Download INFORMATION MEMORANDUM RHINEBRIDGE PLC

INFORMATION MEMORANDUM
RHINEBRIDGE PLC
RHINEBRIDGE LLC
U.S. $20,000,000,000
MEDIUM TERM NOTE PROGRAMME
Rhinebridge PLC (the "Issuer") and Rhinebridge LLC (the "Co-Issuer" and together with the Issuer, the "Issuers")
have established a Medium Term Note Programme (the "Medium Term Note Programme") as described in this
Information Memorandum.
The Issuers jointly, may from time to time, subject to compliance with all relevant Laws (as defined in the section of
this Information Memorandum entitled "Certain definitions"), regulations and directives, issue medium term notes
(the "Medium Term Notes") under the Medium Term Note Programme, pursuant to transactions meeting the
requirements of Rule 144A ("Rule 144A") of the Securities Act in the United States to U.S. Persons that are both
QIBs and QPs (as such terms are defined below). The Issuer may also from time to time, subject to compliance with
all relevant Laws, issue Medium Term Notes under the Medium Term Note Programme to Non-U.S. Persons in
offshore transactions outside the United States pursuant to Regulation S ("Regulation S") under the United States
Securities Act of 1933, as amended (the "Securities Act"). The Issuer, or the Issuers jointly, also may issue secured
subordinated senior capital notes which are subordinated to the "Senior Notes" (as defined below) and rank in
priority to the Mezzanine Capital Notes and Junior Capital Notes (each as defined below) (the "Senior Capital
Notes"), secured subordinated mezzanine capital notes which are subordinated to the Senior Notes and the Senior
Capital Notes and rank in priority to the Junior Capital Notes (the "Mezzanine Capital Notes"), secured
subordinated junior capital notes which are subordinated to the Senior Notes, the Senior Capital Notes and the
Mezzanine Capital Notes (the "Junior Capital Notes") and capital notes having components of more than one of
the foregoing (the "Combination Capital Notes" and together with the Senior Capital Notes, the Mezzanine Capital
Notes and the Junior Capital Notes, the "Capital Notes" and the Capital Notes together with the Medium Term
Notes, the "Term Notes") pursuant to a Capital Note programme (the "Capital Note Programme").
In addition, the Issuers jointly may also issue U.S. commercial paper notes (the "USCP Notes", pursuant to a U.S.
commercial paper programme (the "USCP Programme"). The Issuer may also issue European commercial paper
notes (the "ECP Notes" and, together with the USCP Notes, the "Commercial Paper", and the Commercial Paper
together with the Medium Term Notes, the "Senior Notes", and the Senior Notes together with the Capital Notes,
the "Notes"), pursuant to a European commercial paper programme (the "ECP Programme" and, together with the
USCP Programme, the "Commercial Paper Programme", and the Commercial Paper Programme together with the
Capital Note Programme and the Medium Term Note Programme, the "Programmes").
The maximum dollar equivalent amount of Medium Term Notes outstanding at any time under the Medium Term
Note Programme will not exceed U.S. $20,000,000,000 (the "Medium Term Note Maximum Amount"); the
maximum Fixed Dollar Equivalent Nominal Amount (as defined in the section of this Information Memorandum
entitled "Certain definitions") of Capital Notes outstanding at any time under the Capital Note Programme will not
exceed U.S. $3,000,000,000 (the "Capital Note Maximum Amount"); the Medium Term Note Maximum Amount,
when aggregated with the dollar equivalent of all Commercial Paper outstanding at any time under the Commercial
Paper Programme, will not exceed U.S. $20,000,000,000 (the "Senior Note Maximum Amount" and together with
the Capital Note Maximum Amount and the Medium Term Note Maximum Amount, the "Aggregate Maximum
Amount"). The Medium Term Note Maximum Amount may be increased without the consent of the holders of
Medium Term Notes subject to each of Moody's Investors Service Limited ("Moody's"), Fitch, Inc., Fitch Ratings,
Ltd. and/or any of their subsidiaries including Derivative Fitch, Inc. and Derivative Fitch Ltd. and/or any successor
or successors thereto (collectively, "Fitch") and Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
("S&P"; and together with Fitch and Moody's, the "Rating Agencies") confirming in writing that its rating of the
Medium Term Notes will not be reduced or withdrawn as a result thereof.
The Medium Term Notes are unsubordinated limited recourse debt obligations of the Issuer and, if co-issued by the
Co-Issuer, the Co-Issuer, and will not be guaranteed by, or be the responsibility of, any other entity. The Issuer has
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granted security over its assets and undertaking in favour of The Bank of New York, London branch, as security
trustee for itself and as trustee for the other Secured Creditors (as defined in the section of this document entitled
"Certain definitions") (the "Security Trustee") pursuant to a security trust deed dated on or around the Closing Date
(as amended or modified from time to time, the "Security Trust Deed") between the Issuer, the Manager and the
Security Trustee. The Issuer has created additional security interests in favour of the Security Trustee for itself and
as trustee for the other Secured Creditors on the terms set out in the Account Control Agreement (as defined herein).
The Security Trustee holds the benefit of the security on trust for itself and the other Secured Creditors including the
holders of the Medium Term Notes, on, and subject to, the terms of the Security Trust Deed.
The Medium Term Notes may be issued on a continuing basis to a relevant Medium Term Note Dealer specified
herein under "Overview of the Medium Term Note Programme" and any additional Medium Term Note Dealer
appointed under the Medium Term Note Programme from time to time, which appointment may be for a specified
issue or generally in respect of the Medium Term Note Programme (each, a "Medium Term Note Dealer" and,
together, the "Medium Term Note Dealers"). The applicable Medium Term Note Dealer may resell the Medium
Term Notes in individually negotiated transactions at varying prices. Please refer to the section of this Information
Memorandum entitled "Subscription and sale".
Application has been made to the Irish Financial Services Regulatory Authority (the "Financial Regulator") as
competent authority under Directive 2003/71/EC (the "Prospectus Directive"), for the Information Memorandum to
be approved. Application has been made to the Irish Stock Exchange (the "Irish Stock Exchange") for Medium
Term Notes to be admitted to the Official List (the "Official List") and trading on its regulated market (the
"Market").
This Information Memorandum constitutes a base prospectus for the purposes of Article 5.4 of the Prospectus
Directive.
References in this Information Memorandum to Medium Term Notes being "listed" (and all related or equivalent
references) shall mean that such Medium Term Notes have been admitted to the Official List and admitted to trading
on the Market. The Market is a regulated market (a "Regulated Market") for the purposes of the Investment
Services Directive 93/22/EEC (the "Investment Services Directive").
Medium Term Notes may be listed or admitted to trading, as the case may be, on such other stock exchange(s) or
market(s) (not including any U.S. stock exchange or market) as may be specified in the relevant Final Terms. The
relevant Final Terms will specify whether or not Medium Term Notes will be listed on the Irish Stock Exchange.
The Issuers may also issue unlisted Medium Term Notes and/or Medium Term Notes not admitted to trading on any
market.
The Issuers are not and will not be regulated by the Financial Regulator as a result of issuing Medium Term Notes.
Any investment in Medium Term Notes does not have the status of a bank deposit and is not within the scope of the
deposit protection scheme operated by the Financial Regulator.
The Medium Term Notes of each Series will be denominated in U.S. Dollars or such other currency as may be
agreed between the Issuer and the relevant Medium Term Note Dealer. No Medium Term Notes will be issued under
the Medium Term Note Programme which have a minimum denomination of less than U.S. $250,000 or an integral
multiple of $1,000 in excess thereof (or its equivalent in another currency) or a tenor of less than one year.
The price and amount of Medium Term Notes to be issued under the Medium Term Note Programme will be
determined by the Issuer and the relevant Medium Term Note Dealer at the time of issue in accordance with
prevailing market conditions.
The Medium Term Notes have not been, and are not expected to be, registered under the Securities Act, the
securities Laws of any state of the United States or the securities Laws of any other jurisdiction. The Issuer has not
registered and neither the Issuer nor the Co-Issuer intends to register as an investment company under the United
States Investment Company Act of 1940, as amended (the "Investment Company Act"), in the case of the Issuer, in
reliance on the exception provided by Section 3(c)(7) of the Investment Company Act.
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The Medium Term Notes may be offered (i) in an "offshore transaction" outside of the United States to persons who
are not U.S. persons within the meaning of Regulation S under the Securities Act and who also are not U.S.
residents for purposes of the Investment Company Act (each such person, a "Non-U.S. Person") (such Medium
Term Notes, the "Regulation S Medium Term Notes"), and (ii) within the United States or to or for account or
benefit of U.S. persons within the meaning of Regulation S and/or U.S. residents for the purposes of the Investment
Company Act (each such person, a "U.S. Person"), in reliance on Rule 144A under the Securities Act (such
Medium Term Notes, the "Rule 144A Medium Term Notes"). The Medium Term Notes may not be offered, sold,
issued, transferred or delivered within the United States or to or for the account or benefit of any person that is a
U.S. Person unless, among other things, such person is both (1) a "qualified institutional buyer" (a "QIB") within
the meaning of Rule 144A and (2) a "qualified purchaser" (a "QP") within the meaning of Section 2(a)(51)(A) of
the Investment Company Act and the rules and regulations thereunder, acting for its own account or the account of
another QIB which is a QP, and meets the other requirements set forth herein. Any purchase or transfer of a Rule
144A Medium Term Note to a person that is not a QIB and a QP, who meets the other requirements set forth herein
or a Regulation S Medium Term Note to a person that is not a Non-U.S. Person who meets the other requirements
set forth herein, as the case may be, at the time of acquisition thereof, will be deemed null and void ab initio and of
no effect, and the Issuers may require a sale, transfer or redemption thereof as described herein.
Interests in the Medium Term Notes may not be reoffered, resold, pledged or otherwise transferred unless in
transactions exempt from or not subject to the registration requirements of, the Securities Act and any other
applicable securities Laws. By its purchase of Medium Term Notes, such purchaser will be deemed to agree or, in
the case of registered definitive notes, will be required to certify that it will only resell or otherwise transfer such
Medium Term Notes in accordance with the applicable restrictions set forth therein. Any resale or other transfer of a
Medium Term Note (or a beneficial interest therein) which is not made in compliance with the restrictions set forth
therein shall be null and void ab initio.
The Regulation S Medium Term Notes will be represented by one or more global notes (the "Regulation S Global
Medium Term Notes") in fully registered form without interest coupons deposited with The Bank of New York,
London branch as custodian for, and registered in the name of, The Depository Trust Company ("DTC") (or its
nominee) and deposited with or on behalf of DTC initially for the accounts of Euroclear Bank S.A./N.V.
("Euroclear"), and/or Clearstream Banking, société anonyme, Luxembourg ("Clearstream, Luxembourg").
Interests in the Regulation S Global Medium Term Notes will be shown on, and transfers thereof will be effected
only through, records maintained by DTC and its Participants and Indirect Participants (including, without
limitation, Euroclear and/or Clearstream, Luxembourg).
The Rule 144A Medium Term Notes will be offered in reliance on an exemption from the registration requirements
of the Securities Act and will be represented by one or more global notes in definitive, fully registered form without
interest coupons (the "Rule 144A Global Medium Term Notes"), deposited with The Bank of New York, London
branch as custodian for, and registered in the name of, DTC or its nominee. Interests in the Rule 144A Global
Medium Term Notes will be shown on, and transfers thereof will be effected only through, records maintained by
DTC and its Participants and Indirect Participants. The Regulation S Global Medium Term Notes and the Rule 144A
Global Medium Term Notes are collectively referred to herein as the "Global Medium Term Notes".
Each Global Medium Term Note (or beneficial interest therein) will be exchangeable for definitive certificated notes
only in the limited circumstances specified herein and in such Global Medium Term Note.
The Medium Term Notes will receive a rating of AAA from Fitch, Aaa from Moody's and AAA from S&P. Such a
rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any
time by Moody's, Fitch and/or S&P, as applicable. Please refer to the section of this Information Memorandum
entitled "The Issuer's Business – Ratings".
The attention of investors is drawn to the section headed "Risk factors".
This document comprises a base prospectus for the purposes of Article 5.4 of the Prospectus Directive. References
to the European Council Directive 2003/71/EC and any relevant implementing measure in each Relevant Member
State are to the Prospectus Directive. This Information Memorandum is not a prospectus for purposes of Section
12(A)(2) of, or any provision of a rule under, the Securities Act. Any foreign language text included in this
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Information Memorandum is for convenience purposes only and does not form part of this Information
Memorandum.
Euro Medium Term Note Dealers
U.S. Medium Term Note Dealers
Morgan Stanley
Citi
Goldman Sachs International
Morgan Stanley
Citi
Goldman, Sachs & Co.
The date of this Information Memorandum is 27 June 2007
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IMPORTANT NOTICE
NOTICE TO NEW HAMPSHIRE RESIDENTS
FOR NEW HAMPSHIRE RESIDENTS ONLY: NEITHER THE FACT THAT A
REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCE 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 LICENCED 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.
NOTICE TO FLORIDA RESIDENTS
IF THE INVESTOR IS NOT A BANK, A TRUST COMPANY, A SAVINGS INSTITUTION, AN INSURANCE
COMPANY, A DEALER, AN INVESTMENT COMPANY AS DEFINED IN THE INVESTMENT COMPANY
ACT OF 1940, A PENSION OR PROFIT-SHARING TRUST, OR A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933, AS AMENDED), THE INVESTOR
ACKNOWLEDGES THAT ANY SALE OF MEDIUM TERM NOTES TO THE INVESTOR IS VOIDABLE BY
THE INVESTOR EITHER WITHIN THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS
MADE BY THE INVESTOR TO THE ISSUER, OR TO AN AGENT OF THE ISSUER, OR WITHIN THREE
DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO THE INVESTOR,
WHICHEVER OCCURS LATER.
This Information Memorandum is furnished by the Issuers in connection with an offering exempt from registration
under the Securities Act for the exclusive purpose of enabling prospective purchasers to consider the purchase of the
Medium Term Notes described herein and in the relevant Final Terms. Each offeree of the Medium Term Notes, by
accepting delivery of this Information Memorandum, agrees to the terms and conditions set forth in the immediately
preceding sentence. The Capital Notes and the Commercial Paper are not being offered hereby. The information
contained in this Information Memorandum has been provided by the Issuers and other sources identified herein.
The Issuers accept responsibility for the information contained in this Information Memorandum other than the
information contained in the sections "Description of the Manager" and "Description of the Administrator". To the
best of the knowledge and belief of the Issuers (which have taken all reasonable care to ensure that such is the case)
the information contained in this Information Memorandum is in accordance with the facts and does not omit
anything likely to affect its import.
The Manager accepts responsibility for the information contained in the section "Description of the Manager" (the
"Manager Information"). To the best of the knowledge and belief of the Manager (which has taken all reasonable
care to ensure that such is the case) the Manager Information is in accordance with the facts and does not omit
anything likely to affect the import of the Manager Information. The Manager accepts no responsibility for any
other information contained in this Information Memorandum. Save for the Manager Information, the Manager has
not separately verified the information contained herein. No representation, warranty or undertaking, express or
implied, is made and no responsibility or liability is accepted by the Manager as to the accuracy or completeness of
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any information contained in this Information Memorandum (other than the Manager Information) or any other
information supplied in connection with the Medium Term Notes or their distribution.
QSR Management Limited ("QSR" or the "Administrator") accepts responsibility for the first paragraph of the
section of this document entitled "Description of the Administrator" (the "QSR Information"). To the best of the
knowledge and belief of QSR (which has taken all reasonable care to ensure that such is the case) the QSR
Information is in accordance with the facts and does not omit anything likely to affect the import of the QSR
Information. QSR accepts no responsibility for any other information contained in this Information Memorandum.
Save for the QSR Information, QSR has not separately verified the information contained herein. No representation,
warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by QSR as to the
accuracy or completeness of any information contained in this Information Memorandum (other than the QSR
Information) or any other information supplied in connection with the Medium Term Notes or their distribution.
This Information Memorandum should be read and construed together with any amendments or supplements hereto
and, in relation to any Series of Medium Term Notes, should be read and construed together with the relevant Final
Terms.
The Issuers have confirmed to the Medium Term Note Dealers that this Information Memorandum (including, for
this purpose, any relevant Final Terms and any Supplemental Information Memorandum) contains all information
regarding the Issuers and the Medium Term Notes which is (in the context of the Medium Term Note Programme
and the issue, offering and sale of the Medium Term Notes) material; that such information is true and accurate in all
material respects and is not misleading in any material respect; that any opinions, predictions or intentions expressed
herein on the part of the Issuers are honestly held or made and are not misleading in any material respect; that this
Information Memorandum does not omit to state any material fact necessary to make such information, opinions,
predictions or intentions (in the context of the Medium Term Note Programme and the issue, offering and sale of the
Medium Term Notes) not misleading in any material respect; and that all proper enquiries have been made to verify
the foregoing.
No person has been authorised to give any information or to make any representation not contained in or not
consistent with this Information Memorandum or any other document entered into in relation to the Medium Term
Note Programme or any information supplied by the Issuers or such other information as is in the public domain
and, if given or made, such information or representation should not be relied upon as having been authorised by the
Issuers, the Security Trustee, the Exchange Agent, the Paying Agents, the Calculation Agent, the Registrar, the
Liquidity Providers, the Transfer Agent, the Custodian, the Derivative Counterparties, any Medium Term Note
Dealer, and, except as heretofore stated in the preceding paragraphs, the Administrator or the Manager.
None of the Security Trustee, the Exchange Agent, the Paying Agents, the Calculation Agent, the Registrar, the
Liquidity Providers, the Transfer Agent, the Custodian, the Derivative Counterparties or the Medium Term Note
Dealers and, except as heretofore stated in the preceding paragraphs, neither the Administrator nor the Manager, has
separately verified the information contained herein or any other information provided by the Issuers in connection
with the Medium Term Note Programme, the Medium Term Notes or their distribution. Accordingly, no
representation or warranty is made or implied by the Medium Term Note Dealers, the Security Trustee, the
Exchange Agent, the Paying Agents, the Calculation Agent, the Registrar, the Liquidity Providers, the Transfer
Agent, the Custodian or the Administrator (except as heretofore stated in the preceding paragraph), the Derivative
Counterparties or any of their respective affiliates, and none of the aforementioned parties makes any representation
or warranty or accepts any responsibility as to the accuracy or completeness of the information contained in this
Information Memorandum or any other information provided by the Issuers in connection with the Medium Term
Note Programme or the Medium Term Notes or their distribution. Neither the delivery of this Information
Memorandum or any Final Terms nor the offering, sale or delivery of any Medium Term Note shall, in any
circumstances, create any implication that the information contained in this Information Memorandum is true
subsequent to the date hereof or the date upon which this Information Memorandum has been most recently
amended or supplemented or that there has been no adverse change, or any event reasonably likely to involve any
adverse change, in the condition (financial or otherwise) of the Issuers since the date thereof or, if later, the date
upon which this Information Memorandum has been most recently amended or supplemented or that any other
information supplied in connection with the Medium Term Note Programme is correct at any time subsequent to the
date on which it is supplied or, if different, the date indicated in the document containing the same.
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None of the Security Trustee, the Calculation Agent, the Custodian, the Registrar, the Liquidity Providers, the
Medium Term Note Dealers, the Derivative Counterparties, the Administrator, the Manager, the Exchange Agent or
the Paying Agents has undertaken, and none of them will be under any obligation to, or be in any position to
undertake to, monitor or keep under review the financial condition, creditworthiness, business, assets, activities or
affairs of the Issuers, the Manager or the Administrator or the performance by the Manager of its obligations under
the Management Agreement or the performance by the Administrator of its obligations under the Administrative
Services Agreement during the life of the arrangements contemplated by this Information Memorandum nor to
advise any investor or potential investor in the Medium Term Notes of any information coming to the attention of
any of the Security Trustee, the Calculation Agent, the Exchange Agent, the Paying Agents, the Custodian, the
Registrar, the Liquidity Providers, the Medium Term Note Dealers, the Derivative Counterparties, the Manager or
the Administrator, respectively. Investors should review, inter alia, the most recent consolidated published financial
statements of the Issuer when deciding whether or not to purchase any Medium Term Notes.
Any individual intending to invest in any investment described in this document should consult his or her
professional adviser and ensure that he or she fully understands all the risks associated with making such an
investment and has sufficient financial resources to sustain any loss that may arise from it.
Notice of the aggregate nominal amount of Medium Term Notes then outstanding, interest (if any) payable in
respect of Medium Term Notes, the issue price of Medium Term Notes and any other terms and conditions not
contained herein which are applicable to a particular Tranche of Medium Term Notes will be set out in the relevant
final terms (the "Final Terms") which, with respect to Medium Term Notes to be listed on the Irish Stock
Exchange, will be delivered to the Financial Regulator.
Particulars of the dates of, parties to and general nature of each document to which the Issuer is a party are set out in
various sections of this Information Memorandum.
The distribution of this Information Memorandum, any Supplemental Information Memorandum and any Final
Terms and the offering, placement, sale and delivery of the Medium Term Notes in certain jurisdictions may be
restricted by Law. Persons into whose possession this Information Memorandum, any Supplemental Information
Memorandum or any Final Terms comes are required by the Issuers and the Medium Term Note Dealers to inform
themselves about and to observe any such restrictions. For a description of certain restrictions on offers, sales and
deliveries of Medium Term Notes and on the distribution of this Information Memorandum, any Supplemental
Information Memorandum or any Final Terms and other offering material relating to the Medium Term Notes, see
"Subscription and sale".
None of the Medium Term Note Dealers, the Calculation Agent, the Custodian, the Registrar, the Liquidity
Providers, the Exchange Agent, the Paying Agents, the Security Trustee, the Manager, the Administrator, the
Derivative Counterparties, or the Issuers represent that this Information Memorandum, any Supplemental
Information Memorandum or any Final Terms may be lawfully distributed, or that any Medium Term 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, or assume any responsibility for facilitating any such distribution or
offering.
No Medium Term Note may be offered or sold, directly or indirectly, and neither this Information Memorandum nor
any advertisement or other offering material may be distributed or published in any jurisdiction, except under
circumstances that will result in compliance with any applicable Laws and regulations.
None of this Information Memorandum, any Supplemental Information Memorandum or any Final Terms
constitutes an offer or an invitation to subscribe for or purchase any Medium Term Notes and should not be
considered as a recommendation by the Issuers, the Medium Term Note Dealers, the Calculation Agent, the
Custodian, the Registrar, the Liquidity Providers, the Exchange Agent, the Paying Agents, the Security Trustee, the
Manager, the Administrator, the Derivative Counterparties, or any of them, that any recipient of this Information
Memorandum, any Supplemental Information Memorandum or any Final Terms should subscribe for or purchase
any Medium Term Notes. Each recipient of this Information Memorandum, any Supplemental Information
Memorandum or any Final Terms shall be taken to have made its own investigation and appraisal of the condition
(financial or otherwise) of the Issuers.
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THE MEDIUM TERM NOTES ARE ONLY SUITABLE FOR FINANCIALLY SOPHISTICATED INVESTORS
WHO ARE CAPABLE OF EVALUATING THE RISKS AND MERITS OF SUCH INVESTMENT AND WHO
HAVE SUFFICIENT RESOURCES TO BEAR ANY LOSS WHICH MIGHT RESULT FROM SUCH
INVESTMENT. IF YOU ARE IN ANY DOUBT ABOUT THE CONTENTS OF THIS INFORMATION
MEMORANDUM, YOU SHOULD CONSULT A STOCKBROKER, BANK MANAGER, SOLICITOR,
ACCOUNTANT OR OTHER FINANCIAL ADVISER.
In this Information Memorandum, unless otherwise specified, references to "U.S.$", "U.S. Dollars", "dollars" or
"Dollars" are to United States Dollars, references to "Euro", or "€" are to the single currency introduced at the start
of the third stage of European Economic and Monetary Union pursuant to the Treaty establishing the European
Community, as amended, and references to "£" or "Sterling" are to the currency of the United Kingdom.
In connection with the issue of any Tranche of Medium Term Notes, the Medium Term Note Dealer or
Medium Term Note Dealers (if any) named as the stabilising manager(s) (the "Stabilising Manager(s)") (or
persons acting on behalf of any Stabilising Manager(s)) in the relevant Final Terms may over-allot Medium
Term Notes (provided that, in the case of any Tranche of Medium Term Notes to be listed and admitted to
trading on the Irish Stock Exchange or any other regulated market (within the meaning of the Investment
Services Directive (Directive 93/22/EEC)) in the European Economic Area, the aggregate principal amount of
Medium Term Notes allotted does not exceed 105 per cent. of the aggregate principal amount of the relevant
Tranche) or effect transactions with a view to supporting the market price of the Medium Term Notes at a
level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising
Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Any
stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the
offer of the relevant Tranche of Medium Term Notes is made and, if begun, may be ended at any time, but it
must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Medium Term
Notes and 60 days after the date of the allotment of the relevant Tranche of Medium Term Notes. Any
stabilisation action commenced will be carried out in accordance with applicable Laws and regulations.
INFORMATION AS TO PLACEMENT WITHIN THE UNITED STATES
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE ISSUER, AND IF APPLICABLE, THE CO-ISSUER, AND THE TERMS OF THE MEDIUM TERM
NOTES AND THE OFFERING THEREOF DESCRIBED HEREIN, INCLUDING THE MERITS AND RISKS
INVOLVED. PROSPECTIVE INVESTORS ARE HEREBY OFFERED THE OPPORTUNITY, PRIOR TO
PURCHASING ANY MEDIUM TERM NOTES, TO ASK QUESTIONS, RECEIVE ANSWERS CONCERNING
THE TERMS AND CONDITIONS OF THE OFFERING OF THE MEDIUM TERM NOTES AND TO OBTAIN
FROM THE ISSUER AND IF APPLICABLE, THE CO-ISSUER, ADDITIONAL INFORMATION TO THE
EXTENT THAT THE ISSUER OR, IF APPLICABLE, THE CO-ISSUER POSSESSES SUCH INFORMATION
OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE.
THE MEDIUM TERM NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION (THE "SECURITIES AND EXCHANGE
COMMISSION") OR ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY
IN THE UNITED STATES NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY PASSED UPON THE ACCURACY
OR THE ADEQUACY OF THIS INFORMATION MEMORANDUM. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.
NEITHER THE MEDIUM TERM NOTES NOR ANY BENEFICIAL INTEREST THEREIN HAS BEEN OR IS
EXPECTED TO BE REGISTERED UNDER AND WAS ORIGINALLY ISSUED OR OFFERED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. EXCEPT AS
SPECIFICALLY DESCRIBED BELOW OR ELSEWHERE HEREIN, THE MEDIUM TERM NOTES MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OF, U.S.
PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT ("REGULATION S")) OR
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U.S. RESIDENTS FOR THE PURPOSES OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(EACH SUCH PERSON, A "U.S. PERSON"). PROSPECTIVE PURCHASERS ARE HEREBY NOTIFIED
THAT SELLERS OF THE MEDIUM TERM 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 AND SALES OF THE
MEDIUM TERM NOTES AND DISTRIBUTION OF THIS INFORMATION MEMORANDUM, SEE
"SUBSCRIPTION AND SALE". RHINEBRIDGE PLC (THE "ISSUER") HAS NOT REGISTERED AND DOES
NOT INTEND TO REGISTER AS AN INVESTMENT COMPANY UNDER THE UNITED STATES
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT COMPANY ACT"), IN
RELIANCE ON THE EXCEPTION PROVIDED BY SECTION 3(c)(7) OF THE INVESTMENT COMPANY
ACT. ACCORDINGLY THE RULE 144A GLOBAL MEDIUM TERM NOTES (AND BENEFICIAL
INTERESTS THEREIN) MAY ONLY BE OFFERED, SOLD, RESOLD OR OTHERWISE TRANSFERRED BY
INVESTORS TO A PURCHASER OR TRANSFEREE THAT IS BOTH A QIB AND A QP.
AVAILABLE INFORMATION
To permit compliance with Rule 144A under the Securities Act in connection with the sale of the Medium Term
Notes, the Issuer, and if applicable, the Co-Issuer, will furnish, upon request of a holder of a Medium Term Note, to
such holder or prospective purchaser designated by such holder, as the case may be, the information required to be
delivered under Rule 144A(d)(4) under the Securities Act if at the time of the request the Issuer is not a reporting
company under Section 13 or Section 15(d) of the United States Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or not exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act. All
information made available by the Issuer pursuant to the terms of this paragraph may also be obtained at the Issuer's
expense during usual business hours (on a day which is not a Saturday, Sunday or other public holiday and on which
commercial banks in the city in which the specified office of the Principal Paying Agent is located are open for
business) free of charge at the specified office of the Principal Paying Agent. Notwithstanding the foregoing, the
Issuer agrees to furnish the information required to be delivered under Rule 144A(d)(4) under the Securities Act for
so long as the Issuer relies on Section 3(c)(7) of the Investment Company Act.
9122016.23 06095153
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TABLE OF CONTENTS
Clause
Page
OVERVIEW OF THE MEDIUM TERM NOTE PROGRAMME .......................................................................1
RISK FACTORS ...................................................................................................................................................9
SUPPLEMENTAL INFORMATION MEMORANDUM ..................................................................................31
TERMS AND CONDITIONS OF THE MEDIUM TERM NOTES...................................................................32
FINAL TERMS FOR MEDIUM TERM NOTES ...............................................................................................61
USE OF PROCEEDS ..........................................................................................................................................69
SUMMARY OF PROVISIONS RELATING TO THE MEDIUM TERM NOTES WHILST IN GLOBAL
FORM..................................................................................................................................................................70
DESCRIPTION OF THE ISSUER AND THE CO-ISSUER ..............................................................................76
THE ISSUER'S BUSINESS ................................................................................................................................79
DESCRIPTION OF THE MANAGER .............................................................................................................116
DESCRIPTION OF THE MANAGEMENT AGREEMENT ...........................................................................118
DESCRIPTION OF THE ADMINISTRATOR.................................................................................................121
THE CORPORATE SERVICES AGREEMENTS ...........................................................................................125
THE SECURITY AND ITS ENFORCEMENT ................................................................................................126
TAXATION ......................................................................................................................................................133
SUBSCRIPTION AND SALE ..........................................................................................................................146
CERTAIN ERISA AND OTHER CONSIDERATIONS ..................................................................................177
GENERAL INFORMATION............................................................................................................................179
CERTAIN DEFINITIONS ................................................................................................................................181
INDEX OF DEFINITIONS...............................................................................................................................209
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OVERVIEW OF THE MEDIUM TERM NOTE PROGRAMME
The following general description is a summary only and is taken from, and is qualified in its entirety by the
remainder of this Information Memorandum and, in relation to the terms and conditions of any particular Medium
Term Note, the relevant Final Terms. It should be read as an introduction to this Information Memorandum and any
decision to invest in any Medium Term Notes should be based on consideration of this Information Memorandum as
a whole by any investor. No civil liability will attach to the Issuer or the Co-Issuer in any Member State of the
European Economic Area in respect of this general description, including any translation hereof, unless it is
misleading, inaccurate or inconsistent when read together with the other parts of this Information Memorandum.
Where a claim relating to the information contained in this Information Memorandum is brought before a court in a
Member State of the European Economic Area, the claimant may, under the national legislation of such Member
State where the claim is brought, be required to bear the costs of translating this Information Memorandum before
the legal proceedings are initiated. Words and expressions defined in "Certain definitions", "Terms and Conditions
of the Medium Term Notes" and "Description of the Issuer and the Co-Issuer" shall have the same meanings in this
general description and in the remainder of this Information Memorandum.
PARTIES:
Issuer:
Rhinebridge PLC
Co-Issuer:
Rhinebridge LLC
Euro Medium Term Note
Dealers:
Citigroup Global Markets Limited, Goldman Sachs International and Morgan
Stanley & Co. International plc as initial Euro Medium Term Note Dealers
and such other Euro Medium Term Note Dealers as may be appointed under
the Medium Term Note Dealer Agreement
U.S. Medium Term Note Dealers:
Citigroup Global Markets Inc., Goldman, Sachs & Co. and Morgan Stanley
& Co. Incorporated as initial U.S. Medium Term Note Dealers and such other
U.S. Medium Term Note Dealers as may be appointed under the Medium
Term Note Dealer Agreement
Manager:
IKB Credit Asset Management GmbH, London branch
Administrator:
QSR Management Limited
Security Trustee:
The Bank of New York, London branch
Principal Paying Agent:
The Bank of New York, London branch
New York Paying Agent:
The Bank of New York, New York branch
Registrar:
The Bank of New York, New York branch
Irish Listing Agent:
A&L Listing Limited
Irish Paying Agent:
BNY Fund Services (Ireland) Limited
GENERAL TERMS:
Series and Tranches:
9122016.23 06095153
Medium Term Notes will be issued in series (each, a "Series") and Medium
Term Notes of any Series may be issued in one or more tranches (each, a
"Tranche"). Medium Term Notes of the same Series will be identical
including as to any Redemption Date, save that different Tranches of the
same Series may have different issue dates, issue prices and first interest
1
payment dates.
Conditions to additional
issuances:
The Issuer or Issuers, as the case may be, may from time to time, without the
consent of the Medium Term Noteholders, create and issue further Tranches
of existing Series or new Series of Medium Term Notes either (i) to be
consolidated and form a single Series with the existing Medium Term Notes
of any Series or (ii) to form a new Series upon such terms as to interest,
premium, redemption and otherwise as the Issuer, or the Issuers, as the case
may be, may, in its or their absolute discretion, at the time of issue thereof
determine; provided that: 1) each additional issuance of Medium Term Notes
will not exceed the Medium Term Note Maximum Amount; 2) as a result of
such issuance, the Top Rating of any Senior Note then outstanding would not
be reduced or withdrawn without the approval of all of the holders of such
affected Senior Notes; 3) after giving effect to such issuance, no Restricted
Funding Event or Restricted Investment Event would have occurred; 4) no
Enforcement Event has occurred or after giving effect to such issuance would
have occurred; and 5) such issuance would not be in breach of any of the
Restricted Investment Procedures or Restricted Funding Procedures.
Medium Term Note Maximum
Amount:
Maximum dollar equivalent amount of U.S. $20,000,000,000 outstanding at
any time, which maximum amount may be increased from time to time
without the consent of the holders of Medium Term Notes subject to
compliance with the relevant provisions of the Medium Term Note Dealer
Agreement.
Final Terms:
Each Tranche of Medium Term Notes will be the subject of a set of Final
Terms which will supplement the Conditions of the relevant Medium Term
Notes and which, for the purposes of that Tranche only, constitute (in the
case of Medium Term Notes to be listed on the Irish Stock Exchange) the
Final Terms of that Tranche for the purposes of Article 5(4) of the Prospectus
Directive and must be read in conjunction with this Information
Memorandum.
In the case of Medium Term Notes to be listed on the Irish Stock Exchange, a
copy of the Final Terms will be delivered to the Irish Stock Exchange and to
the Financial Regulator.
Form of Medium Term Notes:
The Medium Term Notes will be issued in registered form as specified in the
relevant Final Terms. The Medium Term Notes may be held in the Specified
Denomination(s). Sales or transfers of Medium Term Notes or any interest in
the Medium Term Notes to U.S. Persons that are not both QIBs and QPs or to
any holder that is determined not to have been a Non-U.S. Person in an
offshore transaction pursuant to the requirements of Regulation S (or in either
case, such holder is determined not to meet the other applicable sale and
transfer restrictions set forth herein) will be void and will not be honoured by
the Issuer (as such terms are defined below). The Issuer may, in its
discretion, redeem the Medium Term Notes or interest in the Medium Term
Notes of any holder who holds any such interest in a Medium Term Note in
violation of the applicable transfer restrictions or compel any such holder to
sell such interest in a Medium Term Note to a person that is both a QIB and a
QP or a Non-U.S. Person as provided herein. See "Subscription and sale".
Denomination of Medium Term
Notes:
No Medium Term Notes may be issued under the Medium Term Note
Programme which have a minimum denomination of less than U.S. $250,000
or an integral multiple of $1,000 in excess thereof (or its equivalent in
another currency). Subject thereto, Medium Term Notes will be issued in
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2
such denominations as may be specified in the relevant Final Terms.
Currencies:
Medium Term Notes may be denominated in U.S. Dollars, Euro, Sterling or
such other currency or currencies (including composite currencies) as the
Issuer and the relevant Medium Term Note Dealer may agree in accordance
with the Medium Term Note Dealer Agreement (the "Specified Currency")
subject to compliance with all applicable legal and/or regulatory and/or
central bank requirements and as specified in the relevant Final Terms.
Payments in respect of Medium Term Notes may, subject to compliance as
aforesaid, be made in and/or linked to, any currency or currencies, including
one or more currencies other than the currency in which such Medium Term
Notes are denominated, subject to Condition 10(e)(Payments).
Redenomination:
In respect of any Tranche of Medium Term Notes, if the country of the
Specified Denomination becomes, or announces its intention to become, a
Member State participating in the Euro currency ("Participating Member
State") the Medium Term Notes may be redenominated in Euro in
accordance with Condition 3(c) (Redenomination, renominalisation and
reconventioning) if so specified in the relevant Final Terms.
Interest:
The holder of a Medium Term Note will be entitled to interest on each
Interest Payment Date in an amount equal to the Interest Amount with respect
to such Medium Term Note.
Taxation:
All payments in respect of the Medium Term Notes will be made without
withholding or deduction for or on account of taxes imposed by Ireland
unless such deduction is required by Law. In the event that any such
deduction is made, the Issuer will, save in certain limited circumstances
provided in Condition 11 (Taxation), be required to pay additional amounts
to cover the amounts so deducted. Subject to certain conditions, in the event
that the Issuer becomes obliged to withhold or deduct or would suffer
additional taxation, the Issuer shall endeavour to arrange for a substitute
company incorporated in another jurisdiction to act as principal obligor or
change its domicile or residence for tax purposes to another jurisdiction. See
Condition 11 (Taxation), and "Taxation–Ireland Taxation". For a description
of certain other tax considerations in the United Kingdom, the European
Union and the United States, see "Taxation–United Kingdom Taxation", "–
EU Savings Tax Directive", "–United States Income Tax Considerations" and
"–German Taxation".
Listing:
This Information Memorandum has been approved by the Financial
Regulator, in its capacity as competent authority under the Prospectus
Directive and constitutes a base prospectus for the purposes of Article 5.4 of
the Prospectus Directive. Application will be made to the Irish Stock
Exchange for Medium Term Notes issued under the Medium Term Note
Programme during the period of twelve months from the date of this
Information Memorandum to be admitted to the Official List and traded on
the Market.
The relevant Final Terms relating to each issue will state whether or not the
Medium Term Notes are to be listed on the Irish Stock Exchange or any other
or additional stock exchange(s) (other than in the U.S.) or whether the
Medium Term Notes will be unlisted. Unlisted Medium Term Notes may also
be issued.
9122016.23 06095153
3
Governing Law:
The Medium Term Notes and the Term Note Agreements will be governed
by, and construed in accordance with, English Law.
REDEMPTION:
Redemption at the Maturity
Date:
Each Medium Term Note will become due and payable on the Maturity Date
relating to such Medium Term Note and shall be redeemed by the Issuer at
the Final Redemption Amount specified in the relevant Final Terms.
Other redemptions:
The Medium Term Notes unless previously redeemed, purchased and
cancelled cannot be redeemed prior to their Maturity Date (other than in
specified instalments (see below)) other than:
9122016.23 06095153
(a)
at the option of any Medium Term Noteholder in whole or in part at
the Put Option Redemption Amount together with interest accrued
thereon to the Put Option Date, if specified in the relevant Final
Terms (as described in Condition 9(b) (Redemption at the option of
the Medium Term Noteholders)),
(b)
at the option of the Issuer in whole or in part at their Issuer Call
Option Redemption Amount together with interest accrued to the
Issuer Call Option Date if specified in the relevant Final Terms (as
described in Condition 9(c) (Redemption at the option of the
Issuer)),
(c)
for so long as the Issuer is in a period of Restricted Funding or after
the occurrence of an Enforcement Event (but prior to the occurrence
of a Mandatory Acceleration Event) (as described in Condition 9(d)
(Restricted Funding or Enforcement Early Redemption)) at the
respective Outstanding Balances of the relevant Medium Term
Notes,
(d)
after a Mandatory Acceleration Event has occurred (as described in
Condition 9(e)(i) (Mandatory Acceleration Event Early
Redemption)) at the respective Outstanding Balances of the relevant
Medium Term Notes,
(e)
if a notice of redemption is given to the Holders of the Capital Notes
pursuant to Condition 9(h) of the Capital Notes (Redemption for
taxation reasons) (as described in Condition 9(e)(ii) (Redemption
relating to certain events under the Capital Notes)) at the respective
Outstanding Balances of the relevant Medium Term Notes,
(f)
at the option of the Issuer for taxation reasons (as described in
Condition 9(g) (Redemption for taxation reasons)) at the respective
Outstanding Balances of the relevant Medium Term Notes, and
(g)
at the option of the Issuer at the respective Outstanding Balances of
the relevant Medium Term Notes if such Medium Term Notes are
held by a person that is neither (A) a QIB that is also a QP meeting
the other requirements set forth herein, nor (B) a Non-U.S. Person
(each of (A) and (B), an "Approved Investor") and if such person
fails to sell or transfer such Medium Term Notes to a person that is
an Approved Investor within 30 days of being required to do so by
4
the Issuer (as described in Condition 9(h) (Regulatory Redemption)),
in each case upon the giving of not less than the relevant period of notice
(which shall be irrevocable) on the relevant date or dates specified and at the
relevant early redemption amount described in the relevant Final Terms or
the Conditions of the Medium Term Notes.
"Issuer Call Option Redemption Amount" means, in respect of any
Medium Term Note, its principal amount outstanding or such other amount
as may be specified in, or determined in accordance with, the relevant Final
Terms.
"Outstanding Balance" means, at any time of determination, (i) for any
Medium Term Notes other than Medium Term Notes issued at a discount, the
outstanding principal amount plus accrued and unpaid interest thereon at such
time, and (ii) for Medium Term Notes issued at a discount, the issue price of
such Medium Term Note plus accreted and unpaid discount and/or accrued
and unpaid interest.
"Put Option Redemption Amount" means, in respect of any Medium Term
Note, its principal amount outstanding or such other amount as may be
specified in, or determined in accordance with, the relevant Final Terms.
The Final Terms may provide that the Medium Term Notes may be repayable
in two or more instalments of such amounts and on such dates as are
indicated in the applicable Final Terms. See Condition 9(i) (Instalment
Medium Term Notes).
Required sale or redemption
upon occurrence of certain
circumstances:
The Issuer or, if applicable, the Issuers, shall be entitled to require any person
that is a holder of a Medium Term Note (or beneficial interest therein) that is
determined not to have been at the time of acquisition of such Medium Term
Note (or such beneficial interest therein) an Approved Investor to sell or
redeem such Medium Term Note (or such beneficial interest therein) in
accordance with the provisions set forth herein (see "Subscription and sale"
and Condition 9(h) (Regulatory Redemption)).
DISTRIBUTION CONSIDERATIONS:
Selling restrictions:
The Medium Term Notes have not been, and are not expected to be,
registered under the Securities Act, the securities Laws of any state of the
United States or the securities Laws of any other jurisdiction. Neither the
Issuer nor the Co-Issuer has registered nor does either the Issuer or the CoIssuer intend to register as an investment company under the Investment
Company Act, in the case of the Issuer, in reliance on the exception from
registration provided by Section 3(c)(7) thereunder.
The Medium Term Notes may be offered (i) outside the United States to
Non-U.S. Persons, and (ii) within the United States or to or for the account or
benefit of U.S. Persons in reliance on the exemption from registration under
the Securities Act pursuant to transactions meeting the requirements of Rule
144A. The Medium Term Notes may not be offered, sold or delivered within
the United States or to or for the account or benefit of any person that is a
U.S. Person unless, among other things, such person is both (1) a QIB and (2)
a QP, acting for its own account or the account of another QIB that is a QP,
9122016.23 06095153
5
and meets the other requirements set forth herein.
Interests in the Medium Term Notes may not be reoffered, resold, pledged or
otherwise transferred unless in transactions exempt from or not subject to the
registration requirements of, the Securities Act and any other applicable
securities Laws. By its purchase of a Medium Term Note (or beneficial
interest therein), such purchaser will be deemed to agree or, in the case of
registered definitive notes, will be required to certify in a Purchaser's Letter,
that it will only resell or otherwise transfer such Medium Term Note (or
beneficial interest therein) in accordance with the applicable restrictions set
forth therein. Any resale or other transfer of a Medium Term Note (or
beneficial interest therein) which is not made in compliance with the transfer
restrictions set forth therein shall be null and void ab initio and will not
honoured by the Issuer or Issuers, as the case may be.
Sales or transfers that would cause the Issuer or Co-Issuer to be required to
register as an investment company under the Investment Company Act will
be null and void ab initio, and will not be honoured by the Issuer or Issuers,
as the case may be. If, at any time, the holding or transfer of a Medium Term
Note (or beneficial interest therein) by, or to, or for the benefit of a U.S.
Person would cause the Issuer or Co-Issuer to be required to register as an
investment company under the Investment Company Act, the Issuer may
require any holder who holds any Medium Term Note (or beneficial interest
therein) in violation of the applicable transfer restrictions set forth herein to
sell such Medium Term Note (or beneficial interest therein) or may require
redemption thereof in accordance with the provisions set forth therein.
For a description of certain restrictions on offers, sales and deliveries of
Medium Term Notes and on the distribution of offering material in the
United States of America, the United Kingdom, Ireland, the European
Economic Area, Australia, Austria, Belgium, Canada, Denmark, France,
Germany, Greece, Hong Kong, Iceland, Israel, Italy, Japan, Korea, Kuwait,
Luxembourg, The Netherlands, New Zealand, Norway, The People's
Republic of China, Portugal, Qatar, Saudi Arabia, Singapore, South Africa,
Spain, Taiwan, and The United Arab Emirates, see "Important notice" and
"Subscription and sale".
Certain null and void transfers:
If any Medium Term Note is transferred to a person that is not an Approved
Investor, the transfer to such person shall be deemed null and void ab initio.
Distribution:
Medium Term Notes may be distributed (i) within the United States or to or
for the account or benefit of U.S. Persons in transactions that are exempt
from the registration requirements of the Securities Act pursuant to
transactions meeting the requirements of Rule 144A and in reliance by the
Issuer on the exception from registration under the Investment Company Act
pursuant to Section 3(c)(7) thereof, and (ii) outside the United States to NonU.S. Persons in reliance on Regulation S.
ERISA:
Employee benefit plans and accounts may generally purchase Medium Term
Notes subject to the considerations described in this Information
Memorandum. Before purchasing any Medium Term Notes, fiduciaries of
such plans should determine whether an investment in such notes is
appropriate for such plan and are urged to review carefully the matters
discussed in this Information Memorandum and to consult with their own
legal and financial advisors before making an investment decision. See
9122016.23 06095153
6
"Certain ERISA and other considerations".
SECURITY AND RATINGS:
Status of the Medium Term
Notes:
The Medium Term Notes will constitute direct, general and unsubordinated
limited recourse obligations of the Issuer or the Issuers, as the case may be,
secured in the manner described in the Security Trust Deed. and will rank
pari passu and without preference among themselves. See Condition 5
(Status of the Medium Term Notes) and "The Security and its enforcement".
The Security Trust Deed establishes the order of priority in which amounts
will be payable by the Issuer as set out in Clause 14.2 (Distribution from
Custody Accounts before enforcement) or 14.3 (Distribution from Custody
Accounts following enforcement) of the Security Trust Deed, as appropriate.
Security:
The Medium Term Notes have the benefit of security over all of the assets
and undertaking of the Issuer granted in favour of the Security Trustee
pursuant to the Security Documents. The Security Trustee holds the benefit
of the security on trust for itself, the Medium Term Noteholders and the other
Secured Creditors specified therein pursuant to the terms of the Security
Documents. The Issuer has created additional security interests in favour of
the Security Trustee for itself and the other Secured Creditors on the terms
set out in the Account Control Agreement. For more information on the
security and the circumstances in which it becomes enforceable, see "The
Security and its enforcement" and Condition 6 (Security).
Custody:
The Issuer has entered into a custody agreement (as amended or modified
from time to time, the "Custody Agreement") dated on or around the
Closing Date with The Bank of New York, London branch, as custodian (the
"Custodian"), pursuant to which the Custodian has undertaken to hold
certain investments on behalf of the Issuer on the terms set out therein. See
"The Security and its enforcement - Custody Arrangements".
Ratings:
The Medium Term Notes which are expected to be issued under the Medium
Term Note Programme on or about the Closing Date will receive the
following ratings upon issuance:
S&P
Fitch
Moody's
AAA
AAA
Aaa
The ratings of the Medium Term Note Programme address the ability of the
Issuer and the Co-Issuer, as applicable, to make payments due to the holders
of the Medium Term Notes in the event that the Issuer is in a period of
Restricted Funding. They do not address the probability of the Issuer being in
a period of Restricted Funding.
The ratings address the credit risk factors associated with the Medium Term
Notes issued under the Medium Term Note Programme. Other risks have not
been addressed but may have a significant effect on yield to investors.
Ratings are not a recommendation to buy or sell or hold a security.
An explanation of the significance of such credit ratings may be obtained
from the Rating Agencies furnishing the same. These ratings are subject to
9122016.23 06095153
7
revision or withdrawal at any time, and there is no assurance that they will
remain unchanged.
9122016.23 06095153
8
RISK FACTORS
An investment in the Medium Term Notes involves certain risks. There can be no assurance that the Issuer's
Investments will be successful, that its Investment Objectives will be achieved or that the Medium Term
Noteholders will receive the full amounts payable by the Issuer under the Medium Term Notes.
Each potential investor in the Medium Term Notes must determine the suitability of that investment in light of its
own circumstances. In particular, each potential investor should:
(a)
have sufficient knowledge and experience to make a meaningful evaluation of the Medium Term Notes, the
merits and risks of investing in the Medium Term Notes and the information contained in this Information
Memorandum or any Supplemental Information Memorandum;
(b)
have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular
financial situation, an investment in the Medium Term Notes and the impact the Medium Term Notes will
have on its overall investment portfolio;
(c)
have sufficient financial resources and liquidity to bear all of the risks of an investment in the Medium
Term Notes, including Medium Term Notes with principal or interest payable in one or more currencies, or
where the currency for principal or interest payments is different from the potential investor's currency;
(d)
understand thoroughly the terms of the Medium Term Notes; and
(e)
be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic,
interest rate and other factors that may affect its investment and its ability to bear the applicable risks.
Medium Term Notes are complex financial instruments. Sophisticated institutional investors generally do not
purchase complex financial instruments as stand-alone investments. They purchase complex financial instruments as
a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall
portfolios. A potential investor should not invest in Medium Term Notes unless it has the expertise (either alone or
with a financial adviser) to evaluate how the Medium Term Notes will perform under changing conditions, the
resulting effects on the value of the Medium Term Notes and the impact this investment will have on the potential
investor's overall investment portfolio.
The Issuers believe that the factors described below represent the principal risks inherent in investing in Medium
Term Notes issued under the Medium Term Note Programme, but the inability of the Issuer, or if applicable, the
Issuers, to pay interest, principal or other amounts on or in connection with any Medium Term Notes may occur for
other reasons and the Issuers do not represent that the statements below regarding the risks of holding any Medium
Term Notes are exhaustive. The risks described below are not the only risks the Issuers face. Additional risks and
uncertainties not presently known to the Issuers or that are currently believed to be immaterial could also have a
material impact on the Issuers' operations and prospects. Prospective investors should also read the detailed
information set out elsewhere in this Information Memorandum and reach their own views prior to making any
investment decision.
Noteholders will be exposed to the general risks of the Issuer's business as well as the risks of the Credit Portfolio.
The principal business risks are described below. These include credit risk, market risk, liquidity risk and
operational risk. In addition, returns to Medium Term Noteholders will be sensitive to any rating changes to the
Medium Term Notes and/or to Commercial Paper issued pursuant to the Commercial Paper Programme. Any such
rating changes could result from any one or all of the following risks materialising and could have a material adverse
effect on the ability of the Issuer to pay interest, principal or any other sums otherwise payable in respect of the
Medium Term Notes.
In addition, the Medium Term Notes are limited in recourse solely to the amounts payable under or in respect of the
Credit Portfolio. See "The Issuer's business – Restricted Funding Procedures" and "Limited recourse" below.
9122016.23 06095153
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Potential investors should also pay particular attention to the events that may lead to, and the consequences of, an
Enforcement Event, a Restricted Funding Event or a Restricted Investment Event. These events and the operating
restrictions and/or other requirements they trigger, may mitigate for Medium Term Noteholders certain risks relating
to the Issuers.
1)
Operational and business risks
The Issuer is a dynamic investment company which may raise funds and invest in assets in a wide variety of
different ways, see "The Issuer's business".
(a)
Credit risk
Medium Term Noteholders will be exposed to credit risk relating both to Investments purchased by the Issuer and to
Derivatives entered into with Derivative Counterparties. The Issuer intends to manage its credit risk relating to
Investments and Derivative Counterparties by complying with the Compliance Tests and Investment Purchase
Criteria described herein. See "The Issuer's business".
To the extent credit defaults occur, the value of the Credit Portfolio will be reduced, which may reduce amounts
available to pay Medium Term Noteholders in respect of interest on and principal of the Medium Term Notes. In
addition, credit defaults and credit rating downgrades of Investments and of Derivative Counterparties may
adversely affect the ability of the Issuer to comply with the Compliance Tests. A downgrade or withdrawal of a
rating by a Rating Agency of an Investment, or such Investment being on "watch" by any Rating Agency, is likely to
have an adverse effect on the market value of the Medium Term Notes, which effect could be material. Finally, a
credit default with respect to an Investment, or with respect to a Derivative, could trigger an Enforcement Event, a
Restricted Funding Event or a Restricted Investment Event, which could result in a loss to Medium Term
Noteholders.
(b)
Risks with Respect to Derivative Counterparties
Various laws enacted for the protection of creditors may apply to the counterparties with which the Issuer enters into
Derivative Transactions. The information in this paragraph is applicable with respect to counterparties that are U.S.
entities. There are different insolvency risks with respect to counterparties that are non-U.S. entities. If a court were
to find that a counterparty did not receive fair consideration or reasonably equivalent value for incurring the
indebtedness constituting the applicable transaction and, after giving effect to such indebtedness, such counterparty
(i) was insolvent, (ii) was engaged in a business of which the remaining assets of such counterparty constituted
unreasonably small capital or (iii) intended to incur, or believed that it would incur, debts beyond its ability to pay
such debts as they mature, such court could invalidate, in whole or in part, such indebtedness as a fraudulent
conveyance, subordinate such indebtedness to existing or future creditors of such counterparty or recover amounts
previously paid by such counterparty in satisfaction of such indebtedness. A court could also reject any attempt by
the Issuer to effect an early termination of the Derivative Transaction upon the counterparty's insolvency. The
measure of insolvency for purposes of the foregoing will vary. Generally, a counterparty would be considered
insolvent at a particular time if the sum of its debts was then greater than all of its property at a fair valuation or if
the present fair saleable value of its assets was then less than the amount that would be required to pay its probable
liabilities on its existing debts as they become absolute and matured. There can be no assurance, however, as to what
standard a court would apply in order to determine whether a counterparty was "insolvent" after giving effect to the
incurrence of the indebtedness constituting the applicable transactions or that, regardless of the method of valuation,
a court would not determine that such counterparty was "insolvent" upon giving effect to such incurrence. In
addition, in the event of the insolvency of a counterparty, payments made to the Issuer on an applicable transaction
could be subject to avoidance as a "preference" if made within a certain period of time (which may be as long as one
year under United States federal bankruptcy law or even longer under state laws) before insolvency. In general, if
payments on a Derivative Transaction are avoidable, whether as fraudulent conveyances or preferences, such
payments can be recaptured either from the initial recipient (such as the Issuer) or from subsequent transferees of
such payments (such as the holders of the Medium Term Notes). To the extent that any such payments are
recaptured from the Issuer, the resulting loss will be borne by the Medium Term Noteholders. The forms that will
generally be used by the Issuer as the basis for its documentation of Derivative Transactions will allow the close-out
and liquidation of such Investments upon the occurrence of certain insolvency events. In the event that a
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counterparty is subject to a bankruptcy or insolvency proceeding, it is likely that the remedies available to its
creditors, including the Issuer, will be limited in a variety of ways. Whilst the bankruptcy or insolvency laws
applicable to many counterparties have provisions designed to facilitate the close-out and liquidation of repurchase
transactions, there is no assurance that such provisions will be available with respect to each counterparty to the
Issuer. If such provisions are not available, then the exercise of rights by the Issuer with respect to Derivative
Transactions may be subject to delay, past payments and deliveries may be reversed and remedies of the Issuer may
be otherwise reduced.
(c)
Risk of Illiquidity of Derivative Transactions
The Derivative Transactions entered into by the Issuer may have no, or only a limited, trading market. The
agreements underlying a Derivative Transaction may restrict the Issuer's ability to terminate or assign such
Derivative Transaction.
(d)
Liquidity risk
Medium Term Noteholders are exposed to liquidity risks arising out of the funding by the Issuer of longer term
assets with short or medium term liabilities. These risks will be addressed by managing the maturity dates of the
Issuer's assets and liabilities in compliance with the Liquidity Tests in such a way as to maintain the then current
ratings of the Capital Notes and the Senior Notes and by arranging for Committed Liquidity and Liquidity Eligible
Investments to cover particular periods of net cumulative outflow concentrations. If the Issuer was unable to access
competitive financing for periods beyond those provided for by Committed Liquidity, a gradual (or, if a Mandatory
Acceleration Event was triggered, forced) wind-down of the Issuer could occur in order to meet the Issuer's
maturing senior liabilities. In such a case, Investments may need to be sold, any applicable Associated Derivatives,
Repo Agreements and Reverse Repo Agreements may need to be closed out and any losses on sales could result in
losses to the Medium Term Noteholders.
(e)
Counterparty risk
The Issuer faces counterparty risk as a result of entering into repo, security, lending, hedging, liquidity, credit
derivative and other derivative transactions. Default or non-performance of such counterparties may result in the
Issuer incurring losses, being unhedged or otherwise being exposed to increased funding and/or liquidity risk.
(f)
Concentration risk
The assets held by the Issuer are subject to concentration risk with respect to, among other things, obligors, regions,
industries and servicers.
(g)
Interest and currency risk
Since the Issuer may acquire Investments and borrow in a variety of currencies and interest rate benchmarks,
Medium Term Noteholders could be exposed to risks in fluctuations in interest and currency exchange rates,
including the risk that authorities with jurisdiction over a particular currency may impose or modify exchange
controls which may adversely affect a particular exchange rate. To hedge these risks, the Issuer will enter into
Associated Derivatives in accordance with procedures intended to reduce interest and currency exchange rate risk to
de minimis levels. See "The Issuer's business". However, there can be no assurance that such hedge agreements will
eliminate all such risks. Failure to follow these procedures could trigger an Enforcement Event or a Restricted
Funding Event, which could result in a loss to the Medium Term Noteholders.
(h)
Market risk
The Issuer faces market risk, which could lead to realised losses if it becomes a forced seller of assets in a declining
market environment or following ratings downgrades or credit losses in respect of its assets.
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Any increase or decrease in the market value of the Investments and Associated Derivatives, Repo Agreements and
Reverse Repo Agreements held by the Issuer affects the value of the Credit Portfolio and may, as a consequence,
affect the amount payable to Medium Term Noteholders in respect of interest and principal and other amounts,
particularly in circumstances where an Enforcement Event, a Restricted Funding Event or a Restricted Investment
Event has been triggered. The Issuer is required to mark to market its assets frequently for the purposes of
calculating certain capital ratios, but on some occasions such marks may not be available to the Issuer or marks
received by the Issuer may not be accurate or realizable. In addition, decreases in the market value of Investments
and Associated Derivatives, Repo Agreements and Reverse Repo Agreements held by the Issuer may result in sales
by the Issuer of such Investments and for the closing out of Associated Derivatives, Repo Agreements and Reverse
Repo Agreements at a loss in order to reduce the Issuer's continuing credit exposures and may adversely affect the
ability of the Issuer to comply with the Compliance Tests, which could in certain circumstances result in an
Enforcement Event, a Restricted Funding Event or a Restricted Investment Event, and could thus result in losses to
the Medium Term Noteholders. In addition, a portion of the assets which will be Acquired on the Closing Date
through the Forward Sale Agreement will be purchased at a price which may be higher or lower than the market
price at the time of purchase.
(i)
Management and operational risk
The ability of the Issuer to meet its business objectives and to manage its risks in such a way as to maintain the
required ratings on the Medium Term Notes is in part dependent upon the operational performance of the Manager
and the Administrator. The Manager is a recently formed company with limited prior operating history. Operating
issues resulting in failure to meet the Compliance Tests could have adverse effects on the Medium Term Notes, for
example by triggering an Enforcement Event, a Restricted Funding Event or a Restricted Investment Event.
(j)
Modelling risks
The Issuer will acquire Investments based on certain modelling assumptions. All models are imperfect and thus may
create operational risk and not fully address market risk. In addition, market fluctuations may be inconsistent with
such assumptions and result in losses which may affect the Issuer's ability to meet its obligations, including to pay
interest, principal or any other sums in respect of the Medium Term Notes. The Manager intends to obtain timely
quotations of prevailing market prices, but there can be no assurance that even the best available data will prove
reliable under adverse or volatile market conditions. There may be circumstances under which the available pricing
estimates do not reflect the actual prices at which the assets of the Issuer can be bought or sold.
Although the risks set out in paragraphs (a) through (j) above are subject to monitoring and control pursuant to the
various rules, tests and specific investment and funding criteria described in "The Issuer's business" section and set
out in the Management Agreement and the Operating Rules, potential investors should note that:
2)
(i)
the rules, tests and criteria may not address all of the risks inherent in the operation of the Issuer's
business;
(ii)
some of the rules, tests and criteria are subject to change at any time with Rating Confirmation;
and
(iii)
there may be other rules, tests and criteria which may be introduced or amended from time to time
subject to Rating Confirmation that are not disclosed, which could impact on, among other things,
the operating flexibility of the Issuer and/or any payments in respect of the Medium Term Notes.
Structured Finance Securities Risks
Up to 100% of the Investments in the Credit Portfolio may consist of Structured Finance Securities. "Structured
Finance Securities" are securities that entitle the holders thereof to receive payments that depend primarily on the
cash flow from or sale proceeds of a specified pool of financial assets or real estate mortgages, either static or
revolving, that by their terms convert into cash within a finite time period, together with rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders of such securities.
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Holders of Structured Finance Securities (which will include the Issuer in relation to the Investments acquired or
otherwise entered into by it) bear various risks, including credit risk, liquidity risk, interest rate risk, market risk,
operations risk, structural risk and legal risk.
Credit risk is an important issue in Structured Finance Securities because of the significant credit risks inherent in
the underlying collateral and because issuers are primarily private limited purpose entities. The structure of a
Structured Finance Security and the terms of the investors' interest in the collateral can vary widely depending on
the type of collateral, the desires of investors and the use of credit enhancements. Although the basic elements of
many Structured Finance Securities are similar, individual transactions can differ markedly in both structure and
execution. Important determinants of the risk associated with issuing or holding the securities include the process
by which principal and interest payments are allocated and distributed to investors, how credit losses affect the
issuing vehicle and the return to investors in such Structured Finance Securities, whether collateral represents a fixed
set of specific assets or accounts, whether the underlying collateral assets are revolving or closed-end, under what
terms (including maturity of the structured finance instrument) any remaining balance in the accounts may revert to
the entity that is the source of the collateral, the performance of the servicer in administering the assets of the issuing
vehicle and the extent to which the entity that is the actual source of the collateral assets is obliged to provide
support to the issuing vehicle or to the investors in such Structured Finance Securities.
Market risk, structural risk and interest rate risk arise from the cash flow characteristics of the security. The cash
flow is determined by credit performance, including the presence of early amortisation or acceleration features
designed to protect some classes of securities in the event that credit losses in the portfolio or the rate of
prepayments rise well above expected levels. Operations risk arises through the potential for misrepresentation of
loan quality or terms by the originating institution, misrepresentation of the nature and current value of the assets by
the servicer and inadequate controls over the disbursements and receipts by the servicer. Legal risk can arise as a
result of the procedures followed in connection with the origination of the mortgage loans or the servicing thereof.
Structural and legal risks of Structured Finance Securities include the possibility that, in a bankruptcy or similar
proceeding involving the originator or the servicer (often the same entity or affiliates), the assets of the issuer of a
Structured Finance Security could be treated as never having been sold by the originator (either as a result of a
temporary stay, or a permanent determination), could be substantively consolidated with the bankruptcy estate of the
originator or the transfer of such assets to such issuer could be voided as a fraudulent transfer or subject to similar
challenges and actions for voidance under the laws of any jurisdiction relevant to the Structured Finance Securities,
including the domicile of the issuer of the security, the originator or servicer of such security, or an obligor of assets
underlying such security. Challenges based on such doctrines could result also in cash flow delays and losses on the
related issue of Structured Finance Securities.
Concentrations of Structured Finance Securities of a particular type, as well as concentrations of Structured
Financed Securities issued or guaranteed by affiliated obligors or serviced by the same servicer, may subject the
Medium Term Notes to additional risk. The underlying collateral backing the Structured Finance Securities may
also be concentrated in certain states or specific geographic regions. As a result, such underlying collateral may be
more susceptible to geographic risks related to such states or regions, such as adverse economic conditions, adverse
events affecting industries located in such areas and natural hazards affecting such areas, than would be the case for
underlying collateral having more diverse property locations.
A portion of the Investments in the Credit Portfolio may be Structured Finance Securities that are subordinate in
right of payment and rank junior to the other securities that are secured by or represent an ownership interest in the
same pool of assets. In addition, many of the transactions have structural features that divert payments of interest
and/or principal to more senior classes when the delinquency or loss experience of the pool exceeds certain levels.
As a result, such securities have a higher risk of loss as a result of delinquencies or losses on the underlying assets.
Additionally, as a result of cash flow being diverted to payments of principal on more senior classes, the average life
of such securities may lengthen.
(a)
Risks relating to U.S. Residential Structured Finance Securities
A significant portion of the Investments in the Credit Portfolio may consist of residential mortgage securities and
structured finance home equity loan securities (each being "U.S. Residential Structured Finance Securities").
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U.S. Residential Structured Finance Securities are, generally, ownership or participation interests in a pool or pools
of mortgage loans secured by one-to-four family residential properties. U.S. Residential Structured Finance
Securities are subject to various risks. Credit risk arises from losses due to defaults by the borrowers in the
underlying mortgage loans. As with other Structured Finance Securities, U.S. Residential Structured Finance
Securities are susceptible to prepayment risks as they may not contain prepayment penalties and a reduction in
interest rates will increase the prepayments on the U.S. Residential Structured Finance Securities resulting in a
reduction in yield to maturity for holders of such securities.
The rate of interest payable on U.S. Residential Structured Finance Securities may be set or effectively capped at the
weighted average net coupon of the underlying mortgage loans themselves, often referred to as an "available funds
cap". As a result of this cap, the return to investors is dependent upon the relative timing and rate of delinquencies
and prepayments of mortgage loans bearing a higher rate of interest. In general, greater levels of prepayments
(presumably of the mortgage loans bearing a higher rate of interest) will have a correspondingly greater impact on
the yield to investors on such U.S. Residential Structured Finance Securities. U.S. Federal or state law may also
affect the return to investors by capping the interest rates payable by certain mortgagors (including hard caps and
lifetime caps). Many of the U.S. Residential Structured Finance Securities that the Issuer may purchase are subject
to such available funds caps or other caps on the interest rate payable to the holders of such securities (including the
Issuer) which may have an adverse effect on the Issuers' ability to pay interest on the Medium Term Notes.
However, the Manager is required to monitor and provide hedging to partially offset this risk using a methodology
whose adoption and changes are subject to Rating Confirmation in order to comply with the Market Sensitivity
Tests.
The Issuer's investments in mortgage-backed securities may also subject the Issuer to extension risk. Extension risk
is the possibility that rising interest rates may cause prepayments to occur at a slower than expected rate. This
particular risk effectively changes a security that was considered short-term or intermediate-term at the time of
purchase into a long-term security. Long-term securities generally fluctuate more widely in response to changes in
interest rates than short-term or intermediate-term securities.
Legal risks can arise as a result of the procedures followed in connection with the origination of the mortgage loans
or the servicing thereof which may be subject to various federal and state laws (including predatory lending laws),
public policies and principles of equity regulating interest rates and other charges, require certain disclosures,
require licencing of originators, prohibit discriminatory lending practices, regulate the use of consumer credit
information and debt collection practices and may limit the servicer's ability to collect all or part of the principal of
or interest on a residential mortgage loan, entitle the borrower to a refund of amounts previously paid by it or subject
the servicer to damages and sanctions.
Violations of consumer protection laws may result in losses on U.S. Residential Structured Finance Securities.
Applicable state laws in the United States generally regulate interest rates and other charges, require licencing of
originators and require specific disclosures. In addition, other state laws in the United States, public policy and
general principles of equity relating to the protection of consumers, unfair and deceptive practices and debt
collection practices may apply to the origination, servicing and collection of the loans backing U.S. Residential
Structured Finance Securities. Depending on the provisions of the applicable law and the specific facts and
circumstances involved, violations of these laws, policies and principles may limit the ability of the servicer of the
mortgage loans underlying a U.S. Residential Structured Finance Security to collect all or part of the principal of or
interest on the underlying loans, may entitle a borrower to a refund of amounts previously paid and, in addition,
could subject the owner of a mortgage loan to damages and administrative enforcement.
In addition, numerous federal and state statutory provisions, including the federal bankruptcy laws, the
Servicemembers Civil Relief Act and state debtor relief laws, may also adversely affect the ability of a servicer of
the mortgage loans underlying a U.S. Residential Structured Finance Security to collect the principal of or interest
on the loans, and holders of the affected U.S. Residential Structured Finance Securities may suffer a loss if the
applicable laws result in these loans becoming uncollectable.
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(b)
Risks relating to Nonprime and other Mortgage Backed Securities
Recent developments in the U.S. residential mortgage market, including the nonprime sector, could adversely affect
the performance and market value of various Investments in the Structured Finance Sector, which could adversely
affect the holders of the Medium Term Notes.
(i)
Risk related to Investments backed by residential mortgages
Recently, the residential mortgage market in the United States has experienced a variety of difficulties and changed
economic conditions that could adversely affect the performance and market value of various Investments. In
particular, issuers of certain Investments in the Structured Finance Sector are in the business of originating,
servicing and investing in mortgage loans and related activities. As a result of these developments, such issuers will
experience (or may continue to experience) credit, liquidity and other difficulties, which could affect the
Investments issued or guaranteed by them. If the market value of such investments decrease or such investments
default, this may cause a Restricted Investment Event, a Restricted Funding Event or an Enforcement Event to occur
and may result in losses to the holders of the Medium Term Notes to the extent that such Investments are included in
the Investment Portfolio.
Delinquencies, defaults and losses with respect to residential mortgage loans generally have increased in recent
months, and may continue to increase, particularly in the nonprime sector. The "nonprime" mortgage sector consists
of loan origination and servicing of mortgage loans (including second-lien and home equity lines) made to (i)
"subprime" borrowers that have poor or "impaired" credit histories, including, for example, prior bankruptcy of the
borrower and (ii) "Alt-A" borrowers that may have credit scores above subprime levels but below prime levels and
that borrow under mortgage loans with non-traditional features, such as negative amortisation. Nonprime mortgage
loans generally have higher interest rates than loans made to "prime" borrowers.
In addition, in recent months housing prices and appraisal values in many U.S. states have declined or stopped
appreciating, after extended periods of significant appreciation. A continued decline or an extended flattening of
those values may result in additional increases in delinquencies and losses on residential mortgage loans generally.
Another factor that may result in higher delinquency rates is the increase in monthly payments on adjustable rate
mortgage loans. Borrowers with adjustable rate mortgage loans are being exposed to increased monthly payments
when the related mortgage interest rate adjusts upward from the initial fixed rate or a low introductory rate, as
applicable, to the rate computed in accordance with the applicable index and margin. This increase in borrowers'
monthly payments, together with any increase in prevailing market interest rates, may result in significantly
increased monthly payments for borrowers with adjustable rate mortgage loans. This issue is exacerbated by a
rising interest rate environment.
Borrowers seeking to avoid these increased monthly payments by refinancing their mortgage loans may no longer be
able to find available replacement loans at comparably low interest rates. A decline in housing prices may also
leave borrowers with insufficient equity in their homes to permit them to refinance. In addition, many mortgage
loans have prepayment premiums that inhibit refinancing. Furthermore, borrowers who intend to sell their homes on
or before the expiration of the fixed rate periods on their mortgage loans may find that they cannot sell their
properties for an amount equal to or greater than the unpaid principal balance of their loans. These events, alone or
in combination, may contribute to higher delinquency and default rates.
Higher delinquency and default rates of nonprime residential mortgages and lower housing prices may result in
higher credit losses of the portfolios backing Structured Finance Investments. This may result in an inability of the
issuers of such Investments to pay principal and interest on the issued debt, downgrade of the rated debt of such
issue, or an event of default. Even though Structured Finance Investments are often designed with various forms of
credit enhancement which are in place to ensure that portfolio credit losses are borne by the non-rated or lowest
rated outstanding debt first, there can be no assurance that the market value or liquidity of Investments backed by
"non-prime" residential mortgage loans will not be adversely effected to an extent that will give rise to an adverse
effect on holders of the Medium Term Notes.
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In distressed circumstances in the residential mortgage market, the market value of Investments constituting
securities backed by a substantial exposure to the nonprime, and in particular subprime, U.S. residential mortgage
market may decrease and sale of such Investments by the Issuer (or by the Security Trustee in connection with the
exercise of remedies following the occurrence of an Enforcement Event) could be on a discounted or possibly
distressed basis and sales on such terms could result in losses to investors (through the Issuer) with respect to such
Investments. (See "Risk Factors – Operational and Business Risks – Liquidity Risks – Refinancing Risk – Market
Risk.")
(ii)
Risk related to issuers of Investments backed by residential mortgages
In addition, higher delinquencies and default rates may decrease the value of residential mortgage loans in the
mortgage market, forcing originators of subprime or adjustable mortgage loans to sell these loans at a greater
discount to par, resulting in decreased revenues or losses. Additionally, delinquencies and defaults may result in
increased repurchase obligations with respect to the sellers of these mortgage loans, diverting capital for that
purpose, and exposing the seller to 100% of the risk of loss on the loans upon repurchase. Even if the seller is not
required to repurchase a delinquent or defaulted loan, increased defaults and delinquencies may decrease the value
of, and cash flow from, any residual interests retained by sellers of mortgage loans in the securitisation market.
Moreover, servicing delinquent loans may result in higher costs for the servicer without a corresponding increase in
compensation. Finally, in certain securitisation transactions, if certain triggers are met with respect to loss and
delinquency numbers, the servicer may lose its rights to service the portfolio, which would result in decreased
servicing revenues and reputational damage as a servicer.
A rising interest rate environment may decrease the number of borrowers seeking to refinance their loans, thus
decreasing overall originations. Declining real estate values also have the result of reducing a borrower's equity in a
home and making new loan originations more difficult.
These factors, among others, may have the overall effect of increasing costs and expenses of these seller/servicers
while at the same time decreasing servicing cash flow and loan origination revenues. This will adversely affect their
ability to meet their existing financial obligations and obtain additional financing. In turn, this will increase their
cost of funds and of doing business generally. Each of the above developments may negatively affect the financial
position and business operations of certain sellers/servicers in the US residential mortgage market and therefore the
ability of the related issuers of Investments in the Structured Finance Sector to make payments on such Investments.
Numerous residential mortgage loan originators that originate nonprime, and in particular subprime, mortgage loans
have recently experienced serious financial difficulties, negative ratings actions and, in some cases, bankruptcy.
Those developments could affect other participants in the market as well as holders of securities of such originators.
These developments could in turn adversely affect the holders of the Medium Term Notes to the extent that such
Investments are included in the Investment Portfolio.
(c)
Risks relating to CMBS Securities
A portion of the Investments in the Credit Portfolio may consist of CMBS Securities. CMBS Securities represent
interests in (or are secured by) commercial mortgage loans. Consequently, CMBS Securities included in the Credit
Portfolio will be affected by payments, defaults and losses on the underlying commercial mortgage loans.
Commercial mortgage loans underlying CMBS Securities are generally secured by income-producing property, such
as a multi-family or commercial property and may entail risks of delinquency and foreclosure, and risks of loss in
the event thereof, which are greater than similar risks associated with loans made on the security of one-to-four
family residential property. The ability of a borrower to repay a loan secured by an income-producing property
typically is dependent primarily upon the successful operation of such property rather than upon the existence of
independent income or assets of the borrower. If the net operating income of the property is reduced (for example,
if rental or occupancy rates decline or real estate tax rates or other operating expenses increase), the borrower's
ability to repay the loan may be impaired. Net operating income of an income-producing property could be affected
by, among other things, tenant mix, success of tenant businesses, property management decisions (including
responding to changing market conditions, planning and implementing rental or pricing structures and causing
maintenance and capital improvements to be carried out in a timely fashion), property location and condition,
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competition from comparable types of properties, changes in laws which increase operating expense or limit rents
that may be charged, any need to address environmental contamination at the property and the occurrence of any
uninsured casualty at the property. In general, incremental risks of delinquency, foreclosure and loss with respect to
an underlying commercial mortgage loan pool may be greater than those associated with residential loan pools. In
part, this is caused by lack of diversity, larger loans and greater individual borrower and property concentrations.
