBOR Excess
Amount") (provided that the Note LIBOR Excess Amount will not be less than zero)
will be subordinated to, inter alia, all other amounts of interest and principal payable on
the Senior Notes, and to the extent there are insufficient funds to pay such amount, such
amount will be deferred to the next Note Interest Period:
(A  (B - C))  D
Where:
A = Principal Amount Outstanding of the Senior Notes on the relevant Note Payment
Date
B = Note LIBOR
C = 5 per cent. per annum
D = Day Count Fraction
The Note LIBOR Excess Amount shall be calculated by the Agent Bank on each Interest
Determination Date.
(c)
For the purposes of these Conditions, "Note Margin" means, with respect to each Class
of Senior Notes:
(i)
Class A Notes: 1.75 per cent. per annum;
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(ii)
Class B Notes: 3.00 per cent. per annum;
(iii)
Class C Notes: 4.25 per cent. per annum; and
(iv)
Class D Notes: 5.50 per cent. per annum.
(d)
With respect to the Junior Notes, the Rate of Interest for any Note Interest Period shall
be a fixed rate of 6 per cent. per annum.
(e)
The Agent Bank will at, or as soon as practicable after, 11.00 a.m. (London time) on
each Note Payment Date or, in the case of the first Note Interest Period, on the Closing
Date (each, an "Interest Determination Date"), determine the Rate of Interest
applicable to, and calculate the amount of interest payable on each of the Notes for the
Note Interest Period commencing on such Interest Determination Date.
(f)
For the purposes of determining the Rate of Interest in respect of the Senior Notes for
each Note Interest Period, Note LIBOR will be determined by the Agent Bank on the
basis of the following provisions:
(i)
on each Interest Determination Date, the Agent Bank will determine at, or as
soon as practicable after, 11.00 a.m. (London time) on such date the interest rate
for three-month sterling deposits in the London inter-bank market which
appears on the Reuters screen page LIBOR01 (the "LIBOR Screen Rate") (or,
in respect of the first such Note Interest Period, one-month sterling deposits) (or
(A) such other page as may replace the Reuters screen page LIBOR01 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 Note Trustee);
or
(ii)
if the LIBOR Screen Rate is not then available, the arithmetic mean (rounded to
four decimal places, 0.00005 rounded upwards) of the rates notified to the
Agent Bank at its request by each of three Reference Banks duly appointed for
such purpose as the rate at which three-month deposits in sterling are offered for
the period commencing on the relevant Note Payment Date by those Reference
Banks to prime banks in the London inter-bank market at or about 11.00 a.m.
(London time) on that date (or, in respect of the first Note Interest Period, onemonth sterling deposits notified by the Reference Banks).
If, on any such Interest Determination Date, at least two 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.
If, on any such Interest Determination Date, only one or none of the Reference
Banks provides the Agent Bank with such an offered quotation, the Agent Bank
shall forthwith consult with the Issuer for the purposes of agreeing one or, as the
case may be, two additional bank(s) to provide such a quotation or quotations to
the Agent Bank and the rate for the Note Interest Period in question shall be
determined, as aforesaid, on the basis of the offered quotations of such
Reference Bank and/or banks as so agreed.
If no such bank or banks is or are so agreed or such bank or banks as so agreed
does not or do not provide such a quotation or quotations, then the rate for the
relevant Note Interest Period shall be the arithmetic mean (rounded to two
decimal places, 0.005 being rounded upwards) of the rates quoted by major
banks in the London inter-bank market, selected by the Agent Bank, at
approximately 11.00 a.m. (London time) on the Closing Date or the relevant
Interest Determination Date, as the case may be, for loans in sterling to leading
Eurozone banks for a period of three months or, in the case of the first Note
Interest Period, the same as the relevant Note Interest Period. If the Rate of
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Interest cannot be determined in accordance with the above provisions, the Rate
of Interest shall be determined as at the last preceding Interest Determination
Date.
If the rate of Note LIBOR calculated by the Agent Bank pursuant to this
Condition 5.4 is less than zero, Note LIBOR shall be deemed to be zero.
5.5
5.6
Senior Note Extension Fees
(a)
On the Note Payment Date that falls on the date on which the Company pays the Senior
Loan Extension Fee, the Issuer shall be required to pay a fee in respect of each Class of
Senior Notes equal to 0.25 per cent. of the Principal Amount Outstanding of such Class
of Senior Notes on the date the Company makes the request to exercise the Second Loan
Extension Option (such amount, the "Senior Note Extension Fee Amount").
(b)
The payment of the Senior Note Extension Fee Amount will be subordinated to, inter
alia, the payment of interest on and repayment of principal of the Notes.
(c)
No Senior Note Extension Fee will be payable in any circumstance where there is no
Senior Loan Extension Fee payable pursuant to the terms of the Senior Finance
Documents.
Note Prepayment Fee Amount
(a)
On each Note Payment Date, the Prepayment Fee (if any) received by or on behalf of the
Issuer will be allocated to each Class of Senior Notes that is subject to prepayment on
such Note Payment Date in an amount equal to the Note Prepayment Fee Amount
calculated for that Class of Senior Notes by reference to each such Note Payment Date.
(b)
Subject to the below, an Note Prepayment Fee Amount will be payable if on a Note
Payment Date the Principal Amount Outstanding of the relevant Class of Senior Notes
(after taking into account any prepayment to be made on the NPD0 (as defined below)
but disregarding any prepayments utilising funds from a prepayment under the Senior
Loan for illegality, as a result of a right of prepayment and cancellation for a single
lender or for market disruption or as a result of a compulsory purchase, each under the
Senior Facility Agreement) is less than the Minimum Target Principal Amount
Outstanding for the relevant Class of Senior Notes for that Note Payment Date
("NPD0"). The Note Prepayment Fee Amount payable on NPD0 will be calculated by
reference to NPD0 and each Note Payment Date after NPD0 on which the Principal
Amount Outstanding of the relevant Class of Notes is less than the Minimum Target
Principal Amount Outstanding (each a "relevant NPD") using the below formula.
(c)
"Note Prepayment Fee Amount" means, in the case of prepayment of each Class of
Senior Notes:


 Bi – A   C  365i 
D
n
i 1


Where:
(A)
A is the Principal Amount Outstanding for the relevant Class of Senior Notes on
NPD0 (taking into account any prepayments to be made on that Note Payment
Date but disregarding any prepayments utilising funds from a prepayment under
the Senior Loan for illegality (as set out in Clause 8.1 (Illegality) of the Senior
Facility Agreement), as a result of a right of prepayment and cancellation for a
single lender (as set out in Clause 8.9 (Right of repayment and cancellation in
relation to a Single Lender) of the Senior Facility Agreement) or for market
disruption (as set out in Clause 8.10 (Right of repayment and cancellation in
relation to Market Disruption) of the Senior Facility Agreement) or as a result
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of a compulsory purchase (as set out in Clause 25.13 (Compulsory purchase) of
the Senior Facility Agreement).
(B)
Bi is the Minimum Target Principal Amount Outstanding for the relevant Class
of Senior Notes on the relevant NPD.
(C)
C is the Note Margin for each Class of Senior Notes.
(D)
Di is the number of days in the relevant Note Interest Period commencing on the
relevant NPD.
(E)
(F)
5.7
indicates each relevant NPD (commencing with NPD0 and each subsequent
relevant NPD being identified in ascending numerical order).
i
n indicates the total number of relevant NPDs on which A is less than B (as at
NPD0 and therefore disregarding the adjustment made subsequent to payment
of any Note Prepayment Fee Amount on NPD0 to the Minimum Target
Principal Amount Outstanding for the relevant Class of Senior Notes referred to
in the paragraph immediately below).
(d)
Following payment of any Note Prepayment Fee Amount on a Note Payment Date, if the
Minimum Target Principal Amount Outstanding for the relevant Class of Senior Notes
in relation to the immediately following Note Payment Date is higher than A above
(calculated as at the relevant Portfolio Determination Date immediately preceding such
Note Payment Date) (such lower amount referred to as the "Adjusted Minimum Target
Principal Amount Outstanding") the Minimum Target Principal Amount Outstanding
will be reduced so that the Minimum Target Principal Amount Outstanding for each of
the relevant Class of Senior Notes is equal to the Adjusted Minimum Target Principal
Amount Outstanding.
(e)
No Note Prepayment Fee Amount will be payable in any circumstance where there is no
Prepayment Fee payable pursuant to the terms of the Senior Finance Documents.
(f)
The aggregate Note Prepayment Fee Amount payable for all Classes of Senior Notes on
any Note Payment Date will never be greater than the Prepayment Fee payable to the
Issuer under the Senior Facility Agreement on the corresponding Loan Payment Date.
Determination of Rates of Interest and calculation of Interest Amounts for Notes and the
Senior Loan
(a)
The Agent Bank shall at, or as soon as practicable after, each Interest Determination
Date, but in no event later than the third day of the relevant Note Interest Period, notify
the Issuer, the Note Trustee, the Issuer Cash Manager, the Paying Agents and each of the
Clearing Systems in writing of (i) the Rates of Interest applicable for the Note Interest
Period within which such Interest Determination Date falls, in respect of the Notes of
each Class and (ii) the amount of interest (the "Interest Amount") payable, subject to
Condition 5.2 (Note Payment Dates and Note Interest Periods) and Condition 5.4 (Rate
of Interest), in respect of such Note Interest Period in respect of the Notes of each Class
and (iii) each Note Factor (as defined in Condition 7.6 (Principal Amount Outstanding
and Note Factor)).
(b)
The Servicer (on behalf of the Loan Facility Agent) shall, on each Interest Determination
Date, calculate the rate of interest payable of the Senior Loan, which shall in respect of
each Loan Interest Period be the aggregate of the applicable:
(i)
Weighted Average Note Margin (based on the calculation of the same by the
Issuer Cash Manager on the Specified Note Payment Date (such rate, the
"Senior Loan Margin"); and
(ii)
Note LIBOR for the Note Interest Period commencing immediately following
the relevant Interest Determination Date (such rate, "Senior Loan LIBOR", and
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together with the relevant Senior Loan Margin, the "Senior Loan Interest
Rate"),
and shall promptly notify the Loan Facility Agent of the Senior Loan Interest Rate in
writing on such date.
(c)
5.8
5.9
Each Interest Amount in respect of the Notes of each Class shall be calculated by
applying the relevant Rate of Interest to the Principal Amount Outstanding of the
relevant Class of Notes and multiplying such sum by the actual number of days in the
relevant Note Interest Period divided by 365, and rounding the resultant figure
downward to the nearest penny.
Publication of Interest Amounts and other Notices
(a)
As soon as practicable after receiving notification thereof, the Issuer will cause the Rate
of Interest and the Interest Amount applicable to the Notes of each Class for each Note
Interest Period and the Note Payment Date in respect thereof to be notified in writing to
the Irish Stock Exchange plc (the "Irish Stock Exchange") (for so long as the Notes are
listed on the Irish Stock Exchange) and will cause notice thereof to be given to the
relevant Class of Noteholders in accordance with Condition 17 (Notice to Noteholders).
(b)
The Interest Amounts, Note Payment Dates and other determinations so notified may
subsequently be amended (or appropriate alternative arrangements made by way of
adjustment) without notice in the event of any extension or shortening of the Note
Interest Period for the Notes.
Determination and/or calculation by the Note Trustee
If the Agent Bank does not at any time for any reason determine the Rate of Interest and/or
calculate the Interest Amount for any Class of Notes and/or make any other necessary
calculations in accordance with this Condition, the Note Trustee may: (or may appoint an agent
at the cost of the Issuer, on its behalf to do so) (a) determine the Rate of Interest at such rate as, in
its absolute discretion (having such regard as it shall think fit to the procedure described above),
it shall deem fair and reasonable in all the circumstances, and/or (as the case may be); (b)
calculate the Interest Amount for each Class of Notes in the manner specified in Condition 5.7
(Determination of Rates of Interest and calculation of Interest Amounts for Notes and the Senior
Loan) and/or (as the case may be); (c) calculate each Note Factor in the manner described in
Condition 7.6 (Principal Amount Outstanding and Note Factor)) and any such determination
and/or calculation shall be deemed to have been made by the Agent Bank or the Issuer Cash
Manager (as applicable).
5.10
Notifications to be final
All notifications, opinions, determinations, certificates, calculations, quotations and decisions
given, expressed, made or obtained for the purposes of this Condition, whether by the Reference
Banks (or any of them) or the Agent Bank or the Note Trustee shall (in the absence of wilful
default, bad faith or manifest error) be binding on the Issuer, the Reference Banks, the Agent
Bank, the Note Trustee, the Servicing Entities, the Issuer Cash Manager, the Paying Agents and
all Noteholders and (in the absence of wilful default, bad faith or manifest error) no liability to
the Noteholders shall attach to the Issuer, the Reference Banks, the Agent Bank or the Note
Trustee in connection with the exercise or non-exercise by them or any of them of their powers,
duties and discretions hereunder.
5.11
Reference Banks and Agent Bank
(a)
The Issuer shall ensure that, so long as any of the Notes remains outstanding, there shall,
at all times, be three Reference Banks and an Agent Bank and the Issuer may, subject to
the prior written approval of the Note Trustee, terminate the appointment of the relevant
Reference Bank or the Agent Bank.
(b)
In the event of the principal London office of any such Reference Bank being unable or
unwilling to continue to act as a Reference Bank, the Agent Bank shall appoint such
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other bank as may have been previously approved in writing by the Note Trustee to act
as such in its place.
5.12
(c)
In the event of the principal London office of any such Agent Bank being unable or
unwilling to continue to act as an Agent Bank or failing duly to determine the Rates of
Interest and the Interest Amounts for any Note Interest Period, the Issuer shall, subject to
the prior written approval of the Note Trustee, appoint the London office of another
major bank engaged in the London interbank market to act in its place.
(d)
Any purported resignation or removal by the Agent Bank shall not take effect until a
successor so approved by the Note Trustee has been appointed.
Non-payment of Interest
For the avoidance of doubt, there shall be no Note Event of Default caused by reason only of the
non-payment (for the avoidance of doubt, to the extent that, on any Note Payment Date, there are
insufficient Available Funds to pay such amounts) when due of interest, Note Prepayment Fee
Amounts or Senior Note Extension Fee Amounts on any Class of Notes other than for nonpayment of Non-Excess Interest on the Most Senior Class of Notes then outstanding.
6.
PAYMENTS
6.1
Global Notes
6.2
(a)
Payment of principal, interest and other amounts will be made by transfer to the
registered account of the Noteholder. Subject to Condition 2 (Definitive Notes), interest,
principal or other amounts on Notes due on a Note Payment Date will be paid to the
holder (or the first named if joint holders) shown on the Register at the close of business
on the date (the "Record Date") being in the case of Global Notes, the Business Day,
and in the case of Definitive Notes, the fifteenth Business Day before the due date for
such payment.
(b)
For the purposes of this Condition, a Noteholder's registered account means the sterling
account maintained by or on behalf of it with a bank that processes payments in sterling,
details of which appear on the register of Noteholders at the close of business, in the case
of principal and interest due otherwise than on a Note Payment Date, on the second
Business Day (as defined below) before the due date for payment and, in the case of
interest due on a Note Payment Date, on the relevant Record Date, and a Noteholder's
registered address means its address appearing on the register of Noteholders at that time.
Definitive Notes
Payments of principal and interest (except where, after such payment, the unpaid principal
amount of the relevant Note would be reduced to zero (including as a result of any other payment
of principal due in respect of such Note), in which case the relevant payment of principal or
interest, as the case may be, will be made against surrender of such Note) in respect of Definitive
Notes, will be made on the relevant Note Payment Date to the holder of a Definitive Note as at
the Record Date for payment in respect of such Definitive Note or by transfer to a sterling
denominated account nominated in writing by the payee to the Registrar not later than the due
date for such payment. Any such application for transfer to such account shall be deemed to
relate to all future payments in respect of such Definitive Note until such time as the Registrar is
notified in writing to the contrary by the holder thereof. If any payment due in respect of any
Definitive Note is not paid in full, the Registrar will annotate the Register with a record of the
amount, if any, so paid.
6.3
Method of Payment
Payments will be made by credit or transfer to an account in sterling maintained by the payee
with a bank in London.
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6.4
Payments subject to applicable Laws
Payments of any amount in respect of a Note including principal and interest in respect of the
Notes are subject, in all cases, to (a) any fiscal or other laws and regulations applicable in the
place of payment and (b) any withholding or deduction required pursuant to an agreement
described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the "U.S. Tax Code")
or otherwise imposed pursuant to Sections 1471 through 1474 of the U.S. Tax Code, any
regulations or agreements thereunder, official interpretations thereof, or any law implementing an
intergovernmental approach thereto.
6.5
6.6
Payment on Business Days
(a)
Where payment is to be made by transfer to a registered account, payment instructions
(for value the due date or, if that is not a Business Day (as defined below), for value the
first following day which is a Business Day) will be initiated on each Note Payment
Date or, in the case of a payment of principal or a payment of interest due otherwise than
on a Note Payment Date, if later, on the Business Day on which the relevant Global Note
is surrendered at the specified office of an Agent.
(b)
Noteholders will not be entitled to any interest or other payment for any delay after the
due date in receiving the amount due if the due date is not a Business Day, if the
Noteholder is late in surrendering its Global Note (if required to do so).
Presentation on non-Business Days
If the date for payment of any amount in respect of a Note is not a Business Day, payment shall
be made on the next succeeding day that is a Business Day (unless such Business Day falls in the
next succeeding calendar month in which event the immediately preceding Business Day) and no
further payments of additional amounts by way of interest, principal or otherwise shall be due in
respect of such Note. For the purposes of Condition 7 (Redemption) and this Condition 6,
"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for
general business in London, Jersey and Dublin.
6.7
Accrual of Interest on late payments
If any payment of interest, principal or any other amount in respect of any Class of Notes is not
made when due and payable (other than because the due date is not a Business Day (as defined in
Condition 6.6 (Presentation on non-Business Days)) or by reason of noncompliance with
Condition 6.1 (Global Notes) or Condition 2 (Definitive Notes)), then such unpaid amount shall
itself bear interest at the applicable Rate of Interest to (but excluding) the date on which payment
in full of the relevant unpaid amount (together with interest accrued thereon) is made and notice
thereof has been duly given to the Noteholders in accordance with Condition 17 (Notice to
Noteholders), provided that such unpaid amount and interest thereon are, in fact, paid.
6.8
Incorrect payments
(a)
The Issuer Cash Manager will (on behalf of the Issuer), from time to time, notify
Noteholders in accordance with the terms of Condition 17 (Notice to Noteholders) of any
over-payment or under-payment of which it has actual notice made on any Note
Payment Date to any party entitled to the same pursuant to the Pre-Enforcement
Revenue Priority of Payments, the Pre-Enforcement Principal Allocation Rules or, as
applicable, the Pre-Enforcement Loan Failure Priority of Payments.
(b)
Following the giving of such a notice, the Issuer Cash Manager shall rectify such overpayment or under-payment by increasing or, as the case may be decreasing payments to
the relevant parties on any subsequent Note Payment Date. Any notice of over-payment
or under-payment pursuant to this Condition shall contain reasonable details of the
amount of the same, the relevant parties and the adjustments to be made to future
payments to rectify the same. Neither the Issuer nor the Issuer Cash Manager shall have
any liability to any person for making any such correction.
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6.9
Initial Paying Agents, Agent Bank and Registrar
(a)
The names of the initial Paying Agent and its initial specified office is set out at the
Agency Agreement. The Principal Paying Agent is Elavon Financial Services Limited
acting through its UK branch at 125 Old Broad Street, London EC2N 1AR. The Issuer
reserves the right, subject to the prior written approval of the Note Trustee, at any time to
vary or terminate the appointment of any Paying Agent, the Registrar and the Agent
Bank and to appoint additional or other agents provided that:
(i)
there will at all times be a person appointed to perform the obligations of the
Principal Paying Agent;
(ii)
there will at all times be at least one Paying Agent (which may be the Principal
Paying Agent) having its specified office in such place as may be required by
the rules and regulations of the relevant stock exchange and competent authority;
(iii)
the Issuer undertakes that it will ensure that it maintains a Paying Agent in a
Member State of the European Union that will not be obliged to withhold or
deduct tax pursuant to European Council Directive 2003/48/EC on the taxation
of savings income or any law implementing or complying with, or introduced in
order to conform to, such Directive; and
(iv)
the Issuer shall not appoint a Paying Agent located in Ireland if to do so would
require the Issuer to make withholding or deduction in respect of Irish taxes
from payments made in respect of the Notes.
(b)
The Issuer will not appoint a Registrar which is located in the United Kingdom and will
not maintain a register in respect of the Notes in the United Kingdom.
(c)
The Issuer will cause at least 30 days' notice of any change in or addition to the Paying
Agents or the Registrar or their specified offices to be given to the Noteholders in
accordance with Condition 17 (Notice to Noteholders).
7.
REDEMPTION
7.1
Final redemption of the Senior Notes
7.2
(a)
Unless previously redeemed in full and cancelled as provided in this Condition 7, the
Issuer will redeem the Senior Notes at their respective Principal Amounts Outstanding
together with the accrued interest and any other accrued but unpaid amounts on the Final
Note Maturity Date.
(b)
The Issuer may not redeem the Senior Notes in whole or in part prior to the Final Note
Maturity Date except as provided in this Condition but without prejudice to Condition 10
(Note Events of Default).
Redemption of the Junior Notes
Unless previously redeemed in full and cancelled as provided in this Condition 7 and provided
that the Senior Notes have been redeemed in full, the Issuer will redeem the Junior Notes at their
Principal Amount Outstanding together with accrued interest on the Final Note Maturity Date.
7.3
Mandatory Redemption from Principal Receipts
(a)
Unless such Note has been previously redeemed in full and cancelled as provided in this
Condition 7:
(i)
each Class of Senior Notes is subject to mandatory early redemption in part on
each Note Payment Date in an amount equal to the Senior Principal Receipts
allocated to such Class on such Note Payment Date; and
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(ii)
the Junior Notes will be subject to mandatory early redemption in an amount
equal to the Junior Note Principal Redemption Amount if any, on such Note
Payment Date subject to the relevant Priority of Payments.
(b)
On each Note Payment Date on which the Pre-Enforcement Loan Failure Priority of
Payments or the Post-Enforcement Priority of Payments do not apply, the Class A Notes
will be subject to mandatory redemption in part in an amount equal to the Class A
Principal Redemption Amount for such Note Payment Date, the Class B Notes will be
subject to mandatory redemption in part in an amount equal to the Class B Principal
Redemption Amount for such Note Payment Date, the Class C Notes will be subject to
mandatory redemption in part in an amount equal to the Class C Principal Redemption
Amount for such Note Payment Date and the Class D Notes will be subject to mandatory
redemption in part in an amount equal to the Class D Principal Redemption Amount for
such Note Payment Date.
(c)
In these Conditions:
"Junior Principal Receipts" means all payments and repayments of principal received
or recovered by or on behalf of the Issuer in connection with the Junior Facility
Agreement.
"Senior Principal Receipts" means:
(i)
all amounts of principal received by or on behalf of the Issuer in respect of any
repayment or prepayment of the Senior Loan whether as a result of a voluntary
or mandatory repayment or prepayment (including any prepayment arising as a
result of the disposal of a Property), including amounts allocated to the same in
respect of any distributions made on any enforcement of the Senior Loan and
the Loan Security; and
(ii)
amounts determined to represent the same and received by or on behalf of the
Issuer in respect of any sale of the Senior Loan undertaken at the instigation of
the Special Servicer (or at the direction of the relevant Senior Noteholders
pursuant to a Note Maturity Plan) as an alternative to directing enforcement of
the Loan Security.
"Cash Trap Principal" means Senior Principal Receipts which are received or
receivable as a result of the provisions of the Senior Facility Agreement requiring, in
certain circumstances, funds standing to the credit of the Cash Trap Account (which is
an Obligor Account) to be applied in prepayment of the Senior Loan.
"Non-Cash Trap Principal" means Senior Principal Receipts other than Cash Trap
Principal.
In respect of a Note Payment Date:
(i)
the "Class A Principal Redemption Amount" shall be (if there are then Class
A Notes outstanding; otherwise it shall be zero) the aggregate of:
(A)
a pro rata share (according to the aggregate Principal Amount
Outstanding of each Class of Notes as determined prior to the
application of any Cash Trap Principal on the Class A Notes) of the
Non-Cash Trap Principal determined by the Issuer Cash Manager as
available for distribution in respect of that Note Payment Date; and
(B)
all Cash Trap Principal so determined up to an amount equal to (1) the
Principal Amount Outstanding of the Class A Notes less (2) the NonCash Trap Principal referred to in (i)(A) above.
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(ii)
the "Class B Principal Redemption Amount" shall be (if there are Class B
Notes outstanding; otherwise it shall be zero) the aggregate of:
(A)
a pro rata share (according to the aggregate Principal Amount
Outstanding of each Class of Notes as determined prior to the
application of any Cash Trap Principal on the Class B Notes) of the
Non-Cash Trap Principal determined by the Issuer Cash Manager as
available for distribution in respect of that Note Payment Date; and
(B)
all Cash Trap Principal (less any payable to the Class A Noteholders as
determined in accordance with paragraph (i)(B) above) so determined
up to the amount equal to (1) the Principal Amount Outstanding of the
Class B Notes less (2) the Non-Cash Trap Principal referred to in (ii)(A)
above.
For the avoidance of doubt, any allocation of Cash Trap Principal to the
Class B Notes shall only be made after the allocation of the Cash Trap
Principal to the Class A Notes as referred to in (i)(B) above and the
Principal Amount Outstanding of the Class A Notes is reduced to zero.
(iii)
the "Class C Principal Redemption Amount" shall be (if there are Class C
Notes outstanding; otherwise it shall be zero) the aggregate of:
(A)
a pro rata share (according to the aggregate Principal Amount
Outstanding of each Class of Notes as determined prior to the
application of any Cash Trap Principal on the Class C Notes) of the
Non-Cash Trap Principal determined by the Issuer Cash Manager as
available for distribution in respect of that Note Payment Date; and
(B)
all Cash Trap Principal (less any payable to the Class A Noteholders
and the Class B Noteholders as determined in accordance with
paragraph (i)(B) or (ii)(B) above, as applicable) so determined up to the
amount equal to (A) the Principal Amount Outstanding of the Class C
Notes less (B) the Non-Cash Trap Principal referred to in (c)(i) above.
For the avoidance of doubt, any allocation of Cash Trap Principal to the
Class C Notes shall only be made after the allocation of the Cash Trap
Principal to the Class A Notes as referred to in (i)(B) above and the
Class B Notes as referred to in (ii)(B) above and the Principal Amount
Outstanding of the Class A Notes and the Class B Notes is reduced to
zero.
(iv)
the "Class D Principal Redemption Amount" shall be (if there are Class D
Notes outstanding; otherwise it shall be zero) the aggregate of:
(A)
a pro rata share (according to the aggregate Principal Amount
Outstanding of each Class of Notes as determined prior to the
application of any Cash Trap Principal on the Class D Notes) of the
Non-Cash Trap Principal determined by the Issuer Cash Manager as
available for distribution in respect of that Note Payment Date; and
(B)
all Cash Trap Principal (less any payable to the Class A Noteholders,
the Class B Noteholders and the Class C Noteholders as determined in
accordance with paragraph (i)(B), (ii)(B) or (iii)(B) above, as applicable)
so determined up to the amount equal to (A) the Principal Amount
Outstanding of the Class D Notes less (B) the Non-Cash Trap Principal
referred to in (c)(i) above.
For the avoidance of doubt, any allocation of Cash Trap Principal to the
Class D Notes shall only be made after the allocation of the Cash Trap
Principal to the Class A Notes as referred to in (i)(B) above, the Class B
Notes as referred to in (ii)(B) and the Class C Notes as referred to in
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(iii)(B) above and the Principal Amount Outstanding of the Class A
Notes, the Class B Notes and the Class C Notes is reduced to zero.
(v)
the "Junior Note Principal Redemption Amount" shall be (if there are Junior
Notes outstanding; otherwise it shall be zero) the lesser of the Junior Principal
Receipts on such Note Payment Date and the Principal Amount Outstanding of
the Junior Notes until the Junior Notes have been redeemed in full.
Prior to the service of a Note Acceleration Notice or the occurrence of a Loan Failure
Event or the Issuer Security becoming enforceable, the allocation of Cash Trap Principal
and Non-Cash Trap Principal comprising Senior Principal Receipts and Junior Principal
Receipts received or expected to be received by or on behalf of the Issuer on a Note
Payment Date (in respect of the related Note Interest Period) in accordance with the
above priority of payments is referred to as the "Pre-Enforcement Principal Allocation
Rules".
(d)
7.4
On each Note Payment Date on which either the Pre-Enforcement Loan Failure Priority
of Payments or the Post-Enforcement Priority of Payments do apply, each Class of Notes
will be subject to mandatory redemption in part in an amount equal to the Available
Funds received by the Issuer on such Note Payment Date less all amounts to be applied
to make payments or provisions of a higher priority in the relevant Priority of Payments.
Optional redemption for tax and other reasons
If the Issuer at any time satisfies the Note Trustee (which will be so satisfied if it receives a legal
opinion confirming such matters, upon which it may rely conclusively and without liability)
immediately prior to giving the notice referred to below that either:
(a)
by virtue of a change in the tax law of the United Kingdom, Ireland or any other
jurisdiction (or the application or official interpretation thereof) from that in effect on the
Closing Date, on the next Note Payment Date the Issuer, or any Paying Agent on its
behalf, would be required to deduct or withhold from any payment of principal or
interest in respect of any Senior Note (other than where the relevant holder or beneficial
owner has some connection with the relevant jurisdiction other than the holding of Notes
and other than in respect of default interest), any amount 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 relevant jurisdiction (or any political subdivision thereof or authority thereof or therein having power to tax) and such
requirement cannot be avoided by the Issuer taking reasonable measures available to it;
or
(b)
by reason of a change in law (or the application or official interpretation thereof), which
change becomes effective on or after the Closing Date, it has become or will become
unlawful for the Issuer to make, fund or allow to remain outstanding all or any advances
(whether made or to be made) under the Senior Facility Agreement or all or any of the
Senior Notes; or
(c)
if any amount payable by the Borrowers in respect of the Issuer Assets is reduced or
ceases to be receivable (whether or not actually received) by the Issuer during the Note
Interest Period preceding the next Note Payment Date,
and, in any such case, the Issuer has, prior to giving the notice referred to below, certified to the
Note Trustee (upon which certification it may rely conclusively and without liability) that it will
have the necessary funds on such Note Payment Date to discharge all of its liabilities in respect
of the Senior Notes to be redeemed under this Condition 7.4 and any amount required to be paid
in priority to, or pari passu with, the Senior Notes to be so redeemed (and for the avoidance of
doubt, the order of priority shall be as set out in the relevant Issuer Priorities of Payments), which
certificate shall be conclusive and binding, and provided that on the Note Payment Date on
which such notice expires, no Note Acceleration Notice has been served, then the Issuer may, but
shall not be obliged to, on any Note Payment Date on which the relevant event described above is
continuing, having given not more than 60 nor fewer than 30 days' written notice ending on such
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Note Payment Date to the Note Trustee, the Paying Agents and to the Noteholders in accordance
with Condition 17 (Notice to Noteholders), redeem all of the Senior Notes in an amount equal to
the then respective aggregate Principal Amounts Outstanding plus interest and other amounts
accrued and unpaid thereon.
Where the Senior Notes are redeemed in full pursuant to this Condition 7.4, the Issuer will
redeem the Junior Notes at their Principal Amount Outstanding together with accrued interest on
the Final Note Maturity Date in accordance with Condition 7.2 (Redemption of the Junior Notes).
7.5
Optional redemption in full
Upon giving not more than 60 nor fewer than 30 days' written notice to the Note Trustee, the
Paying Agents and the Noteholders, in accordance with Condition 17 (Notice to Noteholders) and
provided that:
(a)
on the Note Payment Date on which such notice expires, no Note Acceleration Notice
has been served; and
(b)
the Issuer has, prior to giving such notice, certified to the Note Trustee (upon which
certification it may rely conclusively and without liability) that it will have the necessary
funds to discharge on such Note Payment Date all of its liabilities in respect of the
Senior Notes to be redeemed under this Condition 7.5 and any amount required to be
paid on such Note Payment Date which rank prior to, or pari passu with, the Senior
Notes (and for the avoidance of doubt, the order of priority shall be as set out in the
relevant Issuer Priorities of Payments), which certificate shall be conclusive and binding;
and
(c)
the then aggregate Principal Amount Outstanding of all the Senior Notes is less than 10
per cent. of their aggregate Principal Amount Outstanding as at the Closing Date,
the Issuer may redeem on such Note Payment Date all of the Senior Notes, in an amount equal to
their then respective aggregate Principal Amounts Outstanding plus interest and other amounts
accrued and unpaid thereon (the "Clean-up Call").
Where the Senior Notes are redeemed in full pursuant to this Condition 7.5 or upon the
repayment of the Senior Notes in full on the Final Note Maturity Date, the Issuer will redeem the
Junior Notes at their Principal Amount Outstanding together with accrued interest on the Final
Note Maturity Date in accordance with Condition 7.2 (Redemption of the Junior Notes).
7.6
Principal Amount Outstanding and Note Factor
(a)
On each Portfolio Determination Date, the Issuer Cash Manager shall determine (A) the
Principal Amount Outstanding of each Note on the next following Note Payment Date
(after deducting any principal payment to be paid on such Note on that Note Payment
Date) and (B) the fraction (the "Note Factor"), the numerator of which is equal to the
Principal Amount Outstanding of each Class of Notes immediately prior to such Note
Payment Date and the denominator of which is equal to the aggregate Principal Amount
Outstanding of all the Classes of Notes immediately prior to such Note Payment Date.
Each determination by the Issuer Cash Manager of the Principal Amount Outstanding of
a Note and the Note Factor shall in each case (in the absence of wilful default, bad faith
or manifest error) be final and binding on all persons.
(b)
The "Principal Amount Outstanding" of a Note on any date will be its face amount
less the aggregate amount of principal repayments or prepayments made in respect of
that Note since the Closing Date.
(c)
The Issuer (or the Issuer Cash Manager on its behalf) will cause each determination of
the Principal Amount Outstanding and the Note Factor to be notified in writing forthwith
to the Note Trustee, the Paying Agents, the Rating Agencies, the Agent Bank and (for so
long as the Notes are listed on the Irish Stock Exchange) the Irish Stock Exchange and
will cause notice of each determination of a Principal Amount Outstanding and the Note
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Factor to be given to the Noteholders in accordance with Condition 17 (Notice to
Noteholders) as soon as reasonably practicable thereafter.
(d)
7.7
If the Issuer (or the Issuer Cash Manager on its behalf) does not at any time for any
reason determine the Principal Amount Outstanding or the Note Factor in accordance
with the preceding provisions of this Condition 7.6, such Principal Amount Outstanding
and the Note Factor may be determined by the Note Trustee (or agent appointed by the
Note Trustee), in accordance with this Condition 7.6, and each such determination or
calculation shall be conclusive and shall be deemed to have been made by the Issuer or
the Issuer Cash Manager, as the case may be and the Note Trustee shall have no liability
to any person in respect thereof.
Notice of redemption
Any such notice as is referred to in Conditions 7.4 (Optional redemption for tax and other
reasons) or 7.5 (Optional redemption in full) or above shall be irrevocable and, upon the expiry
of such notice, the Issuer shall be bound to redeem the Notes of the relevant Class in the amounts
specified in these Conditions. As soon as reasonably practicable after becoming aware that the
same will occur, the Issuer will cause notice of redemption of the Notes of each Class to be given
to the Irish Stock Exchange (for so long as the Notes are listed on the Irish Stock Exchange). Any
certificate or legal opinion given by or on behalf of the Issuer pursuant to Condition 7.4
(Optional redemption for tax and other reasons) or Condition 7.5 (Optional redemption in full)
may be relied on by the Note Trustee without further investigation and shall be conclusive and
binding on the Noteholders.
7.8
Cancellation
All Notes redeemed in full or in part pursuant to the foregoing will be cancelled forthwith and
may not be resold or re-issued.
7.9
Redemption Amount
Any Note redeemed pursuant to the above redemption provisions will be redeemed at an amount
equal to the Principal Amount Outstanding of the relevant Note to be redeemed together with
accrued (and unpaid) interest on the Principal Amount Outstanding of the relevant Note and any
other amounts accrued and unpaid up to (but excluding) the date of redemption.
7.10
No purchase by Issuer
The Issuer will not purchase any of the Notes.
8.
TAXATION
All payments in respect of the Notes by or on behalf of the Issuer shall be made without
withholding or deduction for, or on account of, any present or future taxes, duties, assessments or
governmental charges of whatever nature ("Note Taxes"), unless the Issuer or any relevant
Paying Agent is required by applicable law in any jurisdiction to make any payment in respect of
the Notes subject to any such withholding or deduction. In that event, the Issuer or, as the case
may be, the relevant Paying Agent shall make such payment after the withholding or deduction
has been made and shall account to the relevant authorities for the amount required to be
withheld or deducted. Neither the Issuer nor any Paying Agent nor any other person shall be
obliged to make any additional payments to Noteholders in respect of such withholding or
deduction on account of Note Taxes.
Notwithstanding any other provision in these Conditions, the Issuer shall be permitted to
withhold or deduct any amounts in connection with FATCA. Neither the Issuer nor any Paying
Agent will have any obligations to pay additional amounts or otherwise indemnify a holder or
any other person for any withholding deducted or withheld by any party on account of FATCA as
a result of any person not receiving payments free of FATCA withholding.
"FATCA" means the rules of U.S. Internal Revenue Code Sections 1471 through 1474 (or any
amended or successor provisions) and any inter-governmental agreement or implementing
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legislation adopted by another jurisdiction or any agreement with the U.S. Internal Revenue
Service in connection with these provisions.
9.
PRESCRIPTION
(a)
Claims in respect of principal and interest on the Notes will be prescribed after ten years
(in the case of principal) and five years (in the case of interest) from the relevant date in
respect of the relevant payment.
(b)
In this Condition, the "relevant date", in respect of a payment, means the date on which
such payment first becomes due or (if the full amount of the monies payable on that date
has not been duly received by the relevant Paying Agent or the Note Trustee on or prior
to such date) the date on which the full amount of such monies has been so received, and
notice to that effect is duly given to the relevant Noteholders in accordance with
Condition 17 (Notice to Noteholders).
10.
NOTE EVENTS OF DEFAULT
10.1
Note Events of Default
The Note Trustee at its absolute discretion may, and if either:
(a)
so requested in writing by the holders of Notes outstanding constituting not less than 25
per cent. in aggregate of the Principal Amount Outstanding of the Most Senior Class of
Notes then outstanding; or
(b)
so directed by or pursuant to an Extraordinary Resolution of the Most Senior Class of
Noteholders then outstanding,
shall (in all cases subject to the Note Trustee being indemnified and/or secured and/or prefunded
to its satisfaction) give notice (a "Note Acceleration Notice") to the Issuer and the Issuer
Security Trustee declaring all the Notes to be immediately due and repayable at their respective
Principal Amount Outstanding together with accrued interest (including, where applicable,
Deferred Interest and other accrued and unpaid amounts) as provided in the Note Trust Deed, if
any of the following events (each a "Note Event of Default") occurs:
(i)
default is made for a period of three days in the payment of the principal of, or
default is made for a period of five days in the payment of Non-Excess Interest
on, the Most Senior Class of Notes then outstanding, in each case when and as
the same becomes due and payable in accordance with these Conditions; or
(ii)
(A)
the Issuer defaults in the performance or observance of any other
obligation binding upon it under the Notes of any Class, the Note Trust
Deed, the Issuer Deed of Charge or the other Issuer Transaction
Documents to which it is party; or
(B)
any representation or warranty made by the Issuer under any Issuer
Transaction Document is incorrect when made,
and, in any such case (except where the Note Trustee certifies that, in its
opinion, such default or matters giving rise to such misrepresentation, as
applicable, is incapable of remedy when no notice will be required), such
default or matters giving rise to such misrepresentation, as applicable,
continue(s) for a period of 30 days (or such longer period as the Note Trustee
may permit) following the service by the Note Trustee on the Issuer of notice
requiring the same to be remedied; or
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(iii)
the Issuer, otherwise than for the purposes of such amalgamation or
reconstruction as is referred to in sub-paragraph 10.1(iv), ceases or, consequent
upon a resolution of the board of directors of the Issuer, stops or threatens to
cease to carry on business or a substantial part of its business (save for the
purposes of reorganisation on terms approved in writing by the Note Trustee or
by Extraordinary Resolution of the Most Senior Class of Noteholders then
outstanding) or the Issuer is or is deemed unable to pay its debts as and when
they fall due or the value of its assets falls to less than the amount of its
liabilities (taking into account its contingent and prospective liabilities) or it is
deemed unable to pay its debts pursuant to or for the purposes of any applicable
law or is adjudicated or found bankrupt or insolvent; or
(iv)
an order is made by any competent court or an effective resolution is passed for
the winding-up of the Issuer except a winding-up for the purposes of or pursuant
to an amalgamation or reconstruction the terms of which have previously been
approved by an Extraordinary Resolution of the Most Senior Class of
Noteholders then outstanding; or
(v)
proceedings shall be initiated against the Issuer under any applicable liquidation,
insolvency, examinership, composition, receivership, reorganisation or other
similar laws (including, but not limited to, presentation of a petition for an
administration order, the filing of documents with the court for the appointment
of an administrator or the service of a notice to appoint an administrator) and
such proceedings are not being disputed in good faith with a reasonable prospect
of success, or an administration order is granted or the appointment of an
administrator takes effect or an administrative receiver or other receiver,
manager, liquidator, examiner or other similar official shall be appointed (or
formal notice is given of an intention of appoint an administrator) in relation to
the Issuer or any part of its undertaking, property or assets, or an encumbrancer
shall take possession of all or any part of the undertaking, property or assets of
the Issuer, or an execution, diligence, attachment or sequestration or other
process is levied or enforced upon, sued out or put in force against all or any
part of the undertaking, property or assets of the Issuer and such appointment,
possession or process is not discharged or does not otherwise cease to apply
within 15 days; or
(vi)
the Issuer (or the shareholders or directors of the Issuer) initiates or consents to
judicial proceedings relating to itself under applicable liquidation, insolvency,
receivership, examinership, composition, reorganisation or other similar laws or
makes a conveyance or assignment for the benefit of or a composition or similar
arrangement with its creditors generally or takes steps with a view to obtaining a
moratorium in respect of any of the indebtedness of the Issuer or any meeting is
convened to consider a proposal for an arrangement or composition with its
creditors generally (or any class of its creditors),
provided that in the case of each of the events described in 10.1(ii), the Note Trustee
shall have certified to the Issuer that such event is, in its opinion, materially prejudicial
to the interests of the holders of the Most Senior Class of Notes then outstanding and
notice of such certification shall have been given to the Noteholders in accordance with
Condition 17 (Notice to Noteholders).
10.2
Effect of Note Acceleration Notice
Upon the service of a Note Acceleration Notice in accordance with Condition 10.1 (Note Events
of Default) all Classes of the Notes then outstanding shall thereby immediately become due and
repayable at their respective Principal Amounts Outstanding together with accrued interest and
other accrued but unpaid amounts as provided in the Note Trust Deed as described in Condition
11 (Enforcement) below.
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11.
ENFORCEMENT
The Note Trustee may, at any time, at its discretion and without notice, take such action under or
in connection with any of the Issuer Transaction Documents as it may think fit (including,
without limitation, directing the Issuer Security Trustee to take any action under or in connection
with any of the Issuer Transaction Documents or, after the occurrence of a Note Event of Default,
to take steps to enforce the security constituted by the Issuer Deed of Charge), provided that:
(a)
the Note Trustee shall not be bound to take any such action unless it shall have been so
directed by (i) an Extraordinary Resolution or Ordinary Resolution (where permitted) of
the Most Senior Class of Noteholders then outstanding or (ii) a notice in writing signed
by the holders of Notes outstanding constituting at least 25 per cent. in aggregate of the
Principal Amount Outstanding of the Most Senior Class of Notes then outstanding;
(b)
(except where expressly provided otherwise) the Issuer Security Trustee shall not, and
shall not be bound to, take any such action unless it shall have been so directed by (i) the
Note Trustee or (ii) if there are no Notes outstanding, all of the other Issuer Secured
Creditors;
(c)
neither the Note Trustee nor the Issuer Security Trustee shall be bound to take any such
action under this Condition 11 (Enforcement) unless it shall have been indemnified,
secured and/or pre-funded to its satisfaction; and
(d)
the Note Trustee shall not be entitled to take any steps or proceedings to procure the
winding-up, administration, dissolution, court protection, examinership, reorganisation,
receivership, liquidation, bankruptcy or other insolvency proceeding of the Issuer.
In addition to the above, in relation to the Jersey Security Agreement, the Jersey Security Law
provides that before the power of enforcement in respect of a security interest may be exercised
when an event of default has occurred, the secured party has served written notice on the grantor
of a security interest specifying the relevant event of default.
12.
LIMIT ON NOTEHOLDER ACTION, LIMITED RECOURSE AND NON-PETITION
(a)
No Noteholder shall be entitled to proceed directly against the Issuer or any other Issuer
Secured Creditor or any other party to any of the Issuer Transaction Documents to seek
to enforce the Issuer Security or to enforce the performance of any of the provisions of
the Issuer Transaction Documents and/or to take proceedings (including lodging an
appeal in any proceedings) in respect of or concerning the Issuer, except if the Note
Trustee or the Issuer Security Trustee, as the case may be, having become bound to do so,
fails to do so within a reasonable period and such failure shall be continuing, provided
that no Noteholder shall be entitled to take any steps or proceedings to procure the
winding up, administration, dissolution, court protection, examinership, reorganisation,
receivership, liquidation, bankruptcy or other insolvency proceeding of the Issuer.
(b)
The Issuer Security Trustee will not be required to enforce the Issuer Security at the
request of any Issuer Secured Creditor other than the Note Trustee. Notwithstanding any
other provision of these Conditions, any Issuer Transaction Document or otherwise, the
obligations of the Issuer to make any payment under the Notes will be equal to the
nominal amount of such payment or, if less, the actual amount received or recovered
from time to time by or on behalf of the Issuer which consists of funds which are
required to be applied by the Issuer in making such payment in accordance with the PreEnforcement Revenue Priorities of Payments, the Pre-Enforcement Principal Allocation
Rules, the Pre-Enforcement Loan Failure Priority of Payments or Post-Enforcement
Priority of Payments, as applicable. The obligations of the Issuer under these Conditions
and the Note Trust Deed in respect of the Notes will be limited to such amounts from
time to time and none of the Noteholders, the Note Trustee, the Issuer Security Trustee
or the other parties to the Issuer Transaction Documents will have any further recourse to
the Issuer in respect of such obligations.
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(c)
Subject to the Issuer Security Trustee's rights and powers under the Issuer Deed of
Charge, none of the Note Trustee, the Issuer Security Trustee, the Noteholders or the
Issuer Secured Creditors will be entitled to petition or take any action or other steps or
legal proceedings for the winding-up, dissolution, court protection, examinership,
reorganisation, receivership, liquidation, bankruptcy or insolvency of the Issuer or for
the appointment of an administrator, manager, receiver, receiver manager, administrative
receiver, trustee, liquidator, examiner, sequestrator or similar officer in respect of the
Issuer or any of its revenues or assets, provided that the Note Trustee or the Issuer
Security Trustee may prove or lodge a claim in the liquidation of the Issuer initiated by
another party and provided further that the Note Trustee or the Issuer Security Trustee
may take proceedings to obtain a declaration or similar judgment or order as to the
obligations and liabilities of the Issuer under the Issuer Deed of Charge or the other
Issuer Transaction Documents.
(d)
None of the Noteholders or any of the other parties to the Issuer Transaction Documents
will have any recourse against any director, shareholder, or officer of the Issuer in
respect of any obligations, covenant or agreement entered into or made by the Issuer
pursuant to the terms of the Notes, the Issuer Deed of Charge or any other Issuer
Transaction Document to which it is a party or any notice or documents which it is
requested to deliver hereunder or thereunder.
(e)
Nothing in this Condition shall affect a payment under the Notes from falling due for the
purposes of Condition 10 (Note Events of Default).
(f)
If at any time following:
(i)
(ii)
the occurrence of either:
(A)
the Final Note Maturity Date or any earlier date upon which all of the
Notes of each Class are due and payable; or
(B)
the service of an Note Acceleration Notice; and
realisation of the Issuer Charged Property and application in full of any amounts
available to pay amounts due and payable under the Notes in accordance with
the relevant Issuer Priority of Payments,
the proceeds of such Realisation are insufficient, after payment of all other claims
ranking in priority in accordance with the relevant Issuer Priority of Payments, to pay in
full all amounts then due and payable under any Class of Notes then the amount
remaining to be paid (after such application in full of the amounts first referred to in (ii)
above) under such Class of Notes (and any Class of Notes junior to that Class of Notes)
shall, on the day following such application in full of the amounts referred to in (ii)
above, cease to be due and payable by the Issuer.
For the purposes of this Condition 12, "Realisation" means, in relation to any Charged
Property, the deriving, to the greatest extent practicable, (in accordance with the
provisions of the Issuer Transaction Documents) of proceeds from or in respect of such
Charged Property including (without limitation) through sale or through performance by
an Obligor.
13.
NOTE MATURITY PLAN
(a)
If the Senior Loan remains outstanding on the date which is six months prior to the Final
Note Maturity Date and, in the opinion of the Special Servicer, all recoveries then
anticipated by the Special Servicer with respect to the Senior Loan (whether by
enforcement of the related Loan Security or otherwise) are unlikely to be realised in full
prior to the Final Note Maturity Date, the Special Servicer will be required to prepare a
draft Note Maturity Plan and present the same to the Issuer, the Note Trustee, the Issuer
Security Trustee and the Rating Agencies no later than 45 days after such date.
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(b)
Upon receipt of the draft Note Maturity Plan, the Note Trustee will convene, at the
Issuer's cost, a meeting of the Senior Noteholders at which the Senior Noteholders will
have the opportunity to discuss the various proposals contained in the draft Note
Maturity Plan with the Special Servicer. Following such meeting, the Special Servicer
shall reconsider the Note Maturity Plan and make modifications thereto to address the
views of Noteholders (subject to the Servicing Standard) following which it shall
provide a final Note Maturity Plan to the Issuer, the Noteholders, the Rating Agencies,
the Note Trustee and the Issuer Security Trustee.
(c)
Upon receipt of the final Note Maturity Plan, the Note Trustee will convene, at the
Issuer's cost, a meeting of the Noteholders of the Most Senior Class of Notes outstanding
at which the Noteholders of the Most Senior Class will be requested to select their
preferred option among the proposals set out in the final Note Maturity Plan. The Special
Servicer will implement the proposal that receives the approval of the holders of the
Most Senior Class of Notes then outstanding by way of Ordinary Resolution. If no
option receives the approval of the holders of the Most Senior Class of Notes then
outstanding at such meeting, then the Issuer Security Trustee will be deemed to be
directed by all of the Noteholders to appoint a receiver (to the extent applicable) to
realise the Issuer Charged Property in accordance with the Issuer Deed of Charge as
soon as practicable upon such right becoming exercisable, provided that the Issuer
Security Trustee will have no obligation to do so if it shall not have been indemnified
and/or secured and/or prefunded to its satisfaction.
14.
MEETINGS OF NOTEHOLDERS, MODIFICATION AND WAIVER, SUBSTITUTION
AND TERMINATION OF ISSUER RELATED PARTIES
14.1
Meeting of Noteholders
14.2
(a)
The Note Trust Deed contains provisions for convening meetings of each Class of
Noteholders and meetings of all the Noteholders to consider any matter affecting their
interests including the sanctioning by Extraordinary Resolution or Ordinary Resolution,
as appropriate, of, among other things, the removal of the Note Trustee, the Issuer
Security Trustee, the Servicer, the Special Servicer, the Issuer Cash Manager, the Issuer
Account Bank, the Agent Bank, the Principal Paying Agent, the Registrar or the
Corporate Services Provider and a modification of the Notes or the Note Trust Deed
(including these Conditions) or the provisions of any of the other Issuer Transaction
Documents.
(b)
These provisions allow the Issuer, the Note Trustee, the Issuer Cash Manager, the
Servicer or the Special Servicer to convene (or require the Issuer to convene) Noteholder
meetings for any purpose including consideration of Extraordinary Resolutions or
Ordinary Resolutions and provided that at least 14 clear days' (or, in the case of an
adjourned meeting, at least seven clear days') notice of such meeting be given to
Noteholders in accordance with Condition 17 (Notice to Noteholders). The Note Trustee
shall be obliged to convene a meeting of the Senior Noteholders of any Class or Classes
of the Senior Notes (in each case for so long as any Senior Notes remain outstanding)
and (to the extent relating to a Junior Note Entrenched Term, the holders of the Junior
Notes), if requested to do so in writing by the holders of Notes outstanding constituting
at least ten per cent. of the Principal Amount Outstanding of the Notes of the relevant
Class or Classes (subject to being indemnified and/or secured and/or prefunded to its
satisfaction.
Extraordinary Resolution or an Ordinary Resolution of the Class A Noteholders
An Extraordinary Resolution or an Ordinary Resolution passed at any meeting of the Class A
Noteholders shall be binding on the Class B Noteholders, the Class C Noteholders, the Class D
Noteholders and the Junior Noteholders irrespective of the effect upon them, except that:
(a)
an Extraordinary Resolution to sanction a Basic Terms Modification (only if the Class B
Noteholders and/or the Class C Noteholders and/or the Class D Noteholders, as
applicable, are affected by such Basic Terms Modification) will not take effect unless: (i)
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either the Note Trustee is of the opinion that it would not be materially prejudicial to the
interests of the Class B Noteholders or it shall have been sanctioned by an Extraordinary
Resolution of the Class B Noteholders, (ii) either the Note Trustee is of the opinion that
it would not be materially prejudiced to the interests of the Class C Noteholders or it
shall have been sanctioned by an Extraordinary Resolution of the Class C Noteholders
and (iii) either the Note Trustee is of the opinion that it would not be materially
prejudicial to the interests of the Class D Noteholders or it shall have been sanctioned by
an Extraordinary Resolution of the Class D Noteholders,
(b)
and an Extraordinary Resolution to sanction a Junior Note Entrenched Term will not
take effect unless such Extraordinary Resolution shall have been sanctioned by an
Extraordinary Resolution of the Junior Noteholders.
In these Conditions "Junior Note Entrenched Term" means each or any of:
14.3
(i)
a modification to the date of maturity of the Junior Notes;
(ii)
a change in the amount of principal or the rate of interest payable in respect of
the Junior Notes;
(iii)
a modification of the method of calculating the amount payable or the date of
payment in respect of any interest or principal in respect of the Junior Notes;
(iv)
any alteration of the currency of payment of the Junior Notes;
(v)
a modification of this definition of Junior Note Entrenched Term or the quorum
or majority required to effect a modification of a Junior Note Entrenched Term;
and
(vi)
the right of the Junior Noteholder to exchange the Junior Notes for interests in
the Junior Loan as described in Conditions 7.2 (Redemption of the Junior Notes
on surrender), 7.4 (Optional redemption for tax or other reasons) and 7.5
(Optional redemption in full).
Extraordinary Resolution or an Ordinary Resolution of the Class B Noteholders
An Extraordinary Resolution (other than an Extraordinary Resolution referred to in
Condition 14.2 (Extraordinary Resolution or an Ordinary Resolution of the Class A Noteholders))
or an Ordinary Resolution passed at any meeting of the Class B Noteholders shall not be
effective for any purpose unless one of the following conditions is satisfied:
(a)
the Note Trustee is of the opinion that it would not be materially prejudicial to the
interests of the Class A Noteholders (and for greater certainty, an Extraordinary
Resolution (other than as referred to in Condition 14.2 (Extraordinary Resolution or an
Ordinary Resolution of the Class Noteholders)) relating to a Basic Terms Modification
shall be materially prejudicial to the interests of the Class A Noteholders); or
(b)
it is sanctioned by an Extraordinary Resolution, or in the case of an Ordinary Resolution,
an Ordinary Resolution of the Class A Noteholders; or
(c)
none of the Class A Notes remains outstanding.
Subject thereto, an Extraordinary Resolution or an Ordinary Resolution of the Class B
Noteholders shall be binding on the Class C Noteholders, The Class D Noteholders and the
Junior Noteholders irrespective of the effect on them, except that:
(i)
no Extraordinary Resolution to sanction a Basic Terms Modification (only if the
Class C Noteholders and/or the Class D Noteholder are affected by such Basic
Terms Modification) passed at any meeting of the Class B Noteholders shall
take effect unless such Basic Terms Modification (A) would in the opinion of
the Note Trustee not be materially prejudicial to the interests of the Class C
Noteholders and/or the Class D Noteholder or (B) shall have been sanctioned by
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an Extraordinary Resolution of the Class C Noteholders and/or the Class D
Noteholders or (C) none of the Class C Notes or Class D Notes; and
(ii)
14.4
no Extraordinary Resolution to sanction a Junior Note Entrenched Term passed
at any meeting of the Class B Noteholders shall take effect unless such Junior
Note Entrenched Term shall have been sanctioned by an Extraordinary
Resolution of the Junior Noteholders.
Extraordinary Resolution or an Ordinary Resolution of the Class C Noteholders
An Extraordinary Resolution (other than an Extraordinary Resolution referred to in Condition
14.2 or 14.3 above) or an Ordinary Resolution passed at any meeting of the Class C Noteholders
shall not be effective for any purpose unless one of the following conditions is satisfied:
(a)
either the Note Trustee is of the opinion that it would not be materially prejudicial to the
interests of the Class A Noteholders and the Class B Noteholders (and for greater
certainty, an Extraordinary Resolution (other than as referred to in Condition 14.2 or
14.3)) relating to a Basic Terms Modification shall be materially prejudicial to the
interests of the Class A Noteholders and the Class B Noteholders); or
(b)
it is sanctioned by an Extraordinary Resolution, or in the case of an Ordinary Resolution,
an Ordinary Resolution of each of the Class A Noteholders and the Class B Noteholders;
or
(c)
none of the Class A Notes and Class B Notes remains outstanding.
Subject thereto, an Extraordinary Resolution or an Ordinary Resolution of the Class C
Noteholders shall be binding on the Class D Noteholders and the Junior Noteholders irrespective
of the effect on them, except that no Extraordinary Resolution to sanction a Junior Note
Entrenched Term passed at any meeting of the Class C Noteholders shall take effect unless such
Junior Note Entrenched Term shall have been sanctioned by an Extraordinary Resolution of the
Junior Noteholders.
14.5
Extraordinary Resolution or an Ordinary Resolution of the Class D Noteholders
An Extraordinary Resolution (other than an Extraordinary Resolution referred to in Condition
14.2 or 14.3 above) or an Ordinary Resolution passed at any meeting of the Class D Noteholders
shall not be effective for any purpose unless one of the following conditions is satisfied:
(a)
either the Note Trustee is of the opinion that it would not be materially prejudicial to the
interests of the Class A Noteholders, the Class B Noteholders and the Class C
Noteholders (and for greater certainty, an Extraordinary Resolution (other than as
referred to in Condition 14.2 or 14.3)) relating to a Basic Terms Modification shall be
materially prejudicial to the interests of the Class A Noteholders, the Class B
Noteholders and the Class C Noteholders); or
(b)
it is sanctioned by an Extraordinary Resolution, or in the case of an Ordinary Resolution,
an Ordinary Resolution of each of the Class A Noteholders, the Class B Noteholders and
the Class C Noteholders; or
(c)
none of the Class A Notes, Class B Notes and Class C Notes remains outstanding.
Subject thereto, an Extraordinary Resolution or an Ordinary Resolution of the Class D
Noteholders shall be binding on the Junior Noteholders irrespective of the effect on them, except
that no Extraordinary Resolution to sanction a Junior Note Entrenched Term passed at any
meeting of the Class D Noteholders shall take effect unless such Junior Note Entrenched Term
shall have been sanctioned by an Extraordinary Resolution of the Junior Noteholders.
14.6
Extraordinary Resolution or an Ordinary Resolution of the Junior Noteholders
Prior to the date on which the Senior Notes have been redeemed in full (and all interests and
other amounts payable thereon have been duly paid by the Issuer) the Junior Noteholders shall
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not have any right to provide any consent or direction, whether by Extraordinary Resolution or
otherwise, other than to sanction an Extraordinary Resolution relating to a Junior Note
Entrenched Term as contemplated in this Condition 14. For so long as any of the Senior Notes
are outstanding, references in these Conditions to an Ordinary Resolution in respect of the
Noteholders or an Extraordinary Resolution in respect of the Noteholders shall, other than with
respect to a resolution relating to a Junior Note Entrenched Term, be construed as a reference to
an Ordinary Resolution or, as applicable, an Extraordinary Resolution of the Senior Noteholders.
14.7
14.8
Quorum at Noteholder's meeting
(a)
Subject as provided in Condition 14.8 (Basic Terms Modification) and Condition 14.9
(Junior Note Entrenched Terms), the quorum at any meeting of the Senior Noteholders
(or of any Class of Senior Noteholders) for passing an Ordinary Resolution will be one
or more persons present holding Senior Notes outstanding or holding voting certificates
or being proxies representing Senior Notes outstanding constituting not less than 25 per
cent. of the aggregate Principal Amount Outstanding of such Senior Class or Classes of
Senior Notes then outstanding.
(b)
Subject as provided in Condition 14.8 (Basic Terms Modification) and Condition 14.9
(Junior Note Entrenched Terms), the quorum at any meeting of the Senior Noteholders
(or of any Class of Senior Noteholders) for passing an Extraordinary Resolution will be
one or more persons present holding Senior Notes outstanding or holding voting
certificates or being proxies representing Senior Notes outstanding constituting not less
than 50.1 per cent. of the aggregate Principal Amount Outstanding of such Senior Class
or Classes of Senior Notes then outstanding.
(c)
Subject as provided in Condition 14.8 (Basic Terms Modification) and Condition 14.9
(Junior Note Entrenched Terms), the quorum at any adjourned meeting of Senior
Noteholders (or of any Class of Senior Noteholders), for passing an Extraordinary
Resolution or an Ordinary Resolution will be one or more persons being or representing
Senior Noteholders (or Noteholders of such Senior Class) of Notes outstanding whatever
the Principal Amount Outstanding of Senior Notes outstanding or, as the case may be,
the Notes of such Senior Class outstanding so held or represented.
Basic Terms Modification
The quorum at any meeting of the Noteholders of any Senior Class for passing an Extraordinary
Resolution that would have the effect of sanctioning:
(a)
a modification of the date of maturity of any Class of Notes or a modification of the date
of maturity of any of the Loans to a date which is later than the date which is 12 months
after the Senior Loan Initial Repayment Date (as may be extended pursuant to the terms
of the Senior Facility Agreement);
(b)
a reduction in the amount of principal or the rate of interest payable in respect of any
Class of Notes;
(c)
a modification of the method of calculating the amount payable or the date of payment in
respect of any interest or principal in respect of any Class of Notes;
(d)
any alteration of the currency of payment of any Class of Notes;
(e)
a release of the Issuer Security (or any part thereof) other than in accordance with the
provisions of the Issuer Transaction Documents (but without prejudice to the Note
Trustee's and the Issuer Security Trustee's ability to exercise their respective powers and
discretions under the Note Trust Deed, the Issuer Deed of Charge and the other Issuer
Transaction Documents);
(f)
a modification to clause 11 (Operating Advisor) of the Servicing Agreement;
(g)
a modification to the definition of "Controlling Class"; or
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(h)
a modification of the definition of "Basic Terms Modification" or the quorum or
majority required to effect a Basic Terms Modification,
(each, a "Basic Terms Modification", except, in each case, as set out in the final Note Maturity
Plan delivered to the Senior Noteholders pursuant to Condition 13 (Note Maturity Plan)) shall be
one or more persons holding Senior Notes outstanding of the relevant Class or voting certificates
in respect thereof or proxies representing not less than 75 per cent. of the Principal Amount
Outstanding of the Notes of such Senior Class of Notes for the time being outstanding, or at any
adjourned such meeting, not less than 331/3 per cent. of the Principal Amount Outstanding of the
Notes of the relevant Senior Class for the time being outstanding. Where a Basic Terms
Modification is included in the final Note Maturity Plan delivered to the Senior Noteholders
pursuant to Condition 13 (Note Maturity Plan), such Basic Terms Modification may be approved
in accordance with Condition 13 (Note Maturity Plan).
Any Extraordinary Resolution in respect of a Basic Terms Modification shall only be effective if
duly passed at separate meetings (or by separate resolutions in writing or by separate resolutions
passed by way of consents received through the relevant Clearing System(s)) of each relevant
affected Class of Senior Noteholders.