Commercial mortgage loans are obligations of the borrower only and are not typically insured or guaranteed by any
other person or entity. Distributions on the CMBS Securities will depend solely upon the amount and timing of
payments and other collections on the related underlying commercial mortgage loans. The value of an incomeproducing property is directly related to the net operating income derived from such property. Furthermore, rates of
default and losses on commercial mortgage loans and the value of any commercial property may be adversely
affected by risks generally incident to interests in real property, including various events that the related borrower
and/or manager of the commercial property, the issuer, the depositor, the manager, the indenture trustee, the master
servicer or the special servicer may be unable to predict or control, such as changes in general or local economic
conditions and/or specific industry segments; declines in real estate values; declines in rental or occupancy rates,
increases in interest rates, real estate tax rates and other operating expenses; changes in governmental rules,
regulations and fiscal policies, including environmental legislation; acts of God; environmental hazards; and social
unrest, terrorism and civil disturbances. If a commercial mortgage loan is in default, foreclosure on such
commercial mortgage loan may be a lengthy and difficult process and involve significant expense. Furthermore, the
market for defaulted commercial mortgage loans or foreclosed properties may be very limited.
The rate of interest payable on CMBS Securities may be set or effectively capped at the weighted average net
coupon of the underlying mortgage loans themselves, often referred to as an "available funds cap". As a result of
this cap, the return to investors is dependent upon the relative timing and rate of delinquencies and prepayments of
mortgage loans bearing a higher rate of interest. In general, greater levels of prepayments (presumably of the
mortgage loans bearing a higher rate of interest) will have a correspondingly greater impact on the yield to investors
on such CMBS Securities. Federal or state law may also affect the return to investors by capping the interest rates
payable by certain mortgagors. Many of the CMBS Securities that the Issuer may purchase are subject to such
available funds caps and other caps on the interest rate payable to the holders of such securities (including the
Issuer) which may have an adverse effect on the Issuer's ability to pay interest on the Medium Term Notes.
Additional risks may be presented by the type and use of a particular commercial property. For instance,
commercial properties that operate as hospitals and nursing homes may present special risks to lenders due to the
significant governmental regulation of the ownership, operation, maintenance and financing of health care
institutions. Hotel and motel properties are often operated pursuant to franchise, management or operating
agreements that may be terminable by the franchisor or the operation; the transferability of a hotel's operating, liquor
and other licences upon a transfer of the hotel, whether through purchase or foreclosure, is subject to local law
requirements.
(d)
Risks relating to CDO Securities
A portion of the Investments in the Credit Portfolio may consist of CDO Securities. CDO Securities represent
interests in (or are secured by) securities that entitle the holders thereof to receive payments that depend primarily
(except for rights or other assets designed to assure the servicing or timely distribution of proceeds to holders of the
underlying securities) on the cash flow from or the credit exposure to a portfolio consisting of asset backed
securities, mortgage-backed securities, synthetic securities or any combination of the foregoing ("CDO
Collateral"). Consequently, CDO Securities included in the Credit Portfolio will be affected by payments, defaults
and losses on the underlying securities.
In addition, holders of CDO Securities must rely solely on distributions on the underlying CDO Collateral or
proceeds thereof for payment in respect thereof. If distributions on the underlying CDO Collateral are insufficient to
make payments on the CDO Securities, no other assets will be available for payment of the deficiency and following
realisation of the underlying assets, the obligations of the issuer to pay such deficiency shall be extinguished. Many
subordinate classes of CDO Securities provide that a deferral of interest thereon or a write-down does not constitute
an event of default and the holders of such securities will not have available to them any associated default
remedies. During such periods of non payment or partial non-payment, such non-paid interest will generally be
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capitalised and added to the outstanding principal balance of the related security. Any such deferral will reduce the
amount of current payments made on such CDO Securities.
3)
Operating states
(a)
Effect of operating states
In addition to compliance with the Compliance Tests the Issuer will operate in one of four operating states, namely
Normal Operations, Restricted Investment, Restricted Funding or the operating state arising as a result of the
occurrence of an Enforcement Event. See "The Issuer's business – Operating modes". During these operating states
the Issuer will be subject to different controls on its business activities, some of which may have an adverse effect
on the rights of, and payments to, the Medium Term Noteholders. The Issuer will be subject to the least onerous
restrictions on its activities during a period of Normal Operations and there will be various additional restrictions on
the activities of the Issuer during a period of Restricted Investment, Restricted Funding and the operating state
arising as a result of the occurrence of an Enforcement Event. In certain circumstances during a period of Restricted
Investment, the Issuer may be able to make payments on the Capital Notes and to other parties which would be
subordinated to the Medium Term Notes following the occurrence of an Enforcement Event. Following a Restricted
Funding Event or Enforcement Event but prior to a Mandatory Acceleration Event, payments in respect of the
Medium Term Notes shall not be accelerated. These operating states are more fully described in the section entitled
"The Issuer's Business" below, and potential investors are advised to read this section to understand these different
operating states.
(b)
Limited remedies upon an Enforcement Event
The occurrence of an Enforcement Event does not result in acceleration of any Medium Term Notes, except on the
occurrence of a Mandatory Acceleration Event with respect to the Issuer or Co-Issuer. Notwithstanding the
occurrence of an Enforcement Event or any other breach of the Issuer's obligations under the Transaction
Documents, no holder of a Medium Term Note (or a beneficial interest therein) shall have any right to institute any
proceeding, judicial or otherwise, with respect to the Medium Term Notes, or to the appointment of a receiver or
trustee, or to any other remedy thereunder, or be entitled to take any action against the Issuer (including without
prejudice to the foregoing, submitting a winding-up petition in respect of the Issuer) to enforce payment or
repayment under the Medium Term Notes until the Security Trustee, having been bound so to proceed on the
instructions of the requisite Senior Creditors, fails to do so within a reasonable time.
4)
Redemption risks
(a)
Risk of Redemption prior to maturity
Medium Term Notes may be redeemed prior to the Maturity Date if the circumstances and other conditions specified
in the relevant Final Terms relating to such Medium Term Notes, if any, are satisfied. Redemption may occur other
than at the option of the Medium Term Noteholder. The Medium Term Notes may also be subject to Issuer call
options.
(b)
Limitations on Redemption
In addition, in the circumstances where a redemption has been triggered by a Medium Term Noteholder in
accordance with a Put Option specified in the relevant Final Terms, such Medium Term Noteholder's Medium Term
Note may not be redeemed if inter alia, an Enforcement Event, a Restricted Funding Event, a Restricted Investment
Event has occurred and is continuing or would occur as a result of such redemption, unless all Medium Term Notes
are being redeemed in connection with an Enforcement Event.
5)
Ratings Limitations
The Medium Term Note Programme will be rated by one or more Rating Agencies. A rating is not a
recommendation to purchase, hold or sell securities. A rating does not comment as to market price or suitability for
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a particular investor and may be subject to revision or withdrawal at any time by the assigning rating organisation.
Multiple factors could affect the ratings of the Medium Term Notes. A downgrade or withdrawal of a rating by a
rating agency of an Investment, or such Investment being on "watch" by any rating agency, is likely to have an
adverse effect on the market value of the Medium Term Notes, which effect could be material.
The ongoing operations of the Issuer are highly dependent upon the credit ratings assigned by the Rating Agencies
to the USCP Programme, the ECP Programme and the Medium Term Note Programme. At their launch, the notes
issued under the USCP Programme, the ECP Programme and the Medium Term Note Programme are expected to
have Top Ratings. However, if any of S&P, Fitch or Moody's reduces the ratings on the Senior Notes to below the
Top Ratings, the Issuer's funding costs will likely increase and it may not be possible to refinance then outstanding
Senior Notes and its ability to make payments on the Medium Term Notes may be impaired.
Security ratings are subject to revision or withdrawal at any time by the assigning rating agency. In the event that
any rating initially assigned to a Medium Term Note is subsequently lowered for any reason, no person is obligated
to provide any additional support or credit enhancement with respect to such Medium Term Note, nor will any other
remedies be available to the holder of such Medium Term Note. The credit ratings of the Medium Term Notes
address the timely payment of interest and principal in respect of the Medium Term Notes.
6)
Risks related to Medium Term Notes issued at a substantial discount or premium
The market values of securities issued at a substantial discount or premium from their principal amount tend to
fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing
securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to
conventional interest-bearing securities with comparable maturities.
7)
Designated Collateral or other assets
As part of its funding or investment activities the Issuer may enter into credit derivative contracts, repurchase
agreements, committed repurchase agreements and/or securities lending agreements in respect of which either the
Issuer or the relevant counterparty may post specific assets as collateral or otherwise deliver assets to the other party
under the relevant contract or agreement. In such circumstances, any one, or combination, of the following may
apply:
(a)
any such assets will not be available to pay amounts due to any other Secured Creditors (including
the Medium Term Noteholders) in any circumstances;
(b)
any such assets will not be available to pay amounts due to any other Secured Creditors (including
the Medium Term Noteholders) until such contracts or agreements terminate;
(c)
the Issuer will have a contractual right to the repurchase or delivery of "equivalent" assets at a
future point, such equivalent assets being available to pay amounts due to any other Secured Creditors (including the
Medium Term Noteholders) upon such repurchase or delivery; or
(d)
the Issuer will have a contractual obligation to sell or deliver "equivalent" assets at a future point,
such "equivalent" assets not being available to pay amounts due to any other Secured Creditors (including the
Medium Term Noteholders) upon such sale or delivery,
in each case subject to any rights of set-off between the Issuer and the relevant counterparty (see "The Security
Trustee–Role of the Security Trustee" below).
8)
Risks related to the structure of a particular issuance of Medium Term Notes
A wide range of Medium Term Notes may be issued under the Medium Term Note Programme. A number of these
Medium Term Notes may have features which contain particular risks for potential investors. Set out below is a
description of the most common such features:
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(a)
Index Linked Notes and Dual Currency Notes
The Issuers may issue Medium Term Notes with principal or interest determined by reference to an index or
formula, to changes in the prices of securities or commodities, to movements in currency exchange rates or other
factors (each, a "Relevant Factor"). In addition, the Issuers may issue Medium Term Notes with principal or
interest payable in one or more currencies which may be different from the currency in which the Medium Term
Notes are denominated. Potential investors should be aware that:
(i)
the market price of such Medium Term Notes may be volatile;
(ii)
they may receive no interest;
(iii)
payment of principal or interest may occur at a different time or in a different currency than
expected;
(iv)
they may lose all or a substantial portion of their principal;
(v)
a Relevant Factor may be subject to significant fluctuations that may not correlate with changes in
interest rates, currencies or other indices;
(vi)
if a Relevant Factor is applied to Medium Term Notes in conjunction with a multiplier greater
than one or contains some other leverage factor, the effect of changes in the Relevant Factor on
principal or interest payable likely will be magnified; and
(vii)
the timing of changes in a Relevant Factor may affect the actual yield to investors, even if the
average level is consistent with their expectations. In general, the earlier the change in the
Relevant Factor, the greater the effect on yield.
(b)
Partly-paid Notes
The Issuer may issue Medium Term Notes where the issue price is payable in more than one instalment. Failure to
pay any subsequent instalment could result in an investor losing all of his investment.
(c)
Variable Rate Notes with a multiplier or other leverage factor
Medium Term Notes with variable interest rates can be volatile investments. If they are structured to include
multipliers or other leverage factors, or caps or floors, or any combination of those features or other similar related
features, their market values may be even more volatile than those for securities that do not include those features.
(d)
Inverse Floating Rate Notes
Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon a reference rate such
as LIBOR. The market values of those Medium Term Notes typically are more volatile than market values of other
conventional floating rate debt securities based on the same reference rate (and with otherwise comparable terms).
Inverse Floating Rate Notes are more volatile because an increase in the reference rate not only decreases the
interest rate of the Medium Term Notes, but may also reflect an increase in prevailing interest rates, which further
adversely affects the market value of these Medium Term Notes.
(e)
Fixed/Floating Rate Notes
Fixed/Floating Rate Notes may bear interest at a rate that the Issuer may elect to convert from a fixed rate to a
floating rate, or from a floating rate to a fixed rate. The Issuer's ability to convert the interest rate will affect the
secondary market and the market value of the Medium Term Notes since the Issuer may be expected to convert the
rate when it is likely to produce a lower overall cost of borrowing. If the Issuer converts from a fixed rate to a
floating rate, the spread on the Fixed/Floating Rate Notes may be less favourable than then prevailing spreads on
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comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate at any time may be
lower than the rates on its other Floating Rate Notes. If the Issuer converts from a floating rate to a fixed rate, the
fixed rate may be lower than then prevailing rates on its other Floating Rate Notes.
9)
Voting
(a)
Dilution and effect of additional issuance of Medium Term Notes on voting
Subject to satisfaction of the conditions that 1) each additional issuance of Medium Term Notes will not exceed the
Medium Term Note Maximum Amount; 2) as a result of such issuance, the Top Rating of any Senior Note then
outstanding would not be reduced or withdrawn without the approval of all of the holders of such affected Senior
Notes; 3) after giving effect to such issuance, no Restricted Funding Event or Restricted Investment Event would
have occurred; 4) no Enforcement Event has occurred or after giving effect to such issuance would have occurred;
and 5) such issuance would not be in breach of any of the Restricted Investment Procedures or Restricted Funding
Procedures, the Issuer and, if applicable, the Co-Issuer may, without the consent of any holders of Medium Term
Notes, issue additional Tranches of existing Series or Series of Medium Term Notes from time to time. Such
additional Medium Term Notes may have maturity dates, interest rates and other terms that are different from, and
potentially adverse to the holders of, the other Medium Term Notes then outstanding. If any holder of Medium Term
Notes does not purchase a proportionate amount of additional Medium Term Notes so issued, after the issuance of
such additional Medium Term Notes such holder's relative voting power and proportionate share of distributions
made by the Issuers to holders of the Medium Term Notes will decrease, and may decrease disproportionately
relative to the voting power and shares of distributions of other holders of Medium Term Notes. See Condition 18
(Further issues).
(b)
Timing considerations related to voting
In the circumstances where Condition 17 (Meetings of Medium Term Noteholders; modification and waiver) apply,
calling a meeting and obtaining the agreement or consent of holders of Medium Term Notes in respect of any
question or course of action may take a substantial period of time. During such time, any adverse event or condition
that has precipitated the need for holders of Medium Term Notes to vote, may be compounded and could result in
delays and losses to holders of Medium Term Notes.
(c)
Modification
The Conditions of the Medium Term Notes contain provisions for convening meetings of Medium Term
Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to
bind all Medium Term Noteholders including Medium Term Noteholders who did not attend and vote at the relevant
meeting and Medium Term Noteholders who voted in a manner contrary to the majority.
10)
Limited recourse
The Medium Term Notes are limited in recourse solely to the amounts payable under or in respect of the Credit
Portfolio. As a result, such Medium Term Noteholders must rely solely on amounts payable under or in respect of
the Credit Portfolio as the source for the payment of principal and interest on such Notes. If distributions in respect
of the Credit Portfolio are insufficient to make payments on the Medium Term Notes, no other assets will be
available for payment of the deficiency and, following the realisation of the Credit Portfolio, the obligation of the
Issuers to pay any such deficiency will be extinguished. See "The Issuer's business". Each Medium Term Noteholder
will be deemed to have covenanted and agreed that, prior to the date which is two years and one day after all sums
outstanding and owing by the Issuers (whether contingently or otherwise) in respect of all Secured Obligations have
been paid or discharged in full, it will not take, or join in, any corporate or limited liability company action or other
steps or legal proceedings for the winding up, examinership, dissolution or re-organisation of the Issuers or for the
appointment of a receiver, administrator, administrative receiver, trustee, liquidator, examiner, sequestrator or
similar officer of the Issuers or of any or all of the Issuer's revenues and assets or any analogous proceedings in any
jurisdiction.
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The Medium Term Notes do not represent obligations of, nor are they insured or guaranteed by, the Manager, the
Administrator, the Senior Note Dealers, any Capital Note Dealer, the Paying Agents, the Security Trustee, the
Liquidity Providers, the Derivative Counterparties, the Transfer Agent, the Custodian, the Calculation Agent,
Citigroup Global Markets Limited, Citigroup Global Markets Inc., Goldman Sachs International, Goldman, Sachs &
Co., Morgan Stanley & Co. International plc, Morgan Stanley & Co. Incorporated or any of their respective owners,
beneficiaries, agents, officers, directors, employees, affiliates, successors or assigns. None of the Manager, the
Administrator, the Capital Note Dealers, the ECP Dealers, the USCP Placement Agents, any Medium Term Note
Dealer, any Paying Agent, the Security Trustee, any Liquidity Provider, any Derivative Counterparty, the Transfer
Agent, the Custodian, the Calculation Agent, Citigroup Global Markets Limited, Citigroup Global Markets Inc.,
Goldman Sachs International, Goldman, Sachs & Co., Morgan Stanley & Co. International plc, Morgan Stanley &
Co. Incorporated or any of their respective owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns, will be obliged to make payments in respect of the Medium Term Notes.
11)
Conflicts of interest
Various potential and actual conflicts of interest may arise from the overall activities of the Manager, its Affiliates
and certain funds managed by the Manager or its affiliates. Without prejudice to the generality of the foregoing, the
Manager, its Affiliates, certain funds managed by the Manager and their respective directors, officers, partners,
employees and agents may, among other things:
(a)
serve as directors, partners, officers, employees, agents, nominees or signatories for, any obligor in
respect of any Investment and or any reference entity under any contract relating to any
Investment Derivative (each such obligor or reference entity being referred to herein as a
"Relevant Entity");
(b)
receive fees for services rendered to any Relevant Entity;
(c)
be a secured or unsecured creditor of, or hold an equity interest in, any Relevant Entity;
(d)
invest for its own account in any Relevant Entity, and may do so in each case without regard to the
interests of any Secured Creditors (including the Medium Term Noteholders) and shall have no
liability therefor; or
(e)
invest for its own account in any Medium Term Notes, which it may choose to hold or to sell to
the Issuer or any third party on an arm's-length basis. Such party may do so in each case without
regard to the interests of any Secured Creditors (including the Medium Term Noteholders) and
shall have no liability therefor. Further, any purchase of Medium Term Notes by the Issuer from
such party may be financed by amounts received from Secured Creditors (including the Medium
Term Noteholders) or future investors. IKB CAM, London branch as Manager to the Issuer will be
required to consider any such purchase or repurchases requests from its Affiliates with due
consideration of its duties to the Issuer.
The Manager, IKB AG and any of their respective Affiliates may engage in any other business and furnish
investment management, advisory and administrative services to other clients who may include Relevant Entities or
other entities engaged in activities which are similar to those of the Issuer. In providing services to other clients, the
Manager, IKB AG and any of their respective Affiliates may recommend activities that would compete with, or
otherwise adversely affect, the Issuer or the Medium Term Noteholders. In connection with the foregoing activities,
the Manager, IKB AG and any of their respective Affiliates may from time to time come into possession of
information that limits the ability of the Manager or IKB AG to make an investment, and the Issuer's investments
may be constrained as a consequence of the inability of the Manager, IKB AG or any of their respective Affiliates to
use such information for management or advisory purposes or otherwise to take actions that would be in the best
interests of the Issuer. None of the Manager, IKB AG or any of their respective Affiliates shall be liable for any such
conflicts of interests and shall not be liable to account for any profit.
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Citigroup Global Markets Limited, Citigroup Global Markets Inc., Goldman Sachs International, Goldman, Sachs &
Co., Morgan Stanley & Co. International plc, Morgan Stanley & Co. Incorporated and their respective Affiliates are
full service securities firms engaged in, among other things, securities trading and brokerage activities, as well as
providing investment banking, investment management, administrative and financial advisory services.
Notwithstanding that at any time any of Citigroup Global Markets Limited, Citigroup Global Markets Inc., Goldman
Sachs International, Goldman, Sachs & Co., Morgan Stanley & Co. International plc, Morgan Stanley & Co.
Incorporated and their respective Affiliates may assume one or more of various roles with respect to the Notes as,
among other things, a Derivative Counterparty, a Liquidity Provider, a USCP Placement Agent, a Euro Medium
Term Note Dealer, a U.S. Medium Term Note Dealer, an ECP Dealer, and/or a Capital Note Dealer, in the ordinary
course of their respective businesses Citigroup Global Markets Limited, Citigroup Global Markets Inc., Goldman
Sachs International, Goldman, Sachs & Co., Morgan Stanley & Co. International plc, Morgan Stanley & Co.
Incorporated and their respective Affiliates may have positions in, and may effect transactions in, securities and
instruments of the Issuer, the Co-Issuer, the Manager, IKB AG and any of their respective Affiliates and may also
perform or seek to perform investment banking, investment management, administrative and/or financial advisory
services for such parties (including acting as counterparty in certain derivative contracts with the Issuer) or for other
parties engaged in activities similar to those of the above-mentioned parties. None of Citigroup Global Markets
Limited, Citigroup Global Markets Inc., Goldman Sachs International, Goldman, Sachs & Co., Morgan Stanley &
Co. International plc, Morgan Stanley & Co. Incorporated, or any of its or their respective Affiliates shall be liable
for any such conflicts of interest and shall not be liable to account for any profit derived therefrom.
12)
The Issuers
The Issuers are both recently formed companies with no significant prior operating history. The Issuer will have no
significant assets other than the Credit Portfolio. The Issuers will not engage in any business activity other than the
issuance of Senior Notes and Capital Notes from time to time, and in the case of the Issuer, Acquiring Investments
and entering into Associated Derivatives, and certain other activities incidental to the foregoing. Income derived
from the Credit Portfolio and the proceeds of the Notes will be the Issuer's principal source of cash. The Co-Issuer
will have no assets other than nominal capital of €100 held in cash or in a demand deposit account and its rights
under the Transaction Documents to which it is a party, and will have no debt other than as Co-Issuer of the coissued Notes. The Co-Issuer will not hold any Investments. The Co-Issuer will not receive any part of the proceeds
of any of the offerings. The Co-Issuer has agreed to co-issue Notes with the Issuer whenever requested by the Issuer
as an accommodation for the benefit of the Issuer, and is receiving no payment for such co-issuance, but the Issuer
has agreed to indemnify the Co-Issuer for any liabilities in connection with its co-issuance of Notes.
The Issuer is a public limited company incorporated under the Laws of Ireland. Because the Issuer is an Irish
company and its directors reside in Ireland, it may not be possible for investors to effect service of process in any
other jurisdiction on such persons or to enforce against them or against the Issuer in courts in any other jurisdiction
judgments predicated upon the civil liability provisions of the United States and other securities Laws. None of the
directors, security holders, members, officers or incorporators of the Issuer, any of its affiliates (other than the
Issuer, and as applicable, the Co-Issuer) or any other person will be obligated to make payments on the Notes.
13)
Certain legal investment considerations
None of the Issuer, the Co-Issuer, the Manager or the Administrator makes any representation as to the proper
characterisation of the Medium Term Notes to be issued under the Medium Term Note Programme for legal
investment or other purposes, or as to the ability of particular investors to purchase Medium Term Notes for legal
investment or other purposes or as to the ability of particular investors to purchase Medium Term Notes under
applicable investment restrictions. All institutions the activities of which are subject to legal investment Laws and
regulations, regulatory capital requirements or review by regulatory authorities should consult their own legal
advisors in determining whether and to what extent the Medium Term Notes to be issued under the Medium Term
Note Programme are subject to investment, capital or other restrictions. Without limiting the generality of the
foregoing, none of the Issuer, the Co-Issuer, the Manager or the Administrator makes any representation as to the
characterisation of the Medium Term Notes as a U.S.-domestic or foreign (non-U.S.) investment under any state
insurance code or related regulations, and they are not aware of any published precedent that addresses such
characterisation. Although they are not making any such representation, the Co-Issuer understands that the New
York State Insurance Department, in response to a request for guidance, has considered the characterisation (as
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U.S.-domestic or foreign (non-U.S.)) of certain collateralised debt obligation securities co-issued by a non-U.S.
issuer and a U.S. co-issuer. There can be no assurance as to the nature of any advice or other action that may result
from such consideration. The uncertainties described above (and any unfavourable future determinations)
concerning legal investment or financial institution regulatory characteristics of the Medium Term Notes may affect
the liquidity of the Medium Term Notes to be issued under the Medium Term Note Programme.
(a)
Limited secondary market for Medium Term Notes
The Medium Term Notes have not been registered under the Securities Act, or under any U.S. state securities or
"blue sky" Laws or the securities Laws of any other jurisdiction, and are being issued and sold in reliance upon
exemptions from registration provided by such Laws. There is no market for the Medium Term Notes being offered
pursuant to the Medium Term Note Programme and, as a result, a purchaser must be prepared to hold the Medium
Term Notes for an indefinite period of time or until the maturity thereof. No Medium Term Note may be sold or
transferred unless such sale or transfer (i) is exempt from the registration requirements of the Securities Act (for
example, in reliance on exemptions provided by Rule 144A or Regulation S under the Securities Act) and applicable
U.S. state securities Laws, (ii) is in compliance with the transfer restrictions set forth herein, and (iii) does not cause
either Issuer or the Credit Portfolio to become subject to the registration requirements of the Investment Company
Act.
The Issuers will not provide registration rights to any purchaser of the Medium Term Notes. The Medium Term
Notes will be owned by a relatively small number of investors and it is highly unlikely that an active secondary
market for the Medium Term Notes will develop. Purchasers of the Medium Term Notes may find it difficult or
uneconomic to realise their investment at any particular time.
Medium Term Notes will be new securities that may not be widely distributed and for which there is currently no
active trading market (unless in the case of any particular Tranche, such Tranche is to be consolidated with and form
a single Series with a Tranche of Medium Term Notes which is already issued). If the Medium Term Notes are
traded after their initial issuance, they may trade at a discount to their initial offering price, depending upon
prevailing interest rates, the market for similar securities, general economic conditions and the financial condition of
the Issuers. This is particularly the case for Medium Term Notes that are especially sensitive to interest rate,
currency or market risks, are designed for specific investment objectives or strategies or have been structured to
meet the investment requirements of limited categories of investors. These types of Medium Term Notes generally
would have a more limited secondary market and more price volatility than conventional debt securities. Although
application has been made to the Financial Regulator for the Medium Term Notes within 12 months of the date of
this Information Memorandum to be admitted to trading on the Irish Stock Exchange's regulated market and to be
listed on the Irish Stock Exchange, there is no assurance that such applications will be accepted, that any particular
Tranche of Medium Term Notes will be so admitted or that an active trading market will develop. Accordingly,
there is no assurance as to the development or liquidity of any trading market for any particular Tranche of Medium
Term Notes. There is no obligation of the Issuer, the Manager, the Administrator, any Medium Term Note Dealer, or
any of their respective affiliates, successors and assigns, to make a market in the Medium Term Notes.
(b)
Restrictions on Transfer
Neither the Issuer nor the Co-Issuer has registered as an investment company under the Investment Company Act, in
the case of the Issuer, in reliance on the exception provided under Section 3(c)(7) thereof for companies whose
outstanding securities (other than securities sold outside the United States to Non-U.S. Persons) are beneficially
owned by "Qualified Purchasers" (as defined in Section 2(a)(51)(A) of the Investment Company Act and the rules
and regulations thereunder) and which do not make a public offering of its securities in the United States. While
counsel will opine in connection with the initial sale of Medium Term Notes that neither the Issuer nor the Co-Issuer
is on such date required to register as an investment company (assuming the Medium Term Notes are sold in
accordance with the terms of the Medium Term Note Dealer Agreement), no opinion or no-action position has been
requested of the United States Securities and Exchange Commission (the "SEC"). If the SEC or a court of
competent jurisdiction were to find that the Issuer or the Co-Issuer is required to register as an investment company,
possible consequences include, but are not limited to, the SEC applying to enjoin the violation, investors suing the
Issuer or the Co-Issuer, as applicable, to recover any damages caused by the violation and any contract to which the
Issuer or the Co-Issuer is a party made in violation or whose performance involves a violation of the Investment
9122016.23 06095153
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Company Act being unenforceable unless enforcing such contract would produce a more equitable result. Should the
Issuer or the Co-Issuer be subjected to any or all of the foregoing or to any other consequences, the Issuer or the CoIssuer, as applicable, would be materially and adversely affected.
Each transferee of a Medium Term Note (other than transferees of Medium Term Notes sold outside the United
States to a Non-U.S. Person in reliance on Regulation S) will be deemed to make certain representations at the time
of transfer relating to compliance with Section 3(c)(7) of the Investment Company Act. See "Subscription and sale
– United States of America – Initial offers and sales of Medium Term Notes".
Any purported sale or transfer of a Medium Term Note (or beneficial interest therein) which is not made in
compliance with the restrictions set forth herein shall be null and void, ab initio. If, notwithstanding the restrictions
on transfer contained therein, the Issuer determines any beneficial owner or holder of a Medium Term Note (other
than a Medium Term Note transferred in an offshore transaction in reliance on Regulation S of the Securities Act to
a Non-U.S. Person) is not a QIB and a QP meeting the other requirements set forth herein, the Issuers will require
that such beneficial owner or holder present its Note for redemption by the Issuers or sell all of its right, title and
interest in such Note (or beneficial interest therein) to a person who is so qualified, with such sale to be effected
within 30 days after notice of such sale requirement is given. If such sale is not effected within such 30 days, the
Issuers (or an investment bank selected by the Issuers) will be authorised to conduct a commercially reasonable sale
of such Medium Term Note to a person who does so qualify and, pending such sale, no further payments will be
made in respect of such Medium Term Note or any beneficial interest therein. See "Subscription and sale – United
States of America – Representations and restrictions on purchasers and transferees".
The Issuer may also, at its option, redeem any Medium Term Notes of any person who at the time of acquisition was
not an Approved Investor. See Condition 9(h) (Regulatory Redemption).
(c)
Taxation
Special tax considerations may apply to certain types of taxpayers. Prospective investors should consult their own
tax advisers to determine any tax implications of investing. Tax Laws may change and, as a result, the ability of the
Issuer to make payments on the Medium Term Notes may be affected.
The Issuer expects that payments received on the Investments generally either will not be subject to withholding
taxes imposed by the United States or reduced by withholding taxes imposed by other countries from which such
payments are sourced or if they are so subject the withheld tax will be grossed-up by the Investment's obligor.
Payments on the Investments, however, might become subject to the United States or other withholding tax due to a
change in Law or other causes, without any corresponding obligor gross-up obligation. The imposition of
withholding taxes that are not grossed up could materially impair the Issuer's ability to pay principal of, interest on,
and other amounts owing in respect of, the Medium Term Notes.
Holders of Medium Term Notes should be aware that if withholding or deduction for or on account of any present or
future taxes or duties is required by Law with respect to payments of principal and interest on any Senior Notes, the
Issuer will, with certain exceptions, be required to pay additional amounts so that the net amounts received by the
holders of such Senior Notes after such withholding or deduction equals the amounts of principal and interest that
would otherwise have been receivable in respect of such Senior Notes in the absence of such withholding or
deduction. In such circumstances the Issuer or the Co-Issuer, as applicable, may elect to redeem the relevant Senior
Notes. Such withholding or deduction could arise in limited circumstances, including (a) a change of tax Law and
(b) if the Medium Term Notes are not or cease to be listed on a recognised stock exchange or, alternatively, in the
case of Commercial Paper, if such Commercial Paper has a maturity of 365 days or more.
A non-U.S. corporation which is engaged in a United States trade or business is subject to United States federal
income tax (and generally United States branch profits tax) on its income which is effectively connected with such
trade or business. The Issuer does not expect to be subject to such tax because compliance with certain provisions of
the Management Agreement and related certifications is intended to prevent the Issuer from being engaged in a
United States trade or business for this purpose. However, it is not certain that no such tax will apply or that the IRS
would not take a contrary position. For example, the Issuer may own indebtedness secured by U.S. real estate and
could acquire such real estate in a foreclosure of the indebtedness. If the real estate was sold at a gain to the Issuer,
9122016.23 06095153
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such gain would be subject to U.S. tax. If the IRS were to successfully contend that the Issuer is engaged in a U.S.
trade or business, the Issuer would likely be subject to U.S. income tax and branch profits tax on its net income, and
repayment of the Notes would be adversely affected. Prior to the issuance of the Notes, the Issuer will receive an
opinion from Federal Tax counsel, to the effect that, although no activity closely comparable to that contemplated by
the Issuer has been the subject of any Treasury regulation, revenue ruling or judicial decision, and, although the
matter is not free from doubt, the activities that the Issuer may conduct in the United States pursuant to the
transaction documents are best viewed as transactions in securities as an investor or trader for its own account within
the meaning of Section 864(b)(2) of the Code. As such, because a non-U.S. corporation's transactions in securities
as an investor or trader for its own account are not under such Code section treated as activities constituting the
conduct of a trade or business, Federal Tax Counsel is expected to conclude that, although the matter is not free
from doubt, the Issuer will not on account of such activities be treated for U.S. federal income tax purposes as
engaged in the conduct of a trade or business in the United States. Consequently, the Issuer's profits will not be
subject to United States federal income tax on a net income basis (including the branch profits tax). Please refer to
the section of this Information Memorandum entitled "TAXATION – United States Income Tax considerations – U.S.
Tax treatment of the Issuer and Co-Issuer", including the material under "TAXATION – United States Income Tax
considerations – General – NOTICE PURSUANT TO IRS CIRCULAR 230", for further discussion of this matter.
(d)
Special considerations regarding matters of Irish Law
(i)
Preferred creditors under Irish Law and floating charges
The Irish courts could interpret the charges purported to be created pursuant to the Security Trust Deed as floating
charges for the purposes of Irish law.
Under Irish law, floating charges have a number of weaknesses including ranking after (a) certain preferential
creditors, (b) the expenses of a liquidator or examiner and (c) fixed charges. They also have weak priority against
purchasers (who are not on notice of any negative pledge) and charges over the assets concerned and against lien
holders, execution creditors and creditors with rights of set off. See "Examinership under Irish Law".
The Revenue Commissioners may also attach any debt due to a person who is liable to Irish tax (such as the Issuer)
by another person in order to discharge any liabilities of that person 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 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 person who is liable to Irish tax 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.
(ii)
Examinership under Irish Law
The Irish Companies (Amendment) Act 1990, as amended, prohibits certain steps being taken except with the leave
of the court against a company after the presentation of a petition for the appointment of an examiner. This
prohibition continues, if an examiner is appointed, for so long as the examiner remains appointed. Prohibited steps
include steps taken to enforce any guarantees or security, the commencement or continuation of proceedings or
execution or other legal process or the levying of distress against the company or its property and the appointment of
a receiver. The primary risks to the holders of Medium Term Notes if an examiner were to be appointed to the Issuer
are: (a) the potential for a scheme of arrangement being approved involving the writing down of the debt due by the
Issuer to the Medium Term Noteholders as secured by the Security Trust Deed; (b) the potential for the examiner to
seek to set aside any negative pledge in the Medium Term Notes or other 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 the Issuer subsequently goes into liquidation, the examiner's remuneration
and expenses (including certain borrowings incurred by the examiner on behalf of the Issuer) will take priority over
the Secured Obligations.
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(e)
Special considerations regarding matters of German Law
Although the Issuer is not domiciled in Germany, there is a risk that it may become subject to German corporate
income tax and trade tax. This is because the Issuer has appointed the Manager (the London branch of IKB Credit
Asset Management GmbH, a company organised under the Laws of Germany) for the purposes of purchasing and
managing its Investments in accordance with the Investment Objectives described in the section "The Issuer's
Business – Investment objectives" and complying with certain obligations and operating procedures set out in the
Management Agreement described under the section "Description of the Management Agreement". Although the
Manager will primarily carry out its activities through its London branch, certain limited activities might be carried
out by personnel located in its German offices. Although it is rather unlikely, it cannot be excluded that the German
tax authorities could conclude that the place of effective management of the Issuer is in Germany. This could
constitute a permanent establishment of the Issuer in Germany for corporate income tax and trade tax purposes.
Accordingly, both the Medium Term Notes and the Investments could be allocated to such permanent establishment
and any income derived from the Investments would be subject to both German corporate income tax and trade tax
at an effective rate of approximately 38 per cent. Interest paid under the Medium Term Notes are tax-deductible
business expenses; however, only half of the interest would be deductible for trade tax purposes. Additionally,
please refer to the section "Taxation – German Taxation" for a description of the risks associated with the
application of the German Investment Tax Act.
(f)
EU Savings Tax Directive
Under EC Council Directive 2003/48/EC on the taxation of savings income, each Member State is required to
provide to the tax authorities of another member state details of payments of interest or other similar income paid by
a person within its jurisdiction to, or collected by such a person for, an individual resident in that other member
state. However, Austria, Belgium and Luxembourg are required instead to apply a withholding system for a
transitional period in relation to such payments, deducting tax at rates rising over time to 35%. The transitional
period terminates at the end of the first full fiscal year following agreement by certain non-EU countries to the
exchange of information relating to such payments. A number of non-EU countries and territories, including
Switzerland, have agreed to adopt similar measures (a withholding in the case of Switzerland). Therefore payment
of interest on the Notes which is made or collected through Belgium, Luxembourg, Austria or any other relevant
country may be subject to withholding tax which could prevent holders of Medium Term Notes from receiving
interest on the Medium Term Notes in full. The circumstances in which Medium Term Noteholders are or are not
eligible to receive payments of amounts withheld in respect of such taxes are more fully described in Condition 11
(Taxation).
(g)
Changes in Law
This Information Memorandum has been prepared by the Issuers on the basis of Laws, treaties, rules and regulations
in force at the date of this Information Memorandum. Such Laws, treaties, rules and regulations may be subject to
change or adverse interpretations after the initial date on which Medium Term Notes are issued. Therefore, there can
be no assurance that, as a result of any change in any current applicable Law, treaties, rule or regulation in force, or
interpretation thereof, the Issuer's ability to make payment on the Medium Term Notes or the interests of the
Medium Term Noteholders in general will not be adversely affected.
(h)
Emerging requirements of the European Community
As part of the harmonisation of transparency requirements, the European Commission is scheduled to adopt a
directive known as the Transparency Obligations Directive that, among other things, will regulate issuers of
securities that are offered to the public or admitted to trading on a European Union regulated market. The listing of
Medium Term Notes on any European Union securities exchange would subject the Issuers to regulation under the
directive, although the requirements applicable to the Issuers are not yet fully clarified. The Issuers will not be
required to apply for, list or maintain a listing for any Medium Term Notes on a European Union securities
exchange if compliance with the directive (or other requirements adopted by the European Commission or a
Relevant Member State) becomes burdensome in the sole judgment of the Issuers. Should the Medium Term Notes
be delisted from any exchange, the ability of the holders of such Medium Term Notes to sell such Medium Term
Notes in the secondary market may be negatively affected.
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(i)
Projections, forecasts and estimates
Any projections, forecasts and estimates contained herein are not purely historical in nature, but are forward-looking
statements and are based upon information furnished by the Issuers and certain assumptions that the Issuers consider
reasonable, are subject to uncertainties as to circumstances and events that have not yet taken place and are subject
to material variation. Projections are necessarily speculative in nature, and it can be expected that some or all of the
assumptions underlying the projections will not materialise or will vary significantly from actual results.
Accordingly, the projections are only an estimate and there can be no assurance that any projected or forecasted
results will be attained. Actual results may vary from the projections, and the variations may be material.
Some important factors that could cause actual results to differ materially from those in any forward-looking
statements include, among others, changes in interest rates or currency exchange rates, market, financial or legal
uncertainties, the ability to refinance maturing debt, the ability to replace maturing investments, the general
availability of liquidity, the composition of the Credit Portfolio, the occurrence of certain credit events or events of
default with respect to the Investments, and the performance of the Investments. Consequently, the inclusion of
projections herein should not be regarded as a representation by the Issuers or any other person of the results that
will actually be achieved by the Credit Portfolio.
Neither of the Issuers nor any other person has any obligation to update or otherwise revise any projections,
including any revisions to reflect changes in economic conditions or other circumstances arising after the date hereof
or to reflect the occurrence of unanticipated events, even if the underlying assumptions are not correct.
(j)
International investing
The Credit Portfolio may consist of Investments owing by obligors (or guarantors, where applicable) located in
various jurisdictions. Investing in various jurisdictions may involve greater risks than investing in a single
jurisdiction. These risks may include: (i) varying levels of publicly available information; (ii) varying legal regimes;
(iii) varying levels of governmental regulation and supervision; (iv) varying ability to enforce legal rights and
uncertainties as to the status, interpretation and application of Laws therein; (v) risks of economic dislocations in
such other country; and (vi) less data on historic default and recovery rates for the Investments. Moreover, obligors
in different jurisdictions will be subject to varying accounting, auditing and financial reporting standards, practices
and requirements.
In addition, investing in various jurisdictions may involve varying levels of governmental supervision and regulation
of exchanges, brokers and issuers. For example, there may be no provisions under the Laws of certain jurisdictions
with respect to insider trading and similar investor protection securities Laws. Different markets may also have
different clearance and settlement procedures, and in certain markets there have been times when settlements have
failed to keep pace with the volume of securities transactions, making it difficult to conduct such transactions.
Delays in settlement could result in periods when assets of the Issuer are not invested and no return is earned
thereon. Transaction costs of buying and selling securities, including brokerage, tax and custody costs, will also vary
from jurisdiction to jurisdiction and may be higher than those involved in transactions in jurisdictions where
investors in the Medium Term Notes are located. Furthermore, financial markets in various jurisdictions will have
varying, and possibly insufficient, trading and dealing volumes, making securities traded in such jurisdictions less
liquid and their prices more volatile than securities of companies in jurisdictions where trading is more active.
In various jurisdictions there may be the possibility of expropriation, nationalisation or confiscatory taxation,
limitations on the convertibility of currency or the removal of securities, property or other assets of the obligor in
respect thereof, political, economic or social instability or adverse diplomatic developments, each of which could
have an adverse effect on the Issuer's investments in such jurisdictions. The economies of individual jurisdictions
may also differ favourably or unfavourably in such respects as growth of gross domestic product, rate of inflation,
volatility of currency exchange rates, depreciation, capital reinvestment, resource self-sufficiency and balance of
payments position.
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(k)
Effects of consumer protection Laws
Laws of various jurisdictions and general equitable principles and public policy may apply to certain Investments
(collectively, "Consumer Protected Securities"). Such Laws, principles and policies apply to, among other things,
the origination, servicing, collection, and enforceability of such loans. Depending on the provisions of the applicable
Law and the specific facts and circumstances involved, violations of these Laws, policies and principles may limit
the ability of the issuer of a Consumer Protected Security to collect all or part of the principal of or interest on the
underlying loans, may entitle a borrower to a refund of amounts previously paid and, in addition, could subject the
owner of consumer loans to damages and administrative enforcement. In this event, there may be losses on the
Credit Portfolio that result in losses to the holders of the Medium Term Notes.
(l)
Legal investment considerations may restrict certain investments
The investment activities of certain investors are subject to legal investment laws and regulations, or review or
regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and
to what extent (1) Medium Term Notes are legal investments for it, (2) Medium Term Notes can be used as
collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any Medium
Term Notes. Financial institutions should consult their legal advisors or the appropriate regulators to determine the
appropriate treatment of Medium Term Notes under any applicable risk-based capital or similar rules.
(m)
ERISA considerations
Each purchaser and transferee of a Medium Term Note will be deemed to make certain representations at the time of
acquisition relating to ERISA, Section 4975 of the Code and other laws that are substantially similar to Title I of
ERISA and Section 4975 of the Code. See "Certain ERISA and other considerations".
(n)
Global Note considerations
Because the Global Medium Term Notes are held by or Cede & Co. on behalf of DTC, investors will have to rely on
the procedures of DTC for transfer, payment and communication with the Issuers.
After payment of any interest, principal or other amount to DTC, neither the Issuer nor the Co-Issuer will have any
responsibility or liability for the payment of such amount by DTC or to any holder of a beneficial interest in a Note.
DTC or its nominee, Cede & Co., will be the sole registered owner of any Notes held in global form, and therefore
each person owning a beneficial interest in a Medium Term Note held in global form must rely on the procedures of
DTC (and if such person is not a participant in DTC, on the procedures of the participant through which such person
holds such interest) with respect to the exercise of any rights of a holder of a Medium Term Note.
Persons holding beneficial interests in the Global Medium Term Notes will not have a direct right to vote in respect
of the relevant Medium Term Notes. Instead, such persons will be permitted to act only to the extent that they are
enabled by DTC to appoint appropriate proxies.
14)
USA PATRIOT Act considerations
In order to comply with U.S. laws and regulations, including the USA PATRIOT Act of 2001 (the "USA PATRIOT
Act"), aimed at the prevention of money laundering and the prohibition of transactions with certain countries,
organisations and individuals, the Issuers, the Manager or the Medium Term Note Dealers may request from an
investor or a prospective investor such information as they reasonably believe is necessary to verify the identity of
such investor or prospective investor and the source of payment of subscription monies, and to determine whether
such investor or prospective investor is permitted to be an investor in the Notes pursuant to such laws and
regulations. In the event of the delay or failure by any investor or prospective investor in the Notes to deliver to the
Issuers any such requested information, any of the Issuers, the Manager or the Medium Term Note Dealers may (i)
require such investor to immediately transfer any Medium Term Note, or beneficial interest therein, held by such
investor to an investor meeting the requirements of this Information Memorandum and the Medium Term Note
Dealer Agreement, (ii) refuse to accept the subscription of a prospective investor, or (iii) take any other action
9122016.23 06095153
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required to comply with such laws and regulations. In addition, following the delivery of any such information, the
Issuers or the Manager may take any of the actions identified in clauses (i)-(iii) above. In certain circumstances, the
Issuers, the Manager, the Medium Term Note Dealers or the Security Trustee may be required to provide
information about investors to regulatory authorities and to take any further action as may be required by law or
regulation. None of the Issuers, the Manager, the Medium Term Note Dealers or the Security Trustee will be liable
for any loss or injury to an investor or prospective investor that may occur as a result of disclosing such information,
refusing to accept the subscription of any potential investor, redeeming any investment in a Medium Term Note or
taking any other action required by law or regulation.
The USA PATRIOT Act requires certain financial institutions to establish and maintain anti-money laundering
programs. On September 26, 2002, the Secretary of the United States Department of Treasury (the "Treasury
Department") published proposed regulations that will, if enacted in their current form, require all "unregistered
investment companies" to undertake certain activities including establishing, maintaining and periodically testing an
anti-money laundering compliance program, and designating and training personnel responsible for that compliance
program. As part of the rulemaking process, the Treasury Department is considering the appropriate definition of,
and exceptions to, the term "unregistered investment company and may, in its final rule, define the term in such a
way as to include the Issuers. The Issuers will continue to monitor the developments with respect to the USA
PATRIOT Act (as well as other relevant legislation and regulations) and will take all steps required to comply with
the USA PATRIOT Act (as well as other relevant legislation and regulations) to the extent applicable to the Issuers.
It is possible that legislation or regulation could be promulgated which will require the Issuers to implement
additional restrictions on the transfer of the Medium Term Notes.
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SUPPLEMENTAL INFORMATION MEMORANDUM
The Issuers will, if the terms of the Medium Term Note Programme are varied or supplemented or in the event of
any significant new factor, material mistake or inaccuracy relating to information included in this Information
Memorandum which is capable of affecting the assessment of any Medium Term Notes, prepare a supplement to
this Information Memorandum (a "Supplemental Information Memorandum") or publish a new Information
Memorandum for use in connection with any subsequent issue of Medium Term Notes. Furthermore, the Issuers
have given an undertaking to the Medium Term Note Dealers that if at any time during the duration of the Medium
Term Note Programme there is a significant change affecting any matter contained in this Information
Memorandum, including any modification of the Conditions of the Medium Term Notes or any material adverse
change in the financial position of the Issuers, whose inclusion would reasonably be required by investors and their
professional advisers, and would reasonably be expected by them to be found in this Information Memorandum, for
the purpose of making an informed assessment of the assets and liabilities, financial position, profits and losses and
prospectus of the Issuers and the rights attaching to the Medium Term Notes, the Issuers shall prepare an
amendment or supplement to this Information Memorandum or publish a replacement Information Memorandum for
use in connection with any subsequent offering of the Medium Term Notes and shall supply to each Medium Term
Note Dealer such number of copies of such supplement hereto or replacement Information Memorandum as such
Medium Term Note Dealer may reasonably request.
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TERMS AND CONDITIONS OF THE MEDIUM TERM NOTES
The following is the text of the terms and conditions that, save for the text in italics and subject to completion and
amendment and as supplemented or varied in accordance with the provisions of Part A of the relevant Final Terms,
shall be applicable to the Medium Term Notes in global form and the Medium Term Notes in definitive form (if any)
issued in exchange for the Global Medium Term Note(s) representing each Series or in exchange for interests in
such Global Medium Term Notes(s). The relevant Final Terms in relation to any Series of Medium Term Notes may
specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with such terms
and conditions, replace or modify the following terms and conditions for the purpose of such Medium Term Notes.
The terms and conditions applicable to any Medium Term Note in global form will differ from those terms and
conditions which would apply to the Medium Term Note were it in definitive form to the extent described under
"Summary of provisions relating to the Medium Term Notes whilst in Global Form" below. Either (a) the full text of
these terms and conditions together with the relevant provisions of Part A of the Final Terms or (b) these terms and
conditions as so completed, amended, supplemented or varied (and subject to simplification by the deletion of nonapplicable provisions), shall be endorsed on the Medium Term Note Certificates (as defined in Condition 4(a)
below) relating to such Medium Term Notes. All capitalised terms that are not defined in these Conditions will have
the meanings given to them in Part A of the relevant Final Terms or, if not defined therein, in the Transaction Terms
Agreement, as the same may be amended and/or supplemented and/or restated from time to time. Please refer to the
Index of Definitions for the locations of all defined terms used in these Conditions. Those definitions will be
endorsed on the definitive Medium Term Notes or Medium Term Note Certificates, as the case may be. References
in the Conditions to "Medium Term Notes" are to the Medium Term Notes of one Series only, not to all Medium
Term Notes that may be issued under the Medium Term Note Programme.
1)
INTRODUCTION
(a)
Programme: Rhinebridge PLC (the "Issuer") and Rhinebridge LLC (the "Co-Issuer" and, together with the
Issuer, the "Issuers"), have established a Medium Term Note Programme (the "Medium Term Note
Programme") for the issuance of notes which will constitute unsubordinated limited recourse obligations
of the Issuer and, if applicable, the Co-Issuer (the "Medium Term Notes"). The Issuer and, at the
discretion of the Issuer, the Issuers jointly, will offer and sell Medium Term Notes, under the Medium
Term Note Programme in an offering in the United States to "qualified institutional buyers" (as defined in
Rule 144A ("Rule 144A") under the Securities Act) that are also "qualified purchasers" (as defined in
Section 2(a)(51)(A) of the Investment Company Act of 1940, as amended and the rules and regulations set
forth thereunder (the "Investment Company Act")), and meet the other requirements set forth herein, in
reliance on Rule 144A. The Issuer will also offer and sell Medium Term Notes to persons who are not U.S.
persons within the meaning of Regulation S under the Securities Act ("Regulation S") or U.S. residents
for purposes of the Investment Company Act (each such person a "Non-U.S. Person") in "offshore
transactions" outside of the United States in reliance on Regulation S. The obligations of the Co-Issuer are
limited recourse obligations secured by no assets or property of the Co-Issuer. The Co-Issuer will have no
assets other than its rights under the Transaction Documents to which it is a party and its nominal capital of
€100 held in cash or a demand deposit account and will hold no Investments or securities. The Co-Issuer
has agreed to co-issue Rule 144A Medium Term Notes with the Issuer whenever requested by the Issuer as
an accommodation for the benefit of the Issuer, and is receiving no payment for such co-issuance, but the
Issuer has agreed to indemnify the Co-Issuer for any liabilities in connection with its co-issuance of Rule
144A Medium Term Notes. If immediately after any issuance (other than the initial issuance of Notes by
the Issuer, the "Original Issue") of Notes by the Issuer other than Junior Capital Notes, the proportions of
the Issuer's then outstanding Notes represented by Junior Capital Notes and by the sum of Junior Capital
Notes and Mezzanine Capital Notes would be less than such proportions were at the time of the Original
Issue, the Issuer must obtain an opinion of counsel prior to such issuance that such issuance will not
adversely affect the U.S. federal income tax characterisation as debt of any outstanding Capital Notes
which were issued as part of the Original Issue. If the opinion referred to in the previous sentence is not
required because all the Capital Notes (excluding for this purpose Junior Capital Notes) issued in the
Original Issue have been retired but Medium Term Notes issued in the Original Issue are still outstanding,
and if immediately after any issuance of Medium Term Notes or Commercial Paper (other than Medium
Term Notes and Commercial Paper issued in the Original Issue) the proportion of the Issuer's then
outstanding Notes represented by Capital Notes would be less than such proportion was at the time of
9122016.23 06095153
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Original Issue, the Issuer must obtain an opinion of counsel prior to such issuance that such issuance will
not adversely affect the U.S. federal income tax characterisation as debt of any outstanding Medium Term
Notes which were issued as part of the Original Issue.
(b)
Final Terms: Medium Term Notes issued under the Medium Term Note Programme are issued in series
(each a "Series") and each Series may be comprised of one or more tranches (each, a "Tranche") of
Medium Term Notes. Each Tranche is the subject of a final terms supplement (the "Final Terms") which
supplements these terms and conditions (the "Conditions"). The Final Terms will, in the case of Medium
Term Notes listed on the official list of the Irish Stock Exchange Limited (the "Irish Stock Exchange") or
offered in circumstances which require the publication of a prospectus, be available at the offices of the
Irish Paying Agent at Guild House, Guild Street, IFSC, Dublin, Ireland, during usual business hours on any
week day (excluding Saturdays, Sundays and any public holiday). The terms and conditions applicable to
any particular Tranche of Medium Term Notes are these Conditions as supplemented, amended and/or
replaced by the relevant Final Terms. In the event of any inconsistency between these Conditions and the
relevant Final Terms, the relevant Final Terms shall prevail.
(c)
Term Note Agency Agreement: The Medium Term Notes will be issued pursuant to an issuing and paying
agency agreement dated on or around the Closing Date (as amended and/or supplemented and/or restated
from time to time, the "Term Note Agency Agreement") between the Issuers and The Bank of New York,
London branch, as principal paying agent (the "Principal Paying Agent", which expression includes any
successor principal paying agent appointed from time to time in connection with the Medium Term Notes),
The Bank of New York, New York branch, as registrar (the "Registrar", which expression includes any
successor registrar appointed from time to time in connection with the Medium Term Notes) and as New
York paying agent (the "New York Paying Agent", which expression includes any successor New York
paying agent appointed from time to time in connection with the Medium Term Notes), BNY Fund
Services (Ireland) Limited, as Irish paying agent (the "Irish Paying Agent", which expression includes any
successor Irish paying agent appointed from time to time in connection with the Medium Term Notes), the
paying agents named therein (together with the Principal Paying Agent, the Registrar, the New York
Paying Agent and the Irish Paying Agent, the "Paying Agents", which expression includes any successor
or additional paying agents appointed from time to time in connection with the Medium Term Notes), The
Bank of New York, New York branch, as transfer agent (the "Transfer Agent", which expression includes
any successor or additional transfer agents appointed from time to time in connection with the Medium
Term Notes) and The Bank of New York, London branch, as security trustee (the "Security Trustee",
which expression shall include its successor(s) as security trustee and any additional security trustee or
security trustees). The Term Note Agency Agreement will also govern the issuance of capital notes by the
Issuers (the "Capital Notes").
(d)
Security Trust Deed: The Medium Term Notes have the benefit of a security trust deed dated on or before
the Closing Date (as amended and/or supplemented and or restated from time to time, the "Security Trust
Deed") made by the Issuer in favour of the Security Trustee.
(e)
Management Agreement: The Issuer has entered into a Management Agreement (as amended,
supplemented or replaced, the "Management Agreement") dated on or before the Closing Date with IKB
Credit Asset Management GmbH, London branch (the "Manager", which term shall include any successor
or substitute manager appointed pursuant to the terms of the Management Agreement).
(f)
Custody Agreement: The Issuer has entered into a custody agreement (as amended, supplemented or
replaced, the "Custody Agreement") dated on or before the Closing Date, among the Issuer, the Manager,
the Administrator and The Bank of New York, London branch, as custodian (the "Custodian", which term
shall include any successor or substitute custodian appointed pursuant to the terms of the Custody
Agreement).
(g)
The Medium Term Notes: All subsequent references in these Conditions to "Medium Term Notes" are to
each Series of each of the Medium Term Notes which are the subject of the relevant Final Terms. Copies of
the relevant Final Terms are available during normal business hours at the Specified Office of each of the
Paying Agents.
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(h)
Summaries: Certain provisions of these Conditions are summaries of the Term Note Agency Agreement
and the Security Trust Deed and are subject to their detailed provisions. The Medium Term Noteholders are
bound by, and are deemed to have notice of, all the provisions of the Term Note Agency Agreement, the
Transaction Terms Agreement and the Security Trust Deed applicable to them. Copies of the Term Note
Agency Agreement and the Security Trust Deed and the Transaction Terms Agreement (as the same may
be amended and/or supplemented and/or restated from time to time) are available during normal business
hours on a Business Day at the Specified Offices of the Irish Paying Agent and of each of the Paying
Agents.
(i)
Amendments: As a general matter (subject to exceptions as provided in the terms of such documents),
technical amendments to the Transaction Terms Agreement, the Term Note Agency Agreement and the
Security Trust Deed can be approved by the Issuer and the Security Trustee without further consent of the
holders of the Notes. Amendments to the Transaction Terms Agreement, the Term Note Agency
Agreement and the Security Trust Deed which could reasonably be expected to be materially prejudicial to
the interests of the holders of the then outstanding Notes may not be made without the holders of a majority
of such Notes having approved such amendment and the Issuer having obtained a Rating Confirmation with
respect to such amendment. Amendments will apply to all Notes, including those outstanding at the time of
amendment.
2.
INTERPRETATION
(a)
Definitions
Capitalised terms not otherwise defined herein shall have the meaning given to them in Part A of the
relevant Final Terms or, if not defined therein, in the Transaction Terms Agreement. The defined terms in
these Conditions pertain only to the Medium Term Notes which are the subject of the relevant Final Terms,
and any defined term incorporated herein for use in the relevant Final Terms by reference to another
document (other than the relevant Final Terms) shall, unless expressly stated otherwise in these Conditions
or the relevant Final Terms, be interpreted to pertain only to the transactions contemplated by the relevant
Final Terms.
(b)
Interpretation: In these Conditions:
(i)
any reference to the "holder" of a registered Medium Term Note shall be a reference to the person
in whose name such Medium Term Note is for the time being registered in the Register (or, in the
case of a joint holding, the first named thereof), and "Medium Term Noteholder" shall be
construed accordingly;
(ii)
any reference to principal shall be deemed to include the Redemption Amount, any additional
amounts in respect of principal which may be payable under Condition 11 (Taxation), any
premium payable in respect of a Medium Term Note and any other amount in the nature of
principal payable pursuant to these Conditions; and
(iii)
any reference to interest shall be deemed to include any additional amounts in respect of interest
which may be payable under Condition 11 (Taxation) and any other amount in the nature of
interest payable pursuant to these Conditions:
(A)
a Medium Term Note shall be considered to be "outstanding" unless one or more of the
following events has occurred:
(I)
9122016.23 06095153
the due date for its redemption in full has occurred and all sums due in respect of
such Medium Term Note (including all accrued interest) have been received by
the Principal Paying Agent or (as the case may be) the Registrar and remain
available for payment against presentation and surrender of such Medium Term
Note or Definitive Medium Term Note;
34
(B)
(II)
it has been redeemed and cancelled pursuant to Condition 9(l)(Cancellation).
(III)
all claims for principal and interest in respect of such Medium Term Note have
become void under Condition 14 (Prescription);
(IV)
it has been mutilated or defaced, or is alleged to have been lost, stolen or
destroyed, and has been replaced pursuant to Condition 15 (Replacement of
Medium Term Notes and Medium Term Note Certificates); or
(V)
for the purposes of Condition 17 (Meetings of Medium Term Noteholders;
Modification and Waiver) it is held by, or by any person for the benefit of, the
Issuer.
if an expression is stated to have the meaning given in the relevant Final Terms, but the
relevant Final Terms gives no such meaning or specifies that such expression is "not
applicable" then such expression is not applicable to the related Medium Term Notes.
3.
FORM AND DENOMINATION
(a)
Form: The Medium Term Notes will be issued in registered form only. Medium Term Notes will be
issued in Series and each Series may be comprised of one or more Tranches issued on different issue dates.
The Medium Term Notes of each Series will all be subject to identical terms, except that the issue date,
issue price and the amount of the first payment of interest may be different in respect of different Tranches.
The Medium Term Notes of each Tranche will all be subject to identical terms in all respects save that a
Tranche may be comprised of Medium Term Notes of different denominations.
A Medium Term Note may be a Fixed Rate Medium Term Note, a Floating Rate Medium Term Note, a
Zero Coupon Medium Term Note, an Index Linked Interest Medium Term Note, a Dual Currency Interest
Medium Term Note or a combination of any of the foregoing, depending upon the "Interest Basis" shown in
the applicable Final Terms.
A Medium Term Note may be an Index Linked Redemption Medium Term Note, an Instalment Medium
Term Note, a Dual Currency Redemption Medium Term Note, a Partly Paid Medium Term Note or a
combination of any of the foregoing, depending upon the "Redemption/Payment Basis" shown in the
applicable Final Terms.
(b)
Denominations: Medium Term Notes may be held in holdings in the Specified Denomination(s) and each
Medium Term Note issued under Rule 144A must be issued in a minimum amount of $250,000 or integral
multiples in excess of $1,000 thereof and each Medium Term Note issued under Regulation S must be
issued in a minimum amount of $250,000 or integral multiples in excess of $1,000 thereof (or its equivalent
in a Specified Currency).
(c)
Redenomination, renominalisation and reconventioning:
(i)
Application: This Condition 3(c) is applicable to the Medium Term Notes only if it is specified in
the relevant Final Terms as being applicable.
(ii)
Notice of redenomination: If the country of the Specified Denomination becomes, or announces its
intention to become, a Member State participating in the euro currency ("Participating Member
State"), the Issuer may, without the consent of the Medium Term Noteholders on giving at least
30 days' prior written notice to the Medium Term Noteholders and the Paying Agents, designate a
date (the "Redenomination Date"), being an Interest Payment Date under the Medium Term
Notes falling on or after the date on which such country becomes a Participating Member State.
9122016.23 06095153
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(iii)
Redenomination: Notwithstanding the other provisions of these Conditions, with effect from the
Redenomination Date:
(A)
the Medium Term Notes shall be deemed to be redenominated into Euro in the
denomination of Euro 0.01 with a principal amount for each Medium Term Note equal to
the principal amount of that Medium Term Note in the Specified Denomination,
converted into Euro at the rate for conversion of such currency into euro established by
the Council of the European Union pursuant to the Treaty (including compliance with
rules relating to rounding in accordance with European Community regulations);
provided, however, that, if the Issuer determines, with the agreement of the Paying
Agent, then market practice in respect of the redenomination into Euro 0.01 of
internationally offered securities is different from that specified above, such provisions
shall be deemed to be amended so as to comply with such market practice and the Issuer
shall promptly notify the Medium Term Noteholders, each listing authority, stock
exchange and/or quotation system (if any) by which the Medium Term Notes have then
been admitted to listing, trading and/or quotation and the Paying Agents in writing of
such deemed amendments;
(B)
if Medium Term Notes have been issued in definitive form:
(C)
(I)
the payment obligations contained in all Medium Term Notes denominated in
the Specified Denomination will become void on the date (the "Euro Exchange
Date") on which the Issuer gives notice (the "Euro Exchange Notice") to the
Medium Term Noteholders that replacement Medium Term Notes and Receipts
denominated in Euro are available for exchange (provided that such Medium
Term Notes are available) but all other obligations of the Issuer thereunder
(including the obligation to exchange such Medium Term Notes in accordance
with this Condition 3(c) shall remain in full force and effect; and
(II)
new Medium Term Notes denominated in Euro will be issued in exchange for
Medium Term Notes denominated in the Specified Denomination as shall be
notified to the Medium Term Noteholders in the Euro Exchange Notice and such
new Medium Term Notes will be available for exchange, against presentation
and surrender of the existing Medium Term Notes, at the Specified Office of
each Paying Agent; and
all payments in respect of the Medium Term Notes (other than, unless the
Redenomination Date is on or after such date as the Specified Denomination ceases to be
a sub-division of the Euro, payments of interest in respect of periods commencing before
the Redenomination Date) will be made solely in Euro by cheque drawn on, or by credit
or transfer to a Euro account (or any other account to which Euro may be credited or
transferred) maintained by the payee with, a bank in the principal financial centre of any
Member State of the European Communities.
(iv)
Interest: Following redenomination of the Medium Term Notes pursuant to this Condition 3(c),
where Medium Term Notes have been issued in definitive form, the amount of interest due in
respect of the Medium Term Notes will be calculated by reference to the aggregate principal
amount of the Medium Term Notes presented for payment by the relevant holder.
(v)
Interest determination date: If the Floating Rate Note Provisions are specified in the relevant Final
Terms as being applicable and Screen Rate Determination is specified in the relevant Final Terms
as the manner in which the Rate(s) of Interest is/are to be determined, with effect from the
Redenomination Date the Interest Determination Date shall be deemed to be the second TARGET
Business Day before the first day of the relevant Interest Period.
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4.
TITLE AND TRANSFER
(a)
Register: A certificate (each, a "Medium Term Note Certificate") will be issued to each Medium Term
Noteholder in respect of its registered holding. Each Medium Term Note Certificate will be numbered
serially with an identifying number which will be recorded in a Register (the "Register") kept by the
Registrar.
(b)
Title: Title to the Medium Term Notes passes by registration in the Register kept by the Registrar. The
holder of each Registered Medium Term Note shall (except as otherwise required by law) be treated as the
absolute owner of such Registered Medium Term Note for all purposes (whether or not it is overdue and
regardless of any notice of ownership, trust or any other interest therein, any writing on the Medium Term
Note Certificate relating thereto (other than the endorsed form of transfer) or any notice of any previous
loss or theft of such Medium Term Note Certificate) and no person shall be liable for so treating such
holder.
(c )
Transfers: Subject to paragraphs (e), (f) and (g) below, a Registered Medium Term Note may be
transferred in whole or in part (provided that such part is, or is an integral multiple of, the Specified
Denomination) upon surrender of the relevant Medium Term Note Certificate, with the endorsed form of
transfer duly completed, at the Specified Office of the Registrar or any Transfer Agent (during normal
business hours on a day on which commercial banks are open for business in the city in which the Specified
Office of the Registrar or Transfer Agent, as applicable, is located), together with such evidence as the
Registrar and the Transfer Agent (if different) may reasonably require to prove the title of the transferor
and the authority of the individuals who have executed the form of transfer. Where not all the Medium
Term Notes represented by the surrendered Medium Term Note Certificate are the subject of the transfer, a
new Medium Term Note Certificate in respect of the balance of the Medium Term Notes shall be issued to
the transferor.
(d)
Registration and delivery of Medium Term Note Certificates: Within five business days of the surrender of
a Medium Term Note Certificate in accordance with paragraph (c) above, the Registrar shall register the
transfer in question and deliver a new Medium Term Note Certificate (of a like principal amount to the
Medium Term Notes transferred) to each relevant holder at its Specified Office or (at the request and risk
of any such relevant holder) by uninsured first class mail (airmail if overseas) to the address specified for
the purpose by such relevant holder. In this paragraph, "business day" means a day on which commercial
banks are open for business (including dealings in foreign currencies) in the city where the Registrar has its
Specified Office.
(e)
No charge: The transfer of a Registered Medium Term Note will be effected without charge by or on
behalf of the Issuer or the Registrar but against such indemnity as the Registrar may require in respect of
any tax or other duty of whatsoever nature which may be levied or imposed in connection with such
transfer.
(f)
Closed periods: Medium Term Noteholders may not require transfers to be registered during the period of
15 days ending on the due date for any payment of principal or interest in respect of the Medium Term
Notes.
(g)
Regulations concerning transfers and registration: All transfers of the Medium Term Notes and entries on
the Register are subject to the detailed regulations concerning the transfer of Medium Term Notes
scheduled to the Term Note Agency Agreement. The regulations may be changed by the Issuer with the
prior written approval of the Registrar.
(h)
Third Party Rights: No person (other than the Medium Term Noteholders) shall have any right to enforce
any term or condition of any Medium Term Note under the Contracts (Rights of Third Parties) Act 1999.
(i)
Resale and transfer: No Medium Term Note may be offered or sold in the United States or to, or for the
account or benefit of, a U.S. Person, except pursuant to an exemption from the registration requirements of,
9122016.23 06095153
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the Securities Act. No Medium Term Note initially sold to a Non-U.S. Person under Regulation S may be
resold to, or for the account or benefit of, a U.S. Person other than to a Qualified Institutional Buyer (as
defined in Rule 144A under the Securities Act) who is also a Qualified Purchaser (as defined in the
Investment Company Act and the rules and regulations therein) and meets the other requirements as set
forth herein.
Any purchase or transfer of a Rule 144A Medium Term Note to a person that is not a QIB and a QP or who
does not meet the other requirements set forth herein, or a Regulation S Note to a person who is not a NonU.S. Person and who does not meet the other requirements set forth herein, as the case may be, at the time
of acquisition thereof will be deemed null and void, ab initio, and of no effect, and the Issuers may require a
sale, transfer or redemption thereof as described herein.
5.
STATUS OF THE MEDIUM TERM NOTES
The Medium Term Notes to be issued under the Medium Term Note Programme will constitute
unsubordinated limited recourse obligations of the Issuer, and if applicable, the Co-Issuer, secured as
described in the Security Trust Deed. Medium Term Notes rank and will at all times rank in right of
payment pari passu and ratably without preference with all other Medium Term Notes.
6.
SECURITY
(a)
Assigned Documents: By way of first fixed security for the payment and discharge of the Secured
Obligations, the Issuer with full title guarantee has assigned absolutely to the Security Trustee (for the
benefit of the Secured Creditors) all its right, title, interest and benefit in, to and under:
(i)
the Transaction Documents (other than the Security Documents); and
(ii)
all other agreements, deeds and other documents, present and future (other than the Transaction
Documents and the Security Documents) to which the Issuer is or may become a party or in
respect of which it has or may have any right,
(each, an "Assigned Document" and together, the "Assigned Documents"). For the avoidance of
doubt, the Issuer will remain at all times liable in respect of all of its obligations under each of the
Assigned Documents to the same extent as if the Charges had not been created and none of the
Security Trustee, any other Secured Creditor or any Receiver will be under any obligation or
liability to the Issuer or to any other person under or in respect of any Assigned Document.
(b)
Floating charge: As security for the payment and discharge of the Secured Obligations, the Issuer with full
title guarantee has charged to the Security Trustee (for the benefit of the Secured Creditors) by way of first
floating charge the whole of its undertaking and assets, present and future (excluding the Issuer Share
Proceeds and earnings thereon held in the Issuer Capital Account) and assets not validly and effectively
charged or assigned (whether at law or in equity) as described in clause 6(a) (Assigned Documents).
Schedule B1, Paragraph 14 of the Insolvency Act 1986 (the "IA") shall apply to the floating charge created
by the Security Trust Deed. Notwithstanding the foregoing, the Security Trustee will not have first-ranking
security over Designated Investments; except to the extent of the Issuer's redelivery rights with respect to
such Designated Investments, subject to the Issuer's redelivery obligations in respect thereof.
7.
COVENANTS OF AND RESTRICTIONS ON THE ISSUER
The Security Trust Deed contains, inter alia, representations, warranties and covenants in favour of the
Security Trustee which require the Issuer to comply with its obligations under the Transaction Documents
and restrict the ability of the Issuer to dispose of its assets or create or permit to subsist over any of its
assets any security other than that created pursuant to the Security Trust Deed.
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8.
INTEREST PROVISIONS
(a)
Interest payment: Subject to these Conditions each Medium Term Note (other than a Zero Coupon
Medium Term Note) bears interest on its outstanding principal amount (or, in the case of a Partly Paid
Medium Term Note, on the amount paid) from (and including) the Interest Commencement Date and such
interest will be payable in respect of each Interest Period in arrears on the relevant Interest Payment Date,
in the Specified Currency of such Medium Term Note until redemption of such Medium Term Note.
(b)
Interest payable: The interest payable from time to time in respect of each Tranche of Medium Term Notes
outstanding will be calculated and payable in the manner set out below and will be an amount equal to the
Interest Amount.
Interest due on each Interest Payment Date in respect of each Series of Medium Term Notes outstanding
which have an Interest Payment Date on such date shall be paid from available funds on that date and in
accordance with the relevant Priority of Payments.
Each Medium Term Note will cease to bear interest from the due date for final redemption unless, upon due
presentation of the relevant Medium Term Note or (if applicable) Medium Term Note Certificate, payment
of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest
in accordance with this Condition 8 (Interest provisions) (both before and after judgment) until whichever
is the earlier of (i) the day on which all sums due in respect of such Medium Term Note up to that day are
received by or on behalf of the relevant Medium Term Noteholder and (ii) the day on which the Principal
Paying Agent notifies the Medium Term Noteholders that it has received all sums due in respect of the
Medium Term Notes up to such Business Day (except to the extent that there is any subsequent default in
payment).
(c)
Interest Amount: Unless otherwise stated in the relevant Final Terms, the Interest Amount (the "Interest
Amount") in respect of each Medium Term Note of a Series in relation to each Interest Period shall be
calculated as follows:
(i)
Interest on Fixed Rate Notes: Each Fixed Rate Medium Term Note bears interest on its
outstanding principal amount (or, if it is a Partly Paid Medium Term Note, the amount paid up)
from (and including) the Interest Commencement Date at the rate(s) per annum equal to the
Rate(s) of Interest. Interest will be payable in arrear on the Interest Payment Date(s) (as defined
below) in each year up to (and including) the Maturity Date (as specified in the applicable Final
Terms).
Except as provided in the applicable Final Terms, the amount of interest payable on each Interest
Payment Date in respect of the Fixed Interest Period (as defined below) ending on (but excluding)
such date will amount to the "Fixed Coupon Amount". Payments of interest on any Interest
Payment Date will, if so specified in the applicable Final Terms, amount to the Broken Amount so
specified.
As used in these Terms and Conditions, "Fixed Interest Period" means the period from (and
including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the
next (or first) Interest Payment Date.
If interest is required to be calculated for a period other than a Fixed Interest Period, such interest
shall be calculated by applying the Rate of Interest to each Specified Denomination, multiplying
such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest
sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or
otherwise in accordance with applicable market convention.
"Day Count Fraction" means, in respect of the calculation of an amount of interest in accordance
with this Condition 8(c)(i):
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(A)
(B)
if "Actual/Actual (ISMA)" is specified in the applicable Final Terms:
(I)
in the case of Medium Term Notes where the number of days in the relevant period from
(and including) the most recent Interest Payment Date (or, if none, the Interest
Commencement Date) to (but excluding) the relevant payment date (the "Accrual
Period") is equal to or shorter than the Determination Period (as defined below) during
which the Accrual Period ends, the number of days in such Accrual Period divided by the
product of (A) the number of days in such Determination Period and (B) the number of
Interest Payment Dates (as specified in the applicable Final Terms) that would occur in
one calendar year; or
(II)
in the case of Notes where the Accrual Period is longer than the Determination Period
during which the Accrual Period ends, the sum of:
(A)
the number of days in such Accrual Period falling in the Determination Period in
which the Accrual Period begins divided by the product of (x) the number of
days in such Determination Period and (y) the number of Interest Payment Dates
that would occur in one calendar year; and
(B)
the number of days in such Accrual Period falling in the next Interest Period
divided by the product of (x) the number of days in such Interest Period and (y)
the number of Interest Payment Dates that would occur in one calendar year;
and
if "30/360" is specified in the applicable Final Terms, the number of days in the period from (and
including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to
(but excluding) the relevant payment date (such number of days being calculated on the basis of a
year of 360 days with 12 30-day months) divided by 360. In these Terms and Conditions:
"sub-unit" means, with respect to any currency other than U.S. dollar or euro, the lowest amount
of such currency that is available as legal tender in the country of such currency and, with respect
to U.S. dollar or euro, one cent.
"Determination Period" means each period from (and including) an Interest Determination Date
to (but excluding) the next Interest Determination Date (including, where either the Interest
Commencement Date or the final Interest Payment Date is not an Interest Determination Date, the
period commencing on the first Interest Determination Date prior to and ending on the first
Interest Determination Date falling after such date).
(ii)
Interest on Floating Rate Medium Term Notes and Index Linked Interest Medium Term Notes:
(A)
Interest Payment Dates
Each Floating Rate Medium Term Note and Index Linked Interest Medium Term Note bears
interest on its outstanding principal amount (or, if it is a Partly Paid Medium Term Note, the
amount paid up) from (and including) the Interest Commencement Date and such interest will be
payable in arrear on either:
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(I)
the Specified Interest Payment Date(s) in each year specified in the applicable
Final Terms; or
(II)
if no Specified Interest Payment Date(s) is/are specified in the applicable Final
Terms, each date (each such date, together with each Specified Interest Payment
Date, an "Interest Payment Date") which falls the number of months or other
period specified as the Specified Period (the "Specified Period") in the
40
applicable Final Terms after the preceding Interest Payment Date or, in the case
of the first Interest Payment Date, after the Interest Commencement Date.
Such interest will be payable in respect of each Interest Period (which expression shall, in these
Terms and Conditions, mean the period from (and including) an Interest Payment Date (or the
Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date (each,
an "Interest Period").
If a Business Day Convention is specified in the applicable Final Terms and (x) if there is no
numerically corresponding day in the calendar month in which an Interest Payment Date should
occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business
Day (as defined below), then, if the Business Day Convention specified is:
A.
in any case where Specified Periods are specified in accordance with this Condition
8(c)(ii)(A)(II) above, the Floating Rate Convention (the "Floating Rate Convention"),
such Interest Payment Date (a) in the case of (x) above, shall be the last day that is a
Business Day in the relevant month and the provisions of (ii) below shall apply mutatis
mutandis or (b) in the case of (y) above, shall be postponed to the next day which is a
Business Day unless it would thereby fall into the next calendar month, in which event (i)
such Interest Payment Date shall be brought forward to the immediately preceding
Business Day and (ii) each subsequent Interest Payment Date shall be the last Business
Day in the month which falls the Specified Period after the preceding applicable Interest
Payment Date occurred; or
B.
the Following Business Day Convention, such Interest Payment Date shall be postponed
to the next day which is a Business Day; or
C.
the Modified Following Business Day Convention, such Interest Payment Date shall be
postponed to the next day which is a Business Day unless it would thereby fall into the
next calendar month, in which event such Interest Payment Date shall be brought forward
to the immediately preceding Business Day; or
D.
the Preceding Business Day Convention, such Interest Payment Date shall be brought
forward to the immediately preceding Business Day.