14.9
Junior Note Entrenched Terms
The quorum at any meeting of the Junior Noteholders for passing an Extraordinary Resolution
that would affect a Junior Note Entrenched Term shall be one or more persons holding Junior
Notes outstanding or voting certificates in respect thereof or proxies representing not less than 75
per cent. of the Principal Amount Outstanding of the Junior Notes for the time being outstanding,
or at any adjourned such meeting, not less than 33⅓ per cent, of the Principal Amount
Outstanding of the Junior Notes for the time being outstanding. Any consent from a Junior
Noteholder will be validly given if it satisfies the requirements of a Written Extraordinary
Resolution
14.10
Rating Agency Confirmation
(a)
Pursuant to the Issuer Transaction Documents, the implementation of certain matters will
or may (at the request of the Note Trustee or the Issuer Security Trustee), be subject to
the receipt of a Rating Agency Confirmation.
(b)
Any request for a Rating Agency Confirmation shall be given in electronic form to the
relevant Rating Agency or Rating Agencies. If any Rating Agency then rating the Senior
Notes either:
(i)
(A) does not respond to a request to provide a Rating Agency Confirmation
within ten Business Days after such request is made; and (B) does not respond
to a second request to provide a Rating Agency Confirmation, in respect of the
same matter as the request in Condition 14.10(b)(i)(A), within five Business
Days after such second request is made (such second request not to be made less
than ten Business Days after the first request is made); or
(ii)
provides a waiver or acknowledgement indicating its decision not to review or
otherwise declining to review the matter for which the Rating Agency
Confirmation is sought,
the requirement for the Rating Agency Confirmation from the relevant Rating Agency
with respect to such matter will be deemed not to apply, and the Issuer Security Trustee
and the Note Trustee shall not be liable for any losses Noteholders may suffer as a result.
(c)
For the avoidance of doubt, such Rating Agency Confirmation or non-receipt of such
Rating Agency Confirmation shall, however, not be construed to mean that any such
action or inaction (or contemplated action or inaction) or such exercise (or contemplated
exercise) by the Note Trustee or the Issuer Security Trustee of any right, power, trust,
authority, duty or discretion under or in relation to the Note Trust Deed or any of the
other Issuer Transaction Documents is not materially prejudicial to the interest of holders
of that Class of Notes.
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14.11
Disenfranchised Holder
For the purposes of determining: (a) the quorum at any meeting of Senior Noteholders
considering an Extraordinary Resolution or an Ordinary Resolution of the Senior Noteholders or
the majority of votes cast at such meeting; (b) the holders of Senior Notes for the purposes of
giving any direction to the Note Trustee (or any other party); or (c) the majorities required for
any Written Extraordinary Resolution or Written Ordinary Resolution, the voting, objecting
(including, without limitation, in respect of Condition 14.16 (Negative Consent) or Condition
14.14(c)) or directing rights attaching to any Senior Notes held by (or in relation to which the
exercise of the right to vote is directed or otherwise controlled by), (i) the Issuer or any Affiliate
Entity of the Issuer; or (ii) the Shareholder, any Obligor or their respective Affiliates; or (iii) the
Sponsor or a Sponsor Affiliate (each such person falling within (i), (ii) or (iii) above a
"Disenfranchised Holder") shall not be exercisable by such Disenfranchised Holder, and such
Senior Notes shall be treated as if they were not outstanding and shall not be counted in or
towards any required quorum or majority.
"Affiliate Entity" means with respect to any specified entity, any other entity controlling or
controlled by or under common control with such entity. For the purposes of this definition,
control when used with respect to any specified entity means the power to direct the management
and policies of such entity, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms controlling and controlled have meanings
correlative to the foregoing.
14.12
14.13
Written Ordinary Resolution and Written Extraordinary Resolution
(a)
The Note Trust Deed provides for Noteholders (or Noteholders of the relevant class) to
determine certain matters which could be determined by Extraordinary Resolution or
Ordinary Resolution passed at a meeting duly convened and held to be determined
instead by a Written Extraordinary Resolution or, as applicable, a Written Ordinary
Resolution.
(b)
A Written Extraordinary Resolution has the same effect as an Extraordinary Resolution.
A Written Ordinary Resolution has the same effect as an Ordinary Resolution.
Consent or directions of the Noteholders of any Senior Class
Notwithstanding any provision to the contrary in these Conditions, the Note Trust Deed or the
other Issuer Transaction Documents, at any time that any of the Senior Notes remains
outstanding, where the Noteholders of any Senior Class are required to object to, consent or
provide directions with respect to a modification of, or waiver or consent in relation to, the
Senior Finance Document by Ordinary Resolution or Extraordinary Resolution, the Servicer or
Special Servicer as applicable, will require that it will be a condition precedent to the
implementation of such modification, waiver or consent that each person who objected, voted or
counted in the quorum in any meeting of any Class of Senior Noteholders, or otherwise provided
any such objection, consent or direction provides a confirmation that it was not, at the time of
such objection, vote, quorum, consent or direction a Disenfranchised Holder.
14.14
Extraordinary Resolution or Ordinary Resolution binding
Subject to the provisions governing a Basic Terms Modification, a Junior Note Entrenched Term
and to the provisions of these Conditions governing voting generally, an Extraordinary
Resolution or an Ordinary Resolution passed at any meeting or duly signed by the required
majority of Noteholders (or any Class thereof) shall be binding on all Noteholders (or, as the case
may be, all Noteholders of such Class) whether or not they are present at such meeting or signed
such resolution.
14.15
Type of resolution
Other than in respect of any matter requiring an Extraordinary Resolution, Noteholders are
required to vote by way of an Ordinary Resolution.
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14.16
Negative Consent
(a)
(b)
The Issuer, the Note Trustee, the Issuer Cash Manager, the Servicer or the Special
Servicer may propose an Extraordinary Resolution or an Ordinary Resolution of the
Noteholders or any Class of Noteholders relating to any matter for consideration and
approval by Negative Consent by the Noteholders or the Noteholders of such Class,
other than:
(i)
an Extraordinary Resolution relating to a Basic Terms Modification, the waiver
of any Note Event of Default, the acceleration of the Senior Notes or the
enforcement of the Issuer Security; or
(ii)
an Ordinary Resolution relating to a Note Maturity Plan.
"Negative Consent" means, in relation to an Extraordinary Resolution (other than an
Extraordinary Resolution relating to a Basic Terms Modification, the waiver of any Note
Event of Default, the acceleration of the Senior Notes or the enforcement of the Issuer
Security) or an Ordinary Resolution (other than an Ordinary Resolution relating to a
Note Maturity Plan), of the Noteholders or the Noteholders of any Class or Classes, the
process whereby such Extraordinary Resolution or Ordinary Resolution shall be deemed
to be duly passed and shall be binding on all of the Noteholders or the Noteholders of
such Class or Classes of Notes (as the case may be) in accordance with its terms where:
(i)
notice of such Extraordinary Resolution or Ordinary Resolution, as applicable,
(including the full text of the same) has been given by the Issuer, the Note
Trustee, the Issuer Cash Manager, the Servicer or the Special Servicer to the
Noteholders or the Noteholders of such Class or Classes of Notes in accordance
with the provisions of Condition 17 (Notice to Noteholders);
(ii)
such notice contains a statement:
(iii)
(A)
requiring such Noteholders to inform the Note Trustee in writing (or
otherwise in accordance with the then current practice of any applicable
clearing system through which such Notes may be held) if they object
to such Extraordinary Resolution or Ordinary Resolution, stating that
unless holders of (I) in the case of an Extraordinary Resolution, Notes
outstanding constituting 25 per cent. or more in aggregate Principal
Amount Outstanding of the Notes or the Notes of such Class or Classes
outstanding; or (II) in the case of an Ordinary Resolution, Notes
outstanding constituting 50 per cent. or more in aggregate Principal
Amount Outstanding of the Senior Notes outstanding or the Senior
Notes of such Class or Classes, make such objection, the Extraordinary
Resolution or Ordinary Resolution will be deemed to be passed by the
Noteholders or the Noteholders of such Class or Classes; and
(B)
specifying the requirements for the making of such objections
(including addresses, email addresses and deadlines) as further set out
in the following paragraph; and
holders of:
(A)
in the case of an Extraordinary Resolution, Notes outstanding
constituting 25 per cent. or more in aggregate Principal Amount
Outstanding of the Notes or the Notes of such Class or Classes (as the
case may be); or
(B)
in the case of an Ordinary Resolution, Notes outstanding constituting
50 per cent. or more in aggregate Principal Amount Outstanding of the
Notes or the Notes of such Class or Classes,
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have not informed the Note Trustee in writing of their objection to such
Extraordinary Resolution or Ordinary Resolution within 30 days of the date of
the relevant notice.
(c)
14.17
Any notice containing the text of an Extraordinary Resolution or an Ordinary Resolution
shall (A) in all cases also be delivered through the systems of Bloomberg L.P. (or such
other medium as may be approved in writing by the Note Trustee) by the Issuer, the
Note Trustee, the Issuer Cash Manager, the Servicer or the Special Servicer, and (B) for
so long as any Notes are listed in the Irish Stock Exchange, be made available to any
Regulatory Information Service maintained by the Irish Stock Exchange.
Modifications and waivers
(a)
The Note Trustee may agree or may direct the Issuer Security Trustee to agree, without
the consent of the Noteholders of any Class (but without prejudice to Condition 14.18
(Direction of Most Senior Class)):
(i)
to any modification (except a Basic Terms Modification or a modification which
relates to or would constitute a Junior Note Entrenched Term) of the Notes, the
Note Trust Deed (including these Conditions) or any of the other Issuer
Transaction Documents which, in the opinion of the Note Trustee, is not
materially prejudicial to the interests of the holders of any Class of Senior Notes
(for so long as any of the Senior Notes remains outstanding) and (to the extent
relating to a Junior Note Entrenched Term) the holders of the Junior Notes); or
(ii)
to any modification of the Notes, the Note Trust Deed (including these
Conditions) or any of the other Issuer Transaction Documents which, in the
opinion of the Note Trustee, is:
(A)
to correct a manifest error or an error proven to the satisfaction of the
Note Trustee; or
(B)
of a formal, minor or technical nature.
(b)
The Note Trustee may also, without the consent or sanction of the Noteholders or the
other Issuer Secured Creditors and without prejudice to its rights in respect of any
subsequent breach, condition, event or act from time to time and at any time but only if
and in so far as in its opinion the interests of the Senior Noteholders of each Class of
Senior Notes (for so long as any of the Senior Notes remain outstanding) and (to the
extent relating to a Junior Note Entrenched Term), the holders of the Junior Notes shall
not be materially prejudiced thereby, waive or authorise, or direct the Issuer Security
Trustee to waive or authorise, on such terms and subject to such conditions as it shall
deem fit and proper, any breach or proposed breach by the Issuer or any other party
thereto of any of the covenants or provisions contained in the Note Trust Deed
(including these Conditions) or in any other Issuer Transaction Documents (which, for
the avoidance of doubt, shall include payment by the Issuer Cash Manager of monies
standing to the credit of the Issuer Transaction Account other than in accordance with
the provisions of the Issuer Deed of Charge) or determine that any condition, event or act
which constitutes a Note Event of Default or Potential Note Event of Default shall not be
treated as such for the purposes of the Note Trust Deed (including these Conditions).
(c)
If the Issuer is of the opinion that any modification is required to be made to the Issuer
Transaction Documents and/or the Conditions in order to (i) comply with any criteria of
the Rating Agencies which may be published after the Closing Date; (ii) comply with
any alternative requirements of the Rating Agencies (where it is not possible to replace
the Issuer Account Bank with a replacement bank which has the ratings required under
the Issuer Account Bank Agreement); (iii) comply with any changes in the Risk
Retention Requirements after the Closing Date, including as a result of the adoption of
regulatory technical standards in relation to the Risk Retention Requirements or any
other risk retention legislation or regulations or official guidance in relation thereto; (iv)
enable the Note to be (or to remain) listed on the Irish Stock Exchange; (v) enable the
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Issuer or any of the other secured parties to comply with FATCA (or any voluntary
agreement entered into with a taxing authority in relation thereto); (vi) comply with any
changes in the requirements of Credit Rating Agencies Regulation after the Closing Date
and (vii) comply with the requirements of Rule 17g-5, including as a result of the
adoption of regulatory technical standards in relation to the Credit Rating Agencies
Regulation or regulations or official guidance in relation thereto (each an "Additional
Permitted Modification"), the Issuer shall promptly notify all Senior Noteholders in
accordance with Condition 17 (Notice to Noteholders) (but for so long as the Notes are
represented by Global Notes and if, for so long as the Notes are listed on a stock
exchange, the rules of such stock exchange so allow, paragraph (b) and paragraph (c) of
Condition 17 (Notice to Noteholders) are complied with) of the proposed amendments
(and shall make available to Noteholders for inspection drafts of any amendments to
applicable documents) and, if within 30 calendar days from service of such notice Senior
Noteholders representing at least 20 per cent. of the then aggregate Principal Amount
Outstanding of the Senior Notes then outstanding have not contacted the Issuer in
writing (or otherwise in accordance with the then current practice of any applicable
clearing system through which such Notes may be held) to reject the proposed
amendments, then all Noteholders will be deemed to have consented to the modifications
and the Note Trustee shall (subject as further provided below), without seeking any
further consent or sanction of any of the Noteholders or any other Issuer Secured
Creditor and irrespective of whether such modifications are or may be materially
prejudicial to the interests of the Noteholders of any Class or any other parties to any of
the Issuer Transaction Documents, concur with the Issuer and, where relevant, the
Obligors, and/or direct the Issuer Security Trustee to concur with the Issuer and, where
relevant, the Obligors, in making the proposed modifications to the Issuer Transaction
Documents and/or the Conditions that are requested by the Issuer and, where relevant,
the Obligors in order to comply with such updated criteria, provided that the Issuer
certifies to the Note Trustee and the Issuer Security Trustee in writing (upon which the
Note Trustee and the Issuer Security Trustee shall rely on conclusively and without
liability) that (i) the proposed modifications are required to avoid a downgrade,
withdrawal or suspension of the then current ratings assigned by a Rating Agency to any
Class of the Senior Notes, (ii) the proposed modifications constitute an Additional
Permitted Modification, (iii) the proposed modifications do not constitute either (A) a
Basic Terms Modification or (b) a Junior Note Entrenched Term, and (iv) the Noteholder
consultation provisions set out above have been complied with and the Senior
Noteholders have not rejected the proposed amendments within the specified timeframe;
and provided further that the Note Trustee and the Issuer Security Trustee shall not be
obliged to agree to any modification which, in the sole opinion of the Note Trustee and
the Issuer Security Trustee, as applicable, would have the effect of (i) exposing the Note
Trustee and the Issuer Security Trustee, as applicable, to any liability against which it
has not been indemnified and/or secured and/or prefunded to its satisfaction or (ii)
adding to or increasing the obligations, liabilities or duties, or decreasing the protections,
of the Note Trustee and the Issuer Security Trustee, as applicable in respect of the Senior
Notes, in the Issuer Transaction Documents and/or the Conditions.
(d)
The Note Trustee will rely without further investigation on any confirmation or
certification provided to it in connection with the modifications (and, in relation to any
certification as to whether the modifications constitute a Basic Terms Modification shall
rely on such certification) and will not monitor or investigate whether the Issuer is acting
in a commercially reasonable manner, nor will the Note Trustee be responsible for any
liability that may be occasioned to any person by acting in accordance with these
provisions based on any written notification or confirmation it receives from the Issuer.
(e)
Any such modification, waiver, authorisation or determination in accordance with these
Conditions or the Issuer Transaction Documents shall be binding on the Noteholders and,
unless the Note Trustee agrees otherwise, any such modification, waiver, authorisation
or determination shall be notified by the Issuer to the Noteholders as soon as practicable
thereafter in accordance with Condition 17 (Notice to Noteholders).
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(f)
14.18
"Potential Note Event of Default" means an event which would be (with the expiry of
any grace period, the giving of notice or the making of any determination under the
Issuer Transaction Documents or any combination of them) a Note Event of Default.
Direction of Most Senior Class
The Note Trustee shall not exercise the powers of waiver, authorisation or determination set out
in Condition 14.17 (Modifications and waivers) (including for the purposes of complying with
Rating Agency criteria) in contravention of any express written direction given by holders of the
Most Senior Class of Noteholders then outstanding or by an Ordinary Resolution of the Most
Senior Class of Noteholders then outstanding (provided that no such direction or restriction
shall affect any authorisation, waiver or determination previously made or given).
14.19
Conflicts
Where the Note Trustee is required, in connection with the exercise of its rights, powers, trusts,
authorities, duties and discretions, to have regard to the interests of the Noteholders or, as the
case may be, the Noteholders of any Class, it shall have regard to the interests of such
Noteholders as a Class and, in particular, but without prejudice to the generality of the foregoing:
the Note Trustee shall not have regard to, or be in any way liable for, the consequences of such
exercise for individual Noteholders 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 the Note Trustee shall not be entitled to require, nor shall any Noteholder be entitled to
claim, from the Issuer or the Note Trustee or any other person, any indemnification or payment in
respect of any tax consequence of any such exercise upon individual Noteholders.
14.20
Note Trustee discretions
The Note Trustee shall be entitled to determine, in its own opinion, for the purposes of exercising
any right, power, trust, authority, duty or discretion under or in relation to the Notes, the
Conditions or any of the Issuer Transaction Documents, that such exercise will not be materially
prejudicial to the interests of the Noteholders or any Class of Noteholders and in making such a
determination shall be entitled to take into account, without enquiry, among any other things it
may in its absolute discretion consider necessary and/or appropriate, any Rating Agency
Confirmation (if available) in respect of such exercise. For the avoidance of doubt, such Rating
Agency Confirmation or non-receipt of such Rating Agency Confirmation shall, however, not be
construed to mean that any such action or inaction (or contemplated action or inaction) or such
exercise (or contemplated exercise) by the Note Trustee of any right, power, trust, authority, duty
or discretion under or in relation to the Notes, the Conditions or any of the Issuer Transaction
Documents is not materially prejudicial to the interests of holders of that Class of Notes.
14.21
Substitution of Issuer
(a)
The Note Trustee may (subject to such amendments of these Conditions and of any of
the Issuer Transaction Documents, and to such other conditions as the Note Trustee may
require), without the consent of the Noteholders or any other Issuer Secured Creditor,
agree with the Issuer to the substitution in place of the Issuer (or of any previous
substitute) as the principal debtor in respect of the Notes of another body corporate
(being a single purpose vehicle) provided that each Rating Agency provides a Rating
Agency Confirmation (it being acknowledged that there is no obligation on any Rating
Agency to provide any such confirmation) prior to such substitution taking place and
subject to satisfaction of certain other conditions set out in the Note Trust Deed (or
suitable arrangements being put in place to ensure satisfaction of such conditions). In the
case of substitution of the Issuer, for so long as the Notes are listed on the Irish Stock
Exchange and its rules so require, the Irish Stock Exchange shall be notified by the
Issuer of such substitution, a supplemental offering circular will be prepared by the new
principal debtor and filed with the Irish Stock Exchange and notice of the substitution
will be given to the Noteholders by the Issuer in accordance with Condition 17 (Notice
to Noteholders).
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(b)
14.22
Notes being held through Euroclear or Clearstream, Luxembourg
(a)
(b)
15.
In connection with any such substitution of the Issuer as referred to above in Condition
14.18(a), the Note Trustee and the Security Trustee may also agree, without the consent
of the Noteholders or the other Issuer Secured Creditors, to a change of the laws
governing the Notes, these Conditions and/or any of the Issuer Transaction Documents,
provided that such change would not, in the opinion of the Note Trustee or, as the case
may be, the Issuer Security Trustee, be materially prejudicial to the interests of the
Noteholders or the other Issuer Secured Creditors.
Where, for the purposes of these Conditions, the Note Trustee or any other party to the
Issuer Transaction Documents requires a Noteholder holding an interest in Notes
through Euroclear or Clearstream, Luxembourg to establish its holding of such interest
in the Notes to the satisfaction of such party, such holding shall be considered to be
established if such Noteholder provides to the requesting party:
(i)
a Euclid Statement (in the case of Euroclear) or a Creation Online Statement (in
the case of Clearstream, Luxembourg) in each case providing confirmation at
the time of issue of the same of such person's holding in the Notes;
(ii)
if the relevant Notes are held through one or more custodians, a signed letter
from each such custodian confirming on whose behalf it is holding such Notes
such that the Note Trustee is able to verify to its satisfaction the chain of
ownership to the beneficial owner; and
(iii)
any other evidence of holding of such interest in the relevant Notes in a form
acceptable to the Note Trustee.
If in connection with verifying its holding the Note Trustee requires a Noteholder to
temporarily block its interest in the Notes in Euroclear or Clearstream, Luxembourg,
such Noteholder will be required to instruct Euroclear or Clearstream, Luxembourg (via
its custodian, if applicable) to do so.
INDEMNIFICATION AND EXONERATION OF THE NOTE TRUSTEE AND THE
ISSUER SECURITY TRUSTEE
(a)
The Note Trust Deed and the Issuer Deed of Charge and certain of the other Issuer
Transaction Documents contain provisions for indemnification of each of the Note
Trustee and the Issuer Security Trustee and for their responsibility and relief from
responsibility, including provisions relieving them from taking any action including
taking proceedings against the Issuer and/or any other person or, in the case of the Issuer
Security Trustee, enforcing the security constituted by the Issuer Deed of Charge unless
indemnified and/or secured and/or prefunded to their satisfaction.
(b)
The Note Trust Deed and the Issuer Deed of Charge also contain provisions pursuant to
which the Note Trustee and the Issuer Security Trustee are entitled, inter alia:
(i)
to enter into business transactions with the Issuer and/or any other party to any
of the Issuer Transaction Documents and to act as trustee for the holders of any
other securities issued or guaranteed by, or relating to, the Issuer and/or any
other party to any of the Issuer Transaction Documents;
(ii)
to exercise and enforce its rights, comply with its obligations and perform its
duties under or in relation to any such transactions or, as the case may be, any
such trusteeship without regard to the interests of, or consequences for, the
Noteholders; and
(iii)
to retain and not be liable to account for any profit made or any other amount or
benefit received thereby or in connection therewith.
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16.
REPLACEMENT OF GLOBAL NOTES AND DEFINITIVE NOTES
If any Global Note or Definitive Note is mutilated, defaced, lost, stolen or destroyed, it may be
replaced at the specified office of any Paying Agent or the Registrar upon payment by the
claimant of the expenses incurred in connection with such replacement and on such terms as to
evidence and indemnity as the Issuer, the Registrar, the Paying Agent or the Note Trustee may
reasonably require. Mutilated or defaced Global Notes or Definitive Notes must be surrendered
before replacements will be issued.
17.
NOTICE TO NOTEHOLDERS
17.1
Validity of notices
(a)
(b)
All notices, other than notices given in accordance with Conditions 17.2 to 17.5
(inclusive) of this Condition 17, to Noteholders shall be deemed to have been validly
given if:
(i)
for so long as the Notes are listed on a stock exchange, and the rules of such
stock exchange or any applicable regulation so require, or at the option of the
Issuer, if delivered through the announcements section of the relevant stock
exchange and a regulated information service maintained or recognised by such
stock exchange; and
(ii)
for so long as the Notes are represented by Global Notes, and if, for so long as
the Notes are listed on a stock exchange, the rules of such stock exchange so
allow if delivered to Euroclear and/or Clearstream, Luxembourg for
communication by them to their participants and for communication by such
participants to entitled account holders; or
(iii)
for so long as the Notes are represented by Global Notes and if, for so long as
the Notes are listed on a stock exchange, the rules of such stock exchange so
allow if delivered to the electronic communications systems maintained by
Bloomberg L.P. for publication on the relevant page for the Notes or such other
medium for the electronic display of data as may be previously approved in
writing by the Note Trustee; or
(iv)
if the Notes are in definitive form, if published in a leading daily newspaper
printed in the English language and with general circulation in Ireland (which is
expected to be The Irish Times) or, if that is not practicable, in such English
language newspaper or newspapers having a general circulation in Ireland and
the rest of Europe.
Any such notice shall be deemed to have been given on:
(i)
in the case of a notice delivered to the regulated information service of a stock
exchange, the day on which it is delivered to such stock exchange;
(ii)
in the case of a notice delivered to Euroclear and/or Clearstream, Luxembourg,
the day on which it is delivered to Euroclear and/or Clearstream, Luxembourg;
(iii)
in the case of a notice delivered to Bloomberg L.P., the day on which it is
delivered to Bloomberg L.P.; and
(iv)
in the case of a notice published in a newspaper, the date of such publication or,
if published more than once or on different dates, on the first date on which
publication shall have been made in the newspaper or newspapers in which
publication is required.
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17.2
Impossibility
If it is impossible or impractical to give notice in accordance with paragraphs (i), (ii) or (iii) of
Condition 17.1 (Validity of notices) then notice of the relevant matters shall be given in
accordance with paragraph (a) (iv) of Condition 17.1 (Validity of notices).
17.3
Copy of notices to Rating Agencies
A copy of each notice given in accordance with this Condition 17 (Notice to Noteholders) shall
be provided to DBRS Ratings Limited ("DBRS") and Fitch Ratings Ltd. ("Fitch") for so long as,
in each case, such rating agency publishes credit ratings in relation to the Senior Notes (the
"Rating Agencies") to which reference in these Conditions shall include any additional or
replacement rating agency appointed by the Issuer, with the prior written approval of the Note
Trustee, to provide a credit rating in respect of the Notes or any Class thereof. For the avoidance
of doubt, and unless the context otherwise requires, all references to "rating" and "ratings" in
these Conditions shall be deemed to be references to the ratings assigned by the Rating Agencies.
17.4
Note Trustee can sanction other methods of giving notice
The Note Trustee 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 the Notes are then listed and provided that notice of such other method is given to the
Noteholders in such manner as the Note Trustee shall require. The Note Trustee shall give notice
to the Noteholders in accordance with this Condition 17 (Notice to Noteholders) of any additions
to, deletions from or alterations to such methods from time to time.
17.5
Verified Noteholder and Initiating Noteholder
(a)
Any Verified Noteholder will be entitled from time to time to request the Issuer Cash
Manager to publish a notice on its investor reporting website requesting other Verified
Noteholders of any Class or Classes to contact it subject to and in accordance with the
following provisions.
(b)
For these purposes, "Verified Noteholder" means a Noteholder which has satisfied the
Issuer Cash Manager that it is a Noteholder in accordance with Condition 14.22 (Notes
being held through Euroclear or Clearstream, Luxembourg).
(c)
Following receipt of a request for the publication of a notice from a Verified Noteholder
(the "Initiating Noteholder"), the Issuer Cash Manager shall publish such notice on its
investor reporting website as an addendum to any Issuer Cash Manager Quarterly Report
or other report to Noteholders due for publication within five Business Days of receipt of
the same (or, if there is no such report, through a special notice for such purpose as soon
as is reasonably practical after receipt of the same) provided that such notice contains
no more than:
(i)
an invitation to other Verified Noteholders (or any specified Class or Classes of
the same) to contact the Initiating Noteholder;
(ii)
the name of the Initiating Noteholder and the address, phone number, website or
email address at which the Initiating Noteholder can be contacted; and
(iii)
the date(s) from, on or between which the Initiating Noteholder may be so
contacted.
(d)
The Issuer Cash Manager will not request and will not be permitted to publish any
further or different information through this mechanism.
(e)
The Issuer Cash Manager will have no responsibility or liability for the contents,
completeness or accuracy of any such published information and shall have no
responsibility (beyond publication of the same in the manner described above) for
ensuring Noteholders receive the same.
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18.
CONTROLLING CLASS
(a)
The Controlling Class may from time to time appoint by way of an Ordinary Resolution
any person to be its representative for the purposes of this Condition (each such person,
an "Operating Advisor").
(b)
Any Operating Advisor so appointed will have the rights set out in the Servicing
Agreement. Any Operating Advisor shall, unless instructed to the contrary in writing by
the majority of persons who constitute the Controlling Class, be entitled in its sole
discretion to exercise all of the rights expressed to be given to it pursuant to the
Servicing Agreement as it sees fit.
(c)
The appointment of any Operating Advisor shall not take effect until it notifies the Issuer,
the Note Trustee, the Rating Agencies, the Issuer Security Trustee, the Servicer and the
Special Servicer in writing (attaching a copy of the relevant Ordinary Resolution) of its
appointment.
(d)
The Controlling Class may by Ordinary Resolution (notified in writing to the Issuer,
Note Trustee, the Issuer Security Trustee, the Servicer and the Special Servicer)
terminate the appointment of any Operating Advisor. Any Operating Advisor may retire
by giving not less than 21 days' notice in writing to the Noteholders of the Controlling
Class (in accordance with the terms of Condition 17 (Notice to Noteholders)), the Issuer,
the Note Trustee, the Issuer Security Trustee, the Servicer and the Special Servicer.
(e)
The Controlling Class may by Extraordinary Resolution direct the Operating Advisor to
direct the Issuer to replace the person then acting as the Special Servicer in accordance
with the terms of the Servicing Agreement.
(f)
The most junior Class of Senior Notes outstanding shall be the "Controlling Class" if at
the relevant time it meets the Controlling Class Test. A Class of Senior Notes will meet
the "Controlling Class Test" if it has a total Principal Amount Outstanding which is not
less than 25 per cent. of the Principal Amount Outstanding of such Class of Senior Notes
on the Closing Date and for which a Control Valuation Event is not continuing.
(g)
A "Control Valuation Event" will occur with respect to any class of Senior Notes if
and for so long as: (a) the difference between (1) the sum of (i) the then Principal
Amount Outstanding of such class of Senior Notes and (ii) the then Principal Amount
Outstanding of all classes of Senior Notes ranking junior to such class; and (2) the sum
of (i) any Valuation Reduction Amounts with respect to the Senior Loan; and (ii) without
duplication, losses realised with respect to any enforcement of security in respect of the
Properties, is less than (b) 25 per cent. of the then Principal Amount Outstanding of such
class of Senior Notes.
(h)
A "Valuation Reduction Amount" with respect to the Senior Loan will be an amount
equal to the excess of:
(i)
the outstanding principal balance of the Senior Loan; over
(ii)
the excess of:
(A)
90 per cent. of the sum of the values set out in the most recent
Valuation (including all reserves or similar amounts which may be
applied toward payments on the Senior Loan) excluding the values of
any Properties no longer held by the Borrowers as at the testing date;
over
(B)
the sum of:
(AA)
all unpaid interest on the Senior Loan;
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(BB)
any other unpaid fees, expenses and other amounts that are
payable prior to amounts payable to the Issuer under the Senior
Loan; and
(CC)
all currently due and unpaid ground rents and insurance premia
and all other amounts due and unpaid with respect to the Senior
Loan.
The Valuation Reduction Amount will be predetermined on each occasion on which an
updated Valuation is obtained, by reference to such Valuation.
19.
(i)
If the most junior class of Senior Notes outstanding does not meet the Controlling Class
Test, the next most junior Class of Senior Notes outstanding that does meet the
Controlling Class Test will be the Controlling Class.
(j)
If no Class of Senior Notes has a Principal Amount Outstanding that satisfies this
requirement, then the Controlling Class will be the Most Senior Class of Notes then
outstanding. The Principal Amount Outstanding of a Class of Senior Notes for the
purposes of calculating the Controlling Class Test shall be the then current Principal
Amount Outstanding of such Senior Class less any Valuation Reduction Amounts that
have been applied to that Senior Class.
(k)
The Servicer or the Special Servicer, as applicable, shall determine which Class of Notes
meets the Controlling Class Test.
(l)
Each Noteholder acknowledges and agrees, by its purchase of the Notes, that:
(i)
the Operating Advisor may have special relationships and interests that conflict
with those of the holders of one or more classes of the Notes;
(ii)
the Operating Advisor may act solely in the interests of the Controlling Class;
(iii)
the Operating Advisor does not have any duties to any Noteholders other than
the Controlling Class;
(iv)
the Operating Advisor may take actions that favour the interests of the
Noteholders of the Controlling Class over the interests of the other Noteholders;
(v)
the Operating Advisor will not be deemed to have been negligent or reckless, or
to have acted in bad faith or engaged in wilful misconduct, by reason of its
having acted solely in the interests of the Controlling Class; and
(vi)
the Operating Advisor will have no liability whatsoever for having acted solely
in the interests of the Controlling Class, and no holder of any other Class of
Notes may take any action whatsoever against the Operating Advisor for having
so acted.
RIGHTS OF THIRD PARTIES
No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to
enforce any term of the Notes or these Conditions, but this does not affect any right or remedy of
any person which exists or is available apart from that Act.
20.
GOVERNING LAW AND JURISDICTION
20.1
Governing law
The Issuer Transaction Documents and the Notes, and any non-contractual obligation arising
from or in connection with them, will be governed by, and shall be construed in accordance with,
English law (other than the Corporate Services Agreement which will be governed by Irish law
and any terms particular to Scots law in the Issuer Transaction Documents which will be
construed in accordance with Scots law).
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20.2
Jurisdiction
The courts of England are to have exclusive jurisdiction to settle any dispute that may arise out of
or in connection with the Note Trust Deed, the Issuer Deed of Charge, the Notes and the other
Issuer Transaction Documents (other than the Corporate Services Agreement). The Issuer has in
each of the Issuer Transaction Documents to which it is a party irrevocably submitted to the
jurisdiction of the English courts (other than the Corporate Services Agreement, in respect of
which the courts of Ireland shall have jurisdiction and the Issuer Security Agreement, in respect
of which the courts of Jersey shall have jurisdiction).
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USE OF PROCEEDS
The gross proceeds of the Senior Note will be used to:
(a)
acquire all the rights and obligations of the Original Senior Lender as "Lender" under the Senior
Facility Agreement in respect of the Pecan Senior Loans and all related security, which shall be
transferred by novation to the Loan Seller and from the Loan Seller to the Issuer on the Closing
Date; and
(b)
advance three further loans (the "Titan Senior Loans", and together with the Pecan Senior Loans,
the "Senior Loan") to the Titan Borrowers to refinance the Existing Indebtedness of the Titan
Borrowers which was ultimately financed by a repo transaction entered into with Credit Suisse
AG, London Branch.
The gross proceeds (which may be applied in accordance with any settlement and netting arrangements
agreed between the Issuer and the Original Junior Lender) of the Junior Notes will be used to:
(c)
acquire all the rights and obligations of the Original Junior Lender as "Lender" under the Junior
Facility Agreement in respect of the Pecan Junior Loans, which shall be transferred by novation
to the Loan Seller and from the Loan Seller to the Issuer on the Closing Date; and
(d)
advance three further loans (the "Titan Junior Loans", and together with the Pecan Junior Loans,
the "Junior Loan") to the Titan Borrowers to refinance the Existing Indebtedness of the Titan
Borrowers which was ultimately financed by a repo transaction entered into with Credit Suisse
AG, London Branch.
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CERTAIN ASPECTS OF LAW
CERTAIN MATTERS OF JERSEY LAW
The following is a summary of certain aspects of Jersey law relating to the creation and enforcement of
the security governed by Jersey law, the enforcement of English judgment and the institution of
insolvency proceedings in relation to companies incorporated under the Companies (Jersey) Law 1991, as
amended (the "Jersey Companies Law"). This is not a complete summary of currently applicable Jersey
law and prospective Noteholders who are in any doubt as to any matter described in this Offering Circular
should consult their own professional advisors.
Security over intangible movable property under Jersey law
For the purposes of the Security Interests (Jersey) Law 2012 (as amended) (the "Jersey Security Law"),
a "security interest" is defined as an interest in intangible movable property being an interest that, under
a security agreement, secures payment or secures the performance of an obligation.
The Jersey Security Law applies to security interests in intangible movable property including shares,
bank accounts and contract rights.
Attachment
To be enforceable against the grantor of security, a security interest must attach to the collateral that is
intended to be secured.
A security interest attaches to collateral under a security agreement at the time when the following three
conditions are all satisfied:
(a)
value has been given in respect of the security agreement;
(b)
the grantor has rights in the collateral or the power to grant rights in the collateral to a secured
party; and
(c)
one or both of the following requirements are satisfied (i) there is possession or control of the
collateral by the secured party (or on the secured party's behalf by a person other than the grantor
or obligor) and (ii) the security agreement is in writing signed by or on behalf of the grantor and
contains a description of the collateral that is sufficient to enable the collateral to be identified.
A security agreement may provide for a security interest in after-acquired property. The relevant security
interest attaches to after-acquired property on the acquisition by the grantor of rights in the property and
without the need for specific appropriation of the property by the grantor.
Perfection
In order for a security interest to be valid against third parties it must be perfected. The two key objectives
of perfection are:
(a)
priority against subsequent security interests and a purchaser of the collateral; and
(b)
to ensure that the security is effective on the bankruptcy of the grantor and therefore is
enforceable against the Viscount and a liquidator, subject to the usual set aside considerations set
out below.
A security interest is perfected when two conditions are satisfied. The first condition is that the security
interest has attached. The second condition is that any further steps required under the Jersey Security
Law for perfection have been completed.
The "further steps" depend on the nature of the collateral as follows:
(a)
a security interest in shares, bank accounts and contract rights can be perfected by the registration
of a financing statement;
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(b)
a security interest in shares may also be perfected by possession of the relevant share certificates;
and
(c)
a security interest in a bank account may also be perfected by control.
Where a secured party is taking security over shares in a Jersey company (and the shares are not
dematerialised), the secured party will have control if it becomes the registered shareholder or it has
possession of the share certificates.
Possession of share certificates would not perfect a security interest in dividends or further shares and
registration would be required to perfect security in relation to such collateral.
Power of Enforcement
The power of enforcement in respect of a security interest shall become exercisable when (a) an event of
default has occurred in relation to the security agreement that created or made provision for the security
interest; and (b) the secured party has served on the grantor written notice specifying the event of default.
Enforcement options
A secured party may exercise the power of enforcement in respect of a security interest by doing any of
the following in relation to the collateral that is subject to such security interest or in relation to any
proceeds of that collateral:
(a)
appropriating the collateral or proceeds;
(b)
selling the collateral or proceeds;
(c)
taking any of the following ancillary actions:
(d)
(i)
taking control or possession of the collateral or proceeds;
(ii)
exercising any rights of the grantor in relation to the collateral or proceeds; or
(iii)
instructing any person who has an obligation in relation to the collateral or proceeds to
carry out the obligation for the benefit of the secured party; or
applying any remedy that the security agreement provides for as a remedy that is exercisable
pursuant to the power of enforcement, to the extent that the remedy is not in conflict with the
Jersey Security Law.
The enforcement options may be exercised cumulatively to the extent that they are not in conflict.
A secured party who appropriates collateral must, not less than 14 days before appropriating the
collateral, give written notice to (a) the grantor, (b) any person who, 21 days before the appropriation, has
a registered security interest in the collateral and (c) any person other than the grantor who has an interest
in the collateral and has, not less than 21 days before the appropriation, given the secured party notice of
that interest. There is no guidance in the Jersey Security Law as to what the nature of any such interest
may be. However, it would be prudent to view such as a proprietary interest. The secured party is not
obliged to identify interested persons. The interested persons have to actively contact the secured party in
order to be an interested person for the purpose of these provisions.
A secured party who sells collateral must, not less than 14 days before selling the collateral, give written
notice to (a) the grantor, (b) any person who, 21 days before the sale, has a registered security interest in
the collateral and (c) any person other than the grantor who has an interest in the collateral and has, not
less than 21 days before the sale, given the secured party notice of that interest.
In certain circumstances, there is no need to give any notice of sale and these include:
(a)
where the secured party believes on reasonable grounds that the collateral will decline
substantially in value if it is not disposed of within 14 days after the relevant event of default; and
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(b)
for any other reason, the Royal Court (Jersey's principal, superior court of record) orders, on an
ex parte application, that notice need not be given.
The secured party and another person may agree in writing in one or both of the following terms: (a) that
notice concerning sale and/or appropriation need not be given to the other person; (b) for notice
concerning sale and/or appropriation to be given to the other person within a period different from that
specified above.
The Jersey Security Agreements contain a provision that the secured party is not obliged to give any
notice of sale or appropriation to the grantor.
As regards those who have an interest in the collateral, there should be no such interests where security
has been taken from the sole absolute and beneficial owner of the collateral.
Sale of collateral
A secured party may effect a sale of the collateral by auction, public tender, private sale or another
method. A secured party is not prevented from buying any collateral that the secured party sells.
Duty to obtain fair valuation or fair price
A secured party who appropriates or sells collateral owes a duty to those who have a proprietary interest
in the collateral (a) to take all commercially reasonable steps to determine the fair market value of the
collateral as at the time of the appropriation or sale and (b) to act in other respects in a commercially
reasonable manner in relation to the appropriation or sale.
Insolvency
There are two principal regimes for corporate insolvency in Jersey: désastre and winding-up. The
principal type of insolvency procedure available to creditors under Jersey law is the application for an Act
of the Royal Court of Jersey under the Bankruptcy (Désastre) (Jersey) Law 1990, as amended (the
"Jersey Bankruptcy Law") declaring the property of a debtor to be "en désastre" (a "Jersey
declaration"). On a Jersey declaration of désastre, title and possession of the property of the debtor vest
automatically in the Viscount, an official of the Royal Court (the "Viscount"). With effect from the date
of a Jersey declaration, a creditor has no other remedy against the property or person of the debtor, and
may not commence or continue any legal proceedings to recover the debt.
Additionally, the shareholders of a Jersey company (but not its creditors) can instigate a winding up of an
insolvent company, which is known as a "creditors' winding up" pursuant to Chapter 4 of Part 21 of the
Jersey Companies Law. On a creditors' winding up, a liquidator is appointed, usually by the creditors. The
liquidator will stand in the shoes of the directors and administer the winding up, gather assets, settle
claims and distribute assets as appropriate. After the commencement of the winding up, no action can be
taken or continued against the company except with the leave of court. The corporate state and capacity
of the company continues until the end of the winding up procedure, when the company is dissolved. The
Jersey Companies Law requires a creditor of a company (subject to appeal) to be bound by an
arrangement entered into by the company and its creditors immediately before or in the course of its
winding up if (inter alia) three-quarters in number and value of the creditors acceded to the arrangement.
However please see the section headed "Recognition of security in Jersey in an insolvency" in relation to
the rights of a secured party on an insolvency.
Transactions at an Undervalue
Under Article 17 of the Jersey Bankruptcy Law and Article 176 of the Jersey Companies Law, the court
may, on the application of the Jersey Viscount (in the case of a company whose property has been
declared "en désastre") or liquidator (in the case of a creditors' winding up – a procedure which is
instigated by shareholders not creditors), set aside a transaction (including any security interest) entered
into by a company with any person (the "other party") at an undervalue. There is a five-year look-back
period from the date of commencement of the winding up or Jersey declaration of "désastre" during
which transactions are susceptible to examination pursuant to this rule (the "relevant time"). The Jersey
Bankruptcy Law and Jersey Companies Law contain detailed provisions, including (without limitation)
those that define what constitutes a transaction at an undervalue, the operation of the relevant time and the
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effect of entering into such a transaction with a person connected with the company or with an associate
of the company.
Preference
Under Article 17A of the Jersey Bankruptcy Law and Article 176A of the Jersey Companies Law, the
court may, on the application of the Viscount (in the case of a company whose property has been declared
"en désastre") or liquidator (in the case of a creditors' winding up), set aside a preference (including any
security interest) given by the company to any person (the "other party"). There is a 12-month look-back
period from the date of commencement of the winding up or Jersey declaration of "désastre" during
which transactions are susceptible to examination pursuant to this rule (the "relevant time"). The Jersey
Bankruptcy Law and Jersey Companies Law contain detailed provisions, including (without limitation)
those that define what constitutes a preference, the operation of the relevant time and the effect of
entering into a preference with a person connected with the company or with an associate of the company.
Extortionate Credit Transactions
Under Article 17C of the Jersey Bankruptcy Law and Article 179 of the Jersey Companies Law, the court
may, on the application of the Viscount (in the case of a company whose property has been declared "en
désastre") or liquidator (in the case of a creditors' winding up), set aside a transaction providing credit to
the debtor company which is or was extortionate. There is a three-year look-back period from the date of
commencement of the winding up or Jersey declaration of "désastre" during which transactions are
susceptible to examination pursuant to this rule (the "relevant time"). The Jersey Bankruptcy Law and
Jersey Companies Law contain detailed provisions, including (without limitation) those that define what
constitutes a transaction which is extortionate.
Disclaimer of Onerous Property
Under Article 15 of the Jersey Bankruptcy Law, the Viscount may within six months following the date
of the Jersey declaration of désastre and under Article 171 of the Jersey Companies Law, and a liquidator
may within six months following the commencement of a creditors' winding up, disclaim any onerous
property of the company. "Onerous property" is defined to include any moveable property, a contract
lease or other immoveable property if it is situated outside of Jersey that is unsaleable or not readily
saleable or is such that it might give rise to a liability to pay money or perform any other onerous act, and
includes an unprofitable contract.
A disclaimer operates to determine, as of the date it is made, the "rights, interests and liabilities of the
company in or in respect of the property disclaimed" but "does not, except so far as is necessary for the
purpose of releasing the company from liability, affect the rights or liabilities of any other person." A
person sustaining loss or damage as a result of a disclaimer is deemed to be a creditor of the company to
the extent of the loss or damage and shall have standing as a creditor in the désastre or creditors' winding
up. The Jersey Bankruptcy Law and Jersey Companies Law contain detailed provisions, including
(without limitation) in relation to the power to disclaim onerous property.
Fraudulent Dispositions
In addition to the Jersey statutory provisions referred to above, there are certain principles of Jersey
customary law (for example, a Pauline action) under which dispositions of assets with the intention of
defeating creditors' claims may be set aside.
Recognition of security in Jersey in an insolvency
If the grantor of a security interest becomes bankrupt or the grantor or the grantor's property is subjected,
whether in Jersey or elsewhere, to any other judicial arrangement or proceeding consequent upon
insolvency, that shall not affect the power of a secured party to appropriate or sell collateral or otherwise
act in relation to collateral.
If the property vests in the Viscount on a désastre and the secured party wishes to enforce independently
of the Viscount, then the secured party may do so. The secured party retains an independent power of sale
or appropriation under the Jersey Security Law notwithstanding that title to the property has vested in the
Viscount.
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The situation where the secured party does not enforce security is not addressed in the Jersey Security
Law. In addition, the Jersey Security Law is silent as to the situation where there may be a conflict
between the secured party and the Viscount concerning a sale of the collateral (i.e. the secured party has
no right under the Jersey Security Law to block or veto a sale by the Viscount).
The Jersey Bankruptcy Law applies in relation to money received by the Viscount in relation to the
realisation of property. In the case of secured property, the Viscount would only receive such realisation
proceeds if the Viscount sold the secured property in the first place.
The Jersey Bankruptcy Law establishes a general moratorium which applies en désastre. However, the
moratorium does not prevent a secured party from exercising enforcement powers without the consent of
the Viscount and without an order of the court.
Where the Viscount is required to be involved in the sale of the secured assets, he has, as a matter of
practice, sought to claim his fees (which are currently approximately 10 per cent. of the value of realised
assets plus 2.5 per cent. of distributed assets) from such proceeds of sale over and above the costs and
expenses of such sale.
Further, whilst there is no statutory recognition of foreign law governed security interests in the event of a
désastre or creditors' winding up of a Jersey company, from our understanding of the current practice of
insolvency officers in Jersey, (and we also note in this regard the provisions of Article 13(2) of the Jersey
Security Law which gives statutory recognition to the capacity of a Jersey company to grant security
governed by foreign law over property situated outside Jersey) foreign law governed security interests
would be recognised by the Viscount (in the case of a désastre) and a liquidator (in the case of a creditors'
winding up) to the extent they constitute valid, binding and enforceable security interests in accordance
with their governing law.
Floating Charges
Under the laws of Jersey, a person incorporated, resident or domiciled in Jersey is deemed to have
capacity to grant security governed by foreign law over property situated outside the Island of Jersey, but
to the extent that any floating charge is expressed to apply to any asset, property and undertaking of a
person incorporated, resident or domiciled in Jersey such floating charge is not likely to be held valid and
enforceable by the courts of Jersey in respect of Jersey situs assets.
Administrators, Receivers and Statutory and Non-statutory Requests for Assistance
The Insolvency Act 1986 (either as originally enacted or as amended, including by the provisions of the
Enterprise Act 2002) does not apply in Jersey and receivers, administrative receivers and administrators
are not part of the laws of Jersey. Accordingly, the courts of Jersey may not recognise the powers of an
administrator, administrative receiver or other receiver appointed in respect of Jersey situs assets
(although see below in the case of fixed charge receivers).
However, under Article 49(1) of the Jersey Bankruptcy Law, the Jersey court may assist the courts of
prescribed countries and territories in all matters relating to the insolvency of any person to the extent that
the Jersey court thinks fit. These prescribed jurisdictions include the United Kingdom. Further, in doing
so, the Royal Court may have regard to the UNCITRAL model law, even though the model law has not
been (and is unlikely to be) implemented as a separate law in Jersey. In the case In re Estates and General
Developments Ltd (in liquidation) [2013] JRC 027, concerning an English debtor company, owning
Jersey immovable property, which was in liquidation in England, fixed charge receivers appointed by a
foreign secured creditor were able to use Article 49 of the Jersey Bankruptcy Law as a gateway to obtain
recognition of their appointment and the authority to manage and sell Jersey immovable property,
notwithstanding that the appointment of fixed charge receivers is a contractual (rather than court
insolvency) appointment, and there is no such concept in Jersey law.
If the request comes from a non-prescribed country, then common law and principles of comity will be
considered by the Royal Court by virtue of its inherent jurisdiction. If insolvency proceedings are afoot in
another jurisdiction in relation to the company, the nature and extent of the cooperation from Jersey is
likely to depend on the nature of the requesting country's insolvency regime. If the requesting country
adheres to principles of territoriality, as opposed to universality, and, for instance, ring-fences assets for
local creditors, full cooperation is highly unlikely. If, however, the jurisdiction applies similar
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fundamental principles to those applied in Jersey, the Royal Court's approach is more likely to be similar
to the position where prescribed countries are involved.
In the case of both statutory and non-statutory requests for assistance, it should not be assumed that the
UNCITRAL provisions will automatically be followed. That is a matter for the discretion of the Royal
Court. It would also be wrong to assume for European countries that the position will be in accordance
with Council Regulation (EC) No 1346/2000 of 29 May 2000, as amended (the "EU Insolvency
Regulation"). Jersey does not form part of the European community for the purposes of implementation
of its directions. Accordingly, the EU Insolvency Regulation does not apply as a matter of Jersey
domestic law and the automatic test of centre of main interests does not apply as a result.
Enforcement of judgments of the High Court of Justice, the Court of Appeal or the Supreme Court
in Jersey
A final and conclusive judgment under which a sum of money is payable (not being a sum payable in
respect of taxes or other charges of a like nature or in respect of a fine or penalty) obtained in the High
Court of Justice, the Court of Appeal or the Supreme Court in England against a Jersey company would
be recognised as a valid judgment by the Jersey courts and would be enforceable in accordance with and
subject to the provisions of the Judgements (Reciprocal Enforcement) (Jersey) Law 1960 (the "JRL"),
without a substantive re-examination of the merits of such judgment. The JRL contains provisions
enabling an application to be made to the Jersey courts to set aside a judgment registered under the JRL
on the following grounds: (a) the judgment is not a judgment to which the JRL applies; or (b) the High
Court of Justice in England had no jurisdiction in the circumstance of the case; or (c) the judgment debtor,
being the defendant in the High Court of Justice in England, did not receive notice of those proceeding in
sufficient time to enable him to defend those proceedings and did not appear; or (d) the judgment was
obtained by fraud; or (e) that the enforcement of the judgment in Jersey would be contrary to public
policy in Jersey; or (f) that the rights under the judgment are not vested in the person by whom the
application for registration was made; or (g) that that matter in dispute in the proceedings in the High
Court of Justice in England had previously to the date of the judgment in the High Court of Justice in
England been the subject of a final and conclusive judgment by a court having jurisdiction in the matter.
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CERTAIN MATTERS OF SCOTS LAW
The following is an outline of certain aspects of Scots law and practice relevant to lending on a secured
basis over Scottish real property. It does not constitute a complete summary of currently applicable
Scottish law or practice, and should not be treated as a substitute for professional advice. Prospective
Noteholders who are in any doubt as to any matter described herein should consult their own professional
advisors.
Types of Security
In Scotland, the only competent method by which fixed security can be created over Scottish real property
is a standard security and in the case of rental income by means of an assignation of rent.
(a)
Standard Security
A standard security must comply with Scottish statutory requirements and must be registered or
recorded at the Registers of Scotland before a security right is created and from 1 April 2016, all
standard securities will require to be registered in the Land Register of Scotland. An equitable
charge is not created prior to registration or recording of the standard security. Additionally, if
the charge is created by a company or limited liability partnership incorporated in Scotland or
England and Wales it must also be registered within strict time limits at Companies House (i.e.,
with the Registrar of Companies). Failure to register at Companies House will result in the
charge being unenforceable against a liquidator, administrator or any creditor of the chargor.
(b)
Security over rent
An assignation of rents assigns a right in security over the rental income arising under an
identified lease. Assignations of future leases are unlikely to be effective as a matter of Scots law.
Notice of the assignation must be given to the relevant tenants in order for a security interest to
be created. In addition if the assignation is granted by a company or limited liability partnership
incorporated in Scotland or England and Wales it must also be registered within strict time limits
at Companies House (i.e., with the Registrar of Companies). Failure to register at Companies
House will result in the charge being unenforceable against a liquidator, administrator or any
creditor of the chargor.
Perfection
(a)
Registration
A standard security created by a company which has been registered at Companies House within
21 days of the date of delivery of such charge and at the Registers of Scotland, will take priority
over subsequent standard securities and floating charges and all unsecured creditors, including
preferred creditors and, in the event of a liquidation, will also take priority over the liquidator's
costs. Similar rules apply to assignations of rent although notification to the relevant tenants is
required rather than registration at the Registers of Scotland and it is not possible to take a
second-ranking assignation of rents in Scotland if the existing assignation has been perfected.
In the absence of an intercreditor agreement or ranking agreement registered or recorded in the
Registers of Scotland, the effective date of registration of the standard security at the Scottish
Land Registry determines the priority afforded to competing standard securities.
Failure to comply with registration or (in respect of an assignation) notification requirements will
make the standard security or assignation of rents invalid against a liquidator, administrator and
any creditor of the chargor and the underlying debt automatically becomes due.
(b)
Set-off
In addition to the above, charges over rights against obligors are subject to rights of set-off
(which term is used in this Offering Circular to describe rights of retention, compensation and
balancing of accounts in insolvency in relation to Scots law matters) between the obligor and the
chargor. Although the giving of notice of the charge to the obligor stops most new rights of setoff from accruing, rights of set-off which came into existence prior to the giving of notice will
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take effective priority over the interests of the chargee. In addition certain rights of set-off which
are fundamental to the contract between the obligor and the chargor will continue to accrue even
after the giving of notice.
Enforcement of Security
Enforcement of Security Prior to Administration, Insolvency or Bankruptcy of Charging Entity
Standard securities
Enforcement of standard securities must follow statutory procedures. A number of enforcement routes are
available. However, following recent case law, it is generally recommended that enforcement is by the
service of a calling up notice in order to ensure a power of sale arises after the expiry of the relevant
notice period. Additional requirements arise where the security is over residential property where court
consent to enforcement is needed. If, following the enforcement of a standard security, the security holder
enters into possession of the property, the security holder will be entitled to any rental income arising in
respect of the property although entering into possession may incur certain liabilities such as occupiers'
liability and environmental liability.
Foreclosure is not immediately available as an enforcement remedy in respect of Scottish real property.
The property must be exposed for sale (following the statutory procedures) and it is only if such process
fails to generate sufficient proceeds to satisfy the secured liabilities that enforcement by foreclosure
becomes available. An application must be made to the Scottish courts to exercise this enforcement
power.
A receiver cannot be appointed under Scottish fixed security.
Assignations of rents
The assignation of rents is not subject to statutory enforcement requirements and instead enforcement
rights arise under the terms of the assignation and at common law. Generally the assignation will provide
for the rents to be collected by the security holder applied in satisfaction of the secured liabilities
following the occurrence of an event of default and while such default is continuing. This right can be
exercised without taking possession of the underlying property.
Enforcement of Security Upon the Administration, Insolvency or Bankruptcy of Charging Entity
(a)
Enforcement during Scottish administration proceedings of entity.
The effect of the statutory moratorium in a Scottish administration proceeding of a company
from the lender's perspective is that it is unable to enforce the security granted by such entity for
the duration of the administration without the leave of the court or the consent of the
administrator. This might compromise the interests of the secured creditor. For example, an
administrator may decide that it is in the best interests of the creditors of the borrower to delay
the sale of the secured assets. Also, the administrator will have the ability to sell property subject
to security in favour of the creditors, but must account to the creditor for the proceeds.
(b)
Enforcement of security during Scottish liquidation of entity.
When a winding up order has been made by the court in respect of a Scottish company or an
interim or provisional liquidator has been appointed, no action or proceeding will be proceeded
with or commenced against the company or its property, except with leave of the court and
subject to such terms as the court may impose. Specific court orders can be obtained to stay any
actions or proceedings brought against the Scottish company and its property. However, the
rights of secured creditors are unaffected and they may still enforce their security rights, for
example , where the chargor has granted a limited assets floating charge, by the appointment of a
receiver over specific property or assets of the company.
(c)
Enforcement of security in Scotland upon foreign insolvency.
The Scottish courts are required, subject to limited exceptions, to recognise and give effect to the
opening, conduct and closure of "main" insolvency proceedings taking place in accordance with
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the EC Insolvency Regulation in another Member State, as well as judgments handed down in
direct connection with such proceedings. Subject to important exceptions, including those
specified below: (i) the law of the Member State in which insolvency proceedings are opened
pursuant to the EC Insolvency Regulation is to be applied to those proceedings and is to
determine their effect; and (ii) a "liquidator" (as that term is used in the EC Insolvency
Regulation) appointed in main proceedings conducted in another Member State is empowered to
remove any assets of the debtor company located in Scotland.
It is the apparent intention of the EC Insolvency Regulation that the application of these rules be
circumscribed with respect to security interests, including fixed and floating charge security
interests, over assets or rights located in Scotland. In particular, the EC Insolvency Regulation
provides that the opening of insolvency proceedings will not affect the "rights in rem" of
creditors or third parties in respect of tangible or intangible, or moveable or immoveable, assets
(both specific assets and collections of indefinite assets as a whole which change from time to
time) belonging to the debtor which are situated within the territory of another Member State at
the time of the opening of the proceedings.
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CERTAIN MATTERS OF ENGLISH LAW
The following is an outline of certain aspects of English law and practice relevant to lending on a secured
basis over English real property. It does not constitute a complete summary of currently applicable
English law or practice, and should not be treated as a substitute for professional advice. Prospective
Noteholders who are in any doubt as to any matter described herein should consult their own professional
advisors.
Types of Security
In England, security may be fixed or floating. A floating charge is a charge over a generic class of assets
that are changing from time to time and with which the company has the right to deal. By way of contrast,
fixed charges are taken over non-dealing assets.
(a)
Mortgage
English law security over real property typically takes the form of fixed legal charges (i.e.
charges by way of legal mortgage). Title to most English property is registered at the Land
Registry, but if title to a particular property is unregistered, the granting of a first ranking charge
will oblige the property owner to register its title at the Land Registry within strict time limits.
Charges over real property in England and Wales must be registered at the Land Registry.
Additionally, if the charge is created by a company incorporated in England and Wales it must
also be registered within strict time limits at Companies House (i.e., with the Registrar of
Companies). In the case of registered land, failure to register the charge at the Land Registry will
result in the charge being a mere equitable charge over which subsequent legal charges will take
priority. If the charge triggers first registration of title of unregistered land, failure to register
within the prescribed time limits will result in the charge creating only a contract to grant a
mortgage. Failure to register at Companies House will result in the charge being unenforceable
against a liquidator, administrator or any creditor of the mortgagor.
(b)
Security over shares
Loans in respect of commercial property in the United Kingdom are often also secured by a
mortgage over the shares in the company that owns the property. Security over registered shares
issued by a private company, for example the shares in a wholly-owned subsidiary, is usually
"perfected" by the creditor taking possession of the share certificates together with an executed
blank transfer form (which would allow the relevant party to complete the formalities of
transferring ownership of the shares without any further involvement from the mortgagor for the
purpose of causing a sale at a later date to a third party using the proceeds to satisfy the debt). If
the registered shares or securities are listed and traded, the creditor is likely to insist on a legal
mortgage and on "perfecting" its security by requiring the debtor to transfer title to it or its
nominee.
(c)
Security over insurances, leases and rent
Typical security for a mortgage loan will include security assignments of the insurance policies
covering the properties. The lender will usually require that the interests of the security trustee be
noted on the insurance policies, although on some loans the security trustee is made a co-insured
party or more rarely sole loss payee.
Similarly, security assignments of any leases of the property and all rents payable thereunder will
also usually be obtained.
(d)
Security over bank accounts
English law allows a special form of security known as a floating charge to be taken over
particular types of short-term business assets which are acquired and disposed of on a continuous
basis in the course of a business. One of the principal features of the floating charge is that the
chargor is free to use and dispose of the charged assets during the course of its business without
the need to obtain the consent of or otherwise involve the chargee.
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Floating charges are subject to certain limitations from a lender's perspective which are described
in more detail below. Lenders have sought to overcome these limitations by seeking to take fixed
charges over such assets. In a series of cases the English courts have laid down the principle that
where the chargor of assets is entitled to dispose of them free of the chargee's security without
the consent of the chargee, the security in question will be a floating charge regardless of how the
charge is described in the charging document.
While initially the abovementioned principles were designed in the context of assets such as the
stock-in-trade of manufacturing companies, over time they were expanded to cover fluctuating
credit balances in bank accounts as these were seen to have similar features from the point of
view of taking security.
In order to establish a fixed charge under English law over a bank account, the security trustee
creditor must not only have the right under the terms of the charge to control withdrawals from
the account but must also actually exercise this control in practice on an ongoing basis.
Enforcement of a charge over a bank account would usually occur through the appointment of a
receiver to realise the asset, collect funds from the account, and use them to repay the debt.
(e)
Floating charge
A lender will typically seek floating security with respect to a loan. Floating charges can cover
all the existing and future property of the borrower, so there is no need to identify and secure
each asset when it comes into existence. The distinguishing feature of a floating charge is that the
company is free to deal with the charged assets in the ordinary course of business until the
floating charge crystallises. This is an objective test as the parties cannot characterise a charge as
fixed if in fact the company has the right to deal. To have a fixed charge, the creditor must
exercise some degree of control over the asset. Typical floating charge assets are inventory and
receivables, as the company must be able to use its inventory and sell its goods free of the
security interest, and it must be able to collect receivables in its bank account and use the
proceeds to pay its expenses. If the company defaults or the floating charge assets are threatened
by execution, the company's right to deal with the floating charge assets is withdrawn and the
charge crystallises.
In the context of commercial property lending, mortgages and fixed charges are taken over
virtually all of the significant assets of the borrower (other than those assets secured by way of a
method referred to above). As such, the purpose of the floating charge is to "sweep up" any
residual assets and assets acquired in the future, and to protect against any of the fixed charges
which have been taken that prove ineffective.
Floating charges are subject to a number of limitations. Firstly, if the chargor creates a
subsequent fixed charge, then the fixed charge will rank ahead of the earlier floating charge, even
if the subsequent fixed chargee had notice of the prior floating charge. The company also has
apparent authority to create a prior fixed charge over a part of its assets. Secondly, a floating
charge has lower priority than a fixed charge and the following are paid out of the assets subject
to a floating charge: (i) the expenses of an administration or liquidation; (ii) certain employee
wages, benefits and pensions, within limits; and (iii) a fund for unsecured creditors, which is
subject to a maximum of £600,000. Thirdly, a floating charge granted within 12 months before
the onset of insolvency is invalid except to the extent of new money (or other value) given to the
chargor at the same time as (or after) the charge was created. Fourthly, floating charges are often
afforded less recognition abroad as a result of local formalities or registration requirements not
being complied with or because local creditors have not been given notice of the charge where
required by applicable foreign law. Finally, the nature of the charge allows the borrower to
dispose of the charged assets free of the lender's interest. As such there is a real possibility that
there may be few or no assets subject to the charge at the time of enforcement.
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Perfection
(a)
Registration
A fixed charge created by a company which has been registered at Companies House and, if it
relates to land, at the Land Registry, within 21 days of execution of such charge will take priority
over subsequent fixed charges, any floating charges and all unsecured creditors, including
preferred creditors and, in the event of a liquidation, will also take priority over the liquidator's
costs. The holder of a floating charge will take priority over unsecured creditors, but will rank
behind all prior and subsequent fixed charges, the preferential creditors and the unsecured
creditors' fund. In addition, a floating charge which has been registered at Companies House
within 21 days of execution of such charge will take priority over subsequent floating charges
and all unsecured creditors (other than preferential creditors and the unsecured creditors' fund).
Given that English company law allows 21 days from the date of creation of a charge for it to be
registered at Companies House, there always remains a possibility that at the time of creation of a
charge by a company, a prior charge may be in existence which has not been registered. If such a
prior unregistered charge is registered at Companies House within its 21-day period it will take
priority over the subsequent charge even if the subsequent charge has been registered first.