In these Terms and Conditions, "Business Day" means a day which is both:
(a)
a day (other than Saturday or Sunday or any day on which banks are required or
authorised by Law to close in London, United Kingdom) on which commercial banks and
foreign exchange markets settle payments and are open for general business (including
dealing in foreign exchange and foreign currency deposits) in London, United Kingdom
and any Additional Business Centre specified in the applicable Final Terms; and
(b)
either (i) in relation to any sum payable in a Specified Currency other than euro, a day on
which commercial banks and foreign exchange markets settle payments and are open for
general business (including dealing in foreign exchange and foreign currency deposits) in
the principal financial centre of the country of the relevant Specified Currency (if other
than London and any Additional Business Centre or (ii) in relation to any sum payable in
euro, a day on which the Trans-European Automated Real-Time Gross Settlement
ExpressTransfer (TARGET) System (the "TARGET System") is open.
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(B)
Rate of Interest
The Rate of Interest payable from time to time in respect of Floating Rate Medium Term Notes
and Index Linked Interest Medium Term Notes will be determined in the manner specified in the
applicable Final Terms.
(I)
ISDA Determination for Floating Rate Medium Term Notes
Where ISDA Determination is specified in the applicable Final Terms as the manner in
which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period
will be the relevant ISDA Rate (as defined below) plus or minus (as indicated in the
applicable Final Terms) the Margin (if any). For the purposes of this subparagraph (i),
"ISDA Rate" for an Interest Period means a rate equal to the Floating Rate that would be
determined by the Calculation Agent under an interest rate swap transaction if the
Calculation Agent were acting as Calculation Agent for that swap transaction under the
terms of an agreement incorporating the 2006 ISDA Definitions, as published by the
International Swaps and Derivatives Association, Inc. and as amended and updated as at
the Issue Date of the first Tranche of the Notes (the "ISDA Definitions") and under
which:
A.
the Floating Rate Option is as specified in the applicable Final Terms;
B.
the Designated Maturity is a period specified in the applicable Final
Terms; and
C.
the relevant Reset Date is either (a) if the applicable Floating Rate
Option is based on the London interbank offered rate ("LIBOR") or on
the Euro-zone interbank offered rate ("EURIBOR"), the first day of
that Interest Period or (b) in any other case, as specified in the
applicable Final Terms
For the purposes of this subparagraph (I), "Floating Rate", "Calculation Agent",
"Floating Rate Option", "Designated Maturity" and "Reset Date" have the meanings
given to those terms in the ISDA Definitions.
Unless otherwise stated in the applicable Final Terms the Minimum Rate of Interest shall
be deemed to be zero.
(II)
Screen Rate Determination for Floating Rate Medium Term Notes
Where Screen Rate Determination is specified in the applicable Final Terms as the manner
in which the Rate of Interest is to be determined, the Rate of Interest for each Interest
Period will, subject as provided below, be either:
A.
the offered quotation; or
B.
the arithmetic mean (rounded if necessary to the fifth decimal place,
with 0.000005 being rounded upwards) of the offered quotations,
(expressed as a percentage rate per annum) for the Reference Rate which appears or
appear, as the case may be, on the Relevant Screen Page as at 11.00 a.m. (London time, in
the case of LIBOR, or Brussels time, in the case of EURIBOR) on the Interest Payment
Date in question plus or minus (as indicated in the applicable Final Terms) the Margin (if
any), all as determined by the Calculation Agent. If five or more of such offered
quotations are available on the Relevant Screen Page, the highest (or, if there is more than
9122016.23 06095153
42
one such highest quotation, one only of such quotations) and the lowest (or, if there is
more than one such lowest quotation, one only of such quotations) shall be disregarded by
the Calculation Agent for the purpose of determining the arithmetic mean (rounded as
provided above) of such offered quotations.
The Term Note Agency Agreement contains provisions for determining the Rate of
Interest in the event that the Relevant Screen Page is not available or if, in the case of (A)
above, no such offered quotation appears or, in the case of (B) above, fewer than three
such offered quotations appear, in each case as at the time specified in the preceding
paragraph.
If the Reference Rate from time to time in respect of Floating Rate Medium Term Notes is
specified in the applicable Final Terms as being other than LIBOR or EURIBOR, the Rate
of Interest in respect of such Notes will be determined as provided in the applicable Final
Terms.
(C)
Minimum Rate of Interest and/or Maximum Rate of Interest
If the applicable Final Terms specifies a Minimum Rate of Interest for any Interest Period, then, in
the event that the Rate of Interest in respect of such Interest Period determined in accordance with
the provisions of paragraph (B) above is less than such Minimum Rate of Interest, the Rate of
Interest for such Interest Period shall be such Minimum Rate of Interest.
If the applicable Final Terms specifies a Maximum Rate of Interest for any Interest Period, then, in
the event that the Rate of Interest in respect of such Interest Period determined in accordance with
the provisions of paragraph (B) above is greater than such Maximum Rate of Interest, the Rate of
Interest for such Interest Period shall be such Maximum Rate of Interest.
(D)
Determination of Rate of Interest and calculation of Interest Amounts
The Interest Amount of a Floating Rate Medium Term Note or a Index Linked Interest Medium
Term Note shall be calculated by applying the Rate of Interest to each Specified Denomination,
multiplying such sum by the applicable Day Count Fraction (as defined below), and rounding the
resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such subunit being rounded upwards or otherwise in accordance with applicable market convention.
"Day Count Fraction" means, in respect of the calculation of an amount of interest in accordance
with this Condition 8(c)(ii):
9122016.23 06095153
(a)
if "Actual/365" or "Actual/Actual" is specified in the applicable Final Terms, the
actual number of days in the Interest Period divided by 365 (or, if any portion of
that Interest Period falls in a leap year, the sum of (A) the actual number of days
in that portion of the Interest Period falling in a leap year divided by 366 and (B)
the actual number of days in that portion of the Interest Period falling in a nonleap year divided by 365);
(b)
if "Actual/365 (Fixed)" is specified in the applicable Final Terms, the actual
number of days in the Interest Period divided by 365;
(c)
if "Actual/365 (Sterling)" is specified in the applicable Final Terms, the actual
number of days in the Interest Period divided by 365 or, in the case of an
Interest Payment Date falling in a leap year, 366;
(d)
if "Actual/360" is specified in the applicable Final Terms, the actual number of
days in the Interest Period divided by 360;
43
(E)
(e)
if "30/360", "360/360" or "Bond Basis" is specified in the applicable Final
Terms, the number of days in the Interest Period divided by 360 (the number of
days to be calculated on the basis of a year of 360 days with 12 30-day months
(unless (A) the last day of the Interest Period is the 31st day of a month but the
first day of the Interest Period is a day other than the 30th or 31st day of a
month, in which case the month that includes that last day shall not be
considered to be shortened to a 30-day month, or (B) the last day of the Interest
Period is the last day of the month of February, in which case the month of
February shall not be considered to be lengthened to a 30-day month)); and
(f)
if "30E/360" or "Eurobond Basis" is specified in the applicable Final Terms, the
number of days in the Interest Period divided by 360 (the number of days to be
calculated on the basis of a year of 360 days with 12 30-day months, without
regard to the date of the first day or last day of the Interest Period unless, in the
case of the final Interest Period, the Maturity Date is the last day of the month of
February, in which case the month of February shall not be considered to be
lengthened to a 30-day month).
(iii)
Interest on Dual Currency Interest Medium Term Notes. The rate or amount of interest
payable in respect of Dual Currency Interest Medium Term Notes shall be determined in
the manner specified in the applicable Final Terms.
(iv)
Interest on Partly Paid Medium Term Notes. In the case of Partly Paid Medium Term
Notes (other than Partly Paid Medium Term Notes which are Zero Coupon Medium
Term Notes), interest will accrue as aforesaid on the paid-up nominal amount of such
Partly Paid Medium Term Notes or otherwise as specified in the applicable Final Terms.
Interest payment procedures:
(i)
Calculation:
(A)
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The Calculation Agent will, in relation to each Series and Tranche (if required)
of Medium Term Notes outstanding and in respect of each Interest Period:
(x)
determine each Rate of Interest; and
(y)
calculate the Interest Amount payable in respect of each Interest Period
on or as soon as practicable after the determination of the Rate of
Interest under (x) above.
(B)
All determinations and calculations by the Calculation Agent for the purposes
of this Condition 8(c)(ii) shall (in the absence of negligence, wilful default or
manifest error) be binding on the Issuer and all the Medium Term Noteholders
and (in the absence as aforesaid) no liability to the Issuer or the Medium Term
Noteholders shall attach to the Calculation Agent in connection with the
exercise or non-exercise by it of its powers, duties and discretions pursuant to
this Condition 8(c)(ii).
(C)
If the relevant Final Terms specify that any other amount is to be calculated by
the Calculation Agent, the Calculation Agent will, as soon as reasonably
practicable after the time or times at which any such amount is to be determined,
calculate the relevant amount. The relevant amount will be calculated by the
Calculation Agent in the manner specified in the relevant Final Terms.
44
(ii)
Publication: The Calculation Agent will cause each Rate of Interest and Interest Amount
determined by it, together with the relevant Interest Payment Date, and any other
amount(s) required to be determined by it together with any relevant payment date(s) to
be notified in writing to the Paying Agents and each listing authority, stock exchange
and/or quotation system (if any) by which the Medium Term Notes have then been
admitted to listing, trading and/or quotation as soon as reasonably practicable after such
determination but (in the case of each Rate of Interest, Interest Amount and Interest
Payment Date) in any event not later than the first day of the relevant Interest Period.
The Principal Paying Agent or, as applicable, the Registrar shall promptly give notice
thereof to the Medium Term Noteholders in accordance with Condition 19 (Notices).
The Calculation Agent will be entitled to recalculate any Interest Amount (on the basis of
the foregoing provisions) without notice in the event of an extension or shortening of the
relevant Interest Period.
(iii)
Notifications etc: All notifications, opinions, determinations, certificates, calculations,
quotations and decisions given, expressed, made or obtained for the purposes of this
Condition 8 by the Calculation Agent will (in the absence of manifest error) be binding
on the Issuer, the Paying Agents and the Medium Term Noteholders and (subject as
aforesaid) no liability to any such person will attach to the Calculation Agent in
connection with the exercise or non-exercise by it of its powers, duties and discretions for
such purposes.
(iv)
Interest Payment Priority: Interest due on each Interest Payment Date in respect of each
Series of Medium Term Notes outstanding which have an Interest Payment Date on such
date shall be paid on such payment date from amounts received from the Credit Portfolio
and/or raised through issuance of Notes or drawing under any Liquidity Arrangement.
Notwithstanding the foregoing, if on any Interest Payment Date prior to an Enforcement Date the
Issuer has insufficient funds received from the Credit Portfolio and/or is unable to raise additional
funds through issuance of Notes or drawing under any Liquidity Arrangement and as a result can
not pay all principal and interest due and payable on the Medium Term Notes on such date, then
interest will be paid according to the Priority of Payments set out in Clause 14.2 (Distribution
from Custody Accounts before enforcement) of the Security Trust Deed as described in "The
Security and its enforcement –Priority of Payments before enforcement"; provided that following
an Enforcement Date, Medium Term Note interest and all other amounts will be paid according to
the Priority of Payments set out in Clause 14.3 (Distribution from Custody Accounts following
Enforcement) of the Security Trust Deed as described in "The Security and its enforcement –
Priority of Payments following Enforcement".
9.
REDEMPTION AND PURCHASE
(a)
Redemption at Maturity: Unless previously redeemed or purchased and cancelled as specified below, each
Medium Term Note (including each Index Linked Redemption Medium Term Note and Dual Currency
Redemption Medium Term Note) will be redeemed by the Issuer at its Final Redemption Amount specified
in, or determined in the manner specified in, the applicable Final Terms in the relevant Specified Currency
on the Maturity Date.
(b)
Redemption at the option of the Medium Term Noteholders:
(i)
Put Option redemption right: If so specified in the relevant Final Terms, each Medium Term Note
shall become due and payable, and may be redeemed on the Put Option Date and in an amount
equal to the Put Option Redemption Amount (as specified in the Final Terms) and upon the holder
thereof giving to the Issuer and the Principal Paying Agent not less than 15 nor more than 30 days'
notice in accordance with the Transaction Terms Agreement.
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The amount payable upon redemption of a Medium Term Note (or, where specified in the
applicable Final Terms, part thereof) pursuant to this Condition 9(b) (Redemption at the option of
the Medium Term Noteholders) shall be the Put Option Redemption Amount (as specified in the
applicable Final Terms) together with interest accrued thereon to the Put Option Date, which
amount shall be not less than the Outstanding Balance of the applicable Medium Term Note or, as
the case may be, such part thereof being redeemed on the relevant Interest Payment Date, together
with interest accrued thereon to the Put Option Date.
(ii)
Exercise of redemption option: To exercise the right to require redemption of a Medium Term
Note pursuant to sub-paragraph (i) above, the relevant Medium Term Noteholder must deliver, at
the specified offices of the Calculation Agent and the Principal Paying Agent at any time during
normal business hours (on a day other than a Saturday, Sunday or other public holiday and or
which commercial banks in the city/cities in which the specified offices are located are open for
business) falling within the notice period, a duly completed and signed notice of exercise in the
form (for the time being current and substantially in the form as set out in the Term Note Agency
Agreement) obtainable from the specified office of the Principal Paying Agent (an "Investor
Redemption Notice") and (if the Medium Term Note is represented by a Medium Term Note in
restricted global form) Block such Medium Term Note or (if the Medium Term Note is in
definitive form) deliver such Medium Term Note to the Principal Paying Agent outside the United
States (or, in the case of the Registered Medium Term Notes, to the Registrar) with the Investor
Redemption Notice.
Any Investor Redemption Notice given by any Medium Term Noteholder pursuant to this
paragraph may not be revoked.
As used in these Conditions, "Block" means that the relevant Medium Term Noteholder
irrevocably blocks the relevant Medium Term Note in Euroclear or Clearstream, Luxembourg to
the order of the Principal Paying Agent and gives to Euroclear or Clearstream, Luxembourg all
appropriate authorisations and instructions to enable such Medium Term Note to be cancelled or
exchanged, as applicable.
(c)
Redemption at the option of the Issuer: If so specified in the applicable Final Terms, the Issuer may, upon
not less than 15 nor more than 30 days' notice to the relevant Medium Term Noteholders in accordance
with Condition 19 (Notices) (which notice shall be irrevocable and shall specify the date fixed for
redemption) and to the Security Trustee, declare any Medium Term Notes, and such Medium Term Notes
shall thereby become, due and payable in whole or in part, at their Issuer Call Option Redemption Amount
together with accrued interest for such Medium Term Notes to the Issuer Call Option Date or, as the case
may be, such part thereof being redeemed, on the relevant Interest Payment Date on the next following
applicable Issuer Call Option Date(s) specified in the applicable Final Terms.
In the case of a partial redemption of Medium Term Notes, the Medium Term Notes to be redeemed
("Redeemed Medium Term Notes") will be selected individually by lot, in the case of Redeemed Medium
Term Notes represented by definitive Medium Term Notes, and in accordance with the rules of Euroclear
and/or Clearstream, Luxembourg, in the case of Redeemed Medium Term Notes represented by a Global
Medium Term Note, not more than 30 days' prior to the date fixed for redemption (such date of selection
being hereinafter called the "Selection Date"). In the case of Redeemed Medium Term Notes represented
by definitive Medium Term Notes, a list of the serial numbers of such Redeemed Medium Term Notes will
be published in accordance with Condition 19 (Notices) not less than 15 days' prior to the date fixed for
redemption. The aggregate nominal amount of Redeemed Medium Term Notes represented by definitive
Medium Term Notes shall bear the same proportion to the aggregate nominal amount of all Redeemed
Medium Term Notes as the aggregate nominal amount of definitive Medium Term Notes outstanding bears
to the aggregate nominal amount of the Medium Term Notes outstanding, in each case on the Selection
Date, provided that such first mentioned nominal amount shall, if necessary, be rounded downwards to the
nearest integral multiple of the Specified Denomination, and the aggregate nominal amount of Redeemed
Medium Term Notes represented by a Global Medium Term Note shall be equal to the balance of the
Redeemed Medium Term Notes. No exchange of the relevant Global Medium Term Note will be permitted
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during the period from (and including) the Selection Date to (and including) the date fixed for redemption
pursuant to this Condition 9(c) and notice to that effect shall be given by the Issuer to the Medium Term
Noteholders in accordance with Condition 19 (Notices) at least five days prior to the Selection Date. The
Issuer Call Option Redemption Amount cannot be less than the Minimum Call Option Redemption Amount
(as specified in the applicable Final Terms) or more than the Maximum Call Option Redemption Amount.
(d)
Restricted Funding or Enforcement Early Redemption:
Prior to the occurrence of a Mandatory Acceleration Event, the Issuer may, on any date on or after the first
anniversary date of the occurrence of a Restricted Funding Event or an Enforcement Event (and provided
that the Issuer has not reverted to Normal Operations or Restricted Investment in the period since such
Restricted Funding Event or Enforcement Event) redeem all of the Medium Term Notes outstanding, at
their respective Outstanding Balances. Any such redemption shall be effected on the next Interest Payment
Date by the Issuer giving not less than 30 nor more than 60 days' notice to the Security Trustee or Receiver
(as the case may be), the Principal Paying Agent and, in accordance with Condition 19 (Notices), the
relevant Medium Term Noteholders (which notice shall be irrevocable). The Issuer shall not deliver any
such notice in respect of any Medium Term Note unless it simultaneously delivers a notice to redeem each
other Series of Medium Term Notes and can also redeem all outstanding Commercial Paper.
For the avoidance of doubt, there is no obligation of the Issuer to redeem any Medium Term Note prior to
the Maturity Date of such Medium Term Note as a result of the occurrence of an Enforcement Event unless
a Mandatory Acceleration Event Notice has been delivered by the Security Trustee to the Issuer.
(e)
(i) Mandatory Acceleration Event Early Redemption: Upon the occurrence of a Mandatory Acceleration
Event, all Secured Obligations (including the Medium Term Notes) shall become immediately due and
payable. In particular, if the Security Trustee delivers to the Issuer a Mandatory Acceleration Event Notice,
and regardless of whether or not the Maturity Date of any Medium Term Notes outstanding has occurred,
the Issuer shall be obliged immediately to redeem all of the Medium Term Notes in accordance with the
Priority of Payments set out in Clause 14.3 (Distribution from Custody Accounts following Enforcement) of
the Security Trust Deed as described in "The Security and its enforcement – Priority of Payments following
enforcement", at their respective Outstanding Balances.
(ii) Redemption relating to certain events under the Capital Notes: If the Issuer gives notice of redemption
to, inter alios, the Holders of the Capital Notes pursuant to Condition 9(h) of the Capital Notes (Redemption
for taxation reasons), then the Issuer shall, by giving not less than 30 nor more than 60 days' notice to the
Security Trustee or Receiver (as the case may be), the Principal Paying Agent and, in accordance with
Condition 19 (Notices), the relevant Noteholders, (which notice shall be irrevocable), redeem all of the
Medium Term Notes in whole, but not in part, at their Outstanding Balances.
(f)
Outstanding Balance
"Outstanding Balance" means, at any time of determination, (i) for any Medium Term Notes other than
Medium Term Notes issued at a discount, the outstanding principal amount plus accrued and unpaid
interest thereon at such time, and (ii) for Medium Term Notes issued at a discount, the issue price of such
Medium Term Note plus accreted and unpaid discount and/or accrued and unpaid interest.
(g)
Redemption for taxation reasons:
The Medium Term Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time
(if the Medium Term Note is not a Floating Rate Medium Term Note, an Index Linked Interest Medium
Term Note or a Dual Currency Interest Medium Term Note which, in any case, has an Interest Period of
three months or less) or on any Interest Payment Date (if the Medium Term Note is a Floating Rate
Medium Term Note, an Index Linked Interest Medium Term Note or a Dual Currency Interest Medium
Term Note which, in any case, has an Interest Period of three months or less), on giving not less than 30
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nor more than 60 days' notice to the Principal Paying Agent and, in accordance with Condition 19
(Notices), to the Medium Term Noteholders (which notice shall be irrevocable), if either:
(i)
either of the Issuers has or will become obliged to make any payment of principal, premium, if
any, and interest (including discount) in respect of any Series of Medium Term Notes subject to
any withholding or deduction for or on account of any present or future taxes or duties of whatever
nature imposed or levied by or on behalf of any taxing authority thereof having power to tax and
(ii)
the Issuer has used reasonable endeavours to find a substitute issuer or to change its domicile or
residence and is unable to do so,
provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on
which the Issuer or, as the case may be, the Co-Issuer would be obliged to pay such additional amounts
were a payment in respect of the Medium Term Notes then due.
Prior to the publication of any notice of redemption pursuant to this Condition 9(g), the Issuer shall deliver
to the Principal Paying Agent a certificate signed by two Directors of the Issuer stating that the Issuer is
entitled to effect such redemption and setting forth a statement of facts showing that the conditions
precedent to the right of the Issuer to so redeem have occurred, and an opinion of independent legal
advisers of recognised standing to the effect that the Issuer or, as the case may be, the Co-Issuer, has or will
become obliged to pay such additional amounts as a result of such change, event or amendment.
Medium Term Notes redeemed pursuant to this Condition 9(g) will be redeemed at their Outstanding
Balances.
(h)
Regulatory Redemption: The Issuer, at its option, may redeem any Medium Term Notes held by any
person who was neither (A) a QIB that is also a QP that meets the other requirements applicable to the
holders of Rule 144A Notes (or beneficial interests therein) set forth herein nor (B) a Non-U.S. Person that
meets the other requirements applicable to the holders of Regulation S Notes (or beneficial interests
therein) set forth herein in an "offshore transaction" meeting the requirements of Regulation S at the time
such person acquired such Medium Term Notes (or beneficial interests therein) (in the case of (A) or (B) an
"Approved Investor") who acquired such Medium Term Notes (or beneficial interests therein) if such
person fails to sell or transfer such Medium Term Notes (or beneficial interest therein) to a person that is an
Approved Investor within 30 days of being required to do so by the Issuer. The Issuer, at its option, also
may redeem any Medium Term Notes if such redemption is necessary to comply with applicable antimoney laundering laws. Any redemption undertaken pursuant to either of the two preceding sentences
constitutes a "Regulatory Redemption". Prior to any Regulatory Redemption, the Issuer will provide
written evidence to the Principal Paying Agent and Registrar that such Regulatory Redemption is necessary
in order to comply with either the Investment Company Act or with applicable anti-money laundering laws.
The Issuer shall have sole discretion to select both the redemption date for any Regulatory Redemption (the
"Regulatory Redemption Date") and the Medium Term Notes to be redeemed. Upon receiving written
instructions from the Issuer as to the redemption date and the Medium Term Notes to be redeemed, the
Registrar, at the expense of and on behalf of the Issuer, will send written notice to the registered holder of
any Medium Term Note specified by the Issuer and being redeemed in a Regulatory Redemption not less
than five nor more than thirty Business Days prior to the Regulatory Redemption Date. In connection with
any such Regulatory Redemption, the Issuer shall on the Regulatory Redemption Date pay the Outstanding
Balance to the holder of the redeemed Medium Term Note upon presentation and surrender of such
Medium Term Note. The Issuer, at its election, also may require any holder of Medium Term Notes (in
accordance with the provisions of the Medium Term Note Dealer Agreement) (i) who is not an Approved
Investor to transfer its Medium Term Notes to an Approved Investor, or (ii) to transfer its Medium Term
Notes to an Approved Investor if such transfer is necessary to comply with applicable anti-money
laundering laws.
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(i)
Instalment Medium Term Notes
Instalment Medium Term Notes will be redeemed in the Instalment Amounts and on the Instalment Dates
(as specified in the applicable Final Terms).
(j)
Partly Paid Medium Term Notes
Partly Paid Medium Term Notes will be redeemed, whether at maturity, early redemption or otherwise, in
accordance with the provisions of this Condition 9 and the applicable Final Terms.
(k)
Purchase: The Issuer may, at any time, in agreement with the relevant Medium Term Noteholders,
purchase Medium Term Notes in any manner and at any price. If purchases are made by tender, tender
offers must be made available to all Medium Term Noteholders.
(l)
Cancellation: All Medium Term Notes which are redeemed or purchased shall be cancelled, but without
prejudice to the Issuer's rights under Condition 18 (Further issues) to issue further Medium Term Notes.
All Medium Term Notes which are purchased by the Issuer may, at the option of the Issuer, be cancelled,
held, resold or reissued, provided that any such Medium Term Notes that are resold or reissued shall be
treated as new Medium Term Notes.
(m)
Late Payment on Zero Coupon Notes: If the amount payable in respect of any Zero Coupon Medium Term
Note upon redemption of such Zero Coupon Medium Term Note pursuant to this Condition 9 is improperly
withheld or refused, the amount due and repayable in respect of such Zero Coupon Medium Term Note
shall be the Amortised Face Amount calculated as provided below in this Condition 9(m) as though the
references therein to the date fixed for the redemption or the date upon which such Zero Coupon Medium
Term Note becomes due and payable were replaced by references to the date which is the earlier of:
(a)
the date on which all amounts due in respect of such Zero Coupon Medium Term Note have been
paid; and
(b)
five days after the date on which the full amount of the moneys payable in respect of such Zero
Coupon Medium Term Notes has been received by the Principal Paying Agent and notice to that
effect has been given to the Noteholders in accordance with Condition 19 (Notices).
In the case of a Zero Coupon Medium Term Note, the amortised face amount ( the "Amortised Face
Amount") shall be calculated in accordance with the following formula:
Amortised Face Amount = RP × (1 + AY)Y
where:
"RP"
means the Reference Price;
"AY"
means the Accrual Yield expressed as a decimal; and
"Y"
is a fraction the numerator of which is equal to the number of days (calculated on the basis of a
360-day year consisting of 12 months of 30 days each) from (and including) the Issue Date of the
Medium Term Notes to (but excluding) the date of redemption and the denominator of which is
360.
10.
PAYMENTS
(a)
Principal: Payments of principal due on redemption of Medium Term Notes in accordance with Condition
9 (Redemption and purchase) shall be made only against presentation and (provided that payment is made
in full) surrender of the relevant Medium Term Note Certificate at the Specified Office of the Registrar or
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any Transfer Agent. If the due date for payment of principal in respect of any Registered Medium Term
Note is not a Relevant Financial Centre Day, then the holder thereof will not be entitled to payment thereof
until the next day which is such a day, and from such day and thereafter will be entitled to receive payment
by cheque on any Local Banking Day and will be entitled to payment by transfer to a designated account on
any day which is a Local Banking Day, a Relevant Financial Centre Day and a day on which commercial
banks and foreign exchange markets settle payments in the relevant currency in the place where the
relevant designated account is located, and no further payment on account of interest or otherwise shall be
due in respect of such postponed payment unless there is a subsequent failure to pay in accordance with
these Conditions in which event interest shall continue to accrue at the rate in effect immediately prior to
such date.
(b)
Interest: Payments of interest due (other than on final redemption) in respect of the Medium Term Notes
will be paid to the holder thereof (or, in the case of joint holders, the first-named) as appearing in the
Register as at opening of business (local time in the place of the specified office of the Registrar) on the
fifteenth Relevant Banking Day (in the place of the specified office of the Registrar) before the due date for
such payment (the "Record Date").
(c)
Currency: Notwithstanding the provisions of Condition 10(e) (Payments), payment of amounts (whether
principal, interest or otherwise) due (other than on final redemption) in respect of the Medium Term Notes
will be made in the currency in which such amount is due by cheque posted to the address as recorded in
the Register of the holder thereof (or, in the case of joint holders, the first-named) on the applicable
Banking Day not later than the relevant due date for payment, unless prior to the relevant Record Date, the
holder thereof (or, in the case of joint holders, the first-named) has applied to the Registrar and the
Registrar has acknowledged such application for payment to be made to a designated account denominated
in the relevant currency, in which case payment shall be made on the relevant due date for payment by
transfer to such account. In the case of payment by transfer to an account, if the due date for any such
payment is not a Relevant Financial Centre Day, then the holder thereof will not be entitled to payment
thereof until the first day thereafter which is a Relevant Financial Centre Day and a day on which
commercial banks and foreign exchange markets settle payments in the relevant currency in the place
where the relevant designated account is located, and no further payment on account of interest or
otherwise shall be due in respect of such postponed payment unless there is a subsequent failure to pay in
accordance with these Conditions in which event interest shall continue to accrue at the rate in effect
immediately prior to such date.
(d)
Partial payments: If a Paying Agent makes a partial payment in respect of any Medium Term Note
Certificate presented to it for payment, such Paying Agent will endorse thereon a statement indicating the
amount and date of such payment.
(e)
Payments: Payments of amounts due (whether principal, interest or otherwise) in respect of Medium Term
Notes will be made in the currency in which such amount is due by transfer to an account denominated in
that currency and maintained by the payee with a bank in the Relevant Financial Centre of that currency
(which shall be, in the case of a sterling cheque, a town clearing branch of a bank in the City of London).
Notwithstanding the foregoing, the Issuer shall make payments of principal and the Interest Amount with
respect to the Medium Term Notes in the Specified Currency submitted to DTC. The Issuer will make
payments to the Principal Paying Agent in the Specified Currency. The Exchange Agent has been
appointed by the Issuer to convert designated portions of payments into U.S. Dollars. Beneficial owners of
Medium Term Notes, acting through a Participant, may choose to receive principal or Interest Amount
payments in U.S. dollars through DTC's facilities. At present, DTC can only accept payments in U.S.
dollars. The entire payment of principal or the Interest Amount to DTC shall be made in U.S. Dollars
unless DTC is notified by one or more of its Participants holding an interest in a Medium Term Note, or
through which an interest in the Medium Term Notes is held, that it elects to receive such payment, or a
portion thereof, in the Specified Currency outside of DTC.
In the case of payment outside of DTC, DTC will notify the Principal Paying Agent five business days
prior to each date on which interest or principal is scheduled to be paid, of the amount of such payment to
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be received in the Specified Currency and the applicable wire transfer instructions, and the Principal Paying
Agent shall use such instructions to pay or procure the payment of Participants. If DTC does not so notify
the Principal Paying Agent, it is understood that only U.S. dollar payments are to be made in respect of the
payment. The remainder of the payment due Cede & Co., as nominee of DTC, in the Specified Currency
shall be converted from the Specified Currency into U.S. dollars in accordance with provisions of the Term
Note Agency Agreement or other such document authorizing and providing the terms of such currency
conversions. The Principal Paying Agent shall then credit or procure the crediting of the U.S. dollar
payment to Cede & Co., as nominee of DTC, in accordance with the DTC Rules.
In the event that the Principal Paying Agent is unable to convert the Specified Currency into U.S. dollars,
the Principal Paying Agent will notify DTC that the entire payment is to be made in the Specified
Currency. DTC will thereafter ask its Participants for payment instructions and will forward such
instructions to the Principal Paying Agent, which shall use such instructions to pay Participants directly.
Neither the Exchange Agent nor the Principal Paying Agent is liable for any loss or liability suffered by
any person, including, without limitation, any holders of Medium Term Notes who have made a loss or
incurred liability as a result of any foreign exchange transactions conducted by the Exchange Agent,
except, in the case of the Exchange Agent, any loss or incurred liability resulting from the Exchange
Agent’s negligence, wilful misconduct or fraud.
DTC is unable to accept payments denominated in any currency other than U.S. Dollars in respect of any
Rule 144A Global Medium Term Note. Accordingly, DTC Participants which hold interests in the Rule
144A Global Medium Term Note must in accordance with the DTC Rules notify DTC five business days
prior to each date on which interest on or principal of the Rule 144A Global Medium Term Note is
scheduled to be paid (i) that they wish to be paid in currency other than U.S. Dollars and (ii) of the relevant
bank account details into which such payments in currency other than U.S. Dollars are to be made. If such
instructions are not received, the Exchange Agent will exchange the relevant amount in the relevant
currency other than U.S. Dollars into U.S. Dollars in accordance with the Term Note Agency Agreement.
(f)
Payments subject to fiscal Laws: All payments in respect of the Medium Term Notes are subject in all
cases to any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to
the provisions of Condition 11 (Taxation).
(g)
Record Date: Except as otherwise specified in these Conditions, each payment in respect of a Medium
Term Note will be made to the person shown as the holder of such Medium Term Note in the Register as at
the opening of business (in the place of the Registrar's Specified Office) on the Record Date. Where
payment in respect of a Medium Term Note is to be made by cheque, the cheque will be mailed to the
address shown as the address of such Medium Term Noteholder in the Register at the opening of business
on the relevant Record Date.
(h)
Definitions: As used above:
(i)
"Local Banking Day" means a day (other than a Saturday or Sunday) on which
commercial banks are open for business (including dealings in foreign exchange and
foreign currency deposits) in the place of presentation of the relevant Medium Term
Note;
(ii)
"Relevant Banking Day" means, in respect of any city, any day on which commercial
banks are open for business (including dealings in foreign exchange and foreign currency
deposits) in that city; and
(iii)
"Relevant Financial Centre Day" means, in the case of any currency other than Euro, a
day on which commercial banks and foreign exchange markets settle payments in the
Relevant Financial Centre or in the case of payment in Euro, a day on which the
TARGET System is operating.
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(i)
Exchange controls etc.: If by reason of force majeure or an act of state (including the imposition of
exchange controls), it becomes impossible or unlawful for the Issuer to make, or the Issuer is prevented
from making, payments under any Medium Term Note in the Specified Currency, payment under such
Medium Term Notes shall be made in U.S. Dollars in same day funds at the Exchange Rate.
(j)
Interpretation of principal and interest: Any reference in these Terms and Conditions to payments of
principal in respect of the Notes shall be deemed to include, as applicable:
(a)
any additional amounts which may be payable with respect to principal under Condition
9 (Redemption and purchase);
(b)
the Final Redemption Amount (as specified in the applicable Final Terms) (if any) of the
Medium Term Notes;
(c)
the Put Option Redemption Amount(s) or the Issuer Call Option Redemption Amount(s)
(as specified in the applicable Final Terms) (if any) of the Medium Term Notes;
(d)
in relation to Notes redeemable in instalments, the Instalment Amounts (as specified in
the applicable Final Terms); and
(e)
any premium and any other amounts (other than interest) which may be payable by the
Issuer under or in respect of the Medium Term Notes.
Any reference in the Conditions to interest in respect of the Medium Term Notes shall be deemed
to include, as applicable, any additional amounts which may be payable with respect to interest
under Condition 8 (Interest Provisions).
11.
TAXATION
(a)
Payments free of Tax: The Issuer has been formed as a company under the laws of Ireland. All payments
of principal and interest in respect of the Medium Term Notes by or on behalf of the Issuer shall be made
free and clear of, and without withholding or deduction for, any present or future taxes, duties, assessments
or governmental charges of whatsoever nature imposed, levied, collected, withheld or assessed of any
political subdivision or any authority thereof or therein having power to tax (each, a "Taxing
Jurisdiction"), unless such withholding or deduction is required by law. In such event, without prejudice
to the Issuer's right of redemption under Condition 9(g) (Redemption for taxation reasons), the Issuer will
pay such additional amounts as shall be necessary in order that the net amounts received by the Medium
Term Noteholders or Receipts after such withholding or deduction shall equal the respective amounts of
principal and interest which would otherwise have been receivable in respect of the Medium Term Notes or
Receipts, as the case may be, in the absence of such withholding or deduction; except that no such
additional amounts shall be payable with respect to any Medium Term Note or Receipt:
(i)
presented for payment in Ireland; or
(ii)
presented for payment by or on behalf of a holder who is liable for such taxes or duties in respect
of such Medium Term Note or Receipt by reason of his having some connection with a Taxing Jurisdiction
other than the mere holding of such Medium Term Note or Receipt; or
(iii)
presented for payment more than 30 days after the Relevant Date (as defined below) except to the
extent that the holder thereof would have been entitled to an additional amount on presenting the same for
payment on such thirtieth day assuming that day to have been a Local Banking Day, a Relevant Banking
Day in respect of London, United Kingdom, and a Relevant Financial Centre Day; or
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(iv)
where such withholding or deduction is imposed on a payment to an individual and is required to
be made pursuant to European Council Directive 2003/48/EC or any law implementing or complying with,
or introduced in order to conform to, such Directive; or
(v)
presented for payment by or on behalf of a holder who would have been able to avoid such
withholding or deduction by presenting the relevant Medium Term Note or Receipt to another Paying
Agent in a Member State of the European Union; or
(vi)
in respect of which the holder is failing to comply with any certification, identification or other
reporting requirements concerning the nationality, residence, identity or connection with the United States
of such holder, if compliance is required by statute or by regulation as a precondition to exemption from
such withholding or deduction.
As used herein, the "Relevant Date" means the date on which such payment first becomes due, except that,
if the full amount of the moneys payable has not been duly received by the Principal Paying Agent on or
prior to such due date, it means the date on which, the full amount of such moneys having been so received,
notice to that effect is duly given to the Medium Term Noteholders in accordance with Condition 19
(Notices).
(b)
Change of domicile or residence: Subject as provided below, in the event the Issuer satisfies the Principal
Paying Agent that it has or will, on the occasion of the next payment due in respect of Medium Term
Notes, become obliged by any applicable law to withhold or deduct for or on account of or would suffer
additional taxation in respect of its income imposed by any jurisdiction as a result of any change in,
amendments or additions to, any applicable laws or regulations of the relevant Taxing Jurisdiction so that it
would be unable to make payment of the full amount that would otherwise be due but for the imposition of
such tax due, the Issuer (with the consent of the Principal Paying Agent and save as provided below) shall
use all reasonable endeavours to arrange for the substitution of a company incorporated in another
jurisdiction approved by the Principal Paying Agent as the principal obligor under the Medium Term
Notes, or to change its domicile or residence for taxation purposes to another jurisdiction approved by the
Principal Paying Agent, subject to (i) a Rating Confirmation and consent of the holders of the affected
Notes in respect of any substitution or change of domicile or residence, (ii) consent of the Security Trustee,
and (iii) an opinion of nationally recognised U.S. tax counsel that such substitution or change of domicile
or residence will not have a material adverse effect on the U.S. federal income tax characterisation of the
Issuer.
Notwithstanding the above, if any taxes, duties or charges of whatever nature arise:
(i)
due to any present or former connection between the Medium Term Noteholder (or between a
fiduciary, settlor, beneficiary, member or shareholder of such holder, if such holder is an estate, a
trust, a partnership or a corporation) of a Medium Term Note and the relevant Taxing Jurisdiction
otherwise than by reason only of the holding of a Medium Term Note or receiving principal or
interest in respect thereof; or
(ii)
by reason of failure by the relevant Medium Term Noteholder to comply with any applicable
procedures required to establish non-residence or other similar claim for exemption from such tax;
or
(iii)
in respect of payment to an individual which is required to be made pursuant to European Council
Directive 2003/48/EC or any law implementing or complying with, or introduced in order to
conform to, such Directive; or
(iv)
as a result of presentation for payment by or on behalf of a Medium Term Noteholder who would
have been able to avoid such withholding or deduction by presenting the relevant Medium Term
Note to another Paying Agent in a Member State of the European Union,
9122016.23 06095153
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the requirement to arrange for the substitution of the Issuer as principal obligor and/or the change of
domicile or residence of the Issuer for taxation purposes shall not apply.
(c)
U.S. federal income tax: Unless otherwise provided for in the relevant Final Terms, each holder of
Medium Term Notes by acquiring Medium Term Notes hereunder is deemed to agree to treat such Medium
Term Notes as debt issued by the Issuer for purposes of United States federal, state and local income taxes
and any other taxes imposed on or measured by income.
12.
ENFORCEMENT EVENTS
Each of the following events will be an "Enforcement Event":
(a)
the occurrence of a default, other than a Technical Default, in payment of any principal of, or interest on,
any Senior Notes when due;
(b)
the occurrence of (i) a default, other than a Technical Default, in payment of interest (excluding Variable
Margin) on any Capital Note (other than on any Junior Capital Note) on the Legal Maturity Date relating to
such Capital Note or (ii) the failure of the Issuer (for reasons other than Technical Default) to redeem any
Capital Note (other than any Junior Capital Note) in accordance with the Conditions of the Capital Notes
on the Legal Maturity Date relating to such Capital Note;
(c)
the occurrence of a Liquidity Specified Default, other than a Technical Default;
(d)
the occurrence of a Derivative Specified Default, other than a Technical Default;
(e)
the occurrence of a Repo Specified Default;
(f)
the occurrence of a Mandatory Acceleration Event; or
(g)
a breach of the Major Capital Loss Test if such breach remains unremedied immediately following the
expiry of a cure period of five Business Days commencing on the date of such breach.
No Medium Term Noteholders of any Series of Medium Term Notes shall be entitled to proceed directly
against the Issuer to enforce the Security unless the Security Trustee, having become bound so to proceed
upon the instructions of the requisite Senior Creditors, fails to do so within a reasonable period and such
failure shall be continuing. To the extent that there is a conflict between the interests of the Senior
Creditors and the interests of the other Secured Creditors, the Security Trustee or the Receiver (as
applicable) will give priority to the interests of the Senior Creditors.
"Technical Default" means a default in payment of any principal of or interest on any Obligation occurring
solely as the result of an administrative or operational event (provided that reasonable steps have been
taken to prevent the recurrence of such event) or condition or an act of God or emergency outside the
control of the Issuer (including natural disaster, nationalisation, currency restrictions, act of terrorism, act
of war, breakdown or failure of transmission, communications or computer facilities of third parties, postal
or other strikes or industrial action or the failure or disruption of any relevant stock exchange, Clearing
System, settlement system or market), which default (i) with respect to payments of interest or principal of
any ECP Notes or USCP Notes is cured within three Business Days from the time of such default, (ii) with
respect to payments of interest or principal of any Medium Term Notes is cured within three Business Days
from the time of such default and (iii) with respect to payments of interest or principal of any Capital Notes
is cured within five Business Days from the time of such default.
The occurrence of an Enforcement Event does not automatically lead to an acceleration of the Notes except
upon the occurrence of a Mandatory Acceleration Event as described in Condition 9(e)(i) (Mandatory
Acceleration Event Early Redemption). Upon the occurrence of an Enforcement Event, the Security
Trustee will take the actions provided under the Security Trust Deed; provided that, the Security Trustee is
9122016.23 06095153
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not required to take any particular action, to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties, or in the exercise of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or indemnity satisfactory to it against such
risk or liability is not assured to it. In such circumstances the Security Trustee is entitled to refrain from
performing such duties or exercising such rights or powers unless and until it has been indemnified and/or
secured to its satisfaction against any fees, costs, expenses or liabilities which it may incur. See Condition 6
(Security) and "The Security and its enforcement".
13.
MATURITY DATE
The Maturity Date of each Medium Term Note shall be specified in the relevant Final Terms.
14.
PRESCRIPTION
Claims for principal shall become void unless the relevant Medium Term Notes or (if applicable) Medium
Term Note Certificates are presented for payment within ten years of the appropriate Relevant Date.
Claims for interest shall become void unless the relevant Medium Term Note Certificates (if applicable) are
presented for payment within five years of the appropriate Relevant Date.
15.
REPLACEMENT OF MEDIUM TERM NOTES AND MEDIUM TERM NOTE CERTIFICATES
If any Medium Term Note is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the
Specified Office of the Principal Paying Agent and if any Medium Term Note Certificate is lost, stolen,
mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Registrar (and, if the
Medium Term Notes are then admitted to trading and/or quotation by any listing authority, stock exchange
and/or quotation system which requires the appointment of a Paying Agent in any particular place, the
Paying Agent having its Specified Office in the place required by the rules of such listing authority, stock
exchange and/or quotation system), subject to all applicable laws and listing authority, stock exchange
and/or quotation system requirements, upon payment by the claimant of the expenses incurred in
connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as
the Issuer may reasonably require.
Mutilated or defaced Medium Term Notes or Medium Term Note Certificates must be surrendered before
replacements will be issued.
16.
PAYING AGENTS
(a)
In acting under the Term Note Agency Agreement and in connection with the Medium Term Notes, the
Paying Agents act solely as agents of the Issuer, and, if applicable, the Co-Issuer, and do not assume any
obligations towards or relationship of agency or trust for or with any of the Medium Term Noteholders.
(b)
The initial Paying Agents and their initial specified offices are listed in clause (d) below. The Issuer
reserves the right at any time to vary or terminate the appointment of any Principal Paying Agent and to
appoint a successor Principal Paying Agent or Calculation Agent and additional or successor paying agents;
provided, however, that:
(i)
the Issuer shall at all times maintain a Principal Paying Agent; and
(ii)
the Issuer shall maintain a Paying Agent in an EU member state that will not be obliged to
withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any law
implementing or complying with, or introduced to conform to, such Directive;
(iii)
if a Calculation Agent is specified in the relevant Final Terms, the Issuer shall at all times
maintain a Calculation Agent; and
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(iv)
if and for so long as the Medium Term Notes are admitted to trading and/or quotation by any
listing authority, stock exchange and/or quotation system which requires the appointment of a
Paying Agent in any particular place, the Issuer shall maintain a Paying Agent having its Specified
Office in the place required by the rules of such listing authority, stock exchange and/or quotation
system.
(c)
Notice of any change in any of the Paying Agents or in their Specified Offices shall promptly be given to
the Medium Term Noteholders in accordance with Condition 19 (Notices) below.
(d)
The initial Specified Offices of the initial Paying Agents are as follows:
The Bank of New York, London branch, as Principal Paying Agent
One Canada Square
London E14 5AL
United Kingdom
The Bank of New York, New York branch, as New York Paying Agent and as
Registrar
101 Barclay Street
New York, New York 10286
BNY Fund Services (Ireland) Limited, as Irish Paying Agent
Guild House, Guild Street
IFSC, Dublin, Ireland
17.
MEETINGS OF MEDIUM TERM NOTEHOLDERS; MODIFICATION AND WAIVER
The Issuer may, without the consent of any Medium Term Noteholder, modify, amend or supplement any
of the Conditions of the Medium Term Notes or any provisions of the Term Note Agency Agreement for
the purpose of: (i) adding to the covenants of the Issuer for the benefit of the holders of Medium Term
Notes (or any Series thereof); (ii) surrendering any right or power conferred upon the Issuer; (iii) providing
additional security for the Medium Term Notes (or any Series thereof); (iv) evidencing the succession of
another person to the Issuer and the assumption by such successor of the covenants and obligations of the
Issuer in the Term Note Agency Agreement and in the Medium Term Notes in accordance with the terms
of the Term Note Agency Agreement, the Security Trust Deed and the Medium Term Notes; (v) correcting
or supplementing any defective provision contained in the Term Note Agency Agreement or in the Medium
Term Notes in a manner which does not have a material adverse effect on the interest of any outstanding
Medium Term Noteholders; (vi) modifying the restrictions on and procedures for resales and other transfers
of the Medium Term Notes and/or beneficial interests therein to reflect any change in applicable law or
regulation (or the interpretation thereof) or in practices relating to resales or other transfers of restricted
securities generally; (vii) enabling the Issuer to rely upon any exclusion from the definition of "investment
company" under the Investment Company Act that may become available, provided, in each case, that no
such amendment or supplement shall have a material adverse effect on any outstanding Medium Term
Noteholder; (viii) ensuring that the Issuer will not be treated as engaged in a trade or business within the
United States for U.S. federal income tax purposes or otherwise subject to U.S. federal income tax; or (ix)
making any modification of any of the Conditions of the Medium Term Notes or any provisions of the
Term Note Agency Agreement in any manner which the Issuer (in consultation with the Security Trustee)
may reasonably determine and which does not have a material adverse effect upon the interest of any
outstanding Medium Term Noteholders; provided, in each case, that (A) a Rating Confirmation shall have
been obtained and (B) such modification shall not have an adverse effect on the ability of the Issuer to rely
on the exception from registration provided by Section 3(c)(7) of the Investment Company Act, whilst it
intends to so rely. Any such modification to the Medium Term Notes will be conclusive and shall be
binding on the Medium Term Noteholders and all future Medium Term Noteholders and any notes issued
in exchange or substitution therefor, whether or not any notation thereof is made thereon, and notice of
such modification shall be provided to the Medium Term Noteholders as soon as practicable thereafter in
accordance with Condition 19 (Notices). The Principal Paying Agent shall not be obligated to enter into
9122016.23 06095153
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any amendment, waiver or addendum that affects the Principal Paying Agent's rights, duties, immunities or
indemnities under the Term Note Agency Agreement or the other Transaction Documents.
In addition, the Issuer, the Principal Paying Agent, the Irish Paying Agent, the Registrar, the Exchange
Agent, the New York Paying Agent and the Transfer Agent may agree, with the consent of the Majority
Medium Term Noteholders, to any other modification of the provisions of the Term Note Agency
Agreement or the Conditions of the Medium Term Notes; provided that, in each case, a Rating
Confirmation shall have been obtained. Any such modification to the Term Note Agency Agreement and
the Conditions of the Medium Term Notes will be conclusive and binding upon the Medium Term
Noteholders and all future Medium Term Noteholders and any notes issued in exchange or substitution
therefor, whether or not any notation thereof is made thereon, and notice of such modification shall be
provided to the Medium Term Noteholders as soon as practicable thereafter in accordance with Condition
19 (Notices).
Notwithstanding anything herein to the contrary, no modification, amendment or supplement to the
Conditions of the Medium Term Notes or the Term Note Agency Agreement (excluding the issuance of
additional Medium Term Notes in accordance with the terms of the Term Note Agency Agreement) may,
without the written consent of each Medium Term Noteholder affected thereby: (i) change the due date for
the payment of the principal of or any instalment of interest on any Medium Term Note or impair the right
to institute suit for the enforcement of any such payment, change the Redemption Amount relating to such
Medium Term Note or the currency of any Medium Term Note (other than any redenomination of any
Medium Term Note in Euro pursuant to Condition 3(c) (Redenomination, renominalisation and
reconventioning) upon the country of a Specified Denomination becoming, or announcing its intention to
become, a Participating Member State); (ii) reduce the principal amount of any Medium Term Note or the
Rate of Interest thereon; (iii) reduce the proportion of the principal amount of Medium Term Notes the
consent of the Medium Term Noteholders of which is necessary to modify or amend the Term Note
Agency Agreement or the Conditions of the Medium Term Notes or to make, take or give consent, waiver
or other action provided thereby to be made, taken or given; (iv) cause the Issuer to be treated as engaged in
a trade or business within the United States for U.S. federal income tax purposes or otherwise subject to
U.S. federal income tax or (v) reduce the quorum or voting required at any meeting of holders of Medium
Term Notes.
The Term Note Agency Agreement contains provisions for convening meetings of Medium Term
Noteholders (or any Series of Medium Term Noteholders) to consider any matter affecting their interests.
18.
FURTHER ISSUES
The Issuer or Issuers, as the case may be, may from time to time, without the consent of the Medium Term
Noteholders, create and issue further Tranches of existing Series or new Series of Medium Term Notes
upon such terms as to interest, premium, redemption and otherwise as the Issuer, or the Issuers, as the case
may be, may, in its or their absolute discretion, at the time of issue thereof determine; provided that: 1)
each additional issuance of Medium Term Notes will not exceed the Medium Term Note Maximum
Amount; 2) as a result of such issuance, the Top Rating of any Senior Note then outstanding would not be
reduced or withdrawn without the approval of all of the holders of such affected Senior Notes; 3) after
giving effect to such issuance, no Restricted Funding Event or Restricted Investment Event would have
occurred; 4) no Enforcement Event has occurred or after giving effect to such issuance would have
occurred; and 5) such issuance would not be in breach of any of the Restricted Investment Procedures or
Restricted Funding Procedures.
19.
NOTICES
Notices to the Medium Term Noteholders shall be valid if published in a leading English language daily
newspaper published in London (which is expected to be the Financial Times) and, if the Medium Term
Notes are listed on the Irish Stock Exchange and the rules of that exchange so require, a leading newspaper
having general circulation in Ireland (which is expected to be the Financial Times) or in either case, if such
publication is not practicable, in a leading English language daily newspaper having general circulation in
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Europe. Any such notice shall be deemed to have been given on the date of first publication (or if required
to be published in more than one newspaper, on the first date on which publication shall have been made in
all the required newspapers). In addition, if and so long as Medium Term Notes are listed on the Irish
Stock Exchange and the rules of the Irish Stock Exchange so require, any notices to Medium Term
Noteholders shall also be forwarded to the Company Announcement Office of the Irish Stock Exchange no
later than the day of dispatch.
20.
CURRENCY INDEMNITY
If any sum due from the Issuer in respect of the Medium Term Notes or any order or judgment given or
made in relation thereto has to be converted from the currency (the "first currency") in which the same is
payable under these Conditions or such order or judgment into another currency (the "second currency")
for the purpose of (a) making or filing a claim or proof against the Issuer, (b) obtaining an order or
judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to
the Medium Term Notes, the Issuer shall indemnify each Medium Term Noteholder, on the written demand
of such Medium Term Noteholder addressed to the Issuer and delivered to the Issuer or to the Specified
Office of the Principal Paying Agent, against any loss suffered as a result of any discrepancy between (i)
the rate of exchange used for such purpose to convert the sum in question from the first currency into the
second currency and (ii) the rate or rates of exchange at which such Medium Term Noteholder may, in the
ordinary course of business, purchase the first currency with the second currency upon receipt of a sum
paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.
This indemnity constitutes a separate and independent obligation of the Issuer and shall give rise to a
separate and independent cause of action.
21.
GOVERNING LAW AND JURISDICTION
(a)
Governing law: The Medium Term Notes are governed by, and shall be construed in accordance with, the
laws of England and Wales.
(b)
Jurisdiction: The Issuer agrees for the benefit of the Medium Term Noteholders that the courts of England
shall have jurisdiction to hear and determine any suit, action or proceedings, and to settle any disputes,
which may arise out of or in connection with the Medium Term Notes (respectively, "Proceedings" and
"Disputes") and, for such purposes, irrevocably submits to the non-exclusive jurisdiction of such courts.
Each of the Issuer and the Co-Issuer also agrees for the benefit of the Medium Term Note Dealers of the
Medium Term Notes offered pursuant to Rule 144A (the "U.S. Medium Term Note Dealers") that any
Proceedings or Disputes may be brought in the courts of the State of New York or the courts of the United
States of America located in the County of New York and, for such purposes, irrevocably consents and
irrevocably submits to the non-exclusive jurisdiction of each such court.
(c)
Appropriate forum: The Issuer irrevocably waives any objection which it might now or hereafter have to
the courts of England being nominated as the forum to hear and determine any Proceedings and to settle
any Disputes, and agrees not to claim that any such court is not a convenient or appropriate forum.
Each of the Issuer and the Co-Issuer also irrevocably waives any objection that it may now or hereafter
have to the laying of venue of any Proceeding or Dispute brought in the United States federal courts located
in the County of New York or the courts of the State of New York located in the County of New York and
hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court
that any Proceeding or Dispute brought in any such court has been brought in an inconvenient forum.
(d)
Process agent: The Issuer and Co-Issuer each irrevocably appoints IKB Credit Asset Management GmbH,
London branch, at 80 Cannon Street, London, EC4N 6HL, United Kingdom, or, if different, its registered
office in England for the time being as its authorised agent to receive for and on its behalf, service of
process for any proceedings in England. If such person is not or ceases to be effectively appointed to accept
9122016.23 06095153
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service of process on the Issuer's behalf, the Issuer irrevocably agrees to appoint a further person in
England to accept service of process on its behalf and shall immediately notify the Medium Term
Noteholders and Security Trustee thereof. Nothing in this paragraph shall affect the right of any Medium
Term Noteholder to serve process in any other manner permitted by law.
Each of the Issuer and the Co-Issuer also irrevocably designates, appoints and empowers Corporation
Service Company, with offices currently at 1333 Avenue of the Americas, Suite 3100, New York, New
York 10036, United States of America, as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and its properties, assets and revenues, service of any and all legal
process, summons, notices and documents that may be served in any Proceedings or Disputes in any such
United States Federal or state court located in the County of New York and that may be made on such
designee, appointee and agent in accordance with legal procedures prescribed for such courts. If for any
reason such designee, appointee and agent hereunder shall cease to be available to act as such, the Issuer
and the Co-Issuer irrevocably agree to designate a new designee, appointee and agent in the County of New
York on the terms and for the purposes of this Condition 21(d) and shall immediately notify the Medium
Term Noteholders and Security Trustee thereof.
Each of the Issuer and the Co-Issuer further hereby irrevocably consents and agrees to the service of any
and all legal process, summons, notices and documents in any such Proceedings or Disputes by serving a
copy thereof upon the relevant agent for service of process referred to in this Condition 21(d) (whether or
not the appointment of such agent shall, for any reason, prove to be ineffective or such agent shall accept or
acknowledge such service) or by mailing copies thereof by registered or certified air mail, postage prepaid,
to the Issuer and the Co-Issuer, if applicable, at their respective addresses specified in or designated
pursuant to the Transaction Terms Agreement. Each of the Issuer and the Co-Issuer agrees that such
service shall be deemed completed on delivery to such process agent. Failure of any such designee,
appointee and agent to give any notice of such service to it (whether or not it is forwarded to and received
by the Issuers) shall not impair or affect in any way the validity of such service or any judgment rendered
in any action or proceeding based thereon.
Nothing herein shall in any way be deemed to limit the ability of the Paying Agents, the Exchange Agent,
the Calculation Agent, the Custodian, the Administrator, the Registrar, the Liquidity Providers, the Security
Trustee or the U.S. Medium Term Note Dealers to service any such legal process, summons, notices and
documents in any other manner permitted by applicable law or to obtain jurisdiction over the Issuer or the
Co-Issuer or bring actions, suits or proceedings against them in such other jurisdictions, and in such
manner, as may be permitted by applicable law.
(e)
Non-exclusivity: The submission to the jurisdiction of the courts of England and New York shall not (and
shall not be construed so as to) limit the right of any Medium Term Noteholder to take Proceedings in any
other court of competent jurisdiction, nor shall the taking of Proceedings in any one or more jurisdictions
preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not) if and to the
extent permitted by law.
22.
LIMITED RECOURSE AND NO PETITION
(a)
Notwithstanding the provisions of Condition 21(e) (Non-Exclusivity), Medium Term Noteholders
acknowledge and agree that all payments by the Issuers shall be payable solely from the realisation of the
Collateral and shall be made in accordance with the Transaction Documents. Notwithstanding any
provisions contained in a Transaction Document to the contrary, the Issuers shall not, and shall not be
obligated to, pay any fees, costs, expenses or other liabilities due pursuant to any Transaction Document
unless the Issuer has funds which may be used to make such payment in accordance with the Transaction
Documents. Any amount which the Issuer does not pay pursuant to the operation of the preceding sentence
shall not constitute a claim against or obligation of the Issuers for any such insufficiency unless and until
the Issuer has funds which may be used to make such payment.
(b)
No recourse under any obligation, covenant, or agreement (including the payment of any fees or any other
obligations) of the Issuers contained in any Transaction Document or any agreement, instrument or
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document entered into by either of the Issuers shall be had against any shareholder, officer, agent or
director of the Issuers as such, by the enforcement of any assessment or by any legal proceeding, by virtue
of any statute or otherwise; it is expressly agreed and understood that each Transaction Document to which
either of the Issuers is expressed to be a party is a corporate or limited liability company obligation of the
Issuers, and no personal liability shall attach to or be incurred by the shareholders, officers, agents or
directors of the Issuers as such, or any of them, under or by reason of any of the obligations, covenants or
agreements of the Issuers contained in or implied from any of the Transaction Documents, and that any and
all personal liability for breaches by the Issuers of any of such obligations, covenants or agreements, either
under any applicable law, or by statute or constitution, of every shareholder, officer, agent or director of the
Issuers is hereby expressly waived by each investor as a condition of and consideration for the execution of
that Transaction Document.
(c)
Medium Term Noteholders agree that they shall not, until at least two years and one day after full payment
of all of the Obligations (or after the expiration of any other preference period then in effect), take any
corporate or limited liability company action or other steps or legal proceedings, or join any other person in
taking any corporate or limited liability company action or other steps or legal proceedings, in each case
under the laws of any applicable jurisdiction, for the winding-up, dissolution, liquidation, examination,
administration or re-organisation or any equivalent or analogous proceedings or for the appointment of a
receiver, administrator, administrative receiver, trustee, liquidator, sequestrator, examiner or similar officer
of the Issuer or Co-Issuer, as applicable, or of the Issuer's revenues and assets.
(d)
The provisions of this Condition 22 shall survive the termination or expiry of each Transaction Document
and the resignation or removal of any party thereto.
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FINAL TERMS FOR MEDIUM TERM NOTES
Set out below is the form of Final Terms which will comprise the details of the final terms of, and will be
completed for, each Tranche of Medium Term Notes issued pursuant to the Medium Term Note Programme and
which constitutes "Final Terms" for the purposes of Article 5.4 of the Prospectus Directive (the "Prospectus
Directive").
[Date]
Rhinebridge PLC
[Rhinebridge LLC]
Issue of [Aggregate Nominal Amount of Tranche] [Title of Medium Term Notes] Medium Term Notes
under the Medium Term Note Programme of up to U.S. $20,000,000,000
This document constitutes the Final Terms relating to the final terms of the issue of the Tranche of Medium
Term Notes described herein and constitutes "Final Terms" for the purposes of the Prospectus Directive. Terms used
herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Information
Memorandum dated 27 June 2007. These Final Terms must be read in conjunction with such Information
Memorandum.
[Include whichever of the following apply or specify as "Not Applicable" (N/A). Note that the numbering should
remain as set out below, even if "Not Applicable" is indicated for individual paragraphs or sub-paragraphs. Italics
denote directions for completing the Final Terms.]
[When completing any final terms or adding any other final terms or information, consideration should be given as
to whether such terms or information would constitute "significant new factors" and consequently would trigger the
need for a supplement to the Information Memorandum under Article 16 of the Prospectus Directive.]
1.
2.
(i)
Issuer:
Rhinebridge PLC
(ii) Co-Issuer:
[ Rhinebridge LLC] [Not Applicable]
Series and Tranche Number:
[
]
(if fungible with an existing Series, details of that
Series, including the date on which the Medium
Term Notes become fungible)
3.
Specified Currency or Currencies:
[
]
4.
Number of Votes per Specified Denomination
(Fractions being Disregarded):
[
]
5.
Aggregate Nominal Amount:
[
]
[
]
Tranche Issued:
6.
[
] per cent of the Aggregate Nominal
Amount [plus accrued interest from [insert date]
(if applicable)[(in the case of fungible issues only
if applicable).]
Issue Price:
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7.
Specified Denominations:
$250,000 and integral multiples of $1,000 in
excess thereof (or the equivalent in the relevant
Specified Currency).
8.
(i)
[
9.
Issue Date of this Tranche:
]
(ii) Interest Commencement Date (if different
from Issue Date of this Tranche):
[Not Applicable/[insert date]]
Maturity Date:
[insert date or (for Floating Rate Notes) Interest
Payment Date falling in or nearest to the relevant
month and year]
(For the avoidance of doubt, no Medium Term
Note shall have a Maturity Date which falls less
than one year after the Issue Date of such
Medium Term Note.)
10.
Interest Basis:
[Fixed Rate]
[Floating Rate]
[Zero Coupon]
[Index Linked Interest]
[Dual Currency Interest]
[specify other]
(further particulars specified below)
11.
Redemption/Payment Basis:
[Redemption at the Outstanding Balance]
[Index Linked Redemption]
[Dual Currency Redemption]
[Partly Paid]
[Instalment]
[Zero Coupon]
[specify other]
(N.B. If the Final Redemption Amount is less than
100% of the nominal value the Medium Term
Notes will be derivative securities for the purposes
of the Prospectus Directive and the requirements
of Annex XII to the Prospectus Directive
Regulation will apply.)
12.
Status of the Notes:
Senior
13.
Change of Interest Basis or
Redemption/Payment Basis
[Specify details of any provision for change of
Note into another Interest Basis or
Redemption/Payment Basis]
14.
Put/Call Options:
[Investor Put] [Investor Call] [further particulars
specified below]
PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE
15.
Fixed Rate Note Provisions
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62
(If not applicable, delete the remaining
subparagraphs of this paragraph)
(a)
Rate(s) of Interest:
[ ] per cent, per annum [payable [annually/semiannually/quarterly] in arrear]
(If not applicable, delete the remaining
subparagraphs of this paragraph)
(b) Interest Payment Date(s):
[[
] in each year up to and including the
Maturity Date]/[specify other]
(N.B. This will need to be amended in the case of
long or short coupons)
(c)
Fixed Coupon Amount(s):
[
] per [
] in nominal amount
(d) Broken Amount(s)
[Insert particulars of any initial or final broken
interest amounts which do not correspond with the
Fixed Coupon Amount]
(e)
Day Count Fraction:
[30/360 or Actual/Actual (ISMA) or [specify
other]]
(f)
Interest Determination Date(s):
[
] in each year
[Insert regular interest payment dates, ignoring
issue date or maturity date in the case of a long or
short first or last coupon
N.B. This will need to be amended in the case of
regular interest payment dates which are not of
equal duration
N.B. Only relevant where Day Count Fraction is
Actual/Actual (ISMA)]
16.
(g) Other terms relating to the method of
calculating interest for Fixed Rate Notes:
[None/Give details]
Floating Rate Note Provisions
[Applicable/Not Applicable]
(If not applicable, delete the remaining
subparagraphs of this paragraph)
(a) Specified Period(s) / Specified
Interest Payment Dates:
[
(b) Business Day Convention:
[Floating Rate Convention/Following Business
Day Convention/Modified Following Business
Day Convention/ Preceding Business Day
Convention/[specify other]]
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]
(c) Additional Business Centre(s):
[
[Screen Rate Determination/ISDA Determination
/specify other]
(d) Manner in which the Rate of Interest and
Interest Amount is to be determined:
(e) Party responsible for calculating the Rate of
Interest and Interest Amount (if not the
Calculation Agent):
(f)
]
[
]
[
]
Screen Rate Determination
(i) Reference Rate:
(Either LIBOR, EURIBOR or other, although
additional information is required if other including fallback provisions in the Agency
Agreement)
(ii) Interest Determination Date(s):
[
]
(Second London business day prior to the start of
each Interest Period if LIBOR (other than Sterling
or euro LIBOR), first day of each Interest Period
if Sterling LIBOR and the second day on which the
TARGET System is open prior to the start of each
Interest Period if EURIBOR or euro LIBOR)
(iii) Relevant Screen Page:
[
]
(In the case of EURIBOR, if not Reuters Screen
EURIBOR 01 ensure it is a page which shows a
composite rate or amend the fallback provisions
appropriately)
(g) ISDA Determination:
(i) Floating Rate Option:
(ii) Designated Maturity:
(iii) Reset Date:
[
[
[
]
]
]
(h) Margin(s):
[+/-] [
] per cent. per annum
(i)
Minimum Rate of Interest:
[
] per cent. per annum
(j)
Maximum Rate of Interest:
[
] per cent. per annum
(k)
Day Count Fraction:
[Actual/365
Actual/365 (Fixed)
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Actual/365 (Sterling)
Actual/360
30/360
30E/360
Other]
(See Condition 8 for alternatives)
17.
(l) Fallback provisions, rounding provisions and
any other terms relating to the method of
calculating interest on Floating Rate Notes, if
different from those set out in the Conditions:
[
]
Zero Coupon Note Provisions:
[Applicable/Not Applicable]
(If not applicable, delete the remaining
subparagraphs of this paragraph)
18.
(a) Accrual Yield:
[ ] per cent. per annum
(b) Reference Price:
[
]
(c) Any other formula/basis of determining
amount payable:
[
]
(d) Day Count Fraction:
(Consider applicable Day Count Fraction if not
U.S. dollar denominated)
[Applicable/Not Applicable]
Index Linked Interest Note Provisions:
(If not applicable, delete the remaining
subparagraphs of this paragraph)
(a) Index/formula:
[give or annex details]
(b) Calculation Agent responsible for calculating
the interest due:
[
(c) Provisions for determining Coupon where
calculation by reference to Index and/or
Formula is impossible or impracticable:
[need to include a description of market disruption
or settlement disruption events and adjustment
provisions]
(d) Specified Period(s)/Specified Interest
Payment Dates:
[
(e) Business Day Convention:
[Floating Rate Convention/Following Business
Day Convention/Modified Following Business
Day Convention/Preceding Business Day
9122016.23 06095153
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]
]
19.
(f) Additional Business Centre(s):
Convention/specify other]
[
]
(g) Minimum Rate of Interest:
[ ] per cent. per annum
(h) Maximum Rate of Interest:
[ ] per cent. per annum
(i) Day Count Fraction:
[
Dual Currency Interest Note Provisions:
[Applicable/Not Applicable]
]
(If not applicable, delete the remaining
subparagraphs of this paragraph)
(a) Rate of Exchange/method of calculating Rate
of Exchange:
[give or annex details]
(b) Calculation Agent, if any, responsible for
calculating the interest payable:
[
(c) Provisions applicable where calculation by
reference to Rate of Exchange impossible or
impracticable:
[need to include a description of market disruption
or settlement disruption events and adjustment
provisions]
(d) Person at whose option Specified
Currency(ies) is/are payable:
[
]
]
PROVISIONS RELATING TO REDEMPTION
20.
Final Redemption Amount:
[Outstanding Balance/insert amount]
21.
Issuer Call Option:
[Applicable/Not Applicable] (If not applicable,
delete the remaining subparagraphs of this
paragraph)
(i)
[(a) in whole on the Interest Payment Date [insert
date] and each [insert details] Interest Payment
Date thereafter or (b) in part on [insert schedule]]
Issuer Call Option Date(s):
(ii)
Issuer
Call
Option
Redemption
Amount(s) of each Medium Term Note and
method, if any, of calculation of such amount(s):
[Outstanding Balance / insert amount]
(iii)
Minimum Call Option Redemption
Amount:
(iv)
Maximum Call Option Redemption
Amount:
22.
Put Option:
[Applicable/Not Applicable] (If not applicable,
delete the remaining subparagraphs of this
paragraph)
(i)
[(a) exercisable in whole on the Interest Payment
Date in [insert date] [and each Interest Payment
Date in [insert date] thereafter or (b) in part on
Put Option Date(s):
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[insert schedule]]
(ii)
Put Option Redemption Amount(s) of
each Medium Term Note and method, if any, of
calculation of such amount(s):
GENERAL PROVISIONS
23.
Form of Medium Term Notes:
[Registered Medium Term Notes] [Global
Medium Term Notes exchangeable for Definitive
Medium Term Notes in the limited circumstances
specified in the Global Medium Term Note]
24.
Talons for future coupons to be attached to
Definitive Medium Term Notes (and dates on
which such talons mature):
[Yes/No. If yes, give details]
25.
Details relating to Partly Paid Notes: amount of
each payment comprising the Issue Price and date
on which each payment is to be made and
consequences of failure to pay, including any right
of the Issuer to forfeit the Notes and interest due
on late payment:
[Not Applicable/give details]
26.
Details relating to Instalment Notes:
(a) Instalment Amount(s):
(b) Instalment Date(s)
[Not Applicable/give details]
[Not Applicable/give details]
Redenomination applicable:
Redenomination [not] applicable
27.
[(If Redenomination is applicable, specify the
applicable Day Count Fraction and any provisions
necessary to deal with floating rate interest
calculation (including alternative reference
rates))[[(if Redenomination is applicable, specify
the terms of the redenomination in an Annex to the
Final Terms)]
28.
Other Terms or Special Conditions:
29.
Additional
U.S.
considerations
[Not Applicable/give details] (When adding any
other final terms consideration should be given as
to whether such terms constitute a "significant
new factor" and consequently trigger the need for
a supplement to the Information Memorandum
under Article 16 of the Prospectus Directive.)
tax
[Not Applicable/give details]
Names of relevant Medium Term Note
[Not Applicable/give names]
federal
income
DISTRIBUTION
30.
(i)
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Dealers:
(ii)
Stabilising Manager(s) (if any):
31.
Additional selling restrictions:
32.
Operational Information:
[Not Applicable/give names]
[Not Applicable/give details]
(i)
Delivery:
Delivery [against/free of] payment
(ii)
Names and addresses of additional Paying
Agent(s) (if any):
[●]
(iii) CUSIP:
[●]
(iv) ISIN Code:
[●]
(v)
[●]
Common Code:
(vi) Any clearing system(s) other than DTC,
Euroclear Bank S.A./N.V. and Clearstream,
Banking Société Anonyme and the relevant
identification number(s)
33.
[Not Applicable/give name(s) and number(s)]
Listing:
(i) Listing:
(ii) Listing Agent:
[Irish Stock Exchange/name/specify other/name]
[
]
[LISTING APPLICATION
These Final Terms comprise the details required to list the issue of Medium Term Notes described herein
pursuant to the U.S. $20,000,000,000 Medium Term Note Programme of Rhinebridge PLC and Rhinebridge LLC.
RESPONSIBILITY
[Each of] Rhinebridge PLC [and Rhinebridge LLC] accepts responsibility for the information contained in
these Final Terms. [[●] has been extracted from [●]]. [Each of] Rhinebridge PLC [and Rhinebridge LLC] confirms
that such information has been accurately reproduced and that, so far as it is aware, no facts have been omitted
which would render the reproduced inaccurate or misleading.]
Signed on behalf of Rhinebridge PLC:
By: ............................................
Duly authorised
[Signed on behalf of Rhinebridge LLC:
By: ............................................
Duly authorised]
9122016.23 06095153
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USE OF PROCEEDS
The net proceeds from the issuance of any Medium Term Notes by the Issuer and Co-Issuer shall be paid to the
Issuer. The Co-Issuer shall not be entitled to, and shall not receive, any proceeds from the issuance of any Medium
Term Notes or any other offering (whether issued pursuant to Rule 144A or Regulation S).
The net proceeds from the issuance of any Medium Term Notes may be used by the Issuer (i) to repay indebtedness
of the Issuer or Co-Issuer from time to time outstanding, (ii) to acquire or finance the holding of Investments and
(iii) otherwise for the purposes of its business within the parameters set out in "The Issuer's business".
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SUMMARY OF PROVISIONS RELATING TO THE MEDIUM TERM NOTES
WHILST IN GLOBAL FORM
General
The Medium Term Notes offered in reliance upon Regulation S, which will be sold to Non-U.S. Persons in offshore
transactions, will be represented by one or more permanent Regulation S Global Medium Term Notes in definitive,
fully registered form, without interest coupons, and deposited with the Transfer Agent (defined below) as custodian
for, and registered in the name of, DTC or its nominee, initially for the accounts of Euroclear and Clearstream,
Luxembourg. By acquisition of a beneficial interest in a Regulation S Global Medium Term Note, any purchaser
thereof will be deemed to represent that it is not a U.S. Person (as defined above) and that, if in the future it decides
to transfer such beneficial interest, it will transfer such interest only in an offshore transaction in accordance with
Regulation S or to a person who takes delivery in the form of an interest in a Rule 144A Global Medium Term Note
that is a QIB and a QP and that meets the other transfer requirements set forth herein and who delivers a Purchaser's
Letter (as defined below) certifying that it is a QIB and a QP and that it meets the other transfer requirements set
forth herein. Beneficial interests in each Regulation S Medium Term Note will be shown on, and transfers thereof
will be effected only through, records maintained by DTC and its Participants and Indirect Participants, including
Euroclear and Clearstream, Luxembourg.
Medium Term Notes sold to QPs that are QIBs in reliance on the exemption from the registration requirements of
the Securities Act pursuant to Rule 144A under the Securities Act will be issued in the form of one or more
permanent global notes in definitive, fully registered form without interest coupons deposited with the Transfer
Agent as custodian for, and registered in the name of, DTC or its nominee. Interests in Rule 144A Global Medium
Term Notes will be shown on, and transfers thereof will be effected only through, records maintained by DTC and
its Participants and Indirect Participants.
The Medium Term Notes are subject to the restrictions on transfer set forth herein under "Subscription and sale".
Owners of beneficial interests in Regulation S Global Medium Term Notes or Rule 144A Global Medium Term
Notes will be entitled or required, as the case may be, under certain limited circumstances described below, to
receive physical delivery of certificated Medium Term Notes in definitive, fully registered form without interest
coupons ("Definitive Medium Term Notes"). Notwithstanding the above, no owner of an interest in a Regulation S
Global Medium Term Note or a Rule 144A Medium Term Note will be entitled to receive a Definitive Medium
Term Note unless such person provides certification that, in the case of a Regulation S Medium Term Note, the
Definitive Medium Term Note is beneficially owned by a person that is not a U.S. Person and that such beneficial
ownership interest was acquired in a transaction meeting the requirements of Regulation S and, in the case of a Rule
144A Medium Term Note, that the owner is a QIB and a QP and meets the other requirements set forth and acquires
its interest in a transaction meeting the requirements of Rule 144A. The Medium Term Notes are not issuable in
bearer form.
Pursuant to the Term Note Agency Agreement, The Bank of New York, New York branch has been appointed and
will serve as the registrar with respect to the Notes (in such capacity, the "Registrar") and will provide for the
registration of Notes and the registration of transfers and exchanges of Medium Term Notes in the register
maintained by it (the "Register"). The Bank of New York, New York branch has been appointed as a transfer agent
with respect to the Notes (in such capacity, the "Transfer Agent").