Failure to comply will make the charge invalid against a liquidator, administrator and any
creditor of the company and the underlying debt automatically becomes due. There are limited
exemptions to the obligation to file.
(b)
Notice
In relation to security over receivables, notice to the third party obligor to the contract is not
essential for the effectiveness of the security on the insolvency of the assignor or against its
attaching creditors. However, notice is desirable: to ensure that the obligor pays the secured
creditor; to fix priorities (which may rank according to the first to give notice); to limit further
set-offs by the obligor; and to limit variations of the contract between the obligor and assignor.
(c)
Set-off
In addition to the above, charges over rights against obligors are subject to rights of set-off
between the obligor and the chargor. Although the giving of notice of the charge to the obligor
stops most new rights of set-off from accruing, rights of set-off which came into existence prior
to the giving of notice will take effective priority over the interests of the chargee. In addition
certain rights of set-off which are fundamental to the contract between the obligor and the
chargor will continue to accrue even after the giving of notice.
Enforcement of Security
Enforcement of Security Prior to Administration or Insolvency of Charging Entity
There are three principal methods of enforcing English law non-possessory security: foreclosure; orders
of sale; and receivership.
(a)
Foreclosure
Under English law only mortgages allow foreclosure as a method of enforcement. In the context
of real property finance, these arise in relation to mortgages of the land itself and mortgages of
the shares of the property-owning company. Enforcement is available to a lender through an
application to the court for an order which vests the property in the lender. Such an order will
have the effect of "foreclosing" any interest that the related mortgagor may have in the related
properties. However, in the event that a lender forecloses on a mortgagor's interest in a property it
may be liable in respect of claims that are typically made against the owner of such property.
Therefore, the foregoing enforcement procedure is generally avoided in relation to land.
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(b)
Orders for sale
A lender secured by a charge (including a floating charge) or a mortgage over any asset has the
right to apply to court for an order for the sale of the charged or mortgaged asset. The proceeds of
sale would be applied in satisfaction of the related chargor's or mortgagor's obligations under the
related Facility Agreement.
(c)
Receivership
Following a default under a loan or under the security granted in relation to a loan, a lender may
be able to appoint a receiver, which can be an appointment over the relevant property or over all
of the assets of a corporate borrower. The principal role of a receiver, once appointed, is to obtain
satisfaction of the debt due to the appointing creditor.
Enforcement of Security Upon the Administration or Insolvency of Charging Entity
(a)
Enforcement during English administration proceedings of entity
The effect of the statutory moratorium in an English administration proceeding of a company
from the lender's perspective is that he is unable to enforce the security granted by such entity for
the duration of the administration without the leave of the court or the consent of the
administrator. This might compromise the interests of the secured creditor. For example, an
administrator may decide that it is in the best interests of the creditors of the borrower to delay
the sale of the secured assets. Also, the administrator will have the ability to sell property subject
to security in favour of the creditors, but must account to the creditor for the proceeds.
(b)
Enforcement of security during English liquidation of entity
When a winding up order has been made by the court in respect of an English company or a
provisional liquidator has been appointed, no action or proceeding will be proceeded with or
commenced against the company or its property, except with leave of the court and subject to
such terms as the court may impose. Specific court orders can be obtained to stay any actions or
proceedings brought against the English company and its property. However, the rights of
secured creditors are unaffected and they may still enforce their security rights, for example by
the appointment of a receiver over specific property or assets of the company.
(c)
Enforcement of security in England upon foreign insolvency
The English courts are required, subject to limited exceptions, to recognise and give effect to the
opening, conduct and closure of "main" insolvency proceedings taking place in accordance with
the EU Insolvency Regulation in another Member State, as well as judgments handed down in
direct connection with such proceedings. Subject to important exceptions, including those
specified below: (i) the law of the Member State in which insolvency proceedings are opened
pursuant to the EU Insolvency Regulation is to be applied to those proceedings and is to
determine their effect; and (ii) a "liquidator" (as that term is used in the EU Insolvency
Regulation) appointed in main proceedings conducted in another Member State is empowered to
remove any assets of the debtor company located in England and Wales.
It is the apparent intention of the EU Insolvency Regulation that the application of these rules be
circumscribed with respect to security interests, including fixed and floating charge security
interests, over assets or rights located in England and Wales. In particular, the EU Insolvency
Regulation provides that the opening of insolvency proceedings will not affect the "rights in rem"
of creditors or third parties in respect of tangible or intangible, or moveable or immoveable,
assets (both specific assets and collections of indefinite assets as a whole which change from
time to time) belonging to the debtor which are situated within the territory of another Member
State at the time of the opening of the proceedings.
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IRISH TAXATION
The following is a summary of certain Irish tax consequences of the purchase, ownership and
disposition of the Notes. The summary does not purport to be a comprehensive description of all of
the tax considerations that may be relevant to a decision to purchase, own or dispose of the Notes.
The summary relates only to the position of persons who are the absolute beneficial owners of the
Notes and may not apply to certain other classes of persons such as dealers in securities.
The summary is based upon Irish tax laws and the practice of the Irish Revenue Commissioners as
in effect on the date of this Offering Circular, which are subject to prospective or retroactive
change. The summary does not constitute tax or legal advice and the comments below are of a
general nature only. Prospective investors in the Notes should consult their own advisors as to the
Irish or other tax consequences of the purchase, beneficial ownership and disposition of the Notes
including, in particular, the effect of any state or local tax laws.
Income Tax
In general, persons who are resident in Ireland are liable to Irish taxation on their world-wide income
whereas persons who are not resident in Ireland are only liable to Irish taxation on their Irish source
income. All persons are under a statutory obligation to account for Irish taxation on a self-assessment
basis and there is no requirement for the Irish Revenue Commissioners to issue or raise an assessment.
A Note issued by an Irish company, such as the Issuer may be regarded as property situate in Ireland (and
hence Irish source income) on the grounds that a bearer security is deemed to be situate where it is
physically located or a debt is deemed to be situate where the debtor resides. However, the interest earned
on such Notes is exempt from income tax if paid to a person who is not a resident of Ireland and who for
the purposes of Section 198 of the Taxes Consolidation Act 1997 (as amended) ("TCA 1997") is regarded
as being a resident of a relevant territory. A relevant territory for this purpose is a Member State of the
European Communities (other than Ireland) or not being such a Member State a territory with which
Ireland has entered into a double tax treaty that has the force of law or, on completion of the necessary
procedures, will have the force of law and such double tax treaty contains an article dealing with interest
or income from debt claims. A list of the countries with which Ireland has entered into a double tax treaty
is available on www.revenue.ie.
Relief from Irish income tax may also be available under other exemptions contained in Irish tax
legislation or under the specific provisions of a double tax treaty between Ireland and the country of
residence of the holder of the Notes.
If the above exemptions do not apply it is understood that there is a long standing unpublished practice
whereby no action will be taken to pursue any liability to such Irish tax in respect of persons who are
regarded as not being resident in Ireland except where such persons:
(a)
are chargeable in the name of a person (including a trustee) or in the name of an agent or branch
in Ireland having the management or control of the interest; or
(b)
seek to claim relief and/or repayment of tax deducted at source in respect of taxed income from
Irish sources; or
(c)
are chargeable to Irish corporation tax on the income of an Irish branch or agency or to income
tax on the profits of a trade carried on in Ireland to which the interest is attributable.
There can be no assurance that this practice will continue to apply.
Withholding Taxes
In general, withholding tax (currently at the rate of 20 per cent.) must be deducted from interest payments
made by an Irish company such as the Issuer. However, Section 246 TCA 1997 ("Section 246") provides
that this general obligation to withhold tax does not apply in respect of, inter alia, interest payments made
by an Irish issuer to a person, who by virtue of the law of the relevant territory, is resident for the
purposes of tax in a relevant territory (see above for details). This exemption does not apply if the interest
is paid to a company in connection with a trade or business which is carried on in Ireland by the company
through a branch or agency.
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Apart from Section 246, Section 64 TCA 1997 ("Section 64") provides for the payment of interest on a
"Quoted Eurobond" without deduction of tax in certain circumstances. A Quoted Eurobond is defined in
Section 64 as a security which:
(d)
is issued by a company;
(e)
is quoted on a recognised stock exchange (such as the Irish Stock Exchange); and
(f)
carries a right to interest.
There is no obligation to withhold tax on Quoted Eurobonds where:
(g)
the person by or through whom the payment is made is not in Ireland, or
(h)
the payment is made by or through a person in Ireland, and
(i)
the Quoted Eurobond is held in a recognised clearing system (Euroclear and Clearstream
Luxembourg have, among others, been designated as recognised clearing systems); or
(ii)
the person who is the beneficial owner of the Quoted Eurobond and who is beneficially
entitled to the interest is not resident in Ireland and has made an appropriate written
declaration to this effect.
In certain circumstances, Irish encashment tax may be required to be withheld at the standard rate
(currently at the rate of 20 per cent.) from interest on any Note, where such interest is collected by a
person in Ireland on behalf of any holder of Notes.
Capital Gains Tax
A Noteholder will not be subject to Irish taxes on capital gains provided that such Noteholder is neither
resident nor ordinarily resident in Ireland and such Noteholder does not have an enterprise, or an interest
in an enterprise, which carries on business in Ireland through a branch or agency or a permanent
representative to which or to whom the Notes are attributable.
Capital Acquisitions Tax
If the Notes are comprised in a gift or inheritance taken from an Irish domiciled, resident or ordinarily
resident disponer or if the donee/successor is resident or ordinarily resident in Ireland, or if any of the
Notes are regarded as property situate in Ireland, the donee/successor may be liable to Irish capital
acquisitions tax. The Notes may be regarded as Irish situate assets. As a result, a donee/successor may be
liable to Irish capital acquisitions tax, even though neither the disponer nor the donee/successor may be
domiciled, resident or ordinarily resident in Ireland at the relevant time.
Stamp duty
For as long as an Irish issuer is a qualifying company within the meaning of Section 110 TCA 1997, no
Irish stamp duty will be payable on either the issue or transfer of the Notes, provided that the money
raised by the issue of the Notes is used in the course of such Irish issuer's business.
Common Reporting Standard
The OECD Common Reporting Standard regime ("CRS") was adopted by the European Union in
Directive 2014/107/EU. In Ireland, legislation has been introduced to adopt the CRS in Ireland with
effect from 1 January 2016. The CRS will replace the previous European information reporting regime in
respect of savings income under Directive 2003/48/EC (commonly known as the EU Savings Directive
regime), which is to be repealed in Ireland with effect from 1 January 2016.
Under the CRS and implementing legislation, the Issuer may be required to report information to the Irish
Revenue Commissioners relating to Noteholders, including the identity, residence and tax identification
number of Noteholders and details as to the amount of income and sale or redemption proceeds received
by Noteholders in respect of the Notes. This information will be shared by the Irish Revenue
Commissioners with tax authorities in other EU member states and other jurisdictions which implement
the CRS.
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UNITED KINGDOM TAXATION
The following is a summary of the UK withholding taxation treatment in relation to payments of
principal and interest in respect of the Notes as at the date of this Offering Circular. It is based on
current law and practice of Her Majesty's Revenue and Customs ("HMRC") which may be subject
to change, sometimes with retrospective effect. The comments do not deal with other UK tax
aspects of acquiring, holding or disposing of the Notes. The comments relate only to the position of
persons who are absolute beneficial owners of the Notes. The summary set out below is a general
guide and should be treated with appropriate caution. The UK tax treatment of prospective
Noteholders depends on their individual circumstances and may be subject to change in the future.
Prospective purchasers who are in any doubt as to their tax position or who may be subject to tax
in a jurisdiction other than the UK should consult their professional advisors. In particular,
Noteholders should be aware that they may be liable to taxation under the laws of other
jurisdictions in relation to payments in respect of the Notes even if such payments may be made
without withholding or deduction for or on account of taxation under the laws of the UK.
Interest on the Notes
Payments of interest on the Notes may be made by the Issuer without withholding or deduction for or on
account of United Kingdom income tax where such interest is not regarded as having a United Kingdom
source for United Kingdom tax purposes. In the case of interest on Notes which is regarded as having a
United Kingdom source such payments of interest may be made by the Issuer without deduction of or
withholding on account of United Kingdom income tax in the following circumstances:
(a)
where the Notes are listed on a "recognised stock exchange", within the meaning of section 1005
of the Income Tax Act 2007. The Irish Stock Exchange is a recognised stock exchange. The
Notes will satisfy this requirement if they are officially listed in Ireland accordance with
provisions corresponding to those generally applicable in European Economic Area states and are
admitted to trading on the Main Market of the Irish Stock Exchange. Provided, therefore that the
Notes remain so listed, interest on the Notes will be payable without withholding or deduction on
account of United Kingdom tax; and
(b)
where interest on the Notes is paid by a company and, at the time the payment is made, the Issuer
reasonably believes (and any person by or through whom interest on the Notes is paid reasonably
believes) that the beneficial owner is within the charge to United Kingdom corporation tax as
regards the payment of interest; provided that HMRC has not given a direction (in circumstances
where it has reasonable grounds to believe that the above exemption is not available in respect of
such payment of interest at the time the payment is made) that the interest should be paid under
deduction of tax.
In other cases, an amount must generally be withheld from payments of interest on the Notes on account
of United Kingdom income tax at the basic rate (currently 20 per cent.). However, where an applicable
double tax treaty provides for a lower rate of withholding tax (or for no tax to be withheld) in relation to a
Noteholder, HMRC can issue a notice to the Issuer to pay interest to the Noteholder without deduction of
tax (or for interest to be paid with tax deducted at the rate provided for in the relevant double tax treaty).
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OTHER TAX CONSIDERATIONS
The proposed financial transactions tax ("FTT")
On 14 February 2013, the European Commission published a proposal (the "Commission's Proposal")
for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria,
Portugal, Slovenia and Slovakia (the "participating Member States").
The Commission's Proposal has very broad scope and could, if introduced, apply to certain dealings in the
Notes (including secondary market transactions) in certain circumstances. The issuance and subscription
of Notes should, however, be exempt.
Under the Commission's Proposal the FTT could apply in certain circumstances to persons both within
and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes
where at least one party is a financial institution, and at least one party is established in a participating
Member State. A financial institution may be, or be deemed to be, "established" in a participating
Member State in a broad range of circumstances, including (a) by transacting with a person established in
a participating Member State or (b) where the financial instrument which is subject to the dealings is
issued in a participating Member State.
However, the FTT proposal remains subject to negotiation between the participating Member States and
the scope and timing of any such tax is uncertain. Additional EU Member States may decide to
participate.
Prospective holders of the Notes are advised to seek their own professional advice in relation to the FTT.
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FOREIGN ACCOUNT TAX COMPLIANCE ACT
Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986 ("FATCA") impose a new
reporting regime and potentially a 30 per cent. withholding tax with respect to certain payments to (i) any
non-U.S. financial institution (a "foreign financial institution", or "FFI"(as defined by FATCA)) that
does not become a "Participating FFI" by entering into an agreement with the U.S. Internal Revenue
Service (the "IRS") to provide the IRS with certain information in respect of its account holders and
investors or is not otherwise exempt from or deemed to be in compliance with FATCA and (ii) any
investor (unless otherwise exempt from FATCA) that does not provide information sufficient to
determine whether the investor is a U.S. person or should otherwise be treated as holding a "United States
Account" of the Issuer (a "Recalcitrant Holder").
The new withholding regime began 1 July 2014 for certain payments from sources within the United
States and will apply to "foreign passthru payments"(a term not yet defined) no earlier than 1 January
2019. This withholding would potentially apply to payments in respect of (i) any Notes characterised as
debt (or which are not otherwise characterised as equity and have a fixed term) for U.S. federal tax
purposes that are issued after the "grandfathering date", which is the date that is six months after the
date on which final U.S. Treasury regulations defining the term foreign passthru payment are filed with
the Federal Register, or which are materially modified after the grandfathering date and (ii) any Notes
characterised as equity or which do not have a fixed term for U.S. federal tax purposes, whenever issued.
The United States and a number of other jurisdictions have entered into intergovernmental agreements to
facilitate the implementation of FATCA (each, an "IGA"). Pursuant to FATCA and the "Model 1" and
"Model 2" IGAs released by the United States, an FFI in an IGA signatory country could be treated as a
"Reporting FI" not subject to withholding under FATCA on any payments it receives. Further, an FFI in
a Model 1 IGA jurisdiction would generally not be required to withhold under FATCA or an IGA (or any
law implementing an IGA) (any such withholding being "FATCA Withholding") from payments it
makes. The Model 2 IGA leaves open the possibility that a Reporting FI might in the future be required to
withhold as a Participating FFI on foreign passthru payments and payments that it makes to Recalcitrant
Holders. Under each model IGA, a Reporting FI would still be required to report certain information in
respect of its account holders and investors to its home government or to the IRS. The United States and
Ireland have entered into an agreement (the "U.S.-Ireland IGA") based largely on the Model 1 IGA.
The Issuer expects to be treated as a Reporting FI pursuant to the U.S.-Ireland IGA and does not
anticipate being obliged to deduct any FATCA Withholding on payments it makes. There can be no
assurance, however, that the Issuer will be treated as a Reporting FI, or that it would in the future not be
required to deduct FATCA Withholding from payments it makes. Accordingly, the Issuer and financial
institutions through which payments on the Notes are made may be required to withhold FATCA
Withholding if (i) any FFI through or to which payment on such Notes is made is not a Participating FFI,
a Reporting FI, or otherwise exempt from or in deemed compliance with FATCA or (ii) an investor is a
Recalcitrant Holder. Further, if the Issuer becomes subject to FATCA Withholding on payments it
receives, such withholding may reduce the amounts available to the Issuer to make payments on the
Notes.
Whilst the Notes are in global form and held within the clearing systems, it is expected that FATCA will
not affect the amount of any payments made under, or in respect of, the Notes by the Issuer, any paying
agent or the common safekeeper, given that it is expected that the Notes will be listed on a recognised
stock exchange with the intention that the Notes may be traded, and, in any event, each of the entities in
the payment chain between the Issuer and the participants in the clearing systems is a major financial
institution whose business is dependent on compliance with FATCA and that any alternative approach
introduced under an IGA will be unlikely to affect the Notes. The documentation expressly contemplates
the possibility that the Notes may go into definitive form and therefore that they may be taken out of the
clearing systems. If this were to happen, then a non-FATCA compliant holder could be subject to FATCA
withholding, unless the Notes were treated as listed on a recognised stock exchange with the intention that
they may be traded. If withholding is required, the provisions of Condition 7.4 (Optional redemption for
tax and other reasons) may apply and the Issuer may redeem the Notes as more fully set out in Condition
7 (Redemption).
FATCA is particularly complex and its application is uncertain at this time. The above description
is based in part on regulations, official guidance and the U.S.-Ireland IGA, all of which are subject
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to change. Prospective investors should consult their tax advisers on how these rules may apply to
the Issuer and to payments they may receive in connection with the Notes.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS AND OTHER REGULATORY
DISCLOSURES
U.S. Federal Income Tax Considerations
The following is a summary of certain U.S. federal income tax consequences of the purchase, beneficial
ownership, and disposition of the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes
and the Junior Notes (collectively, the "Offered Notes") by a U.S. Holder (as defined below).
For purposes of this summary, a "U.S. Holder" is a beneficial owner of an Offered Note that is, for U.S.
federal income tax purposes:

an individual who is a citizen or a resident of the United States;

a corporation that is created or organised in or under the laws of the United States, any State
thereof, or the District of Columbia;

an estate whose income is subject to U.S. federal income taxation regardless of its source; or

a trust if a court within the United States is able to exercise primary supervision over its
administration, and one or more United States persons have the authority to control all of its
substantial decisions.
This summary is based on interpretations of the Internal Revenue Code of 1986, as amended (the
"Code"), its legislative history, existing and proposed regulations thereunder, published rulings and court
decisions, all as of the date hereof and all subject to change at any time. Any such change may be applied
retroactively and may adversely affect the U.S. federal income tax consequences described herein. This
summary addresses only U.S. Holders that purchase Offered Notes at initial issuance (and at their issue
price) for cash and beneficially own such Offered Notes as capital assets and not as part of a "straddle,"
"hedge," "synthetic security" or a "conversion transaction" for U.S. federal income tax purposes, or as
part of some other integrated investment. This summary does not discuss all of the tax consequences that
may be relevant to particular investors (such as any alternative minimum tax consequences or the
Medicare tax on net investment income) or to investors subject to special treatment under the U.S. federal
income tax laws (such as banks, thrifts, or other financial institutions; insurance companies; securities
dealers or brokers, or traders in securities electing mark-to-market treatment; mutual funds or real estate
investment trusts; small business investment companies; S corporations; investors holding the Notes in
connection with a trade or business conducted outside of the United States; partnerships or investors that
hold their Offered Notes through a partnership or other entity treated as a partnership for U.S. federal
income tax purposes; U.S. Holders whose functional currency is not the U.S. dollar; certain former
citizens or residents of the United States; retirement plans or other tax-exempt entities, or persons holding
the Offered Notes in tax-deferred or tax-advantaged accounts). This summary also does not address the
tax consequences to shareholders, or other equity holders in, or beneficiaries of, an investor in Notes, or
any state, local or non-U.S. tax consequences of the purchase, ownership or disposition of the Notes.
The U.S. federal income tax treatment of a partner in an entity treated as a partnership for U.S. federal
income tax purposes that holds Notes will depend on the status of the partner and the activities of the
partnership. Prospective purchasers that are entities treated as partnerships for U.S. federal income tax
purposes should consult their tax advisers concerning the U.S. federal income tax consequences to them
and their partners of the acquisition, ownership and disposition of Notes by the partnership.
THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES SET OUT BELOW IS FOR
GENERAL INFORMATION ONLY. PROSPECTIVE PURCHASERS OF NOTES SHOULD
CONSULT THEIR TAX ADVISERS AS TO THE U.S FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES,
AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING
JURISDICTION TO WHICH THEY MAY BE SUBJECT.
U.S. Federal Income Tax Treatment of the Offered Notes
The Issuer intends to take the position that the Offered Notes are debt for United States federal income
tax purposes. However, no opinion will be received with respect to the debt-for-tax characterization of
any of the Offered Notes. The Issuer's characterisation will be binding on all Noteholders and U.S.
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Holders, and the Note Trust Deed requires the Noteholders and U.S. Holders to treat the Offered Notes as
indebtedness for U.S. federal, state and local income and franchise tax purposes. Such an agreement is not
binding on the IRS or the courts. Accordingly, the IRS could assert, and a court could ultimately hold,
that one or more Classes of Offered Notes represent equity interests in the Issuer. There is a greater risk
that the Junior Notes could be treated as equity because of the subordinated nature of the Junior Notes. If
a Class of Offered Notes were treated as equity in, rather than debt of, the Issuer for U.S. federal income
tax purposes, then the Noteholders of that Class of Offered Notes would be subject to the special and
potentially adverse U.S. tax rules applicable to U.S. equity owners in a "passive foreign investment
company". The balance of this summary assumes that all of the Offered Notes are treated as indebtedness
of the Issuer for U.S. federal, state and local income and franchise tax purposes. Prospective investors in
the Offered Notes should consult their tax advisers regarding the U.S. federal, state and local income and
franchise tax consequences to the investors in the event their Class of Offered are treated as equity in the
Issuer.
Stated Interest
U.S. Holders of Offered Notes will include in gross income the U.S. dollar value of payments of stated
interest accrued or received on their Offered Notes, in accordance with their usual method of tax
accounting, as ordinary interest income. Interest paid by the Issuer on the Offered Notes and original
issue discount ("OID"), if any, accrued with respect to the Offered Notes (as described below under "—
Original Issue Discount") constitutes income from sources outside the United States. Prospective
purchasers should consult their tax advisers concerning the applicability of the foreign tax credit and
source of income rules to income attributable to the Offered Notes.
In general, U.S. Holders of Offered Notes that use the accrual method of accounting or that otherwise are
required to accrue stated interest before receipt will calculate the U.S. dollar value of accrued interest
based on the average Sterling-to-U.S. dollar spot exchange rate during the applicable accrual period (or,
with respect to an accrual period that spans two taxable years, at the average Sterling-to-U.S. dollar spot
exchange rate for the partial period within the U.S. Holder's taxable year). Alternatively, a U.S. Holder of
Offered Notes can elect to calculate the U.S. dollar value of accrued interest based on the Sterling-to-U.S.
dollar spot exchange rate on the last day of the applicable accrual period (or, in the case of an accrual
period that spans two taxable years, at the Sterling-to-U.S. dollar spot exchange rate on the last day of the
U.S. Holder's taxable year) or, if the last day of the accrual period is within five business days of the U.S.
Holder's receipt of the payment, the spot exchange rate on the date of receipt. Any such election must be
applied to all debt instruments held by the U.S. Holder and is irrevocable without the consent of the IRS.
Accrual basis U.S. Holders of Offered Notes also will recognise foreign currency exchange gain or loss
on the receipt of interest payments on their Offered Notes to the extent that the U.S. dollar value of such
payments (based on the Sterling-to-U.S. dollar spot exchange rate on the date such payments are
received) differs from the U.S. dollar value of such payments when they were accrued. The foreign
currency exchange gain or loss generally will be treated as ordinary income or loss.
Original Issue Discount
The amount of an Offered Note's OID is the excess of the Offered Note's stated redemption price at
maturity over its issue price, if that excess is equal to or more than 0.25 per cent multiplied by the product
of the stated redemption price at maturity and the number of complete years from its issue date to its
maturity or the weighted average maturity in the case of instalment obligations. Generally, the issue price
of an Offered Note will be the first price at which a substantial amount of the Class of Offered Notes of
which the Offered Note is a part is sold to persons other than bond houses, brokers, or similar persons or
organisations acting in the capacity of underwriters, placement agents, or wholesalers. In general, the
stated redemption price at maturity of an Offered Note is the total of all payments provided by the
Offered Notes that are not payments of qualified stated interest. In general, an interest payment on a debt
security is qualified stated interest if it is one of a series of stated interest payments on a debt security that
are unconditionally payable at least annually at a single fixed rate or a permitted variable rate. The stated
redemption price at maturity of an Offered Note is its principal amount plus any premium payable upon
an early redemption at the U.S. Holder's option (regardless of whether such a redemption actually occurs).
Prospective investors should note that to the extent that interest payments on the Class B Notes, the Class
C Notes, the Class D Notes or the Junior Notes (together the "Deferrable Notes") are not made on a
relevant Interest Payment Date, such unpaid interest amounts will generally be deferred ("Deferred
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Interest") until the first Interest Payment Date thereafter on which funds are available to the Issuer to
fund the payment of such Deferred Interest to the extent of such available funds. (See "Terms and
Conditions of the Notes – Interest – Deferral of Interest"). Consequently, such interest is not
unconditionally payable at least annually and will not be treated as qualified stated interest. Therefore, all
of the stated interest payments on each of the Deferrable Notes will be included in the stated redemption
price at maturity of such Deferrable Notes, and as a result the Deferrable Notes will be treated as issued
with OID.
The Offered Notes may be debt instruments described in Section 1272(a)(6) of the Code (debt
instruments that may be accelerated by reason of the prepayment of other debt obligations securing such
debt instruments). Special tax rules, principally relating to the accrual of OID, apply to debt instruments
described in Section 1272(a)(6). Further, those debt instruments may not be treated for U.S. federal
income tax purposes as part of an integrated transaction with a related hedge under Treasury Regulation
Section 1.1275-6. Prospective investors should consult with their own tax advisors regarding the effects
of Section 1272(a)(6) of the Code.
If a U.S. Holder holds an Offered Note with OID (a "Discount Note"), such U.S. Holder must include
OID in income calculated on a constant-yield method before the receipt of cash attributable to the income,
and generally will have to include in income increasingly greater amounts of OID over the life of the
Discount Note. The amount of OID includible in income by a U.S. Holder of a Discount Note is the sum
of the daily portions of OID with respect to the Discount Note for each day during the taxable year or
portion of the taxable year on which the U.S. Holder holds the Discount Note ("accrued OID"). The daily
portion is determined by allocating to each day in any "accrual period" a pro rata portion of the OID
allocable to that accrual period. Accrual periods with respect to a Discount Note may be of any length
selected by the U.S. Holder and may vary in length over the term of the Discount Note as long as (i) no
accrual period is longer than one year; and (ii) each scheduled payment of interest or principal on the
Discount Note occurs on either the final or first day of an accrual period. The amount of OID allocable to
an accrual period equals the excess of (a) the product of the Discount Note's adjusted issue price at the
beginning of the accrual period and the Discount Note's yield to maturity (determined on the basis of
compounding at the close of each accrual period and properly adjusted for the length of the accrual
period) over (b) the sum of the payments of interest on the Discount Note allocable to the accrual period.
The "adjusted issue price" of a Discount Note at the beginning of any accrual period is the issue price of
the Discount Note increased by the amount of accrued OID for each prior accrual period.
OID for each accrual period will be determined in Sterling and then translated into U.S. dollars in the
same manner as stated interest accrued by an accrual basis U.S. Holder, as described above under "Stated
Interest". Upon receipt of an amount attributable to OID (whether in connection with a payment of
interest or the sale or retirement of a Discount Note), a U.S. Holder may recognise U.S. source exchange
gain or loss (taxable as ordinary income or loss) equal to the difference between the amount received
(translated into U.S. dollars at the spot rate on the date of receipt) and the amount previously accrued,
regardless of whether the payment is in fact converted into U.S. dollars.
Sale, Exchange or Retirement.
A U.S. Holder generally will recognise gain or loss on the sale or retirement of an Offered Note equal to
the difference between the amount realised on the sale or retirement and the U.S. Holder's adjusted tax
basis in the Offered Note. A U.S. Holder's adjusted tax basis in an Offered Note generally will be its U.S.
dollar cost (as defined below) increased by the amount of any OID (if any) included in the U.S. Holder's
income with respect to the Offered Note and reduced by any payments (other than payments of qualified
stated interest) on the Offered Note. The U.S. dollar cost of an Offered Note purchased with Sterling
generally will be the U.S. dollar value of the purchase price on the date of purchase, or the settlement date
for the purchase, in the case of Offered Notes traded on an established securities market, within the
meaning of the applicable Treasury Regulations, that are purchased by a cash basis U.S. Holder (or an
accrual basis U.S. Holder that so elects). The amount realised does not include the amount attributable to
accrued but unpaid qualified stated interest, which will be taxable as interest income to the extent not
previously included in income. The amount realised on a sale or retirement for an amount in Sterling will
be the U.S. dollar value of this amount on the date of sale or retirement, or the settlement date for the sale,
in the case of Offered Notes traded on an established securities market, within the meaning of the
applicable Treasury Regulations, sold by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so
elects).
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A U.S. Holder will recognise U.S. source exchange rate gain or loss (taxable as ordinary income or loss)
on the sale or retirement of an Offered Note equal to the difference, if any, between the U.S. dollar values
of the U.S. Holder's purchase price for the Offered Note (i) on the date of sale or retirement and (ii) the
date on which the U.S. Holder acquired the Offered Note. Any such exchange rate gain or loss (including
any exchange gain or loss with respect to the receipt of accrued but unpaid interest) will be realised only
to the extent of total gain or loss realised on the sale or retirement. Prospective purchasers should consult
their tax advisers as to the foreign tax credit implications of the sale or retirement of Offered Notes.
Except to the extent attributable to or changes in exchange rates, gain or loss recognised by a U.S. Holder
on the sale or retirement of an Offered Note will be capital gain or loss and will be long-term capital gain
or loss if the Note was held by the U.S. Holder for more than one year. Gain or loss realised by a U.S.
Holder on the sale or retirement of an Offered Note generally will be U.S. source.
Alternative Characterisation.
It is possible that the Offered Notes could be treated as "contingent payment debt instruments" for U.S.
federal income tax purposes. In this event, the timing of a U.S. Holder's OID inclusions could differ from
that described above and any gain recognised on the sale, exchange, or retirement of such Offered Notes
would be treated as ordinary income and not as capital gain. Prospective purchasers should consult their
tax advisers concerning the applicability of the contingent payment debt instrument rules to the Offered
Notes.
Receipt of Sterling
U.S. Holders will have a tax basis in Sterling received in respect of the Offered Notes on a sale,
redemption, or other disposition of the Offered Notes equal to the U.S. dollar value of Sterling, on that
date. Any gain or loss recognised on a sale, exchange, or other disposition of Sterling, as applicable,
generally will be ordinary income or loss. A U.S. Holder that converts the Sterling, as applicable, into
U.S. dollars on the date of receipt generally should not recognise ordinary income or loss in respect of the
conversion.