Global Notes
So long as the depositary for a Global Medium Term Note, or its nominee, is the registered holder of such Global
Medium Term Note, such depositary or such nominee, as the case may be, will be considered the absolute owner or
holder of such Medium Term Note represented by such Global Medium Term Note for all purposes under the
Medium Term Note Dealer Agreement and the Term Note Agency Agreement and the Conditions of the Medium
Term Notes and members of, or participants in, the depositary (the "Participants") as well as any other persons on
whose behalf Participants may act (including Euroclear and Clearstream, Luxembourg and account holders and
participants therein) will have no rights under the Medium Term Note Dealer Agreement or under such Medium
Term Note. Owners of beneficial interests in a Global Medium Term Note will not be considered to be the owners or
9122016.23 06095153
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holders of any Medium Term Note under the Medium Term Note Dealer Agreement or under the Medium Term
Notes. In addition, no beneficial owner of an interest in a Global Medium Term Note will be able to exchange or
transfer that interest, except in accordance with the applicable procedures of the depositary and, in the case of a
Regulation S Global Medium Term Note, of Euroclear or Clearstream, Luxembourg (in addition to those under the
Medium Term Note Dealer Agreement and the Term Note Agency Agreement), in each case to the extent applicable
(the "Applicable Procedures").
Investors may hold their interests in a Regulation S Global Medium Term Note directly through Euroclear or
Clearstream, Luxembourg, if they are participants in such systems, or indirectly through organisations which are
participants in such systems. Euroclear and Clearstream, Luxembourg will hold interests in Regulation S Global
Medium Term Notes on behalf of their participants through customers' securities accounts in their respective names
on the books of their respective depositaries, which in turn will hold such interests in such Regulation S Global
Medium Term Notes in customers' securities accounts in the depositaries' names on the books of DTC. Investors
may hold their interests in a Global Medium Term Note directly through DTC, if they are participants in such
system, or indirectly through organisations which are participants in such system.
Payments of the principal of, and interest on, or, as applicable, distributions on, an individual Global Medium Term
Note registered in the name of a depositary or its nominee will be made to the depositary or its nominee, as the case
may be, as the registered owner of the Global Medium Term Note. None of the Issuer, the Co-Issuer, the Registrar
and any Paying Agent will have any responsibility or liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests in Global Medium Term Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
With respect to the Global Medium Term Notes, the Issuer expects that the depositary for any Global Medium Term
Note or its nominee, upon receipt of any payment of principal of or interest on, or as applicable, distributions on
such Global Medium Term Note, will immediately credit the accounts of Participants with payments in amounts
proportionate to their respective beneficial interests in the principal amount of such Global Medium Term Note as
shown on the records of the depositary or its nominee. The Issuer also expects that payments by Participants to
owners of beneficial interests in such Global Medium Term Note held through such Participants will be governed by
standing instructions and customary practices, as is now the case with securities held for the accounts of customers
registered in the name of nominees for such customers. Such payments will be the responsibility of such
Participants.
The Issuer shall make payments of principal and the Interest Amount with respect to the Medium Term Notes in the
Specified Currency submitted to DTC. The Issuer will make payments to the Principal Paying Agent in the
Specified Currency. The Exchange Agent has been appointed by the Issuer to convert designated portions of
payments into U.S. Dollars. Beneficial owners of Medium Term Notes, acting through a Participant, may choose to
receive principal or Interest Amount payments in U.S. dollars through DTC's facilities. At present, DTC can only
accept payments in U.S. dollars. The entire payment of principal or the Interest Amount to DTC shall be made in
U.S. Dollars unless DTC is notified by one or more of its Participants holding an interest in a Medium Term Note,
or through which an interest in the Medium Term Notes is held, that it elects to receive such payment, or a portion
thereof, in the Specified Currency outside of DTC.
In the case of payment outside of DTC, DTC will notify the Principal Paying Agent five business days prior to each
date on which interest or principal is scheduled to be paid, of the amount of such payment to be received in the
Specified Currency and the applicable wire transfer instructions, and the Principal Paying Agent shall use such
instructions to pay or procure the payment of Participants. If DTC does not so notify the Principal Paying Agent, it
is understood that only U.S. dollar payments are to be made in respect of the payment. The remainder of the
payment due Cede & Co., as nominee of DTC, in the Specified Currency shall be converted from the Specified
Currency into U.S. dollars in accordance with provisions of the Term Note Agency Agreement or other such
document authorizing and providing the terms of such currency conversions. The Principal Paying Agent shall then
credit or procure the crediting of the U.S. dollar payment to Cede & Co., as nominee of DTC, in accordance with the
DTC Rules.
In the event that the Principal Paying Agent is unable to convert the Specified Currency into U.S. dollars, the
Principal Paying Agent will notify DTC that the entire payment is to be made in the Specified Currency. DTC will
9122016.23 06095153
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thereafter ask its Participants for payment instructions and will forward such instructions to the Principal Paying
Agent, which shall use such instructions to pay Participants directly.
DTC is unable to accept payments denominated in any currency other than U.S. Dollars in respect of any Rule 144A
Global Medium Term Note. Accordingly, DTC Participants which hold interests in the Rule 144A Global Medium
Term Note must in accordance with the DTC Rules notify DTC five business days prior to each date on which
interest on or principal of the Rule 144A Global Medium Term Note is scheduled to be paid (i) that they wish to be
paid in currency other than U.S. Dollars and (ii) of the relevant bank account details into which such payments in
currency other than U.S. Dollars are to be made. If such instructions are not received, the Exchange Agent will
exchange the relevant amount in the relevant currency other than U.S. Dollars into U.S. Dollars in accordance with
the Term Note Agency Agreement.
Neither the Exchange Agent nor the Principal Paying Agent is liable for any loss or liability suffered by any person,
including, without limitation, any holders of Medium Term Notes who have made a loss or incurred liability as a
result of any foreign exchange transactions conducted by the Exchange Agent, except, in the case of the Exchange
Agent, any loss or incurred liability resulting from the Exchange Agent’s negligence, wilful misconduct or fraud.
Definitive Medium Term Notes
Interests in a Regulation S Global Medium Term Note or a Rule 144A Global Medium Term Note will be
exchangeable or transferable, as the case may be, for a Regulation S Medium Term Note in the form of a Definitive
Medium Term Note (a "Definitive Regulation S Medium Term Note") or a Rule 144A Medium Term Note in the
form of a Definitive Medium Term Note (a "Definitive Rule 144A Medium Term Note"), as applicable, if (a) such
Global Medium Term Note is held by a DTC custodian on behalf of DTC or any successor depositary, and DTC or
such successor depositary notifies the Issuer that it is no longer willing or able to discharge properly its
responsibilities as depositary with respect to such Global Medium Term Note or DTC ceases to be a "clearing
agency" registered under the Exchange Act or is at any time no longer eligible to act as such, and the Issuer is
unable to locate a qualified successor within 90 days of receiving notice of such ineligibility on the part of DTC or
such successor depositary; (b) an Enforcement Event occurs; or (c) if specified in the Global Medium Term Note, if
instructions have been given for the transfer of an interest in Medium Term Notes evidenced by a Global Medium
Term Note to a person who would otherwise take delivery thereof in the form of an interest in Medium Term Notes
evidenced by the other Global Medium Term Note where such Global Medium Term Note has been exchanged for
Definitive Medium Term Notes. In such circumstances, such Definitive Medium Term Notes shall be registered in
such names as the applicable Clearing System shall direct in writing and the Issuer will notify the holders as soon as
practicable after the occurrence of any event specified in (a) or (b) (each, an "Exchange Event") in accordance with
the Conditions. If interests in any Regulation S Global Medium Term Note or a Rule 144A Global Medium Term
Note are exchanged or transferred for a Definitive Regulation S Medium Term Note or a Definitive Rule 144A
Medium Term Note, such Global Medium Term Note shall be surrendered by DTC, or its custodian on its behalf, to
the Transfer Agent, and the Transfer Agent will authenticate and deliver without charge an equal aggregate principal
amount of Definitive Medium Term Notes of authorised denominations. Definitive Medium Term Notes will be
exchangeable or transferable for interests in other Definitive Medium Term Notes as described below.
Transfer and Exchange of Medium Term Notes
An owner of a beneficial interest in a Regulation S Global Medium Term Note may transfer such interest in the form
of a beneficial interest in such Regulation S Global Medium Term Note without the provision of written
certification; provided that (i) such transfer is not made to a U.S. Person or for the account or benefit of a U.S.
Person, (ii) such transfer is effected through Euroclear or Clearstream, Luxembourg in an offshore transaction as
required by Regulation S and only in accordance with the procedures of DTC, Euroclear and Clearstream,
Luxembourg, as applicable, and (iii) the transferee can make (and will be deemed to make) each of the applicable
representations required by the Medium Term Note Dealer Agreement and set forth herein under "Subscription and
sale".
An owner of a beneficial interest in a Rule 144A Global Medium Term Note may transfer such interest in the form
of a beneficial interest in such Rule 144A Global Medium Term Note without the provision of written certification
in the U.S. or to a U.S. Person; provided that (i) the transferee is a QP that the transferor reasonably believes is a
9122016.23 06095153
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QIB and (ii) the transferee can make (and will be deemed to make) each of the applicable representations required
by the Medium Term Note Dealer Agreement and set forth herein under "Subscription and sale".
Transfers by a holder of a beneficial interest in a Regulation S Global Medium Term Note to a transferee who takes
delivery of such interest through a Rule 144A Global Medium Term Note will be made only upon receipt by the
Transfer Agent of a purchaser's letter in the form provided for in the Medium Term Note Dealer Agreement (the
"Purchaser's Letter") indicating that, among other things, such transferee is both a Qualified Institutional Buyer
and a Qualified Purchaser and meets the other requirements applicable to the Rule 144A Global Medium Term
Notes.
Transfers by a holder of a beneficial interest in a Rule 144A Global Medium Term Note to a transferee who takes
delivery of such interest through a Regulation S Global Medium Term Note will be made only upon receipt by the
Transfer Agent of a Purchaser's Letter in the form provided for in the Medium Term Note Dealer Agreement
indicating that, among other things, such transfer is being made to a Non-U.S. Person in an offshore transaction in
accordance with Rule 904 of Regulation S.
Notes in the form of Definitive Medium Term Notes may be exchanged or transferred, in whole or in part, in the
principal amount of authorised denominations by surrendering such Definitive Medium Term Notes at the office of
the Registrar or any Transfer Agent with a written instrument of transfer as provided in the Term Note Agency
Agreement. In addition, if the Definitive Medium Term Notes being exchanged or transferred contain a legend,
additional certifications to the effect that such exchange or transfer is in compliance with the restrictions contained
in such legend may be required. With respect to any transfer of a portion of a Definitive Medium Term Note, the
transferor will be entitled to receive, at any aforesaid office, a new Definitive Medium Term Note representing the
principal amount retained by the transferor after giving effect to such transfer; provided, that the principal amount
thereof being transferred and the principal amount thereof being retained are each at least equal to the minimum
denomination applicable to the Medium Term Notes. Definitive Medium Term Notes issued upon any such
exchange or transfer (whether in whole or in part) will be made available at the Specified Office of the Transfer
Agent. Transfer of Definitive Medium Term Notes will require delivery of a Purchaser's Letter.
A Definitive Regulation S Medium Term Note or a beneficial interest in a Regulation S Global Medium Term Note
may be transferred to a person who takes delivery in the form of a Definitive Rule 144A Medium Term Note only
upon receipt by the Transfer Agent of a Purchaser's Letter indicating that, among other things, the transferee is both
a QP and a QIB and meets the other applicable requirements.
Exchanges or transfers by a holder of a Medium Term Note represented by a Definitive Medium Term Note to a
transferee who takes delivery of such Medium Term Note through a Global Medium Term Note will be made only
after the receipt by the Registrar or Transfer Agent, as the case may be, of the Definitive Medium Term Notes to be
so exchanged or transferred and shall be made only in accordance with the Applicable Procedures.
If, notwithstanding the restrictions on transfer contained herein or in any Transaction Document, the Issuer
determines that any beneficial owner of an interest in a Global Medium Term Note at the time of acquisition (A) is
not a person that is a Non-U.S. Person acquiring such interest in an offshore transaction in accordance with the terms
of Regulation S or (B) is not both a QIB and a QP that meets the other applicable requirements set forth herein, then
the Issuer may require, by notice to such holder, that such holder sell all of its right, title and interest in such Global
Medium Term Note (or interest therein) to (x) a Person that is both a QIB and a QP that meets the other applicable
requirements set forth herein, or (y) a Non-U.S. Person in an offshore transaction in accordance with the terms of
Regulation S, with each such sale to be effected within 30 days after notice of such sale requirement is given. If such
beneficial owner fails to effect the transfer required within such 30-day period, (i) the Issuer shall cause such
beneficial owner's interest in such Medium Term Note to be transferred in a commercially reasonable sale
(conducted in accordance with Section 9-610(b), 9-611 and 9-627 of the Uniform Commercial Code as applied to
securities that are sold on a recognised market or that may decline speedily in value) to a person that certifies that
such person is either (x) both a QIB and a QP (meeting the other applicable requirements set forth herein) or (y) a
Non- U.S. Person acquiring such interest in an offshore transaction in accordance with the terms of Regulation S,
and (ii) pending such transfer, no further payments will be made in respect of such Medium Term Note held by such
beneficial owner.
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The Issuer may also, at its option, redeem any Medium Term Notes of any person who at the time of acquisition was
not an Approved Investor. See Condition 9(h) (Regulatory Redemption).
Each purchaser or subsequent transferee of a beneficial interest in any Medium Term Note will be deemed to
represent, warrant and covenant (and, if it is acquiring an interest in a definitive Medium Term Note, it will be
required to certify) to the Transfer Agent, the Issuer and the Co-Issuer that (A) either (i) it is not, and is not acting on
behalf of, an "employee benefit plan" as defined in Section 3(3) of ERISA that is subject to Title I of ERISA, a
"plan" as defined in and subject to Section 4975 of the Code, an entity whose underlying assets include plan assets
of any of the foregoing, or a governmental or other employee benefit plan which is subject to any federal, state, local
or non-U.S. Law that is substantially similar to the provisions of Title I of ERISA or Section 4975 of the Code, or
(ii) its acquisition, holding and disposition of such Medium Term Note will not result in a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or violate any applicable law that is
substantially similar to Title I of ERISA or Section 4975 of the Code and (B) if it is acquiring an interest in such a
definitive Medium Term Note, it will not sell or otherwise transfer such Medium Term Note to any person without
obtaining these same representations, warranties and agreements from such person.
Transfer and exchange of Medium Term Notes – general
Transfers between Participants in DTC will be effected in the ordinary manner in accordance with the Applicable
Procedures and will be settled in immediately available funds. Transfers between participants in Euroclear and
Clearstream, Luxembourg will be effected in the ordinary manner in accordance with their respective rules and
operating procedures.
No service charge will be made for exchange or registration of transfer of any Medium Term Notes, but the Transfer
Agent may require payment of a sum sufficient to cover any tax or governmental charge payable in connection
therewith and expenses of delivery (if any) not made by regular mail.
Medium Term Notes issued upon any exchange or registration of transfer of securities shall be valid obligations of
the Issuer, as applicable, evidencing the same debt, and entitled to the same benefits, as the Medium Term Notes, as
the case may be, surrendered upon exchange or registration of transfer.
The Registrar, along with the Transfer Agent, will effect exchanges and transfers of Medium Term Notes. In
addition, the Note Registrar will keep in the Register records of the ownership, exchange and transfer of Medium
Term Notes.
The laws of some states require that certain persons take physical delivery of securities in definitive form.
Consequently, any transfer of beneficial interests in a Medium Term Note represented by a Global Medium Term
Note to such persons may require that such interests in a Global Medium Term Note be exchanged for Definitive
Medium Term Notes. Because DTC can only act on behalf of Participants, which in turn act on behalf of Indirect
Participants and certain banks, the ability of a person having a beneficial interest in a Global Medium Term Note to
pledge such interest to persons or entities that do not participate in the DTC system, or otherwise take actions in
respect of such interest, may require that such interest in a Global Medium Term Note be exchanged for Definitive
Medium Term Notes. Interests in a Global Medium Term Note will be exchangeable for Definitive Medium Term
Notes only as described above.
Under the terms of the Term Note Agency Agreement, the Issuer, Registrar and the Transfer Agent will treat the
persons in whose names the Medium Term Notes are registered (including Medium Term Notes represented by a
Global Medium Term Note) as the owners thereof for the purpose of receiving payments and for any and all other
purposes whatsoever; provided that with respect to remedies, consents, determinations and other information and
reports deliverable to a holder of a Medium Term Note, a beneficial owner of an interest in a Medium Term Note
that provides certification of ownership in the form required by the Term Note Agency Agreement will be
considered an owner of such Note to the extent of such investor's beneficial interest therein. Payments in respect of
the principal of, and interest on, a Global Medium Term Note registered in the name of a nominee of DTC will be
payable by the Transfer Agent to DTC or its nominee as the registered holder of such Note under the Term Note
Agency Agreement. Consequently, none of the Issuer, the Transfer Agent or any of their respective agents has or
will have any responsibility or liability for (a) any aspect of DTC's records or any direct participant's or indirect
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participant's records relating to, or payments made on account of, beneficial ownership interests in any Global
Medium Term Note or for maintaining, supervising or reviewing any of DTC's records or any direct participant's or
indirect participant's records relating to the beneficial ownership interests in any Global Medium Term Note or (b)
any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.
Subject to compliance with the transfer restrictions applicable to the Medium Term Notes described above and
under "Subscription and sale", cross-market transfers between DTC, on the one hand, and directly or indirectly
through Euroclear or Clearstream, Luxembourg participants, on the other hand, will be effected in DTC in
accordance with DTC rules on behalf of Euroclear or Clearstream, Luxembourg, as the case may be, by its
respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or
Clearstream, Luxembourg, as the case may be, by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (Brussels time). Euroclear or Clearstream, Luxembourg, as the case
may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to
take action to effect final settlement on its behalf by delivering or receiving interests in a Regulation S Global
Medium Term Note in DTC and making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Clearstream, Luxembourg participants and Euroclear participants may not
deliver instructions directly to the depositaries of Euroclear or Clearstream, Luxembourg.
Because of time zone differences, cash received in Euroclear or Clearstream, Luxembourg as a result of sales of
interests in a Global Medium Term Note by or through a Euroclear or Clearstream, Luxembourg participant to a
DTC participant will be received with value on the DTC settlement date but will be available in the relevant
Euroclear or Clearstream, Luxembourg cash account only as at the business day following settlement in DTC.
DTC has advised the Issuer that it will take any action permitted to be taken by a holder of Medium Term Notes
(including, without limitation, the presentation of Medium Term Notes for exchange as described above) only at the
direction of one or more Participants to whose account with the DTC interests in the Global Medium Term Notes are
credited, and only in respect of such portion of the outstanding principal amount of the Medium Term Notes as to
which such Participant or Participants has or have given such direction. However, if there is an Enforcement Event
under the Medium Term Notes, DTC will exchange the Global Medium Term Notes for Definitive Medium Term
Notes legended, in each case, as appropriate, which it will distribute to its Participants.
DTC has advised the Issuers as follows: DTC is a limited-purpose trust company organised under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code
and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its Participants and facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organisations. Indirect access to the DTC system is available to
others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly ("Indirect Participants"). The address of DTC is 55 Water Street,
New York, New York 10041. The address for Clearstream, Luxembourg is 42 Avenue, J.F. Kennedy, 1855
Luxembourg. The address for Euroclear is 1 Boulevard du Roi Albert II, Brussels B-1210, Belgium.
Although DTC, Euroclear and Clearstream, Luxembourg have agreed to the foregoing procedures in order to
facilitate transfers of interests in Global Medium Term Notes among participants of DTC, 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 Co-Issuer, the Registrar, the Principal Paying
Agent, the Exchange Agent or the Transfer Agent will have any responsibility for the performance by DTC,
Euroclear or Clearstream, Luxembourg or their respective direct or indirect participants, of their respective
obligations under the rules and procedures governing their operations.
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DESCRIPTION OF THE ISSUER AND THE CO-ISSUER
Rhinebridge PLC
The Issuer was incorporated and registered on 8 September 2006 under The Companies Acts 1963 to 2006 of
Ireland (the "Companies Law") as a public limited company having registered number 426163 and being domiciled
at, and having its registered office at First Floor, 7 Exchange Place, IFSC, Dublin 1, Ireland (with telephone number
+353 1 612 5555). The Issuer has its "centre of main interest", as that term is used in Article 3(i) of the EU
Insolvency Regulation, in Ireland and will not move its "centre of main interest" to another jurisdiction.
The Issuer and the Co-Issuer have established the Medium Term Note Programme. The maximum aggregate
nominal amount of Medium Term Notes outstanding is limited to the Medium Term Note Maximum Amount
although such limit may be increased without the consent of any of the holders of Medium Term Notes.
The Issuer's Investment Objectives are set out in Schedule 1 to the Management Agreement and described below
under "The Issuer's business - Investment objectives".
The Issuer has been established as a special purpose vehicle for the purpose of issuing asset backed securities
(including the Medium Term Notes), with no limitation on its corporate duration.
Other than the Co-Issuer, the Issuer has no subsidiaries at the date hereof. The Issuer will establish no further
subsidiary unless consent of the holders of the Notes and a Rating Confirmation has been received. The Co-Issuer
will have no assets other than its nominal capital of €100 held in cash or in a demand deposit account.
Corporate objectives
The principal activities of the Issuer are the issuance of financial instruments, the acquisition and management of
financial assets and the entering into of other legally binding arrangements as more particularly set out in Clause 3
of its Memorandum of Association.
The Issuer currently has no intention to make any material change to its corporate objectives. The Issuer has entered
into the Security Trust Deed for the benefit of the Secured Creditors, which contains restrictions on the activities of
the Issuer. For a description of the investment policy to be followed by the Issuer in pursuit of the objectives, see
"The Issuer's business". The Issuer currently has no intention to carry on any business other than that set out in this
section "Description of the Issuer and the Co-Issuer" or the section "The Issuer's business" (or any related
activities). In addition, in order to maintain the ratings assigned to the Senior Notes, and to maintain the ratings
assigned to the Capital Notes (if any) on their respective issue dates, changes to certain of the restrictions on the
operation of the Issuer's business are subject to Rating Confirmation. See "The Issuer's business" below for more
detail.
Capitalisation and indebtedness
Share capital
The authorised share capital of the Issuer is €40,000 divided into 40,000 ordinary shares of €1.00 par value each (the
"Shares"), of which 40,000 shares are issued and paid to 25 per cent.
Trust
All of the Shares of the Issuer are held by Wilmington Trust SP Services (London) Limited (the "Share Trustee")
and six nominee non-U.S. shareholders on behalf of the Share Trustee under a Declaration of Trust dated 6
November 2006 (the "Declaration of Trust"). The six nominee shareholders are Robin Gregory Baker, Mark
Howard Filer, Martin McDermott, Sunil Masson, Elizabeth Nead and Paul Winship, each at First Floor, 7 Exchange
Place, IFSC, Dublin 1, Ireland, each of whom holds one share. The Share Trustee holds 39,993 shares.
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The Issuer and IKB Deutsche Industriebank AG, as seller (the "Seller"), entered into a forward sale agreement dated
6 November 2006, as amended and restated on 23 March 2007 and as further amended and restated on 25 May 2007
(the "Forward Sale Agreement") whereby the Issuer agreed to purchase on the Closing Date from the Seller a
portfolio of asset backed securities for an aggregate purchase price not to exceed €3,000,000,000. The purchase
price for each security so purchased will be calculated as the gross price actually paid by the Seller for such security
(net of accrued and unpaid yield), reduced by the aggregate amount of distributions in respect of principal and
further increased or reduced, as the case may be, by an amount equal to the difference between the margin received
by the Seller during the time it owned such security (the "Security Margin") and the margin charged by the Seller
to the Issuer in respect of such security over the same period. The purchase price calculation is designed to ensure
that the price covers the Seller's invested amount of the security whilst splitting the Security Margin, in the cases
where the Security Margin exceeds the margin charged by the Seller to the Issuer, between the Seller and the Issuer
pursuant to an agreed formula. Pursuant to the Forward Sale Agreement, the asset backed securities sold shall meet
certain eligibility criteria described therein. The Issuer will settle the forward under the Forward Sale Agreement
with the net proceeds of the issuance of Notes.
Other than as disclosed above, as at the date hereof, since 8 September 2006 (being the date of incorporation of the
Issuer), there has been no significant change in the financial or trading position of the Issuer or the Co-Issuer.
Except for the security created by or pursuant to the Security Documents, the Issuer has, as at the date hereof,
created no other mortgages or Security Interests over its assets and revenues. The Medium Term Notes will be
secured notes pursuant to the terms of the Security Documents.
Directors and Secretary of the Issuer
The directors of the Issuer are (the "Directors"):
Name
Business Occupation
Alan Geraghty
Accountant
Roger McGreal
Company Director
The business address of each of the Directors, and the head office of the Issuer, is First Floor, 7 Exchange Place,
IFSC, Dublin 1, Ireland.
The Secretary of the Issuer is Wilmington Trust SP Services (Dublin) Limited, which has its registered office at First
Floor, 7 Exchange Place, IFSC, Dublin 1, Ireland.
Reporting
The Issuer's financial year end is 31 December. The auditors of the Issuer will prepare annual audited financial
statements.
The Issuer has appointed PricewaterhouseCoopers whose registered address is at 1 Spencer Dock, North Wall Quay,
Dublin 1, Ireland as its auditors. PricewaterhouseCoopers are chartered accountants and members of The Institute
of Chartered Accountants in Ireland and are registered auditors qualified to practice in Ireland.
Rhinebridge LLC
The Co-Issuer is a limited liability company organised on 28 December 2006 under the laws of the State of
Delaware with a file number of 4231084, and is wholly owned by the Issuer. The registered office of the Co-Issuer
is Corporation Service Company, 2711 Centerville Road, Wilmington, Delaware 19808, USA, phone number: 800927-9800. The Co-Issuer has been established as a special purpose vehicle for the purpose of issuing asset backed
securities. The sole business of the Co-Issuer is the co-issuance and sale of asset-backed securities pursuant to Rule
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144A and/or Section 4(2) of the Securities Act with the Issuer. The Issuer will, in its capacity as managing member,
hold all membership interests with respect to the Co-Issuer and will be responsible for management of the Co-Issuer.
Neither the proceeds of Medium Term Notes offered under the Medium Term Note Programme nor the proceeds of
any Commercial Paper or Capital Notes will be directly or indirectly paid to the Co-Issuer, and the Co-Issuer does
not, and will not have any assets other than nominal capital of €100 held in cash or in a demand deposit account and
its rights under the Transaction Documents to which it is a party, and will have no debt other than as Co-Issuer of
the co-issued Notes pursuant to Rule 144A and/or Section 4(2) of the Securities Act. The Co-Issuer will not hold
any Investments, including any securities. The Co-Issuer has agreed to co-issue certain of the Medium Term Notes
with the Issuer as an accommodation for the benefit of the Issuer, and is receiving no payment for such co-issuance,
but the Issuer has agreed to indemnify the Co-Issuer for any liabilities in connection with its co-issuance of such
Medium Term Notes.
Director, Independent Manager and Special Member of the Co-Issuer
Thomas M. Strauss is the sole director and sole independent manager of the Co-Issuer. If the Issuer shall cease to be
managing member unless a new managing member shall replace the Issuer in accordance with the terms of the CoIssuer's Limited Liability Company Agreement, the sole independent manager and sole director shall become a
special member of the Co-Issuer. Pursuant to Section 18-301 of the Delaware Limited Liability Company Act, the
special member shall not hold any membership interests in the Co-Issuer. Donald R. McLamb is the Secretary of
the Co-Issuer. The business address of the sole director, the sole independent manager and the Secretary is 1100
North Market Street, Wilmington, Delaware, 19890.
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THE ISSUER'S BUSINESS
The Issuer invests in a portfolio of Investments and funds its Investments by issuing Medium Term Notes under the
Medium Term Note Programme, Capital Notes under the Capital Note Programme, and Commercial Paper under the
Commercial Paper Programme and by entering into transactions under Repo Agreements and Securities Lending
Agreements and, where necessary, by drawing on Liquidity Arrangements and/or entering into transactions under
Committed Repo Agreements. The Issuer does not propose to carry on any business other than that described in this
section entitled "The Issuer's business" or the section entitled "Description of the Issuer" and any related activities.
As set out below in "Ratings", the Manager manages the Portfolio within guidelines designed to preserve the Top
Ratings of the Senior Notes and to maintain the ratings assigned to the Capital Notes (if any) on their respective
Issue Dates.
As set out more fully in the later paragraphs of this section, the Issuer has entered into, or may, at the discretion of
the Manager, enter into certain agreements including, inter alia, Securities Lending Agreements, Repo Agreements,
Reverse Repo Agreements, Derivatives and Liquidity Arrangements in each case with Associated Derivative
Counterparties, Investment Derivative Counterparties or Eligible Counterparties, respectively, in accordance with
criteria, the adoption or amendment of which is subject to Rating Confirmation. The Issuer has entered into, or may,
at the discretion of the Manager, enter into such agreements in order, inter alia, to manage the Portfolio within the
parameters of the Investment Purchase Criteria and Compliance Tests and in furtherance of the Funding Objectives
and the Investment Objectives, and in connection with this, the Manager shall in accordance with the Manager
Standard maintain the then current Top Ratings of the Senior Notes and, the then current ratings assigned to the
Capital Notes (if any).
Funding Objectives
Pursuant to the Management Agreement, the Manager has undertaken to provide funding management services to
the Issuer, and to provide the Issuer with management services in respect of capital adequacy, currency, interest rate
and liquidity risks associated with the Portfolio. The Manager has undertaken, inter alia, to use the Manager
Standard to arrange for the Issuer and, if applicable, the Co-Issuer, to issue or enter into, as the case may be, Senior
Funding and/or Capital Notes so as to enable the Issuer to achieve the funding objectives. The funding objectives
(the "Funding Objectives") include:
(a)
maximising the diversity of the Issuer's funding providers, subject to paragraphs (b) to (h) (inclusive)
below;
(b)
minimising the Issuer's cost of borrowing, subject to paragraphs (a) above and (c) to (h) (inclusive) below;
(c)
managing the interest rate and currency risks associated with the conduct of the Issuer's business taking into
consideration the Market Sensitivity Tests;
(d)
managing the liquidity risks associated with the Investment Portfolio taking into consideration the Liquidity
Tests;
(e)
managing the capital adequacy of the Issuer with the objective of maintaining compliance with the Capital
Tests;
(f)
complying with the funding limits, the adoption or amendment of which shall be subject to Rating
Confirmation (including compliance with the Weighted Average Life of Senior Funding Test);
(g)
the issuance by the Issuer and, if applicable, the Co-Issuer, of Capital Notes and Senior Notes; and
(h)
redeeming the Senior Funding and/or the Capital Notes and making payments of any interest due and
payable in accordance with the respective terms and conditions of, and agreements documenting, the Senior
Funding and/or the Capital Notes subject to paragraphs (c) to (f) (inclusive) above and, where applicable, in
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accordance with the applicable procedures upon entering Restricted Investment or Restricted Funding or
following the occurrence of an Enforcement Event (as defined in Condition 12 (Enforcement Events)) and
any amended procedures which procedures shall be subject to Rating Confirmation from time to time and
in turn, redeeming and making payments of interest in respect of the Issuer and the Co-Issuer (as
applicable).
Funding Restrictions
Notwithstanding the objectives set out in "Funding Objectives" above, the Manager will not arrange for the Issuer,
or the Co-Issuer (as applicable), to issue or enter into any Senior Funding (except in relation to paragraph (e) below)
or Capital Notes if:
(a)
as a result of such issuance, the Top Rating of any Senior Note then outstanding would be reduced or
withdrawn without the approval of all of the holders of such affected Senior Notes;
(b)
the undertaking by the Issuer of the proposed issuance and the entering into by the Issuer of any Associated
Derivative would result in:
(i)
a breach of the relevant issuance limit under any of the Programmes; or
(ii)
the maturity date of the relevant Senior Funding and/or Capital Notes occurring after the eightieth
anniversary of the Issuer's entry into the Security Trust Deed;
(c)
any Associated Derivative proposed to be entered into in relation to the proposed issuance is not a
Permitted Associated Derivative or fails to meet certain other conditions;
(d)
the issuance or entering into of such Senior Funding and/or Capital Notes would be in breach of any of the
Restricted Investment Procedures or the Restricted Funding Procedures (where applicable), as described
below in "Restricted Investment Procedures" and "Restricted Funding Procedures", respectively;
(e)
the issuance of such Capital Notes would lead to a breach of any of the Capital Tests or, if the Issuer is in
breach of any of the Capital Tests, the issuance of such Capital Notes would cause such breach to worsen;
(f)
after giving effect to such issuance, a Restricted Funding Event or a Restricted Investment Event would
have occurred; or
(g)
an Enforcement Event has occurred or, after giving effect to such issuance, an Enforcement Event would
have occurred.
Operating modes
Normal Operations
Unless a Restricted Investment Event or a Restricted Funding Event is continuing or an Enforcement Event has
occurred, the Issuer (or the Manager on the its behalf) shall be permitted to issue any Notes, enter into Repo
Transactions, Reverse Repo Transactions, and enter into Liquidity Arrangements, Acquire Investments, enter into
Associated Derivatives, and engage in activities incidental to the foregoing, all generally in accordance with the
requirements described herein and as set forth in the Operating Rules ("Normal Operations"). Upon the occurrence
of a Restricted Investment Event, a Restricted Funding Event or an Enforcement Event, the Issuer (and the Manager
or the Emergency Back-Up Manager) shall be subject to certain additional restrictions described below.
Each of the following events will be a "Restricted Investment Event":
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(i)
a breach of any of the Minor Capital Tests or the Weighted Average Life of Senior Funding Test if such
breach remains unremedied immediately following the expiry of a cure period of five Business Days
commencing on the date of such breach;
(ii)
a failure by the Issuer to redeem any Capital Note on or by its Expected Maturity Date if such failure
remains unremedied immediately following the expiry of a cure period of five Business Days commencing
on the date of such failure;
(iii)
a breach of any of the Market Sensitivity Tests; or
(iv)
a breach of any of the Liquidity Tests.
Upon the occurrence of a Restricted Investment Event, the Manager will take the actions provided in such event
under the Management Agreement. See "The Issuer's business–Operating modes".
Each of the following events will be a "Restricted Funding Event":
(i)
a breach of any of the Major Capital Tests (other than the Major Capital Loss Test) if such breach remains
unremedied immediately following the expiry of a cure period of five Business Days commencing on the
date of such breach;
(ii)
a breach of the Major Capital Loss Test;
(iii)
a breach of any of the Market Sensitivity Tests, if such breach remains unremedied immediately following
the expiry of a cure period of five Business Days commencing on the date of such breach; or
(iv)
a breach of any of the Liquidity Tests if such breach remains unremedied immediately following the expiry
of a cure period of five Business Days commencing on the date of such breach.
Upon the occurrence of a Restricted Funding Event, the Manager will take the actions provided in such event under
the Management Agreement. See "The Issuer's business–Operating modes".
Each of the following events will be an "Enforcement Event":
(a)
the occurrence of a default, other than a Technical Default, in payment of any principal of, or interest on,
any Senior Notes when due;
(b)
the occurrence of (i) a default, other than a Technical Default, in payment of interest (excluding Variable
Margin) on any Capital Note (other than on any Junior Capital Note) on the Legal Maturity Date relating to
such Capital Note or (ii) the failure of the Issuer (for reasons other than Technical Default) to redeem any
Capital Note (other than any Junior Capital Note) in accordance with the Conditions of the Capital Notes
on the Legal Maturity Date relating to such Capital Note;
(c)
the occurrence of a Liquidity Specified Default, other than a Technical Default;
(d)
the occurrence of a Derivative Specified Default, other than a Technical Default;
(e)
the occurrence of a Repo Specified Default;
(f)
the occurrence of a Mandatory Acceleration Event;
(g)
a breach of the Major Capital Loss Test if such breach remains unremedied immediately following the
expiry of a cure period of five Business Days commencing on the date of such breach.
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No Medium Term Noteholders of any Series of Medium Term Notes shall be entitled to proceed directly against the
Issuer to enforce the Security unless the Security Trustee, having become bound so to proceed upon the instructions
of the requisite Senior Creditors, fails to do so within a reasonable period and such failure shall be continuing. To
the extent that there is a conflict between the interests of the Senior Creditors and the interests of the other Secured
Creditors, the Security Trustee or the Receiver (as applicable) will give priority to the interests of the Senior
Creditors.
"Technical Default" means a default in payment of any principal of or interest on any Obligation occurring solely
as the result of an administrative or operational event (provided that reasonable steps have been taken to prevent the
recurrence of such event) or condition or an act of God or emergency outside the control of the Issuer (including
natural disaster, nationalisation, currency restrictions, act of terrorism, act of war, breakdown or failure of
transmission, communications or computer facilities of third parties, postal or other strikes or industrial action or the
failure or disruption of any relevant stock exchange, Clearing System, settlement system or market), which default
(i) with respect to payments of interest or principal of any ECP Notes or USCP Notes is cured within three Business
Days from the time of such default, (ii) with respect to payments of interest or principal of any Medium Term Notes
is cured within three Business Days from the time of such default, (iii) with respect to payments of interest or
principal of any Capital Notes is cured within five Business Days from the time of such default, (iv) with respect to
a Liquidity Specified Default, which default is cured within three Business Days from the time of such default and
(v) with respect to a Derivative Specified Default, which default is cured within three Business Days from the time
of such default.
The occurrence of an Enforcement Event does not automatically lead to an acceleration of the Notes except upon the
occurrence of a Mandatory Acceleration Event as described in Condition 9(e)(i) (Mandatory Acceleration Event
Early Redemption). Upon the occurrence of an Enforcement Event, the Security Trustee will take the actions
provided under the Security Trust Deed; provided that, the Security Trustee is not required to take any particular
action, to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its
duties, or in the exercise of its rights or powers, if it shall have reasonable grounds for believing that repayment of
such funds or indemnity satisfactory to it against such risk or liability is not assured to it. In such circumstances the
Security Trustee is entitled to refrain from performing such duties or exercising such rights or powers unless and
until it has been indemnified and/or secured to its satisfaction against any fees, costs, expenses or liabilities which it
may incur. See Condition 6 (Security) and "The Security and its enforcement".
Restricted Investment Procedures
Pursuant to the Management Agreement, the Manager has agreed that it will notify (inter alios) the Security Trustee
and the Rating Agencies immediately upon becoming aware of a Restricted Investment Event. If any Restricted
Investment Event has occurred, and for so long as (i) the Issuer does not enter Restricted Funding, (ii) no
Enforcement Event has occurred with respect to the Issuer and (iii) the Issuer has not cured all existing Restricted
Investment Events, the Issuer will be in a period of "Restricted Investment". During Restricted Investment (or if
any of the following actions would (regardless of any applicable grace periods), give rise to Restricted Investment
Event), the Manager shall take such actions itself and on behalf of the Issuer, as may be necessary or desirable, to
comply (or procure compliance) with the procedures set forth below (the "Restricted Investment Procedures"):
(a)
new Investments may only be Acquired by the Issuer if (i) the Issuer had committed to purchase such
Investment(s) whilst in Normal Operations and prior to the occurrence of the relevant Restricted
Investment Event, (ii) such transaction forms part of an Investment Switch or (iii) a Rating Confirmation
has been obtained in respect of the proposed Acquisition of such Investment;
(b)
new Investment Derivatives may only be entered into by the Issuer if (i) the Issuer had committed to enter
into such Investment Derivative whilst in Normal Operations and prior to the occurrence of the relevant
Restricted Investment Event, (ii) such transaction forms part of an Investment Switch or (iii) Rating
Confirmation has been obtained in respect of the proposed entry into such Investment Derivative;
(c)
no Capital Notes may be redeemed under Condition 9(d) (Redemption at the option of the Capital
Noteholders) of the Capital Notes or Condition 9(e) (Issuer Call Option) of the Capital Notes or purchased
under Condition 9(j) (Purchase) of the Capital Notes;
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(d)
no Capital Notes may be redeemed under Condition 9(a) (Redemption at or following the Expected
Maturity Date) of the Capital Notes unless (and only to the extent that after giving effect to such
redemption, a Restricted Funding Event or an Enforcement Event would not occur or exist):
(i)
the redemption of such Capital Notes would prevent the occurrence of an Enforcement Event
which would otherwise arise due to a Capital Note (other than any Junior Capital Note) not being
redeemed on its Legal Maturity Date;
(ii)
following such redemption, the only cause of the Issuer being in a period of Restricted Investment
(regardless of any applicable cure period) would be a failure to redeem outstanding Capital Notes
by their Expected Maturity Date and/or a breach of the Capital Note Maturity Test;
(iii)
the result of such redemption would enable the Issuer to return to Normal Operations; or
(iv)
all outstanding Senior Ranking Obligations to the relevant Class of Capital Notes have been paid
and/or provisioned for in full,
provided that, if any redemption of Capital Notes is allowed in accordance with the provisions of sub-paragraphs (i),
(ii) or (iii) above, such redemption shall be made in accordance with the Conditions to Redemption and the
Redemption Priority (as defined in Conditions 9(b) (Conditions to Redemption) of the Capital Notes and 9(c)
(Redemption Priority) of the Capital Notes) and more generally in accordance with Condition 9 (Redemption and
purchase) of the Capital Notes;
(e)
no Interest Amount may be paid to the holders of the Junior Capital Notes unless such Junior Capital Notes
are being redeemed pursuant to Condition 9(b)(ii) (Conditions to Redemption) of the Capital Notes or all
outstanding Senior Ranking Obligations to such Class of Capital Notes have been paid and/or provisioned
for in full;
(f)
no Variable Margin on any Capital Note may be paid to holders of the Capital Notes;
(g)
no Junior Management Fee may be paid to the Manager;
(h)
no Mezzanine Capital Notes Subordinated Payments may be paid unless the Issuer (regardless of any
applicable cure period) is in Restricted Investment solely as a result of its failure to redeem outstanding
Capital Notes by their Expected Maturity Date and/or as a result of a breach of the Capital Note Maturity
Test and such payment shall not lead to the occurrence of a Restricted Investment Event, a Restricted
Funding Event or an Enforcement Event (other than solely as a result of any such aforementioned failure or
breach, and regardless of applicable cure period) until all outstanding Senior Ranking Obligations to the
Mezzanine Capital Notes Subordinated Payments have been paid and/or provisioned for in full; and
(i)
no Junior Capital Notes Subordinated Payments may be paid until all outstanding Senior Ranking
Obligations to the Junior Capital Notes Subordinated Payments have been paid and/or provisioned for in
full.
Restricted Funding Procedures
Pursuant to the Management Agreement, the Manager has agreed that it will notify (inter alios) the Security Trustee
and the Rating Agencies immediately upon becoming aware of a Restricted Funding Event. If any Restricted
Funding Event has occurred, and for so long as (i) no Enforcement Event has occurred with respect to the Issuer and
(ii) the Issuer has not cured all existing Restricted Funding Events, subject to any restrictions on the Issuer’s ability
to cure Restricted Funding Events the adoption or amendment of the criteria for which is subject to Rating
Confirmation, the Issuer will be in a period of "Restricted Funding". During Restricted Funding (or following
Confirmation of an Enforcement Event (unless the Security Trustee or a Receiver, as the case may be, is of the
opinion that the following restrictions would adversely affect the interests of the Senior Creditors))(or if any of the
following actions would (regardless of any applicable cure periods) give rise to a Restricted Funding Event or an
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Enforcement Event), in addition to, and qualifying, the Restricted Investment Procedures, the Funding Objectives
and the specific investment and funding criteria described below and set out in the Management Agreement and the
Operating Rules, the Manager, the Security Trustee, the Enforcement Manager on behalf of the Security Trustee, or
a Receiver, as the case may be, shall take such actions itself and on behalf of the Issuer, as may be necessary or
desirable, to comply (or procure compliance) with the procedures set forth below (the "Restricted Funding
Procedures").
(a)
no Senior Notes may be issued by the Issuer or Co-Issuer;
(b)
new Repo Transactions or Securities Lending Transactions may not be entered into except to fund the
Acquisition of an Investment which the Issuer had committed to purchase whilst in Normal Operations or
Restricted Investment and prior to the occurrence of the relevant Restricted Funding Event;
(c)
new Investments (except Agreed-Upon Investments or any other Investments, the adoption or amendment
of criteria for which is subject to Rating Confirmation) may only be Acquired by the Issuer for the purpose
of improving investment returns on available funds until the Issuer requires such funds to meet the
repayment of outstanding Secured Obligations; provided that, this restriction shall not apply with respect to
any Investment the Issuer had committed to purchase whilst in Normal Operations or Restricted Investment
and prior to the occurrence of the relevant Restricted Funding Event;
(d)
new Investment Derivatives may only be entered into by the Issuer if the Issuer had committed to enter into
such Investment Derivatives whilst in Normal Operations and prior to the occurrence of the relevant
Restricted Funding Event;
(e)
no Interest Amount may be paid to the holders of the Senior Capital Notes, Mezzanine Capital Notes, or
Junior Capital Notes until all the outstanding Senior Ranking Obligations to the relevant Class of Capital
Notes have been paid and/or provisioned for in full;
(f)
no Variable Margin may be paid to the holders of the Senior Capital Notes, Mezzanine Capital Notes, or
Junior Capital Notes until all the outstanding Senior Ranking Obligations to payment of Variable Margin to
the relevant Class of Capital Notes have been paid and/or provisioned for in full;
(g)
no Capital Notes may be redeemed until all the outstanding Senior Ranking Obligations to the relevant
Class of Capital Notes have been paid and/or provisioned for in full and such Capital Notes are being
redeemed in accordance with Condition 9(f) (Restricted Funding or Enforcement Early Redemption) of the
Capital Notes; and
(h)
no Mezzanine Capital Notes Subordinated Payments may be paid until all outstanding Senior Ranking
Obligations to the Mezzanine Capital Notes Subordinated Payments have been paid and/or provisioned for
in full.
Restricted Funding additional guidelines
Liquidity management
Whilst the Issuer is in Restricted Funding (or following Confirmation of an Enforcement Event (unless the Security
Trustee or a Receiver, as the case may be, is of the opinion that following such restrictions would adversely affect
the interests of the Senior Creditors)):
(a)
the Issuer shall draw down all undrawn liquidity under the Liquidity Arrangements (including entering into
Committed Repo Transactions) to the extent that the Manager deems it advisable;
(b)
required cash outflows shall be met, where necessary, with the proceeds from sales or terminations (in the
case of Investment Derivatives) of Investments (such sale of Investments (excluding Investment
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Derivatives) taking into consideration the Preferred Order of Sale) or terminations of Associated
Derivatives;
(c)
excess cash may be invested in Agreed-Upon Investments or any other Investments for the purpose of
improving investment returns on available funds until the Issuer requires such funds to meet the repayment
of outstanding Secured Obligations; and
(d)
Liquidity Notes shall be extended to their final maturity date to the extent that the Manager (or the
Receiver, as applicable) deems advisable.
Credit risk management
Whilst the Issuer is in Restricted Funding (or following Confirmation of an Enforcement Event (unless the Security
Trustee or a Receiver, as the case may be, is of the opinion that following such restrictions would adversely affect
the interests of the Senior Creditors)):
(a)
the Manager (or the Receiver, as applicable) shall act reasonably in order to reduce exposures to any issuer,
guarantor, industry sector or country and generally to reduce the Issuer's exposure to declining Investment
credit quality (but, for the avoidance of doubt, this shall not require the Issuer to dispose of any specific
Investment);
(b)
if there is a default in relation to any Investment in the Investment Portfolio, the Manager (or the Receiver,
as applicable) shall, as it deems appropriate, use all reasonable efforts to arrange for the sale or termination
(in the case of an Investment Derivative) of such Investment and seek to terminate any Associated
Derivative (without breach thereof);
(c)
if there is an event of default under any of the Issuer's outstanding Associated Derivatives or any event
which would result in the Associated Derivative Counterparty no longer being an Eligible Associated
Derivative Counterparty, the Manager shall arrange for a replacement Permitted Associated Derivative to
be entered into or otherwise act so as to remove any market risk caused by such Associated Derivative
Counterparty's default; and
(d)
each Investment Derivative shall be terminated (i) at any time that the Manager (or the Receiver, as
applicable) deems advisable, (ii) within a certain period following the earlier to occur of a Restricted
Funding Event which is not subsequently cured or an Enforcement Event as specified in the relevant
Investment Derivative documentation, (iii) on the maturity date of the Investment Derivative or (iv)
otherwise as outlined in the Investment Derivative documentation.
Enforcement Procedures
Upon the occurrence of an Enforcement Event, the security constituted by the Security Trust Deed shall
become immediately enforceable. The Security Trustee has agreed, pursuant to the Security Trust Deed, that upon:
(A) the Security Trustee receiving a Default Notice from the Issuer, any Secured Creditor or the Manager on behalf
of the Issuer, (B) the Security Trustee receiving a Default Notice and the applicable Notice Period passes without the
Issuer contesting such Default Notice or the applicable Determination Period passes without either the Notifying
Party withdrawing or the Security Trustee dismissing such Default Notice, or (C) a Responsible Officer of the
Security Trustee obtaining actual knowledge of an Enforcement Event (the occurrence of any of (A), (B) or (C)
being a "Confirmation" of an Enforcement Event), the Security Trustee shall (at the cost and expense of the Issuer)
notify the Issuers, the Manager and the Rating Agencies promptly (and in no event later than two (2) Business Days
thereafter) of the occurrence of an Enforcement Event.
Upon the Confirmation of an Enforcement Event, the Manager shall become the agent of the Security Trustee (in
such capacity, the "Enforcement Manager") and shall, on behalf of the Security Trustee, follow the Enforcement
Procedures unless otherwise directed by the Security Trustee and shall continue to exercise the Manager Standard,
or if the Manager's role as Enforcement Manager has been terminated pursuant to the Management Agreement or
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the Security Trust Deed, the Security Trustee shall, pending the appointment of a Substitute Manager pursuant to
Clause 6.2 (Replacement of Manager) of the Security Trust Deed, use reasonable endeavours to procure timely
payment in full of the Issuer's obligations to Secured Creditors and compliance with the Enforcement Procedures (as
defined below) and shall be exclusively entitled (to the exclusion of the Manager, the Issuer and each other person)
to follow the Enforcement Procedures and to take any enforcement actions against the Collateral (including the U.S.
Collateral) provided in the Security Trust Deed. Where the Security Trustee (or a Receiver), as applicable, is
required to make such determination and there exists a conflict between the interests of the Senior Creditors and the
interests of the other Secured Creditors, the Security Trustee (or the Receiver), as applicable, will give priority to the
interests of the Senior Creditors.
The Security Trustee or the Enforcement Manager (on behalf of the Security Trustee) shall take such actions itself
and on behalf of the Issuer, as may be necessary or desirable, to comply (or procure compliance) with the Restricted
Funding Procedures and the "Restricted Funding additional guidelines" set forth above (the "Enforcement
Procedures").
Upon a Mandatory Acceleration Event all Secured Obligations shall become immediately due and payable.
In following the Enforcement Procedures and taking any enforcement actions against the Collateral the Security
Trustee shall be entitled to rely absolutely upon the advice of the Enforcement Manager or any other person
(including the Manager) selected by it in accordance with the terms of the Security Trust Deed (including Clauses
15.1(x) (Exculpatory provisions), 15.2 (Delegation of duties) and 15.3 (Reliance by the Security Trustee) of the
Security Trust Deed), and the Enforcement Manager or such other person shall have the power and authority to deal
with the Collateral on behalf of and as an agent for the Security Trustee subject to compliance with the provisions of
the Security Trust Deed and any directions provided by the Security Trustee from time to time. The Security Trustee
shall have the ability to revoke the authority of the Enforcement Manager or Manager, as the case may be, or such
other person at any time with or without cause. The Security Trustee shall not be liable for any action or inaction on
the part of Enforcement Manager nor shall the Security Trustee owe any obligations to the Enforcement Manager,
including in respect of costs, fees or expenses.
Administrative services
Pursuant to the Administrative Services Agreement, the Issuer and the Co-Issuer have appointed the Administrator
to provide certain operational and technology support services for and on behalf of the Issuer and the Co-Issuer, as
appropriate. For a further description of the services provided by the Administrator under the Administrative
Services Agreement, see "Description of the Administrator".
Ratings
Commercial Paper expected to be issued under the Commercial Paper Programme on or about the Closing Date will
receive the following ratings upon issuance:
S&P
Moody's
Fitch
A-1+
P-1
F1+
Medium Term Notes expected to be issued under the Medium Term Note Programme on or about the Closing Date
will receive the following ratings upon issuance:
S&P
Moody's
Fitch
AAA
Aaa
AAA
The Senior Capital Notes which are expected to be issued on or about the Closing Date will receive the following
ratings upon issuance:
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Moody's
Fitch
Aaa
AAA
The Senior Capital Notes will be unrated by S&P.
The Mezzanine Capital Notes which are expected to be issued on or about the Closing Date will receive the
following ratings upon issuance:
S&P
Moody's
Fitch
A
A3
A
The Junior Capital Notes will be unrated.
The ratings of the Combination Capital Notes (if any) will be confirmed in the relevant Final Terms.
The ratings of the Commercial Paper Programme and the Medium Term Note Programme address the ability of the
Issuer and the Co-Issuer, as applicable, to make payments due to the holders of the Commercial Paper or the holders
of the Medium Term Notes (as applicable) in the event that the Issuer is in a period of Restricted Funding. They do
not address the probability of the Issuer being in a period of Restricted Funding.
The above-mentioned Moody's ratings of the Senior Capital Notes and Mezzanine Capital Notes address the
expected loss posed to investors in relation to ultimate payment of principal and interest (excluding Variable
Margin) in respect of such Senior Capital Notes and Mezzanine Capital Notes on or before the Legal Maturity Date
of such Senior Capital Notes and such Mezzanine Capital Notes. The Moody's ratings do not address the risk that
interest payments in respect of such Senior Capital Notes and Mezzanine Capital Notes may be deferred prior to the
Legal Maturity Date of such Senior Capital Notes and such Mezzanine Capital Notes, whether as a result of the
Issuer being in Restricted Funding or the occurrence of an Enforcement Event or otherwise and does not apply to
any redemption at the option of the Capital Noteholders pursuant to the relevant Conditions. Moody's rating
assigned to the Senior Capital Notes and the Mezzanine Capital Notes addresses the likelihood that investors will
receive payments as promised in the event that the Issuer is in a period of Restricted Funding and the probability
that the Issuer is in a period of Restricted Funding.
The above-mentioned Fitch ratings of the Senior Capital Notes and Mezzanine Capital Notes address the ability of
the Issuer to make ultimate payment of principal and interest (excluding Variable Margin) in respect of such Senior
Capital Notes and such Mezzanine Capital Notes on or before the Legal Maturity Date of such Senior Capital Notes
and such Mezzanine Capital Notes. The Fitch ratings do not address the risk that interest payments in respect of
such Senior Capital Notes and Mezzanine Capital Notes may be deferred prior to the Legal Maturity Date of such
Senior Capital Notes and such Mezzanine Capital Notes, whether as a result of the Issuer being in Restricted
Funding or the occurrence of an Enforcement Event or otherwise and does not apply to any redemption at the option
of the Capital Noteholders pursuant to the relevant Conditions.
The above-mentioned S&P ratings of the Mezzanine Capital Notes address the ability of the Issuer to make ultimate
payment of principal and interest (excluding Variable Margin) in respect of such Mezzanine Capital Notes on or
before the Legal Maturity Date of such Mezzanine Capital Notes. The S&P ratings do not address the risk that
interest payments in respect of such Mezzanine Capital Notes may be deferred prior to the Legal Maturity Date of
such Mezzanine Capital Notes, whether as a result of the Issuer being in Restricted Funding or the occurrence of an
Enforcement Event or otherwise and does not apply to any redemption at the option of the Capital Noteholders
pursuant to the relevant Conditions.
The payment of the Variable Margin component of interest in respect of any Capital Note will be unrated.
The ratings address the credit risk factors associated with the rated Notes. Other risks have not been addressed but
may have a significant effect on yield to investors.
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Ratings are not a recommendation to buy or sell or hold a security. An explanation of the significance of such credit
ratings may be obtained from the Rating Agencies furnishing the same. These ratings are subject to revision or
withdrawal at any time, and there is no assurance that they will remain unchanged.
Pursuant to the Management Agreement, the Manager has undertaken to act as the agent of the Issuer in dealing
with the Rating Agencies. In particular, the Manager has undertaken, in accordance with the Manager Standard, to
apply for and maintain Top Ratings for each of the Senior Notes and the then current ratings assigned to the Capital
Notes (if any). To that end, the Manager has established a set of operating rules (the "Operating Rules") which are
aimed at obtaining and maintaining the ratings of the USCP Notes, ECP Notes, Medium Term Notes and certain of
the Capital Notes and the adoption or amendment of which will require Rating Confirmation. These rules are in
some cases additional to, or are more restrictive than, those contained in the Transaction Documents. In other cases
these rules supplement those contained in the Transaction Documents by providing greater detail of the calculation
of the rules contained in the Transaction Documents. Calculations of whether the Compliance Tests are breached
shall be made in accordance with both the Transaction Documents and the Operating Rules. The Manager intends to
manage the Portfolio within the Operating Rules; failure to comply with these Operating Rules may result in the
downgrade of the ratings of the rated Notes. The Operating Rules may be changed without the consent of, or notice
to, the holders of the Senior Notes and/or the Capital Notes, but only if Rating Confirmation is obtained.
Investment management
Overview and objectives
Pursuant to the Management Agreement, the Manager has undertaken to provide the Issuer with investment
management services, including the management of credit, currency, interest rate and liquidity risks associated with
the Investment Portfolio and related Investment Derivatives, Associated Derivatives, Securities Lending
Agreements, Committed Repo Agreements, Repo Agreements (including Derivative Transactions) and Reverse
Repo Agreements. See "Description of the Management Agreement". The Manager has authority under the
Management Agreement to invest on behalf of the Issuer in Investments of any kind, wherever situated and whether
or not producing income, and to sell or otherwise dispose of Investments on behalf of the Issuer, in any such case on
any market, provided that, as at the date on which the Manager proposes to acquire such Investment:
(a)
if the Issuer is in a period of Restricted Investment or Restricted Funding, the Manager complies with the
Restricted Investment Procedures or, as the case may be, the Restricted Funding Procedures and the
"Restricted Funding additional guidelines" described above; and
(b)
the proposed Investment is a Permitted Investment.
In addition, the Manager may only effect a transaction on behalf of the Issuer if such transaction satisfies certain
other conditions, as set out in the Management Agreement.
Investment Objectives
The Manager is further required to have regard to the Issuer's Investment Objectives (the "Investment Objectives"),
which include:
(a)
achieving a stable return on the Credit Portfolio subject to paragraphs (b) to (g) (inclusive) below;
(b)
acquiring Permitted Investments;
(c)
managing interest rate risks, currency risks and, where the Manager deems it appropriate, credit risks
associated with the Investment Portfolio by entering into Associated Derivatives with Associated
Derivative Counterparties;
(d)
managing the credit and liquidity risks associated with the Investment Portfolio and related Associated
Derivatives;
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(e)
managing the Investment Portfolio having regard for the Investment Portfolio Parameter Tests;
(f)
achieving returns which meet reasonable investor expectations; and
(g)
redeeming the Senior Funding and/or the Capital Notes and making payments of any interest due and
payable in accordance with the respective terms and conditions of, and agreements documenting, the Senior
Funding and/or the Capital Notes, subject to paragraphs (b) to (e) (inclusive) above and, where applicable,
in accordance with the procedures prescribed for the Issuer upon entering Restricted Investment, Restricted
Funding or upon an Enforcement Event and any amended procedures (the amendment of which is subject
to Rating Confirmation) from time to time.
Certain Acquisition Procedures
The Manager shall, in connection with its duties under the Management Agreement, take such actions itself and on
behalf of the Issuer, as may be necessary or desirable, to comply (or procure compliance) with the procedures set
forth below (the "Acquisition Procedures"):
(a)
Except as otherwise provided herein, the Manager and the Issuer (including their employees and
agents, including any affiliate as defined below) shall perform all activities in connection with
their duties hereunder or otherwise in connection with the Issuer's activities (other than
administrative duties related solely to the issuance and payment of certain of the Notes) from
locations outside the United States of America;
(b)
Except as otherwise provided herein, the Manager shall not cause the Issuer (including their
employees and agents, including any affiliate as defined below) to, and the Issuer shall not,
participate in any lending or underwriting syndicate, the agent, manager or other arranger for
which acts in connection therewith from any office or other location in the United States of
America, nor shall the Manager or Issuer (including their employees and agents, including any
affiliate as defined below) purchase any Debt Security or other Investment constituting debt for
U.S. federal income tax purposes directly from any Obligor or guarantor thereof in connection
with its original issuance, or enter into any Reverse Repo Transaction, through any placement
agent or arranger that acts in connection therewith from an office or other location in the United
States of America;
(c)
The Manager shall not, and shall not cause the Issuer to, and the Issuer shall not, directly or
indirectly purchase a Debt Security or other Investment constituting debt for U.S. federal income
tax purposes in connection with its original issuance unless the Issuer purchases less than onethird of the total principal amount of the securities issued in such Debt Security's or Investment's
issuance;
(d)
The Manager shall not, and shall not cause the Issuer to, and the Issuer shall not, purchase any
Investment that is not denominated as debt under relevant Law unless (a) such Investment is debt
for United States Federal income tax purposes, or (b) it has obtained advice of counsel that
ownership of, or entering into, such instrument will not cause the Issuer to be engaged in a trade or
business within the United States for such purposes;
(e)
The Manager and Issuer will not acquire an Investment which constitutes indebtedness (or a
beneficial interest therein) for U.S. federal income tax purposes unless it (i) was originated as part
of a public or private offering through an underwriter or placement agent (in each case not related
to the Manager or the Issuer) and not as a loan or loan participation negotiated between the
borrower(s) and the lender(s) or their agent(s), (ii) is purchased "as is" as shown to the Manager by
the placement agent or underwriter and (iii) is purchased without the Issuer receiving directly or
indirectly any portion of the fees or other origination profit earned by the placement agent or
underwriter in respect of its activities with respect to the structuring, negotiation, placement or sale
of the Investment;
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(f)
The Manager shall not cause the Issuer to, and the Issuer shall not, acquire an equity security (or
debt security the documentation for which indicates it is equity for U.S. federal income tax
purposes) or option thereon constituting an interest in a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code and the Manager will not cause
the Issuer to, and the Issuer shall not, acquire indebtedness (or an option thereon) convertible into
such equity or indebtedness giving the holder the right to share in the appreciation in value of or
the gross or net proceeds or profits generated by an interest in U.S. real property;
(g)
The Manager and the Issuer shall not cause the Issuer to acquire any equity security (including a
Debt Security the documentation for which indicates that it constitutes equity for U.S. federal
income tax purposes), or an option thereon, other than one for which the documentation indicates
it is (i) an equity interest in an entity or vehicle that is classified for U.S. federal income tax
purposes as a corporation or an association taxable as a corporation or (ii) an equity interest in an
entity or vehicle that (x) is not classified as a corporation or an association taxable as a corporation
for U.S. federal income tax purposes and (y) is not engaged or deemed to be engaged in the
conduct of a trade or business in the United States for U.S. federal income tax purposes;
(h)
The Manager and Issuer shall require with respect to any credit default swap or similar
arrangement entered into by the Issuer with respect to which the Issuer is the protection seller that
(i) the documentation of the transaction states that the counterparty is not required to have suffered
a loss on, or to have owned or held, any relevant obligation at any time in order to receive the
contingent payment and (ii) there exists no other agreement, arrangement or understanding to the
effect that (x) the counterparty is required to own or hold any reference obligation at any time or
(y) the counterparty is economically compelled to own or hold any such obligation and shall also
require that with respect to any credit default swap or similar arrangement entered into by the
Issuer that the credit events will be standard credit events under International Swaps and
Derivatives Association, Inc. documentation; and
(i)
If the Issuer owns (directly or indirectly) indebtedness secured by U.S. real estate, the Manager
will, unless unable to, have the Issuer, and the Issuer shall sell such indebtedness (or beneficial
interest therein) prior to acquiring (directly or indirectly) ownership of such real estate or an
interest therein if there is a default, workout, foreclosure or similar event with respect to such
indebtedness (or beneficial interest therein). The Manager also will not otherwise cause the Issuer
to, and the Issuer shall not, own (directly or indirectly) U.S. real estate (or a beneficial interest
therein).
(j)
The Manager and the Issuer will not be dealers in assets (Investments, Repo Transactions, Reverse
Repo Transactions and Derivatives) owned by the Issuer, i.e., they will not be dealers of such
assets regularly engaged in purchasing such assets and selling them to customers. The Manager
and Issuer will purchase, sell and hold such assets for investment or speculation in order to realize
income and gain for the Issuer. The Manager and Issuer will purchase, sell, acquire and dispose of
assets of the Issuer or otherwise enter into transactions only when it is consistent (i) with the terms
of the Transaction Documents and (ii) with their objective of realizing income or gain or
minimizing loss for the Issuer. They do not stand ready to purchase assets from or sell assets to or
enter transactions (including Securities Lending Transactions) with customers in the ordinary
course of business or with any person (even if creditworthy) who makes an offer to them with
respect to the type of assets acquired and sold by or transactions engaged in by the Issuer (even if
entering into such offer would be consistent with the Transaction Documents). The Issuer is not
regulated as a bank under the laws of Ireland, the United States of America or any other
jurisdiction. In addition, the Issuer does not and will not take deposits (provided, however, that
the Issuer assumes in making such representation that the Notes are not deposits).
(k)
The Manager and Issuer will not regularly offer to enter into, assume, offset, assign or otherwise
terminate positions in Derivatives with customers in the ordinary course of business, including
regularly holding themselves out in the ordinary course of business as being willing and able to
enter into either side of a Derivative transaction. The Manager and Issuer will purchase and sell
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Derivatives, usually as hedges with respect to other assets of the Issuer, and sometimes for
investment or speculation and only when it is consistent (i) with the terms of the Transaction
Documents and (ii) with their objective of realizing income or gain or minimizing loss for the
Issuer. The Issuer's investment in any Derivative is, in effect, a method of hedging its assets or
enhancing its yield on the collateral, if any, securing such Derivative as an alternative to investing
directly in the reference obligation. Any obligation acquired by the Issuer upon the occurrence of
a credit event under a Derivative will, subject to the terms of the Transaction Documents, be
treated no differently than any other asset of Issuer and will be held for possible sale if justified by
market conditions and such acquisition will otherwise meet the requirements of these Acquisition
Procedures. The Issuer and any other person acting on behalf of the Issuer (including the
Manager) agree not to treat any Derivative as insurance or a guarantee for any purpose, including
without limitation, any tax, accounting or regulatory purpose. To the best of the Issuer's and such
person's knowledge, with respect to counterparties that are not derivatives dealers, such
counterparties will not treat any Derivative as insurance or a guarantee for any purpose, including
without limitation, any tax, accounting or regulatory purpose. Any reference obligation for a
Derivative will be an obligation for which pricing information is readily available.
(l)
Derivatives. The Issuer may invest in or hedge positions with Derivatives.
(1)
The Manager will not recommend that the Issuer acquire or enter into any Derivative
unless:
(i)
the criteria used to determine whether to acquire or enter into any particular
Derivative is similar to the criteria used by any fixed-income portfolio manager
to hedge or make investments in debt securities, with the expectation of
profiting from holding the Derivative and not to earn a fee, commission, spread,
or markup over its cost.
(ii)
none of the Issuer, the Manager, and any other person acting on behalf of the
Issuer solicit, advertise or publish the Issuer's ability to enter into Derivatives for
the benefit of another person;
(iii)
the Derivative is written on standard form ISDA documentation if applicable;
(iv)
the direct acquisition of the reference obligation or obligations would not violate
any of the provisions of these Acquisition Procedures,
(2)
The Derivative will provide for physical settlement by the buyer of protection only if (1) in the
case where the applicable standard form ISDA agreement also permits, at the discretion of the
counterparty, cash settlement (within the meaning of the definitions published from time to time
by ISDA), the credit default swap transaction similarly permits such cash settlement, (2) the
Manager does not cause the issuer to enter into such Derivative for the purpose of acquiring or
holding the obligation of which would violate any of the provisions of these Acquisition
Procedures, and (3) at least one such obligation deliverable under the Derivative is an obligation
for which, on the date such Derivative is entered into, firm offer price quotations can be obtained
from at least two dealers, or is readily available to purchasers generally in a liquid market.
(3)
The Manager will not recommend that the Issuer acquire or enter into any Derivative with a view
towards finding another party to assume the issuer's risk (whether under the Derivative or through
another offsetting transaction), and the Manager will not recommend that the Issuer enter into a
transaction that reduces the Issuer's risk with respect to the Derivative unless there has been a
material change in circumstances that causes the Issuer or the Manager to believe that the
Derivative is a less attractive position (whether absolutely or relative to other positions) than the
Manager believed at the time the Issuer originally entered into the position, in which case the
Issuer may enter into an offsetting or other transaction as a means to effectively reduce or
eliminate the Issuer's economic exposure under the Derivative.
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(4)
The Issuer will not make any significant upfront payment on or with respect to any Derivative and
will not use Derivatives as a means of making advances to any Derivative counterparty following
the date on which the Derivative is acquired or entered into.
(5)
The Issuer and Manager will enter into credit default swaps and similar positions in which the
Issuer is providing the credit protection only when consistent with the provisions below.
(i)
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a Derivative structured as a credit default swap (other than a credit default swap
described in clause (ii) below) must be done exclusively under documentation
published by the International Swaps and Derivatives Association, Inc.
("ISDA"), or involve a structured investment comprised of an interest in an
instrument constituting debt for U.S. federal income tax purposes and such a
credit default swap, where in either case the credit default swap meets the
following criteria:
(A)
each "credit event" is a standard ISDA credit event;
(B)
the documentation of the transaction states that the counterparty is not
required to have suffered a loss on, or to have owned or held, any
relevant obligation at any time in order to receive the contingent
payment;
(C)
there exists no other agreement, arrangement or understanding to the
effect that the counterparty is (1) required to own or hold any reference
obligation at any time, or (2) economically compelled to own or hold
any such obligation;
(D)
the counterparty may require cash or physical settlement of the swap
transaction based on one of multiple potential obligations of the
reference obligor selected by the counterparty all in a manner
determined under standard ISDA provisions;
(E)
the Issuer is not involved directly or indirectly in the origination of any
reference obligation or in the establishment of any of its terms;
(F)
if the Issuer is entering into the derivative within ten (10) days of the
origination of a debt instrument that is a reference obligation for the
derivative, the counterparty is a person who regularly offers to enter
into, assume, offset, assign, or otherwise terminate positions in similar
derivative transactions with customers in the ordinary course of a trade
or business;
(G)
either the counterparty is not a special purpose entity and has a preexisting business history and substantial operations and assets unrelated
to its issuance of the instrument, or the counterparty does not and will
not, prior to the occurrence of any credit event, own or have a
contractual entitlement to acquire any reference obligation or any other
deliverable obligation;
(H)
in the case of a structured investment, the Issuer's acquisition of the
debt component would otherwise meet the requirements of these
Acquisition Procedures;
92
(ii)
9122016.23 06095153
(I)
to the Issuer's and Manager's knowledge the Derivative is not treated as
insurance or a financial guarantee sold by the Issuer for United States
or Irish regulatory purposes;
(J)
the Derivative does not require that either party to the Derivative (i)
determine any payment based on an actual loss incurred by either party
or (ii) own the applicable reference obligation, hedge its position under
the Derivative, necessarily incur any loss or other detriment that would
be avoided to the extent such party owned the reference obligation, or
require by its terms the delivery of reports or other information relating
to the reference obligation if the effect of such requirement is that
either party would be required to own the applicable reference
obligation;
(K)
to the Issuer's and the Manager's knowledge, the Derivative is not
entered into with a counterparty regulated or licensed to do business as
an insurance company or a reinsurance company (except as described
in paragraph (L) immediately below or that will treat the Derivative for
any purpose as other than an investment in (or short sale of) an option,
a forward contract, a series of contingent put options or a notional
principal contract; and
(L)
if a Derivative is entered into with a counterparty that, to the Issuer's or
the Manager's knowledge, is regulated or licensed to do business as an
insurance company or a reinsurance company, then to the Issuer's or the
Manager's knowledge, (i) the counterparty will not treat, and will not
be required to treat, the Derivative as an insurance or reinsurance
contract or policy for tax, regulatory, financial accounting or any other
purpose, and (ii) the counterparty is not entering into the Derivative for
the purpose of reducing an insurance or reinsurance risk of either such
counterparty or an affiliate of such counterparty with respect to a credit
event of the issuer of the applicable reference obligation.
a credit Derivative transaction with pay-as-you-go or physical settlement,
structured as a credit default swap exclusively under documentation published
by ISDA, where the credit default swap meets the following criteria:
(A)
each such "credit event" is a standard ISDA credit event, and each such
"floating payment event" is either a "writedown", a "failure to pay
principal", a "distressed ratings downgrade" or an "interest shortfall",
each as described in the Indenture and defined in standard ISDA
documentation;
(B)
the documentation of the transaction states that the counterparty is not
required to have suffered a loss on, or to have owned or held, any
relevant obligation at any time in order to receive the contingent
payment;
(C)
there exists no other agreement, arrangement or understanding to the
effect that the counterparty is (1) required to own or hold any reference
obligation at any time, or (2) economically compelled to own or hold
any such obligation;
(D)
the related reference obligation is fully funded and outstanding at the
time the Issuer enters into the Derivative and would, if purchased
93
directly, comply with the provisions set forth in these Acquisition
Procedures;
(iii)
(E)
neither the Issuer nor the counterparty is involved directly or indirectly
in the origination of any reference obligation or in the establishment of
any of its terms;
(F)
the counterparty is a person who regularly offers to enter into, assume,
offset, assign, or otherwise terminate positions in similar derivative
transactions with customers in the ordinary course of a trade or
business;
(G)
the counterparty is not a special purpose entity and has a pre-existing
business history and substantial operations and assets unrelated to its
issuance of the instrument; and
(H)
the Derivative is not treated as insurance or a financial guarantee sold
by the Issuer for United States or Irish regulatory purposes;
(I)
the Derivative does not require that either party to the Derivative (i)
determine any payment based on an actual loss incurred by either party
or (ii) own the applicable reference obligation, hedge its position under
the Derivative, necessarily incur any loss or other detriment that would
be avoided to the extent such party owned the reference obligation, or
require by its terms the delivery of reports or other information relating
to the reference obligation if the effect of such requirement is that
either party would be required to own the applicable reference
obligation;
(J)
to the Issuer's and the Manager's knowledge, the Derivative is not
entered into with a counterparty regulated or licensed to do business as
an insurance company or a reinsurance company (except as described
in paragraph (K) immediately below or that will treat the Derivative for
any purpose as other than an investment in (or short sale of) an option,
a forward contract, a series of contingent put options or a notional
principal contract; and
(K)
if a Derivative is entered into with a counterparty that, to the Issuer's or
the Manager's knowledge, is regulated or licensed to do business as an
insurance company or a reinsurance company, then to the Issuer's or the
Manager's knowledge, (i) the counterparty will not treat, and will not
be required to treat, the Derivative as an insurance or reinsurance
contract or policy for tax, regulatory, financial accounting or any other
purpose, and (ii) the counterparty is not entering into the Derivative for
the purpose of reducing an insurance or reinsurance risk of either such
counterparty or an affiliate of such counterparty with respect to a credit
event of the issuer of the applicable reference obligation.
the position is an unsecured instrument in the form of debt that is fully recourse
to the debtor, and that bears a principal amount payable in one or more
installments and that meets the following criteria:
(A)
9122016.23 06095153
the Issuer makes no payment to the debtor other than at issuance of the
instrument, and repayment of some or all of the principal amount to the
Issuer is dependent on the absence of a credit event or events, or at the
94
option of the debtor may be made by delivery following a credit event
or events of deliverable obligations, of a single reference obligor (other
than the debtor or an affiliate of the debtor);
(m)
(n)
(B)
standards relating to the debtor on the instrument and the reference
obligor equivalent to those described for the default swap counterparty
and reference obligor under subheadings (B), (C), and (D) of clause (i)
above are fulfilled;
(C)
either the debtor on the instrument is not a special purpose entity and
has a pre-existing business history and substantial operations and assets
unrelated to its issuance of the instrument, or the debtor does not and
will not, prior to the occurrence of any credit event, own or have a
contractual entitlement to acquire any reference obligation or
deliverable obligation; and
(D)
the Issuer has made no commitment to the counterparty to enter into or
purchase the instrument prior to the time when the Issuer would be
permitted to commit to acquire such reference obligation directly,
consistent with the requirements of these Acquisition Procedures.
Securities lending guidelines. The Issuer may from time to time enter into Securities Lending
Agreements. The Issuer and Manager will not purchase any position primarily for the purpose of
entering into a Securities Lending Agreement with respect thereto. Each Securities Lending
Agreement shall be on market terms (except as may be required below) and shall:
(i)
require that, in the first instance, the Securities Lending Counterparty return to
the Issuer debt obligations that are identical (in terms of issue and class) to the
loaned obligations; provided that if the Issuer and the Manager have received an
opinion or advice of tax counsel of nationally recognised standing in the United
States experienced in such matters to the effect that the failure of the Securities
Lending Counterparty to return such loaned obligations will not cause the Issuer
to be engaged, or deemed to be engaged, in a trade or business in the United
States for U.S. federal income tax purposes or otherwise to be subject to U.S.
federal income tax on a net basis, the Issuer may accept an alternative other than
such loaned obligations from the Securities Lending Counterparty (for so long
as the failure of the Securities Lending Counterparty to provide such alternative
will not constitute an event of default under such Securities Lending
Agreement);
(ii)
require that the Securities Lending Counterparty pay to the Issuer such amounts
as are equivalent to all interest and other payments that the owner of the loaned
collateral obligation is entitled to for the period during which the obligation is
loaned and such payments shall not be subject to any withholding tax imposed
by any jurisdiction unless the Securities Lending Counterparty is required under
the Securities Lending Agreement to make "gross-up" payments to the Issuer
that cover the full amount of such withholding tax on an after-tax basis.
(iii)
be subject to Rating Confirmation; and
(iv)
satisfy any other requirements of Section 1058 of the Code and the Treasury
Department regulations promulgated thereunder.