Reportable Transactions
A U.S. taxpayer that participates in a "reportable transaction" will be required to disclose its participation
to the IRS. Under the relevant rules, a U.S. Holder may be required to treat a foreign currency exchange
loss from the Offered Notes as a reportable transaction if this loss exceeds the relevant threshold in the
regulations (U.S.$50,000 in a single taxable year, if the U.S. Holder is an individual or trust, or higher
amounts for other non-individual U.S. Holders), and to disclose its investment by filing Form 8886 with
the IRS. A penalty in the amount of U.S.$10,000 in the case of a natural person and U.S.$50,000 in all
other cases generally is imposed on any taxpayer that fails to timely file an information return with the
IRS with respect to a transaction resulting in a loss that is treated as a reportable transaction. Prospective
purchasers are urged to consult their tax advisers regarding the application of these rules.
Information Reporting and Backup Withholding
Payments of principal, interest and accruals of OID on, and the proceeds of sale or other disposition of
Offered Notes by a paying agent or other U.S. intermediary will be reported to the IRS and to the U.S.
Holder as may be required under applicable regulations. Backup withholding may apply to these
payments, including payments of accrued OID, if the U.S. Holder fails to provide an accurate taxpayer
identification number or certification of exempt status or fails to comply with applicable certification
requirements. Certain U.S. Holders are not subject to backup withholding. U.S. Holders should consult
their tax advisers about these rules and any other reporting obligations that may apply to the ownership or
disposition of Offered Notes, including requirements related to the holding of certain foreign financial
assets.
Certain U.S. Regulatory Disclosures
Rule 15Ga-2
On 27 August 2014, the SEC approved rules and issued a release regarding third-party due diligence
reports. The release relates primarily to two rules, Rule 15Ga-2 and Rule 17g-10, which became effective
on 10 June 2015. Rule 15Ga-2 requires any issuer or underwriter of asset-backed securities (including, for
this purpose, securitizations of residential and commercial mortgage loans as well as other asset classes)
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rated by a nationally recognized statistical rating organization to furnish a form via the SEC's EDGAR
database describing the findings and conclusions of any third-party due diligence report obtained by the
issuer or underwriter. Notably, the filing requirements apply to both publicly registered offerings and
unregistered securitizations of assets offered within the United States such as those relying on Rule 144A.
A third-party due diligence report is any report containing findings and conclusions relating to due
diligences services, which are defined as a review of pool assets for the purposes of issuing findings on:
(1) the accuracy of the asset data; (2) determining whether the assets conform to stated underwriting
standards; (3) asset value(s); (4) legal compliance by the originator; and (5) any other factor material to
the likelihood that the issuer will pay interest and principal as required. These due diligence services are
routinely provided by third-party due diligence vendors in asset-backed securities structured transactions
and affect their credit ratings. The rules also set forth a form of certification that providers of third-party
due diligence services will be required to deliver to each nationally recognized statistical rating
organization producing a credit rating to which those due diligence services "relate". The delivery
obligation is included in a new Rule 17g-10 and will be accomplished primarily by providing the
certification to the issuer or underwriter for posting on its Rule 17g-5 website.
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CERTAIN ERISA CONSIDERATIONS
ERISA imposes certain requirements on "employee benefit plans" subject thereto, on entities (such as
collective investment funds, insurance company separate accounts and some insurance company general
accounts) the underlying assets of which include the assets of such plans (collectively, "ERISA Plans"),
and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans are
subject to ERISA's general fiduciary requirements, including the requirement of prudence, diversification
and compliance with the documents governing the plan. The prudence of a particular investment must be
determined by the responsible fiduciary of an ERISA Plan by taking into account the ERISA Plan's
particular circumstances and all of the facts and circumstances of the investment.
Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of
an ERISA Plan, as well as assets of those plans that are not subject to ERISA but which are subject to
Section 4975 of the Code, such as individual retirement accounts and Keogh plans, and entities the
underlying assets of which include the assets of such plans (together with ERISA Plans, "Plans") and
certain persons (referred to as "parties in interest" under ERISA or "disqualified persons" under the
Code (collectively, "Parties in Interest")) having certain relationships to such Plans, unless a statutory or
administrative exception or exemption is applicable to the transaction. A Party in Interest who engages in
a prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA
and the Code and the transaction may have to be rescinded at significant cost to the Issuer.
The Issuer, the Arranger and the Lead Manager, the Co-Manager and the Trustee and any of their
respective Affiliates may be Parties in Interest with respect to many Plans. Prohibited transactions within
the meaning of Section 406 of ERISA or Section 4975 of the Code may arise if the Notes are acquired or
held by a Plan with respect to which the Issuer, the Arranger, the Lead Manager, the Co-Manager, the
Trustee, or any of their respective Affiliates, is a Party in Interest. Certain exemptions from the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Code may be applicable,
however, in certain cases, depending in part on the type of Plan fiduciary making the decision to acquire
any Securities and the circumstances under which such decision is made. Included among these
exemptions are Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code (relating to
transactions with certain service providers) and Prohibited Transaction Class Exemption ("PTCE") 91-38
(relating to investments by bank collective investment funds), PTCE 84–14 (relating to transactions
effected by independent "qualified professional asset managers"), PTCE 95-60 (relating to transactions
involving insurance company general accounts), PTCE 90-1 (relating to investments by insurance
company pooled separate accounts) and PTCE 96-23 (relating to transactions determined by certain "inhouse asset managers"). There can be no assurance that any of these exemptions or any other exemption
will be available with respect to any particular transaction involving the Notes.
Governmental plans, certain church plans and certain non-U.S. plans, while not subject to the fiduciary
responsibility or prohibited transaction provisions of ERISA or the provisions of Section 4975 of the
Code, may nevertheless be subject to substantially similar rules under Federal, state, local or non-U.S.
law or regulation ("Similar Law").
Under the Plan Asset Regulation, if a Plan invests in an "equity interest" of an entity that is neither a
"publicly offered security" nor a security issued by an investment company registered under the 1940 Act,
the Plan's assets are deemed to include both the equity interest and an undivided interest in each of the
entity's underlying assets, unless it is established (a) that the entity is an "operating company", as that
term is defined in the Plan Asset Regulation, or (b) that less than 25 per cent. of the total value of each
class of equity interest in the entity, disregarding the value of any equity interests held by persons (other
than Benefit Plan Investors) with discretionary authority or control over the assets of the entity or who
provide investment advice for a fee (direct or indirect) with respect to such assets, and their respective
Affiliates (each a "Controlling Person"), is held by Benefit Plan Investors (the "25 per cent.
Limitation"). A "Benefit Plan Investor" means (1) an employee benefit plan (as defined in Section 3(3)
of ERISA), subject to the provisions of part 4 of Subtitle B of Title I of ERISA, (2) a plan to which
Section 4975 of the Code applies, or (3) any entity whose underlying assets include plan assets by reason
of such an employee benefit plans or plans investment in such entity.
If the underlying assets of the Issuer are deemed to be plan assets, the obligations and other
responsibilities of Plan sponsors, Plan fiduciaries and Plan administrators, and of Parties in Interest, under
Parts 1 and 4 of Subtitle B of Title I of ERISA and Section 4975 of the Code, as applicable, may be
expanded, and there may be an increase in their liability under these and other provisions of ERISA and
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the Code. In addition, various providers of fiduciary or other services to the entity, and any other parties
with authority or control with respect to the Issuer, could be deemed to be Plan fiduciaries or otherwise
parties in interest or disqualified persons by virtue of their provision of such services (and there could be
an improper delegation of authority to such providers).
The Plan Asset Regulation defines an "equity interest" as any interest in an entity other than an instrument
that is treated as indebtedness under applicable local law and that has no substantial equity features.
Although it is not free from doubt, the Issuer intends to treat the Class A Notes and the Class B Notes
offered hereby as indebtedness with no substantial equity features for purposes of ERISA. The treatment
of the Class C Notes, the Class D Notes (the "ERISA Restricted Notes") and the Junior Notes as not
being equity interests in the Issuer could, however, be affected, subsequent to their issuance, by certain
changes in the structure or financial condition of the Issuer. The Junior Notes will be subscribed for and
retained by the Retention Holder, acting through the Loan Seller, for the life of the Transaction.
Each purchaser and transferee of a Class A Note and a Class B Note or any interest in such Note will be
deemed to have represented, warranted and agreed that (i) either (A) it is not and is not acting on behalf of
(and for so long as it holds any such Note or interest therein will not be, and will not be acting on behalf
of), a Benefit Plan Investor or a governmental, church, non-U.S. or other plan which is subject to any
federal, state, local or non-U.S. law or regulation that is similar to the prohibited transaction provisions of
Section 406 of ERISA and/or Section 4975 of the Code ("Similar Plan Law"), and no part of the assets
to be used by it to acquire or hold such Notes or any interest therein constitutes the assets of any Benefit
Plan Investor or such Similar Plan Law, or (B) its acquisition, holding or disposition of such Notes (or
interests therein) will not constitute or result in a non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code, or, in the case of a governmental, church, non-U.S. or other plan, a
non-exempt violation of any Similar Plan Law, and (ii) it will not sell or transfer such Notes (or interests
therein) to a transferee acquiring such Notes (or interests therein) unless the transferee makes, or is
deemed to make, the foregoing representations, warranties and agreements described in clause (i) hereof.
The Issuer intends to limit equity participation by Benefit Plan Investors to less than 25% of each class of
the ERISA Restricted Notes. Each purchaser or transferee of an ERISA Restricted Note will be deemed to
represent, warrant and covenant that, for so long as it holds a beneficial interest in such Note, it (and each
account for which it is acquiring such ERISA Restricted Note) is not a Benefit Plan Investor. See
"Transfer Restrictions" below.
Any Plan fiduciary considering whether to acquire a Note on behalf of a Benefit Plan Investor or a plan
not subject to ERISA or Section 4975 of the Code should consult with its counsel regarding the potential
consequences of such investment, the applicability of the fiduciary responsibility and prohibited
transaction provisions of ERISA and the Code and/or provisions of Similar Plan Law, and the scope of
any available exemption relating to such investment.
The sale of Notes to a Benefit Plan Investor or an employee benefit plan not subject to ERISA or Section
4975 of the Code is in no respect a representation or warranty by the Issuer, or any other person that this
investment meets all relevant legal requirements with respect to investments by Benefit Plan Investors or
such other plans generally or any particular plan, that any prohibited transaction exemption would apply
to the acquisition, holding, or disposition of this investment by such plans in general or any particular
plan, or that this investment is appropriate for such plans generally or any particular plan.
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SUBSCRIPTION AND SALE
Credit Suisse in its capacity as Lead Manager and RBC Europe Limited in its capacity as Co-Manager
(together with the Lead Manager, the "Managers"), have agreed, pursuant to the Subscription
Agreement, subject to certain conditions, to subscribe for the Senior Notes at the relevant issue price. It is
likely that following such subscription all of the Notes will be acquired by the funds advised by Varde
Partners Inc (the "Varde Funds") and be ultimately financed by a repo transaction entered into with
Credit Suisse AG, London Branch.
Pursuant to the Subscription Agreement, Eurynome LLC as Retention Holder has covenanted that it will,
through the Loan Seller, retain a material net economic interest of not less than 5 per cent. in the
securitisation in accordance with the text of each of Article 405, Article 51 and Article 254(2). As at the
Closing Date, such interest will be comprised of an interest in the Junior Notes as required by the text of
each of Article 405, Article 51, Article 254(2). Any change to the manner in which such interest is held
will be notified to Noteholders. The Junior Notes will be ultimately financed by a repo transaction entered
into with Credit Suisse AG, London Branch.
United States of America
The Managers have acknowledged to the Issuer that the Notes have not been and will not be registered
under the Securities Act, the securities or "Blue Sky" laws of any states in the United States, or any
foreign securities laws, nor has the SEC or the regulatory authority of any such state or foreign
jurisdiction passed upon the adequacy of this Offering Circular. This Offering Circular does not constitute
an offer to sell or a solicitation of an offer to buy the Notes in any jurisdiction where such offer or
solicitation is unlawful. 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 except in certain transactions exempt from, or not subject to,
the registration requirements of the Securities Act and in the manner so as not to require the registration
of the Issuer as an "investment company" pursuant to the 1940 Act.
The Notes are a new issue of securities with no established trading market and we cannot assure you that
a secondary market for the Notes will develop. The Managers currently intend to make a market in the
Notes but are under no obligation to do so and may discontinue its market-making activities at any time
without notice. Moreover, if a secondary market does develop, we cannot assure you that it will provide
holders of Notes with liquidity of investment or that it will continue for the life of the Notes.
Notes of each Class in the form of Regulation S Notes will be issued in minimum denominations of
£100,000 and integral multiples of £1,000 in excess thereof.
Notes of each Class in the form of Rule 144A Notes will be issued in minimum denominations of
£100,000 and integral multiples of £1,000 in excess thereof.
Any offer or sale of Rule 144A Notes in reliance on Rule 144A will be made by broker dealers who are
registered as such under the Exchange Act.
The Notes are being offered and sold outside of the United States to non-U.S. persons in reliance on
Regulation S. The Subscription Agreement provides that the Arranger and Managers may directly or
through their respective U.S. broker-dealer affiliates arrange for the offer and resale of Notes within the
United States only to qualified institutional buyers in reliance on Rule 144A.
In addition, until 40 days after the commencement of the offering of the Notes, an offer or sale of Notes
within the United States by a dealer that is not participating in the offering may violate the registration
requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule
144A.
This Offering Circular has been prepared by the Issuer for use in connection with the offer and sale of the
Notes and for the listing of the Notes of each Class on the Global Exchange Market of the Irish Stock
Exchange. The Issuer, the Arranger and the Managers reserve the right to reject any offer to purchase, in
whole or in part, for any reason, or to sell less than the principal amount of Notes which may be offered.
This Offering Circular does not constitute an offer to any person in the United States or to any U.S.
Person. Distribution of this Offering Circular to any such U.S. Person or to any person within the United
States, other than in accordance with the procedures described above, is unauthorised and any disclosure
of any of its contents, without the prior written consent of the Issuer, is prohibited.
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European Economic Area
In relation to each Relevant Member State, the Issuer and the Managers have represented, warranted and
agreed that with effect from and including the date on which the Prospectus Directive is implemented in
that Relevant Member State it has not made and will not make an offer of Notes which are the subject of
the offering contemplated by this Offering Circular to the public in that Relevant Member State other than:
(a)
to any legal entity which is a qualified investor as defined in the Prospectus Directive;
(b)
to fewer than 150 as permitted under the Prospectus Directive, subject to obtaining the prior
consent of the Managers or Lead Managers nominated by the Issuer for any such offer; or
(c)
in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Notes will require the Issuer or any Lead Manager 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 these provisions, the expression of "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 for the Notes, as the same may be varied in that member state by any
measure implementing the Prospectus Directive in that member state.
United Kingdom
Each of the Managers has further represented and agreed that except as permitted by the Subscription
Agreement:
(a)
it has only communicated or caused to be communicated and will only communicate or cause to
be communicated any invitation or inducement to engage in investment activity (within the
meaning of Section 21 of FSMA received by it in connection with the issue or sale of the Notes
in circumstances in which Section 21(1) of FSMA does not apply to the Issuer; and
(b)
it has complied and will comply with all applicable provisions of FSMA with respect to anything
done by it in relation to the Notes in, from or otherwise involving the United Kingdom.
Ireland
Each of the Managers has further represented and agreed that:
(a)
it has not offered, sold or placed and will not offer, sell or place any Notes otherwise than in
conformity with the provisions of the Prospectus (Directive 2003/71/EC) Regulations 2005 (as
amended) of Ireland and the provisions of the Irish Companies Act 2014 (the ''Irish Companies
Act''), including any rules issued under Section 1363 of the Irish Companies Act;
(b)
it has not and will not offer, sell or place any Notes other than in compliance with the provisions
of the Market Abuse (Directive 2003/6/EC) Regulations 2005 (as amended) of Ireland and any
rules issued under Section 1370 of the Irish Companies Act;
(c)
it has not offered, sold or placed and will not offer, sell or place any Notes otherwise than in
conformity with the provisions of the European Communities (Markets in Financial Instruments)
Regulations 2007 (as amended) of Ireland including, without limitation, Regulations 7 and 152
thereof and it will conduct itself in accordance with any rules or codes of conduct and any
conditions or any other enactment imposed or approved by the Central Bank of Ireland;
(d)
it has not and will not offer, sell or place any Notes other than in compliance with the provisions
of the Central Bank Acts 1942 to 2014 and any codes of conduct rules made under Section 117(1)
of the Central Bank Act 1989 (as amended) of Ireland; and
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(e)
in connection with offers or sales of Notes, it has only issued or passed on, and will only issue or
pass on, any document received by it in connection with the issue of the Notes to persons who
are persons to whom the documents may otherwise lawfully be issued or passed on.
General
Other than the approval by the Central Bank of Ireland of this Offering Circular as a prospectus in
accordance with the requirements of the Prospectus Directive and implementing measures in Ireland,
application having been made for the Notes to be admitted to the Official List of the Irish Stock Exchange
and to trading on the Main Securities Market and the filing of this Offering Circular as a prospectus with
the Companies Registration Office in Ireland, no action is being taken in any jurisdiction that would or is
intended to permit a public offering of the Notes, or the possession, circulation or distribution of this
Offering Circular or any other material relating to the Issuer or the Notes in any jurisdiction where action
for that purpose is required. This Offering Circular does not constitute, and may not be used for the
purpose of, an offer or solicitation in or from any jurisdiction where such an offer or solicitation is not
authorised. Accordingly, the Notes may not be offered or sold, directly or indirectly, and neither this
Offering Circular nor any other offering material or advertisement in connection with the Notes may be
distributed or published in or from any country or jurisdiction, except under circumstances that will result
in compliance with any applicable rules and regulations of any such country or jurisdiction.
The Lead Manager has undertaken not to offer or sell any of the Notes, or to distribute this document or
any other material relating to the Notes, in or from any jurisdiction except under circumstances that will
result in compliance with applicable law and regulations.
Interests of natural and legal persons involved in the issue/offer
The Managers and their affiliates (including parent companies) have engaged, and may in the future
engage, in investment banking and/or commercial banking transactions and may perform services for the
Issuer, the Borrowers and their respective shareholders and affiliates in the ordinary course of business
for which they have received and will receive compensation.
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TRANSFER RESTRICTIONS
Because of the following restrictions, purchasers are advised to consult legal counsel prior to making any
offer, resale, pledge or transfer of the Notes.
Rule 144A Notes
Each prospective purchaser of Rule 144A Notes, by accepting delivery of this Offering Circular, will be
deemed to have represented and agreed that such person acknowledges that this Offering Circular is
personal to it and does not constitute an offer to any other person or to the public generally to subscribe
for or otherwise acquire Notes other than pursuant to Rule 144A or in offshore transactions in accordance
with Regulation S. Distribution of this Offering Circular, or disclosure of any of its contents to any person
other than such offeree and those persons, if any, retained to advise it with respect thereto is unauthorised
and any disclosure of any of its contents, without the prior written consent of the Issuer, is prohibited.
Each purchaser of (i) Notes represented by a Rule 144A Global Note will be deemed to have represented
and agreed and (ii) Rule 144A Notes represented by Definitive Certificates will be required to represent
and agree, as follows:
(1)
The purchaser (a) is a QIB, (b) is aware, and each beneficial owner of such Notes has been
advised, that the sale of such Notes to it is being made in reliance on Rule 144A, (c) is acquiring
such Notes for its own account or for the account of a QIB as to which the purchaser exercises
sole investment discretion, and in a principal amount of not less than £100,000, for the purchaser
and for each such account and (d) will provide notice of the transfer restrictions described in the
"Notice to Investors" to any subsequent transferees.
(2)
The purchaser understands that such Rule 144A Notes have not been and will not be registered
under the Securities Act, and may be reoffered, resold or pledged or otherwise transferred only
(a)(i) to a person whom the purchaser reasonably believes is a QIB purchasing for its own
account or for the account of a QIB as to which the purchaser exercises sole investment
discretion in a transaction meeting the requirements of Rule 144A or (ii) to a non-U.S. Person, in
an offshore transaction complying with Rule 903 or Rule 904 of Regulation S and (b) in
accordance with all applicable securities laws including the securities laws of any state of the
United States. The purchaser understands that the Issuer has not been registered under the 1940
Act. The purchaser understands that before any interest in a Rule 144A Note or may be offered,
sold, pledged or otherwise transferred to a person who takes delivery in the form of an interest in
the Regulation S Notes, the Registrar is required to receive a written certification from the
purchaser (in the form provided in the Note Trust Deed) as to compliance with the transfer
restrictions described herein. The purchaser understands and agrees that any purported transfer of
the Rule 144A Notes to a purchaser that does not comply with the requirements of this
paragraph (2) shall be null and void ab initio.
(3)
The purchaser is not purchasing such Rule 144A Notes with a view toward the resale,
distribution or other disposition thereof in violation of the Securities Act. The purchaser
understands that an investment in the Rule 144A Notes involves certain risks, including the risk
of loss of its entire investment in the Rule 144A Notes under certain circumstances. The
purchaser has had access to such financial and other information concerning the Issuer and the
Notes as it deemed necessary or appropriate in order to make an informed investment decision
with respect to its purchase of the Rule 144A Notes, including an opportunity to ask questions of,
and request information from, the Issuer.
(4)
In connection with the purchase of the Rule 144A Notes: (a) none of the Issuer, the Trustee, the
Arranger, the Lead Manager or the Co-Manager is acting as a fiduciary or financial or portfolio
manager for the purchaser; (b) the purchaser is not relying (for purposes of making any
investment decision or otherwise) upon any advice, counsel or representations (whether written
or oral) of the Issuer, the Note Trustee, the Arranger, the Lead Manager or the Co-Manager other
than in this Offering Circular for such Notes and any representations expressly set forth in a
written agreement with such party; (c) none of the Issuer, the Note Trustee, the Arranger, the
Lead Manager or the Co-Manager has given to the purchaser (directly or indirectly through any
other person) any assurance, guarantee or representation whatsoever as to the expected or
projected success, profitability, return, performance, result, effect, consequence or benefit
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(including legal, regulatory, tax, financial, accounting or otherwise) as to an investment in the
Rule 144A Notes; (d) the purchaser has consulted with its own legal, regulatory, tax, business,
investment, financial and accounting advisers to the extent it has deemed necessary, and it has
made its own investment decisions (including decisions regarding the suitability of any
transaction pursuant to the Note Trust Deed) based upon its own judgment and upon any advice
from such advisers as it has deemed necessary and not upon any view expressed by the Issuer,
the Note Trustee, the Arranger, the Lead Manager or the Co-Manager; (e) the purchaser has
evaluated the rates, prices or amounts and other terms and conditions of the purchase and sale of
the Rule 144A Notes with a full understanding of all of the risks thereof (economic and
otherwise), and it is capable of assuming and willing to assume (financially and otherwise) those
risks; and (f) the purchaser is a sophisticated investor.
(5)
(a)
With respect to the purchase, holding and disposition of any Class A Note and Class B
Note or any interest in such Note (i) either (A) it is not and is not acting on behalf of,
(and for so long as it holds any such Note or interest therein will not be, and will not be
acting on behalf of), a Benefit Plan Investor or a governmental, church, non-U.S. or
other plan which is subject to any Similar Plan Law, and no part of the assets to be used
by it to acquire or hold such Notes or any interest therein constitutes the assets of any
Benefit Plan Investor or such governmental, church, non-U.S. or other plan, or (B) its
acquisition, holding or disposition of such Notes (or interests therein) will not constitute
or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section
4975 of the Code, or, in the case of a governmental, church, non-U.S. or other plan, a
non-exempt violation of any Similar Plan Law, and (ii) it will not sell or transfer such
Notes (or interests therein) to an acquiror acquiring such Notes (or interests therein)
unless the acquiror makes or is deemed to make the foregoing representations,
warranties and agreements described in clause (i) hereof. Any purported transfer of the
Notes in violation of the requirements set forth in this paragraph shall be null and void
ab initio and the acquiror understands that the Issuer will have the right to cause the sale
of such Notes to another acquiror that complies with the requirements of this
paragraph in accordance with the terms of the Note Trust Deed.
With respect to the purchase, holding and disposition of any Class C Note, Class D Note
and Junior Note or any interest in such note (1) it is not, and for so long as it holds such
Notes it will not be, and will not be acting on behalf of, a Benefit Plan Investor, and (2)
if it is a governmental, church or non-U.S. plan, (x) its acquisition, holding and
disposition of such Notes will not constitute or result in a non-exempt violation of any
Similar Plan Law.
(b)
(6)
The purchaser acknowledges that the Issuer, the Note Trustee, the Arranger, the Lead
Manager, the Co-Manager and their Affiliates, and others, will rely upon the truth and
accuracy of the foregoing acknowledgements, representations and agreements and that if
it is acquiring any Notes for the account of one or more QIBs, it represents that it has
sole investment discretion with respect to such account and that it has full power to make
the foregoing acknowledgements, representations and agreements on behalf of each such
account.
The purchaser understands that pursuant to the terms of the Note Trust Deed, the Issuer has
agreed that the Rule 144A Global Notes or Definitive Certificates representing Rule 144A Notes,
as applicable, offered in reliance on Rule 144A will bear the legend set forth below, and will be
represented by one or more Rule 144A Global Notes or Definitive Certificates representing Rule
144A Notes, as applicable. The Rule 144A Global Notes may not at any time be held by or on
behalf of, within the United States, persons, or outside the United States, U.S. Persons that are
not QIBs. Before any interest in a Rule 144A Global Note may be offered, resold, pledged or
otherwise transferred to a person who takes delivery in the form of an interest in a Regulation S
Global Note, the transferor will be required to provide the Transfer Agent with a written
certification (in the form provided in the Note Trust Deed) as to compliance with the transfer
restrictions.
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THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR WITH ANY
SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE
UNITED STATES, AND THE ISSUER HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT
COMPANY ACT"). THE HOLDER HEREOF, BY PURCHASING THE NOTES IN RESPECT OF
WHICH THIS NOTE HAS BEEN ISSUED, AGREES FOR THE BENEFIT OF THE ISSUER THAT
THE NOTES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES
ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER, IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A UNDER THE SECURITIES ACT, OR (2) TO A NON-U.S. PERSON, IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S OF THE
SECURITIES ACT AND, IN THE CASE OF CLAUSE (1), IN A PRINCIPAL AMOUNT OF NOT
LESS THAN [£100,000] FOR THE PURCHASER AND FOR EACH ACCOUNT FOR WHICH IT IS
ACTING AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES. ANY TRANSFER IN VIOLATION OF THE FOREGOING
WILL BE OF NO FORCE AND EFFECT, WILL BE VOID AB INITIO AND WILL NOT OPERATE
TO TRANSFER ANY RIGHTS TO THE TRANSFEREE, NOTWITHSTANDING ANY
INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE TRANSFER AGENT OR ANY
INTERMEDIARY. EACH TRANSFEROR OF THIS NOTE WILL PROVIDE NOTICE OF THE
TRANSFER RESTRICTIONS SET FORTH HEREIN AND IN THE NOTE TRUST DEED TO ITS
TRANSFEREE.
PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. ANY PERSON ACQUIRING THIS NOTE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE REGISTRAR.
TRANSFERS OF THIS NOTE OR OF PORTIONS OF THIS NOTE SHOULD BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE NOTE
TRUST DEED REFERRED TO HEREIN.
[LEGEND TO BE INCLUDED IN RELATION TO THE CLASS A NOTES AND CLASS B NOTES
ONLY] [EACH PERSON ACQUIRING OR HOLDING THIS NOTE OR ANY INTEREST HEREIN
SHALL BE DEEMED TO HAVE REPRESENTED, WARRANTED AND AGREED THAT (I)
EITHER (A) IT IS NOT AND IS NOT ACTING ON BEHALF OF (AND FOR SO LONG AS IT
HOLDS THIS NOTE OR AN INTEREST HEREIN WILL NOT BE, AND WILL NOT BE ACTING ON
BEHALF OF) AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO THE PROVISIONS OF
PART 4 OF SUBTITLE B OF TITLE I OF THE UNITED STATES EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN TO WHICH SECTION
4975 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), APPLIES, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS
BY REASON OF ANY SUCH PLAN'S INVESTMENT IN SUCH ENTITY WITHIN THE MEANING
OF 29 C.F.R. SECTION 2510.3-101 (AS MODIFIED BY SECTION 3(42) OF ERISA) ("BENEFIT
PLAN INVESTOR"), OR A GOVERNMENTAL, CHURCH, NON-U.S. OR OTHER PLAN WHICH
IS SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAW OR REGULATION THAT
IS SIMILAR TO THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF ERISA
AND/OR SECTION 4975 OF THE CODE ("SIMILAR LAW"), AND NO PART OF THE ASSETS TO
BE USED BY IT TO ACQUIRE OR HOLD SUCH NOTES OR ANY INTEREST THEREIN
CONSTITUTES THE ASSETS OF ANY BENEFIT PLAN INVESTOR OR SUCH
GOVERNMENTAL, CHURCH, NON-U.S. OR SIMILAR PLAN, OR (B) ITS ACQUISITION,
HOLDING OR DISPOSITION OF SUCH NOTES (OR INTERESTS THEREIN) WILL NOT
CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR, IN THE CASE OF A
GOVERNMENTAL, CHURCH, NON-U.S. OR OTHER PLAN, A NON-EXEMPT VIOLATION OF
ANY SIMILAR LAW, AND (II) IT WILL NOT SELL OR TRANSFER SUCH NOTES (OR
INTERESTS THEREIN) TO AN ACQUIROR ACQUIRING SUCH NOTES (OR INTERESTS
THEREIN) UNLESS THE ACQUIROR MAKES OR IS DEEMED TO MAKE THE FOREGOING
REPRESENTATIONS, WARRANTIES AND AGREEMENTS DESCRIBED IN CLAUSE (I)
- 265-
HEREOF. ANY PURPORTED TRANSFER OF THE NOTES IN VIOLATION OF THE
REQUIREMENTS SET FORTH IN THIS PARAGRAPH SHALL BE NULL AND VOID AB INITIO
AND THE ACQUIROR UNDERSTANDS THAT THE ISSUER WILL HAVE THE RIGHT TO
CAUSE THE SALE OF SUCH NOTES TO ANOTHER ACQUIROR THAT COMPLIES WITH THE
REQUIREMENTS OF THIS PARAGRAPH IN ACCORDANCE WITH THE TERMS OF THE NOTE
TRUST DEED.]
[LEGEND TO BE INCLUDED IN RELATION TO THE CLASS C NOTES, CLASS D NOTES AND
JUNIOR NOTES IN THE FORM OF RULE 144A GLOBAL NOTES ONLY] [EACH PERSON
ACQUIRING OR HOLDING THIS NOTE OR ANY INTEREST HEREIN SHALL BE DEEMED TO
HAVE REPRESENTED, WARRANTED AND AGREED THAT (I) FOR SO LONG AS IT HOLDS
THIS NOTE OR AN INTEREST HEREIN IT IS NOT, AND IS NOT ACTING ON BEHALF OF, A
BENEFIT PLAN INVESTOR AND (II) IF IT IS A GOVERNMENTAL, CHURCH, NON-U.S. OR
SIMILAR PLAN, (A) IT IS NOT, AND FOR SO LONG AS IT HOLDS THIS NOTE OR AN
INTEREST HEREIN IT WILL NOT BE, SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NONU.S. LAW OR REGULATION THAT COULD CAUSE THE UNDERLYING ASSETS OF THE
ISSUER TO BE TREATED AS ASSETS OF THE INVESTOR IN ANY NOTE (OR INTEREST
THEREIN) BY VIRTUE OF ITS INTEREST AND THEREBY SUBJECT THE ISSUER (OR OTHER
PERSONS RESPONSIBLE FOR THE INVESTMENT AND OPERATION OF THE ISSUER'S
ASSETS) TO LAWS OR REGULATIONS THAT ARE SIMILAR TO THE PROHIBITED
TRANSACTION PROVISIONS OF SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE") ("SIMILAR LAW"), AND (B) ITS
ACQUISITION, HOLDING AND DISPOSITION OF THIS NOTE OR AN INTEREST HEREIN WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT VIOLATION OF ANY APPLICABLE
SIMILAR LAW.