No later than the date of the first payment or distribution of interest on a position, the Issuer will
give to the paying agent or other person having control or custody over payments on such
9122016.23 06095153
95
positions a properly completed Internal Revenue Service Form W-8BEN (or successor form) and
will provide to such paying agent or other person a newly executed Form W-8BEN (or successor
form) periodically as required by applicable Treasury Department regulations until the maturity or
repayment of such obligation.
(o)
Neither the Issuer nor any party acting on behalf of the Issuer shall form or avail itself of any
entity or other person (including any affiliate of the Issuer for the purpose of avoiding the
requirements set forth in the acquisition procedures in the Management Agreement for the
acquisition of positions (by, for example, relying on an affiliate to indirectly acquire positions or
to provide financing to the party originating the positions).
(p)
Except in the case of a position that provides for "gross up" payments to the Issuer to cover any
withholding taxes imposed on payments under such position, neither the Issuer nor any other party
acting on behalf of the Issuer shall purchase or acquire any position paying U.S. source interest,
original issue discount or income, unless, (A) payments of interest on the position would
constitute "portfolio interest" within the meaning of Section 881(c) of the Code for the Issuer or
otherwise be exempt from U.S. federal income tax and (B) if such position is an obligation
described in Section 163(f)(2)(B) of the Code, the Issuer holds such position through a financial
institution that meets the requirements of Treasury Regulation Section 1.165 12(c)(3) (in its then
current form) or any successor provision.
(q)
Neither the Issuer nor any party acting on behalf of the Issuer shall register as, hold itself out as,
represent to others that it is, engage in the activities (other than as otherwise permitted herein)
customarily undertaken by, or become subject to regulatory supervision or other legal
requirements under the laws of any country or political subdivision thereof as, a broker-dealer,
middleman, market marker, retailer or wholesaler of securities, or a bank, an insurance company,
financial guarantor, surety bond issuer, or a company engaged in loan origination. Neither the
Issuer nor any party acting on behalf of the Issuer shall purchase an position in order to earn a
dealer spread or dealer mark-up over its cost or hold itself out as being ready to effect purchase or
sale transactions with customers.
(r)
Except as otherwise specified herein, the following terms (whether or not capitalized) shall have
for purposes of these Acquisition Procedures the respective meanings set forth below, and the
definitions of such terms are equally applicable to the singular, plural, and other forms of such
terms and to the masculine, feminine and neuter genders of such terms.
"Code" means the Internal Revenue Code of 1986, as amended.
"originate" and "origination" mean, with respect to any debt instrument, the performance of all acts
concluding with closing and funding of such debt instrument.
"purchase" or "acquisition" or any similar transaction described herein as being undertaken by or on
behalf of the Manager or Issuer shall refer to a purchase or acquisition of positions pursuant to the terms of the
Transaction Documents.
"Restricted Transaction Affiliate" means the Issuer or the Manager (or any successor Manager) or any
affiliate of the Issuer or Manager (or any successor Manager); provided, however, such term shall not include any
entity which (A) is not itself either the Manager or does not itself own 10 percent or more of a class of securities of
the Issuer that are characterized as equity for U.S. federal income tax purposes, (B) regularly engages (and has a
history of regularly engaging) in the business of originating or underwriting debt, including regularly selling such
debt contemporaneously with its origination to investors unaffiliated with itself, the Issuer of any of the above
entities in secondary market transactions on arm's-length terms equivalent to those described herein, and (C) does
not have any overlap of its personnel acting on its behalf in activities of either an operational or supervisory nature
which also act on behalf of the Issuer, Manager or other party in any capacity in connection with Issuer acquisitions
of positions. For purposes of these Acquisition Procedures, the term "affiliate" of an entity means any other entity
which is directly or indirectly in control of, controlled by, or is under common control with such entity, and the term
9122016.23 06095153
96
"control" means (1) a direct or indirect 20 percent or greater power with respect to the election of directors (or the
equivalent of directors) of any entity or the direct or indirect power to direct or cause the direction of the
management or policies of an entity (whether by contract or otherwise), (2) ownership of 20 percent or more of a
class of securities of such entity that is characterized as equity for U.S. federal income tax purposes or (3) the ability
to exercise discretionary investment authority for or on behalf of such entity.
"Seasoned" means, with respect to any position, that the position has been issued, funded, outstanding and
owned by the seller or a predecessor of the seller for a certain period of time before the commitment, purchase and
funding of purchase by the Issuer.
(s)
The conditions in paragraphs (a) and (b) of the Acquisition Procedures regarding the Issuer,
Manager, their affiliates and agents having to act from locations outside the United States do not
have to apply to acquisitions of Investments by the Issuer (but do have to apply to other positions
acquired by the Manager and Issuer, their agents and affiliates such as Reverse Repo Transactions,
and Securities Lending Transactions and reverse repos generally even if constituting an
Investment and they may enter into Reverse Repo Transactions, reverse repos generally and
Securities Lending Transactions with persons located in the United States provided they
themselves act strictly from locations outside the United States in connection with such Reverse
Repo Transactions and Securities Lending Transactions), provided the conditions set forth in
paragraph (t) below are satisfied.
(t)
Acquisition Not in Compliance with paragraphs (a) and (b) of the Acquisition Procedures
Concerning Activities Being Only From Outside the United States.
(1)
9122016.23 06095153
General Restrictions. If an acquisition of a position by the Issuer involves activities
conducted in the United States by the Issuer, the Manager, their affiliates or agents, in
addition to the more specific restrictions contained in the subparagraphs below, the
following general provisions will apply with respect to any acquisition of a position,
regardless of the affiliated or non-affiliated status of the seller thereof or the timing of
acquisition of such position.
(i)
Neither the Issuer nor any other party acting on behalf of the Issuer will engage
in any origination, placement or underwriting services or other similar activities
in connection with any position acquired by the Issuer or be a member of an
original underwriting, placement or lending syndicate with respect to any
position acquired by the Issuer.
(ii)
The Issuer and any other party acting on behalf of the Issuer will purchase
positions on behalf of the Issuer at prevailing market prices in customary
primary securities offerings or secondary market purchases.
(iii)
Neither the Issuer nor any other party acting on behalf of the Issuer will post
deposits in advance of settlement for the account of the Issuer or make other pre
settlement payments or guarantees for the benefit of an underwriter or placement
agent of any positions; provided, however, that the Issuer may engage in
customary underwriting allocation ("circling") or equivalent customary
procedures.
(iv)
Neither the Issuer nor any party acting on behalf of the Issuer may engage in any
negotiations of any terms or conditions of positions offered to the Issuer for
purchase; provided, that the Issuer may engage in customary due diligence prior
to the issuance of positions in public or private offerings (including private
placements). The foregoing will not prevent the Issuer in public or private
offerings (including private placements) from engaging in customary
conversations with the underwriter or placement agent regarding terms and
97
provisions of the positions, including responses to customary offering period
inquiries by the underwriter.
(2)
9122016.23 06095153
(v)
Except as permitted in subparagraph (t)(3) below, with respect to purchases of
positions from Restricted Transaction Affiliates, the Issuer will only purchase
positions from sellers unaffiliated with the Issuer or Restricted Transaction
Affiliates.
(vi)
Neither the Issuer nor any other party acting on behalf of the Issuer shall commit
to purchase unissued or unfunded positions unless the purchase price is fixed at
the time of the commitment.
(vii)
Neither the Issuer nor any other party acting on behalf of the Issuer shall receive
any fees in respect of the purchase of any positions or otherwise purchase
securities that would entitle the Issuer to receive any fees (such as a variable
funding note issued by a position issuer).
Additional Restrictions with respect to Purchases of Positions in Primary Securities
Offerings. In addition to the general restrictions set forth in subparagraph (t)(1) above,
the Issuer and persons acting on its behalf may (without complying with the requirements
of acting outside the U.S. in paragraphs (a) and (b) of the Acquisition Procedures in the
Management Agreement) purchase positions directly from the issuer or obligor thereof
(that is, in purchases other than purchases from the underwriter or other similar
intermediary), in a primary securities offering, provided, that the following conditions are
met:
(i)
no commitment is made by the Issuer to purchase the position prior to the
Issuer's purchase thereof;
(ii)
the Issuer arranges for such purchase solely with the placement agent or broker
of the position who is regularly engaged in the business of underwriting, placing
and selling securities such as the position and is not a Restricted Transaction
Affiliate;
(iii)
such placement agent or broker has negotiated and structured the material terms
of the position;
(iv)
the position is purchased substantially "as is" as shown to the Issuer by the
placement agent or broker (i.e., without any negotiation on the part of the Issuer
including through the placement agent or broker of the position, other than
limited exchange of information pertaining to the price and terms of the position
that customarily occurs between a purchaser and an underwriter, placement
agent or broker incident to solicitations of market interest by such underwriter,
placement agent or broker);
(v)
the position is purchased (A) at par or at an insubstantial discount from par, or if
at greater than an insubstantial discount from par, at a price that does not reflect
any origination profit or similar fees and (B) at the same price and on the same
terms as paid, and pursuant to documentation substantially the same as
documentation entered into, by other unrelated contemporaneous purchasers of
the same position;
(vi)
the position is purchased (A) in an offering that is registered with the Securities
and Exchange Commission under the Securities Act, (B) in an offering that is
not registered under the Securities Act, but that is offered only to "qualified
98
institutional buyers" pursuant to Rule 144A under the Securities Act, or (C) at
least 40 percent of the positions in the issuance are purchased at the same price
and on the same terms by another market purchaser or purchasers unrelated to
the Issuer or any affiliate; and
(vii)
(3)
the Issuer does not receive, directly or indirectly in any manner, any portion of
the fees or other origination profit earned by the placement agent or broker in
respect of its activities with respect to the structuring, negotiation, placement or
sale of such position;
Additional Restrictions with respect to Purchases of Positions from Restricted
Transaction Affiliates. In addition to the general restrictions set forth in subparagraph
(t)(1) above, any purchase by the Issuer from any Restricted Transaction Affiliate of a
position may not involve any type of pre closing or pre funding commitment and must
comply with the following requirements:
(i)
either (A) a material amount of such position is also sold to an unrelated
secondary market purchaser in a transaction contemporaneous with, and on
terms substantially identical to, the sale to the Issuer or (B) the Issuer obtains
quotes from two independent dealers; provided that (1) such quotes reflect fair
market value in the secondary market and, if at a discount, such discount is
customary for a secondary market purchaser under the market conditions, (2) the
purchase price is no greater than the higher of the two quotes, and (3) either (a)
the purchase price is not materially less than the average of such quotes or (b)
any material deviance of such price from the average is a typical market
variance based on the timing of the purchase (and not based on any origination
profit or similar fees);
(ii)
neither the Restricted Transaction Affiliate nor any other party, including any
employee thereof, that participates in the origination of a position by the
Restricted Transaction Affiliate may act on behalf of the Issuer in connection
with the Issuer's purchase of such position; and
(iii)
such position must have been Seasoned for not less than two (2) days.
(u)
Opinion of Tax Counsel. The Issuer shall be excused from compliance with any of the
provisions set forth in these Acquisition Procedures as long as, with respect to a particular
transaction, the Issuer shall have received advice, which may be oral, of tax counsel of nationally
recognised standing in the United States experienced in such matters to the effect that the purchase
of such position will not cause the Issuer to be treated as engaged in a trade or business within the
United States for United States federal income tax purposes or otherwise to be subject to United
States federal income tax on a net basis. The acquisition provisions may be amended, eliminated
or supplemented if the Issuer, and the Security Trustee shall have received an opinion of tax
counsel of nationally recognised standing in the United States experienced in such matters that the
Issuer's compliance with such amended or supplemental provisions or the failure to comply with
such provisions proposed to be eliminated, as the case may be, will not cause the Issuer to be
engaged, or deemed to be engaged, in a trade or business within the United States for United
States federal income tax purposes or otherwise to be subject to United States federal income tax
on a net basis.
(v)
The Manager and Issuer will require that any of their successors comply with these Acquisition
Procedures.
(w)
If the Manager or Issuer becomes aware of any change in the Code or the Treasury Department
regulations promulgated thereunder or of any judicial decision that is directly relevant to the
question of whether the Issuer would be treated as being engaged in a trade or business in the
9122016.23 06095153
99
United States, the Manager or Issuer shall seek the advice from nationally recognised tax counsel
as to whether any activity otherwise permitted by the Acquisition Procedures specified in
paragraphs (a) through (h) could, as a result of such change in the Code or the Treasury
Department regulations promulgated thereunder or such judicial decision, result in the Issuer being
treated as being engaged in a trade or business in the United States; if such tax counsel determines
that the Issuer could be treated as being engaged in a trade or business in the United States as a
result of any activity otherwise permitted by the Acquisition Procedures specified in paragraphs
(a) through (h), the Manager and Issuer shall thereafter refrain from engaging in such activity.
Specific investment and funding criteria
The following paragraphs of this section "Specific investment and funding criteria" set out the provisions applicable
to the management of the Portfolio as at the date of this Information Memorandum pursuant to the terms of the
Management Agreement. Any of these provisions may be amended and/or supplemented subject to Rating
Confirmation from time to time.
The Investment Portfolio
The Investment Portfolio includes all Investments held at that time by the Issuer, each of which must have been a
Permitted Investment at the time of purchase. The Portfolio includes the Investment Portfolio together with all
outstanding Associated Derivatives to which the Issuer is a party and which are entered into with Associated
Derivative Counterparties. The Investment Portfolio and, in certain circumstances, the Credit Portfolio are subject to
certain Investment Purchase Criteria contained in the Management Agreement and summarised below. The
Investment Purchase Criteria prescribe the types of Investments that the Issuer may Acquire or enter into. The
Manager shall manage the Investment Portfolio, and in certain circumstances, the Portfolio taking into consideration
the ongoing Investment Portfolio Parameter Tests. In addition, the Manager shall also manage the Portfolio with
reference to the Market Sensitivity Tests, the Liquidity Tests, the Capital Tests and the Weighted Average Life of
Senior Funding Test.
The Manager shall test for compliance with each of the Investment Purchase Criteria and each Investment Portfolio
Parameter Test separately for each Rating Agency using, if required, the Deemed Ratings of the applicable Rating
Agency for such calculation and each of the Investment Purchase Criteria or, as the case may be, each Investment
Portfolio Parameter Test shall be deemed to be breached if the result of any such calculation indicates a breach of
such Investment Purchase Criteria or such Investment Portfolio Parameter Test. If, after testing for compliance with
the Investment Portfolio Parameter Tests in relation to a certain Rating Agency, the Issuer is required to incur
additional capital charges, such additional capital charges shall only be considered when calculating the capital
requirement applicable to such Rating Agency.
During the Ramp-Up Period, the Investment Portfolio Exposure for the purpose of testing for compliance with the
Investment Purchase Criteria and the Investment Portfolio Parameter Tests shall be the greater of (a) the actual
Investment Portfolio Exposure at such time and (b) the then applicable minimum reference exposure size (which
minimum reference exposure size may be amended from time to time provided that a Rating Confirmation is
obtained).
Eligible Investment Classes
The Issuer may purchase Permitted Investments which are of Eligible Investment Classes and which meet the
Investment Purchase Criteria. Eligible Investment Classes are Structured Finance, U.S. Government Agency,
Sovereign, Supranational, Cash Equivalents, Financing Transactions and other Investment Classes subject to Rating
Confirmation (the "Eligible Investment Classes").
The Issuer shall also be permitted to take exposure to the above Eligible Investment Classes synthetically in the
form of Investment Derivatives, provided that a Rating Confirmation is obtained in connection with the required
changes, deletions or additions to the Investment Purchase Criteria and Compliance Tests prior to the Issuer entering
into the first Investment Derivative. Where the Investment Portfolio comprises Investment Derivatives, certain
9122016.23 06095153
100
criteria and/or tests including, inter alia, the Investment Purchase Criteria, the Investment Portfolio Parameter Tests,
the Market Sensitivity Tests, the Liquidity Tests and the Capital Tests, may be amended to take into account the
different form of Investment. Under Investment Derivatives, the Issuer shall also be permitted to buy credit
protection (in the form of credit default swaps, total return swaps or similar instruments) that reference Investments
which are not owned by the Issuer, subject to Rating Confirmation prior to the Issuer entering into the first such
Investment Derivative.
The Issuer may purchase, or otherwise take exposure to, Investments that are Financing Transactions, provided that
a Rating Confirmation is obtained in connection with any required changes, deletions or additions to the Investment
Purchase Criteria and Compliance Tests. Financing Transactions are Investments that benefit from external liquidity
and/or specific credit enhancement and which meet certain criteria, the adoption or amendment of which shall be
subject to Rating Confirmation from time to time (the "Financing Transactions"); Financing Transactions may
comprise a single security or multiple component parts and any interest, currency or credit protection purchased in
connection therewith; and Financing Transactions may include (i) an underlying debt security (which, when being
considered as part of a Financing Transaction, does not need to meet the Investment Purchase Criteria as an
individual Investment) and credit protection purchased through a credit default swap, total return swap or similar
instrument and (ii) an Investment under a repurchase agreement (or similar instrument) where the Issuer has
exposure to a debt security (which, when being considered as part of a Financing Transaction, does not need to meet
the Investment Purchase Criteria as an individual Investment) with the benefit of overcollateralisation (by virtue of
the Issuer's purchase price under the repurchase agreement (or similar instrument) being less than the initial market
value of the debt security) as agreed under the repurchase agreement (or similar agreement) and such agreement
contains a commitment from the counterparty to repurchase such debt security from the Issuer at a later point in
time.
Financing Transactions and any underlying debt security which comprises a Financing Transaction may be exempt
from certain tests, limits and/or criteria or may be included in certain tests or subject to certain limits and/or criteria
in an amended fashion, provided that a Rating Confirmation is obtained in connection with such exemptions,
exceptions or amendments to the tests, limits and/or criteria prior to the Issuer entering into or, as the case may be,
purchasing the first Financing Transaction. In addition, new tests, limits and/or criteria may be introduced in relation
to Financing Transactions, subject to Rating Confirmation.
Investment Purchase Criteria
The Manager shall test each Investment which is under consideration for inclusion in the Investment Portfolio (such
Investment, a "Potential Investment") for compliance with the Investment Purchase Criteria (as further described in
the Management Agreement and summarised below) (the "Investment Purchase Criteria") by applying the
Investment Purchase Criteria after taking into account the addition of the Potential Investment. The Investment
Purchase Criteria shall be deemed to be satisfied if, on the date of such potential purchase:
(a)
the Potential Investment is of an Eligible Investment Class;
(b)
the Potential Investment has either a Deemed Rating of at least A- by S&P, A- from Fitch and A3 by
Moody's or, in the case of an Investment that has an original term to maturity of 180 days or less, A-1 by
S&P and P-1 by Moody's and F1 by Fitch (or it is a condition of the agreement to acquire such Investment
that the Issuer shall not be obligated to Acquire such Investment unless such Investment has a confirmed
Deemed Rating as specified above not later than the settlement date for such purchase);
(c)
the Acquisition of the Potential Investment by the Issuer will not cause the Issuer to breach an Eligible
Limit of an Investment Portfolio Parameter Test;
(d)
the Potential Investment is denominated in an Eligible Currency;
(e)
the Country of Investment of the Potential Investment is an Eligible Jurisdiction;
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101
(f)
the Potential Investment is not (i) an Investment in either capital or income notes of a structured investment
vehicle, (ii) an interest-only bond, (iii) the ordinary share capital of a company or the units in a unit trust
(for the avoidance of doubt, the shares held by the Issuer in the Co-Issuer shall not be considered an
Investment for the purpose of this provision), the performance of which is calculated by reference to the
dividend payable on, or change in value of, the shares of or units in one or more companies or unit trusts,
(iv) a commodity, (v) an Investment that gives rise to a perpetual obligor exposure, (vi) an Investment that
is not freely transferable or (vii) an Investment that is convertible into any of the foregoing;
(g)
the Manager or any of its Affiliates is not acting in a managerial or servicing capacity with respect to such
Potential Investment unless a Rating Confirmation has been obtained in connection with the purchase of
such Investment;
(h)
the Issuer is not restricted from purchasing such Potential Investment as a result of being in Restricted
Investment or Restricted Funding or as a result of the occurrence of an Enforcement Event, and the
purchase of such Potential Investment would not give rise to a Restricted Investment Event, a Restricted
Funding Event or an Enforcement Event (regardless of any applicable cure periods);
(i)
the addition of such Potential Investment does not cause non-compliance with the Legal Final Maturity at
Point of Purchase Condition, or, if the Issuer is already failing to comply with such condition, such addition
does not cause such non-compliance to worsen. The Legal Final Maturity at Point of Purchase Condition
requires that the Legal Final Maturity of an Investment may not exceed 35 years from the date of purchase
(except for investments in residential mortgage-backed securities and collateralised debt obligations of
asset-backed securities, the Legal Final Maturity of which may not exceed 45 years (or in the case of an
issuer located in the Netherlands, 100 years) from the date of purchase), provided that Investments
representing no greater than 20 per cent. of the Investment Portfolio Exposure may comprise Investments
that have a Legal Final Maturity greater than the limits specified above;
(j)
the addition of such Potential Investment does not cause non-compliance with the Expected Final Maturity
at Point of Purchase Condition, or, if the Issuer is already failing to comply with such condition, such
addition does not cause such non-compliance to worsen. The Expected Final Maturity at Point of Purchase
Condition requires that the Expected Final Maturity of the Investment may not exceed 15 years from the
date of purchase, provided that Investments representing no greater than 5 per cent. of the Investment
Portfolio Exposure may comprise Investments that have an Expected Final Maturity greater than the limits
specified above but less than 20 years from the date of purchase. However, the Expected Final Maturity of
Investments that are Investment Derivatives may not in any case exceed 10 years from the date of entering
into such Investment Derivatives;
(k)
the addition of such Potential Investment does not cause non-compliance with the Investment Weighted
Average Life at Point of Purchase Condition, or, if the Issuer is already failing to comply with such
condition, such addition does not cause such non-compliance to worsen. The Expected Final Maturity at
Point of Purchase Condition requires that the Weighted Average Life of an Investment may not exceed 10
years from the date of purchase, provided that Investments representing no greater than 5 per cent. of
Investment Portfolio Exposure may comprise Investments that have a weighted average life greater than the
limits specified above but less than 15 years from the date of purchase;
(l)
the addition of such Potential Investment does not cause non-compliance with the Investment Derivative
Concentration at Point of Purchase Condition, or, if the Issuer is already failing to comply with such
condition, such addition does not cause such non-compliance to worsen. The Investment Derivative
Concentration at Point of Purchase Condition requires that the percentage of Investment Portfolio Exposure
that comprises exposure to reference obligations under Investment Derivatives may not exceed 35 per cent.;
(m)
the addition of such Potential Investment does not cause non-compliance with the Weighted Average Life
of the Investment Portfolio Condition, which requires that the Weighted Average Life of the Investment
Portfolio may not exceed 7 years from the date of purchase, or, if the Issuer is already failing to comply
with such condition, such addition does not cause such non-compliance to worsen;
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(n)
the addition of such Potential Investment does not cause non-compliance with the Maximum Single
Obligor at Point of Purchase – Percentage of Investment Portfolio Exposure Condition, which requires that
the Issuer's Exposure to Investments (excluding certain Cash Equivalents, the adoption or amendment of
criteria for which is subject to Rating Confirmation from time to time) from the Single Obligor Group of
the Potential Investment and with a Deemed Rating that falls within the Deemed Rating range set out in the
table below shall not exceed the Maximum Single Obligor Percentage of Investment Portfolio Exposure
Purchase Limit that corresponds to such Deemed Rating in the table below, or, if the Issuer is already
failing to comply with such condition, such addition does not cause such non-compliance to worsen;
Deemed Rating range
(Moody's/S&P/Fitch)
Composite..................................
Aaa/AAA/AAA .........................
Aa/AA/AA ................................
A/A/A........................................
Maximum Single Obligor
Percentage of Investment
Portfolio Exposure Purchase
Limit
4.0%
4.0%
2.0%
0.5%
Maximum Single Obligor
Percentage of Investment
Portfolio Exposure Purchase
Limit (Exceptions)
8.0%
8.0%
4.0%
1.0%
(i)
the Composite Deemed Rating range in the table above considers exposure to all Investments in a
Single Obligor Group, regardless of their Deemed Rating;
(ii)
certain categories (the adoption or amendment of which shall be subject to Rating Confirmation
from time to time) of Investments, such as Investments with a Deemed Rating of AAA with
respect to S&P, AAA with respect to Fitch and Aaa with respect to Moody's, which benefit from a
guarantee from a monoline insurance company may be subject to higher limits (as exceptions) as
specified in the third column of the table immediately above;
(o)
the addition of such Potential Investment does not cause non-compliance with the Maximum Single
Obligor at Point of Purchase Percentage of Net Asset Value Test, which requires that the Issuer's Exposure
to the largest Single Obligor Group, the two largest Single Obligor Groups excluding Investments with a
Deemed Rating of AAA/Aaa/AAA (for S&P/Moody's/Fitch respectively) and the three largest Single
Obligor Groups excluding Investments with a Deemed Rating of AA-/Aa3/AA- (for S&P/Moody's/Fitch
respectively) or above, shall not exceed the Maximum Single Obligor Percentage of Net Asset Value
Purchase Limit, which is set as 100 per cent. of the Net Asset Value of the Capital Notes, or, if the Issuer is
already not in compliance with such criteria, such addition does not cause such non-compliance to worsen.
Certain Cash Equivalents, the adoption or amendment of purchasing criteria for which is subject to Rating
Confirmation, are exempt from the Maximum Single Obligor at Point of Purchase Percentage of Net Asset
Value Test; and
(p)
the Potential Investment is a Qualifying Asset for the purposes of §110 of the Irish Taxes Consolidation
Act 1997.
Investment Portfolio Parameter Tests
The Manager shall test for compliance of the Investment Portfolio, and, in certain cases, the Credit Portfolio, with
the Investment Portfolio Parameter Tests on each Business Day and shall promptly notify the Rating Agencies of
any breach of the Investment Portfolio Parameter Tests.
The Manager shall test for compliance of the Investment Portfolio with certain Eligible Limits relating to each
Investment Portfolio Parameter Test, as further described in the Management Agreement and summarised below. In
addition, in relation to certain of the Investment Portfolio Parameter Tests, the Manager will test for compliance of
the Investment Portfolio with more restrictive operational limits the adoption or amendment of which is subject to
Rating Confirmation from time to time (such operational limits, the "Operational Limits"). Operational Limits are
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more restrictive than the related Eligible Limits and are, therefore, subject to breach prior to (or simultaneous with)
the related Eligible Limits.
Both the Operational Limits and the Eligible Limits are subject to change with Rating Confirmation. However
neither the Operational Limits nor the Eligible Limits may be raised or lowered (as appropriate) beyond any
additional limits (the "Consent Limits") shown below. If there are no Consent Limits, with respect to a particular
Investment Portfolio Parameter Test at any time, then the Eligible Limit and Operational Limit for such Investment
Portfolio Parameter Test may be changed without regard to the preceding sentence with Rating Confirmation.
Amendment of existing Consent Limits will require consent of the requisite holders of the Capital Notes and Rating
Confirmation. See Condition 17 of the Capital Notes (Meetings of Capital Noteholders; modification and waiver).
Breach of either an Eligible Limit or an Operational Limit shall result in increased capital charges in the Major
Capital Adequacy Test and the Minor Capital Adequacy Test. Generally, breach of an Operational Limit will incur
additional capital charges which are less onerous than the additional capital charges that will result from a breach of
an Eligible Limit. In cases where multiple Investment Portfolio Parameter Tests are breached, the total additional
capital charge shall depend on the nature and severity of such breaches, whether such breach relates to the Eligible
Limits or the Operational Limits, and the particular combination of Investment Portfolio Parameter Tests that have
been breached and may be less than the sum of the individual additional capital charges that would result if each
Investment Portfolio Parameter Test were breached independently.
The Manager may, subject to the Issuer's receipt of Rating Confirmation, introduce a Monte Carlo-based test in
order to determine the required amount of capital to support the Top Ratings of the Senior Notes (the "Senior Notes
Simulation Model Rating Test"). After the introduction of any such Senior Notes Simulation Model Rating Test,
the additional capital charge incurred in the Major Capital Adequacy Test and the Minor Capital Adequacy Test
following the breach of an Investment Portfolio Parameter Test that remains uncured, as described above, may be
amended or removed entirely provided that a Rating Confirmation is obtained.
When calculating Investment Portfolio Exposure and testing for compliance with the Eligible Limits and
Operational Limits of the Investment Portfolio Parameter Tests, Exposures to Associated Derivative Counterparties
under Associated Derivatives are not generally included. However, in certain circumstances, the definition of
Investment Portfolio Exposure may be amended to include exposure under certain types of individual Associated
Derivatives, subject to Rating Confirmation from time to time.
Maximum Single Obligor Percentage of Investment Portfolio Exposure Test
In relation to each Single Obligor Group and without considering certain Cash Equivalents (subject to Rating
Confirmation from time to time), the Manager shall consider the percentage of Investment Portfolio Exposure, the
Deemed Rating of which falls within each Deemed Rating range, and shall test for compliance with the Maximum
Single Obligor Percentage of Investment Portfolio Exposure Eligible Limits as set out below.
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Deemed Rating range
Maximum Single Obligor
Percentage of Investment
Portfolio Exposure Purchase
Eligible Limit
(Moody's/S&P/Fitch)
Composite ..........................
Aaa/AAA/AAA..................
Aa/AA/AA .........................
A/A/A.................................
Baa/BBB/BBB ...................
Ba/BB/BB ..........................
Maximum Single Obligor
Percentage of Investment
Portfolio Exposure Purchase
Eligible Limit (Exceptions)
4.0%
4.0%
4.0%
4.0%
2.0%
0.5%
8.0%
8.0%
8.0%
8.0%
4.0%
1.0%
(i)
The Composite Deemed Rating range in the table above considers exposure to all Investments in a
Single Obligor Group, regardless of their Deemed Rating;
(ii)
certain categories of Investments the adoption or amendment of criteria for which is subject to
Rating Confirmation from time to time, such as Investments with a Deemed Rating of AAA with
respect to S&P, AAA with respect to Fitch and Aaa with respect to Moody's, which benefit from a
guarantee from a monoline insurance company, may be subject to higher Eligible Limits (as
exceptions) as specified in the third column of the table immediately above;
(the "Maximum Single Obligor Percentage of Investment Portfolio Exposure Test").
Maximum Single Obligor Percentage of Junior Capital Note Outstanding Principal Amount Test
Excluding certain Cash Equivalents the adoption or amendment of criteria for which is subject to Rating
Confirmation from time to time, the Issuer's Exposure to
(a)
the largest Single Obligor Group calculated excluding all Investments with a Deemed Rating of
Aa3 or above by Moody's;
(b)
the two largest Single Obligor Groups calculated excluding all Investments with a Deemed Rating
of A3 or above by Moody's; or
(c)
the three largest Single Obligor Groups calculated excluding all Investments with a Deemed
Rating of Baa3 or above by Moody's;
shall be considered and tested for compliance with the Maximum Single Obligor Percentage of Junior Capital
Note Outstanding Principal Amount Limit, which is 100 per cent. of the outstanding principal amount of the Junior
Capital Notes (the "Maximum Single Obligor Percentage of Junior Capital Note Outstanding Principal
Amount Test").
Maximum Single Obligor Percentage of Net Asset Value Test
Excluding certain Cash Equivalents the adoption or amendment of criteria for which is subject to Rating
Confirmation from time to time, the Issuer's Exposure to
(a)
the largest Single Obligor Group;
(b)
the two largest Single Obligor Groups calculated excluding all Investments with a Deemed Rating of
AAA/Aaa/AAA for S&P/Moody's/Fitch, respectively;
(c)
the three largest Single Obligor Groups calculated excluding all Investments with a Deemed Rating of AA/Aa3/AA- or above for S&P/Moody's/Fitch, respectively; or
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(d)
the five largest Single Obligor Groups calculated excluding all Investments with a Deemed Rating of A/A3/A- or above for S&P/Moody's/Fitch, respectively;
shall be considered and tested for compliance with the Maximum Single Obligor Percentage of Net Asset Value
Eligible Limit, which is 100 per cent. of the Net Asset Value of the Capital Notes (the "Maximum Single Obligor
Percentage of Net Asset Value Test").
Minimum Ratings Concentration Test
The Manager shall consider the percentage of Investment Portfolio Exposure which relates to Investments the
Deemed Rating of which falls within each Deemed Rating range, and shall test for compliance with the Minimum
Ratings Concentration Eligible Limits as set out below (the "Minimum Ratings Concentration Test").
Deemed Rating range (Moody's/S&P/Fitch)
Minimum
Ratings
Concentration
Eligible Limit
Minimum
Ratings
Concentration
Consent Limit
Aaa/AAA/AAA .................................................................
Aaa/AAA/AAA to Aa3/AA-/AA- .....................................
Aaa/AAA/AAA to A3/A-/A-.............................................
Aaa/AAA/AAA to Baa3/BBB-/BBB- ...............................
Aaa/AAA to Ba3/BB-/BB- ................................................
40%
60%
80%
85%
90%
35%
55%
75%
85%
90%
The Issuer may only enter into contracts to Acquire Investments which have a Deemed Rating of at least A- by S&P,
A- by Fitch and at least A3 by Moody's (in the case of long-term investments) or a Deemed Rating of at least A-1 by
S&P, F1 by Fitch and P-1 by Moody's (in the case of short-term investments) at the time at which such contract is
entered into (unless it is a condition of the agreement to Acquire such Investment that the Issuer shall not be obliged
to Acquire such Investment unless such Investment has a confirmed Deemed Rating as specified above not later than
the settlement date for such acquisition). The Issuer may, however, subject to the other provisions of the
Management Agreement, hold Investments the Deemed Ratings of which, after entry into the contract to acquire
them, are downgraded below A- by S&P, A- by Fitch and A3 by Moody's (in the case of long-term investments) or
below A-1 by S&P, F1 by Fitch and P-1 by Moody’s (in the case of short-term investments).
Maximum Investment Class Concentration Test
The Manager shall consider the percentage of Investment Portfolio Exposure to Investments in each Investment
Class and shall test for compliance with the Maximum Investment Class Concentration Eligible Limits as set out
below (the "Maximum Investment Class Concentration Test").
Investment Class
Cash Assets...................................................
Financing Transactions.................................
Sovereign......................................................
Structured Finance........................................
Supranational ................................................
U.S. Government Agency.............................
Corporates.....................................................
Financial Institutions ....................................
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Maximum Investment
Class Concentration
Eligible Limit
Maximum Investment
Class Concentration
Consent Limit
100%
35%
100%
100%
100%
100%
10%
10%
100%
35%
100%
100%
100%
100%
15%
15%
106
The Manager shall consider the percentage of Investment Portfolio Exposure to Investments in each Structured
Finance Sector within the Structured Finance Investment Class and shall test for compliance with the Maximum
Structured Finance Sector Concentration Eligible Limits as set out below.
Structured Finance Sector
Maximum Structured
Finance Sector
Concentration Eligible
Limit
CDO.............................................................
CMBS ..........................................................
Consumer ABS ............................................
Corporate ABS ............................................
Monoline Guaranteed RMBS ......................
RMBS ..........................................................
Other Structured Finance.............................
Maximum Structured
Finance Sector
Concentration Consent
Limit
40%
50%
60%
50%
30%
75%
8%
45%
55%
65%
50%
35%
80%
10%
The Manager may also test for compliance with any Eligible Limits, the adoption or amendment of which are
subject to Rating Confirmation, from time to time in respect of sub-sectors of the Structured Finance Sectors
specified in the above table.
Maximum Country of Investment Concentration Test
The Manager shall consider the percentage of Investment Portfolio Exposure which relates to Investments in each
Country of Investment and shall test for compliance with the Maximum Country of Investment Concentration
Eligible Limits as set out below (the "Maximum Country of Investment Concentration Test").
Country of Investment
U.S..............................................................................................
Each of France, Germany, Italy, Spain, United Kingdom ..........
Each of Austria, Belgium, Denmark, Finland, Ireland,
Luxembourg, The Netherlands, Norway, Portugal, Sweden,
Switzerland, Australia, Canada and Japan..................................
Each of Greece, Singapore, Hong Kong, South Korea and New
Zealand .......................................................................................
Maximum Country
of Investment
Concentration
Eligible Limit
Maximum Country
of Investment
Concentration
Consent Limit
100%
50%
25%
100%
50%
25%
10%
10%
Minimum Currency Concentration Test
The Manager shall consider the percentage of Investment Portfolio Exposure to U.S. dollar-denominated
Investments and shall test for compliance with the Minimum Currency Concentration Eligible Limit as set out below
(the "Minimum Currency Concentration Test").
Currency
U.S. Dollar.................................................................................
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Minimum
Currency
Concentration
Eligible Limit
Minimum
Currency
Concentration
Consent Limit
75%
70%
Maximum Fixed Rate Investments Test, Maximum Servicer Concentration Test and Maximum Non-Public Nor
Shadow Rated Investments Test
The Manager shall consider the percentage of Investment Portfolio Exposure to fixed rate Investments (the
"Maximum Fixed Rate Investments Test"), to the relevant servicer in respect of each Investment (the "Maximum
Servicer Concentration Test") and to non-public nor shadow-rated (or in the case of Moody's, credit-estimated)
Investments (the "Maximum Non Public Nor Shadow Rated Investments Test"). The Manager will test for
compliance with the Eligible Limits of the Maximum Fixed Rate Investments Test, the Maximum Servicer
Concentration Test and the Maximum Non Public Nor Shadow Rated Investments Test, respectively. The adoption
or amendment of each of the Eligible Limits for these Investment Portfolio Parameter Tests will be subject to Rating
Confirmation from time to time.
Market Sensitivity and Liquidity Tests
The exposure of the Portfolio to changes in interest rates, foreign exchange rates and liquidity risks is addressed by
monitoring compliance with the Market Sensitivity Tests and the Liquidity Tests. The Manager shall test the Market
Sensitivity Tests and the Liquidity Tests on each Business Day and shall act in accordance with the Manager
Standard to promptly remedy any breach of a Market Sensitivity Tests or a Liquidity Tests. If required, the Manager
will apply the Market Sensitivity Tests and the Liquidity Tests separately for each Rating Agency (and may use
different methodologies the adoption or amendment of which are subject to Rating Confirmation). Breach of a
Market Sensitivity Tests or Liquidity Tests shall cause a Restricted Investment Event, and if breach remains uncured
immediately following the expiry of a cure period of 5 Business Days commencing on the date of such breach, shall
cause a Restricted Funding Event. The Manager shall notify the Rating Agencies of any breach of a Market
Sensitivity Tests or Liquidity Tests on the date of breach.
Interest Rate Sensitivity Tests
The variation in the Effective Net Asset Value of the Capital Notes caused by each change to the specified point (or
points) on the yield curve shall not exceed the Interest Rate Sensitivity Limit (expressed as a percentage of the
Effective Net Asset Value of the Capital Notes) which corresponds to such change to the specified point (or points)
on the yield curve in the table below.
The Interest Rate Sensitivity Tests comprise two forms of tests, the Parallel Yield Curve Shift Tests and the
Individual Point Shift Tests (the "Interest Rate Sensitivity Test"). The Parallel Yield Curve Shift Tests involve
applying a parallel shift in the yield curve for each relevant currency by simultaneously increasing and then
simultaneously decreasing every specified point on the curve by either 1 bp or 100 bps (the "Parallel Yield Curve
Shift Tests"). The sensitivity of the Effective Net Asset Value of the Capital Notes to each individual stress is tested
for compliance with the relevant Interest Rate Sensitivity Limits as specified below (the "Interest Rate Sensitivity
Limit"). The Individual Point Shift Tests involve separately increasing and then separately decreasing a range of
specified points (the adoption or amendment of criteria for which is subject to Rating Confirmation from time to
time) along the yield curve for each relevant currency, independent of all other points on the curve by either 1 bp or
100 bps (the "Individual Point Shift Tests"). The sensitivity of the Effective Net Asset Value of the Capital Notes
to each such stress is tested for compliance with the relevant Interest Rate Sensitivity Limits as specified below.
Interest Rate Sensitivity Limit
Parallel Yield Curve Shift Tests (+/-1 bp) .........................................
Individual Point Shift Tests (+/-1 bp) ................................................
Parallel Yield Curve Shift Tests (+/-100 bp) .....................................
Individual Point Shift Tests (+/-100 bp) ............................................
+/-0.2 bps of Effective NAV
+/-0.2 bps of Effective NAV
+/-20 bps of Effective NAV
+/-20 bps of Effective NAV
Currency Sensitivity Test
The variation in the Effective Net Asset Value of the Capital Notes caused by each specified upward or downward
percentage shift in the value of non-U.S. Dollar Eligible Currencies to the U.S. Dollar shall not exceed the Currency
Sensitivity Limit, expressed as a percentage of the Effective Net Asset Value and specified below (the "Currency
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Sensitivity Limit"), which corresponds to the relevant upward or downward percentage shift. The Currency
Sensitivity Test involves separately shifting upwards and downwards the value of each of the relevant non-U.S.
Dollar Eligible Currencies to the U.S. Dollar by either 1 per cent. or 10 per cent. (the "Currency Sensitivity Test").
Currency Sensitivity Limit
Currency Sensitivity Test (+/-1%)..............................................................
Currency Sensitivity Test (+/-10%)............................................................
+/-2.0 bps of Effective NAV
+/-20 bps of Effective NAV
Amendments to the Market Sensitivity Tests
Certain Investments, which shall be monitored or hedged in a manner the adoption or amendment of criteria for
which is subject to Rating Confirmation from time to time (for example Investments which have residual interest
rate exposure such as Investments in home equity loan securities) shall be treated differently for the purpose of
testing for compliance with the Market Sensitivity Tests and shall not be included, or shall be included in an
amended manner in the Market Sensitivity Tests subject to Rating Confirmation from time to time.
Liquidity Tests
The Issuer is required to have Available Liquidity to cover its expected maximum net cumulative outflow needs as
described below during specified periods. On each Business Day, the Manager shall test for compliance with each of
the Liquidity Tests. The Manager shall use the Manager Standard to promptly remedy any breach by the Issuer of a
Liquidity Test and shall notify the Rating Agencies if any Liquidity Tests has been breached on the date on which
such breach occurs. Breach of a Liquidity Test shall cause a Restricted Investment Event, and if such breach remains
unremedied following the expiration of a cure period of 5 Business Days commencing on the date of such breach,
shall cause a Restricted Funding Event.
The Manager is required to monitor the cumulative maximum net cash outflow ("MNCO") of the Issuer over
specified periods of time, subject to Rating Confirmation, in order to measure compliance with the Liquidity Tests.
The "n" Day MNCO is measured on any Business Day as the amount of the Issuer's largest cumulative net cash
outflow occurring during any period of up to "n" successive London and New York Business Days (or any portion
thereof) in the calendar year that follows such Business Day (the ""n" Day MNCO").
Cumulative maximum net cash outflow, in respect of a period of one or more successive London and New York
Business Days, means the Dollar Equivalent of the aggregate Scheduled Payments falling due during that period (or
during any portion thereof) less the Dollar Equivalent of the aggregate Scheduled Receipts falling due during that
period (or such portion thereof). To the extent that the Issuer issues Liquidity Notes, for the purpose of calculating
the Liquidity Tests, the maturity of the Liquidity Notes may be assumed to be either the expected maturity date or
the legal maturity date of the Liquidity Notes at the discretion of the Manager or otherwise, subject to Rating
Confirmation from time to time. The Liquidity Tests may be run in different currencies, subject to Rating
Confirmation from time to time.
"London and New York Business Day" means any day (other than a Saturday or Sunday) on which banks and
foreign exchange markets are open for the transaction of commercial business in London and New York.
"Scheduled Payments" means certain payments under Senior Funding, Capital Notes, Derivatives and other
liabilities scheduled or expected to be made by the Issuer as determined by the Manager (or the Administrator on its
behalf).
"Scheduled Receipts" means certain payments under Investments, Derivatives and other sources of income
scheduled or expected to be received by the Issuer as determined by the Manager (or the Administrator on its
behalf).
The Liquidity Tests shall comprise the 1, 5, 10 and 15 Day Liquidity Tests.
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In order to test for compliance with the Liquidity Tests, the Manager shall test the "n" Day Liquidity Test by
considering whether the "n" Day MNCO plus any relevant Repo Margin Call Buffer and CDS Buffer is less than the
aggregate value of Available Liquidity in place on that Business Day. The Repo Margin Call Buffer, the CDS Buffer
and the Available Liquidity may differ depending on the Liquidity Test being considered.
"CDS Buffer" means an additional liquidity requirement that takes into account potential cash outflows that could
result from outstanding Investment Derivatives. The methodology for calculating the CDS Buffer may vary
depending on the Liquidity Tests being calculated. The methodology for calculating the CDS Buffer shall be
adopted or amended subject to Rating Confirmation.
"Repo Margin Call Buffer" means a measure of potential additional cash outflows which may arise due to margin
calls on Repo Transactions and Committed Repo Transactions. The methodology for calculating the Repo Margin
Call Buffer may vary depending on the Liquidity Test being calculated. The methodology for calculating the Repo
Margin Call Buffer shall be adopted or amended subject to Rating Confirmation.
Available Liquidity for the purpose of the 1, 5, 10 and 15 Day Liquidity Tests is the aggregate of the Dollar
Equivalent of the undrawn notional available under the Liquidity Facility Agreements, the notional of Breakable
Deposits, the notional of Money Market Funds, the put price of Puttable Investments and the amount of Liquidity
Eligible Committed Repos. In addition, the Dollar Equivalent of the Haircut Market Value of Liquidity Eligible
Investments is also eligible for inclusion in Available Liquidity for the 10 and 15 Day Liquidity Tests only. Other
sources of liquidity may be eligible for inclusion in Available Liquidity with Rating Confirmation.
"Haircut Market Value of Liquidity Eligible Investments" means the Market Value of Liquidity Eligible
Investments as reduced by an Investment specific factor that is adopted or amended subject to Rating Confirmation.
Sources of Available Liquidity
Liquidity Facility Agreements are liquidity facilities with Eligible Liquidity Providers that may be drawn with same
day availability and that also satisfy other eligibility criteria, which criteria may be modified from time to time
provided that a Rating Confirmation is obtained.
Breakable Deposits are deposits with Eligible Deposit Banks that may be withdrawn with same-day availability and
that meet certain additional criteria, the adoption or amendment of which shall be subject to Rating Confirmation
from time to time (the "Breakable Deposits").
Money Market Funds are short-term investments rated AAA by S&P, AAA/V1+ by Fitch and Aaa/MR1+ by
Moody's, moneys from which may be withdrawn with same day availability and that also satisfy other eligibility
criteria, the adoption or amendment of which shall be subject to Rating Confirmation from time to time (the "Money
Market Funds").
Puttable Investments are Investments that can be put to an Eligible Puttable Investment Counterparty with same-day
availability on pre-agreed terms (in accordance with criteria adopted or amended subject to Rating Confirmation)
(the "Puttable Investments").
Committed Repo Facilities are facilities under which the Issuer pays an ongoing commitment fee to an Eligible
Committed Repo Counterparty for the right, with same-day availability, to enter into Committed Repo Transactions
as seller with an Eligible Committed Repo Counterparty on pre-agreed terms and subject to additional criteria
subject to Rating Confirmation from time to time (the "Committed Repo Facilities").
"Liquidity Eligible Committed Repo" means certain amounts available for inclusion in the Liquidity Tests as
Available Liquidity taking into consideration the undrawn notional amount of Committed Repo Facilities,
(restrictions related to which may be adopted or amended subject to Rating Confirmation) the percentage of Senior
Funding which comprise Repo Transactions, Committed Repo Transactions and the Haircut Market Value of
Investments eligible for Committed Repo Transactions.
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Liquidity Eligible Investments are Investments held by the Issuer that meet the Liquidity Eligible Investment
eligibility criteria adopted or amended subject to Rating Confirmation (the "Liquidity Eligible Investments").
Where applicable, each of the above sources of Available Liquidity shall become ineligible for the purpose of
Available Liquidity following downgrade of the relevant Liquidity Provider below the specified threshold rating
levels (or as otherwise adopted or amended subject to Rating Confirmation) but only if such downgrade remains
unremedied following any cure period.
Capital Tests
The Manager shall, using the Manager Standard, be required to manage the Portfolio in order to enable the Issuer to
satisfy the Major Capital Tests and the Minor Capital Tests (together, the "Capital Tests"). On each Business Day,
the Manager shall test whether the level, maturity and composition of capital held by the Issuer on such day is
consistent with the requirements of the Major Capital Tests and Minor Capital Tests; however, the Capital Note
Maturity Test and the Capital Note Simulation Model Rating Test shall only be tested on a weekly basis. The
Manager shall calculate the Capital Tests separately for each Rating Agency (using the capital requirements adopted
or amended subject to Rating Confirmation and any additional capital requirements resulting from breaches of the
Investment Portfolio Parameter Tests considered in relation to the relevant Rating Agency) and the relevant Capital
Test shall be deemed to be breached if the result of any such calculation indicates a breach of such Capital Test.
Breach of a Minor Capital Test shall constitute a Restricted Investment Event if such breach remains unremedied
following the expiration of a cure period of five Business Days commencing on the date of such breach. Breach of a
Major Capital Test (except the Major Capital Loss Test) shall constitute a Restricted Funding Event if such breach
remains unremedied following the expiration of a cure period of five Business Days commencing on the date of
such breach. Breach of the Major Capital Loss Test shall constitute a Restricted Funding Event, and shall constitute
an Enforcement Event if such breach remains unremedied following the expiration of a cure period of five Business
Days commencing on the date of such breach.
Major Capital Tests
(a)
The Issuer shall breach the "Major Capital Adequacy Test" if the aggregate Dollar Equivalent of the
Market Value of the Investments and Associated Derivatives (adjusted to consider (i) the relevant
Investment or counterparty specific Restricted Funding Capital Requirement Haircut, (ii) costs of
terminating certain Liquidity Arrangements, (iii) additional capital requirements resulting from any
breaches of Investment Portfolio Parameter Tests and (iv) any other adjustments the adoption or
amendment of which is subject to Rating Confirmation) is less than the then-outstanding Senior
Obligations.
(b)
The Issuer shall breach the "Major Capital Loss Test" if the Net Asset Value of the total Capital Notes
outstanding is less than 50 per cent. of the Dollar Equivalent of the outstanding principal amount of the
Capital Notes outstanding.
(c)
The "Maximum Leverage Tests" are comprised of the Capital Notes Maximum Leverage Test, the
Mezzanine Capital Notes Leverage Test and the Junior Capital Notes Maximum Leverage Test:
(i)
The Issuer shall breach the "Capital Notes Maximum Leverage Test" in the event that the Dollar
Equivalent of the outstanding principal amount of Capital Notes outstanding as a percentage of the
Credit Portfolio Value is less than 4 per cent.
(ii)
The Issuer shall breach the "Mezzanine Capital Notes Maximum Leverage Test" in the event
that the Dollar Equivalent of the outstanding principal amount of Mezzanine Capital Notes and the
Junior Capital Notes as a percentage of the Credit Portfolio Value is less than 3 per cent.
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(iii)
(d)
The Issuer shall breach the "Junior Capital Notes Maximum Leverage Test" in the event that
the Dollar Equivalent of the outstanding principal amount of Junior Capital Notes as a percentage
of the Credit Portfolio Value is less than 0.75 per cent.
The Issuer shall breach the "Relative Leverage Test" in the event that either (i) the relative Dollar
Equivalent of the outstanding principal amounts of the Senior Capital Notes and the Mezzanine Capital
Notes outstanding to Junior Capital Notes outstanding is greater than 10 or (ii) the relative Dollar
Equivalent of the outstanding principal amounts of Senior Capital Notes to Mezzanine Capital Notes and
Junior Capital Notes is greater than 1:1.
Minor Capital Tests
(a)
The Issuer shall breach the "Minor Capital Adequacy Test" if the aggregate Dollar Equivalent of the
Market Value of the Investments and Associated Derivatives (adjusted to consider (i) the relevant
Investment or counterparty specific Restricted Investment Capital Requirement Haircut, (ii) costs of
terminating certain Liquidity Arrangements, (iii) additional capital requirements resulting from any
breaches of Investment Portfolio Parameter Tests and (iv) any other adjustments the adoption or
amendment of which is subject to Rating Confirmation) is less than the then outstanding Senior
Obligations.
(b)
The Issuer shall breach the "Minor Capital Loss Test" if the Net Asset Value of the total Capital Notes
outstanding is less than 70 per cent. of the Dollar Equivalent of the outstanding principal amount of such
Capital Notes outstanding.
(c)
The Issuer shall breach the "Capital Note Simulation Model Rating Test" if (i) the implied rating of the
Mezzanine Capital Notes (using methodologies the adoption or amendment of which is subject to Rating
Confirmation for the purposes of such Capital Note Simulation Model Rating Test (which implied rating
may not be the same as the public rating from the relevant Rating Agency of such Mezzanine Capital
Notes)) falls below any of BBB+, BBB+ or Baa1 from S&P, Fitch or Moody's, respectively, or (ii) the
implied rating of the Senior Capital Notes (using methodologies the adoption or amendment of which is
subject to Rating Confirmation for the purposes of such Capital Note Simulation Model Rating Test (which
implied rating may not be the same as the public rating from the relevant Rating Agency of such Senior
Capital Notes)) falls below any of AA or Aa2 from Fitch or Moody's, respectively.
(d)
The Issuer shall breach the "Capital Note Maturity Test" if the results of the Capital Note Maturity Tests
indicate (using methodologies and criteria the adoption or amendment of which is subject to Rating
Confirmation) that the Issuer is unlikely to be able to redeem the Capital Notes by their respective Legal
Maturity Dates predominantly through natural amortisation of the Investment Portfolio.
(e)
The Issuer shall breach the "Senior Notes Rating Test" if the Moody's public ratings of the Senior Notes
are downgraded below the Top Rating relating to Moody's.
(f)
The Issuer shall breach the "Net Asset Value Leverage Test" if the Net Asset Value of the Capital Notes
outstanding as a percentage of the Dollar Equivalent of the outstanding principal amount of Senior Funding
is less than 4.55 per cent.
Amendments to the Capital Tests
After the introduction (if any) of a Senior Notes Simulation Model Rating Test, the Capital Tests may be amended
from time to time and, in particular, the Major Capital Adequacy Test and the Minor Capital Adequacy Tests may be
amended or removed entirely.
The Market Value of Investment Derivatives entered into by the Issuer and which meet certain criteria, the adoption
or amendment of which shall be subject to Rating Confirmation may not be included, or may be included in an
amended form, in the calculation of the Capital Tests.
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Weighted Average Life of Senior Funding Test
The Issuer shall breach the Weighted Average Life of Senior Funding Test in the event that the Weighted Average
Life of Senior Funding falls below the Weighted Average Life of Senior Funding Limit of 3 months (or 1 month
during the Ramp-Up Period). If required, the Manager will apply the Weighted Average Life of Senior Funding Test
separately for each Rating Agency (and may use different methodologies in respect of which Rating Confirmation
has been obtained).
Breach of the Weighted Average Life of Senior Funding Test will cause a Restricted Investment Event if such
breach remains unremedied immediately following the expiry of a cure period of 5 Business Days.
Components of Senior Funding which meet certain criteria the adoption or amendment of which is subject to Rating
Confirmation may be excluded from the calculation of the Weighted Average Life of Senior Funding for the purpose
of the Weighted Average Life of Senior Funding Test, or may be included in an amended manner subject to Rating
Confirmation from time to time.
Amendments to the Investment Purchase Criteria and the Compliance Tests
The characteristics of the Investment Purchase Criteria and each Compliance Test may be amended from time to
time subject to Rating Confirmation. In relation to the Investment Purchase Criteria and each Compliance Test (i)
the Compliance Tests, Investment Purchase Criteria and/or limits of such tests or criteria may be amended or deleted
or new Compliance Tests, Investment Purchase Criteria and/or limits of such tests or criteria may be introduced, (ii)
the implications of breaching such Compliance Tests or the Investment Purchase Criteria may change, (iii) the
methodology used for calculating compliance with the Compliance Tests and/or the Investment Purchase Criteria
may change, (iv) the applicable cure periods or implications of being in a cure period may change, (v) the reporting
or testing frequency requirements may change and (vi) other Investment Purchase Criteria or Compliance Test
characteristics may be amended subject to Rating Confirmation from time to time. However, the Eligibility Limits
and Operational Limits with respect to a particular Investment Portfolio Parameter Test may not be raised or
lowered (as applicable) beyond the Consent Limits for such Investment Portfolio Parameter Test without obtaining
both Rating Confirmation and the consent of the requisite holders of the Capital Notes. See Condition 17 of the
Capital Notes (Meetings of Capital Noteholders; modification and waiver).
When testing for compliance with the Compliance Tests and the Investment Purchase Criteria unless Rating
Confirmation is received to exclude such Exposure, the Manager is also required to take into account Exposures to
Investments that are subject to Repo Transactions, Committed Repo Transactions or Securities Lending
Transactions (and which therefore may not be held or owned by the Issuer) and Investments posted as collateral (or
any such similar arrangement) under Investment Derivative Contracts and/or Associated Derivatives.
Subject to Rating Confirmation from time to time, certain Investments, Associated Derivatives, Senior Funding or
Capital Notes, or groups of Investments, Reverse Repo Agreements, Senior Funding or Capital Notes with specified
characteristics, may be excluded, or included following amendment in certain Investment Purchase Criteria and/or
Compliance Tests. In addition, the characteristics of certain Investment Purchase Criteria and/or Compliance Tests
may vary depending on the characteristics of certain Investments, Associated Derivatives, Senior Funding or Capital
Notes, or groups of Investments, Associated Derivatives, Senior Funding or Capital Notes, subject to Rating
Confirmation from time to time.
Specifically, certain Investment Purchase Criteria and Compliance Tests may be amended to take into account
Financing Transactions (either considering the Financing Transaction as an individual Investment or the component
parts of such Financing Transaction) and Investment Derivatives.
Reporting
The Issuer will publish annual audited accounts and will report on a weekly basis to the Rating Agencies regarding
compliance with the contractual limits contained in the Transaction Documents and with the Operating Rules.
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The Manager is also required to report to the Security Trustee, inter alia, when either Restricted Investment or
Restricted Funding has ended immediately upon becoming aware of the same. The Issuer will cease to be in
Restricted Investment if the cause of the Restricted Investment Event is cured and no other conditions which would
cause a Restricted Investment Event are outstanding and uncured or upon the occurrence of a Restricted Funding
Event or Enforcement Event. The Issuer will cease to be in Restricted Funding if the cause of the Restricted Funding
Event is cured, taking account of terms, the adoption or amendment of which is subject to Rating Confirmation,
restricting the ability of the Issuer to cure certain Restricted Funding Events, and no other conditions which would
cause a Restricted Funding Event are then outstanding and uncured or upon the occurrence of an Enforcement
Event.
The Administrator, using only results generated by its proprietary risk management and reporting system, shall assist
the Issuer in preparing monthly investment reports for distribution by the Manager to the Rating Agencies, the
Medium Term Note Dealers, the holders of the Notes, and the Liquidity Providers which shall include the following
information (subject to such individual modification as to content and frequency as may be agreed between the
Issuer and each such party from time to time):
(a)
the Investments contained in the Investment Portfolio;
(b)
the weighted average margin between the Credit Portfolio and LIBOR;
(c)
a breakdown of total Available Liquidity;
(d)
the weighted average life of the Senior Funding;
(e)
if the Issuer has entered into any Repo Transactions and/or Reverse Repo Transactions from time to time,
the aggregate principal amount of securities governed by such transactions; and
(f)
whether the Issuer has breached any of the Compliance Tests.
Remuneration and expenses
In consideration of the management services to be provided by the Manager pursuant to the Management Agreement
the Issuer shall pay to the Manager on each Profit Distribution Date the following fees calculated for the threemonth period (or if shorter, the period since the Closing Date) immediately preceding such Profit Distribution Date:
(i)
a per annum Senior Management Fee (the "Senior Management Fee") calculated and payable in
arrears, of 0.05 per cent of the average daily Market Value of the Investment Portfolio (excluding
Cash Equivalents) on such Profit Distribution Date;
(ii)
a per annum Subordinated Management Fee (the "Subordinated Management Fee") calculated
and payable in arrears, of 0.04 per cent of the average daily Market Value of the Investment
Portfolio (excluding Cash Equivalents) on such Profit Distribution Date; and
(iii)
an Incentive Management Fee (the "Incentive Management Fee") calculated and payable in
arrears, on such Profit Distribution Date, equal to the Residual Distributable Profits.
"Residual Distributable Profits" means, on any date of determination, Distributable Profits after the deduction of
(i.e. net of) all payments of Variable Margin made to Capital Noteholders on the relevant Profit Distribution Date.
Five Business Days prior to each Profit Distribution Date, the Manager shall notify the Issuer of the amount of
Management Expenses due for the immediately preceding three-month (or shorter, if applicable) period, and the
Issuer shall pay such Management Expenses for such period on such Profit Distribution Date.
If there are insufficient funds on any Profit Distribution Date to pay the Senior Management Fee and Management
Expenses in full, any such amounts not paid on such Profit Distribution Date shall be deferred and shall become due
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and payable on the next Profit Distribution Date upon which funds are available. If there are insufficient funds on
any Profit Distribution Date to pay any portion or all of the Junior Management Fee due on such Profit Distribution
Date, in full, or such payment is not made due to the operating state of the Issuer such portion or all of such Junior
Management Fee shall not be deferred but rather shall be extinguished and shall be no longer due and payable.
During any period of Restricted Investment, Restricted Funding or following Confirmation of an Enforcement Event
no Junior Management Fee may be paid to the Manager until such time as all Senior Ranking Obligations have been
paid in full. The payment of any of the Senior Management Fee, the Subordinated Management Fee or the Incentive
Management Fee may be deferred to a later date which falls prior to the following Profit Distribution Date at the
Manager's option.
Notwithstanding the foregoing, the Issuer shall not be obligated to pay any fees, costs, expenses or other liabilities
due pursuant to the Management Agreement unless the Issuer has funds which may be used to make such payment
in accordance with the Transaction Documents.
In addition, the Issuer shall be required to meet other ongoing fees, costs and expenses relating to, inter alios, (i) the
Administrator, (ii) the Security Trustee, (iii) the Custodian, (iv) the Principal Paying Agent, (v) the Rating Agencies,
(vi) the Dealers (excluding distribution and placement fees) and (vii) legal counsel for the Issuer, the Manager and
the aforementioned parties, which fees, costs and expenses (excluding the Senior Management Fee and
Subordinated Management Fee), when aggregated, are estimated at the date of this Information Memorandum and
for the next 12 months to be the sum of (A) approximately U.S. $1 million and (B) approximately 0.05 per cent. per
annum of the anticipated average daily Market Value of the Investment Portfolio. The Issuer shall also incur
distribution and placement fees for payment to the Dealers, which shall depend on the size of the Portfolio and the
Notes distributed or placed by the Dealers in any given year. The Issuer shall also incur initial upfront costs of
approximately U.S. $16 million which shall be paid on or following the Closing Date and which are expected to be
amortised (for the purpose of determining Distributable Profits) over a period of time to be determined in the sole
and absolute discretion of the board of directors of the Issuer.
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DESCRIPTION OF THE MANAGER
IKB Credit Asset Management GmbH ("IKB CAM") is a Wholly-Owned Subsidiary of IKB Deutsche
Industriebank AG ("IKB AG"). IKB CAM was registered at the Commercial Register (Handelsregister) of
Düsseldorf on 18 September 2006 under its registration number HRB 54720. Its registered office is located at
Uerdinger Strasse 90 in 40474 Düsseldorf. It is supported by IKB AG in the performance of its duties.
IKB CAM, London branch (the "Manager") carries out certain management activities as more fully described in
"Description of the Management Agreement".
As at the date of this Information Memorandum, IKB CAM is unrated and IKB AG has the following ratings for its
senior unsecured and unguaranteed obligations: short-term P-1 and long-term Aa3 (with stable outlook) from
Moody's and short-term F1 and long-term A+ (with stable outlook) from Fitch.
A credit rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, revision or
withdrawal at any time by the assigning rating organisation. A suspension, reduction or withdrawal of the rating
assigned to any securities may adversely affect the market price of such securities.
IKB Credit Asset Management GmbH, London branch
IKB CAM registered the Manager as its London branch on 27 November 2006 under company number FC 027159
and branch number BR 009091. IKB CAM has exercised its right to establish a branch in the United Kingdom by
virtue of the European passport process and is therefore permitted to act as a financial institution in the United
Kingdom; the Manager is authorised by the German Financial Supervisory Authority (Bundesanstalt für
Finanzdienstleistungsaufsicht) ("BaFin") and regulated by the Financial Services Authority for the conduct of UK
business. The London branch is headed by Mr. Neil Ryan, whose biography is set out below. The Manager's
registered office is 80 Cannon Street, London EC4N 6HL. The Manager manages the investment, funding and
hedging activities of the Issuer; please see "Description of the Management Agreement". The Manager specialises in
managing investments primarily in various securitised products as well as other forms of financial institution and
corporate bonds and asset swaps, including collateralised debt obligations and asset-backed securities.
IKB Credit Asset Management GmbH
IKB CAM is a German financial institution (Finanzdienstleistungsinstitut) organised as a limited liability company
(Gesellschaft mit beschränker Haftung) and subject to supervision by BaFin. IKB CAM's issued and fully paid up
share capital is €5 million.
IKB CAM has a two-tier board system – the advisory board (Beirat) and the board of directors (Geschäftsführung).
The Beirat consists of seven directors. The biographies of the directors who comprise the Geschäftsführung are set
out below.
IKB CAM engages in the broking of business involving the purchase and sale of financial instruments or their
documentation (investment broking), the purchase and sale of financial instruments in the name of and for the
account of others (contract broking) and the administration of individual portfolios of financial instruments for
others on a discretionary basis (portfolio management). In each case with no authority to assume ownership of its
clients' funds or securities.
IKB CAM is investment adviser for the asset-backed commercial paper conduit Rhineland Funding Capital Corp.
("Rhineland") and a portfolio of investments held by IKB AG as principal. As at 31 March 2007, gross assets under
management totalled approximately €17,387 billion with €12,057 billion in respect of Rhineland and about €5,33
billion in respect of IKB AG (all as converted from U.S.$ into EUR as of 31 March 2007).
IKB Deutsche Industriebank AG
IKB AG is a German banking institution under the German banking act and is regulated by BaFin.
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Profit extraction agreement
IKB CAM and IKB AG have entered into a profit extraction agreement (Gewinnabführungsvertrag) (the "Profit
Extraction Agreement"), effective upon registration with the German commercial register (Handelsregister) and
given retroactive effect from the point of establishment of IKB CAM on June 6, 2006. The Profit Extraction
Agreement obliges IKB CAM to pass its profits to IKB AG. In turn, IKB AG agrees to balance any annual shortfall
(Verlustausgleichspflicht) IKB CAM may suffer. The Profit Extraction Agreement is governed by German law and,
subject as provided below, may not be terminated before 31 March 2012. One year's advance notice must be given
prior to any termination of the Profit Extraction Agreement. On 31 March 2012, in the absence of any such notice,
the Profit Extraction Agreement becomes subject to rolling automatic annual renewal from that date and on each
anniversary thereafter, in the absence of any termination notice. An exception to the foregoing is that the Profit
Extraction Agreement may be terminated at any time for cause (aus wichtigem Grund), an example of this may be if
IKB AG were to sell its interest in IKB CAM in whole or in part.
Pursuant to the Management Agreement, the Manager has undertaken to the Issuer that, in circumstances where it is
unable to meet its payment obligations to the Issuer from its own funds, it will take all actions reasonably available
to it to enforce its rights under the Profit Extraction Agreement and formal keep-well arrangements with IKB AG in
order to enable it to meet its obligations to the Issuer under the Management Agreement.
Biographies
Set out below are biographies of the members of the Geschäftsführung of IKB CAM and the head of IKB CAM,
London branch.
Members of Geschäftsführung
Mr. Winfried Reinke, CEO, has been the head of IKB CAM since September 2006. He has also been the Co-Head
of the treasury and Financial Markets functions of IKB AG since 1996. Prior to that appointment Mr. Reinke was
Managing Director of IKB's Luxembourg subsidiary as well as Head of its Luxembourg branch from 1991-1996,
where his prime responsibility was the derivative business with corporate customers. From 1984-1991, Mr. Reinke
spent 7 years in a senior position in the export finance department of IKB AG in Düsseldorf. From 1980-1984 Mr.
Reinke worked in the Export Finance Division of DG Bank in Frankfurt. Prior to joining DG Bank Mr. Reinke
worked as a credit analyst with Citibank, Frankfurt, from 1978 until 1980. Mr. Reinke obtained his University
degree as a translator and in economics at the University of Saarbrücken in 1973/78 respectively.
Dr. Frank Lehrbass, CIO, has been Head of IKB CAM since March 2007. From 2002 until 2006 Dr. Lehrbass
worked for DG Hypothekenbank AG, Hamburg ("DG Hyp") where he headed the Portfolio Management and
Structured Credit Group. Prior to that appointment he was Head of Credit Risk Modelling, where his responsibilities
included the bankwide implementation of Credit Risk+ and the RAROC approach. Parallel to his functions at DG
Hyp he was responsible as Managing Director for the foundation of the NPL-Servicer IMMOFORI. Prior to joining
DG Hyp Dr. Lehrbass headed the Analytics and Systems Group within the Credit Management Division of WestLB.
Dr. Lehrbass started his professional career at WestLB as Trader in the Index Derivatives Group. Dr. Lehrbass was
educated at the University of Bonn, Johns-Hopkins-University, Baltimore, and the University of Mannheim, where
he was awarded a M.A. degree in Economics. He also holds a Ph.D. in Economics from the University of Dortmund.
Director, Head of IKB CAM, London branch
Mr. Neil Ryan, Director and Head of IKB CAM, London branch, joined in October 2006. He previously worked in
New York, London and Dublin with a number of financial institutions including Manufacturers Hanover Trust,
Abbey National Treasury Services, Lehman Brothers, BW Bank Ireland and Naspa Dublin. He has over 17 years
experience in the credit and ABS markets. Mr. Ryan graduated in law (LL.B., Trinity College Dublin 1988 and
LL.M., London School of Economics 1989) before completing a MBA at London Business School (1996). As well
as being a part-time lecturer at University College Dublin, he was a founder of the Irish Securitisation Forum.
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DESCRIPTION OF THE MANAGEMENT AGREEMENT
Summary of the Management Agreement
Pursuant to the Management Agreement, the Issuer has appointed the Manager for the purpose of purchasing and
managing the Issuer's Investments in accordance with the Investment Objectives and the Acquisition Procedures
described herein under "Investment Management – Certain Acquisition Procedures - Investment Objectives" above
and complying with certain obligations, operating procedures and principles set out in the Management Agreement,
effective until the Manager's appointment is terminated as described below.
Remuneration of the Manager
The Issuer will pay to the Manager, quarterly in arrears, certain management expenses and fees. The fees will be
payable after payment or provision for payment of the Notes and Senior Ranking Obligations which are then due
and payable. The fees will consist of the Senior Management Fee, the Subordinated Management Fee and the
Incentive Management Fee. The Senior Management Fee and the Subordinated Management Fee are each payable
quarterly in arrears on each Profit Distribution Date, and are calculated on the basis of a fixed percentage of the
average daily Market Value of the Issuer's assets from and including the immediately preceding Profit Distribution
Date to but excluding such Profit Distribution Date. The Incentive Management Fee is payable quarterly in arrears
on each Profit Distribution Date, and is equal to the Residual Distributable Profits for such Profit Distribution Date.
To the extent that there are insufficient funds to pay the Senior Management Fee and Management Expenses, the
Senior Management Fee and such expenses may be deferred to the next Profit Distribution Date upon which funds
are available. If there are insufficient funds on any Profit Distribution Date to pay any portion or all of the Junior
Management Fee due on such date in full, such portion or all of such Junior Management Fee shall not be deferred
but rather extinguished and shall no longer be due and payable. The payment of any of the Senior Management Fee,
the Subordinated Management Fee or the Incentive Management Fee or the Management Expenses may be deferred
to a later date which falls prior to the following Profit Distribution Date at the Manager's option.
Termination of appointment of and substitution of the Manager
The Manager's appointment will terminate on the occurrence of any of the following events:
(a)
the payment in full of the Secured Obligations, the liquidation of the Credit Portfolio and the distribution of
the proceeds therefrom in accordance with the Transaction Documents;
(b)
the Manager Transition Date (as defined below);
(c)
the events set out in Clause 16.8(a) or (b) (Certain Manager events) of the Management Agreement;
(d)
replacement thereof in accordance with Clause 6.2 (Replacement of Manager) of the Security Trust Deed;
and
(e)
on each anniversary of the Management Agreement, the Issuer may, in its sole and absolute discretion,
notify the other parties to the Management Agreement in writing (with a copy to the Rating Agencies and
the Dealers) of its intention to terminate the appointment of the Manager under the Management
Agreement as of the date specified in such notice and appoint a Substitute Manager.
Pursuant to Clause 6.2 (Replacement of Manager) of the Security Trust Deed, following Confirmation of an
Enforcement Event, the Security Trustee is entitled to (a) terminate the appointment of the Manager and
Enforcement Manager and (b) appoint a Substitute Manager specified by the Security Trustee in accordance with the
terms thereof as Enforcement Manager. See "Security and its enforcement".
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Resignation of the Manager
The Manager may, with or without cause, notify the other parties to the Management Agreement in writing (with a
copy to the Rating Agencies and the Dealers) of its intention to resign from its appointment as Manager as of the
date specified in such notice, which date shall be not less than 90 Business Days after the date of delivery of such
notice, provided that such resignation shall not be effective until the Manager Transition Date.
Removal of the Manager
The Issuer or, after the Enforcement Date, the Security Trustee pursuant to Clause 6.17 (Termination of Manager) of
the Security Trust Deed shall in the case of paragraphs (A), (B) and (C) below, as soon as reasonably practicable
upon becoming aware (or in the case of the Security Trustee, upon a Responsible Officer of the Security Trustee
having actual knowledge) of such event immediately notify the Manager or the Enforcement Manager, as the case
may be, the Rating Agencies, the Security Trustee (if not the notifying party) and the Dealers of the occurrence of
such event, and shall notify each such party of its intention to terminate the appointment of the Manager or the
Enforcement Manager, as the case may be, under the Management Agreement and appoint a Substitute Manager
effective as of the date specified in such notice, in the event that:
(A)
the Manager or the Enforcement Manager, as the case may be, commits a material breach of its obligations
under the Management Agreement (except due to events or circumstance beyond its control) and such
breach has not, within 30 Business Days of the earlier of the Manager or Enforcement Manager, as the case
may be, being notified of or discovering such breach, been waived by the Issuer or, as applicable, the
Security Trustee, or rectified to the reasonable satisfaction of the Issuer or, as applicable, the Security
Trustee;
(B)
the Manager or the Enforcement Manager, as the case may be, fails to have any necessary consent, licence,
approval or authorisation required in order to perform its obligations under the Management Agreement
and such failure has not, within 30 Business Days of the earlier of the Manager or the Enforcement
Manager, as the case may be, being notified of or discovering such failure, been waived by the Issuer or, as
applicable, the Security Trustee or rectified to the reasonable satisfaction of the Issuer or, as applicable, the
Security Trustee; or
(C)
an Insolvency Event occurs with respect to the Manager or the Enforcement Manager, as the case may be;
and
in the case of sub-clauses (A) and (B), such breach or failure (as the case may be) shall be reasonably likely to have
an adverse effect on the holders of rated Notes.
Following any termination of the appointment of the Manager as described above, the Issuer or, following the
Enforcement Date, the Security Trustee shall appoint a Substitute Manager effective as of the date specified in the
notice of termination, subject as described below.
Pursuant to Clause 6.2 (Replacement of Manager) of the Security Trust Deed, following Confirmation of an
Enforcement Event, the Security Trustee is entitled to (a) terminate the appointment of the Manager and
Enforcement Manager and (b) appoint a Substitute Manager specified by the Security Trustee in accordance with the
terms thereof as Enforcement Manager. See "Security and its enforcement".
The "Manager Transition Date" is the later of (1)(i) in the case of (x) any of the mandatory termination events
described in sub-paragraphs (A) through (C) under the section "Removal of the Manager" or (y) pursuant to the
resignation of the Manager described under the section "Resignation of the Manager" or (z) any termination
described in sub-paragraph (e) under the section "Termination of appointment of and substitution of Manager,", the
termination date stipulated in a notice delivered thereunder; (ii) in the case of any termination as a result of certain
taxation matters described in sub-paragraph (c) under section "Termination of appointment of and substitution of
Manager", the date 30 or 60 days, as applicable, after the occurrence of the relevant event; and (2) in any case, the
date when all of the following conditions are met: (A) the proposed Substitute Manager has obtained all necessary
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consents, licences, approvals and authorisations required under applicable Law in order to perform its obligations as
Substitute Manager; (B) such person's appointment as Substitute Manager and the terms of the appointment have
been approved by the Issuer (such approval not to be unreasonably withheld or delayed); (C) Rating Confirmation
has been obtained with respect thereto; and (D) the proposed Substitute Manager has agreed to be bound by the
terms of the Management Agreement as if it were a party thereto and as if references to the Manager were references
to the Substitute Manager.
Removal of the Enforcement Manager
After the Enforcement Date, in addition to the Security Trustee's power to terminate the Enforcement Manager upon
the occurrence of any event described in sub-paragraphs (A) through (C) under "Removal of the Manager", the
Security Trustee may remove the Enforcement Manager at any time with or without cause, in its sole discretion.
Emergency Back-Up Manager
If any of the events described in sub-paragraphs (A) through (C) under the section "Removal of the Manager"
occurs, the Issuer may appoint the Administrator or any other person meeting the requirements of the definition of
"Emergency Back-Up Manager" as Emergency Back-Up Manager until (a) a Substitute Manager is appointed and
(b) the Manager Transition Date occurs. If the Issuer is in Normal Operations or Restricted Investment, the
Emergency Back-Up Manager will use all reasonable efforts to operate under the Restricted Investment Procedures,
if applicable. If a Restricted Funding Event has occurred, the Emergency Back-Up Manager will use all reasonable
efforts to operate under the Restricted Funding Procedures.