"BENEFIT PLAN INVESTOR" MEANS A BENEFIT PLAN INVESTOR, AS DEFINED IN
SECTION 3(42) OF ERISA, AND INCLUDES (A) AN EMPLOYEE BENEFIT PLAN THAT IS
SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF TITLE I OF ERISA, (B) A
PLAN THAT IS SUBJECT TO SECTION 4975 OF THE CODE OR (C) ANY ENTITY WHOSE
UNDERLYING ASSETS INCLUDE "PLAN ASSETS" FOR PURPOSES OF ERISA BY REASON OF
ANY SUCH PLAN'S INVESTMENT IN THE ENTITY. ANY PURPORTED TRANSFER OF THE
NOTES IN VIOLATION OF THE REQUIREMENTS SET FORTH IN THIS PARAGRAPH SHALL
BE NULL AND VOID AB INITIO AND THE ACQUIRER UNDERSTANDS THAT THE ISSUER
WILL HAVE THE RIGHT TO CAUSE THE SALE OF SUCH NOTES TO ANOTHER ACQUIRER
THAT COMPLIES WITH THE REQUIREMENTS OF THIS PARAGRAPH IN ACCORDANCE WITH
THE TERMS OF THE NOTE TRUST DEED.
THE ISSUER HAS THE RIGHT, UNDER THE NOTE TRUST DEED, TO COMPEL ANY
BENEFICIAL OWNER OF A NOTE WHO HAS MADE OR HAS BEEN DEEMED TO MAKE A
PROHIBITED TRANSACTION, BENEFIT PLAN INVESTOR, CONTROLLING PERSON, OR
SIMILAR LAW REPRESENTATION THAT IS SUBSEQUENTLY SHOWN TO BE FALSE OR
MISLEADING TO SELL ITS INTEREST IN THE NOTE, OR MAY SELL SUCH INTEREST ON
BEHALF OF SUCH OWNER.]
[LEGEND TO BE INCLUDED IN RELATION TO THE CLASS C NOTES, CLASS D NOTES AND
JUNIOR NOTES IN THE FORM OF DEFINITIVE CERTIFICATES ONLY] [EACH PURCHASER
OR TRANSFEREE OF THIS NOTE WILL BE REQUIRED TO REPRESENT AND WARRANT
THAT (I) FOR SO LONG AS IT HOLDS THIS NOTE OR AN INTEREST HEREIN IT IS NOT, AND
IS NOT ACTING ON BEHALF OF, A BENEFIT PLAN INVESTOR AND (II) IF IT IS A
GOVERNMENTAL, CHURCH, NON-U.S. OR SIMILAR PLAN, (A) IT IS NOT, AND FOR SO
LONG AS IT HOLDS THIS NOTE OR AN INTEREST HEREIN IT WILL NOT BE, SUBJECT TO
ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAW OR REGULATION THAT COULD CAUSE
THE UNDERLYING ASSETS OF THE ISSUER TO BE TREATED AS ASSETS OF THE INVESTOR
IN ANY NOTE (OR INTEREST THEREIN) BY VIRTUE OF ITS INTEREST AND THEREBY
SUBJECT THE ISSUER (OR OTHER PERSONS RESPONSIBLE FOR THE INVESTMENT AND
OPERATION OF THE ISSUER'S ASSETS) TO LAWS OR REGULATIONS THAT ARE SIMILAR
TO THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") ("SIMILAR
- 266-
LAW"), AND (B) ITS ACQUISITION, HOLDING AND DISPOSITION OF THIS NOTE OR AN
INTEREST HEREIN WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT VIOLATION OF
ANY APPLICABLE STATE, LOCAL, OTHER FEDERAL OR NON-U.S. LAW OR REGULATION
THAT IS SIMILAR.
"BENEFIT PLAN INVESTOR" MEANS A BENEFIT PLAN INVESTOR, AS DEFINED IN
SECTION 3(42) OF ERISA, AND INCLUDES (A) AN EMPLOYEE BENEFIT PLAN THAT IS
SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF TITLE I OF ERISA, (B) A
PLAN THAT IS SUBJECT TO SECTION 4975 OF THE CODE OR (C) ANY ENTITY WHOSE
UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY SUCH PLAN'S
INVESTMENT IN THE ENTITY. ANY PURPORTED TRANSFER OF THE NOTES IN VIOLATION
OF THE REQUIREMENTS SET FORTH IN THIS PARAGRAPH SHALL BE NULL AND VOID AB
INITIO AND THE ACQUIRER UNDERSTANDS THAT THE ISSUER WILL HAVE THE RIGHT TO
CAUSE THE SALE OF SUCH NOTES TO ANOTHER ACQUIRER THAT COMPLIES WITH THE
REQUIREMENTS OF THIS PARAGRAPH IN ACCORDANCE WITH THE TERMS OF THE NOTE
TRUST DEED.
THE ISSUER HAS THE RIGHT, UNDER THE NOTE TRUST DEED, TO COMPEL ANY
BENEFICIAL OWNER OF A NOTE WHO HAS MADE OR HAS BEEN DEEMED TO MAKE A
PROHIBITED TRANSACTION, BENEFIT PLAN INVESTOR, SIMILAR LAW OR OTHER PLAN
LAW REPRESENTATION THAT IS SUBSEQUENTLY SHOWN TO BE FALSE OR MISLEADING
TO SELL ITS INTEREST IN THE NOTE, OR MAY SELL SUCH INTEREST ON BEHALF OF SUCH
OWNER.]
EACH PERSON ACQUIRING OR HOLDING THIS NOTE OR ANY INTEREST HEREIN SHALL BE
DEEMED TO HAVE ACKNOWLEDGED AND AGREED THAT SUCH NOTE OR INTEREST
HEREIN SHALL NOT CARRY ANY RIGHT TO VOTE IN RESPECT OF, OR BE COUNTED FOR
THE PURPOSES OF DETERMINING A QUORUM AND THE RESULT OF VOTING ON A PM
REMOVAL RESOLUTION OR A PM REPLACEMENT RESOLUTION.
All holders of individual Notes or beneficial interests in a Global Certificate shall be deemed to have
represented and agreed to reoffer, resell, pledge or otherwise transfer such Notes or beneficial interests
only in accordance with the foregoing legend.
Holders of beneficial interests in the Notes may, subject to the rules and procedures of Euroclear or
Clearstream, Luxembourg, cause Euroclear or Clearstream, Luxembourg (or its nominee) to notify the
certificate registrar in writing of a request for transfer or exchange of such Notes for an individual Note.
Individual Notes issued upon transfer or exchange of beneficial interests in the Rule 144A Global
Certificate and the Rule 144A Global Certificates will bear securities legends. Individual Notes issued
upon transfer or exchange of beneficial interests in the Regulation S Global Certificates after the
restricted period shall not bear the securities legend. Upon the transfer, exchange or replacement of
individual Notes bearing the legend, or upon specific request for removal of the legend on an individual
Note, the certificate registrar shall deliver only individual Notes that bear such legend, or shall refuse to
remove such legend, as the case may be, unless there is delivered to the certificate registrar and the Issuer
such satisfactory evidence, which may include an opinion of counsel familiar with United States
securities laws, as may be required by the certificate registrar, that neither the legend nor the restrictions
on transfer set forth therein are required to ensure compliance with the provisions of the Securities Act.
Any replacement of the Rule 144A Global Certificate shall likewise bear securities legends unless the
provisions of the preceding sentence are complied with.
(7)
The purchaser will not, at any time, offer to buy or offer to sell the Notes by any form of general
solicitation or advertising, including, but not limited to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar medium or broadcast over
television or radio or seminar or meeting whose attendees have been invited by general
solicitations or advertising.
(8)
Prospective purchasers are hereby notified that sellers of the Notes may be relying on the
exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.
(9)
The purchaser will treat the Issuer and the Notes as described in the "Certain U.S. Federal
Income Tax Considerations" section of the Offering Circular for all U.S. federal, state and local
- 267-
income tax purposes and will take no action inconsistent with such treatment unless required by
law.
(10)
The purchaser will timely furnish the Issuer or its agents any tax form or certification (including,
without limitation, IRS Form W-9, an applicable IRS Form W-8, or any successors to such IRS
forms) that the Issuer or its agents may reasonably request (A) to permit the Issuer or its agents to
make payments to the purchaser without, or at a reduced rate of, deduction or withholding, (B) to
enable the Issuer or its agents to qualify for a reduced rate of withholding or deduction in any
jurisdiction from or through which the Issuer or its agents receive payments, and (C) to enable
the Issuer or its agents to satisfy reporting and other obligations under the Code and Treasury
Regulations, or under any other applicable law, and will update or replace any tax forms or
certifications as appropriate or in accordance with their terms or subsequent amendments thereto.
The purchaser acknowledges that the failure to provide, update or replace any such tax forms or
certifications may result in the imposition of withholding or back up withholding upon payments
to the purchaser, or to the Issuer. Amounts withheld from payments to the purchaser by the Issuer
or its agents that are, in their sole judgment, required to be withheld pursuant to applicable tax
laws will be treated as having been paid to the purchaser by the Issuer.
(11)
The purchaser will provide the Issuer or its agents with any correct, complete and accurate
information and will take any other actions that may be required for the Issuer to comply with
FATCA and to prevent the imposition of U.S. federal withholding tax under FATCA on
payments to or for the benefit of the Issuer. In the event the purchaser fails to provide such
information or take such actions, or to the extent that its ownership of Notes would otherwise
cause the Issuer to be subject to any tax under FATCA, (A) the Issuer (and any agent acting on
its behalf) is authorised to withhold amounts otherwise distributable to the purchaser as
compensation for any amounts withheld from payments to or for the benefit of the Issuer as a
result of such failure or such ownership, and (B) to the extent necessary to avoid an adverse
effect on the Issuer as a result of such failure or such ownership, the Issuer will have the right to
compel the purchaser to sell its Notes and, if the purchaser does not sell its Notes within 10
Business Days after notice from the Issuer or its agents, the Issuer will have the right to sell such
Notes at a public or private sale called and conducted in any manner permitted by law, and to
remit the net proceeds of such sale (taking into account any taxes incurred by the Issuer in
connection with such sale) to such person as payment in full for such Notes. The Issuer may
assign each such Note, or procure that each such Note is assigned, a separate ISIN in the Issuer's
sole discretion. The purchaser agrees that the Issuer, the Trustee or their agents or representatives
may (1) provide any information and documentation concerning its investment in its Notes to the
U.S. Internal Revenue Service and any other relevant tax authority and (2) take such other steps
as they deem necessary or helpful to ensure that the Issuer complies with FATCA.]
(12)
The purchaser understands and acknowledges that the Issuer has the right under the Note Trust
Deed to compel any Non-Permitted Holder or Non-Permitted ERISA Holder to sell its interest in
the Notes, or may sell such interest in its Notes on behalf of such Non-Permitted Holder or NonPermitted ERISA Holder.
Regulation S Notes
Each purchaser of Regulation S Notes will be deemed to have made the representations set forth in
clauses (4), (6), (10) through (12) (inclusive) above (except that references to Rule 144A Notes shall be
deemed to be references to Regulation S Notes) and to have further represented and agreed as follows:
(1)
The purchaser is located outside the United States and is not a U.S. Person.
(2)
The purchaser understands that the Notes have not been and will not be registered under the
Securities Act and that the Issuer has not registered and will not register under the Investment
Company Act. It agrees, for the benefit of the Issuer that, if it decides to resell, pledge or
otherwise transfer such Notes (or any beneficial interest or participation therein) purchased by it,
prior to the expiration of the distribution compliance period, any offer, sale or transfer of such
Notes (or any beneficial interest or participation therein) will be made in compliance with the
Securities Act and only (i) to a person (A) it reasonably believes is a QIB purchasing for its own
account or for the account of a QIB in a nominal amount of not less than £100,000 for it and each
such account, in a transaction that meets the requirements of Rule 144A and takes delivery in the
- 268-
form of a Rule 144A Note; or (ii) to a non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904 (as applicable) under Regulation S.
(3)
The purchaser understands that unless the Issuer determines otherwise in compliance with
applicable law, such Notes will bear a legend set forth below.
THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER
JURISDICTION OF THE UNITED STATES, AND THE ISSUER HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940,
AS AMENDED (THE "INVESTMENT COMPANY ACT"). THE HOLDER HEREOF, BY
PURCHASING THE NOTES IN RESPECT OF WHICH THIS NOTE HAS BEEN ISSUED,
AGREES FOR THE BENEFIT OF THE ISSUER THAT THE NOTES MAY BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (A)(1) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER, IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER
THE SECURITIES ACT, OR (2) [LANGUAGE TO BE INCLUDED IN RELATION TO
CLASS A NOTE, CLASS B NOTES AND CLASS C NOTES ONLY] TO A NON-U.S.
PERSON, IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE
904 OF REGULATION S OF THE SECURITIES ACT AND [IN THE CASE OF CLAUSE (1),
IN A PRINCIPAL AMOUNT OF NOT LESS THAN £100,000 [LANGUAGE TO BE
INCLUDED IN RELATION TO CLASS A NOTE, CLASS B NOTES AND CLASS C NOTES
ONLY] IN A PRINCIPAL AMOUNT OF NOT LESS THAN [£100,000] AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES. ANY TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF
NO FORCE AND EFFECT, WILL BE VOID AB INITIO AND WILL NOT OPERATE TO
TRANSFER ANY RIGHTS TO THE TRANSFEREE, NOTWITHSTANDING ANY
INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE TRANSFER AGENT OR
ANY INTERMEDIARY. EACH TRANSFEROR OF THIS NOTE WILL PROVIDE NOTICE
OF THE TRANSFER RESTRICTIONS SET FORTH HEREIN AND IN THE NOTE TRUST
DEED TO ITS TRANSFEREE.
TRANSFERS OF THIS NOTE OR OF PORTIONS OF THIS NOTE SHOULD BE LIMITED
TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
THE NOTE TRUST DEED REFERRED TO HEREIN.
PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ON THE FACE HEREOF. ANY PERSON ACQUIRING THIS
NOTE MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE
REGISTRAR.
[LEGEND TO BE INCLUDED IN RELATION TO THE CLASS A NOTES AND CLASS B
NOTES ONLY] [EACH PERSON ACQUIRING OR HOLDING THIS NOTE OR ANY
INTEREST HEREIN SHALL BE DEEMED TO HAVE REPRESENTED, WARRANTED
AND AGREED THAT (I) EITHER (A) IT IS NOT AND IS NOT ACTING ON BEHALF OF
(AND FOR SO LONG AS IT HOLDS THIS NOTE OR AN INTEREST HEREIN WILL NOT
BE, AND WILL NOT BE ACTING ON BEHALF OF) AN EMPLOYEE BENEFIT PLAN
THAT IS SUBJECT TO THE PROVISIONS OF PART 4 OF SUBTITLE B OF TITLE I OF
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), A PLAN TO WHICH SECTION 4975 OF THE UNITED STATES INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), APPLIES, OR AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH
PLAN'S INVESTMENT IN SUCH ENTITY WITHIN THE MEANING OF 29 C.F.R.
SECTION 2510.3-101 (AS MODIFIED BY SECTION 3(42) OF ERISA) ("BENEFIT PLAN
INVESTOR"), OR A GOVERNMENTAL, CHURCH, NON-U.S. OR OTHER PLAN WHICH
IS SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAW OR REGULATION
THAT IS SIMILAR TO THE PROHIBITED TRANSACTION PROVISIONS OF SECTION
- 269-
406 OF ERISA AND/OR SECTION 4975 OF THE CODE ("SIMILAR LAW"), AND NO
PART OF THE ASSETS TO BE USED BY IT TO ACQUIRE OR HOLD SUCH NOTES OR
ANY INTEREST THEREIN CONSTITUTES THE ASSETS OF ANY BENEFIT PLAN
INVESTOR OR SUCH GOVERNMENTAL, CHURCH, NON-U.S. OR SIMILAR PLAN, OR
(B) ITS ACQUISITION, HOLDING OR DISPOSITION OF SUCH NOTES (OR INTERESTS
THEREIN) WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR,
IN THE CASE OF A GOVERNMENTAL, CHURCH, NON-U.S. OR SIMILAR PLAN, A
NON-EXEMPT VIOLATION OF ANY SIMILAR LAW, AND (II) IT WILL NOT SELL OR
TRANSFER SUCH NOTES (OR INTERESTS THEREIN) TO AN ACQUIROR ACQUIRING
SUCH NOTES (OR INTERESTS THEREIN) UNLESS THE ACQUIROR MAKES OR IS
DEEMED TO MAKE THE FOREGOING REPRESENTATIONS, WARRANTIES AND
AGREEMENTS DESCRIBED IN CLAUSE (I) HEREOF. ANY PURPORTED TRANSFER OF
THE NOTES IN VIOLATION OF THE REQUIREMENTS SET FORTH IN THIS
PARAGRAPH SHALL BE NULL AND VOID AB INITIO AND THE ACQUIROR
UNDERSTANDS THAT THE ISSUER WILL HAVE THE RIGHT TO CAUSE THE SALE OF
SUCH NOTES TO ANOTHER ACQUIROR THAT COMPLIES WITH THE
REQUIREMENTS OF THIS PARAGRAPH IN ACCORDANCE WITH THE TERMS OF THE
NOTE TRUST DEED.]
[LEGEND TO BE INCLUDED IN RELATION TO THE NOTES IN THE FORM OF
REGULATION S GLOBAL CLASS C NOTES, CLASS D NOTES AND JUNIOR NOTES ONLY]
[EACH PERSON ACQUIRING OR HOLDING THIS NOTE OR ANY INTEREST HEREIN
SHALL BE DEEMED TO HAVE REPRESENTED, WARRANTED AND AGREED THAT (I)
FOR SO LONG AS IT HOLDS THIS NOTE OR AN INTEREST HEREIN, IT IS NOT, AND IS
NOT ACTING ON BEHALF OF, A BENEFIT PLAN INVESTOR AND (II) IF IT IS A
GOVERNMENTAL, CHURCH, NON-U.S. OR SIMILAR PLAN, (A) IT IS NOT, AND FOR
SO LONG AS IT HOLDS THIS NOTE OR AN INTEREST HEREIN IT WILL NOT BE,
SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAW OR REGULATION
THAT COULD CAUSE THE UNDERLYING ASSETS OF THE ISSUER TO BE TREATED
AS ASSETS OF THE INVESTOR IN ANY NOTE (OR INTEREST THEREIN) BY VIRTUE
OF ITS INTEREST AND THEREBY SUBJECT THE ISSUER (OR OTHER PERSONS
RESPONSIBLE FOR THE INVESTMENT AND OPERATION OF THE ISSUER'S ASSETS)
TO LAWS OR REGULATIONS THAT ARE SIMILAR TO THE PROHIBITED
TRANSACTION PROVISIONS OF SECTION 406 OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") ("SIMILAR
LAW"), AND (B) ITS ACQUISITION, HOLDING AND DISPOSITION OF THIS NOTE OR
AN INTEREST HEREIN WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT
VIOLATION OF ANY APPLICABLE STATE, LOCAL, OTHER FEDERAL OR NON-U.S.
LAW OR REGULATION THAT IS SIMILAR.
"BENEFIT PLAN INVESTOR" MEANS A BENEFIT PLAN INVESTOR, AS DEFINED IN
SECTION 3(42) OF ERISA, AND INCLUDES (A) AN EMPLOYEE BENEFIT PLAN THAT
IS SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF TITLE I OF
ERISA, (B) A PLAN THAT IS SUBJECT TO SECTION 4975 OF THE CODE OR (C) ANY
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF
ANY SUCH PLAN'S INVESTMENT IN THE ENTITY. ANY PURPORTED TRANSFER OF
THE NOTES IN VIOLATION OF THE REQUIREMENTS SET FORTH IN THIS
PARAGRAPH SHALL BE NULL AND VOID AB INITIO AND THE ACQUIRER
UNDERSTANDS THAT THE ISSUER WILL HAVE THE RIGHT TO CAUSE THE SALE OF
SUCH NOTES TO ANOTHER ACQUIRER THAT COMPLIES WITH THE
REQUIREMENTS OF THIS PARAGRAPH IN ACCORDANCE WITH THE TERMS OF THE
NOTE TRUST DEED.
THE ISSUER HAS THE RIGHT, UNDER THE NOTE TRUST DEED, TO COMPEL ANY
BENEFICIAL OWNER OF A NOTE WHO HAS MADE OR HAS BEEN DEEMED TO
MAKE A PROHIBITED TRANSACTION, BENEFIT PLAN INVESTOR OR SIMILAR PLAN
LAW REPRESENTATION THAT IS SUBSEQUENTLY SHOWN TO BE FALSE OR
MISLEADING TO SELL ITS INTEREST IN THE NOTE, OR MAY SELL SUCH INTEREST
ON BEHALF OF SUCH OWNER.]
- 270-
[LEGEND TO BE INCLUDED IN RELATION TO CLASS C NOTES, CLASS D NOTES AND
JUNIOR NOTES IN THE FORM OF DEFINITIVE CERTIFICATES ONLY] [EACH
PURCHASER OR TRANSFEREE OF THIS NOTE WILL BE REQUIRED TO REPRESENT,
WARRANT AND AGREE THAT (I) FOR SO LONG AS IT HOLDS THIS NOTE OR AN
INTEREST HEREIN, IT IS NOT, AND IS NOT ACTING ON BEHALF OF, A BENEFIT
PLAN INVESTOR AND (II) IF IT IS A GOVERNMENTAL, CHURCH, NON-U.S. OR
SIMILAR PLAN, (A) IT IS NOT, AND FOR SO LONG AS IT HOLDS THIS NOTE OR AN
INTEREST HEREIN IT WILL NOT BE, SUBJECT TO ANY FEDERAL, STATE, LOCAL OR
NON-U.S. LAW OR REGULATION THAT COULD CAUSE THE UNDERLYING ASSETS
OF THE ISSUER TO BE TREATED AS ASSETS OF THE INVESTOR IN ANY NOTE (OR
INTEREST THEREIN) BY VIRTUE OF ITS INTEREST AND THEREBY SUBJECT THE
ISSUER (OR OTHER PERSONS RESPONSIBLE FOR THE INVESTMENT AND
OPERATION OF THE ISSUER'S ASSETS) TO LAW OR REGULATION THAT IS SIMILAR
TO THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") ("SIMILAR LAW"), AND (B) ITS ACQUISITION, HOLDING AND
DISPOSITION OF THIS NOTE OR AN INTEREST HEREIN WILL NOT CONSTITUTE OR
RESULT IN A NON-EXEMPT VIOLATION OF ANY FEDERAL, STATE, LOCAL OR NONU.S. LAW OR REGULATION THAT IS SIMILAR.
"BENEFIT PLAN INVESTOR" MEANS A BENEFIT PLAN INVESTOR, AS DEFINED IN
SECTION 3(42) OF ERISA, AND INCLUDES (A) AN EMPLOYEE BENEFIT PLAN THAT
IS SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF TITLE I OF
ERISA, (B) A PLAN THAT IS SUBJECT TO SECTION 4975 OF THE CODE OR (C) ANY
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF
ANY SUCH PLAN'S INVESTMENT IN THE ENTITY. ANY PURPORTED TRANSFER OF
THE NOTES IN VIOLATION OF THE REQUIREMENTS SET FORTH IN THIS
PARAGRAPH SHALL BE NULL AND VOID AB INITIO AND THE ACQUIRER
UNDERSTANDS THAT THE ISSUER WILL HAVE THE RIGHT TO CAUSE THE SALE OF
SUCH NOTES TO ANOTHER ACQUIRER THAT COMPLIES WITH THE
REQUIREMENTS OF THIS PARAGRAPH IN ACCORDANCE WITH THE TERMS OF THE
NOTE TRUST DEED.
THE ISSUER HAS THE RIGHT, UNDER THE NOTE TRUST DEED, TO COMPEL ANY
BENEFICIAL OWNER OF A NOTE WHO HAS MADE OR HAS BEEN DEEMED TO
MAKE A PROHIBITED TRANSACTION, BENEFIT PLAN INVESTOR, SIMILAR LAW OR
OTHER PLAN LAW REPRESENTATION THAT IS SUBSEQUENTLY SHOWN TO BE
FALSE OR MISLEADING TO SELL ITS INTEREST IN THE NOTE, OR MAY SELL SUCH
INTEREST ON BEHALF OF SUCH OWNER.]
(4)
The purchaser acknowledges that the Note Issuer, the Trustee, the Arranger, the Lead Manager,
the Co-Manager and their Agents and Affiliates, and others will rely upon the truth and accuracy
of the foregoing acknowledgements, representations and agreements.
(5)
The purchaser understands that the Regulation S Notes may not, at any time, be held by, or on
behalf of, U.S. Persons.
A transferor who transfers an interest in a Regulation S Note to a transferee who will hold the interest in
the same form is not required to make any additional representation or certification.
- 271-
GENERAL INFORMATION
21.
The issue of the Notes was authorised by resolution of the board of directors of the Issuer passed
on 18 December 2015.
22.
It is expected that admission of the Notes to the Official List of the Irish Stock Exchange and to
trading on the Main Securities Market will be granted on or around the Closing Date, subject
only to the issue of the Global Notes. The listing of the Notes will be cancelled if the Global
Notes are not issued. Secondary transactions will normally be effected for settlement in sterling
and for delivery on the third working day after the day of the transaction.
23.
The Global Notes have been accepted for clearance through Euroclear and Clearstream,
Luxembourg as set out under "Description of the Notes".
24.
The Issuer is not, and has not been, involved in any governmental, legal or arbitration
proceedings (including any such proceedings which are pending or threatened of which the Issuer
is aware), since the date of its incorporation, which may have, or have had, since the date of its
incorporation, significant effects on the Issuer's financial position or profitability.
25.
Copies of the following documents (and any amendments thereto from time to time) will be
available electronically or may be inspected in physical/electronic form during usual business
hours on any week day (excluding Saturdays, Sundays and public holidays) at the specified
offices of the Principal Paying Agent and at the registered office of the Issuer for the term of the
Notes for the life of the Offering Circular:
(a)
the memorandum and articles of association of the Issuer;
(b)
the Senior Facility Agreement;
(c)
the Junior Facility Agreement;
(d)
the Subscription Agreement;
(e)
the Note Trust Deed;
(f)
the Issuer Deed of Charge;
(g)
the Issuer Security Agreement;
(h)
the Servicing Agreement;
(i)
the Cash Management Agreement;
(j)
the Issuer Account Bank Agreement;
(k)
the Corporate Services Agreement;
(l)
the Loans Transfer Agreements;
(m)
the Agency Agreement; and
(n)
the Master Definitions Schedule.
26.
The Note Trust Deed and the Issuer Deed of Charge will provide that the Note Trustee and the
Issuer Security Trustee may rely on reports or other information from professional advisers or
other experts (whether addressed to or obtained by the Issuer, the Note Trustee, the Issuer
Security Trustee or any other person) in accordance with the provisions of the Note Trust Deed
and the Issuer Deed of Charge, respectively, whether or not such report or other information
contains any monetary or other limit on the liability of the relevant professional adviser or expert.
27.
Except as is outlined in this Offering Circular, the Issuer does not intend to provide any post
issuance information in relation to the Notes.
- 272-
28.
The language of this Offering Circular is English. Any foreign language text that is included with
or within this document has been included for convenience purposes only and does not form part
of this Offering Circular.
29.
No website referred to in this Offering Circular forms part of this Offering Circular for the
purposes of the listing of the Notes on the Irish Stock Exchange.
30.
Servicer Quarterly Reports, Issuer Cash Manager Quarterly Reports and other notices to the
Noteholders will be made available for review at www.usbank.com/abs.
31.
Fees and expenses relating to the application for admission of the Notes to trading on the Main
Securities Market are expected to be approximately €6,790.
32.
Arthur Cox Listing Services Limited is acting solely in its capacity as listing agent for the Issuer
in relation to the Notes and is not itself seeking admission of the Notes to the Official List of the
Irish Stock Exchange or to trading on the Main Securities Market for the purposes of the
Prospectus Directive.
- 273-
APPENDIX 1
TARGET LOAN AMOUNTS
Loan Payment
Date
Maximum Target Senior
Loan Amount
20/01/2016
184, 599,000
110,775,000
20/04/2016
184, 599,000
73,850,000
20/07/2016
184, 599,000
36,925,000
20/10/2016
164,100,000
-
20/01/2017
143,600,000
-
20/04/2017
123,100,000
-
20/07/2017
102,600,000
-
20/10/2017
82,000,000
-
20/01/2018
61,500,000
-
20/04/2018
41,000,000
-
20/07/2018
20,500,000
-
Minimum TLA
20/10/2018
-
20/01/2019
-
- 274-
APPENDIX 2
TARGET MINIMUM PRINCIPAL AMOUNT OUTSTANDING
Minimum Target Principal
Amounts Outstanding2
Relevant Note Payment
Date
20 January 2016
20 April 2016
20 July 2016
20 October 2016
20 January 2017
20 April 2017
20 July 2017
20 October 2017
20 January 2018
20 April 2018
20 July 2018
20 October 2018
20 January 2019
Class A (£)
£73,690,378
£49,126,918
£24,563,459
£0
£0
£0
£0
£0
£0
£0
£0
£0
£0
Class B (£)
£9,961,403
£6,640,935
£3,320,468
£0
£0
£0
£0
£0
£0
£0
£0
£0
£0
Minimum Target
Loan Amount (£)3
Class C (£)
Class D (£)
£16,802,366
£11,201,577
£5,600,789
£0
£0
£0
£0
£0
£0
£0
£0
£0
£0
£10,320,853
£6,880,569
£3,440,284
£0
£0
£0
£0
£0
£0
£0
£0
£0
£0
£110,775,000
£73,850,000
£36,925,000
£0
£0
£0
£0
£0
£0
£0
£0
£0
£0
2
Subject to adjustment as further described in the section entitled "Cashflow and Issuer Priorities of Payments".
3
Subject to adjustment as further described in the section entitled "Description of the Senior Facility Agreement".
- 275-
APPENDIX 3
THE PORTFOLIO
TABLE A – TITAN PROPERTIES
JLL
Reference
Number
1
Owner
Address
Title
Number(s)
Leto
Limited
90 High Street, Bromley BR1
1EY
K168469
£780,000
1
3
Leto
Limited
498 502 508 Kenton Lane,
Harrow HA3 8RD
NGL792128
NGL792129
NGL792132
£760,500
2
4
Leto
Limited
107 Clarence Street, Kingston
upon Thames KT1 1NP
SGL401393
£802,500
1
5
Leto
Limited
72/80 Clarence Street, Kingston
upon Thames KT1 1NP
TGL140325
£2,595,000
1
8
Leto
Limited
12/14 Hill Street, Richmond
TW9 1TN
SGL61389
£1,417,500
1
9
Leto
Limited
45-47 South Street, Romford
RM1 1NL
EGL70186
£422,500
2
10
Leto
Limited
Leto
Limited
76-80 Bellegrove Road, Welling
DA16 3QB
10 High Street, Banbury OX16
5DZ
SGL614120
£253,500
2
ON113934
£195,000
2
12
Leto
Limited
2 High Street, Banbury OX16
4BZ
ON220450
£487,500
1
13
Leto
Limited
12-12A London Street,
Basingstoke RG21 7NU
HP552561
£341,250
1
15
Leto
Limited
98 Old Christchurch Road,
Bournemouth BH1 1LR
DT161786
£352,500
1
16
Leto
Limited
43 Broomfield Road,
Chelmsford CM1 1SY
EX505508
£390,000
2
17
Leto
Limited
Portsdown House, 175/177 West
Street, Fareham PO16 0EF
HP184183 /
HP202778
£130,000
2
20
Leto
Limited
Mitre Building, Kitson Way,
Harlow CM20 1BZ
EX397138
£2,550,000
1
22
Leto
Limited
Units 1-3 Town Centre, Hatfield
AL10 0JZ
HD191113
£572,000
2
23
Leto
Limited
208 The Marlowes, Hemel
Hempstead HP1 1BH
HD263924
£397,500
1
24
Leto
Limited
2/3 High Street, High Wycombe
HP11 2AZ
BM147730
£182,000
2
25
Leto
Limited
76 Week Street, Maidstone
ME14 1RJ
K91021
£461,250
1
28
Leto
Limited
12/28 Arundel Street,12/28
Arundel Street, Portsmouth PO1
1NL
HP476013
£799,500
2
30
Leto
Limited
33-37 High Street, Ramsgate
CT11 9AG
K581172 FH
K853395 LH
£210,000
1
31
Perses
Limited
Progress Business Park, Slough
SL1 6DQ
BK265444
BK265445
£188,500
2
11
- 276-
Allocated Loan
Amount (£)
Tier
JLL
Reference
Number
32
Owner
Address
Title
Number(s)
Allocated Loan
Amount (£)
Leto
Limited
Unit D, Wexham Spring, Slough
SL3 6PJ
BM220428
£8,287,500
1
33
Leto
Limited
100 Above Bar Street,
Southampton SO14 7DT
HP244835
£390,000
1
34
Leto
Limited
120 High Street, Southend on
Sea SS1 1JT
EX419627
£370,500
2
35
Leto
Limited
133-135 High Street, Southend
on Sea SS1 1LH
EX291662
£787,500
1
36
Helios
Limited
39-41 Queensway, Stevenage
SG1 1DN
HD195990
£660,000
1
37
Leto
Limited
95 High Street, Strood ME2
4TG
K807594
£357,500
2
38
Leto
Limited
19E & 20 Regent Street,
Swindon SN1 1JL
WT86871
WT91285
£266,500
2
39
Helios
Limited
New Buildings Masters Court,
69-70 High Street, Thame OX9
2BU
ON59401
£1,061,250
1
41
Helios
Limited
9/12 Market Street,
Wellingborough NN8 1AN
NN127292
£1,462,500
2
42
Leto
Limited
147 High Street, Winchester
SO23 9AY
HP6851
£435,500
2
43
Helios
Limited
179-181 King Street, Great
Yarmouth NR30 1LS
NK289456
£825,500
2
44
Perses
Limited
114 High Street, Kings Lynn,
PE30 1DD
NK71488
£126,750
2
45
Leto
Limited
46 High Street, Kings Lynn
PE30 1BE
NK197571
£240,500
2
46
Helios
Limited
66/67 High Street, Kings Lynn
PE30 1AY
NK151499
£351,000
2
47
Helios
Limited
98-100 London Road North,
Lowestoft NR32 1ET
SK166047
SK223731
£799,500
2
48
Leto
Limited
40/42 Bridge Street,
Peterborough PE1 1DT
CB247793
£1,111,500
2
49
Leto
Limited
24 Well Street, Thetford IP24
2PL
NK376221
£91,000
2
50
Leto
Limited
8-12 Burlington Street,
Chesterfield S40 1PY
DY105401
£910,000
2
51
Leto
Limited
39 Queens Square, Corby NN17
1PD
NN236673
£341,250
2
52
Leto
Limited
27-32 Victoria Street, Derby
DE1 1ES
DY359690
£455,000
2
53
Leto
Limited
The Borough, Hinckley LE10
1NR
LT388731
£305,500
2
54
Helios
Limited
2-26 Corporation Street, Lincoln
LN2 1HN
LL1690
£1,725,000
1
55
Leto
Limited
23 Market Street, Barnsley S70
1SL
SYK313411
£578,500
2
57
Leto
Limited
22-23 Baxtergate, Doncaster
DN1 1LD
SYK303727
£915,000
1
- 277-
Tier
JLL
Reference
Number
58
Owner
Address
Title
Number(s)
Leto
Limited
30 Boothferry Road, Goole
DN14 5DA
HS97273
£225,000
1
59
Perses
Limited
54/56 Victoria Street West,
Grimsby DN31 1BL
HS101256
£208,000
2
60
Helios
Limited
14-18 King Street, Huddersfield
HD1 2QD
WYK807264
/
WYK341884
£760,500
2
61
Leto
Limited
61-67 New Street, Huddersfield
HD1 2TW
WYK475119
WYK334448
£653,250
2
62
Perses
Limited
37-38 Whitefriargate, Hull HU1
2HN
HS230119
£237,250
2
63
Leto
Limited
51-51A Whitefriargate, Hull
HU1 2HP
HS267562
£2,115,000
1
64
Leto
Limited
Sovereign House, The Headrow,
Leeds LS1 5QL
WYK513554
£3,620,500
2
65
Leto
Limited
84-98 Baghill Lane, Pontefract
WF8 2HB
WYK602940
£308,750
2
66
Leto
Limited
17-19 Effingham Street,
Rotherham S65 1AJ
SYK231808
SYK246255
£445,250
2
67
Leto
Limited
31 College Street, Rotherham
S65 1AG
SYK198525
£201,500
2
68
Leto
Limited
54-64 Union Street, Sheffield
S26 7YH
SYK370218
£221,000
2
69
Leto
Limited
Gosforth Valley Shopping
Centre, Sheffield S18 8ZQ
DY242772
£893,750
2
70
Leto
Limited
St Pauls Chambers, Sheffield S1
2JL
SYK432810
£1,781,250
1
73
Leto
Limited
Woodseats House, Chesterfield
Road, Sheffield S8 8QF
SYK444540
FH /
SYK462583
LH
£438,750
2
74
Leto
Limited
105/121 Kirkgate, Wakefield,
WF1 1JG
WYK74097
£1,784,250
2
78
Leto
Limited
2-20 Front Street, Lanchester
DH7 0ER
DU206954
£442,000
2
79
Leto
Limited
90 -100 The Avenue,
Nunthorpe, Middlesborough
TS7 0AP
CE26215
£146,250
2
81
Helios
Limited
82/83 Newborough,
Scarborough YO11 1ET
NYK256486
£573,750
1
82
Leto
Limited
1-10 Harpers Parade, StocktonOn-Tees TS18 5EQ
CE136753
£633,750
2
83
Leto
Limited
29-37 High Street, Stockton-OnTees TS20 1AH
CE136750
£318,500
2
84
Leto
Limited
90 High Street West,
Sunderland SR1 3BY
TY175206
£113,750
2
85
Leto
Limited
93-99 & 91 High Street, Yarm
TS15 9BB
CE136752
£929,500
2
86
Leto
Mastrick Industrial Estate,
Whitemyres Avenue, Aberdeen
ABN786
£2,722,500
1
- 278-
Allocated Loan
Amount (£)
Tier
Owner
Address
Limited
AB16 6HQ
87
Leto
Limited
Redmoss Business Centre,
Greenbank Road, Aberdeen
AB12 3BQ
KNC930
KNC929
£1,875,000
1
89
Leto
Limited
Unit 1-4 Altens Industrial Est,
Aberdeen AB12 3LY
KNC28
£1,102,500
1
91
Leto
Limited
63/67 Alloway Street, Ayr KA7
1SP
AYR57844
£234,000
2
92
Leto
Limited
North & South Bridge, Bathgate
EH48 4PS
WLN1945
WLN47976
£396,500
2
93
Leto
Limited
1-9 Argyle Court, Broxburn
EH52 5EQ
WLN9905
£507,000
2
94
Leto
Limited
Royal Elizabeth Yard, Dalmeny
EH29 9EN
WLN11013
£2,080,000
2
95
Leto
Limited
2-8 Carnoustie Place, Glasgow
G5 8PH
GLA38802
£201,500
2
96
Perses
Limited
29 Wellington Road Industrial,
Bishopbriggs, Glasgow G64
2SA
GLA56918
£227,500
2
97
Leto
Limited
53-59 Bath Street, Glasgow G2
2DH
GLA150951
GLA164654
£825,000
1
98
Leto
Limited
67-91 Merkland Drive,
Kirkintilloch, Glasgow G66 3SJ
DMB9281
£1,332,500
2
99
Perses
Limited
8 Alleysbank Road, Glasgow
G73 1LX
LAN41708
£58,500
2
101
Leto
Limited
Jordanvale Avenue, Glasgow
G14 0QP
GLA38803
£292,500
2
103
Leto
Limited
15-29 La Port Precinct & 2-31
Talbot Street, Grangemouth
FK3 8AZ
STG8752
£1,738,750
2
104
Leto
Limited
Gateway Business Park,
Beancross Road, Grangemouth
FK3 8WX
STG32923
£1,579,500
2
105
Leto
Limited
65/69 High Street, Hawick TD9
9BP
ROX12751
£204,750
2
106
Leto
Limited
27-34 Mackintosh Place, South
Newmoor Industrial Estate,
Irvine KA11 4JT
AYR19017
£568,750
2
108
Leto
Limited
7 Armour Street, Kilmarnock
KA1 3HT
AYR100377
£260,000
2
109
Leto
Limited
81-83 King Street & 2 Water
Lane, Kilmarnock KA1 1PT
AYR38856
£266,500
2
110
Leto
Limited
Bridgend Industrial Estate,
Kinross KY13 8GA
KNR1718
£578,500
2
112
Leto
Limited
32-48 High Street, Lanark
ML11 7EX
LAN22049
£1,183,000
2
113
Leto
Limited
St Vincent Place, Lanark ML11
7LA
LAN86616
LAN602667
£4,061,250
1
114
Leto
16 High Street, Paisley PA1
REN62751
£262,500
1
JLL
Reference
Number
Title
Number(s)
- 279-
Allocated Loan
Amount (£)
Tier
Owner
Address
Limited
2BE
115
Leto
Limited
116
JLL
Reference
Number
Title
Number(s)
Allocated Loan
Amount (£)
101-103 & 105 George Street,
Altrincham WA14 1RN
GM933039
GM916705
£331,500
2
Leto
Limited
58 George Street, Altrincham
WA14 1RH
GM479111
£403,000
2
117
Leto
Limited
140/142 Dalton Road, Barrow in
Furness LA14 1JH
CU56202
£221,000
2
118
Leto
Limited
9-10 Portland Walk, Barrow-inFurness LA14 1HH
CU129469
£565,500
2
119
Leto
Limited
32-35 Portland Walk, Barrowin-Furness LA14 1HH
CU133348
£893,750
2
120
Leto
Limited
Supermarket & 1-6 Lakes
Parade, Ennerdale Drive,
Barrow in Furness LA14 4PR
CU119895
£195,000
2
121
Leto
Limited
37-41 Church Street, Blackpool
FY01 1HT
LA445586
£438,750
2
122
Leto
Limited
47&49, 51-53 Victoria Street,
Blackpool FY1 4RJ
LA417902
LA433823
£735,000
1
123
Helios
Limited
61-71 Church St & 4-14
Coronation Street, Blackpool
FY1 1HU
LA787378
£1,365,000
2
124
Leto
Limited
64-70 Church Street, Blackpool
FY1 1HP
LH =
LA733570
FH =
LA476885
£594,750
2
125
Perses
Limited
78 Bank Hey Street, Blackpool
FY1 4PX
LA454311
£240,000
1
126
Perses
Limited
80/82 & 82A Church Street,
Blackpool FY1 1HP
LA432477
LA631882
£234,000
2
127
Leto
Limited
1-33 Market Street, Little
Leaver, Bolton BL3 1HH
LA196662
£630,500
2
128
Leto
Limited
29-31 Newport Street, Bolton
BL1 1NE
GM605070
£483,750
1
129
Leto
Limited
46-58 Newbrook Road, Over
Hulton, Bolton BL5 1ER
GM722225
£517,500
1
130
Leto
Limited
2-18 Lowther Arcade, Carlisle
CA3 8LX
CU120146
£308,750
2
132
Perses
Limited
Devonshire Chambers,8/10
Devonshire Street, Carlisle CA3
8LP
CU120145
£139,750
2
133
Leto
Limited
39/41 High Street, Congleton
CW12 1AU
CH266213
£825,000
1
135
Leto
Limited
426-446 Chester Road, Little
Sutton, Ellesmere Port CH66
3RB
CH414477
£487,500
2
137
Leto
Limited
15, 17 & 19 Liverpool Road,
Liverpool L23 2SA
MS116816
£390,000
2
138
Leto
Limited
38/48 Derby Road, Huyton,
Liverpool L36 9UJ
MS238847
£1,170,000
2
- 280-
Tier
JLL
Reference
Number
139
Owner
Address
Title
Number(s)
Allocated Loan
Amount (£)
Leto
Limited
Audley House & Hughes House,
London Road, Liverpool L3 8JA
MS332012
£3,055,000
2
144
Perses
Limited
Wilton House, Bury Road,
Radcliffe M26 2UA
GM577777
FH /
GM581174
LH
£35,750
2
145
Leto
Limited
44, 44a & 46 Yorkshire Street,
Rochdale OL16 1JW
FH =
GM266186
LH =
GM266931
£438,750
2
146
Leto
Limited
45 & 47 Yorkshire Street,
Rochdale OL16 1HP
GM568775
£568,750
2
147
Leto
Limited
57-59 Yorkshire Street,
Rochdale OL16 1BZ
FH =
LA348522
LH =
LA350829
£240,500
2
148
Leto
Limited
60 & 64 Yorkshire Street,
Rochdale OL16 1HP
LA59899
GM178863
£185,250
2
149
Leto
Limited
Cutgate Shopping Precinct, 293315 Edenfield Road, Rochdale
OL11 5AQ
LA248450
£1,124,500
2
150
Helios
Limited
49/51 School Road, Sale M33
7YF
GM327974
£292,500
2
151
Leto
Limited
1-2 Warren Street, Stockport
SK1 1UD
GM347588
£1,300,000
2
155
Leto
Limited
2/4 Regent Street, Wrexham
LL11 1SA
WA863150
£325,000
2
158
Helios
Limited
Units F & G Cosgrove,
Blackpole WR3 8UA
HW57732
£1,245,000
1
159
Leto
Limited
62-68A High Street,
Bromsgrove B61 8EX
HW73115
£659,750
2
160
Leto
Limited
43/53 High Street, Brownhills
WS8 6HH
WM387527
£375,000
1
161
Leto
Limited
Block L Peartree Business Park,
Crackley Way, Dudley DY2
0UW
WM697997
£757,250
2
162
Leto
Limited
Midland House, Trinity Street,
Hanley ST1 5LA
SF455415
SF426807
£224,250
2
163
Leto
Limited
20/34 Princess St & 4 Chapel
Street, Stafford ST16 2BT
SF443248
£455,000
2
164
Leto
Limited
Oldfield Business Park, Stoke
on Trent ST4 3ES
SF316852
£3,627,000
2
165
Leto
Limited
4/5 Market Square,1&3 Wrekin
House, Telford TF1 1BP
SL36959
£182,000
2
166
Leto
Limited
60/62 New Street, Wellington,
Telford TF1 1NE
SL5490 /
SL127094
£450,000
1
167
Leto
Limited
Halesfield 11,Halesfield
Industrial Estate, Telford TF7
4LZ
SL21701
£4,559,750
2
169
Leto
1-3 Red Street / Darkgate,
WA700853
£2,028,000
2
- 281-
Tier
Owner
Address
Limited
Carmarthen SA31 1PS
170
Leto
Limited
171
JLL
Reference
Number
Title
Number(s)
Allocated Loan
Amount (£)
Griffin Island, Newport NP20
1RU
CYM93204
WA199649
£1,313,000
2
Leto
Limited
1-5 Taff Street, Pontypridd
CF37 4UE
WA100021
£806,000
2
172
Leto
Limited
89-89b, 90/91 Taff St,
Pontypridd CF37 4SL
WA151683
£308,750
2
173
Helios
Limited
83 Broadmead, Bristol BS1 3DT
AV97321
£570,000
1
175
Leto
Limited
125/126 High Street, Crediton
EX17 3LQ
DN279457
£276,250
2
176
Leto
Limited
Cedar House, Spa Road,
Gloucester GL1 1XL
GR31777 /
GR27626
£2,137,500
1
177
Leto
Limited
55-65 Worcester Street & 4-6
Oxford Street, Kidderminster
DY10 1EL
HW133536
£650,000
2
178
Leto
Limited
9 Market Place, Penzance TR18
2JA
CL158660
£357,500
2
179
Leto
Limited
78 New George Street,
Plymouth PL1 1EF
DN368708
£622,500
1
180
Leto
Limited
122/126 Union Street, Torquay
TQ2 5QB
DN217937
£412,500
1
181
Leto
Limited
1-2 Victoria St &,10 St Nicholas
St, Truro TR1 2RS
CL123031
£1,673,750
2
182
Leto
Limited
19/19A Pydar Street, Truro TR1
2AY
CL191979
£637,500
1
183
Leto
Limited
25 Victoria Square, Truro TR1
2RS
CL933 /
CL193828
£1,105,000
2
184
Leto
Limited
77 High Street, Weston Super
Mare BS23 1HE
AV250328
£308,750
2
185
Leto
Limited
94 St Mary Street, Weymouth
DT4 8NY
DT73263
£273,000
2
186
Leto
Limited
22 Middle Street, Yeovil BA20
1LY
ST158143
£344,500
2
188
Leto
Limited
800 The Boulevard, Capability
Green Luton LU1 3BA
BD214292
£8,790,000
1
189
Leto
Limited
Trackside Business Park, Abbot
Close, West Byfleet KT14 7JP
SY337074
SY358287
£4,290,000
2
190
Leto
Limited
33-39 Gallowtree Gate,
Leicester LE1 5AD
LT45216
£4,283,500
2
191
Helios
Limited
12-13 High Town, Hereford
HR1 2AA
HE30459
£1,072,500
2
192
Leto
Limited
6, 6A & 8 Market Square,
Hanley, Stoke on Trent ST1
1NU
SF123282
£633,750
2
193
Leto
Limited
49 Dudley Street,
Wolverhampton WV1 3ER
WM176052
£693,750
1
194
Leto
Limited
17 Vicarage Street, Yeovil
BA20 1JB
WS13367
£435,500
2
- 282-
Tier
TABLE B – PECAN PROPERTIES
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Owner
Address
Title
Number(s)
Allocated
Loan
Amount
(£)
Tier
Toucan
Finance
Limited
34-50 Cheapside,
Barnsley S70 IRU
SYK566570
£5,988,750
1
Pecan
Finance
Limited
Grand Buildings,
66-100 Jameson
Street, Hull, HU1
3JX
HS236969
£6,383,250
1
Toucan
Finance
Limited
19, 20, 20A and 21
Albion Place, Leeds
WYK345206
£2,203,500
1
Toucan
Finance
Limited
202 High Street,
Lincoln (LN5 7AP)
LL171071 and
LL321101
£2,287,500
1
Toucan
Finance
Limited
32 Lister Gate,
Nottingham NG1
7DD
NT262447
£1,134,000
1
Toucan
Finance
Limited
24-25 Broad Street,
Reading RG1 2BT
BK111751
£3,283,500
1
Culver
Finance
Limited
22-24 High Street,
Colchester (CO1
1DB) and 12
Culver Street West,
Colchester (CO1
1JG)
EX413109
and
EX389106
£4,635,000
1
Toucan
Finance
Limited
11 Broad Street,
Reading, (RG1
2BH)
BK14771
£1,701,000
1
Toucan
Finance
Limited
28 High Street,
Winchester
HP581960
£2,587,500
1
Toucan
Finance
Limited
37-38 Fore Street
Taunton (TA1
1HR) and 39 Fore
Street, Taunton
(TA1 1HR)
ST144415 and
ST188574
£1,281,750
1
Toucan
Finance
Limited
28-30 King Street,
Manchester, MA
6AY
MAN11125
£2,521,500
1
- 283-
No.
12.
13.
14.
Owner
Address
Title
Number(s)
Allocated
Loan
Amount
(£)
Tier
Toucan
Finance
Limited
74-76 English
Street and 39
Blackfriars Street,
Carlisle CA3 8HP
CU260938
£983,250
1
Toucan
Finance
Limited
86 Broad Street,
Reading (RG1
2AP) and 87 and
87A Broad Street,
Reading (RG1
2AP)
BK137213
and
BK384734
£3,139,500
1
Toucan
Finance
Limited
20 Queen Street,
Cardiff (CF10
2BU) and the site of
a wall
WA69078 and
WA650891
£1,308,750
1
- 284-
INDEX OF DEFINED TERMS
1940 Act ............................................................ i
25 per cent. Limitation ................................. 258
Account .......................................................... 99
Accountholder .............................................. 193
Accounts SIA ............................................... 102
Acquisition Agreement ................................... 99
Acquisition Agreements ................................. 91
Acquisition Documents .................................. 91
Act .................................................................. 70
Ad Hoc Review ............................................ 169
Additional Interest Rate Cap Confirmation .. 147
Additional Interest Rate Cap Transaction..... 147
Additional Permitted Modification ......... 21, 225
Adjusted Minimum Target Loan Amount .... 116
Adjusted Minimum Target Principal Amount
Outstanding ...................................... 157, 203
Administrative Party....................................... 99
Affiliate Entity .............................................. 222
Agency Agreement ....................................... 190
Agent Bank ................................................... 190
Agents........................................................... 190
AIFMD ........................................................... 31
AIFMR .......................................................... xiv
Allocated Loan Amount ................................. 99
any Obligor ................................................... 124
Appointees ............................................ 116, 158
Appraisals ..................................................... xvii
Approved Replacement Managing Agent ...... 99
Article 254(2) ................................................ xiv
Article 405 ..................................................... xiv
Article 405(1) ................................................ xiv
Article 51 ....................................................... xiv
Article 51(1) .................................................. xiv
Asset Management Agreement ....................... 93
Asset Management Agreement Event of Default
.................................................................... 94
Asset Manager ................................................ 93
Asset Manager Duty of Care Agreement........ 93
Asset Manager Fees........................................ 94
Asset Status Report ...................................... 168
Assignation of Rents ...................................... 99
Authorisation ................................................ 141
Authorisations ................................................ 99
Available Funds ............................................ 155
Basel Committee ............................................ 32
Basel III .......................................................... 32
Basic Terms Modification ...................... 60, 221
Benefit Plan Investor29, 258, 265, 266, 267,
269, 270, 271
Benefit Plan Investors .................................... 29
Borrower Collection Account ....................... 146
Borrower General Account ........................... 146
Borrower Shares SIA.................................... 101
Borrowers ......................................................... 2
Business Day .......................................... 64, 206
Business Plan .................................................. 93
Business Plan Expenses .................................. 99
Cap Provider ................................................... 99
Cap Provider Fitch Required Rating ............. 148
Capex Contingency Reserve Account ..... 99, 146
Capex Expenditure .......................................... 99
Capital Requirements Regulation .................. xiv
Cash Management Agreement ...................... 151
Cash Trap Event ............................................ 100
Cash Trap Principal............................... 156, 208
CBRELS ......................................................... 73
Centre of Main interests ................................ 100
Class .............................................................. 190
Class A Noteholders ..................................... 190
Class A Notes................................................ 190
Class A Principal Redemption Amount 160, 208
Class B Noteholders ...................................... 190
Class B Notes ................................................ 190
Class B Principal Redemption Amount 160, 209
Class C Noteholders ...................................... 190
Class C Notes ................................................ 190
Class C Principal Redemption Amount 160, 209
Class D Principal Redemption Amount ........ 161
Clean-up Call ................................................ 211
Clearstream, Luxembourg ........................ ix, 191
Client Account ................................................ 96
Closing Date ............................................ iv, 190
CMBS ............................................................. 20
Code ...................... 253, 265, 266, 269, 270, 271
Collection Account ....................................... See
Commission's Proposal ........................... 30, 250
Common Safekeeper ........................................ vi
Company ..................................................... 2, 68
Company Shares SIA .................................... 102
Compensation Prepayment Proceeds ............ 100
Conditions ..................................................... 190
Control Valuation Event ............................... 230
Controlling Class .......................................... 230
Controlling Class Test................................... 230
Controlling Person ........................................ 258
Corrected Loan ............................................. 168
CRA Regulation ...............................................iii
Credit Suisse ..................................................... 9
creditors' winding up ..................................... 236
CREFC European Investor Reporting Package
.................................................................. 174
CSA............................................................... 148
Cure Account ................................................ 146
Cut-Off Date ................................................... 64
Day Count Fraction ....................................... 199
DBRS ............................................................ 229
DBRS Rating Event ...................................... 149
Deferrable Notes ........................................... 254
Deferred Interest ............................. 48, 199, 255
Deferred Note Prepayment Fee Amount . 48, 199
Deferred Senior Note Extension Fee Amount 48,
199
Definitive Notes .................................... 183, 193
Deposit Account............................................ 146
Designated Website ...................................... 128
Discount Note ............................................... 255
- 285 -
Disenfranchised Holder ................................ 222
disqualified persons ...................................... 258
EBA ......................................................... xiv, 32
Effective Date ............................................... 113
English Security Agreement ......................... 140
English Security Agreements ....................... 140
Environmental Report .................................. 100
ERISA ..................... 28, 265, 266, 269, 270, 271
ERISA Plans ................................................. 258
ERISA Restricted Notes ............................... 259
Escrow Monies ............................................. 133
Establishment ............................................... 100
EU Insolvency Regulation ............................ 239
Euroclear ................................................. ix, 191
Eurynome ...................................................... xiv
Eurynome Loans Transfer Agreement.... 39, 144
Exchange Act .............................................. iii, v
Excluded Recovery Proceeds ....................... 100
Existing Retention Requirements ................... xv
Extraordinary Resolution................................ 63
Facility Agreements ........................................ iv
Facility Fee ................................................... 100
FATCA ................................................. 212, 251
FATCA Deduction ....................................... 100
FATCA Withholding .................................... 251
Fee Letter ...................................................... 100
FFI ................................................................ 251
Final Note Maturity Date................................ 64
Final Recovery Determination ..................... 175
Financial Indebtedness ................................. 100
First Insured .................................................... 87
Fitch .............................................................. 229
Fitch Downgrade Remedial Actions............. 149
Foreign Financial Institution ........................ 251
FTT ............................................................... 250
General Account ........................................... 146
Global Note ..................................................... vi
Global Notes ............................................ ix, 191
grandfathering date ....................................... 251
Group ............................................................ 101
Group taken as a whole ................................ 124
Guarantors ........................................................ 2
Headlease ..................................................... 101
Hedging Agreements .................................... 101
Hedging Prepayment Proceeds ..................... 101
HMRC .......................................................... 249
IDR ............................................................... 148
IGA ............................................................... 251
Information Agent ................................... xvi, 67
Initial Cap Amount ....................................... 147
Initial Cap Notional Amount ........................ 147
Initial Fitch Downgrade Event ..................... 148
Initial Interest Rate Cap Confirmation ......... 147
Initial Interest Rate Cap Transaction ............ 147
Initiating Noteholder .............................. 62, 229
Insurance Prepayment Proceeds ................... 101
Insurances ..................................................... 101
Insured Information Matter .......................... 127
Insured Use ..................................................... 89
Interest Amount ............................................ 203
Interest Determination Date .................... 65, 201
Investment Company Act...................... 265, 269
Irish Companies Act ..................................... 261
Irish Stock Exchange .................................... 204
IRS ................................................................ 251
Issuer ............................................................. 190
Issuer Account Bank Agreement .................. 152
Issuer Account Bank Minimum Ratings ....... 153
Issuer Accounts ..................................... 154, 198
Issuer Assets ................................................. 179
Issuer Cash Manager Quarterly Report ......... 151
Issuer Charged Documents ............................. 51
Issuer Charged Property .................................. 51
Issuer Deed of Charge ............................. 51, 190
Issuer Loans Transfer Agreement ........... 39, 144
Issuer Priorities of Payments......................... 151
Issuer Priority of Payments ........................... 151
Issuer Priority Payments ............................... 158
Issuer Proceeds Account ......................... 51, 154
Issuer Secured Creditors ............................... 195
Issuer Secured Liabilities ................................ 51
Issuer Security................................. 51, 188, 195
Issuer Security Agreement .............................. 51
Issuer Security Trustee .................................. 190
Issuer Transaction Account ........................... 152
Issuer Transaction Documents ........................ 51
Issuer's Profit................................................. 154
Jersey Bankruptcy Law ................................. 236
Jersey Companies Law ................................. 234
Jersey declaration .......................................... 236
Jersey Security Agreement.................... 101, 141
Jersey Security Agreements .......................... 141
Jersey Security Law ...................................... 234
JRL ................................................................ 239
Junior Facility Agreement ................................. 4
Junior Loan .......................................... iv, 4, 233
Junior Note Entrenched Term ................. 60, 218
Junior Note Principal Redemption Amount . 161,
210
Junior Noteholders ........................................ 190
Junior Notes .............................................. ii, 190
Junior Principal Receipts ...................... 155, 208
Lease Document............................................ 102
Lease Prepayment Proceeds .......................... 102
LIBOR Screen Rate ...................................... 201
Limited Liability Company Agreement .......... 70
Liquidation Fee ............................................. 173
Liquidation Proceeds .............................. 25, 173
Loan Extension Option ................................... 49
Loan Facility Agent .......................................... 1
Loan Failure Event ........................................ 161
Loan Hedging Agreement ............................. 147
Loan Interest Period ...................................... 102
Loan Legal Reservations ............................... 102
Loan Payment Date ......................................... 64
Loan Perfection Requirements ...................... 102
Loan Security Documents ..................... 102, 141
Loan Security Trustee ....................................... 1
Loan Seller ..................................................... xiv
Loan Tax ....................................................... 102
- 286 -
Loan Tax Credit............................................ 156
Loan to Value ............................................... 103
Loan Transaction Documents ....................... 103
Loan Transaction Obligor............................. 103
Loans ............................................................... iv
Loans Transfer Agreements ................... 39, 144
LPD0 ............................................................ 116
Main Securities Market .................................... ii
Majority Lenders .......................................... 103
Managers ...................................................... 260
Managing Agent ........................................... 103
Managing Agent Duty of Care Agreement ..... 95
Managing Agents ........................................... 95
Master Definitions Schedule ........................ 191
Material Adverse Effect ............................... 103
Members ......................................................... 70
Minimum Target Loan Amount ................... 104
Minimum Target Principal Amount Outstanding
.................................................................. 157
Modelling Assumptions................................ 180
Most Senior Class ........................................... 49
Negative Consent ......................................... 223
Net Disposal Proceeds .................................. 104
Net Rental Income ........................................ 104
No Search Inception Date ............................... 89
No Search Insurance ............................... 85, 112
No Search Insured .......................................... 89
Non Opted Property...................................... 104
Non-Cash Trap Principal ...................... 156, 208
Non-Excess Interest ................................ 47, 200
Non-Permitted ERISA Holder ...................... 192
Non-Permitted Holder ............................ 29, 192
Note Acceleration Notice ............................. 213
Note Event of Default ................................... 213
Note Factor ................................................... 211
Note Interest Period ................................ 64, 199
Note LIBOR ................................................. 200
Note LIBOR Excess Amount ............ iii, 48, 200
Note Margin ................................................. 200
Note Maturity Plan ....................................... 172
Note Payment Date ................................. 64, 199
Note Prepayment Fee Amount ............. 157, 202
Note Taxes.................................................... 212
Note Trust Deed ........................................... 190
Note Trustee ................................................. 190
Noteholder .................................................... 190
Noteholders .................................................. 190
Notes................................................. ii, 190, 191
NPD0 .................................................... 157, 202
NRSROs ...................................................... iii, v
Obligors ............................................................ 2
Occupational Lease ...................................... 104
Offered Notes ............................................... 253
Offering Circular .............................................. ii
Official List ...................................................... ii
Offshore Transactions ..................................... vi
OID ............................................................... 254
Onerous Property .......................................... 237
Operating Advisor ........................................ 230
Operating Expenditure.................................. 104
Ordinary Resolution ........................................ 63
Original Junior Lender ...................................... 4
Original Senior Lender ..................................... 1
Other Party ............................................ 236, 237
Owner's Title Insurance .......................... 85, 112
participants .................................................... 183
Participating FFI ........................................... 251
participating Member States ................... 30, 250
parties in interest ........................................... 258
Parties in Interest........................................... 258
Paying Agents ............................................... 190
Pecan Acquisition ........................................... 91
Pecan Acquisition Agreements ....................... 91
Pecan Appraisal .............................................. 91
Pecan Borrowers ............................................... 2
Pecan Certificates of Title ............................. 104
Pecan Junior Loans ........................................... 4
Pecan Managing Agent ................................... 95
Pecan Property Management Agreement ........ 95
Pecan Seller..................................................... 91
Pecan Senior Loans ........................................... 1
Percentage Reduction in Value ..................... 104
Permitted Payment ........................................ 145
Plan Asset Regulation ..................................... 28
Plans .............................................................. 258
Portfolio ........................................................... iv
Portfolio Determination Date .................. 64, 155
Potential Note Event of Default .................... 226
Pre-Enforcement Loan Failure Priority of
Payments ................................................... 162
Pre-Enforcement Principal Allocation Rules161,
210
Pre-Enforcement Revenue Priority of Payments
.................................................................. 158
Prepayment Fee ............................................. 115
Principal Amount Outstanding ................ 59, 211
Principal Paying Agent ................................. 190
Principal Receipts ......................................... 156
Projected Interest Cover ................................ 104
Projected Net Rental Income ........................ 105
Properties ......................................................... iv
Property............................................................ iv
Property Management Agreements ................. 95
Property Protection Advance ........................ 171
Property Protection Loan .............................. 105
Property Reports ........................................... 105
Property-Level Information ...................... 85, 91
Prospectus Directive .........................................ii
Protected Party ...................................... 105, 117
PTCE............................................................. 258
Purchaser Property Reports ........................... 105
QIBs ............................................................ vi, ix
QIBS .................................................................. i
Qualifying Lender ......................................... 105
Quarterly report ............................................. 105
Quotation Day ............................................... 105
Rate of Interest .............................................. 200
Rates of Interest ............................................ 200
rating ............................................................. 229
Rating Agencies ............................................ 229
- 287 -
Rating Agency Confirmation ......................... 18
ratings ........................................................... 229
RBC Europe Limited ..........