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DESCRIPTION OF THE ADMINISTRATOR
QSR Management Limited is a UK-based, Wholly-Owned Subsidiary of The Bank of New York. QSR provides
third-party administrative services to the structured investment vehicle and asset-backed commercial paper market.
QSR was established in August 2002, when The Bank of New York acquired part of the business of Quadrant
Capital Limited. QSR intends to provide certain administrative and cash management functions to the Issuer and CoIssuer. QSR is authorised and regulated for the conduct of its business in the United Kingdom by the Financial
Services Authority.
The Administrator's role
Pursuant to the Administrative Services Agreement, the Issuer and the Co-Issuer have each appointed the
Administrator to provide certain administrative and cash management functions for and on behalf of the Issuer and
Co-Issuer, as appropriate, in connection with or relating to:
(a)
the acquisition, administration and disposal of Investments that may be made by the Issuer from time to
time, in each case as selected by the Manager and notified by the Manager to the Administrator from time
to time;
(b)
the issuance, sale, payment and redemption (including any optional redemption) of the Senior Notes;
(c)
the entering into by the Issuer of Investment Derivatives, Associated Derivatives, Repo Agreements,
Reverse Repo Agreements, Committed Repo Agreements, Securities Lending Agreements, and Puttable
Investments;
(d)
the implementation and administration of the Transaction Documents; and
(e)
related operations and activities of the Issuer and Co-Issuer, respectively.
In addition, the Administrative Services Agreement sets out more specific duties of the Administrator with regard to
the Issuer including:
(a)
providing access to the Manager, and developing upgrades, to its proprietary computer applications for risk
management and reporting;
(b)
performing all calculations and determinations required of it or the Issuer and/or Co-Issuer under the
Requirements (as defined below) or any agreement relating to the operations of the Issuer and/or Co-Issuer
to which it or the Issuer and/or Co-Issuer is a party;
(c)
shall assist the Issuer in preparing Monthly Investor Reports for distribution by the Manager to, inter alios,
the Issuer, the Rating Agencies, the Dealers, the Noteholders, the Liquidity Providers and the Security
Trustee;
(d)
arranging for, and managing, audits of the Issuer's and Co-Issuer's annual financial accounts;
(e)
arranging for the preparation of draft monthly management accounts containing a balance sheet, income
statement and cashflow statement for final approval by the Issuer;
(f)
preparing and serving, sending or delivering, as the case may be, all notices required to be prepared and
served, sent or delivered by or on behalf of the Issuer or the Co-Issuer under the Transaction Documents;
(g)
furnishing such information, notices, certificates, opinions and other documents upon request to the Issuer,
the Co-Issuer, the Security Trustee, the Noteholders, the Rating Agencies or any authorised representative
of any of the foregoing in connection with, the Requirements and the Administrative Services Agreement
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as well as other information, certificates, opinions and other documents as may be reasonably requested
from time to time;
(h)
assisting the Issuer and, if applicable, the Co-Issuer in connection with the settlement of each issuance of
Notes, the settlement of each redemption of the Notes (including any optional redemption), the settlement
upon the maturity of the Notes and the settlement upon any interim interest payment date of the Notes;
(i)
assisting the Issuer and, if applicable, the Co-Issuer in connection with the settlement of each issuance of
securities other than Notes and the incurrence of other indebtedness by the Issuer and, if applicable, the CoIssuer, the settlement of each redemption of such other securities or each repayment of such other
indebtedness, the settlement upon the maturity of such other indebtedness and the settlement upon any
interim interest payment date of such other securities or such other indebtedness;
(j)
assisting the Issuer and, if applicable, the Co-Issuer in connection with the appointment of the Security
Trustee and any other agents of the Issuer or Co-Issuer appointed under the Transaction Documents;
(k)
providing information to the Issuer and, if applicable, the Co-Issuer regarding the Administrator, to assist
the Issuer and, if applicable, Co-Issuer in preparing the Offering Documents in connection with the sale of
the Notes;
(l)
assisting the Issuer and, if applicable, the Co-Issuer in connection with negotiating and arranging
repurchases of Notes;
(m)
assisting the Issuer in connection with purchases, sales and loans of Investments, and the entry into of
certain Securities Lending Agreements, Repo Agreements, Reverse Repo Agreements, Committed Repo
Agreements, Associated Derivatives and Investment Derivatives, in each case based upon the instructions
of the Manager;
(n)
identifying certain Short-Term Investments for purchase, sale or lending, or for use in repurchase
arrangements, in each case provided that the Manager or the Issuer decides which such transactions shall
take place and will approve the terms of such transactions;
(o)
establishing and maintaining on behalf of the Issuer with the Custodian or an Approved Bank, such
accounts in such currencies and take such action on behalf of the Issuer in connection with the Custody
Agreement and the USCP Depositary Agreement as the Issuer may reasonably require;
(p)
taking any action it considers necessary (after consultation and instruction from the Manager) to maintain
the ratings assigned to the rated Notes by the Rating Agencies (including monitoring compliance with all
relevant tests and reporting the extent to which such tests are in compliance to the Issuer, the Co-Issuer and
the Manager);
(q)
assisting the Issuer in making arrangements for a replacement Paying Agent, USCP Depositary and/or
Custodian in the event the appointment of either is terminated; and
(r)
if necessary, requesting a drawdown under the Liquidity Arrangements.
"Approved Short-Term Investment Schedule" means the schedule prepared in accordance with the Requirements
(other than the Approved Short-Term Investment Schedule) by the Manager designating Permitted Investments for
the investment of excess, short-term cash by the Administrator (as amended and updated from time to time by the
Manager in accordance with the Requirements).
"Monthly Investor Report" means a report prepared by the Administrator in accordance with the Monthly Report
Requirements set forth in Schedule Part 2 (Monthly Report Requirements) to the Administrative Services
Agreement.
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"Requirements" means, collectively: (a) the Operating Rules; (b) the covenants and agreements undertaken by the
Issuer and the Co-Issuer in the Transaction Documents; (c) the terms and provisions of the Security Documents; (d)
the Approved Short-Term Investment Schedule; (e) the Investment Objectives; (f) the Funding Objectives; and (g)
any other requirements as may be agreed by the Issuer, the Co-Issuer, the Manager, the Administrator and subject to
Rating Confirmation.
"Short-Term Investments" means any Investment with a maturity date of no more than one month after the date of
its Acquisition by the Issuer.
In addition, the Administrative Services Agreement provides that in the event of the termination of the Manager's
appointment under the Management Agreement, the Administrator may be appointed to act as Emergency Back-Up
Manager. In such capacity, the Administrator will, until the Manager Transition Date provide various investment
management and funding services to the Issuer and Co-Issuer as set out in the Administrative Services Agreement,
including, inter alia, investing any excess cash of the Issuer in Agreed-Upon Investments, arranging for the issuance
by the Issuer and Co-Issuer of the Notes (with the exception of the Capital Notes), and using all reasonable efforts to
ensure that the Issuer does not fail any of the Liquidity Tests, the Capital Tests, Market Sensitivity Tests, or the
Weighted Average Life of Senior Funding Test if appointed Emergency Back-up Manager. The Administrator shall
not issue or enter into Capital Notes or provide any services in relation thereto.
If appointed Emergency Back-Up Manager, the Administrator or any other person acting as Emergency Back-Up
Manager will be bound by certain funding conditions as set out in the Management Agreement. If no Restricted
Funding Event or Enforcement Event has occurred, the Administrator, as Emergency Back-Up Manager will use all
reasonable efforts to operate under the Restricted Investment Procedures. If a Restricted Funding Event has
occurred, the Emergency Back-Up Manager will use all reasonable efforts to operate under the Restricted Funding
Procedures. The Emergency Back-Up Manager will also perform certain similar duties on behalf of the Co-Issuer as
appropriate.
QSR acts solely as the agent of the Issuer and the Co-Issuer pursuant to the terms of the Administrative Services
Agreement.
Term, termination of appointment and substitution of the Administrator
The Administrator's appointment will terminate upon the earliest of:
(a)
any change in any Law, regulation or interpretation applicable to the Administrator issued by the FSA or
any governmental, regulatory or self-regulatory entity (including any entity responsible for propagating
accounting standards) that (i) renders illegal, or otherwise materially conflicts with, the performance by the
Administrator of the services or its other obligations under the Administrative Services Agreement or (ii)
makes the business of the provision of advisory, management and administrative services by banks to
vehicles of a type similar to the Issuer uneconomic over the medium and long term; provided that the
Administrator has made all commercially reasonable actions to mitigate the effect of such change;
(b)
the date on which (i) the Secured Obligations have been unconditionally and irrevocably paid or discharged
in full; (ii) all of the Secured Creditors have ceased to have any commitment, liability or obligation
(whether actual or contingent) to make any credit or provide any other accommodation to the Issuer under
any Transaction Document or otherwise or to any other person in respect of whose liabilities the Issuer has
undertaken a liability to the Security Trustee or any Secured Creditor under any Transaction Document; or
(iii) the Issuer has ceased to have any liability (whether actual or contingent) to the Security Trustee or any
Secured Creditor under any Transaction Document in respect of any matter or thing whatsoever; or
(c)
the receipt by the Administrator of notice, from a Receiver appointed under the Security Trust Deed, of the
termination of its appointment under the Administrative Services Agreement.
Each of the Administrator and the Issuer and the Co-Issuer has the right to terminate the Administrative Services
Agreement on the third anniversary of the date on which the Administrative Services Agreement was signed. In the
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event that the Administrative Services Agreement is not terminated on its third anniversary, then it will
automatically renew for a further six month term.
Each of the Issuer and the Co-Issuer may remove the Administrator at any time following the occurrence (subject to
a cure period) of certain removal events (which include, among other things, a wilful breach of a material obligation
by the Administrator). In addition, each of the Issuer and Co-Issuer will have the power to waive any of the removal
events.
The Administrator may also resign upon 45 days' written notice to the Issuer, the Co-Issuer and the Manager.
Except in relation to (b) or (c) above, no resignation or removal of the Administrator or termination of the
Administrative Services Agreement shall become effective until (i) the appointment of a replacement administrator
which assumes the duties and the obligations of the Administrator and (ii) receipt of Rating Confirmation in respect
of the proposed appointment of a replacement administrator.
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THE CORPORATE SERVICES AGREEMENTS
The Issuer and the Irish Corporate Services Provider have entered into the Irish Corporate Services Agreement in
order to appoint the Irish Corporate Services Provider to provide certain corporate services to the Issuer. The Irish
Corporate Services Agreement provides for termination immediately, upon one party giving to the other party notice
of termination in the event of: (i) either party becoming insolvent or going into liquidation or a receiver being
appointed or some event having equivalent effect occurring; or (ii) another party committing a material breach of the
Irish Corporate Services Agreement and (if such breach is capable of remedy) that party not making good such
breach within thirty days of being so required.
The Issuer shall not be entitled to assign or otherwise transfer the benefit or burden of the Irish Corporate Services
Agreement other than to the Security Trustee by way of security pursuant to the Security Trust Deed.
"Irish Corporate Services Provider" means Wilmington Trust SP Services (Dublin) Limited in its capacity as
corporate services provider under the Irish Corporate Services Agreement.
The Co-Issuer and Wilmington Trust Company (the "U.S. Corporate Services Provider" have also entered into an
agreement (the "U.S. Corporate Services Agreement") wherein the U.S. Corporate Services Provider agrees to
provide the services of an independent director, independent manager and special member, and certain officers from
time to time including the Secretary, to the Co-Issuer.
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THE SECURITY AND ITS ENFORCEMENT
Security Trust Deed
Under the Security Trust Deed, the Issuer, by way of first fixed security for the payment of the Secured Obligations,
has assigned all its right, title, interest and benefit, present and future, in the Transaction Documents (other than the
Security Documents), and any other agreement or document (other than the Transaction Documents and the Security
Documents) to which the Issuer is a party or to which it is, or may at any time be expressed to have right, title,
benefit and interest, present and future, therein or thereunder, and has granted a first ranking floating charge over the
whole of the undertaking and assets (including the Cash Account, Euro Accounts, the Custody Accounts and
proceeds thereof but excluding the Issuer Share Proceeds and earnings thereon held in the Issuer Capital Account)
and any asset over which security has been granted pursuant to the assignment as described above) to the Security
Trustee as trustee for the Secured Creditors. Paragraph 14 of Schedule B1 to the Insolvency Act 1986 applies to the
floating charge so created. Notwithstanding the foregoing, the Security Trustee will not have first-ranking security
over Designated Investments; except to the extent of the Issuer's redelivery rights with respect to such Designated
Investments, subject to the Issuer's redelivery obligations in respect thereof.
Role of the Security Trustee
The Bank of New York, London branch, as Security Trustee will be trustee of the security constituted by the
Security Documents (the "Security"). The Security Trust Deed provides expressly for steps to be taken by the
Security Trustee to enforce the security constituted by the Security Trust Deed. The Security Trustee shall not be
responsible for, and makes no representation as to, the enforceability, sufficiency, validity or adequacy of the
security created by the Security Documents.
In exercising any of its trusts, powers, authorities or discretions under the Security Trust Deed, the Security Trustee
is required to have regard to the interests of the Secured Creditors as a class provided that if, in the opinion of the
Security Trustee, there is a conflict between the interests of the Senior Creditors and the interests of the other
Secured Creditors, the Security Trustee will give priority to the interest of the Senior Creditors.
Notwithstanding that it may be a party to certain of them, the Security Trustee has no role or responsibility in
relation to the monitoring or supervision or enforcement of the performance and observance by the Issuer or any
other party thereto of the Transaction Documents (other than the Security Trust Deed). The Security Trustee's role in
relation to the Security Trust Deed is limited by the terms of the Security Trust Deed.
No provision of the Security Trust Deed requires the Security Trustee to take any particular action, to expend or risk
its own funds or otherwise incur any financial liability in the performance of any of its duties, or in the exercise of
any rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or indemnity
satisfactory to it against such risk or liability is not assured to it. In such circumstances the Security Trustee is
entitled to refrain from performing such duties or exercising such rights or powers unless and until it has been
indemnified and/or provided with security to its satisfaction. The Security Trustee is not liable to any person
(including any Secured Creditor) for any loss or liability incurred by such person as a result of it refraining from
performing such duties or exercising such rights or powers.
Enforcement of the Security
Confirmation of Enforcement Events
The Collateral shall become immediately enforceable upon the Confirmation (as defined below) of an Enforcement
Event notwithstanding that none of the Secured Obligations are then due and payable. The power of sale and other
powers under the Security Trust Deed, shall be immediately exercisable by the Security Trustee or the Security
Trustee's agents upon and at any time after the Confirmation of any Enforcement Event.
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Notification of Enforcement Event
Upon Confirmation of an Enforcement Event, the Security Trustee shall at the cost and expense of the Issuer (i)
promptly (and in no event later than two (2) Business Days thereafter) deliver an Enforcement Notice, specifying the
Enforcement Event which has occurred, to the Issuer, the Manager, the Custodian, any Securities Intermediary, the
Rating Agencies, each Derivative Counterparty, each Repo Counterparty, each Reverse Repo Counterparty, each
Medium Term Note Dealer, each Liquidity Agent, each of the Liquidity Providers, the Administrator and each
Securities Agent (subject, in each case, to the Security Trustee receiving notice details therefor pursuant to the
Security Trust Deed), (ii) promptly (and in no event later than two (2) Business Days thereafter) request each
Securities Agent to provide notice to the holders of the Notes for which it is a paying agent of the occurrence of an
Enforcement Event, (iii) promptly (and in no event later than one (1) Business Day thereafter) deliver a "Notice of
Exclusive Control" pursuant to, and as defined in, each Account Control Agreement, to any Securities Intermediary
thereunder or an equivalent notice to the Custodian (in the case of the Custody Accounts), and to the “Deposit
Bank” pursuant to, and as defined in, each Account Control Agreement, (iv) promptly (and in no event later that one
(1) Business Day thereafter) deliver a notice to the Custodian (in the case of the Custody Accounts other than any
U.S. Securities Accounts) revoking the signing rights on the Custody Accounts such that amounts may be
withdrawn only by (or on the instruction of) the Security Trustee, and (v) take such other actions to administer the
Collateral and enforce the Security Documents on behalf of the Secured Creditors in accordance with the terms of
the Security Trust Deed.
"Securities Intermediary" means any entity in the capacity of securities intermediary under any Account Control
Agreement, and any successor thereto.
"U.S. Securities Account" means any securities account of the Issuer maintained at any securities intermediary (as
such term is defined in the UCC) in the United States.
Enforcement Procedures
Upon the Confirmation of an Enforcement Event (including the occurrence of a Mandatory Acceleration Event), the
security constituted by the Security Trust Deed shall become immediately enforceable. The Security Trustee has
agreed, pursuant to the Security Trust Deed, that it will notify the Issuers, the Administrator and the Manager as
soon as reasonably practicable (and in no event later than the next following Business Day) after it becomes aware
of the occurrence of an Enforcement Event. Upon the Confirmation of an Enforcement Event, the Security Trustee
(or the Enforcement Manager on behalf of the Security Trustee) shall follow the Enforcement Procedures. The
Enforcement Manager shall be the agent of the Security Trustee and shall act on behalf of the Security Trustee and
as directed by the Security Trustee, provided that, in the absence of express instructions to the contrary, the
Enforcement Manager shall follow the Enforcement Procedures and shall take any enforcement actions against the
Collateral (including the U.S. Collateral) provided in the Security Trust Deed and in the other Security Documents.
The Security Trustee shall not be liable for any action or inaction on the part of the Manager as Enforcement
Manager or any other Enforcement Manager nor shall the Security Trustee owe any financial or other obligations to
the Enforcement Manager, including in respect of costs, fees, expenses or indemnity payments.
If the Enforcement Manager's appointment is terminated by the Security Trustee and no other Enforcement Manager
has been appointed, the Security Trustee shall, pending the appointment of a Substitute Manager as described below,
use reasonable endeavours to procure that the Enforcement Procedures are complied with (to the extent that
compliance with the Enforcement Procedures does not adversely affect the interests of the Secured Creditors), and
shall be exclusively entitled (to the exclusion of the Manager, the Issuer and each other person) to follow the
Enforcement Procedures and to take any enforcement actions against the Collateral (including the U.S. Collateral)
provided in the Security Trust Deed. Where the Security Trustee (or Receiver) is required to make a determination
of whether compliance with the Enforcement Procedures adversely affects the interests of the Secured Creditors or
whether there exists a conflict between the interests of the Senior Creditors and the interests of the other Secured
Creditors, the Security Trustee (or Receiver) will give priority to the interest of the Senior Creditors.
Upon the occurrence of a Mandatory Acceleration Event, the Security Trustee (or Receiver on its behalf) shall take
enforcement action against the Collateral (including the U.S. Collateral) not otherwise prohibited by the Security
Documents or any applicable Law or regulation and retain and liquidate the Collateral and make distributions to the
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Secured Creditors in accordance with the terms of the Security Trust Deed, any Account Control Agreement and the
other Security Documents, as applicable.
Mandatory Acceleration Event
Upon a Mandatory Acceleration Event all Secured Obligations shall become immediately due and payable. If the
Manager, the Enforcement Manager, the Receiver or the Issuer notifies the Security Trustee of the occurrence of a
Mandatory Acceleration Event, or a Responsible Officer of the Security Trustee has actual knowledge of the
occurrence of such an event, (i) the Security Trustee (or a Receiver on its behalf) may draw down all available
amounts under Liquidity Facility Arrangements and Committed Repo Agreements (if any) and liquidate investments
in Money Market Funds and Breakable Deposits and otherwise utilise any other Liquidity Arrangements; (ii) all
amounts received on the Collateral shall be applied in accordance with "The Security and its enforcement – Priority
of Payments following enforcement" and the Issuer will cause a redemption in whole (but not in part) of the
outstanding Medium Term Notes issued at par (it being understood and agreed, however, that in the case of any
Medium Term Notes issued at a discount such Medium Term Notes shall be redeemed net of any unearned original
issue discount, and in the case of any Medium Term Notes issued at a premium such Medium Term Notes shall be
redeemed net of such premium); and (iii) the Security Trustee shall be entitled to appoint a Receiver in accordance
with Clause 7.1 (Appointment of Receivers) of the Security Trust Deed and shall cause the collection of the proceeds
of the Collateral and all amounts received on the Collateral shall be applied in accordance with "The Security and its
enforcement – Priority of Payments following enforcement".
Replacement of Manager
Following Confirmation of an Enforcement Event, the Security Trustee is entitled, in its sole discretion, (a) to
terminate the appointment of the Manager as Enforcement Manager with or without cause and (b) to direct the
Issuer to appoint a Substitute Manager as Enforcement Manager specified by the Security Trustee. In connection
with any such termination and appointment, the Security Trustee: (i) is entitled to assume that the Manager is the
Enforcement Manager unless it is informed otherwise in writing by the Manager or has actual knowledge that the
Manager is not the Enforcement Manager; (ii) shall use its reasonable endeavours to identify a Substitute Manager
and shall have no liability to any person if, having used its reasonable endeavours, it is unable to identify a suitable
Substitute Manager; (iii) shall only direct the Issuer to appoint a Substitute Manager if a Rating Confirmation is
obtained; (iv) shall use reasonable endeavours to procure that the Enforcement Procedures are complied with during
the time it is attempting to identify such Substitute Manager; (v) shall follow the Enforcement Procedures if no
Substitute Manager has been appointed; and (vi) may appoint a Receiver.
Priority of Payments before enforcement
Prior to an Enforcement Date, the Issuer or the Administrator on its behalf shall pay its Obligations on the date when
they become due and payable from amounts received from the Credit Portfolio and/or raised through the issuance of
Notes or drawing under any Liquidity Arrangement subject to any Restricted Investment Procedures or Restricted
Funding Procedures in effect; provided that, if at any time the Issuer (or the Administrator, or failing that, the
Manager on its behalf has determined that the Issuer) has insufficient funds received from the Credit Portfolio and/or
it is unable to raise additional funds through the issuance of Notes or drawing under any Liquidity Arrangement and
as a result cannot pay all of its Obligations then due, such Obligations shall be paid in the following order of priority
subject to any Restricted Investment Procedures or Restricted Funding Procedures in effect:
(a)
first, to pay, pro rata, out of Deposited Funds all Administrative Expenses due on such date in the
order specified in the definition of "Administrative Expenses";
(b)
second, to pay, pro rata, out of Deposited Funds all amounts due in respect of any Senior
Obligations due on such date;
(c )
third, to pay, pro rata, out of Deposited Funds all Operating Expenses due on such date;
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(d)
fourth, to pay, pro rata, out of Deposited Funds, all Interest Amounts and principal in respect of
the Capital Notes due on such date in accordance with the Interest Payment Priority set out in
Condition 8(e)(iv) (Interest Payment Priority) of the Capital Notes and the Redemption Priority
set out in Condition 9(c) (Redemption Priority), of the Capital Notes and Condition 9(f)
(Restricted Funding or Enforcement Early Redemption) of the Capital Notes as applicable;
(e)
fifth, to pay, pro rata and pari passu, out of Deposited Funds, the Mezzanine Capital Notes
Subordinated Payments due on such date;
(f)
sixth, to pay, pro rata and pari passu, out of Deposited Funds, the Junior Capital Notes
Subordinated Payments due on such date;
(g)
seventh, to pay, pro rata, out of Deposited Funds, all of the Variable Margin, if any, in respect of
the Capital Notes due on such date in accordance with Condition 8(e)(iv) (Interest Payment
Priority) of the Capital Notes; and
(h)
eighth, to pay, pro rata, out of Deposited Funds, the Incentive Management Fee (if any) due on
such date.
Notwithstanding the foregoing, the Obligations set out in any of sub-clauses (d) to (h) (inclusive) may only be paid
on any date to the extent that (1) such payment is not otherwise prohibited under the Transaction Documents
(including whilst any Restricted Funding Procedures or, any Restricted Investment Procedures are in effect), (2)
such payment will not result in the occurrence of a Restricted Funding Event or, any Restricted Investment Event,
(3) such payment will not result in the occurrence of an Enforcement Event, and (4) the Manager determines, in its
exercise of its sole discretion that such payments will not cause the Issuer to become unable to pay the Obligations
set out in the clauses preceding such clause as they come due. All payments in respect of the Obligations set out in
sub-clauses (a) to (h) (inclusive) shall, when made, be free and clear of all Security Interests, liens and other
encumbrances in favour of the Security Trustee for the benefit of the Secured Creditors pursuant to the Security
Trust Deed and all other Security Documents.
Priority of Payments following enforcement
Following an Enforcement Date, the Security Trustee (or the Enforcement Manager or a Receiver) shall instruct the
Custodian to withdraw Deposited Funds from the Custody Accounts and shall cause all proceeds of the Collateral
and all such Deposited Funds withdrawn from the Custody Accounts, to be applied for the following purposes and in
the following order of priority:
(a)
first, in satisfaction of or provision for all Administrative Expenses accrued and/or payable, in the
order specified in the definition of Administrative Expenses;
(b)
second, in satisfaction of or provision for all Senior Obligations as and when the same become
payable and, if more than one Senior Obligation is payable at the relevant time, pari passu and in
proportion to the amounts payable in respect thereof;
(c)
third, in satisfaction of or provision for all Operating Expenses accrued and/or payable, pari
passu and in proportion to the amounts payable in respect thereof;
(d)
fourth, in satisfaction of or provision for all Interest Amounts and all outstanding Redemption
Amounts payable to the Senior Capital Noteholders in respect of Senior Capital Notes outstanding
pari passu and in proportion to the amounts payable;
(e)
fifth, in satisfaction of or provision for all Interest Amounts and all outstanding Redemption
Amounts payable to the Mezzanine Capital Noteholders in respect of Mezzanine Capital Notes
outstanding pari passu and in proportion to the amounts payable;
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(f)
sixth, in satisfaction of or provision for all the Mezzanine Capital Notes Subordinated Payments
pari passu and in proportion to the amounts payable;
(g)
seventh, in satisfaction of or provision for all Interest Amounts and all outstanding Redemption
Amounts payable to the Junior Capital Noteholders in respect of Junior Capital Notes outstanding
pari passu and in proportion to the amounts payable;
(h)
eighth, in satisfaction of or provision for all the Junior Capital Notes Subordinated Payments pari
passu and in proportion to the amounts payable;
(i)
ninth, in satisfaction of an amount equal to the greater of (A) the remaining surplus (if any) less
the Equity Amount and (B) zero, which shall be declared as Distributable Profits and paid first to
the Capital Noteholders as Variable Margin according to the Interest Payment Priority set out in
items (D) to (F) of Condition 8(e)(iv) (Interest Payment Priority) of the Capital Notes and then to
the Manager as an Incentive Management Fee; and
(j)
tenth, in payment of any remaining amount following application of the amounts set out in the
above paragraphs (which amount shall not exceed the Equity Amount) to the Issuer.
"Equity Amount" means a dividend payable to the shareholders of the Issuer in an amount equal to a maximum of
£1,000.
The Security Trustee or a Receiver (as applicable) shall ensure that:
(a)
if and to the extent that Designated Investments fall to be delivered, sold, posted or otherwise
designated as collateral to, or for the benefit of, a Derivative Counterparty under the terms of a
Derivative Transaction in accordance with its terms, such Designated Investments shall be
released from the security constituted by the Security Trust Deed and (pending any redelivery or
resale of Designated Investments or any release of such collateral to the Issuer) neither such
Designated Investments nor the proceeds of liquidation thereof will comprise assets, or, as the case
may be, moneys which are available for application by the Security Trustee in accordance with
"The Security and its enforcement – Priority of Payments following enforcement", subject to any
rights of set-off between the Issuer and the Derivative Counterparty; and
(b)
once all amounts payable, or contingently payable, to the Issuer by any Derivative Counterparty
have been paid, any collateral which has been posted or, as the case may be, otherwise designated
as collateral by such Derivative Counterparty in respect of any Derivative Transaction shall be
released from the security constituted by the Security Trust Deed and neither such collateral nor
the proceeds of liquidation thereof will comprise assets, or, as the case may be, moneys which are
available for application by the Security Trustee in accordance with "The Security and its
enforcement – Priority of Payments following enforcement".
For the avoidance of doubt, upon any redelivery or resale of Designated Investments, or any release of such
collateral, to the Issuer, such Designated Investments or collateral will be subject to the security constituted by the
Security Trust Deed and will comprise assets, or, as the case may be, moneys which are available for application by
the Security Trustee in accordance with "The Security and its enforcement – Priority of Payments following
enforcement".
For the avoidance of doubt, no funds shall be applied at any item in the Priority of Payments set out above unless
and until payment for all amounts at a more senior position have been discharged, except to the extent that the
Security Trustee, the Enforcement Manager (on behalf of the Security Trustee) or, as the case may be, the Receiver
considers that sufficient cash has been realised from the disposal or maturity of the Credit Portfolio to enable all
such obligations at a more senior position which are not then due and payable to be discharged as and when they fall
due for payment (provided that the Security Trustee, the Enforcement Manager (on behalf of the Security Trustee)
or, as the case may be, the Receiver shall not be liable if the cash realised from the Credit Portfolio is subsequently
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found to be insufficient for such purpose); provided that (i) in respect of the obligations that are fee-related
obligations which accrue over time, payment of and/or provision for all such fees which are currently accrued and/or
payable at the next date of payment of such fees shall be sufficient to allow for payments to be made to obligations
at a more junior position in this clause; and (ii) that any moneys received by the Security Trustee, the Enforcement
Manager (on behalf of the Security Trustee) or any Receiver subject to the provisions of Clause 7.3 (Rights of
Receivers) of the Security Trust Deed, after the occurrence of an Enforcement Event and retained to provide for feerelated obligations which are not then due and payable may be paid into such bank account(s) or invested or
otherwise dealt with, in each case as the Security Trustee or, as the case may be, the Receiver considers appropriate.
Payments to Senior Creditors as described in this section shall be made in accordance with the provisions (if any)
concerning payments contained in the documentation governing the Liquidity Arrangements, the terms and
conditions of the Senior Notes, the Security Trust Deed, the transactions involving Investment Derivatives, the
Associated Derivatives, any Securities Lending Agreements, any Repo Agreements, any Committed Repo
Agreements or any Reverse Repo Agreements, as the case may be, (including, for the avoidance of doubt, any
provisions concerning the conversion of Dollar amounts into a currency other than Dollars) and any payment so
made shall be a good discharge to the Security Trustee or, as the case may be, the Receiver.
Procedures relating to a Default Notice
Subject to the conditions set out below, upon receipt by the Security Trustee of a Default Notice (as defined below)
from the Issuer or any Secured Creditor (the person by or on whose behalf the Default Notice is delivered being the
"Notifying Party"), of the occurrence of an event such Notifying Party believes constitutes an Enforcement Event
or an event which such Notifying Party believes will, upon the service of such notice, constitutes an Enforcement
Event, the Security Trustee shall promptly (and in no event later than the next following Business Day) provide
notice thereof to the Issuer and the Manager whereupon the Issuer shall have three (3) Business Days following such
notification (the "Notice Period") to advise the Security Trustee if it intends to contest the Default Notice and of the
grounds on which it intends to do so.
Unless it has received written notice to the contrary from the Issuer by 5:00 p.m. (London time) on the last day of
the Notice Period, or the Issuer or the Manager has reported the occurrence of such Enforcement Event to the
Security Trustee, then the Security Trustee shall be entitled to and shall assume that the Issuer does not wish to
contest the Default Notice.
If the Issuer notifies the Security Trustee within the Notice Period that it wishes to contest the Default Notice, the
Issuer shall have five (5) Business Days following the end of the Notice Period (the "Determination Period")
during which to satisfy the Security Trustee that an Enforcement Event has not in fact occurred, and shall present to
the Security Trustee (with a copy to the Notifying Party) any evidence which the Issuer wishes to put forward to
support its claim and any evidence which the Security Trustee may reasonably request.
If at any time during the Determination Period the Security Trustee is satisfied that the Enforcement Event specified
in the Default Notice has not in fact occurred, the Security Trustee shall so advise the Issuer and the Notifying Party
that such Default Notice has been dismissed. The Notifying Party may also, at its option, withdraw the Default
Notice by notice to both of the Issuer and the Security Trustee at any time during the Determination Period, in which
case the Default Notice shall be dismissed.
"Confirmation" means, with respect to an Enforcement Event, that (i) the Security Trustee has received a Default
Notice from the Issuer or the Manager on behalf of the Issuer, (ii) the Security Trustee has received a Default Notice
and the applicable Notice Period passes without the Issuer contesting such Default Notice or the applicable
Determination Period passes without either the Notifying Party withdrawing or the Security Trustee dismissing such
Default Notice or (iii) a Responsible Officer of the Security Trustee has obtained actual knowledge of an
Enforcement Event.
"Default Notice" means a written notice from a Notifying Party or the Issuer to the Security Trustee of an
Enforcement Event.
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Custody Arrangements
The Issuer and the Manager have entered into the Custody Agreement, pursuant to which the Custodian has
undertaken to hold investments received for the benefit and to the order of the Issuer, as applicable, subject to the
security created in favour of the Security Trustee pursuant to the Security Documents. The Custody Agreement
provides for the replacement of the Custodian within 30 calendar days if the Custodian's short-term senior debt
obligations are rated below P1 by Moody's, F1+ by Fitch or A-1 by S&P or its long-term senior unsecured debt
obligations are rated below A1 by Moody's, A+ by Fitch or A+ by S&P, or if the Custodian's long term debt rating
by Moody's, Fitch or S&P is withdrawn. If either the Issuer, or the Manager on its behalf, has not appointed a
replacement custodian and obtained Rating Confirmation within 20 days of such 30 calendar day period, the
Custodian may itself appoint (but is not obliged to appoint) a replacement custodian but must remain as custodian
until a replacement custodian has been appointed and Rating Confirmation has been obtained.
Perfection of U.S. Security Interest
The Issuer, the Deposit Bank (defined below) and the Security Trustee have, on or about the date of this Information
Memorandum, entered into a Deposit Account Control and Security Agreement (the “Deposit Account Control
and Security Agreement”) in order to create and perfect the Security Trustee's Security Interest in the U.S.
Accounts located in New York and identifiable cash proceeds thereof, and to grant a security interest in all accounts,
instruments and general intangibles (as such terms are defined in the New York Uniform Commercial Code) which
consist of rights of the Issuer under all Transaction Documents which are governed by laws other than the laws of
England and Wales, and all proceeds of any of the foregoing. The Deposit Account Control and Security Agreement
has been entered into in order to establish "control" (within the meaning of Article 9 of the New York Uniform
Commercial Code) in favour of the Security Trustee, as secured party, over the U.S. Accounts located in New York.
Pursuant to the Deposit Account Control and Security Agreement, The Bank of New York, New York branch, as
New York Paying Agent and as depositary bank for the U.S. Accounts (the "Deposit Bank"), has agreed to follow
the instructions of the Security Trustee with regard to the U.S. Accounts, without further consent of the Issuer or any
other person, and has acknowledged the Security Interest of the Security Trustee in the U.S. Accounts. Until the
delivery of a Notice of Exclusive Control over U.S. Account (as defined in the Deposit Account Control and
Security Agreement) to the Deposit Bank by the Security Trustee, which notice may be given upon the occurrence
of an Enforcement Event pursuant to Clause 6.3(c)(iii) of the Security Trust Deed, the Deposit Bank will comply
with directions and orders of the Issuer (or the Manager or Administrator on its behalf) and the Security Trustee with
respect to the U.S. Accounts. After delivery of a Notice of Exclusive Control over U.S. Accounts to the Deposit
Bank by the Security Trustee, the Deposit Bank has agreed to cease complying with directions and orders of the
Issuer and to comply solely with the directions and orders of the Security Trustee with respect to the U.S. Accounts.
The Issuer also intends to file a Uniform Commercial Code financing statement in the District of Columbia in favour
of the Security Trustee in order to perfect the security interest granted under the Deposit Account Control and
Security Agreement to the extent that such security interest is not perfected by means of the Deposit Account
Control and Security Agreement itself. The Issuer is required by the terms of the Security Trust Deed to obtain an
additional Account Control Agreement with respect to each additional deposit account or securities account it opens
in the United States (if any) or which is established in its name or on its behalf.
The foregoing is a summary of, and subject to the detailed provisions of, the Security Documents.
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TAXATION
The following is a general description of certain tax considerations relating to the Medium Term Notes. It does not
purport to be a complete analysis of all tax considerations relating to the Medium Term Notes. Prospective
purchasers of Medium Term Notes should consult their own tax advisers as to which countries' tax Laws could be
relevant to acquiring, holding and disposing of Medium Term Notes and receiving payments of interest, principal
and/or other amounts under the Medium Term Notes and the consequences of such actions under the tax Laws of
those countries. This summary is based upon the Law as in effect on the date of this Information Memorandum and
is subject to any change in Law that may take effect after such date.
Ireland Taxation
The following is a summary based on the Laws and practices currently in force in Ireland regarding the tax
position of investors beneficially owning their Medium Term Notes and should be treated with appropriate
caution. Particular rules may apply to certain classes of taxpayers holding Medium Term Notes. The
summary does not constitute tax or legal advice and the comments below are of a general nature only.
Prospective investors in the Medium Term Notes should consult their professional advisers on the tax
implications of the purchase, holding, redemption or sale of the Medium Term Notes and the receipt of
interest thereon under the Laws of their country of residence, citizenship or domicile.
Withholding Tax
In general, tax at the standard rate of income tax (currently 20 per cent), is required to be withheld from payments of
Irish source annual interest. However, an exemption from withholding on annual interest payments exists under
Section 64 of the Irish Taxes Consolidation Act, 1997 (the "1997 Act") for certain interest bearing securities
("quoted Eurobonds") issued by a body corporate (such as the Issuer) which are quoted on a recognised stock
exchange (which would include the Irish Stock Exchange).
Any annual interest paid on such quoted Eurobonds can be paid free of withholding tax provided:
1.
the person by or through whom the payment is made is not in Ireland; or
2.
the payment is made by or through a person in Ireland, and either:
(a)
the quoted Eurobond is held in a clearing system recognised by the Irish Revenue Commissioners
(Euroclear, Clearstream Banking SA, Clearstream Banking AG and the Depository Trust Company of New
York are so recognised), or
(b)
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 a declaration to a relevant person (such as an Irish paying
agent) in the prescribed form.
So long as the Medium Term Notes are quoted on a recognised stock exchange and are held in Euroclear,
Clearstream Banking SA, Clearstream Banking AG and/or the Depository Trust Company of New York, annual
interest on the Medium Term Notes can be paid by the Issuer and any paying agent acting on behalf of the Issuer
without any withholding or deduction for or on account of Irish income tax.
If, for any reason, the quoted Eurobond exemption referred to above does not or ceases to apply, the Issuer can still
pay annual interest on the Medium Term Notes free of withholding tax provided it is a "qualifying company"
(within the meaning of Section 110 of the 1997 Act) and provided the interest is paid to a person resident in a
"relevant territory" (i.e. a member state of the European Union (other than Ireland) or in a country with which
Ireland has a double taxation agreement). For this purpose, residence is determined by reference to the Law of the
country in which the recipient claims to be resident. This exemption from withholding tax will not apply, however,
if the annual interest is paid to a company in connection with a trade or business carried on by it through a branch or
agency located in Ireland.
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In certain circumstances, Irish tax will be required to be withheld at the standard rate from interest on any quoted
Eurobond, where such interest is collected by a bank or other collection agent in Ireland on behalf of any Medium
Term Noteholder who is an Irish resident.
Taxation of Medium Term Noteholders
Notwithstanding that a Medium Term Noteholder may receive interest on the Medium Term Notes free of
withholding tax, the Medium Term Noteholder may still be liable to pay Irish income tax. Interest paid on the
Medium Term Notes may have an Irish source and therefore be within the charge to Irish income tax and levies.
Ireland operates a self assessment system in respect of income tax and any person, including a person who is neither
resident nor ordinarily resident in Ireland, with Irish source income comes within its scope.
However, interest on the Medium Term Notes will be exempt from Irish income tax if the recipient of the interest is
resident in a relevant territory provided either (i) the Medium Term Notes are quoted Eurobonds and are exempt
from withholding tax as set out above, (ii) in the event of the Medium Term Notes not being or ceasing to be quoted
Eurobonds exempt from withholding tax, if the Issuer is a qualifying company within the meaning of Section 110 of
the 1997 Act, or (iii) if the Issuer has ceased to be a qualifying company, the recipient of the interest is a company.
Notwithstanding these exemptions from income tax, a corporate recipient that carries on a trade in Ireland through a
branch or agency in respect of which the Medium Term Notes are held or attributed, may have a liability to Irish
corporation tax on the interest.
A Medium Term Noteholder receiving interest on the Medium Term Notes which does not fall within the above
exemptions may be liable in respect of Irish income tax.
Capital gains Tax
A holder of Medium Term Notes will be subject to Irish tax on capital gains on a disposal of Medium Term Notes
unless such holder is neither resident nor ordinarily resident in and does not carry on a trade in Ireland through a
branch or agency in respect of which the Medium Term Notes are used or held.
Capital acquisitions Tax
A gift or inheritance comprising of Medium Term Notes will be within the charge to capital acquisitions tax if either
(i) the disponer or the donee/successor in relation to the gift or inheritance is resident or ordinarily resident in Ireland
(or, in certain circumstances, if the disponer is domiciled in Ireland irrespective of his residence or that of the
donee/successor) or (ii) if the Medium Term Notes are regarded as property situate in Ireland. Bearer Medium Term
Notes are generally regarded as situated where they are physically located at any particular time. Registered Medium
Term Notes are generally regarded as situated where the principal register of Medium Term Noteholders is
maintained or is required to be maintained, but the Medium Term Notes may be regarded as situated in Ireland
regardless of their physical location or the location of the register as they secure a debt due by an Irish resident
debtor and they may be secured over Irish property. Accordingly, if such Medium Term Notes are comprised in a
gift or inheritance, the gift or inheritance may be within the charge to tax regardless of the residence status of the
disponer or the donee/successor.
Stamp duty
On the basis of an exemption provided for in Section 85(2)(c) to the Stamp Duties Consolidation Act, 1999 provided
the money raised on the issue of the Medium Term Notes is used in the course of the Issuer's business no stamp duty
or similar tax is imposed in Ireland on the issue, transfer or redemption of the Medium Term Notes whether they are
represented by Global Medium Term Notes or Definitive Medium Term Notes.
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EU savings directive
The Council of the European Union has adopted a directive regarding the taxation of interest income known as the
European Union Directive on the Taxation of Savings Income (Directive 2003/48/EC).
Ireland has implemented the directive into national Law. Any Irish paying agent making an interest payment on
behalf of the Issuer to an individual, and certain residual entities defined in the 1997 Act, resident in another EU
Member State and certain associated and dependent territories of a Member State will have to provide details of the
payment to the Irish Revenue Commissioners who in turn will provide such information to the competent authorities
of the state or territory of residence of the individual or residual entity concerned.
United Kingdom Taxation
The following is a summary of the United Kingdom withholding taxation treatment at the date hereof in relation to
payments of principal and interest in respect of the Medium Term Notes. The comments do not deal with other
United Kingdom tax aspects of acquiring, holding or disposing of Medium Term Notes. The comments are made on
the assumption that the Issuer of the Medium Term Notes is not resident in the United Kingdom for United
Kingdom tax purposes. The comments further assume that all payments of interest will be made by the Issuer, even
where the Medium Term Notes are co-issued by the Issuer and the Co-Issuer, as the Co-Issuer will not receive any
proceeds from the issuance of the Medium Term Notes. The comments relate only to the position of persons who
are absolute beneficial owners of the Medium Term Notes. Prospective Medium Term Noteholders should be aware
that the particular terms of issue of any Series of Medium Term Notes as specified in the relevant Final Terms may
affect the tax treatment of that and other Series of Medium Term Notes. The following is a general guide and should
be treated with appropriate caution. Medium Term Noteholders who are in any doubt as to their tax position should
consult their professional advisers. Medium Term Noteholders who may be liable to taxation in jurisdictions other
than the United Kingdom in respect of their acquisition, holding or disposal of the Medium Term Notes are
particularly advised to consult their professional advisers as to whether they are so liable (and if so under the Laws
of which jurisdictions), as the following comments relate only to certain United Kingdom taxation aspects of
payments in respect of the Medium Term Notes. In particular, Medium Term 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 Medium
Term Notes even if such payments may be made without withholding or deduction for or on account of taxation
under the Laws of the United Kingdom.
UK withholding Tax on interest payments by the Issuer
Interest on Medium Term Notes issued for a term of one year or more (or under arrangements the effect of which is
to render the Medium Term Notes part of a borrowing with a total term of one year or more) may be paid by the
Issuer without withholding or deduction for or on account of United Kingdom income tax except in circumstances
where such interest has a United Kingdom source. Interest on Medium Term Notes may have a United Kingdom
source where, for example, the Medium Term Notes are secured on assets situate in the United Kingdom or the
interest is paid out of funds maintained in the United Kingdom.
Interest which has a United Kingdom source ("UK interest") may be paid by the Issuer without withholding or
deduction for or on account of United Kingdom income tax if the Medium Term Notes in respect of which the UK
interest is paid constitute quoted Eurobonds. Medium Term Notes which are issued by a company (Medium Term
Notes which are issued by the Issuer will satisfy this requirement and Medium Term Notes which are co-issued by
the Issuer and the Co-Issuer should satisfy this requirement) and carry a right to interest will constitute quoted
Eurobonds provided they are and continue to be listed on a recognised stock exchange. On the basis of the United
Kingdom HM Revenue & Custom's published interpretation of the relevant legislation, Medium Term Notes which
are to be listed on a stock exchange in a country which is a Member State of the European Union will satisfy this
requirement if they are listed by a competent authority in that country and are admitted to trading on a recognised
stock exchange in that country. The Irish Stock Exchange is a recognised stock exchange for these purposes.
In all other cases, UK interest on the Medium Term Notes may, if it is treated as having a UK source, fall to be paid
under deduction of United Kingdom income tax at the lower rate (currently 20%) subject to such relief as may be
available under the provisions of any applicable double taxation treaty or to any other exemption which may apply.
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Other rules relating to United Kingdom withholding Tax
Where interest has been paid under deduction of United Kingdom income tax, Medium Term Noteholders who are
not resident in the United Kingdom may be able to recover all or part of the tax deducted if there is an appropriate
provision in any applicable double taxation treaty.
The references to "interest" in this United Kingdom Taxation section mean "interest" as understood in United
Kingdom tax Law. The statements in this United Kingdom Taxation section do not take any account of any different
definitions of "interest" or "principal" which may prevail under any other Law or which may be created by the
Conditions or any related documentation.
The above description of the United Kingdom withholding tax position assumes that there will be no substitution of
the Issuer and does not consider the tax consequences of any such substitution.
Provision of information
Medium Term Noteholders should note that where any interest on Medium Term Notes is paid to them (or to any
person acting on their behalf) by any person in the United Kingdom acting on behalf of the Issuer (a "paying
agent"), or is received by any person in the United Kingdom acting on behalf of the relevant Medium Term
Noteholder (other than solely by clearing or arranging the clearing of a cheque) (a "collecting agent"), then the
Issuer, the paying agent or the collecting agent (as the case may be) may, in certain cases, be required to supply to
the United Kingdom HM Revenue & Customs details of the payment and certain details relating to the Medium
Term Noteholder (including the Medium Term Noteholder's name and address). These provisions will apply
whether or not the interest has been paid subject to withholding or deduction for or on account of United Kingdom
income tax and whether or not the Medium Term Noteholder is resident in the United Kingdom for United Kingdom
taxation purposes. Where the Medium Term Noteholder is not so resident, the details provided to the United
Kingdom HM Revenue & Customs may, in certain cases, be passed by the United Kingdom HM Revenue &
Customs to the tax authorities of the jurisdiction in which the Medium Term Noteholder is resident for taxation
purposes.
The provisions referred to above may also apply, in certain circumstances, to payments made on redemption of any
Medium Term Notes where the amount payable on redemption is greater than the issue price of the Medium Term
Notes.
EU Savings Tax Directive
Under EC Council Directive 2003/48/EC on the taxation of savings income, each member state is required to
provide to the tax authorities of another member state details of payments of interest or other similar income paid by
a person within its jurisdiction to, or collected by such a person for, an individual resident in that other member
state. However, Austria, Belgium and Luxembourg are required instead to apply a withholding system for a
transitional period in relation to such payments, deducting tax at rates rising over time to 35%. The transitional
period terminates at the end of the first full fiscal year following agreement by certain non-EU countries to the
exchange of information relating to such payments. A number of non-EU countries and territories, including
Switzerland, have agreed to adopt similar measures (a withholding in the case of Switzerland). Therefore payment
of interest on the Medium Term Notes which is made or collected through Belgium, Luxembourg, Austria or any
other relevant country may be subject to withholding tax which would prevent holders of Medium Term Notes from
receiving interest on the Medium Term Notes in full.
German Taxation
The following is a general discussion of certain German tax consequences of the acquisition and ownership of
Medium Term Notes. It does not purport to be a comprehensive description of all tax considerations that may be
relevant to a decision to purchase Medium Term Notes, and, in particular, does not consider any specific facts or
circumstances that may apply to a particular purchaser. This summary is based on the Laws of Germany currently in
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force and as applied on the date of this Information Memorandum, which are subject to change, possibly with
retroactive or retrospective effect.
Prospective purchasers of Medium Term Notes are advised to consult their own tax advisors as to the tax
consequences of the purchase, ownership and disposition of Medium Term Notes, including the effect of any
state or local taxes, under the tax Laws of Germany and each country of which they are residents.
Tax residents
Payments of interest on the Medium Term Notes, including interest having accrued up to the disposition of a
Medium Term Note and credited separately ("Accrued Interest"), if any, to persons who are tax residents of
Germany (i.e. persons whose residence, habitual abode, statutory seat, or place of effective management and control
is located in Germany) are subject to German personal or corporate income tax (plus solidarity surcharge
(Solidaritätszuschlag)) at a rate of 5.5 per cent thereon. Such interest may also be subject to trade tax if the Medium
Term Notes form part of the property of a German trade or business. Accrued Interest paid upon the acquisition of a
Medium Term Note may give rise to negative income if the Medium Term Note is held as a non-business asset.
Upon the disposition, assignment or redemption of a Medium Term Note, a holder holding the Medium Term Note
as a non-business asset will have to include in his taxable income further amounts if the Medium Term Note can be
classified as a financial innovation (Finanzinnovation) under German tax Law (including, among other things,
Floating Rate Medium Term Notes and Medium Term Notes being traded "flat", i.e. without Accrued Interest being
credited separately). In this case, generally the difference between the proceeds from the disposition, assignment or
redemption and the issue or purchase price is deemed to constitute interest income subject to income tax (plus the
solidarity surcharge) in the year of the disposition, assignment or maturity of the Medium Term Note. Where
Medium Term Notes are issued in a currency other than Euro the difference will be computed in the foreign
currency and will then be converted into Euro. Alternatively, the holder of the Medium Term Note may show that
such difference exceeds the difference between the redemption amount and the issue price of the Medium Term
Note to the extent attributable to the period over which he has held such Medium Term Note. In this case only the
lower pro-rated initial yield to maturity, if such amount is fixed at the time of issue, minus interest (including
Accrued Interest) already taken into account, is taxed as interest income.
Where a Medium Term Note forms part of the property of a German trade or business, each year the part of the
difference between the issue or purchase price of the Medium Term Note and its redemption amount (if such amount
is fixed at the time of the acquisition) attributable to such year as well as interest accrued must be taken into account
as interest income and may also be subject to trade tax.
Capital gains from the disposition of Medium Term Notes, other than income described in the second paragraph
above, are only taxable to a German tax-resident individual if the Medium Term Notes are disposed of within one
year after their acquisition or form part of the property of a German trade or business, in which case the capital gains
may also be subject to trade tax. Capital gains derived by German-resident corporate holders of Medium Term Notes
will be subject to corporate income tax (plus solidarity surcharge at a rate of 5.5 per cent thereon) and trade tax.
Provided that the Medium Term Notes qualify as registered notes (Namensschuldverschreibung) under German
Law, no withholding tax will be levied on the interest, since the obligor of the Medium Term Notes is not a German
branch of a German or non-German bank or financial services institution.
If the Medium Term Notes do not qualify as registered notes under German Law and are held in a custodial account
that the Medium Term Noteholder maintains with a German branch of a German or non-German bank or financial
services institution (the "Disbursing Agent") a 30 per cent (plus 5.5 per cent solidarity surcharge on thereon i.e.
effectively 31.65 per cent) withholding tax on interest payments will be levied (Zinsabschlag). If Medium Term
Notes are not kept in a custodial account with a Disbursing Agent, withholding tax will apply at a rate of 35 per
cent. (plus 5.5 per cent. solidarity surcharge thereon, i.e. effectively 36.925 per cent) of the gross amount of interest
paid by a Disbursing Agent upon presentation of a coupon (Tafelgeschäft). In both cases withholding tax on interest
is also imposed on Accrued Interest. Further, special withholding tax rules would apply to Medium Term Notes that
qualify as financial innovations, as explained above, and to the sale of coupons.
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Withholding tax and the solidarity surcharge thereon are credited as prepayments against the German personal or
corporate income tax and the solidarity surcharge liability of the German resident. Amounts over withheld will
entitle the Noteholder to a refund, based on an assessment to tax.
Non-residents
Interest, including Accrued Interest, and capital gains are not subject to German taxation, unless (i) the Medium
Term Notes form part of the business property of a permanent establishment, including a permanent representative,
or a fixed base maintained in Germany by the holder of a Medium Term Note; or (ii) the interest income otherwise
constitutes German-source income (such as income from the letting and leasing of certain German-situs property).
In cases (i) and (ii) a tax regime similar to that explained above under "Tax residents" applies. Capital gains from the
disposition of Medium Term Notes other than proceeds from their sale or redemption re-characterised as interest
income for German tax purposes (as explained above under "Tax residents") are, however, only taxable in the case
of (i) above.
Non-residents of Germany are, in general, exempt from German withholding tax on interest and the solidarity
surcharge thereon. However, if the Medium Term Notes would not qualify as registered notes
(Namensschuldverschreibung) under German Law, withholding tax is levied as explained above under "Tax
residents". The withholding tax may be refunded based on an assessment to tax or under an applicable tax treaty.
Inheritance and gift Tax; other Taxes
No inheritance or gift taxes with respect to any Medium Term Note will arise under the Laws of Germany, if, in the
case of inheritance tax, neither the decedent nor the beneficiary, or, in the case of gift tax, neither the donor nor the
donee, is a resident of Germany and such Medium Term Note is not attributable to a German trade or business for
which a permanent establishment is maintained, or a permanent representative has been appointed, in Germany.
Exceptions from this rule apply to certain German expatriates.
No stamp, issue, registration or similar taxes or duties will be payable in Germany in connection with the issuance,
delivery or execution of the Medium Term Notes. Currently, net assets tax is not levied in Germany.
EU Savings Tax Directive
The EU Savings Tax Directive applies as explained under "United Kingdom Taxation" above.
Taxation according to the German Investment Tax Act (Investmentsteuergesetz)
According to the Issuer's Investments and the Investment Objectives as defined and described in this Information
Memorandum, the Issuer's portfolio of investments will, in particular, consist of Debt Securities, Investment
Derivatives, Cash Equivalents and Financing Transactions which fall in the scope of the German Investment Act
(Investmentgesetz). Further, it is likely that the Issuer's Investments comply with the principle of risk diversification
(Grundsatz der Risikomischung) according to the German Investment Act. Therefore, there is a significant risk that
(i) the Issuer qualifies as a foreign investment fund and (ii) the Medium Term Notes are deemed as foreign
investment units (Investmentanteile) under German Law. In this case, Medium Term Noteholders, who are subject
to German taxation as described above, would be taxed according to the German Investment Tax Act
(Investmentsteuergesetz). The German Investment Tax Act provides for a punitive lump-sum taxation of the
Medium Term Noteholder and excludes the latter from certain tax privileges. This could only be avoided if the
Issuer complies with certain additional reporting requirements based on German tax and accounting rules which is
not feasible for the Issuer on a general basis.
Prospective purchasers of Medium Term Notes are advised to consult their own tax advisors concerning the
application of the German Investment Tax Act.
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United States income Tax considerations
General
NOTICE PURSUANT TO IRS CIRCULAR 230
NEITHER THE DISCUSSION BELOW NOR ANY OTHER STATEMENTS MADE IN THIS INFORMATION
MEMORANDUM OR THE FINAL TERMS FOR ANY SERIES ARE INTENDED OR WRITTEN BY THE
ISSUERS OR THEIR COUNSEL TO BE USED, AND CANNOT BE USED, BY ANY PERSON FOR THE
PURPOSE OF AVOIDING TAX PENALTIES THAT MAY BE IMPOSED UNDER U.S. TAX LAWS. THIS
DISCUSSION IS PROVIDED TO SUPPORT THE PROMOTION OR MARKETING BY THE ISSUER OF THE
MEDIUM TERM NOTES OFFERED HEREBY. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON
THE TAXPAYER'S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR
CONCERNING THE POTENTIAL TAX CONSEQUENCES OF AN INVESTMENT IN THE MEDIUM TERM
NOTES ISSUED UNDER THE PROGRAMME.
The matters described herein and the associated tax strategies are not confidential, proprietary or exclusive.
Notwithstanding anything to the contrary herein, there is no limitation on the disclosure by any recipient of this
Information Memorandum or any Final Terms of the tax treatment or tax structure of any transaction described
herein.
The following summary describes the principal U.S. federal income tax consequences of the purchase, ownership
and disposition of Medium Term Notes by U.S. Holders (as defined below). This summary does not purport to be a
comprehensive description of all the tax considerations that may be relevant to a particular investor's decision to
purchase the Medium Term Notes. For example, the specific U.S. federal income tax considerations applicable to
financial institutions, regulated investment companies, entities that are treated as partnerships or trusts for U.S.
federal income tax purposes or partners or beneficiaries thereof, dealers in securities or currencies, traders in
securities, life insurance companies, tax exempt entities, and U.S. expatriates are not discussed here. In addition, this
summary does not describe any tax consequences arising under the Laws of any state, locality or taxing jurisdiction
other than the U.S. federal income tax Laws. In general, the summary assumes that a U.S. Holder holds a Medium
Term Note as a capital asset and not as part of a hedge, straddle, or conversion transaction within the meaning of
Section 1258 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), and has as its "functional
currency" the U.S. dollar.
The U.S. federal income tax considerations applicable to the purchase, ownership and disposition of index-linked
interest notes, and any other special U.S. federal income tax considerations applicable to any issuance of Medium
Term Notes offered hereunder, will be described in the Final Terms relating thereto.
This summary is based on the Code, regulations (final, temporary and proposed), administrative rulings and practice
and judicial decisions in effect or available on the date of this Information Memorandum. All of the foregoing are
subject to change or differing interpretation at any time, which change or interpretation may apply retroactively and
could affect the continued validity of this summary.
This summary is included herein for general information only. There can be no assurance that the U.S. Internal
Revenue Service (the "IRS") will agree that the U.S. federal income tax consequences of an investment in the
Medium Term Notes are as described herein. ACCORDINGLY, PROSPECTIVE PURCHASERS OF THE
MEDIUM TERM NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO U.S.
FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF MEDIUM TERM NOTES, AND THE POSSIBLE APPLICATION OF STATE, LOCAL, OR NON-U.S.
TAX LAWS.
As used in this section, the term "U.S. Holder" means a beneficial owner of a Medium Term Note that, for U.S.
federal income tax purposes, is or is treated as a citizen or individual resident alien of the United States of America,
an entity taxed as a corporation, created or organised in or under the Laws of the United States of America, any State
thereof, or the District of Columbia, an estate the income of which is includible in gross income for U.S. federal
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income tax purposes regardless of its source, or a trust if a court within the United States of America is able to
exercise primary supervision over its administration and one or more U.S. persons have the authority to control all
substantial decisions of such trust or the trust has validly elected to be treated as a United States person for U.S.
federal tax purposes.
U.S. Tax treatment of the Issuer and Co-Issuer
The Issuer will be treated as a non-U.S. corporation for U.S. federal income tax purposes, and it will make no
elections to the contrary. A non-U.S. corporation which is engaged in a United States trade or business is subject to
United States federal income tax (and generally United States branch profits tax) on its income which is effectively
connected with such trade or business. The Issuer does not expect to be subject to such tax because compliance with
certain provisions of the Management Agreement and related certifications is intended to prevent the Issuer from
being engaged in a United States trade or business for this purpose. However, it is not certain that no such tax will
apply or that the IRS would not take a contrary position. For example, the Issuer may own indebtedness secured by
U.S. real estate and could acquire such real estate in a foreclosure of the indebtedness. If the real estate was sold at a
gain to the Issuer, such gain would be subject to U.S. tax. If the IRS were to successfully contend that the Issuer is
engaged in a U.S. trade or business, the Issuer would likely be subject to U.S. income tax and branch profits tax on
its net income.
Under Section 881 of the Code, a non-U.S. corporation that does not conduct a trade or business in the United States
is nonetheless subject to tax at a flat rate of 30% (or, if applicable, a lower tax treaty rate) on the gross amount of
certain items of U.S. source income. This gross basis tax is generally collected through withholding by the payor of
the income. Income subject to U.S. gross basis taxation is income of a fixed or determinable annual or periodic
nature, including certain interest income. There is an income tax treaty between the United States and Ireland but it
may not apply to reduce this withholding tax. Nevertheless, the Issuer expects that the "portfolio interest" exception
to U.S. withholding tax described in the following paragraph generally will apply to its U.S. source interest income.
Certain types of income of a non-U.S. corporation are specifically exempted from the 30% tax and thus withholding
is not required on payments of these types of income. The 30% tax does not apply to U.S. source capital gains
(whether long-term or short-term) or to interest paid to a non-U.S. corporation on its deposits with U.S. banks. The
30% tax also does not apply to interest that qualifies as "portfolio interest". The term "portfolio interest" generally
includes interest on an obligation in registered form which has been issued after 18 July 1984 and with respect to
which the person who would otherwise be required to deduct and withhold the 30% tax receives a statement that the
beneficial owner of the obligation is not a United States person and provided that such beneficial owner is not a
controlled foreign corporation related to the obligor (within the meaning of the Code) and is not treated as owning
(directly or by attribution) 10% or more of the voting equity of the obligor, and the interest is not determined by
reference to certain contingencies (for example, the obligor's cash flow, profits or dividends). The Issuer expects to
conduct its affairs such that its income will not be subject directly to material amounts of withholding tax imposed
by the United States.
U.S. Tax treatment of U.S. Holders of Medium Term Notes
Status of the Medium Term Notes. For the purposes of Irish Law, the Medium Term Notes will be characterised as
debt of the Issuer. Under U.S. federal income tax principles, the Issuer intends to treat the Medium Term Notes as
debt for U.S. federal income tax purposes. In connection with the initial issuance of Medium Term Notes hereunder,
if the Medium Term Notes are rated "AAA" by each of S&P and Fitch and "Aaa" by Moody's (as expected) and if
the percentage of Capital Notes issued with such initial issuance of Medium Term Notes equals or exceeds a certain
percentage of the Notes, counsel to the Issuer is expected to issue an opinion that, such Medium Term Notes will
constitute debt for U.S. federal income tax purposes, assuming that each subsequent issuance of Medium Term
Notes by the Issuer will not adversely affect the characterisation as debt of such initial issuance of Medium Term
Notes (e.g. assuming that, immediately after each subsequent issuance of Medium Term Notes, outstanding Capital
Notes as a percentage of the total outstanding Notes of the Issuer equals or exceeds the percentage of the initial
issuance of Notes represented by Capital Notes). An opinion of counsel is not binding on the IRS, which may take
the view that such Medium Term Notes are equity of the Issuer for U.S. federal income tax purposes. The Issuer and
each holder of a Medium Term Note, by acquiring a beneficial interest therein, will agree to treat such Medium
Term Note as debt of the Issuer for U.S. federal income tax purposes.
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With regard to the characterisation for U.S. federal income tax purposes of the Medium Term Notes issued after the
initial issuance of Medium Term Notes hereunder, prospective investors should note that the characterisation of an
instrument as debt or equity for U.S. federal income tax purposes is highly factual and must be based on the
applicable Law and the facts and circumstances existing at the time such instrument is issued and material changes
from those existing at the time of the initial issuance of Medium Term Notes hereunder (e.g. a material decline in
the value of the Issuer's assets, a material adverse change in the Issuer's ability to repay the Medium Term Notes
previously issued, and/or a material decline in the proportion of the Capital Notes to the total outstanding Notes)
could affect the characterisation of the notes issued after such changes. No opinion of counsel will be provided with
respect to the characterisation for U.S. federal income tax purposes of Medium Term Notes issued after the initial
issuance until the time such Medium Term Notes are initially issued, if at all. Additionally, no ruling will be sought
from the IRS regarding this, or any other, aspect of the U.S. federal income tax treatment of the Medium Term
Notes. Accordingly, there can be no assurance that the IRS will not contend, and that a court will not ultimately
hold, that Medium Term Notes are equity in the Issuer. If the Medium Term Notes were treated as equity in, rather
than debt of, the Issuer for U.S. federal income tax purposes, U.S. Holders of such Medium Term Notes would be
subject to taxation under rules substantially the same as those set forth in the Capital Notes Information
Memorandum under "United States income Tax considerations—Capital Notes treated as equity for federal income
Tax purposes (the "Equity Capital Notes")" with respect to treatment as equity of the Junior Capital Notes, which
could cause adverse tax consequences upon sale, exchange, redemption, retirement or other taxable disposition of, or
the receipt of certain types of distributions on, the Medium Term Notes by a U.S. Holder of such Medium Term
Notes.
The discussion below assumes that the Medium Term Notes are characterised as debt for U.S. federal tax purposes.
INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE
CHARACTERISATION OF THE NOTES FOR U.S. FEDERAL TAX PURPOSES.
The following discussion is based in part on the rules governing original issue discount ("OID") that are set forth in
Sections 1271 through 1273 and 1275 of the Code and in Treasury regulations issued thereunder (the "OID
Regulations"). The OID Regulations, however, do not adequately address certain issues relevant to securities such
as the Medium Term Notes.
Medium Term Notes treated as debt for federal income Tax purposes
Taxation of Interest Income. Stated interest on the Medium Term Notes that is considered "unconditionally payable"
(as described below) will be includible in income by a U.S. Holder when received or accrued in accordance with
such U.S. Holder's method of tax accounting. If interest that is considered unconditionally payable is paid with
respect to a Medium Term Note issued in a Specified Currency other than the U.S. dollar (a "Foreign Currency
Note"), the amount of interest income realised by a U.S. Holder that uses the cash method of tax accounting will be
the U.S. dollar value of the Specified Currency payment based on the exchange rate in effect on the date of receipt,
regardless of whether the payment in fact is converted into U.S. Dollars. A U.S. Holder that uses the accrual method
of accounting for tax purposes will accrue stated interest that is considered unconditionally payable on the Medium
Term Note in the relevant Specified Currency and translate the amount accrued into U.S. Dollars based on the
average exchange rate in effect during the Interest Period (or portion thereof within the U.S. Holder's taxable year),
or, at the accrual basis U.S. Holder's election, at the spot rate of exchange on the last day of the accrual period (or
the last day of the U.S. Holder's taxable year within such accrual period if the accrual period spans more than one
taxable year), or at the spot rate of exchange on the date of receipt, if such date is within five business days of the
last day of the accrual period. A U.S. Holder that makes such election must apply it consistently to all debt
instruments from year to year and cannot change the election without the consent of the IRS. A U.S. Holder that
uses the accrual method of accounting for tax purposes will recognise foreign currency gain or loss, as the case may
be, on the receipt of an interest payment made with respect to a Foreign Currency Note if the exchange rate in effect
on the date the payment is received differs from the rate applicable to a previous accrual of that interest income. This
foreign currency gain or loss will be treated as ordinary income or loss but generally will not be treated as an
adjustment to interest income received on the Foreign Currency Note.
If the "issue price" of any Medium Term Note is less than the "stated redemption price at maturity" ("SRPM")
of such Medium Term Note, the excess of the SRPM over the issue price may constitute OID. The "issue price" of a
particular issue of Medium Term Notes will be the first price at which a substantial amount of such Medium Term
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Notes is purchased by investors other than bond houses, brokers or similar persons acting in the capacity of
underwriters, placement agents or wholesalers. Under a de minimis rule, if the excess of the SRPM of such Medium
Term Note over its issue price is less than one-fourth of one percent of the SRPM of such Medium Term Note
multiplied by the weighted average maturity determined under applicable Treasury regulations, such Medium Term
Note will not be treated as issued with OID. For purposes of determining the weighted average maturity of a
Medium Term Note, the Issuer will be deemed to exercise any Issuer Call Option in a manner that minimises the
yield to maturity of the Medium Term Note, and holders will be deemed to exercise any Put Option in a manner that
maximises the yield to maturity of the Medium Term Note. If any Medium Term Notes are in fact issued at a greater
than de minimis discount or are otherwise treated as having been issued with OID, the excess of the SRPM of such
Medium Term Notes over their issue price will constitute OID. Under the Code, U.S. Holders of Medium Term
Notes issued with OID would be required to include the daily portions of OID in income as interest over the term of
such Medium Term Notes under a constant yield method that reflects the time value of money, regardless of such
U.S. Holder's method of accounting and without regard to the timing of actual payments. For this purpose, the term
of the Medium Term Notes over which OID would be required to be included in a U.S. Holder's income will be
assumed to be the term determined applying the rules with respect to the deemed exercise of Issuer Call Options and
Put Options described above.
Treasury regulations provide, for purposes of determining whether a debt instrument is issued with OID, that stated
interest must be included in the SRPM of the debt instrument if such interest is not "unconditionally payable".
Interest is considered "unconditionally payable" if reasonable legal remedies exist to compel timely payment or the
terms and conditions of the debt instrument make the likelihood of late payment (other than late payment that occurs
within a reasonable grace period) or non-payment (ignoring the possibility of non-payment due to default,
insolvency or similar circumstances) a remote contingency. In the case of an issue of Medium Term Notes for which
no reasonable legal remedies exist to compel timely payment, the Issuer may nonetheless, pursuant to its
interpretation of the foregoing rules and the specific terms and conditions of the particular issue of Medium Term
Notes, take the position that the late payment or non-payment of interest on any such Medium Term Notes on any
Payment Date is a remote contingency. Thus, the Issuer's position would be that payments of interest on such
Medium Term Notes are considered unconditionally payable, and thus not included in the SRPM of such Medium
Term Notes.
If interest on any Medium Term Notes is not considered "unconditionally payable" but such Medium Term Notes
are issued at an issue price equal to their principal amount, the Issuer intends to treat such Medium Term Notes as
subject to a special rule for debt instruments issued with OID that nonetheless have a fixed yield. In such event, the
Issuer would take the position that, in accordance with such rule, the amount of OID that accrues on such Medium
Term Notes in each accrual period is equal to the amount of stated interest that accrues on such Medium Term Notes
during such period.
If a Medium Term Note that is issued with OID has an issue price less than its principal amount, then the Medium
Term Note may be subject to an income accrual method applicable to debt instruments whose payments are subject
to acceleration (prescribed by section 1272(a)(6) of the Code) using an assumption as to the expected prepayments
on such Medium Term Notes as a result of prepayments of the Issuer's investments (the "PAC Method"). The OID
Regulations do not, however, provide sufficient rules to determine accruals of OID on such Medium Term Notes if
the timing of principal payments on such Medium Term Notes could not be determined as of their issue date. In the
absence of definitive guidance, the Issuer will treat any Medium Term Notes issued with OID whose principal
payments are contingent as to time as subject to an income accrual method analogous to the PAC Method and the
method applicable to debt instruments having payments that are contingent as to amount but not as to time. Under
such method, the assumption as to expected prepayments on such Medium Term Notes would be reflected on a
projected payment schedule prepared by the Issuer. The projected payment schedule will be utilised solely to
determine the amount of OID to be included in income annually by U.S. Holders of such Medium Term Notes. As
such, the calculation of the projected payment schedule would be based on a number of assumptions and estimates
and is not a prediction of the actual amounts of payments on the such Medium Term Notes or of the actual yield of
the such Medium Term Notes. In any case, however, the Issuer's determination would not be binding on the IRS.
Special rules may apply for purposes of determining whether Medium Term Notes are issued with OID if such
Medium Term Notes have a method of calculating interest that varies between the issue date and the maturity date of
the relevant Series. For example, if interest is calculated at more than one Fixed Rate during different periods of
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time, interest in excess of the lowest of such Fixed Rates is generally required to be added to the SRPM of such
Medium Term Notes. Any special rules for determining OID on a Medium Term Note that provides for interest
determined on the basis of two or more Floating Rates or one or more Fixed Rates and one or more Floating Rates
will be described in the applicable Final Terms.
In the case of a Medium Term Note issued with OID that is also a Foreign Currency Note, a U.S. Holder should
determine the U.S. dollar amount includible in income as OID for each accrual period by (a) calculating the amount
of OID allocable to each accrual period in the Specified Currency using the constant-yield method described above,
and (b) translating the amount of the Specified Currency so derived at the average exchange rate in effect during that
accrual period (or portion thereof within a U.S. Holder's taxable year) or, at the U.S. Holder's election (as described
above under "Payments of Interest"), at the spot rate of exchange on the last day of the accrual period (or the last day
of the U.S. Holder's taxable year within such accrual period if the accrual period spans more than one taxable year),
or at the spot rate of exchange on the date of receipt, if such date is within five business days of the last day of the
accrual period. Because exchange rates may fluctuate, a U.S. Holder of a Medium Term Note issued with OID that
is also a Foreign Currency Note may recognise a different amount of OID income in each accrual period than would
the holder of an otherwise similar Medium Term Note denominated in U.S. Dollars. Upon the receipt of an amount
attributable to OID (whether in connection with a payment of an amount that is not treated as unconditionally
payable or the sale or retirement of the Medium Term Note), a U.S. Holder will recognise ordinary income or loss
measured by the difference between the amount received (translated into U.S. Dollars at the exchange rate in effect
on the date of receipt or on the date of disposition of the Medium Term Note, as the case may be) and the amount
accrued (using the exchange rate applicable to such previous accrual).
Short-Term Medium Term Notes. The rules set forth above will also generally apply to Medium Term Notes having
maturities of not more than one year ("Short-Term Medium Term Notes"), but with certain modifications
described below.
First, the OID Regulations treat none of the interest on a Short-Term Medium Term Note as interest that is
unconditionally payable (but instead treat such interest payments as part of the Short-Term Medium Term Note's
stated redemption price at maturity, thereby giving rise to OID). Thus, all Short-Term Medium Term Notes will be
treated as Medium Term Notes issued with OID. OID will be treated as accruing on a Short-Term Medium Term
Note ratably, or at the election of a U.S. Holder, under a constant yield method.
Second, a U.S. Holder of a Short-Term Medium Term Note that uses the cash method of tax accounting and is not a
bank, securities dealer, regulated investment company or common trust fund, and does not identify the Short-Term
Medium Term Note as part of a hedging transaction, will generally not be required to include OID in income on a
current basis. Such a U.S. Holder may not be allowed to deduct all of the interest paid or accrued on any
indebtedness incurred or maintained to purchase or carry such Short-Term Medium Term Note until the Stated
Maturity of the Short-Term Medium Term Note or its earlier disposition in a taxable transaction. In addition, such a
U.S. Holder will be required to treat any gain realized on a sale, exchange or retirement of the Short-Term Medium
Term Note as ordinary income to the extent such gain does not exceed the OID accrued with respect to the ShortTerm Medium Term Note during the period the U.S. Holder held the Short-Term Medium Term Note.
Notwithstanding the foregoing, a cash-basis U.S. Holder of a Short-Term Medium Term Note may elect to accrue
OID in income on a current basis (in which case the limitation on the deductibility of interest described above will
not apply). A U.S. Holder using the accrual method of tax accounting and certain cash-basis U.S. Holders
(including banks, securities dealers, regulated investment companies and common trust funds) generally will be
required to include OID on a Short-Term Medium Term Note in income on a current basis.
Third, any U.S. holder (whether cash or accrual basis) of a Short-Term Medium Term Note can elect to accrue the
"acquisition discount," if any, with respect to the Short-Term Medium Term Note on a current basis. If such an
election is made, the OID rules will not apply to the Short-Term Medium Term Note. Acquisition discount is the
excess of the remaining redemption amount of the Short-Term Medium Term Note at the time of acquisition over
the purchase price. Acquisition discount will be treated as accruing ratably or, at the election of the U.S. holder,
under a constant-yield based on daily compounding.
Sale or disposition of the Medium Term Notes. In general a U.S. Holder of a Medium Term Note will have a basis in
such Medium Term Note equal to the cost of the Medium Term Note to such U.S. Holder, increased by any amount
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includible in income by such U.S. Holder as OID and reduced by any payments of principal or interest on its
Medium Term Note (other than payments of stated interest that are not required to be included in the SRPM of such
Medium Term Note). In the case of a Foreign Currency Note, the cost of such Medium Term Note to a U.S. Holder
will be the U.S. dollar value of the Specified Currency purchase price on the date of purchase. In the case of a
Foreign Currency Note that is traded on an established securities market, a cash basis U.S. Holder (and, if it so
elects, an accrual basis U.S. Holder) will determine the U.S. dollar value of the cost of such Foreign Currency Note
by translating the amount paid at the spot rate of exchange on the settlement date of the purchase. The conversion of
U.S. Dollars to a Specified Currency and the immediate use of the Specified Currency to purchase a Foreign
Currency Note generally will not result in taxable gain or loss for a U.S. Holder.
Upon the sale, exchange, redemption or retirement of a Medium Term Note, a U.S. Holder will recognise taxable
gain or loss, if any, generally equal to the difference between the amount realised on the sale, exchange, redemption
or retirement (other than accrued stated interest, which interest will be taxable as such) and such U.S. Holder's
adjusted tax basis in such Medium Term Note. If a U.S. Holder receives a Specified Currency other than the U.S.
dollar in respect of the sale, exchange, redemption or retirement of a Medium Term Note, the amount realised will
be the U.S. dollar value of the Specified Currency received calculated at the exchange rate in effect on the date the
instrument is disposed of or retired. In the case of a Foreign Currency Note that is traded on an established securities
market, a cash basis U.S. Holder, and if it so elects, an accrual basis U.S. Holder will determine the U.S. dollar value
of the amount realised by translating such amount at the spot rate on the settlement date of the sale. The election
available to accrual basis U.S. Holders in respect of the purchase and sale of Foreign Currency Notes traded on an
established securities market, discussed above, must be applied consistently to all debt instruments from year to year
and cannot be changed without the consent of the IRS.
Except as discussed below with respect to foreign currency gain or loss, any gain or loss upon the sale, exchange,
redemption or retirement of a Medium Term Note will generally be long-term capital gain or loss; provided, that
such Medium Term Note was a capital asset in the hands of the U.S. Holder and had been held for the requisite
period. In certain circumstances, U.S. Holders that are individuals may be entitled to preferential treatment for net
long-term capital gains; however, the ability of U.S. Holders to offset capital losses against ordinary income is
limited.
Gain or loss recognised by a U.S. Holder on the sale, exchange, redemption or retirement of a Foreign Currency
Note generally will be treated as ordinary income or loss to the extent that the gain or loss is attributable to changes
in exchange rates during the period in which the holder held such Foreign Currency Note. This foreign currency gain
or loss will not be treated as an adjustment to interest income received on the Foreign Currency Note.
Information reporting and backup withholding
Under certain circumstances, the Code requires "information reporting", and may require "backup withholding",
with respect to certain payments made on the Medium Term Notes and the payment of the proceeds from the
disposition of the Medium Term Notes. Backup withholding generally will not apply to corporations, tax-exempt
organisations, qualified pension and profit sharing trusts, and individual retirement accounts. Backup withholding
will apply to a U.S. Holder if the U.S. Holder fails to provide certain identifying information (such as the U.S.
Holder's taxpayer identification number) or otherwise comply with the applicable requirements of the backup
withholding rules. The application for exemption from backup withholding for a U.S. Holder is available by
providing a properly completed IRS Form W-9.
Backup withholding is not an additional Tax and may be refunded (or credited against the U.S. Holder's U.S.
federal income tax liability, if any), provided that certain required information is furnished. The information
reporting requirements may apply regardless of whether withholding is required.
U.S. Tax treatment of non-U.S. Holders of Medium Term Notes
A Medium Term Noteholder that is not a United States person within the meaning of Section 7701(a)(30) of the
Code, will be exempt from any United States federal income or withholding taxes with respect to gain derived from
the sale, exchange or redemption of, or any distributions received in respect of Medium Term Notes unless such
gain or distributions are effectively connected with the conduct of a United States trade or business by the non-U.S.
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Medium Term Noteholder, or in the case of gain, such non-U.S. Medium Term Noteholder is a non-resident alien
individual who holds Medium Term Notes as a capital asset and who is present in the United States for 183 days or
more during a taxable year of the disposition, and certain other conditions are satisfied.
Payment of the proceeds from the disposition of Medium Term Notes to or through the United States office of a
broker is subject to information reporting and backup withholding unless the non-U.S. Medium Term Noteholder
establishes an exemption from information reporting and backup withholding.
Disclosure of reportable transactions.
Any U.S. Holder of Medium Term Notes that claims significant losses in respect of such Medium Term Notes
(generally U.S. $2 million or more for individuals and partnerships with one or more noncorporate partners, and
U.S. $10 million or more for corporations and partnerships consisting solely of corporate partners) in any taxable
year may be required under certain circumstances to disclose such transactions on IRS Form 8886. Recent
legislation imposes significant penalties on taxpayers who participate in such "reportable transactions" and fail to
make the required disclosure. The penalty is generally U.S. $10,000 for natural persons and U.S. $50,000 for other
persons (increased to U.S. $100,000 and U.S. $200,000, respectively, if the reportable transaction is a "listed"
transaction). Prospective investors should consult their tax advisers concerning the possible application of these
rules with respect to the Medium Term Notes.
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SUBSCRIPTION AND SALE
Medium Term Notes may be sold from time to time by the Issuer and, if applicable, the Co-Issuer, to the Medium
Term Note Dealers. The arrangements under which Medium Term Notes may from time to time be agreed to be sold
by the Issuer to, and purchased by, the Medium Term Note Dealers are set out in the Medium Term Note Dealer
Agreement. Any such agreement will, inter alia, make provision for the form and terms and conditions of the
relevant Medium Term Notes, the price at which such Medium Term Notes will be purchased by the Medium Term
Note Dealers and the commissions or other agreed deductibles (if any) payable or allowable by the Issuer in respect
of such purchase. The Medium Term Note Dealer Agreement makes provision for the resignation or termination of
appointment of existing Medium Term Note Dealers and for the appointment of additional or other Medium Term
Note Dealers either generally in respect of the Programme or in relation to a particular Tranche of Medium Term
Notes.
Medium Term Notes offered and sold in the United States pursuant to Rule 144A under the Securities Act will be
offered by the U.S. Medium Term Note Dealers listed on the cover of this Information Memorandum and Medium
Term Notes sold pursuant to Regulation S in "offshore transactions" will be offered by the Euro Medium Term Note
Dealers listed on the cover of this Information Memorandum.
Each prospective initial purchaser of the Medium Term Notes offered in reliance on Rule 144A and each
prospective initial purchaser of the Medium Term Notes offered in reliance on Regulation S under the Securities Act
(collectively, the "Initial Offerees") will be deemed to have represented, acknowledged and agreed as follows:
(a)
The Initial Offeree acknowledges that this Information Memorandum (together with any relevant Final
Terms and any relevant Supplemental Information Memorandum (collectively, the "Offering
Documents")) is personal to the Initial Offeree and does not constitute an offer to any other person or to
the public generally to subscribe for or otherwise acquire the Medium Term Notes other than pursuant to
Rule 144A under the Securities Act or in offshore transactions in accordance with Regulation S.
Distribution of the Offering Documents or disclosure of any of their contents to any person other than the
Initial Offeree and those persons, if any, retained to advise the Initial Offeree with respect thereto and other
persons meeting the requirements of Rule 144A, Regulation S or another exemption to the registration
requirements of the Securities Act is unauthorised and any disclosure of any of the contents of the Offering
Documents, without the prior written consent of the Issuer, is prohibited, except where required by
applicable Law.
(b)
The Initial Offeree agrees to make no photocopies of the Offering Documents or any documents referred to
herein or therein and, if received in any electronic format, agrees not to disclose or alter the contents of the
Offering Documents or to forward a copy of all or any portion hereof or thereof by electronic mail or any
other means to any person other than the person receiving electronic transmission hereof or thereof from
the Medium Term Note Dealer and any person retained to advise the person receiving such electronic
transmission with respect to the offering contemplated herein. If the Initial Offeree does not purchase the
Medium Term Notes or the offering is terminated, it agrees to return all Offering Documents and all other
documents referred to herein or therein to Rhinebridge PLC at First Floor, 7 Exchange Place, IFSC, Dublin
1, Ireland, Attention: The Directors, or, at the sole election and direction of the Medium Term Note Dealer,
to permanently delete any electronic copy thereof.
(c)
The Initial Offeree has carefully read and understands the Offering Documents, including, without
limitation, the "Risk factors" section herein, and has based its decision to purchase the Medium Term Notes
upon the information contained herein and not on any other information. The Initial Offeree is not
purchasing the Medium Term Notes with a view to the resale, distribution or other disposition thereof in
violation of the Securities Act.
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United States of America:
Initial offers and sales of Medium Term Notes
The Medium Term Notes (or beneficial interests therein) have not been, and are not expected to be, registered under
the Securities Act, the securities Laws of any state of the United States or the securities Laws of any other
jurisdiction. Neither the Issuer nor the Co-Issuer has registered nor does either intend to register as an investment
company under the Investment Company Act, in the case of the Issuer in reliance on the exception provided by
Section 3(c)(7) of the Investment Company Act.
The Medium Term Notes are being offered (i) outside of the United States to persons who are not "U.S. persons"
within the meaning of Regulation S and who also are not "U.S. residents" for purposes of the Investment Company
Act, and (ii) within the United States or to or for the account or benefit of "U.S. persons" within the meaning of
Regulation S or any "U.S. resident" for the purposes of the Investment Company Act, in reliance on the exemption
from the registration requirements of the Securities Act pursuant to Rule 144A under the Securities Act. The
Medium Term Notes may not be offered, sold or transferred within the United States or to or for the account or
benefit of any person that is a U.S. Person unless, among other things, such person is both (1) a QIB (as defined
below) and (2) a QP (as defined below), acting for its own account or the account of another QIB which is a QP, and
meets the other requirements set forth herein.
Interests in the Medium Term Notes may not be reoffered, resold, pledged or otherwise transferred unless in
transactions exempt from or not subject to the registration requirements of, the Securities Act and any other
applicable securities Laws. By its purchase or acquisition of Medium Term Notes (or beneficial interests therein),
such purchaser will represent, warrant, acknowledge and agree or, in the case of registered definitive Medium Term
Notes, will be required to certify that it will only resell or otherwise transfer such Medium Term Notes (or beneficial
interests therein) in accordance with the applicable restrictions set forth in the Medium Term Notes and herein. Any
resale or other transfer of a Medium Term Note (or beneficial interest therein) which is not made in compliance with
the transfer restrictions set forth therein shall be null and void and not honoured by the Issuer.
Representations and restrictions on purchasers and transferees
Purchasers' representations and warranties
Rule 144A Medium Term Notes:
Each person who purchases or otherwise acquires a Rule 144A Medium Term Note (or a beneficial interest therein)
represents, warrants, acknowledges and agrees (and if it is acquiring an interest in a Rule 144A Medium Term Note
in definitive form (a "Definitive Rule 144A Medium Term Note") will be required to certify), for the benefit of the
Issuer and the Co-Issuer that it and any person for which it is acting will not offer, purchase, reoffer, resell, pledge,
exchange or otherwise transfer such Rule 144A Medium Term Note or any beneficial interest therein except in
compliance with the Securities Act and all other applicable Laws of any jurisdiction and except to a person it
reasonably believes to be both a QIB (as defined below) and a QP (as defined below) in a transaction meeting the
requirements of Rule 144A under the Securities Act and the other requirements set forth herein.
Each purchaser or subsequent transferee of a Rule 144A Medium Term Note or a beneficial interest in any Rule
144A Medium Term Note shall be deemed to represent, warrant, acknowledge and agree (and if it is acquiring an
interest in a Definitive Rule 144A Medium Term Note will be required to certify) that:
(a)
it, and each person for which it is acting, is a QIB (as defined below) that is a QP (as defined below) and is
acquiring the Rule 144A Medium Term Notes (or beneficial interests therein) for its own account or for the
account or accounts of one or more other persons, each of which is a QIB and a QP and meets the other
requirements set forth herein;
(b)
it, and each person for which it is acting, is aware that the sale, resale, pledge, exchange or other transfer of
the Rule 144A Medium Term Notes (or beneficial interests therein) is being made in reliance on Rule 144A
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under the Securities Act and will so inform any subsequent purchaser or transferee of a Rule 144A Medium
Term Note or beneficial interest therein that the transfer will be made in reliance on Rule 144A;
(c)
it, and each account for which it is purchasing or otherwise acquiring such Rule 144A Medium Term Notes
(or beneficial interests therein), will purchase, hold or transfer at least U.S. $250,000 (or its equivalent in
any Specified Currency in which Rule 144A Medium Term Notes may be issued) of Rule 144A Medium
Term Notes (or beneficial interests therein);
(d)
it, and each person for which it is acting, understands that each of the Issuer and Co-Issuer has not
registered, and does not intend to register as an investment company under the Investment Company Act
and that the Issuer is relying on Section 3(c)(7) of the Investment Company Act. It, and each person for
which it is acting, also understands and agrees that each of the Issuer and the Co-Issuer shall have the right
to request and receive such additional documents, certifications, representations and undertakings, from
time to time, as the Issuer and the Co-Issuer may deem necessary in order to comply with applicable legal
requirements;
(e)
it, and each person for which it is acting, understands that any sale or transfer to a person that does not
comply with the requirements set forth in paragraphs (a) through (i) hereof will be null and void ab initio
and not honoured by the Issuer or the Co-Issuer;
(f)
it, and each person for which it is acting, agrees that the Issuer and the Co-Issuer shall be entitled to require
any holder of a Rule 144A Medium Term Note (or beneficial interest therein) that is determined not to have
been both a QIB and a QP (and to have complied with the requirements set forth in paragraphs (a) through
(i) hereof) at the time of acquisition of such Rule 144A Medium Term Note (or beneficial interest therein),
to sell such Rule 144A Medium Term Note (or beneficial interest therein), or such Rule 144A Medium
Term Note (or beneficial interest therein) may be redeemed by the Issuer in accordance with the provisions
set forth herein and under "Required Sale and Redemption" below;
(g)
it, and each person for which it is acting, will provide notice of these transfer restrictions to any subsequent
transferees and agrees not to reoffer, resell, pledge or otherwise transfer the Rule 144A Medium Term
Notes or any beneficial interests therein to any person except to a person that (i) meets all of the
requirements in paragraphs (a) through (i) hereof and (ii) agrees not to subsequently transfer the Rule 144A
Medium Term Notes or any beneficial interests therein except in accordance with these transfer
restrictions; and
(h)
it, and each person for which it is acting, understands that the Issuer may receive a list of participants from
DTC (as defined below) or any other depository holding beneficial interests in the Medium Term Notes
(i.e. in the Global Notes); and
(i)
it, and each person for which it is acting is not a "swap counterparty" or other type of intermediary whereby
any other party is acquiring an economic or beneficial interest (including a participation) in the Medium
Term Notes acquired;
"DTC" means The Depository Trust Company, currently of 55 Water Street, New York, New York 10041, USA, its
nominees, and their respective successors.
"QIB" means a "qualified institutional buyer" as defined under Rule 144A.
"QP" means a "qualified purchaser" as defined under Section 2(a)(51)(A) of the Investment Company Act and the
rules and regulations thereunder, and that is not:
(a)
a broker-dealer which owns and invests on a discretionary basis less than U.S. $25 million in securities of
issuers unaffiliated with such broker-dealer;
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(b)
a participant-directed employee plan, such as a 401(k) plan, or a trust fund holding the assets of such plan
(unless the investment decisions with respect to such plan are made solely by the fiduciary, trustee or
sponsor of such plan);
(c)
an entity formed, reformed or recapitalised for the purpose of investing in the Medium Term Notes (or
beneficial interests therein) and/or other securities of the Issuer or the Co-Issuer (unless all of the beneficial
owners of such entity's securities are both QIBs and QPs);
(d)
an investment company excepted from the Investment Company Act pursuant to Section 3(c)(1) or Section
3(c)(7) thereof (or a foreign investment company under Section 7(d) thereof relying on Section 3(c)(1) or
3(c)(7) with respect to its holders that are U.S. persons), which was formed on or before 30 April 1996,
unless it has received the consent of its beneficial owners who acquired their interests on or before 30 April
1996, with respect to its treatment as a QP in the manner required by Section 2(a)(51)(C) of the Investment
Company Act and the rules promulgated thereunder;
(e)
a: (a) partnership; (b) common trust fund; or (c) corporation, special trust, pension fund or profit sharing or
retirement plan, or other entity, in which the partners, beneficiaries, beneficial owners, participants,
shareholders or other equity owners, as the case may be, may designate the particular investments to be
made, or the allocation thereof (unless all of the beneficial owners of such entity's securities are both QIBs
and QPs); or
(f)
an entity that has invested more than 40% of its assets in the Medium Term Notes (or beneficial interests
therein) and/or other securities of the Issuer or the Co-Issuer after giving effect to the purchase of the
Medium Term Notes (or beneficial interests therein) (unless all of the beneficial owners of such entity's
securities are both QIBs and QPs).
The Issuer and the Co-Issuer will be relying on the foregoing representations and agreements with respect to the
exemption of the offering under the Securities Act and the exception of the Issuer under Section 3(c)(7) of the
Investment Company Act.
The holders of a Rule 144A Medium Term Note (or beneficial interest therein) may offer, sell or transfer such Rule
144A Medium Term Note (or beneficial interest therein) in accordance with the procedures set forth below under
"Regulation S Medium Term Notes" to a person that (1) is not a U.S. Person, (2) is taking delivery of an interest in a
Regulation S Medium Term Note in an offshore transaction meeting the requirements of Regulation S and the
transfer restrictions applicable to Regulation S Medium Term Notes set forth herein and (3) the transferee has
provided to the Transfer Agent and the Issuer the Purchaser's Letter applicable to transfers of Regulation S Medium
Term Notes (or beneficial interests therein).
In addition, each purchaser and any subsequent transferee which is a purchaser of a Rule 144A Medium Term Note
(or a beneficial interest therein) will be deemed to represent, warrant, acknowledge and agree that it, and each
person for which it is acting, understands that the Rule 144A Medium Term Notes are being offered and may be
transferred only in transactions not involving any public offering within the meaning of the Securities Act and must
be prepared to hold its Rule 144A Medium Term Note (or beneficial interest therein) until maturity.
Each purchaser or subsequent transferee of a beneficial interest in any Rule 144A Medium Term Note will be
deemed to represent, warrant and covenant (and, if it is acquiring an interest in a Rule 144A Medium Term Note in
definitive form (a "Definitive Rule 144A Medium Term Note") it will be required to certify) to the Transfer Agent,
the Issuer and the Co-Issuer that (A) either (i) it is not, and is not acting on behalf of, an ERISA Plan or other Plan,
or an entity whose underlying assets include plan assets by reason of an ERISA Plan's or other Plan's investment in
the entity within the meaning of the Plan Assets Regulation, or a governmental or other employee benefit plan which
is subject to any federal, state, local or non-U.S. Law that is substantially similar to the provisions of Title I of
ERISA or Section 4975 of the Code, or (a) its acquisition, holding and disposition of such Medium Term Note will
not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or violate
any applicable law that is substantially similar to Title I of ERISA or Section 4975 of the Code and (B) if it is
acquiring an interest in a Definitive Rule 144A Medium Term Note it will not sell or otherwise transfer such
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Medium Term Note to any person without obtaining these same representations, warranties and agreements from
such person.
As used herein:
"ERISA" means the United States Employee Retirement Income Security Act of 1974, as amended;
"ERISA Plan" means an employee benefit plan within the meaning of Section 3(3) of ERISA that is subject to Title
I of ERISA;
"other Plan" means a plan, an individual retirement account or another entity subject to Section 4975 of the Code;
and
"Plan Assets Regulation" means the regulations issued by the United States Department of Labor and found at 29
CFR Section 2510.3-101, as modified by Section 3(42) of ERISA.
No Medium Term Note may be issued as or exchanged for a bearer Definitive Medium Term Note.
Regulation S Medium Term Notes:
Each purchaser or subsequent transferee of a Regulation S Medium Term Note (or a beneficial interest therein) will
be deemed to represent, warrant, acknowledge and agree (and if it is acquiring an interest in a Definitive Regulation
S Medium Term Note will be required to certify), for the benefit of the Issuer and the Co-Issuer, that it and any
person for which it is acting will not offer, sell, reoffer, resell, pledge, exchange or otherwise transfer such
Regulation S Medium Term Note or any beneficial interest therein except in compliance with the Securities Act and
all other applicable Laws of any jurisdiction and except to a Non-U.S. Person in an offshore transaction meeting the
requirements of Regulation S under the Securities Act and the transfer restrictions applicable to Regulation S
Medium Term Notes.
Each Initial Offeree will represent and agree and each subsequent purchaser or other transferee of a beneficial
interest in any Regulation S Medium Term Note will be deemed, by its acquisition thereof, to represent, warrant,
acknowledge and agree (and if it is acquiring an interest in a registered Regulation S Medium Term Note in
definitive form (a "Definitive Regulation S Medium Term Note") will be required to certify) that:
(a)
it and each person for which it is acting is a Non-U.S. Person and is acquiring a beneficial interest in the
Notes in an offshore transaction meeting the requirements of Regulation S;
(b)
it, and each person for which it is acting will hold at least U.S. $250,000 (or its equivalent in any other
Specified Currency in which the Regulation S Medium Term Notes may be issued) of Regulation S
Medium Term Notes or beneficial interests therein;
(c)
it and each person for which it is acting is taking delivery in the form of an interest in a Regulation S
Global Medium Term Note or, if delivery is in the form of a Definitive Regulation S Medium Term Note, it
and each person for which it is acting has delivered to the Transfer Agent and the Issuer the Purchaser's
Letter applicable to transfers of Definitive Regulation S Medium Term Notes;
(d)
it and each person for which it is acting will provide notice of these transfer restrictions to any subsequent
transferee and agrees not to reoffer, resell, pledge, or otherwise transfer the Regulation S Medium Term
Notes or any beneficial interests therein to any person except to a person that (i) meets all of the
requirements in (a) through (h) hereof and (ii) agrees not to subsequently transfer the Medium Term Notes
or any beneficial interests therein except in accordance with these transfer restrictions;
(e)
it and each person for which it is acting understands that any sale or transfer to a person that does not
comply with the foregoing requirements will be null and void ab initio and not honoured by the Issuer;
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(f)
it and each person for which it is acting agrees that the Issuer shall be entitled to require any holder of a
Regulation S Medium Term Note (or beneficial interest therein), that is determined not to have been a NonU.S. Person at the time of acquisition of such Regulation S Medium Term Note (or beneficial interest
therein), to sell such Regulation S Medium Term Notes (or such beneficial interest therein) or such
Regulation S Medium Term Notes (or beneficial interest therein) may be redeemed by the Issuer in
accordance with the provisions set forth herein and under "Required Sale and Redemption" below;
(g)
it, and each person for which it is acting, understands that each of the Issuer and the Co-Issuer has not
registered, and does not intend to register as an investment company under the Investment Company Act
and that the Issuer is relying on Section 3(c)(7) of the Investment Company Act. It, and each person for
which it is acting, also understands and agrees that the Issuers shall have the right to request and receive
such additional documents, certifications, representations and undertakings, from time to time, as the Issuer
may deem necessary in order to comply with applicable legal requirements; and
(h)
it, and each person for which it is acting, understands that the Issuer will have the right to request a list of
participants holding beneficial interests in the Regulation S Global Medium Term Notes from DTC or any
other depository holding beneficial interests in the Medium Term Notes.
The Issuer and the Co-Issuer will be relying on the foregoing representations and agreements with respect to the
exemption of the offering under the Securities Act and the exception of the Issuer under Section 3(c)(7) of the
Investment Company Act.
The holder of a Regulation S Medium Term Note, and each person for which it is acting may transfer such
Regulation S Medium Term Note (or beneficial interest therein) to a person that (1) is both a QIB and a QP and
meets the other requirements herein, and (2) is taking delivery of a Rule 144A Medium Term Note in a transaction
meeting the requirements of Rule 144A and the requirements hereof with respect to Rule 144A Medium Term
Notes, and (3) has delivered to the Issuer and the Transfer Agent the Purchaser's Letter applicable to transfers of
Rule 144A Medium Term Notes.
In addition, each purchaser and any subsequent transferee of a Regulation S Medium Term Note (or a beneficial
interest therein), by its purchasing or otherwise accepting such Regulation S Medium Term Note (or beneficial
interest therein), will be deemed to represent, warrant, acknowledge and agree (and if it is acquiring an interest in a
Definitive Regulation S Medium Term Note will be required to certify) that it, and each person for which it is
acting, understands that the Regulation S Medium Term Notes are being offered and may be transferred only in
transactions not involving any public offering within the meaning of the Securities Act and must be prepared to hold
its Regulation S Medium Term Note (or beneficial interest therein) until maturity.
Each purchaser or subsequent transferee of a beneficial interest in any Regulation S Medium Term Note will be
deemed to represent, warrant, acknowledge and agree (and if it is acquiring an interest in a Definitive Regulation S
Medium Term Note it will certify to the Transfer Agent, the Issuer and the Co-Issuer) that (A) either (i) it is not, and
is not acting on behalf of, an ERISA Plan or other Plan, or an entity whose underlying assets include plan assets by
reason of an ERISA Plan's or other Plan's investment in the entity within the meaning of the Plan Assets Regulation,
or a governmental or other employee benefit plan which is subject to any federal, state, local or non-U.S. Law that is
substantially similar to the provisions of Title I of ERISA or Section 4975 of the Code, or (ii) its acquisition, holding
and disposition of such Medium Term Note will not result in a non-exempt prohibited transaction under Section 406
of ERISA or Section 4975 of the Code or violate any applicable law that is substantially similar to Title I of ERISA
or Section 4975 of the Code and (B) if it is acquiring an interest in a Definitive Regulation S Medium Term Note, it
will not sell or otherwise transfer such Medium Term Note to any person without obtaining these same
representations, warranties and agreements from such person.
Interests in Regulation S Medium Term Notes
Regulation S Medium Term Notes may not be offered, sold, delivered or otherwise transferred within the United
States or to or for the account or benefit of any U.S. Person. Any purported sale or other transfer of such beneficial
interest that does not comply with the foregoing requirement shall be null and void ab initio and not honoured by the
Issuer to the extent permitted by applicable Law.
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Required sale and redemption
The Issuer and the Co-Issuer shall be entitled to require any Person (A) that is a holder of any Rule 144A Medium
Term Note (or beneficial interest therein) that is determined not to have been, at the time of acquisition of such
Medium Term Note (or beneficial interest therein), both a QIB and a QP that meets the other requirements set forth
herein, or (B) that is a holder of a Regulation S Medium Term Note (or beneficial interest therein) that was not a
Non-U.S. Person at the time that it acquired such Medium Term Note, to sell such Medium Term Note (or beneficial
interest therein) within 30 days after notice of the sale requirement is given, to a person that either:
(a)
(i) is both a QIB and a QP that meets other requirements set forth herein, and (ii) is taking delivery of a
Rule 144A Medium Term Note in a transaction meeting the requirements of Rule 144A and the
requirements hereof with respect to Rule 144A Medium Term Notes; or
(b)
(i) is not a U.S. Person, and (ii) is taking delivery of an interest in a Regulation S Medium Term Note in an
offshore transaction meeting the requirements of Regulation S and the requirements thereof with respect to
the Regulation S Medium Term Notes.
If such holder fails to effect the sale within such 30-day period, the Issuer shall cause such holder's Medium Term
Note (or beneficial interest therein) to be transferred in a commercially reasonable sale (conducted in accordance
with Sections 9-610, 9-611 and 9-627 of the Uniform Commercial Code as applied to securities that are sold on a
recognised market or that may decline speedily in value) to a person that meets the requirements of either (a) or (b)
above.
The Issuer may also, at its option, redeem any Medium Term Notes of any Person who at the time of acquisition did
not meet the requirements of (a) or (b) above. See Condition 9(h) (Regulatory Redemption).
Legends
Set forth below are the form of legends which shall appear on each Medium Term Note, unless the Issuer and CoIssuer, based on advice of counsel, determine otherwise in compliance with applicable Law. Such legends shall be
used to notify transferees of the foregoing restrictions on the resale or other transfer of Medium Term Notes. The
following legends may not be removed from any Medium Term Note as long as the Issuer is relying on Section
3(c)(7) of the Investment Company Act.
Rule 144A Medium Term Note: Each Rule 144A Global Medium Term Note will contain the
following legend:
"UNLESS THIS GLOBAL MEDIUM TERM NOTE IS PRESENTED BY AN AUTHORISED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER (AS DEFINED BELOW) AND, IF APPLICABLE THE CO-ISSUER (AS DEFINED BELOW)
OR ITS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORISED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORISED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE OF THIS MEDIUM TERM NOTE FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER OF
THIS MEDIUM TERM NOTE, CEDE & CO., HAS AN INTEREST IN THIS MEDIUM TERM NOTE.
NEITHER THIS MEDIUM TERM NOTE NOR ANY BENEFICIAL INTEREST IN THIS MEDIUM TERM
NOTE HAS BEEN OR IS EXPECTED TO BE REGISTERED UNDER AND WAS ORIGINALLY ISSUED OR
OFFERED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION.
NEITHER RHINEBRIDGE PLC (THE "ISSUER") NOR RHINEBRIDGE LLC (THE "CO-ISSUER") HAS
REGISTERED AND NEITHER THE ISSUER NOR THE CO-ISSUER INTENDS TO REGISTER AS AN
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INVESTMENT COMPANY UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (THE "INVESTMENT COMPANY ACT"), IN THE CASE OF THE ISSUER, IN RELIANCE ON
THE EXCEPTION PROVIDED BY SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT.
THIS RULE 144A MEDIUM TERM NOTE AND BENEFICIAL INTERESTS IN THIS MEDIUM TERM NOTE
MAY NOT BE REOFFERED, RESOLD, PLEDGED, EXCHANGED OR OTHERWISE TRANSFERRED IN
VIOLATION OF THE SECURITIES ACT OR SUCH OTHER SECURITIES LAWS. EACH PURCHASER OR
SUBSEQUENT TRANSFEREE OF THIS MEDIUM TERM NOTE (OR A BENEFICIAL INTEREST IN THIS
MEDIUM TERM NOTE) IS REQUIRED AND DEEMED TO REPRESENT, WARRANT, ACKNOWLEDGE
AND AGREE, FOR THE BENEFIT OF THE ISSUER AND THE CO-ISSUER THAT IT AND ANY PERSON
FOR WHICH IT IS ACTING IS A QIB AND A QP (AS DEFINED BELOW) AND MEETS THE OTHER
REQUIREMENTS FOR PURCHASERS AND HOLDERS OF THIS MEDIUM TERM NOTE (OR ANY
BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE) AND WILL NOT REOFFER, RESELL, PLEDGE,
EXCHANGE OR OTHERWISE TRANSFER THIS MEDIUM TERM NOTE OR ANY BENEFICIAL INTEREST
IN THIS MEDIUM TERM NOTE EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND ALL
OTHER APPLICABLE LAWS OF ANY JURISDICTION AND EXCEPT TO A PERSON IT REASONABLY
BELIEVES TO BE BOTH A QIB (AS DEFINED BELOW), AND QP (AS DEFINED BELOW) THAT MEETS
THE OTHER REQUIREMENTS SET FORTH IN THIS MEDIUM TERM NOTE APPLICABLE TO HOLDERS
OF THIS NOTE (AND ANY BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT ("RULE
144A") (IN WHICH CASE IT WILL INFORM SUCH PERSON THAT THE TRANSFER TO SUCH PERSON IS
BEING MADE IN RELIANCE ON RULE 144A); IF APPLICABLE IN A TRANSACTION THAT HAS
RECEIVED THE PRIOR WRITTEN AUTHORISATION OF THE ISSUER.
"QIB" MEANS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED UNDER RULE 144A.
"QP" MEANS A "QUALIFIED PURCHASER" AS DEFINED UNDER SECTION 2(a)(51)(A) OF THE
INVESTMENT COMPANY ACT AND THE RULES AND REGULATIONS THEREUNDER, AND THAT IS
NOT:
(a)
A BROKER-DEALER WHICH OWNS AND INVESTS ON A DISCRETIONARY BASIS LESS THAN
U.S. $25 MILLION IN SECURITIES OF ISSUERS UNAFFILIATED WITH SUCH BROKER-DEALER;
(b)
A PARTICIPANT-DIRECTED EMPLOYEE PLAN, SUCH AS A 401(k) PLAN, OR A TRUST FUND
HOLDING THE ASSETS OF SUCH PLAN, UNLESS THE INVESTMENT DECISIONS WITH
RESPECT TO SUCH PLAN ARE MADE SOLELY BY THE FIDUCIARY, TRUSTEE OR SPONSOR
OF SUCH PLAN;
(c)
AN ENTITY FORMED, REFORMED OR RECAPITALISED FOR THE PURPOSE OF INVESTING IN
THE MEDIUM TERM NOTES (OR BENEFICIAL INTERESTS THEREIN) AND/OR OTHER
SECURITIES OF THE ISSUER (UNLESS ALL OF THE BENEFICIAL OWNERS OF SUCH ENTITY'S
SECURITIES ARE BOTH QIBs AND QPs);
(d)
AN INVESTMENT COMPANY EXCEPTED FROM THE INVESTMENT COMPANY ACT
PURSUANT TO SECTION 3(c)(1) OR SECTION 3(c)(7) THEREOF (OR A FOREIGN INVESTMENT
COMPANY UNDER SECTION 7(d) THEREOF RELYING ON SECTION 3(c)(1) OR 3(c)(7) WITH
RESPECT TO ITS HOLDERS THAT ARE U.S. PERSONS), WHICH WAS FORMED ON OR BEFORE
30 APRIL 1996, UNLESS IT HAS RECEIVED THE CONSENT OF ITS BENEFICIAL OWNERS WHO
ACQUIRED THEIR INTERESTS ON OR BEFORE 30 APRIL 1996, WITH RESPECT TO ITS
TREATMENT AS A QP IN THE MANNER REQUIRED BY SECTION 2(a)(51)(C) OF THE
INVESTMENT COMPANY ACT AND THE RULES PROMULGATED THEREUNDER;
(e)
A: (A) PARTNERSHIP; (B) COMMON TRUST FUND; OR (C) CORPORATION, SPECIAL TRUST,
PENSION FUND OR PROFIT SHARING OR RETIREMENT PLAN, OR OTHER ENTITY, IN WHICH
THE PARTNERS, BENEFICIARIES, BENEFICIAL OWNERS, PARTICIPANTS, SHAREHOLDERS
OR OTHER EQUITY OWNERS, AS THE CASE MAY BE, MAY DESIGNATE THE PARTICULAR
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INVESTMENTS TO BE MADE, OR THE ALLOCATION THEREOF (UNLESS ALL OF THE
BENEFICIAL OWNERS OF SUCH ENTITY'S SECURITIES ARE BOTH QIBs AND QPs); OR
(f)
AN ENTITY THAT HAS INVESTED MORE THAN 40% OF ITS ASSETS IN THE MEDIUM TERM
NOTES (OR BENEFICIAL INTERESTS IN SUCH MEDIUM TERM NOTES) AND/OR OTHER
SECURITIES OF THE ISSUER OR CO-ISSUER AFTER GIVING EFFECT TO THE PURCHASE OF
THE MEDIUM TERM NOTES (OR BENEFICIAL INTERESTS IN SUCH MEDIUM TERM NOTES)
(UNLESS ALL OF THE BENEFICIAL OWNERS OF SUCH ENTITY'S SECURITIES ARE BOTH QIBs
AND QPs).
EACH PURCHASER OR TRANSFEREE OF THIS MEDIUM TERM NOTE AND EACH PERSON FOR WHICH
IT IS ACTING WILL BE DEEMED BY ACQUISITION OF THIS RULE 144A MEDIUM TERM NOTE OR
BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE TO REPRESENT, WARRANT, ACKNOWLEDGE
AND AGREE, THAT:
(a)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, IS A QIB THAT IS A QP AND IS ACQUIRING
THIS RULE 144A MEDIUM TERM NOTE (OR BENEFICIAL INTEREST IN THIS MEDIUM TERM
NOTE) FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OR ACCOUNTS OF ONE OR MORE
OTHER PERSONS, EACH OF WHICH IS A QIB AND A QP;
(b)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, IS AWARE THAT THE SALE, RESALE,
PLEDGE, EXCHANGE OR OTHER TRANSFER OF THE RULE 144A MEDIUM TERM NOTES (OR
BENEFICIAL INTERESTS IN THIS MEDIUM TERM NOTE) IS BEING MADE IN RELIANCE ON
RULE 144A UNDER THE SECURITIES ACT) AND WILL SO INFORM ANY SUBSEQUENT
PURCHASER OR TRANSFEREE OF A RULE 144A MEDIUM TERM NOTE OR BENEFICIAL
INTEREST THEREIN THAT THE TRANSFER WILL BE MADE IN RELIANCE ON RULE 144A;
(c)
IT, AND EACH ACCOUNT FOR WHICH IT IS PURCHASING OR OTHERWISE ACQUIRING RULE
144A MEDIUM TERM NOTES (OR BENEFICIAL INTERESTS IN SUCH MEDIUM TERM NOTES),
WILL PURCHASE, HOLD OR TRANSFER AT LEAST U.S. $250,000 (OR ITS EQUIVALENT IN A
SPECIFIED CURRENCY IN WHICH RULE 144A MEDIUM TERM NOTES MAY BE ISSUED) OF
RULE 144A MEDIUM TERM NOTES (OR BENEFICIAL INTERESTS IN SUCH MEDIUM TERM
NOTES);
(d)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, UNDERSTANDS THAT NEITHER THE
ISSUER NOR THE CO-ISSUER HAS REGISTERED, OR INTENDS TO REGISTER AS AN
INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT AND THAT THE ISSUER
IS RELYING ON THE EXCEPTION PROVIDED BY SECTION 3(c)(7) OF THE INVESTMENT
COMPANY ACT. IT, AND EACH PERSON FOR WHICH IT IS ACTING, ALSO UNDERSTANDS
AND AGREES THAT EACH OF THE ISSUER AND THE CO-ISSUER SHALL HAVE THE RIGHT
TO REQUEST AND RECEIVE SUCH ADDITIONAL DOCUMENTS, CERTIFICATIONS,
REPRESENTATIONS AND UNDERTAKINGS, FROM TIME TO TIME, AS THE ISSUER AND THE
CO-ISSUER MAY DEEM NECESSARY IN ORDER TO COMPLY WITH APPLICABLE LEGAL
REQUIREMENTS;
(e)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, UNDERSTANDS THAT ANY SALE OR
TRANSFER TO A PERSON THAT DOES NOT COMPLY WITH THE REQUIREMENTS SET FORTH
IN PARAGRAPHS (a) THROUGH (i) HEREOF WILL BE NULL AND VOID AB INITIO AND NOT
HONOURED BY THE ISSUER OR THE CO-ISSUER;
(f)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, AGREES THAT THE ISSUER SHALL BE
ENTITLED TO REQUIRE ANY HOLDER OF THIS MEDIUM TERM NOTE (OR ANY BENEFICIAL
INTEREST IN THIS MEDIUM TERM NOTE) THAT IS DETERMINED NOT TO HAVE BEEN BOTH
A QIB AND A QP (AND TO HAVE COMPLIED WITH THE REQUIREMENTS SET FORTH IN
PARAGRAPHS (a) THROUGH (i) HEREOF) AT THE TIME OF ACQUISITION OF SUCH RULE
144A MEDIUM TERM NOTE (OR ANY BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTE)
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TO SELL SUCH RULE 144A MEDIUM TERM NOTE (OR ANY BENEFICIAL INTEREST IN SUCH
MEDIUM TERM NOTE) OR TO REDEEM SUCH RULE 144A MEDIUM TERM NOTE (OR ANY
BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTE) IN ACCORDANCE WITH THE
PROVISIONS SET FORTH HEREIN;
(g)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, WILL PROVIDE NOTICE OF THESE
TRANSFER RESTRICTIONS TO ANY SUBSEQUENT TRANSFEREES AND AGREES NOT TO
REOFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER THE RULE 144A MEDIUM TERM
NOTES OR ANY BENEFICIAL INTERESTS IN SUCH MEDIUM TERM NOTES TO ANY PERSON
EXCEPT TO A PERSON THAT (I) MEETS ALL OF THE REQUIREMENTS IN PARAGRAPHS (a)
THROUGH (i) OF THIS MEDIUM TERM NOTE AND (II) AGREES NOT TO SUBSEQUENTLY
TRANSFER THE RULE 144A MEDIUM TERM NOTES OR ANY BENEFICIAL INTERESTS IN
SUCH MEDIUM TERM NOTES EXCEPT IN ACCORDANCE WITH THESE TRANSFER
RESTRICTIONS;
(h)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, UNDERSTANDS THAT THE ISSUER MAY
RECEIVE A LIST OF PARTICIPANTS FROM DTC OR ANY OTHER DEPOSITORY HOLDING A
BENEFICIAL INTEREST IN THE GLOBAL MEDIUM TERM NOTES; AND
(i)
IT, AND EACH PERSON FOR WHICH IT IS ACTING IS NOT A "SWAP COUNTERPARTY" OR
OTHER TYPE OF INTERMEDIARY WHEREBY ANY OTHER PARTY IS ACQUIRING AN
ECONOMIC OR BENEFICIAL INTEREST (INCLUDING A PARTICIPATION) IN THE MEDIUM
TERM NOTES ACQUIRED;
THE HOLDER OF THE RULE 144A MEDIUM TERM NOTE (OR ANY BENEFICIAL INTEREST IN SUCH
MEDIUM TERM NOTE) AND EACH PERSON FOR WHICH IT IS ACTING MAY TRANSFER ITS RULE
144A MEDIUM TERM NOTE (OR INTEREST IN THE RULE 144A MEDIUM TERM NOTE) TO, A NON-U.S.
PERSON WITHIN THE MEANING OF REGULATION S AND WHO ALSO IS NOT A U.S. RESIDENT FOR
PURPOSES OF THE INVESTMENT COMPANY ACT, AND WHO IS TAKING DELIVERY OF AN INTEREST
IN A REGULATION S MEDIUM TERM NOTE IN AN OFF-SHORE TRANSACTION MEETING THE
REQUIREMENTS OF REGULATION S AND THE REQUIREMENTS SET FORTH IN THE LEGEND ON
SUCH REGULATION S MEDIUM TERM NOTES (INCLUDING THE DELIVERY OF A PURCHASER'S
LETTER) AND THE OTHER TRANSFER RESTRICTIONS APPLICABLE TO REGULATION S MEDIUM
TERM NOTES SET FORTH THEREIN IN THE MINIMUM DENOMINATION OF U.S. $250,000 (OR
EQUIVALENT IN A SPECIFIED CURRENCY) IN A TRANSACTION THAT HAS RECEIVED THE PRIOR
WRITTEN AUTHORISATION OF THE ISSUER.
IN ACQUIRING THIS RULE 144A MEDIUM TERM NOTE (OR ANY BENEFICIAL INTEREST IN THIS
MEDIUM TERM NOTE), THE TRANSFEREE MAY SEEK THE PRIOR WRITTEN AUTHORISATION OF
THE ISSUER AND A WRITTEN OPINION OF THE ISSUER'S COUNSEL THAT SUCH TRANSACTION
WILL NOT AFFECT THE ISSUER'S ABILITY TO RELY ON THE SECTION 3(c)(7) EXCEPTION FROM THE
INVESTMENT COMPANY ACT. THE REGISTRAR MAY RELY UPON ANY SUCH AUTHORISATION OR
OPINION FOR ALL PURPOSES HEREUNDER WITHOUT FURTHER INQUIRY.
THE ISSUER AND THE TRANSFER AGENT MAY REQUIRE THE HOLDER TO PROVIDE THEM WITH AN
OPINION OF COUNSEL ADDRESSED TO AND SATISFACTORY TO THEM TO THE EFFECT THAT SUCH
REOFFER, RESALE, EXCHANGE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM OR NOT SUBJECT
TO REGISTRATION UNDER THE SECURITIES ACT AND WILL NOT REQUIRE THE ISSUER OR THE COISSUER TO REGISTER AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT.
IN ADDITION, EACH PURCHASER AND ANY SUBSEQUENT TRANSFEREE OF THIS RULE 144A
MEDIUM TERM NOTE (OR A BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE), WILL BE
REQUIRED AND DEEMED TO REPRESENT, WARRANT, ACKNOWLEDGE AND AGREE THAT IT, AND
EACH PERSON FOR WHICH IT IS ACTING, UNDERSTANDS THAT THIS RULE 144A MEDIUM TERM
NOTE (OR ANY BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE) IS BEING OFFERED AND MAY
BE TRANSFERRED ONLY IN TRANSACTIONS NOT INVOLVING ANY PUBLIC OFFERING WITHIN THE
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MEANING OF THE SECURITIES ACT AND MUST BE PREPARED TO HOLD THIS MEDIUM TERM NOTE
(OR ANY BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE) UNTIL MATURITY.
EACH PURCHASER OR SUBSEQUENT TRANSFEREE OF A BENEFICIAL INTEREST IN ANY RULE 144A
MEDIUM TERM NOTE WILL BE DEEMED TO REPRESENT, WARRANT, COVENANT (AND, IF IT IS
ACQUIRING AN INTEREST IN A DEFINITIVE RULE 144A MEDIUM TERM NOTE IT WILL BE
REQUIRED TO CERTIFY) TO THE TRANSFER AGENT, THE ISSUER AND THE CO-ISSUER THAT (A)
EITHER (i) IT IS NOT, AND IS NOT ACTING ON BEHALF OF, AN ERISA PLAN (AS DEFINED BELOW)
OR OTHER PLAN (AS DEFINED BELOW), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE
PLAN ASSETS BY REASON OF AN ERISA PLAN'S OR OTHER PLAN'S INVESTMENT IN THE ENTITY
WITHIN THE MEANING OF THE PLAN ASSETS REGULATION (AS DEFINED BELOW), OR A
GOVERNMENTAL OR OTHER EMPLOYEE BENEFIT PLAN WHICH IS SUBJECT TO ANY FEDERAL,
STATE, LOCAL OR NON-U.S. LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF
TITLE I OF ERISA (AS DEFINED BELOW) OR SECTION 4975 OF THE CODE (AS DEFINED BELOW), OR
(ii) ITS ACQUISITION, HOLDING AND DISPOSITION OF SUCH MEDIUM TERM NOTE WILL NOT
RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE OR VIOLATE ANY APPLICABLE LAW THAT IS SUBSTANTIALLY
SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE AND (B) IF IT IS ACQUIRING AN
INTEREST IN A DEFINITIVE RULE 144A MEDIUM TERM NOTE, IT WILL NOT SELL OR OTHERWISE
TRANSFER SUCH MEDIUM TERM NOTE TO ANY PERSON WITHOUT OBTAINING THESE SAME
REPRESENTATIONS, WARRANTIES AND AGREEMENTS FROM SUCH PERSON.
AS USED ABOVE:
"ERISA" MEANS THE UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED;
THE "CODE" MEANS THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED;
"ERISA PLAN" MEANS AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF
ERISA THAT IS SUBJECT TO TITLE I OF ERISA;
"OTHER PLAN" MEANS A PLAN, AN INDIVIDUAL RETIREMENT ACCOUNT OR ANOTHER ENTITY
SUBJECT TO SECTION 4975 OF THE CODE; AND
"PLAN ASSETS REGULATION" MEANS THE REGULATIONS ISSUED BY THE UNITED STATES
DEPARTMENT OF LABOR AND FOUND AT 29 CFR SECTION 2510.3-101, AS MODIFIED BY SECTION
3(42) OF ERISA.
IF THE PURCHASER OR ANY SUBSEQUENT TRANSFEREE OF A RULE 144A MEDIUM TERM NOTE (OR
A BENEFICIAL INTEREST IN A RULE 144A MEDIUM TERM NOTE) IS DETERMINED NOT TO HAVE
BEEN BOTH A QIB AND A QP (AND TO HAVE MET THE OTHER REQUIREMENTS SET FORTH HEREIN)
AT THE TIME IT ACQUIRED SUCH RULE 144A MEDIUM TERM NOTE (OR A BENEFICIAL INTEREST IN
SUCH MEDIUM TERM NOTE), THE ISSUER MAY REDEEM SUCH RULE 144A MEDIUM TERM NOTE OR
COMPEL SUCH PERSON TO SELL SUCH MEDIUM TERM NOTE (OR ANY BENEFICIAL INTEREST IN
SUCH MEDIUM TERM NOTE) WITHIN 30 DAYS AFTER NOTICE OF THE SALE REQUIREMENT IS
GIVEN TO A PERSON THAT IS A QIB AND A QP OR A NON-U.S. PERSON (AND MEETS THE OTHER
REQUIREMENTS SET FORTH IN THIS MEDIUM TERM NOTE) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF REGULATIONS. IF SUCH PERSON FAILS TO EFFECT THE SALE
WITHIN SUCH 30-DAY PERIOD, THE ISSUER MAY CAUSE SUCH PERSON'S MEDIUM TERM NOTE (OR
ANY BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTE) TO BE TRANSFERRED IN A
COMMERCIALLY REASONABLE SALE (CONDUCTED IN ACCORDANCE WITH SECTIONS 9-610, 9-611
AND 9-627 OF THE UNIFORM COMMERCIAL CODE AS APPLIED TO SECURITIES THAT ARE SOLD ON
A RECOGNISED MARKET) TO A TRANSFEREE THAT CERTIFIES TO THE ISSUER THAT IT IS BOTH A
QIB AND A QP (AND MEETS THE OTHER REQUIREMENTS SET FORTH IN THIS MEDIUM TERM NOTE)
AND IS AWARE THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A AND
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REGULATION S, AS APPLICABLE, TOGETHER WITH THE OTHER ACKNOWLEDGEMENTS,
REPRESENTATIONS AND AGREEMENTS TO BE MADE BY A TRANSFEREE OF A MEDIUM TERM
NOTE (OR BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTE), PROVIDED, HOWEVER, THAT
THE ISSUER MAY WAIVE THE FOREGOING CERTIFICATION REQUIREMENT IF THEY HAVE BEEN
ADVISED BY ISSUER'S COUNSEL THAT SUCH SALE WOULD NOT REQUIRE THE ISSUER TO
REGISTER AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OR REQUIRE
REGISTRATION UNDER THE SECURITIES ACT.
THIS MEDIUM TERM NOTE AND RELATED DOCUMENTATION MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME BY THE ISSUER, WITHOUT THE CONSENT OF BUT UPON
NOTICE TO THE DEALERS AND TO THE HOLDERS OF MEDIUM TERM NOTES SENT TO THEIR
REGISTERED ADDRESSES, TO (1) MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR RESALES
AND OTHER TRANSFERS OF THIS MEDIUM TERM NOTE AND/OR BENEFICIAL INTERESTS IN SUCH
MEDIUM TERM NOTE TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE
INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO RESALES OR OTHER TRANSFERS OF
RESTRICTED SECURITIES SUCH AS THIS MEDIUM TERM NOTE GENERALLY OR (2) ENABLE THE
ISSUER TO RELY UPON ANY EXCLUSION FROM THE DEFINITION OF INVESTMENT COMPANY
UNDER THE INVESTMENT COMPANY ACT THAT MAY BECOME AVAILABLE, PROVIDED, IN EACH
CASE, THAT NO SUCH AMENDMENT OR SUPPLEMENT SHALL HAVE A MATERIAL ADVERSE
EFFECT UPON HOLDERS OR OWNERS OF BENEFICIAL INTERESTS IN THE MEDIUM TERM NOTES OR
ON THE ABILITY OF THE ISSUER TO RELY ON SECTION 3(c)(7) OF THE INVESTMENT COMPANY
ACT. THE HOLDER OF THIS MEDIUM TERM NOTE, BY PURCHASING OR ACCEPTING THIS MEDIUM
TERM NOTE, AGREES, AND EACH BENEFICIAL OWNER, BY PURCHASING OR OTHERWISE
ACQUIRING A BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE, SHALL AGREE, TO ANY SUCH
AMENDMENT OR SUPPLEMENT (EACH OF WHICH SHALL BE CONCLUSIVE AND BINDING ON THE
HOLDER OF THIS MEDIUM TERM NOTE AND THE OWNERS OF BENEFICIAL INTERESTS IN THIS
MEDIUM TERM NOTE AND ALL FUTURE HOLDERS OF THIS MEDIUM TERM NOTE AND OWNERS OF
BENEFICIAL INTERESTS IN THIS MEDIUM TERM NOTE AND ANY MEDIUM TERM NOTES ISSUED IN
EXCHANGE OR SUBSTITUTION FOR SUCH MEDIUM TERM NOTE, WHETHER OR NOT ANY
NOTATION THEREOF IS MADE THEREON)".
The legends on a Definitive Rule 144A Medium Term Note shall omit the first paragraph of the legend and
paragraph (h) of the transferee's representations and warranties.
Regulation S Medium Term Note. Each Regulation S Global Medium Term Note will contain the
following legend:
"UNLESS THIS GLOBAL MEDIUM TERM NOTE IS PRESENTED BY AN AUTHORISED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORISED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORISED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE OF THIS
CAPITAL NOTE FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER OF THIS MEDIUM TERM NOTE, CEDE & CO., HAS AN INTEREST IN THIS
MEDIUM TERM NOTE.
NEITHER THIS REGULATION S MEDIUM TERM NOTE NOR ANY BENEFICIAL INTEREST IN THIS
MEDIUM TERM NOTE HAS BEEN, OR IS EXPECTED TO BE, REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), THE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION.
NEITHER RHINEBRIDGE PLC (THE "ISSUER") NOR RHINEBRIDGE LLC (THE "CO-ISSUER") HAS
REGISTERED AND NEITHER INTENDS TO REGISTER AS AN INVESTMENT COMPANY UNDER THE
UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT
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COMPANY ACT"), IN THE CASE OF THE ISSUER, IN RELIANCE ON THE EXCEPTION FROM
REGISTRATION PROVIDED BY SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT.
THIS REGULATION S MEDIUM TERM NOTE AND BENEFICIAL INTERESTS IN THIS REGULATION S
MEDIUM TERM NOTE MAY NOT BE REOFFERED, RESOLD, PLEDGED, EXCHANGED OR OTHERWISE
TRANSFERRED IN VIOLATION OF THE SECURITIES ACT OR SUCH OTHER SECURITIES LAWS.
EACH PURCHASER OR SUBSEQUENT TRANSFEREE OF THIS MEDIUM TERM NOTE (OR BENEFICIAL
INTEREST IN THIS MEDIUM TERM NOTE), BY PURCHASING OR ACCEPTING THIS REGULATION S
MEDIUM TERM NOTE (OR A BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE), REPRESENTS,
WARRANTS, ACKNOWLEDGES AND AGREES, AND WILL BE DEEMED TO REPRESENT, WARRANT,
ACKNOWLEDGE AND AGREE (AND IF IT IS ACQUIRING AN INTEREST IN A DEFINITIVE
REGULATION S MEDIUM TERM NOTE WILL BE REQUIRED TO CERTIFY) FOR THE BENEFIT OF THE
ISSUER, THAT:
(A)
IT AND EACH PERSON FOR WHICH IT IS ACTING IS NOT A U.S. PERSON WITHIN THE
MEANING OF REGULATION S OR A U.S. RESIDENT FOR PURPOSES OF THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED ("INVESTMENT COMPANY ACT") (EACH SUCH
PERSON A "NON-U.S. PERSON") AND IS ACQUIRING A BENEFICIAL INTEREST IN THE
NOTES IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF REGULATION S;
(B)
IT, AND EACH ACCOUNT FOR WHICH IT IS ACTING WILL HOLD AT LEAST U.S. $250,000 (OR
ITS EQUIVALENT IN ANY OTHER CURRENCY IN WHICH THE REGULATION S MEDIUM
TERM NOTES MAY BE ISSUED) OF REGULATION S MEDIUM TERM NOTES (OR BENEFICIAL
INTERESTS THEREIN);
(C)
IT AND EACH PERSON FOR WHICH IT IS ACTING IS TAKING DELIVERY IN THE FORM OF AN
INTEREST IN A REGULATION S GLOBAL MEDIUM TERM NOTE OR, IF DELIVERY IS IN THE
FORM OF A DEFINITIVE REGULATION S MEDIUM TERM NOTE, IT AND EACH PERSON FOR
WHICH IT IS ACTING HAS DELIVERED TO THE TRANSFER AGENT AND THE ISSUER THE
PURCHASER'S LETTER APPLICABLE TO TRANSFERS OF DEFINITIVE REGULATION S
MEDIUM TERM NOTES;
(D)
IT AND EACH PERSON FOR WHICH IT IS ACTING WILL PROVIDE NOTICE OF THESE
TRANSFER RESTRICTIONS TO ANY SUBSEQUENT TRANSFEREE AND AGREES NOT TO
REOFFER, RESELL, PLEDGE, OR OTHERWISE TRANSFER THE REGULATION S MEDIUM
TERM NOTES OR ANY BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTES TO ANY
PERSON EXCEPT TO A PERSON THAT (I) MEETS ALL OF THE REQUIREMENTS IN (A)
THROUGH (H) HEREOF AND (II) AGREES NOT TO SUBSEQUENTLY TRANSFER THE MEDIUM
TERM NOTES OR ANY BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTES EXCEPT IN
ACCORDANCE WITH THESE TRANSFER RESTRICTIONS;
(E)
IT AND EACH PERSON FOR WHICH IT IS ACTING UNDERSTANDS THAT ANY SALE OR
TRANSFER TO A PERSON THAT DOES NOT COMPLY WITH THE FOREGOING
REQUIREMENTS SET FORTH IN PARAGRAPHS (A) THROUGH (H) HEREOF WILL BE NULL
AND VOID AB INITIO AND NOT HONOURED BY THE ISSUER;
(F)
IT AND EACH PERSON FOR WHICH IT IS ACTING AGREES THAT THE ISSUER SHALL BE
ENTITLED TO REQUIRE ANY HOLDER OF A REGULATION S MEDIUM TERM NOTE (OR
BENEFICIAL INTERESTS IN A MEDIUM TERM NOTE), THAT IS DETERMINED NOT TO HAVE
BEEN A NON-U.S. PERSON AT THE TIME OF ACQUISITION OF SUCH MEDIUM TERM NOTE
(OR BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTE), TO SELL SUCH MEDIUM TERM
NOTES (OR SUCH BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTES) OR SUCH
REGULATION S MEDIUM TERM NOTES (OR BENEFICIAL INTERESTS IN SUCH MEDIUM
TERM NOTES) MAY BE REDEEMED BY THE ISSUER IN ACCORDANCE WITH THE
PROVISIONS SET FORTH HEREIN AND UNDER "REQUIRED SALE AND REDEMPTION" BELOW;
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(G)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, UNDERSTANDS THAT THE ISSUER WILL
NOT REGISTER AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT
AND THAT THE ISSUER IS RELYING ON SECTION 3(c)(7) OF THE INVESTMENT COMPANY
ACT. IT, AND EACH PERSON FOR WHICH IT IS ACTING, ALSO UNDERSTANDS AND AGREES
THAT THE ISSUER SHALL HAVE THE RIGHT TO REQUEST AND RECEIVE SUCH ADDITIONAL
DOCUMENTS, CERTIFICATIONS, REPRESENTATIONS AND UNDERTAKINGS, FROM TIME TO
TIME, AS THE ISSUER MAY DEEM NECESSARY IN ORDER TO COMPLY WITH APPLICABLE
LEGAL REQUIREMENTS; AND
(H)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, UNDERSTANDS THAT THE ISSUER WILL
HAVE THE RIGHT TO REQUEST A LIST OF PARTICIPANTS HOLDING INTERESTS IN THE
GLOBAL REGULATION S MEDIUM TERM NOTES FROM DTC OR ANY OTHER DEPOSITORY
HOLDING BENEFICIAL INTERESTS IN THE MEDIUM TERM NOTES.
THE HOLDER OF A REGULATION S MEDIUM TERM NOTE, AND EACH PERSON FOR WHICH IT IS
ACTING MAY TRANSFER SUCH REGULATION S MEDIUM TERM NOTE (OR ANY BENEFICIAL
INTEREST IN SUCH MEDIUM TERM NOTE) IN A MINIMUM DENOMINATION OF U.S. $250,000 (OR ITS
EQUIVALENT IN A SPECIFIED CURRENCY) TO A PERSON THAT (1) IS BOTH A QIB AND A QP AND
MEETS THE OTHER REQUIREMENTS SET FORTH BELOW IN THIS MEDIUM TERM NOTE, (2) IS
TAKING DELIVERY OF A RULE 144A MEDIUM TERM NOTE IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A AND THE REQUIREMENTS OF THIS MEDIUM TERM NOTE WITH
RESPECT TO RULE 144A MEDIUM TERM NOTES, AND (3) HAS DELIVERED TO THE ISSUER AND THE
TRANSFER AGENT THE PURCHASER'S LETTER APPLICABLE TO TRANSFERS OF RULE 144A
MEDIUM TERM NOTES:
(a)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, IS A QIB (AS DEFINED BELOW) THAT IS A
QP (AS DEFINED BELOW) AND IS ACQUIRING THIS RULE 144A MEDIUM TERM NOTE (OR
BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE) FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OR ACCOUNTS OF ONE OR MORE OTHER PERSONS, EACH OF WHICH IS A QIB
AND A QP;
(b)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, IS AWARE THAT THE SALE, RESALE,
PLEDGE, EXCHANGE OR OTHER TRANSFER OF THE RULE 144A MEDIUM TERM NOTES (OR
BENEFICIAL INTERESTS IN THE RULE 144A MEDIUM TERM NOTES) IS BEING MADE IN
RELIANCE ON RULE 144A UNDER THE SECURITIES ACT) AND WILL SO INFORM ANY
SUBSEQUENT RULE 144A TRANSFEREE THAT THE TRANSFER WILL BE MADE IN RELIANCE
ON RULE 144A;
(c)
IT, AND EACH ACCOUNT FOR WHICH IT IS PURCHASING OR OTHERWISE ACQUIRING RULE
144A MEDIUM TERM NOTES (OR BENEFICIAL INTERESTS IN THE RULE 144A MEDIUM TERM
NOTES), WILL PURCHASE, HOLD OR TRANSFER AT LEAST U.S. $250,000 (OR ITS
EQUIVALENT IN A SPECIFIC CURRENCY) OF RULE 144A MEDIUM TERM NOTES (OR
BENEFICIAL INTERESTS IN THE RULE 144A MEDIUM TERM NOTE);
(d)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, UNDERSTANDS THAT NEITHER THE
ISSUER NOR THE CO-ISSUER HAS REGISTERED, OR INTENDS TO REGISTER AS AN
INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT AND THAT THE ISSUER
IS RELYING ON THE EXCEPTION PROVIDED BY SECTION 3(c)(7) OF THE INVESTMENT
COMPANY ACT. IT, AND EACH PERSON FOR WHICH IT IS ACTING, ALSO UNDERSTANDS
AND AGREES THAT EACH OF THE ISSUER AND THE CO-ISSUER SHALL HAVE THE RIGHT
TO REQUEST AND RECEIVE SUCH ADDITIONAL DOCUMENTS, CERTIFICATIONS,
REPRESENTATIONS AND UNDERTAKINGS, FROM TIME TO TIME, AS THE ISSUER AND THE
CO-ISSUER MAY DEEM NECESSARY IN ORDER TO COMPLY WITH APPLICABLE LEGAL
REQUIREMENTS;
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(e)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, UNDERSTANDS THAT ANY SALE OR
TRANSFER TO A PERSON THAT DOES NOT COMPLY WITH THE REQUIREMENTS SET FORTH
IN PARAGRAPHS (a) THROUGH (i) OF THIS MEDIUM TERM NOTE WILL BE NULL AND VOID
AB INITIO AND NOT HONOURED BY THE ISSUER OR THE CO-ISSUER;
(f)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, AGREES THAT THE ISSUER SHALL BE
ENTITLED TO REQUIRE ANY HOLDER OF THIS RULE 144A MEDIUM TERM NOTE (OR ANY
BENEFICIAL INTEREST IN THIS RULE 144A MEDIUM TERM NOTE) THAT IS DETERMINED
NOT TO HAVE BEEN BOTH A QIB AND A QP (AND TO HAVE COMPLIED WITH THE
REQUIREMENTS SET FORTH IN PARAGRAPHS (a) THROUGH (i) HEREOF) AT THE TIME OF
ACQUISITION OF SUCH RULE 144A MEDIUM TERM NOTE (OR BENEFICIAL INTEREST OF
THIS MEDIUM TERM NOTE) TO SELL SUCH RULE 144A MEDIUM TERM NOTE (OR ANY
BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTE) OR TO REDEEM SUCH RULE 144A
MEDIUM TERM NOTE (OR ANY BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTE) IN
ACCORDANCE WITH THE PROVISIONS SET FORTH HEREIN;
(g)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, WILL PROVIDE NOTICE OF THESE
TRANSFER RESTRICTIONS TO ANY SUBSEQUENT TRANSFEREES AND AGREES NOT TO
REOFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER THE RULE 144A MEDIUM TERM
NOTES OR ANY BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTES TO ANY PERSON
EXCEPT TO A PERSON THAT (I) MEETS ALL OF THE REQUIREMENTS IN PARAGRAPHS (a)
THROUGH (i) HEREOF AND (II) AGREES NOT TO SUBSEQUENTLY TRANSFER THE RULE
144A MEDIUM TERM NOTES OR ANY BENEFICIAL INTEREST IN SUCH MEDIUM TERM
NOTES EXCEPT IN ACCORDANCE WITH THESE TRANSFER RESTRICTIONS;
(h)
IT, AND EACH PERSON FOR WHICH IT IS ACTING, UNDERSTANDS THAT THE ISSUER MAY
RECEIVE A LIST OF PARTICIPANTS FROM DTC OR ANY OTHER DEPOSITORY HOLDING A
BENEFICIAL INTEREST IN THE GLOBAL MEDIUM TERM NOTES; AND
(i)
IT, AND EACH PERSON FOR WHICH IT IS ACTING IS NOT A "SWAP COUNTERPARTY" OR
OTHER TYPE OF INTERMEDIARY WHEREBY ANY OTHER PARTY IS ACQUIRING AN
ECONOMIC OR BENEFICIAL INTEREST (INCLUDING A PARTICIPATION) IN THE MEDIUM
TERM NOTES ACQUIRED;"
"QIB" MEANS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED UNDER RULE 144A;
"QP" MEANS A "QUALIFIED PURCHASER" AS DEFINED UNDER SECTION 2(a)(51)(A) OF THE
INVESTMENT COMPANY ACT AND THE RULES AND REGULATIONS THEREUNDER, AND THAT IS
NOT:
(a)
A BROKER-DEALER WHICH OWNS AND INVESTS ON A DISCRETIONARY BASIS LESS THAN
U.S. $25 MILLION IN SECURITIES OF ISSUERS UNAFFILIATED WITH SUCH BROKER-DEALER;
(b)
A PARTICIPANT-DIRECTED EMPLOYEE PLAN, SUCH AS A 401(k) PLAN, OR A TRUST FUND
HOLDING THE ASSETS OF SUCH PLAN, UNLESS THE INVESTMENT DECISIONS WITH
RESPECT TO SUCH PLAN ARE MADE SOLELY BY THE FIDUCIARY, TRUSTEE OR SPONSOR
OF SUCH PLAN;
(c)
AN ENTITY FORMED, REFORMED OR RECAPITALISED FOR THE PURPOSE OF INVESTING IN
THE MEDIUM TERM NOTES (OR BENEFICIAL INTERESTS THEREIN) AND/OR OTHER
SECURITIES OF THE ISSUER (UNLESS ALL OF THE BENEFICIAL OWNERS OF SUCH ENTITY'S
SECURITIES ARE BOTH QIBs AND QPs);
(d)
AN INVESTMENT COMPANY EXCEPTED FROM THE INVESTMENT COMPANY ACT
PURSUANT TO SECTION 3(c)(1) OR SECTION 3(c)(7) THEREOF (OR A FOREIGN INVESTMENT
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COMPANY UNDER SECTION 7(d) THEREOF RELYING ON SECTION 3(c)(1) OR 3(c)(7) WITH
RESPECT TO ITS HOLDERS THAT ARE U.S. PERSONS), WHICH WAS FORMED ON OR BEFORE
30 APRIL 1996, UNLESS IT HAS RECEIVED THE CONSENT OF ITS BENEFICIAL OWNERS WHO
ACQUIRED THEIR INTERESTS ON OR BEFORE 30 APRIL 1996, WITH RESPECT TO ITS
TREATMENT AS A QP IN THE MANNER REQUIRED BY SECTION 2(a)(51)(C) OF THE
INVESTMENT COMPANY ACT AND THE RULES PROMULGATED THEREUNDER;
(e)
A: (A) PARTNERSHIP; (B) COMMON TRUST FUND; OR (C) CORPORATION, SPECIAL TRUST,
PENSION FUND OR PROFIT SHARING OR RETIREMENT PLAN, OR OTHER ENTITY, IN WHICH
THE PARTNERS, BENEFICIARIES, BENEFICIAL OWNERS, PARTICIPANTS, SHAREHOLDERS
OR OTHER EQUITY OWNERS, AS THE CASE MAY BE, MAY DESIGNATE THE PARTICULAR
INVESTMENTS TO BE MADE, OR THE ALLOCATION THEREOF; OR
(f)
AN ENTITY THAT HAS INVESTED MORE THAN 40% OF ITS ASSETS IN THE RULE 144A
MEDIUM TERM NOTES (OR BENEFICIAL INTERESTS IN SUCH MEDIUM TERM NOTES)
AND/OR OTHER SECURITIES OF THE ISSUER OR CO-ISSUER AFTER GIVING EFFECT TO THE
PURCHASE OF THE MEDIUM TERM NOTES (OR BENEFICIAL INTERESTS IN SUCH MEDIUM
TERM NOTES).
IN ACQUIRING SUCH MEDIUM TERM NOTE (OR ANY BENEFICIAL INTEREST IN SUCH MEDIUM
TERM NOTE) THE TRANSFEREE MAY SEEK THE PRIOR WRITTEN AUTHORISATION OF THE ISSUER
AND A WRITTEN OPINION OF THE ISSUER'S COUNSEL THAT SUCH TRANSACTION WILL NOT
RESTRICT THE ISSUER'S ABILITY TO RELY ON THE SECTION 3(c)(7) EXCEPTION FROM THE
INVESTMENT COMPANY ACT.
THE ISSUER AND THE TRANSFER AGENT MAY REQUIRE THE HOLDER TO PROVIDE THEM WITH AN
OPINION OF COUNSEL ADDRESSED TO AND SATISFACTORY TO THEM TO THE EFFECT THAT SUCH
REOFFER, RESALE, EXCHANGE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM OR NOT SUBJECT
TO REGISTRATION UNDER THE SECURITIES ACT AND WILL NOT REQUIRE THE ISSUER TO
REGISTER AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT.
IN ADDITION, EACH PURCHASER AND ANY SUBSEQUENT TRANSFEREE OF THIS MEDIUM TERM
NOTE (OR A BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE), BY ITS PURCHASING OR
OTHERWISE ACCEPTING THIS MEDIUM TERM NOTE (OR BENEFICIAL INTEREST IN THIS MEDIUM
TERM NOTE), WILL BE DEEMED TO REPRESENT, WARRANT, ACKNOWLEDGE AND AGREE (AND IF
IT IS ACQUIRING AN INTEREST IN A DEFINITIVE REGULATION S MEDIUM TERM NOTE WILL BE
REQUIRED TO CERTIFY) THAT IT, AND EACH PERSON FOR WHICH IT IS ACTING, UNDERSTANDS
THAT THIS MEDIUM TERM NOTE (OR BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE) IS
BEING OFFERED AND MAY BE TRANSFERRED ONLY IN TRANSACTIONS NOT INVOLVING ANY
PUBLIC OFFERING WITHIN THE MEANING OF THE SECURITIES ACT AND MUST BE PREPARED TO
HOLD THIS MEDIUM TERM NOTE (OR BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE) UNTIL
MATURITY.
EACH PURCHASER OR SUBSEQUENT TRANSFEREE OF A BENEFICIAL INTEREST IN ANY
REGULATION S MEDIUM TERM NOTE WILL BE DEEMED TO REPRESENT, WARRANT,
ACKNOWLEDGE AND AGREE (AND IF IT IS ACQUIRING AN INTEREST IN A DEFINITIVE
REGULATION S MEDIUM TERM NOTE IT WILL CERTIFY) THAT (A) EITHER (i) IT IS NOT, AND IS NOT
ACTING ON BEHALF OF, AN ERISA PLAN (AS DEFINED BELOW) OR OTHER PLAN (AS DEFINED
BELOW), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF AN
ERISA PLAN'S OR OTHER PLAN'S INVESTMENT IN THE ENTITY WITHIN THE MEANING OF THE
PLAN ASSETS REGULATION (AS DEFINED BELOW), OR A GOVERNMENTAL OR OTHER EMPLOYEE
BENEFIT PLAN WHICH IS SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAW THAT IS
SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF TITLE I OF ERISA (AS DEFINED BELOW) OR
SECTION 4975 OF THE CODE (AS DEFINED BELOW), OR (ii) ITS ACQUISITION, HOLDING AND
DISPOSITION OF SUCH MEDIUM TERM NOTE WILL NOT RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR VIOLATE ANY
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APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF
THE CODE AND (B) IF IT IS ACQUIRING AN INTEREST IN A DEFINITIVE REGULATION S MEDIUM
TERM NOTE, IT WILL NOT SELL OR OTHERWISE TRANSFER SUCH MEDIUM TERM NOTE TO ANY
PERSON WITHOUT OBTAINING THESE SAME REPRESENTATIONS, WARRANTIES AND
AGREEMENTS FROM SUCH PERSON.
AS USED ABOVE:
"ERISA" MEANS THE UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED;
THE "CODE" MEANS THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED;
"ERISA PLAN" MEANS AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF
ERISA THAT IS SUBJECT TO TITLE I OF ERISA;
"OTHER PLAN" MEANS A PLAN, AN INDIVIDUAL RETIREMENT ACCOUNT OR ANOTHER ENTITY
SUBJECT TO SECTION 4975 OF THE CODE; AND
"PLAN ASSETS REGULATION" MEANS THE REGULATIONS ISSUED BY THE UNITED STATES
DEPARTMENT OF LABOR AND FOUND AT 29 CFR SECTION 2510.3-101, AS MODIFIED BY SECTION
3(42) OF ERISA.
IF THE PURCHASER OR ANY SUBSEQUENT TRANSFEREE OF A MEDIUM TERM NOTE (OR A
BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE) THAT IS A U.S. PERSON IS DETERMINED NOT
TO HAVE BEEN BOTH A QIB AND A QP (AND TO HAVE MET THE OTHER REQUIREMENTS SET
FORTH IN THIS MEDIUM TERM NOTE) AT THE TIME IT ACQUIRED SUCH MEDIUM TERM NOTE (OR
BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTE), THE ISSUER MAY REDEEM SUCH MEDIUM
TERM NOTE (OR ANY BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTE) OR COMPEL SUCH
PERSON TO SELL SUCH MEDIUM TERM NOTE (OR BENEFICIAL INTEREST THEREIN) WITHIN 30
DAYS AFTER NOTICE OF THE SALE REQUIREMENT IS GIVEN TO A PERSON THAT IS BOTH A QIB
AND A QP (AND MEETS THE OTHER REQUIREMENTS SET FORTH IN THIS MEDIUM TERM NOTE) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR TO A NON-U.S. PERSON WHO
TAKES AN INTEREST IN A REGULATION S MEDIUM TERM NOTE. IF SUCH PERSON FAILS TO
EFFECT THE SALE WITHIN SUCH 30-DAY PERIOD, THE ISSUER MAY CAUSE SUCH PERSON'S
MEDIUM TERM NOTE (OR ANY BENEFICIAL INTEREST IN SUCH MEDIUM TERM NOTE) TO BE
TRANSFERRED IN A COMMERCIALLY REASONABLE SALE (CONDUCTED IN ACCORDANCE WITH
SECTIONS 9-610, 9-611 AND 9-627 OF THE UNIFORM COMMERCIAL CODE AS APPLIED TO
SECURITIES THAT ARE SOLD ON A RECOGNISED MARKET) TO A TRANSFEREE THAT CERTIFIES TO
THE ISSUER AND THE TRANSFER AGENT THAT IT IS BOTH A QIB AND A QP (AND MEETS THE
OTHER REQUIREMENTS SET FORTH IN THIS MEDIUM TERM NOTE) AND IS AWARE THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, TOGETHER WITH THE OTHER
ACKNOWLEDGEMENTS, REPRESENTATIONS AND AGREEMENTS TO BE MADE BY A TRANSFEREE
OF A MEDIUM TERM NOTE OR BENEFICIAL INTEREST IN A MEDIUM TERM NOTE, PROVIDED,
HOWEVER, THAT THE ISSUER MAY WAIVE THE FOREGOING CERTIFICATION REQUIREMENT IF
THEY HAVE BEEN ADVISED BY ISSUER'S COUNSEL THAT SUCH SALE WOULD NOT REQUIRE THE
ISSUER TO REGISTER AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT
OR REQUIRE REGISTRATION UNDER THE SECURITIES ACT.
THIS MEDIUM TERM NOTE AND RELATED DOCUMENTATION MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME BY THE ISSUER, WITHOUT THE CONSENT OF BUT UPON
NOTICE TO THE DEALERS AND TO THE HOLDERS OF MEDIUM TERM NOTES SENT TO THEIR
REGISTERED ADDRESSES, TO (1) MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR RESALES
AND OTHER TRANSFERS OF THIS MEDIUM TERM NOTE AND/OR BENEFICIAL INTERESTS IN THIS
MEDIUM TERM NOTE TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE
INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO RESALES OR OTHER TRANSFERS OF
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RESTRICTED SECURITIES SUCH AS THIS MEDIUM TERM NOTE GENERALLY OR (2) ENABLE THE
ISSUER TO RELY UPON ANY EXCLUSION FROM THE DEFINITION OF INVESTMENT COMPANY
UNDER THE INVESTMENT COMPANY ACT THAT MAY BECOME AVAILABLE, PROVIDED, IN EACH
CASE, THAT NO SUCH AMENDMENT OR SUPPLEMENT SHALL HAVE A MATERIAL ADVERSE
EFFECT UPON HOLDERS OR OWNERS OF BENEFICIAL INTERESTS IN THE MEDIUM TERM NOTES OR
ON THE ABILITY OF THE ISSUER TO RELY ON SECTION 3(c)(7) OF THE INVESTMENT COMPANY
ACT. THE HOLDER OF THIS MEDIUM TERM NOTE, BY PURCHASING OR ACCEPTING THIS MEDIUM
TERM NOTE, AGREES, AND EACH BENEFICIAL OWNER, BY PURCHASING OR OTHERWISE
ACQUIRING A BENEFICIAL INTEREST IN THIS MEDIUM TERM NOTE, SHALL AGREE, TO ANY SUCH
AMENDMENT OR SUPPLEMENT (EACH OF WHICH SHALL BE CONCLUSIVE AND BINDING ON THE
HOLDER OF THIS MEDIUM TERM NOTE AND THE OWNERS OF BENEFICIAL INTERESTS IN THIS
MEDIUM TERM NOTE AND ALL FUTURE HOLDERS OF THIS MEDIUM TERM NOTE AND OWNERS OF
BENEFICIAL INTERESTS IN THIS MEDIUM TERM NOTE AND ANY MEDIUM TERM NOTES ISSUED IN
EXCHANGE OR SUBSTITUTION FOR THIS MEDIUM TERM NOTE, WHETHER OR NOT ANY NOTATION
THEREOF IS MADE THEREON)".
The legends on a Definitive Regulation S Medium Term Note shall omit the first paragraph of the legend and
paragraph (H) of the transferee's representations and warranties.
Amendments and supplements
The Medium Term Notes and related documentation may be amended or supplemented from time to time by the
Issuer, and, if applicable, the Co-Issuer, without the consent of but upon notice to the Medium Term Note Dealers
and to the holders of Medium Term Notes sent to their registered address, to (1) modify the restrictions on and
procedures for resales and other transfers of the Medium Term Notes to reflect any change in applicable Law or
regulation (or the interpretation thereof) or in practices relating to the resale or other transfer of restricted securities
generally or (2) enable the Issuer and, if applicable, the Co-Issuer, to rely upon any exception from registration
under the Investment Company Act that may become available, provided, in each case, that no such amendment or
supplement shall have a material adverse effect upon holders of Medium Term Notes or on the ability of the Issuer
to rely on the exception provided by Section 3(c)(7) of the Investment Company Act whilst it intends to so rely.
Each holder of a Medium Term Note shall be deemed, by its acceptance or purchase thereof, to have agreed to any
such amendment or supplement (each of which shall be conclusive and binding on such holder and all future holders
of such Medium Term Note and any Medium Term Notes issued in exchange or substitution for such Medium Term
Note, whether or not any notation thereof is made thereon).
United Kingdom
Each Medium Term Note Dealer has represented and agreed, and each further Medium Term Note Dealer appointed
under the Medium Term Note Programme will be required to represent and agree, that:
(a)
it has only communicated or caused to be communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment activity (within the meaning of Section
21 of the Financial Services and Markets Act 2000 ("FSMA")) received by it in connection with the issue
or sale of any Medium Term Notes in circumstances in which Section 21(1) of the FSMA does not apply to
the Issuers; and
(b)
it has complied and will comply with all applicable provisions of the FSMA with respect to anything done
by it in relation to any Medium Term Notes in, from or otherwise involving the United Kingdom.
Australia
(A)
NEITHER THIS PROSPECTUS NOR ANY OTHER PROSPECTUS OR DISCLOSURE DOCUMENT
IN RELATION TO THE MEDIUM TERM NOTES HAS BEEN LODGED WITH, OR REGISTERED
BY, THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION;
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(B)
NO OFFER OR INVITATION OF AN OFFER OF THE MEDIUM TERM NOTES FOR ISSUE OR
SALE HAS BEEN MADE OR WILL BE MADE IN AUSTRALIA (INCLUDING AN OFFER OR
INVITATION WHICH IS RECEIVED BY A PERSON IN AUSTRALIA); AND
(C)
NO DISTRIBUTION OR PUBLICATION OF THIS PROSPECTUS OR ANY OTHER OFFERING
MATERIAL OR ADVERTISEMENT RELATING TO THE MEDIUM TERM NOTES IN AUSTRALIA
HAS BEEN MADE OR WILL BE MADE, UNLESS (i) THE MINIMUM AGGREGATE
CONSIDERATION PAYABLE BY EACH OFFEREE IS AT LEAST A $500,000 (DISREGARDING
MONIES LENT BY THE OFFEROR OR ITS ASSOCIATES) OR THE OFFER OTHERWISE DOES
NOT REQUIRE DISCLOSURE TO INVESTORS IN ACCORDANCE WITH PART 6D.2 OF THE
CORPORATIONS ACT 2001 OF AUSTRALIA, AND (ii) SUCH ACTION COMPLIES WITH ALL
APPLICABLE LAWS AND REGULATIONS AND DOES NOT REQUIRE ANY DOCUMENT TO BE
LODGED WITH THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION.
Austria
THE MEDIUM TERM NOTES MAY ONLY BE OFFERED IN THE REPUBLIC OF AUSTRIA IN
COMPLIANCE WITH THE PROVISIONS OF THE AUSTRIAN CAPITAL MARKET ACT AND OTHER
LAWS APPLICABLE IN THE REPUBLIC OF AUSTRIA GOVERNING THE OFFER AND SALE OF THE
MEDIUM TERM NOTES IN THE REPUBLIC OF AUSTRIA. THE MEDIUM TERM NOTES ARE NOT
REGISTERED OR OTHERWISE AUTHORISED FOR PUBLIC OFFER EITHER UNDER THE CAPITAL
MARKET ACT OR THE INVESTMENT FUND ACT. THE RECIPIENTS OF THIS PROSPECTUS AND
OTHER SELLING MATERIAL WITH RESPECT TO THE MEDIUM TERM NOTES HAVE BEEN
INDIVIDUALLY SELECTED AND IDENTIFIED BEFORE THE OFFER BEING MADE AND ARE
TARGETED EXCLUSIVELY ON THE BASIS OF A PRIVATE PLACEMENT. ACCORDINGLY, THE
MEDIUM TERM NOTES MAY NOT BE, AND ARE NOT BEING, OFFERED OR ADVERTISED PUBLICLY
OR OFFERED SIMILARLY UNDER EITHER THE CAPITAL MARKET ACT OR THE INVESTMENT FUND
ACT. THIS OFFER MAY NOT BE MADE TO ANY OTHER PERSONS THAN THE RECIPIENTS TO WHOM
THIS DOCUMENT IS PERSONALLY ADDRESSED.
Belgium
THE OFFER HAS NOT BEEN NOTIFIED TO THE BELGIAN BANKING, FINANCE AND INSURANCE
COMMISSION ("COMMISSION BANCAIRE, FINANCIÈRE ET DES ASSURANCES") BY THE OFFEROR
PURSUANT TO ARTICLES 5, 32 AND 52 OF THE BELGIAN LAW OF 16 JUNE 2006 ON THE PUBLIC
OFFERING OF FINANCIAL INSTRUMENTS AND THE ADMISSION OF FINANCIAL INSTRUMENTS TO
TRADING ON REGULATED MARKETS (THE "LAW ON PUBLIC OFFERINGS") NOR BY THE
COMPETENT AUTHORITY OF THE HOME MEMBER STATE OF THE ISSUER PURSUANT TO ARTICLE
38 OF THE LAW ON PUBLIC OFFERINGS. ACCORDINGLY THE OFFER MAY NOT BE ADVERTISED,
THE MEDIUM TERM NOTES MAY NOT BE OFFERED OR SOLD, AND THIS PROSPECTUS NOR ANY
OTHER INFORMATION CIRCULAR, BROCHURE OR SIMILAR DOCUMENT MAY NOT BE
DISTRIBUTED, DIRECTLY OR INDIRECTLY, TO ANY PERSON IN BELGIUM OTHER THAN (i)
ELIGIBLE QUALIFIED INVESTORS REFERRED TO IN ARTICLE 3.2(A) OF THE LAW ON PUBLIC
OFFERINGS OR (ii) INVESTORS WISHING TO ACQUIRE MEDIUM TERM NOTES FOR A TOTAL
CONSIDERATION OF AT LEAST EUR 50,000 (OR ITS EQUIVALENT IN FOREIGN CURRENCIES) PER
TRANSACTION, AS SPECIFIED IN ARTICLE 3.2(C) OF THE LAW ON PUBLIC OFFERINGS.
ANY OFFER TO SELL OR SALE OF MEDIUM TERM NOTES MUST BE MADE IN COMPLIANCE WITH
THE PROVISIONS OF THE LAW OF JULY 14, 1991 ON CONSUMER PROTECTION AND TRADE
PRACTICES ("SUR LES PRATIQUES DU COMMERCE ET SUR L'INFORMATION ET LA PROTECTION DU
CONSOMMATEUR"/"BETREFFENDE DE HANDELSPRAKTIJKEN EN DE VOORLICHTING EN
BESCHERMING VAN DE CONSUMENT"), TO THE EXTENT APPLICABLE PURSUANT TO THE ROYAL
DECREE OF DECEMBER 5, 2000 "RENDANT APPLICABLES AUX INSTRUMENTS FINANCIERS ET AUX
TITRES ET VALEURS CERTAINES DISPOSITIONS DE LA LOI DU 14 JUILLET 1991 SUR LES
PRATIQUES DU COMMERCE ET SUR L'INFORMATION ET LA PROTECTION DU
CONSOMMATEUR"/"WAARBIJ SOMMIGE BEPALINGEN VAN DE WET VAN 14 JULI 1991
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BETREFFENDE DE HANDELSPRAKTIJKEN EN DE VOORLICHTING EN BESCHERMING VAN DE
CONSUMENT, VAN TOEPASSING WORDEN VERKLAARD OP FINANCIËLE INSTRUMENTEN,
EFFECTEN EN WAARDEN".
Canada
For Ontario and Quebec Residents Only
THIS INFORMATION MEMORANDUM CONSTITUTES AN OFFERING OF THE MEDIUM TERM NOTES
WITHIN CANADA ONLY IN THOSE JURISDICTIONS AND TO THOSE PERSONS WHERE AND TO
WHOM THEY MAY BE LAWFULLY OFFERED FOR SALE, AND THEREIN ONLY BY PERSONS
PERMITTED TO SELL THE MEDIUM TERM NOTES. THIS INFORMATION MEMORANDUM IS NOT,
AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED AS, AN ADVERTISEMENT OR A PUBLIC
OFFERING OF THE MEDIUM TERM NOTES. NO SECURITIES COMMISSION OR SIMILAR AUTHORITY
IN CANADA HAS REVIEWED OR IN ANY WAY PASSED UPON THIS DOCUMENT OR THE MERITS OF
THE MEDIUM TERM NOTES AND ANY REPRESENTATION TO THE CONTRARY IS AN OFFENCE. THE
OFFERING OF THE MEDIUM TERM NOTES IN CANADA IS BEING MADE SOLELY BY THIS
INFORMATION MEMORANDUM PROVIDED TO POTENTIAL INVESTORS. NO PERSON HAS BEEN
AUTHORISED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED HEREIN OR THEREIN. THE DELIVERY OF THIS INFORMATION MEMORANDUM
DOES NOT IMPLY THAT ANY INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE SET FORTH ON THE COVER HEREOF.
THIS INFORMATION
MEMORANDUM CONSTITUTES AN OFFERING OF THE MEDIUM TERM NOTES IN THE ABOVEMENTIONED PROVINCES ONLY.
Resale Restrictions
THE DISTRIBUTION OF THE MEDIUM TERM NOTES IN CANADA IS BEING MADE ONLY ON A
PRIVATE PLACEMENT BASIS AND IS EXEMPT FROM THE REQUIREMENT THAT THE ISSUER
PREPARES AND FILES A PROSPECTUS WITH THE RELEVANT CANADIAN SECURITIES
REGULATORY AUTHORITIES. ACCORDINGLY, ANY RESALE OF MEDIUM TERM NOTES MUST BE
MADE IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS WHICH MAY REQUIRE RESALES TO
BE MADE IN ACCORDANCE WITH EXEMPTIONS FROM REGISTRATION AND PROSPECTUS
REQUIREMENTS. PURCHASERS ARE ADVISED TO SEEK LEGAL ADVICE PRIOR TO ANY RESALE OF
MEDIUM TERM NOTES.
Representations of Purchasers
EACH CANADIAN INVESTOR WHO PURCHASES MEDIUM TERM NOTES WILL BE DEEMED TO HAVE
REPRESENTED TO THE ISSUER AND THE MANAGER AND THE DEALERS THAT:
(A)
SUCH PURCHASER HAS REVIEWED THE TERMS REFERRED TO ABOVE UNDER
"RESALE RESTRICTIONS";
(B)
WHERE REQUIRED BY LAW, SUCH PURCHASER IS PURCHASING AS PRINCIPAL AND
NOT AS AGENT;
(C)
TO THE KNOWLEDGE OF SUCH PURCHASER, THE SALE OF ANY MEDIUM TERM
NOTES WAS NOT ACCOMPANIED BY ANY ADVERTISEMENT IN PRINTED MEDIA OF
GENERAL AND REGULAR PAID CIRCULATION, RADIO OR TELEVISION; AND
(D)
SUCH PURCHASER IS A "SOPHISTICATED PURCHASER" WITHIN THE MEANING OF
SECTION 43 OF THE SECURITIES ACT (QUEBEC) OR IS OTHERWISE PERMITTED
UNDER APPLICABLE SECURITIES LAWS TO PURCHASE MEDIUM TERM NOTES
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WITHOUT THE BENEFIT OF A PROSPECTUS QUALIFIED UNDER, OR REGISTRATION
UNDER, SUCH SECURITIES LAWS.
Taxation and Eligibility for Investment
PURCHASERS OF MEDIUM TERM NOTES SHOULD CONSULT THEIR OWN LEGAL AND TAX
ADVISERS WITH RESPECT TO THE TAX CONSEQUENCES OF AN INVESTMENT IN THE MEDIUM
TERM NOTES IN THEIR PARTICULAR CIRCUMSTANCES AND WITH RESPECT TO THE ELIGIBILITY
OF THE MEDIUM TERM NOTES FOR INVESTMENT BY THE PURCHASER UNDER RELEVANT
CANADIAN LEGISLATION.
Additional Risks
THE ISSUER'S INVESTMENTS WILL BE DENOMINATED IN CURRENCIES OTHER THAN CANADIAN
DOLLARS. THEREFORE, THE VALUE OF MEDIUM TERM NOTES TO CANADIAN INVESTORS MAY BE
AFFECTED BY FLUCTUATIONS IN THE RATE OF EXCHANGE BETWEEN THE CANADIAN DOLLAR
AND OTHER CURRENCIES.
Enforcement of Legal Rights
THE ISSUER HAS BEEN INCORPORATED UNDER THE LAWS OF IRELAND. THE ISSUER AND ITS
RESPECTIVE DIRECTORS AND OFFICERS AS WELL AS CERTAIN OF THE EXPERTS NAMED HEREIN
MAY BE LOCATED OUTSIDE OF CANADA AND, AS A RESULT, IT MAY NOT BE POSSIBLE FOR
CANADIAN PURCHASERS TO EFFECT SERVICE OF PROCESS WITHIN CANADA UPON THE ISSUER
OR SUCH PERSONS. ALL OR A SUBSTANTIAL PORTION OF THE ASSETS OF THE ISSUER AND SUCH
PERSONS MAY BE LOCATED OUTSIDE OF CANADA AND, AS A RESULT, IT MAY NOT BE POSSIBLE
TO SATISFY A JUDGMENT AGAINST THE ISSUER OR SUCH PERSONS IN CANADA OR TO ENFORCE
A JUDGMENT OBTAINED IN CANADIAN COURTS AGAINST THE ISSUER OR PERSONS OUTSIDE OF
CANADA.
Denmark
THIS INFORMATION MEMORANDUM HAS NOT BEEN AND WILL NOT BE FILED WITH OR
APPROVED BY THE DANISH FINANCIAL SUPERVISORY AUTHORITY OR ANY OTHER REGULATORY
AUTHORITY IN THE KINGDOM OF DENMARK.
THE MEDIUM TERM NOTES HAVE NOT BEEN OFFERED OR SOLD AND MAY NOT BE OFFERED,
SOLD OR DELIVERED DIRECTLY OR INDIRECTLY IN DENMARK, UNLESS IN COMPLIANCE WITH
CHAPTERS 6 OR 12 OF THE DANISH ACT ON TRADING IN SECURITIES AND EXECUTIVE ORDERS
ISSUED PURSUANT HERETO AS AMENDED FROM TIME TO TIME.
ACCORDINGLY, THIS
INFORMATION MEMORANDUM MAY NOT BE MADE AVAILABLE NOR MAY INTERESTS IN THE
ISSUER OTHERWISE BE MARKETED AND OFFERED FOR SALE IN DENMARK OTHER THAN IN
CIRCUMSTANCES WHICH ARE DEEMED NOT TO BE A MARKETING OR AN OFFER TO THE PUBLIC
IN DENMARK.
France
EACH OF THE MEDIUM TERM NOTE DEALERS AND THE ISSUER HAVE REPRESENTED AND
AGREED THAT, IN CONNECTION WITH THEIR INITIAL DISTRIBUTION, IT HAS NOT OFFERED OR
SOLD AND WILL NOT OFFER OR SELL, DIRECTLY OR INDIRECTLY, ANY MEDIUM TERM NOTES BY
WAY OF A PUBLIC OFFERING IN FRANCE (AN APPEL PUBLIC À L'ÉPARGNE, AS DEFINED IN
ARTICLES L-411-1, L-411-2, D-411-1 AND D-411-2 OF THE CODE MONÉTAIRE ET FINANCIER). THE
MEDIUM TERM NOTES MAY ONLY BE SUBSCRIBED FOR OR HELD BY (I) QUALIFIED INVESTORS
(INVESTISSEURS QUALIFIÉS), AS DEFINED BY ARTICLES L. 411-2 AND D. 411-1 OF THE CODE
MONÉTAIRE ET FINANCIER, ACTING FOR THEIR OWN ACCOUNT, (II) A RESTRICTED CIRCLE OF
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INVESTORS (CERCLE RESTREINT D'INVESTISSEURS) AS DEFINED BY ARTICLES L. 411-2 AND D. 4114 OF THE CODE MONÉTAIRE ET FINANCIER, ACTING FOR THEIR OWN ACCOUNT, OR (III) NONFRENCH RESIDENTS.
THIS PROSPECTUS IS FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE
REPRODUCED OR REDISTRIBUTED TO ANY OTHER PERSON. IT IS STRICTLY CONFIDENTIAL AND
IS SOLELY DESTINED FOR PERSONS OR INSTITUTIONS TO WHICH IT WAS INITIALLY SUPPLIED.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR AN INVITATION TO SUBSCRIBE FOR OR
TO PURCHASE ANY SECURITIES AND NEITHER THIS PROSPECTUS NOR ANYTHING CONTAINED
HEREIN SHALL FORM THE BASIS OF ANY CONTRACT OR COMMITMENT WHATSOEVER.
THIS PROSPECTUS MAY NOT BE DISTRIBUTED TO THE PUBLIC IN FRANCE OR USED IN
CONNECTION WITH ANY OFFER FOR SUBSCRIPTION OR SALE OF SECURITIES IN FRANCE OTHER
THAN IN ACCORDANCE WITH ARTICLES L-411-1, L-411-2, D-411-1 AND D-411-2 OF THE CODE
MONÉTAIRE ET FINANCIER. THIS PROSPECTUS HAS NOT BEEN SUBMITTED TO THE "AUTORITÉ
DES MARCHES FINANCIERS" FOR APPROVAL AND DOES NOT CONSTITUTE AN OFFER FOR SALE
OR SUBSCRIPTION OF SECURITIES.
ANY CONTACTS WITH POTENTIAL INVESTORS IN FRANCE DO NOT AND WILL NOT CONSTITUTE
FINANCIAL OR BANKING SOLICITATION (DÉMARCHAGE BANCAIRE OU FINANCIER) AS DEFINED
IN ARTICLES L. 341-1 ET SEQ. OF THE CODE MONÉTAIRE ET FINANCIER.
Germany
EACH DEALER HAS REPRESENTED, WARRANTED AND AGREED THAT THE MEDIUM TERM NOTES
MAY ONLY BE DISTRIBUTED OR ACQUIRED WITHIN THE FEDERAL REPUBLIC OF GERMANY IN
ACCORDANCE WITH THE GERMAN SECURITIES PROSPECTUS ACT (WERTPAPIERPROSPEKTGESETZ
- "WPPG"), THE GERMAN SALES PROSPECTUS ACT (WERTPAPIER-VERKAUFSPROSPEKTGESETZ "VERKPROSPG"), AND THE GERMAN INVESTMENT ACT (INVESTMENTGESETZ - "INVG") AND ANY
OTHER LAWS AND REGULATIONS APPLICABLE IN THE FEDERAL REPUBLIC OF GERMANY
GOVERNING THE ISSUE, OFFERING, DISTRIBUTION AND SALE OF THE MEDIUM TERM NOTES.
EACH DEALER HAS CONFIRMED THAT IT IS AWARE OF THE FACT THAT THE DISTRIBUTION OF
THE MEDIUM TERM NOTES HAS NOT BEEN NOTIFIED AND THE MEDIUM TERM NOTES ARE NOT
REGISTERED OR AUTHORIZED FOR PUBLIC DISTRIBUTION IN THE FEDERAL REPUBLIC OF
GERMANY AND THAT THIS INFORMATION MEMORANDUM HAS NOT BEEN FILED OR DEPOSITED
WITH THE FEDERAL FINANCIAL SUPERVISORY AUTHORITY (BUNDESANSTALT FÜR
FINANZDIENSTLEISTUNGSAUFSICHT - "BAFIN"). THEREFORE, EACH DEALER HAS FURTHER
REPRESENTED AND AGREED THAT THE MEDIUM TERM NOTES MUST NOT BE DISTRIBUTED (I) BY
THE WAY OF PUBLIC OFFERING WITHIN THE MEANING OF SECTION 2 NO. 4 OF THE WPPG OR (II)
BY THE WAY OF PUBLIC OFFERING WITHIN THE MEANING OF SECTION 8 F OF THE VERKPROSPG
OR (III) BY WAY OF A PUBLIC OFFER, PUBLIC ADVERTISEMENT OR IN ANY SIMILAR MANNER
WITHIN THE MEANING OF SECTION 2 (11) OF THE INVG NOR SHALL THIS INFORMATION
MEMORANDUM CONSTITUTE SUCH PUBLIC OFFER, PUBLIC ADVERTISEMENT OR SIMILAR OFFER.
FURTHERMORE, EACH DEALER HAS CONFIRMED THAT IT IS AWARE OF THE FACT THAT NO
GERMAN PROSPECTUS WITHIN THE MEANING OF THE WPPG, THE VERKPROSPG OR THE INVG HAS
BEEN OR WILL BE PREPARED, PUBLISHED OR OTHERWISE PROVIDED.
THIS INFORMATION MEMORANDUM SHALL ONLY BE ADDRESSED TO RECIPIENTS TO WHOM THIS
INFORMATION MEMORANDUM IS PERSONALLY ADDRESSED AND DOES NOT CONSTITUTE AN
OFFER OR ADVERTISEMENT TO THE PUBLIC NOR MAY IT BE SUPPLIED TO THE PUBLIC IN THE
FEDERAL REPUBLIC OF GERMANY OR USED IN CONNECTION WITH ANY OFFER FOR
SUBSCRIPTION OF THE MEDIUM TERM NOTES TO THE PUBLIC IN GERMANY.
IT CAN NOT TOTALLY BE EXCLUDED THAT THE MEDIUM TERM NOTES MAY FALL WITHIN THE
SCOPE OF THE GERMAN INVESTMENT TAX ACT (INVESTMENTSTEUERGESETZ - "INVSTG").
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THEREFORE, IT CANNOT BE EXCLUDED THAT GERMAN INVESTORS MAY BE FACED WITH TAXES
PURSUANT TO THE INVSTG. PLEASE NOTE THAT IT IS NOT CONTEMPLATED TO PROVIDE OR ISSUE
CERTAIN INFORMATION DESIGNATED IN THE INVSTG."
Greece
EACH PLACEMENT AGENT, MEDIUM TERM NOTE DEALER AND/OR MANAGER HAS REPRESENTED
AND AGREED THAT NO PUBLIC OFFERING OF THE MEDIUM TERM NOTES IS PERMITTED IN THE
HELLENIC REPUBLIC AND CONSEQUENTLY NO ADVERTISEMENT OF ANY KIND, NOTIFICATIONS,
STATEMENTS OR OTHER ACTIONS ARE PERMITTED TO BE TAKEN OR MADE IN THE HELLENIC
REPUBLIC WITH A VIEW TO ATTRACTING THE PUBLIC IN GREECE TO ACQUIRE OR OTHERWISE
INVEST IN THE MEDIUM TERM NOTES, OTHER THAN IN COMPLIANCE WITH THE LAWS
APPLICABLE AT THE TIME IN THE HELLENIC REPUBLIC GOVERNING THE ISSUE, OFFERING AND
SALE OF SECURITIES, INCLUDING ANY IMPLEMENTING LEGISLATION OF EU DIRECTIVE
2003/71/EC.
Hong Kong
THE CONTENTS OF THIS DOCUMENT HAVE NOT BEEN REVIEWED BY ANY REGULATORY
AUTHORITY IN HONG KONG. YOU ARE ADVISED TO EXERCISE CAUTION IN RELATION TO THE
OFFER. IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE CONTENTS IN THIS DOCUMENT, YOU
SHOULD OBTAIN INDEPENDENT PROFESSIONAL ADVICE.
IN HONG KONG THIS DOCUMENT MAY ONLY BE ISSUED, CIRCULATED OR DISTRIBUTED AND THE
NOTES MAY ONLY BE OFFERED FOR SUBSCRIPTION OR PURCHASE: (1) TO PERSONS WHO ARE
"PROFESSIONAL INVESTORS" AS DEFINED IN THE SECURITIES AND FUTURES ORDINANCE
(CHAPTER 571) OF HONG KONG AND ANY RULES MADE UNDER THE ORDINANCE; OR (2) IN OTHER
CIRCUMSTANCES: (A) WHICH DO NOT RESULT IN THIS DOCUMENT BEING A "PROSPECTUS" AS
DEFINED IN THE COMPANIES ORDINANCE (CHAPTER 32) OF HONG KONG OR WHICH DO NOT
CONSTITUTE AN OFFER TO THE PUBLIC WITHIN THE MEANING OF THAT ORDINANCE; AND (B) IN
WHICH THE ISSUE OR POSSESSION OF THIS DOCUMENT DOES NOT CONSTITUTE AN OFFENCE
UNDER SECTION 103(1) SECURITIES AND FUTURES ORDINANCE.
Iceland
THIS INFORMATION MEMORANDUM HAS BEEN ISSUED TO POTENTIAL PURCHASERS OF THE
MEDIUM TERM NOTES EXCLUSIVELY FOR THE PURPOSES OF CONSIDERING AN INVESTMENT IN
THE MEDIUM TERM NOTES. ACCORDINGLY, THIS INFORMATION MEMORANDUM AND ANY
RELEVANT INFORMATION MAY NOT BE USED FOR ANY OTHER PURPOSE OR PASSED ON TO ANY
OTHER PERSON IN ICELAND.
THE INVESTMENT DESCRIBED IN THIS INFORMATION MEMORANDUM IS NOT A PUBLIC OFFERING
OF SECURITIES. IT IS NOT REGISTERED FOR PUBLIC DISTRIBUTION IN ICELAND WITH THE
FINANCIAL SUPERVISORY AUTHORITY PURSUANT TO THE ICELANDIC ACT ON SECURITIES
TRANSACTIONS (THE "ACT") NO. 33/2003 AND SUPPLEMENTARY REGULATIONS.
THE MEDIUM TERM NOTES MAY NOT BE OFFERED OR SOLD BY MEANS OF THIS INFORMATION
MEMORANDUM OR ANYWAY LATER RESOLD OTHER THAN TO ENTITIES OR PERSONS DEFINED AS
INSTITUTIONAL INVESTORS WITHIN NO.7, ARTICLE 2, OF THE ACT. ANY RESALE OF THE MEDIUM
TERM NOTES IN ICELAND MUST TAKE PLACE IN ACCORDANCE WITH THE PROVISIONS OF THE
ACT.
Ireland
EACH MEDIUM TERM NOTE DEALER HAS CONFIRMED AND AGREED THAT:
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(A)
IT HAS NOT OFFERED OR SOLD AND WILL NOT OFFER OR SELL ANY MEDIUM TERM NOTES
TO THE PUBLIC WITHIN IRELAND, OTHERWISE THAN IN CONFORMITY WITH THE
PROVISIONS OF THE IRISH INVESTMENT INTERMEDIARIES ACT, 1995 (AS AMENDED),
INCLUDING, WITHOUT LIMITATION, SECTIONS 9 AND 23 THEREOF AND ANY CODES OF
CONDUCT RULES MADE UNDER SECTION 37 THEREOF AND THE PROVISIONS OF THE
INVESTOR COMPENSATION ACT, 1998;
(B)
IT HAS NOT OFFERED OR SOLD AND WILL NOT OFFER OR SELL ANY MEDIUM TERM NOTES
TO THE PUBLIC WITHIN IRELAND, OTHERWISE THAN IN CONFORMITY WITH THE
PROVISIONS OF THE IRISH CENTRAL BANK ACTS, 1942 – 1998 (AS AMENDED) AND THE
CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACTS 2003 TO 2004
AND ANY CODES OF CONDUCT RULES MADE UNDER SECTION 117(1) OF THE CENTRAL
BANK ACT, 1989;
(C)
IT HAS NOT OFFERED OR SOLD AND WILL NOT OFFER OR SELL ANY MEDIUM TERM NOTES
TO THE PUBLIC WITHIN IRELAND, OR DO ANYTHING IN IRELAND IN RESPECT OF THE
MEDIUM TERM NOTES OTHERWISE THAN IN CONFORMITY WITH THE PROVISIONS OF THE
IRISH PROSPECTUS (DIRECTIVE 2003/71/EC) REGULATIONS, 2005 AND ANY RULES ISSUED
UNDER SECTION 51 OF THE IRISH INVESTMENT FUNDS, COMPANIES AND MISCELLANEOUS
PROVISIONS ACT, 2005 BY THE FINANCIAL REGULATOR; AND
(D)
IT HAS NOT OFFERED OR SOLD AND WILL NOT OFFER OR SELL ANY MEDIUM TERM NOTES
TO THE PUBLIC WITHIN IRELAND, OR OTHERWISE ACT IN IRELAND IN RESPECT OF THE
MEDIUM TERM NOTES, OTHERWISE THAN IN CONFORMITY WITH THE PROVISIONS OF THE
IRISH MARKET ABUSE (DIRECTIVE 2003/6/EC) REGULATIONS, 2005 AND ANY RULES ISSUED
UNDER SECTION 34 OF THE IRISH INVESTMENT FUNDS, COMPANIES AND MISCELLANEOUS
PROVISIONS ACT, 2005 BY THE FINANCIAL REGULATOR.
Israel
IN THE STATE OF ISRAEL, THIS DOCUMENT WILL BE DISTRIBUTED ONLY IN A MANNER THAT
WILL NOT CONSTITUTE AN "OFFER TO THE PUBLIC" IN ACCORDANCE WITH THE SECURITIES
LAW, 5728 - 1968 ("THE SECURITIES LAW") SPECIFICALLY INCLUDING SECTIONS 15, 15A, 15B, 15C
AND 15D OF THE SECURITIES LAW. THE MEDIUM TERM NOTES OFFERED BY THIS DOCUMENT
MAY ONLY BE OFFERED TO INVESTORS OF THE TYPES LISTED IN THE FIRST SCHEDULE OF THE
SECURITIES LAW IN ADDITION TO NOT MORE THAN 35 OTHER INVESTORS DURING ANY GIVEN 12
MONTH PERIOD AND SUBJECT TO THE SECURITIES LAW AND ANY OTHER LAWS AND
REGULATIONS AS SHALL BE APPLICABLE IN THE STATE OF ISRAEL GOVERNING THE ISSUE, THE
OFFERING AND THE SALE OF SECURITIES.
Italy
THE OFFER OF THE MEDIUM TERM NOTES HAS NOT BEEN CLEARED BY CONSOB (THE ITALIAN
SECURITIES EXCHANGE COMMISSION) AND/OR THE BANK OF ITALY PURSUANT TO ITALIAN
SECURITIES LEGISLATION AND, ACCORDINGLY, NO MEDIUM TERM NOTES MAY BE OFFERED,
SOLD OR DELIVERED, NOR MAY COPIES OF THE PROSPECTUS OR OF ANY OTHER DOCUMENT
RELATING TO THE MEDIUM TERM NOTES BE DISTRIBUTED IN THE REPUBLIC OF ITALY, EXCEPT:
(A)
TO PROFESSIONAL INVESTORS ("OPERATORI QUALIFICATI"), AS DEFINED IN ARTICLE 31,
SECOND PARAGRAPH, OF CONSOB REGULATION NO. 11522 OF 1ST JULY, 1998, AS
AMENDED; OR
(B)
IN CIRCUMSTANCES WHICH ARE EXEMPTED FROM THE RULES ON SOLICITATION OF
INVESTMENTS PURSUANT TO ARTICLE 100 OF LEGISLATIVE DECREE NO. 58 OF 24TH
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FEBRUARY, 1998 (THE FINANCIAL SERVICES ACT) AND ARTICLE 33, FIRST PARAGRAPH, OF
CONSOB REGULATION NO. 11971 OF 14TH MAY, 1999, AS AMENDED.
ANY OFFER, SALE OR DELIVERY OF THE MEDIUM TERM NOTES OR DISTRIBUTION OF COPIES OF
THE PROSPECTUS OR ANY OTHER DOCUMENT RELATING TO THE MEDIUM TERM NOTES IN THE
REPUBLIC OF ITALY UNDER (A) OR (B) ABOVE MUST BE:
(A)
MADE BY AN INVESTMENT FIRM, BANK OR FINANCIAL INTERMEDIARY PERMITTED TO
CONDUCT SUCH ACTIVITIES IN THE REPUBLIC OF ITALY IN ACCORDANCE WITH THE
FINANCIAL SERVICES ACT AND LEGISLATIVE DECREE NO. 385 OF 1ST SEPTEMBER, 1993
(THE BANKING ACT), AS AMENDED;
(B)
IN COMPLIANCE WITH ARTICLE 129 OF THE BANKING ACT AND THE BANK OF ITALY
IMPLEMENTATION GUIDELINES PURSUANT TO WHICH THE ISSUE OR THE OFFER OF
MEDIUM TERM NOTES IN THE REPUBLIC OF ITALY MAY NEED TO BE PRECEDED AND
FOLLOWED BY AN APPROPRIATE NOTICE TO BE FILED WITH THE BANK OF ITALY
DEPENDING, AMONG OTHER THINGS, ON THE AGGREGATE VALUE OF THE MEDIUM TERM
NOTES ISSUED OR OFFERED IN THE REPUBLIC OF ITALY AND THEIR CHARACTERISTICS;
AND
(C)
IN ACCORDANCE WITH ANY OTHER APPLICABLE LAWS AND REGULATIONS.
PURSUANT TO ARTICLE 100-BIS OF THE FINANCIAL SERVICES ACT, TO THE EXTENT AN OFFER OF
MEDIUM TERM NOTES (OR ANY PART OF SUCH OFFER) IS MADE SOLELY TO PROFESSIONAL
INVESTORS AND THEN SUCH MEDIUM TERM NOTES ARE TRANSFERRED IN THE REPUBLIC OF
ITALY DURING THE PERIOD OF 12 MONTHS FROM THE DATE OF ISSUE OF THE MEDIUM TERM
NOTES, THE TRANSFERRING PROFESSIONAL INVESTORS WILL BE LIABLE TO ANY PURCHASERS
OF THE MEDIUM TERM NOTES WHO ARE NON-PROFESSIONAL INVESTORS FOR ANY DEFAULT BY
THE ISSUER IN ITS PAYMENT OBLIGATIONS UNDER THE MEDIUM TERM NOTES IF THE ISSUER IS
OR BECOMES INSOLVENT, EVEN WHERE THE SALE BY THE PROFESSIONAL INVESTOR TOOK
PLACE AT THE EXPRESS REQUEST OF THE PURCHASER. THESE PROVISIONS WILL NOT APPLY
WHERE THE PROFESSIONAL INVESTOR, PRIOR TO ANY SUCH TRANSFER OF THE MEDIUM TERM
NOTES, DELIVERED TO THE PURCHASER AN INFORMATION DOCUMENT CONTAINING ALL SUCH
INFORMATION AS IS REQUIRED BY CONSOB; HOWEVER, AS AT THE DATE HEREOF CONSOB HAS
NOT IMPLEMENTED ANY REGULATIONS SPECIFYING THE CONTENT OF SUCH INFORMATION
DOCUMENT.
INSOFAR AS THE REQUIREMENTS ABOVE ARE BASED ON LAWS WHICH ARE SUPERSEDED AT ANY
TIME PURSUANT TO THE IMPLEMENTATION OF THE DIRECTIVE 2003/71/EC (THE "PROSPECTUS
DIRECTIVE"), SUCH REQUIREMENTS SHALL BE REPLACED BY THE APPLICABLE REQUIREMENTS
UNDER THE PROSPECTUS DIRECTIVE OR THE RELEVANT IMPLEMENTING LAWS.
Japan
NO REGISTRATION PURSUANT TO ARTICLE 4, PARAGRAPH 1 OF THE SECURITIES AND EXCHANGE
LAW OF JAPAN (THE "LAW") HAS BEEN MADE OR WILL BE MADE WITH RESPECT TO THE
SOLICITATION OF THE APPLICATION FOR THE ACQUISITION OF THE MEDIUM TERM NOTES ON
THE GROUND THAT ARTICLE 2, PARAGRAPH 3, ITEM 2-(i) THEREOF IS APPLIED TO SUCH
SOLICITATION.
THE OFFERING OF THE MEDIUM TERM NOTES IS LIMITED TO AND MADE ONLY TO QUALIFIED
INSTITUTIONAL INVESTORS ("QIIs") AS DEFINED IN ARTICLE 2, PARAGRAPH 3, ITEM 1 OF THE LAW
AND ARTICLE 4 OF THE CABINET ORDER REGARDING DEFINITIONS UNDER ARTICLE 2 OF THE
LAW. NO TRANSFER OF THE MEDIUM TERM NOTES MAY BE MADE IN JAPAN TO PERSONS OTHER
THAN QIIs.
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Korea
EACH MEDIUM TERM NOTE DEALER HAS REPRESENTED AND AGREED, AND EACH MEDIUM TERM
NOTE DEALER APPOINTED UNDER THE MEDIUM TERM NOTE PROGRAMME WILL BE REQUIRED TO
REPRESENT AND AGREE, THAT MEDIUM TERM NOTES HAVE NOT BEEN AND WILL NOT BE
OFFERED, DELIVERED OR SOLD DIRECTLY OR INDIRECTLY IN KOREA OR TO ANY RESIDENT OF
KOREA OR TO OTHERS FOR RE-OFFERING OR RESALE DIRECTLY OR INDIRECTLY IN KOREA OR TO
ANY RESIDENT OF KOREA EXCEPT AS OTHERWISE PERMITTED UNDER APPLICABLE KOREAN
LAWS AND REGULATIONS.
EACH MEDIUM TERM NOTE DEALER HAS UNDERTAKEN, AND EACH FURTHER MEDIUM TERM
NOTE DEALER APPOINTED UNDER THE MEDIUM TERM NOTE PROGRAMME WILL BE REQUIRED TO
UNDERTAKE, TO ENSURE THAT ANY SECURITIES DEALER TO WHICH IT SELLS MEDIUM TERM
NOTES CONFIRMS THAT IT IS PURCHASING SUCH MEDIUM TERM NOTES AS PRINCIPAL AND
AGREES WITH SUCH MEDIUM TERM NOTE DEALER THAT IT WILL COMPLY WITH THE
RESTRICTIONS DESCRIBED ABOVE.
Kuwait
THIS INFORMATION MEMORANDUM HAS NOT BEEN APPROVED BY THE KUWAIT CENTRAL BANK
OR THE KUWAIT MINISTRY OF COMMERCE AND INDUSTRY, NOR HAS ANY OF THE ISSUER, THE
MANAGER OR ANY PLACEMENT AGENT RECEIVED AUTHORISATION OR LICENCING FROM THE
KUWAIT CENTRAL BANK OR THE KUWAIT MINISTRY OF COMMERCE AND INDUSTRY TO MARKET
OR SELL THE MEDIUM TERM NOTES WITHIN KUWAIT. THEREFORE, NO SERVICES RELATING TO
THE OFFERING, INCLUDING THE RECEIPT OF APPLICATIONS AND/OR THE ALLOTMENT OF
MEDIUM TERM NOTES OR THIS INFORMATION MEMORANDUM, OR BOTH MAY BE RENDERED
WITHIN KUWAIT BY ANY OF THE ISSUER, THE MANAGER OR ANY MEDIUM TERM NOTE DEALERS
OR PERSONS REPRESENTING ANY SUCH PARTIES.
Luxembourg
THE MEDIUM TERM NOTES MAY NOT BE OFFERED OR SOLD TO THE PUBLIC IN THE GRAND
DUCHY OF LUXEMBOURG, DIRECTLY OR INDIRECTLY, AND NEITHER THIS INFORMATION
MEMORANDUM NOR ANY OTHER CIRCULAR, PROSPECTUS, FORM OF APPLICATION,
ADVERTISEMENT OR OTHER MATERIAL MAY BE DISTRIBUTED, OR OTHERWISE MADE
AVAILABLE IN, OR FROM OR PUBLISHED IN, THE GRAND DUCHY OF LUXEMBOURG EXCEPT FOR
THE PURPOSES OF THE LISTING OF THE MEDIUM TERM NOTES ON THE LUXEMBOURG STOCK
EXCHANGE (IF APPLICABLE) AND EXCEPT IN CIRCUMSTANCES WHICH DO NOT CONSTITUTE A
PUBLIC OFFER OF SECURITIES.
THIS INFORMATION MEMORANDUM IS DISTRIBUTED UNDER THE CONDITION THAT THE ABOVE
OBLIGATIONS ARE ACCEPTED BY THE ISSUER AND ANY RECIPIENT AND THAT THE ISSUER AND
ANY RECIPIENT EACH ACKNOWLEDGE AND UNDERTAKE TO COMPLY WITH THE ABOVE.
The Netherlands
ALL MEDIUM TERM NOTES (INCLUDING RIGHTS REPRESENTING AN INTEREST IN A GLOBAL
MEDIUM TERM NOTE) ISSUED BY THE ISSUER SHALL BE OFFERED IN THE NETHERLANDS IN
ACCORDANCE WITH THE FOLLOWING CONDITIONS:
(A)
SUCH MEDIUM TERM NOTES SHALL UPON THE ISSUE DATE HAVE A
DENOMINATION OF AT LEAST EUR 100,000 (OR THE EQUIVALENT IN OTHER
CURRENCY);
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(B)
EITHER THE ISSUER IS NOT REASONABLY ABLE TO IDENTIFY ANY DUTCH
RESIDENT HOLDERS OF THE MEDIUM TERM NOTES ON THE ISSUE DATE OR, TO
THE EXTENT MEDIUM TERM NOTES ARE ISSUED DIRECTLY TO SUCH HOLDERS OR
ISSUED IN CIRCUMSTANCES WHERE THE ISSUER IS REASONABLY AWARE OF
THEIR IDENTITY ON OR PRIOR TO THE ISSUE DATE, SUCH DUTCH RESIDENT
HOLDERS MUST QUALIFY AS PROFESSIONAL MARKET PARTIES ("PMPS") AND BE
VERIFIED AS SUCH BY THE ISSUER ON OR PRIOR TO SUCH ISSUE DATE IN
ACCORDANCE WITH THE DUTCH CENTRAL BANK'S 2005 POLICY RULES PURSUANT
TO THE DUTCH BANKING ACT EXEMPTION REGULATION (BELEIDSREGEL 2005
KERNBEGRIPPEN MARKTTOETREDING EN HANDHAVING WTK 1992); AND
(C)
ALL MEDIUM TERM NOTES ARE HELD AT THE TIME OF ISSUANCE THROUGH A
CLEARING SYSTEM THAT IS ESTABLISHED IN AN EEA MEMBER STATE, THE
UNITED STATES, JAPAN, AUSTRALIA, CANADA OR SWITZERLAND IN WHICH
SECURITIES CAN ONLY BE HELD THROUGH A LICENCED BANK OR SECURITIES
FIRM OR DIRECTLY BY A MEMBER OF SUCH CLEARING SYSTEM QUALIFYING AS A
PMP.
FOR THE PURPOSES OF THIS PARAGRAPH, "DUTCH RESIDENT" AND "DUTCH RESIDENTS" SHALL
MEAN: INDIVIDUALS OR LEGAL ENTITIES ESTABLISHED, DOMICILED OR RESIDENT IN THE
NETHERLANDS.
New Zealand
THE MEDIUM TERM NOTES MAY NOT BE OFFERED, SOLD OR DELIVERED, DIRECTLY OR
INDIRECTLY, NOR MAY ANY PROSPECTUS OR ADVERTISEMENT IN RELATION TO ANY OFFER OF
MEDIUM TERM NOTES BE DISTRIBUTED IN NEW ZEALAND, OTHER THAN:
(I)
(II)
TO ANY OR ALL OF THE FOLLOWING PERSONS ONLY:
(A)
TO PERSONS WHOSE PRINCIPAL BUSINESS IS THE INVESTMENT OF MONEY
OR WHO, IN THE COURSE OF AND FOR THE PURPOSES OF THEIR BUSINESS,
HABITUALLY INVEST MONEY, AND/OR
(B)
PERSONS WHO ARE EACH REQUIRED TO PAY A MINIMUM SUBSCRIPTION
PRICE OF AT LEAST NZ$500,000 FOR THE MEDIUM TERM NOTES, AND/OR
(C)
ANY OTHER PERSON WHO IN ALL THE CIRCUMSTANCES CAN PROPERLY
BE REGARDED AS HAVING BEEN SELECTED OTHER THAN AS MEMBERS OF
THE PUBLIC; OR
IN OTHER CIRCUMSTANCES WHERE THERE IS NO CONTRAVENTION OF THE
SECURITIES ACT 1978 OF NEW ZEALAND.
NO NOTE HOLDER SHALL SUBSCRIBE FOR, OFFER, SELL OR DELIVER ANY NOTE OR DISTRIBUTE
ANY INFORMATION MEMORANDUM, ADVERTISEMENT OR OFFERING MATERIAL RELATING TO
THE MEDIUM TERM NOTES IN BREACH OF THE SECURITIES ACT 1978 AND, IN PARTICULAR, NO
NOTE HOLDER SHALL OFFER FOR SALE MEDIUM TERM NOTES TO ANY MEMBER OF THE PUBLIC
IN NEW ZEALAND IN BREACH OF THE SECURITIES ACT 1978. BY SUBSCRIBING FOR THE MEDIUM
TERM NOTES, EACH INVESTOR:
(A)
WARRANTS IT IS A PERSON DESCRIBED IN PARAGRAPH (I)(A) TO (I)(C) ABOVE;
(B)
UNDERTAKES TO COMPLY WITH THE ABOVE SELLING RESTRICTIONS; AND
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(C)
AGREES TO INDEMNIFY THE ISSUER AND EVERY PERSON ACTING ON BEHALF OF
THE ISSUER IN RESPECT OF ANY EXPENSE, LOSS OR LIABILITY SUSTAINED OR
INCURRED BY THOSE PERSONS AS A RESULT OF THE BREACH BY THE INVESTOR
OF THE ABOVE SELLING RESTRICTIONS."
Norway
THE MEDIUM TERM NOTES MAY BE OFFERED ONLY TO INSTITUTIONAL INVESTORS WITH A
MINIMUM SUBSCRIPTION AND ALLOTMENT AMOUNT PER INVESTOR OF EUR 40,000. THIS
INFORMATION MEMORANDUM HAS NEITHER BEEN APPROVED NOR DISAPPROVED BY THE OSLO
STOCK EXCHANGE NOR FILED WITH THE NORWEGIAN REGISTER OF BUSINESS ENTERPRISES.
People's Republic of China
THE MEDIUM TERM NOTES MAY NOT BE OFFERED OR SOLD IN THE PEOPLE'S REPUBLIC OF CHINA
(EXCLUDING HONG KONG, MACAU AND TAIWAN).
Portugal
THIS PROSPECTUS HAS NOT BEEN SUBMITTED FOR APPROVAL, NOR NOTIFIED TO COMISSÃO DE
MERCADO DE VALORES MOBILIARIOS. THE MEDIUM TERM NOTES HAVE NOT BEEN OFFERED,
ADVERTISED, SOLD OR DELIVERED IN CIRCUMSTANCES WHICH WOULD QUALIFY AS A PUBLIC
OFFER PURSUANT TO ARTICLE 109 OF THE CODIGO DOS VALORES MOBILIÁRIOS ("CVM") OR IN
CIRCUMSTANCES WHICH COULD QUALIFY THE ISSUE OF THE MEDIUM TERM NOTES AS AN ISSUE
IN THE PORTUGUESE MARKET. THE MEDIUM TERM NOTES HAVE NOT BEEN DIRECTLY OR
INDIRECTLY DISTRIBUTED AND THIS PROSPECTUS, ANY OTHER DOCUMENT, CIRCULAR,
ADVERTISEMENT OR ANY OFFERING MATERIAL WILL NOT BE DIRECTLY OR INDIRECTLY
DISTRIBUTED EXCEPT TO QUALIFIED INVESTORS AS DEFINED IN ARTICLE 30 OR REGISTERED
UNDER ARTICLE 110-A OF THE CVM IN ACCORDANCE WITH ALL APPLICABLE LAWS AND
REGULATIONS.
Qatar
NONE OF THE ISSUER, THE MANAGER OR THE DEALERS HAVE BEEN AUTHORIZED, NOR HAS ANY
APPLICATION BEEN MADE, OR WILL BE MADE, FOR SUCH AUTHORISATION UNDER ARTICLE (4)
LAW NO.(14) OF THE YEAR 1995 TO REGISTER THE ISSUER ON ANY EXCHANGE IN QATAR.
ACCORDINGLY, THE MEDIUM TERM NOTES MAY NOT BE OFFERED, SOLD OR DELIVERED, NOR
MAY THIS INFORMATION MEMORANDUM OR ANY OFFERING MATERIAL RELATING TO THE
MEDIUM TERM NOTES BE DISTRIBUTED IN THE STATE OF QATAR BY THE ISSUER, THE MANAGER
OR THE DEALERS OR ANY PERSON ACTING ON THEIR BEHALF.
Saudi Arabia
THIS INFORMATION MEMORANDUM HAS NOT BEEN APPROVED BY THE SAUDI ARABIAN
MONETARY AGENCY, THE CAPITAL MARKETS AUTHORITY OR THE SAUDI ARABIAN MINISTRY OF
COMMERCE AND INDUSTRY OR ANY OTHER AUTHORITIES IN SAUDI ARABIA, NOR HAS ANY OF
THE ISSUER, THE MANAGER OR THE DEALERS RECEIVED AUTHORISATION OR LICENCING FROM
THE SAUDI ARABIAN MONETARY AGENCY, THE CAPITAL MARKETS AUTHORITY OR THE SAUDI
ARABIAN MINISTRY OF COMMERCE AND INDUSTRY OR ANY OTHER AUTHORITIES IN SAUDI
ARABIA TO MARKET OR SELL THE MEDIUM TERM NOTES WITHIN SAUDI ARABIA. THEREFORE,
THE MEDIUM TERM NOTES MAY NOT BE MARKETED OR SOLD IN SAUDI ARABIA AND NO
SERVICES RELATING TO THE OFFERING, INCLUDING THE RECEIPT OF APPLICATIONS OR THIS
INFORMATION MEMORANDUM, OR BOTH, MAY BE RENDERED WITHIN SAUDI ARABIA BY ANY OF
THE ISSUER, THE MANAGER OR THE DEALERS OR PERSONS REPRESENTING SUCH PARTIES.
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Singapore
THIS PROSPECTUS HAS NOT BEEN REGISTERED AS A PROSPECTUS WITH THE MONETARY
AUTHORITY OF SINGAPORE UNDER THE SECURITIES AND FUTURES ACT (CAP. 289) OF SINGAPORE
(THE "SECURITIES AND FUTURES ACT"). ACCORDINGLY, THE MEDIUM TERM NOTES MAY NOT BE
OFFERED OR SOLD OR MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE
NOR MAY THIS PROSPECTUS OR ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH
THE OFFER OR SALE OR INVITATION FOR SUBSCRIPTION OR PURCHASE OF ANY MEDIUM TERM
NOTES BE CIRCULATED OR DISTRIBUTED, WHETHER DIRECTLY OR INDIRECTLY, TO THE PUBLIC
OR ANY MEMBER OF THE PUBLIC IN SINGAPORE OTHER THAN UNDER EXEMPTIONS PROVIDED IN
THE SECURITIES AND FUTURES ACT FOR OFFERS MADE (A) TO AN INSTITUTIONAL INVESTOR
PURSUANT TO SECTION 274 OF THE SECURITIES AND FUTURES ACT, (B) TO A RELEVANT PERSON,
OR ANY PERSON PURSUANT TO SECTION 275 OF THE SECURITIES AND FUTURES ACT, AND IN
ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SECURITIES AND
FUTURES ACT OR (C) OTHERWISE THAN PURSUANT TO, AND IN ACCORDANCE WITH THE
CONDITIONS OF, ANY OTHER APPLICABLE PROVISION OF THE SECURITIES AND FUTURES ACT.
INVESTORS SHOULD NOTE THAT ANY SUBSEQUENT SALE OF THE MEDIUM TERM NOTES
ACQUIRED PURSUANT TO AN OFFER IN THIS PROSPECTUS MADE UNDER EXEMPTIONS (A) OR (B)
ABOVE WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF INITIAL ACQUISITION IS
RESTRICTED TO (A) INSTITUTIONAL INVESTORS, (B) RELEVANT PERSONS AS DEFINED IN SECTION
275(2) OF THE SECURITIES AND FUTURES ACT, AND (C) PERSONS PURSUANT TO AN OFFER
REFERRED TO IN SECTION 275(1A) OF THE SECURITIES AND FUTURES ACT.
THE ISSUER AND THE DEALERS AGREE TO NOTIFY (WHETHER THROUGH THE DISTRIBUTION OF
THIS PROSPECTUS OR ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH THE OFFER
OR SALE OR INVITATION FOR SUBSCRIPTION OR PURCHASE OF ANY MEDIUM TERM NOTES OR
OTHERWISE) EACH OF THE FOLLOWING RELEVANT PERSONS SPECIFIED IN SECTION 276 OF THE
SECURITIES AND FUTURES ACT WHICH HAS SUBSCRIBED OR PURCHASED NOTES FROM AND
THROUGH SUCH ISSUER OR DEALER, NAMELY A PERSON WHO IS:
(I)
A CORPORATION (WHICH IS NOT AN ACCREDITED INVESTOR) THE SOLE BUSINESS
OF WHICH IS TO HOLD INVESTMENTS AND THE ENTIRE SHARE CAPITAL OF WHICH
IS OWNED BY ONE OR MORE INDIVIDUALS, EACH OF WHOM IS AN ACCREDITED
INVESTOR; OR
(II)
A TRUST (WHERE THE TRUSTEE IS NOT AN ACCREDITED INVESTOR) WHOSE SOLE
PURPOSE IS TO HOLD INVESTMENTS AND EACH BENEFICIARY IS AN ACCREDITED
INVESTOR,
THAT SECURITIES OF THAT CORPORATION OR THE BENEFICIARIES' RIGHTS AND INTEREST IN THE
TRUST SHALL NOT BE TRANSFERABLE FOR SIX MONTHS AFTER THAT CORPORATION OR TRUST
HAS ACQUIRED THE MEDIUM TERM NOTES UNDER SECTION 275 OF THE SECURITIES AND
FUTURES ACT EXCEPT: (I) TO AN INSTITUTIONAL INVESTOR UNDER SECTION 274 OF THE
SECURITIES AND FUTURES ACT OR TO A RELEVANT PERSON, OR ANY PERSON PURSUANT TO
SECTION 275 OF THE SECURITIES AND FUTURES ACT, AND IN ACCORDANCE WITH THE
CONDITIONS, SPECIFIED IN SECTION 275 OF THE SECURITIES AND FUTURES ACT; (II) WHERE NO
CONSIDERATION IS GIVEN FOR THE TRANSFER; OR (III) BY OPERATION OF LAW.
South Africa
NOTHING CONTAINED IN THIS INFORMATION MEMORANDUM SHALL CONSTITUTE ANY KIND OF
OFFER OF MEDIUM TERM NOTES TO THE PUBLIC FOR THE PURPOSES OF SECTION 141 OF THE
COMPANIES ACT 1973, OR ANY KIND OF OFFER OF MEDIUM TERM NOTES TO THE PUBLIC FOR THE
PURPOSES OF SECTIONS 142-147 OF THE COMPANIES ACT 1973.
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Spain
THE MEDIUM TERM NOTES MAY ONLY BE OFFERED IN SPAIN (I) TO QUALIFIED INVESTORS AND
(II) IN DENOMINATIONS OF AT LEAST EUR 50,000. THE MEDIUM TERM NOTES HAVE NOT BEEN
REGISTERED WITH THE CNMV AND ACCORDINGLY NO PUBLICITY MAY BE CARRIED OUT IN
SPAIN NOR ANY DOCUMENT OR OFFER MATERIAL BE DISTRIBUTED IN SPAIN OR TARGETED TO
SPANISH RESIDENT INVESTOR SAVE IN COMPLIANCE AND IN ACCORDANCE WITH THE
REQUIREMENTS SET OUT IN ROYAL DECREE 291/1992 AS AMENDED.
Taiwan
THE MEDIUM TERM NOTES MAY BE MADE AVAILABLE FOR PURCHASE OUTSIDE TAIWAN BY
INVESTORS RESIDING IN TAIWAN (EITHER DIRECTLY OR THROUGH PROPERLY LICENCED
TAIWAN INTERMEDIARIES ACTING ON BEHALF OF SUCH INVESTORS) BUT MAY NOT BE OFFERED
OR SOLD IN TAIWAN.
UAE
THIS PROSPECTUS HAS NOT BEEN APPROVED BY THE UAE CENTRAL BANK OR THE UAE
MINISTRY OF ECONOMY, EMIRATES SECURITIES AND COMMODITIES AUTHORITY OR DUBAI
INTERNATIONAL FINANCIAL EXCHANGE, NOR HAS ANY OF THE ISSUER, THE JOINT LEAD
MANAGERS OR THE PLACEMENT AGENTS RECEIVED AUTHORISATION OR LICENCING FROM THE
UAE CENTRAL BANK OR THE UAE MINISTRY OF ECONOMY, EMIRATES SECURITIES AND
COMMODITIES AUTHORITY OR DUBAI INTERNATIONAL FINANCIAL EXCHANGE TO MARKET OR
SELL THE MEDIUM TERM NOTES WITHIN THE UAE. THEREFORE, THE MEDIUM TERM NOTES MAY
NOT BE MARKETED OR SOLD IN THE UAE AND NO SERVICES RELATING TO THE OFFERING,
INCLUDING THE RECEIPT OF APPLICATIONS AND/OR THE ALLOTMENT OR INVESTMENTS OR THIS
PROSPECTUS, OR BOTH, MAY BE RENDERED WITHIN THE UAE BY ANY OF THE ISSUER, THE
DEALERS OR PERSONS REPRESENTING ANY SUCH PARTIES.
General
Other than with respect to the admission to listing, trading and/or quotation by such one or more listing authorities,
stock exchanges and/or quotation systems as may be specified in any relevant Final Terms, no action has been or
will be taken in any country or jurisdiction by the Issuer or the Medium Term Note Dealers that would permit a
public offering of Medium Term Notes, or possession or distribution of any offering material in relation thereto, in
any country or jurisdiction where action for that purpose is required. Persons into whose hands this Information
Memorandum or any Final Terms comes are required by the Issuer and the Medium Term Note Dealers to comply
with all applicable Laws and regulations in each country or jurisdiction in or from which they purchase, offer, sell or
deliver Medium Term Notes or have in their possession or distribute such offering material, in all cases at their own
expense.
The Medium Term Note Dealer Agreement provides that the Medium Term Note Dealers shall not be bound by any
of the restrictions relating to any specific jurisdiction (set out above) to the extent that such restrictions shall, as a
result of change(s) or change(s) in official interpretation, after the date hereof, of applicable Laws and regulations,
no longer be applicable but without prejudice to the obligations of the Medium Term Note Dealers described in the
paragraph headed "General information" above.
Selling restrictions may be supplemented or modified with the agreement of the Issuer. Any such supplement or
modification will be set out in the relevant Final Terms (in the case of a supplement or modification relevant only to
a particular Tranche of Medium Term Notes) or (in any other case) in a supplement to this Information
Memorandum.
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The Issuers have agreed to indemnify the Medium Term Note Dealers against and contribute toward certain
liabilities, including liabilities under the Securities Act, and to reimburse the Medium Term Note Dealers for certain
expenses.
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CERTAIN ERISA AND OTHER CONSIDERATIONS
ERISA Considerations
Section 406 of the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and Section
4975 of the Code prohibit pension, profit-sharing or other employee benefit plans as defined in Section 3(3) of
ERISA that are subject to Title I of ERISA, individual retirement accounts, specified types of Keogh Plans or other
plans as defined in Section 4975 of the Code that are subject to Section 4975 of the Code and other entities, such as
collective investment funds or insurance company general or separate accounts which are deemed to hold "plan
assets" of these plans and accounts (each of the foregoing, a "Plan") from engaging in specified transactions with
persons that are "parties in interest" under ERISA or "disqualified persons" under Section 4975 of the Code with
respect to that Plan. A violation of these "prohibited transaction" rules may result in an excise tax or other penalties
and liabilities under ERISA and Section 4975 of the Code for these persons. In addition, Title I of ERISA also
requires fiduciaries of a Plan subject to ERISA to make investments that are prudent, diversified and in accordance
with the governing plan documents.
Employee benefit plans that are governmental plans (as defined in Section 3(32) of ERISA), foreign plans and
certain church plans (as defined in Section 3(33) of ERISA) are not subject to ERISA requirements. However, nonU.S., federal, state or local laws or regulations governing the investment and management of the assets of
governmental or foreign plans may contain fiduciary and prohibited transaction requirements similar to those under
ERISA and Section 4975 of the Code discussed herein.
Certain transactions involving the Issuers might be deemed to constitute prohibited transactions under ERISA and
Section 4975 of the Code with respect to a Plan that purchased Medium Term Notes if assets of the Issuers were
deemed to be assets of the Plan. Under a regulation issued by the United States Department of Labor (the "Plan
Assets Regulation"), the assets of the Issuers would be treated as plan assets of a Plan for the purposes of ERISA
and Section 4975 of the Code only if the Plan acquired an "equity interest" in the Issuers and none of the exceptions
to plan assets contained in the Plan Assets Regulation, as modified by Section 3(42) of ERISA, were applicable. An
equity interest is defined under the Plan Assets 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 the subject, assuming the Medium Term Notes constitute debt for local law
purposes, the Issuers believe that, at the time of their issuance, the Medium Term Notes should not be treated as an
equity interest in the Issuers for purposes of the Plan Assets Regulation. This determination is based in part upon
the traditional debt features of the Medium Term Notes, including the reasonable expectation of purchasers of such
notes that such notes will be repaid when due, traditional default remedies, as well as the absence of conversion
rights, warrants and other typical equity features. The debt treatment of the Medium Term Notes for ERISA
purposes could change if the Issuers incur losses. This risk of recharacterisation is enhanced for notes that are
subordinated to other classes of securities.
However, without regard to whether the Medium Term Notes are treated as an equity interest for purposes of the
Plan Assets Regulation, the acquisition or holding of the Medium Term Notes by or on behalf of a Plan could be
considered to give rise to a prohibited transaction if the Issuers, the Security Trustee, the Paying Agents, the
Registrar, the Calculation Agent, the Liquidity Provider, the Transfer Agent, the Custodian, any Dealer, the
Administrator, or the Manager is or becomes a party in interest or a disqualified person with respect to such Plan.
Certain exemptions from the prohibited transaction rules could be applicable to the purchase and holding of the
Medium Term Notes by a Plan depending on the type and circumstances of the plan fiduciary making the decision to
acquire the Medium Term Notes. Included among these exemptions are: Prohibited Transaction Class Exemption
("PTCE") 96-23, regarding transactions effected by "in-house asset managers"; PTCE 95-60, regarding investments
by insurance company general accounts; PTCE 91-38, regarding investments by bank collective investment funds;
PTCE 90-1, regarding investments by insurance company pooled separate accounts; and PTCE 84-14, regarding
transactions effected by "qualified professional asset managers". In addition to the class exemptions listed above,
the Pension Protection Act of 2006 provides a statutory exemption under Section 408(b)(17) of ERISA and Section
4975(d)(20) of the Code for prohibited transactions between a Plan and a person or entity that is a party in interest to
such Plan solely by reason of providing services to the Plan (other than a party in interest that is a fiduciary, or its
affiliate, that has or exercises discretionary authority or control or renders investment advice with respect to the
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assets of the Plan involved in the transaction), provided that there is adequate consideration for the transaction.
Even if the conditions specified in one or more of these exemptions are met, the scope of the relief provided by these
exemptions might or might not cover all acts which might be construed as prohibited transactions. There can be no
assurance that any of these, or any other exemption, will be available with respect to any particular transaction
involving the Medium Term Notes and prospective purchasers that are Plans should consult with their advisors
regarding the applicability of any such exemption.
Each purchaser or subsequent transferee of a Medium Term Note or a beneficial interest therein will be deemed to
represent, warrant and covenant to the Transfer Agent, the Issuer and the Co-Issuer that either (i) it is not, and is not
acting on behalf of, a Plan or a governmental or other employee benefit plan which is subject to any federal, state,
local or non-U.S. Law that is substantially similar to the provisions of Title I of ERISA or Section 4975 of the Code,
or (ii) its acquisition, holding and disposition of such Medium Term Note will not result in a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or violate any applicable law that is
substantially similar to Title I of ERISA or Section 4975 of the Code.
Any fiduciary of a Plan that proposes to cause a Plan to purchase a Medium Term Note should consult with its own
legal and tax advisors with respect to the potential applicability of ERISA and the Code to such investments and the
consequences of such an investment under ERISA and the Code. Moreover, each fiduciary of a Plan should
determine whether, under the general fiduciary standards of ERISA, an investment in such Medium Term Note or an
interest therein is appropriate for the Plan, taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
Each fiduciary of a Plan or other employee benefit plan that proposes to cause a Plan or other employee benefit plan
to purchase such a Medium Term Note or an interest therein should also consult with its own legal and tax advisors
with respect to the ability to make the representations and warranties described above.
USA PATRIOT Act Considerations
In order to comply with U.S. laws and regulations, including the USA PATRIOT Act, aimed at the prevention of
money laundering and the prohibition of transactions with certain countries, organisations and individuals, the
Issuers, the Manager or the Medium Term Note Dealers may request from an investor or a prospective investor such
information as they reasonably believe is necessary to verify the identity of such investor or prospective investor,
and to determine whether such investor or prospective investor is permitted to be an investor in the Notes pursuant
to such laws and regulations. In the event of the delay or failure by any investor or prospective investor in the notes
to deliver to the Issuers any such requested information, any of the Issuers, the Manager or the Medium Term Note
Dealers may (i) require such investor to immediately transfer any note, or beneficial interest therein, held by such
investor to an investor meeting the requirements of this offering memorandum and the indenture, (ii) refuse to
accept the subscription of a prospective investor, or (iii) take any other action required to comply with such laws and
regulations. In addition, following the delivery of any such information, the Issuers or the Manager may take any of
the actions identified in clauses (i)-(iii) above. In certain circumstances, the Issuers, the Manager or the Medium
Term Note Dealers may be required to provide information about investors to regulatory authorities and to take any
further action as may be required by law. None of the Issuers, the Manager, the Medium Term Note Dealers or the
Security Trustee will be liable for any loss or injury to an investor or prospective investor that may occur as a result
of disclosing such information, refusing to accept the subscription of any potential investor, redeeming any
investment in a Medium Term Note or taking any other action required by law.
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GENERAL INFORMATION
Listing
This Information Memorandum has been approved by the Irish Financial Services Regulatory Authority (the
"Financial Regulator") in its capacity as competent authority under Directive 2003/71/EC (the "Prospectus
Directive") and constitutes a base prospectus for the purposes of Article 5.4 of the Prospectus Directive.
Application will be made to The Irish Stock Exchange Limited (the "Irish Stock Exchange") for any Medium Term
Notes issued under the Medium Term Note Programme during the period of 12 months from the date of this
Information Memorandum to be admitted to the Irish Stock Exchange's Official List (the "Official List") and to
trading on its regulated market (the "Market").
References in this Information Memorandum to Medium Term Notes being "listed" (and all related references) shall
mean that such Medium Term Notes have been admitted to the Official List and admitted to trading on the Market.
The Market is a regulated market for the purposes of the Investment Services Directive 93/22/EEC (the "Investment
Services Directive") (a "Regulated Market"). As at the date of this Prospectus, the fees for listing on the Irish
Stock Exchange are €500 per listing or, for a further tranche of Notes from an existing series, €250.
Prior to the listing of any Medium Term Notes, the constitutional documents of the Issuer and the legal notice
relating to the issue will be registered with the Irish Listing Agent, where copies of these documents may be
obtained upon request.
However, Medium Term Notes may be issued pursuant to the Medium Term Note Programme which will not be
listed on the Irish Stock Exchange or any other stock exchange or which will be listed on such stock exchange
(other than in the United States of America) as the Issuer and the relevant Medium Term Note Dealer(s) may agree.
Authorisations
The establishment of the Programme and the issue of Medium Term Notes under the Programme was authorised by
a resolution of the board of directors of the Issuer dated 20 June 2007 and a resolution of the board of directors of
the Co-Issuer dated 25 June 2007. The Issuer and the Co-Issuer, as applicable, have obtained or will obtain from
time to time all necessary consents, approvals and authorisations in connection with the issue and performance of
the Medium Term Notes.
Litigation
There are no governmental, legal or arbitration proceedings within the last 12 months before the date hereof against
or affecting the Issuer or the Co-Issuer or any of their respective assets or revenues, nor is the Issuer or the Co-Issuer
aware of any pending or threatened proceedings of such kind, which may have, or have had significant effects on the
Issuer's or Co-Issuer's financial position or profitability.
No significant change
Other than as disclosed in relation to the Issuer under "Description of the Issuer and the Co-Issuer – Capitalisation
and Indebtedness – Capitalisation of Issuer", as at the date hereof, since 8 September, 2006 (being the date of
incorporation of the Issuer), there has been no significant change in the financial or trading position of the Issuer or
the Co-Issuer.
No financial information
Since their respective dates of organisation, neither the Issuer nor the Co-Issuer, as the case may be, has carried out
any operations (other than those incidental to their respective organisation and registration) and no financial
statements have been made up as at the date of this Information Memorandum.
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Documents available for inspection
For so long as the Medium Term Note Programme remains in effect or any Medium Term Notes are outstanding,
copies of the following documents may be inspected, and for so long as any Medium Term Notes issued under the
Medium Term Note Programme are listed on the Irish Stock Exchange, copies of the following documents will be
physically available and at the Issuer's expense may be obtained free of charge during normal business hours at the
specified office of the Principal Paying Agent and the Irish Paying Agent and at the office of the Issuer (in each case
during normal business hours on a day which is not a Saturday, Sunday or other public holiday and on which
commercial banks in the cities in which such specified offices are located are open for business), namely:
(a)
the Medium Term Note Dealer Agreement;
(b)
the Custody Agreement;
(c)
the Security Trust Deed;
(d)
the Transaction Terms Agreement;
(e)
the Management Agreement;
(f)
the Administrative Services Agreement;
(g)
the Memorandum and Articles of Association of the Issuer and the certificate of formation and the
operating agreement of the Co-Issuer; and
(h)
any Final Terms relating to Medium Term Notes which are admitted to listing, trading and/or quotation by
any listing authority, stock exchange and/or quotation system. (In the case of any Medium Term Notes
which are not admitted to listing, trading and/or quotation by any listing authority, stock exchange and/or
quotation system, copies of the relevant Final Terms will only be available for inspection by the relevant
Medium Term Noteholders).
In addition, copies of each Final Terms relating to Medium Term Notes which are admitted to listing, trading and/or
quotation by any listing authority, stock exchange and/or quotation system will be obtainable at the Issuer's expense
from the specified office of the relevant Paying Agent which, in the case of Medium Term Notes listed on the Irish
Stock Exchange, shall be the Irish Paying Agent. (In the case of any Medium Term Notes which are not admitted to
listing, trading and/or quotation by any listing authority, stock exchange and/or quotation system, copies of the
relevant Final Terms will only be available for inspection by the relevant Noteholders at the offices of the Paying
Agents).
In addition to the documents mentioned above, copies of all other documents mentioned in the Information
Memorandum will at the Issuer's expense be available for inspection at the specified office of the Irish Paying Agent
during normal business hours.
Financial statements available
For so long as the Programme remains in effect or any Medium Term Notes are outstanding, copies of the most
recent publicly available audited financial statements of the Issuer beginning with such financial statements for the
period from 8 September 2006 to 31 December 2007 may be obtained during normal business hours at the specified
office of the Principal Paying Agent and the Irish Paying Agent.
Neither the Issuer nor the Co-Issuer produces interim financial statements and the Co-Issuer does not publish
audited annual financial statements.
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CERTAIN DEFINITIONS
The following expressions have the following meanings:
"Account Control Agreement" means such agreement or other document each of which upon such execution and
delivery shall, together with the Security Trust Deed and the Deposit Account Control and Security Agreement in
form and substance as is necessary to perfect the Security Trustee's security interest in the Collateral referred to
therein.
"Accounts" means the Custody Accounts, including the Euro Accounts and the U.S. Accounts and each other
account established by or on behalf of the Issuer;
"Acquire", "Acquired", "Acquiring" or "Acquisition" when used in respect of any Investment, Investment
Derivative or Associated Derivative, means an Investment, Investment Derivative or Associated Derivative that has
been, is being, or will be, purchased or entered into, or the purchasing of or entering into such Investment,
Investment Derivative or Associated Derivative, as the case may be;
"Administrative Expenses" means payment of the following amounts in the following order of priority:
first, any fees, costs and expenses (including reasonable legal fees and expenses) owing to the:
(i)
Security Trustee, any Receiver or Insolvency Administrator; then to
(ii)
Custodian; then to
(iii)
Securities Agents; and then to
(iv)
any fees and expenses incurred by the Issuers for the purpose of maintaining their
corporate or limited liability company existence or authority to engage in the transactions
contemplated by the Transaction Documents; and
second, any indemnification obligations of the Issuer to the:
(i)
Security Trustee including any Receiver or Insolvency Administrator and Administrator;
and then to
(ii)
The Securities Agents, the Manager, the Custodian and the Dealers; in each case up to an
amount not exceeding the Indemnity Cap.
"Administrative Services Agreement" means the Administrative Services Agreement dated on or before the
Closing Date among the Issuer, the Co-Issuer, the Administrator and the Manager;
"Administrator's Fee" has the meaning ascribed to it in Clause 4 (Fees of the Administrator) of the Administrative
Services Agreement and shall be exclusive of value added tax thereof (if any);
"Affiliate" of any specified person means any other person, directly or indirectly, controlling or controlled by or
under common control with such specified person. For purposes of this definition, "control" when used with respect
to any specified person means the power to direct the management and policies of such person, 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; provided that the Issuer shall be deemed to have no
Affiliates other than the Co-Issuer;
"Agreed-Upon Investments" means, unless such criteria is amended with Rating Confirmation, Investments rated
AAA by S&P and Aaa by Moody's and AAA by Fitch and which meet certain criteria the adoption or amendment of
which is subject to Rating Confirmation from time to time;
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"Applicable Business Day Convention" means the Business Day Convention which may be specified in the
relevant Final Terms as applicable to any date in respect of the Medium Term Notes. Where the relevant Final
Terms specifies "No Adjustment" in relation to any date, such date will not be adjusted in accordance with any
Business Day Convention. Where the Final Terms fails either to specify an applicable Business Day Convention or
"No Adjustment" for the purposes of an Interest Payment Date, then in the case of Medium Term Notes which bear
interest at a fixed rate, "No Adjustment" shall be deemed to have been so specified and in the case of Medium Term
Notes which bear interest at a floating rate, the Modified Following Business Day Convention shall be deemed to
have been so specified. Different Business Day Conventions may apply, or be specified in relation to, the Interest
Payment Dates and any other date or dates in respect of any Medium Term Notes;
"Application" has the meaning ascribed to such term in the Administrative Services Agreement;
"Approved Bank" means any bank whose short-term unsecured and unsubordinated debt is rated at least A-1 or
above by S&P, F1 or above by Fitch and P-1 or above by Moody's; provided however that, the Custodian, each
Securities Agent and any other bank appointed by the Issuer (in any capacity) with responsibility for or custody over
all or any material portion of the Collateral shall, in each case, only be deemed to meet the requirements of this
definition if it is a bank whose short-term unsecured and unsubordinated debt is rated at least A-1 or above by S&P,
F1+ or above by Fitch and P-1 or above by Moody's;
"Associated Derivative" means any agreement, other than any Investment Derivative, entered into by the Issuer,
which constitutes or provides for a rate swap transaction, basis swap, forward rate transaction, equity or equity index
swap, equity or equity index option, credit or credit index swap, credit default swap, credit or credit index option,
bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction
(including any option with respect to any of these transactions) or any combination of these transactions;
"Associated Derivative Counterparty" means any Eligible Associated Derivative Counterparty with whom the
Issuer has entered into an Associated Derivative;
"Automatic Rolling Maturity Capital Note" means a Capital Note in respect of which the Expected Maturity Date
automatically rolls forward, subject to (i) the Capital Noteholder's right to elect that it should not do so or (ii) the
Automatic Rolling Maturity Maximum Expected Maturity Date, as described in Condition 13(b) (Automatic Rolling
Maturity Capital Notes), such Capital Note being neither a Fixed Maturity Capital Note nor an Optional Rolling
Maturity Capital Note;
"Automatic Rolling Maturity Maximum Expected Maturity Date" means, in respect of a Tranche of Capital
Notes, the date specified as such in the Final Terms relating to such Tranche of Capital Notes;
"Available Liquidity" means, in each of the Liquidity Tests, the sum of the forms of liquidity which are listed as
being acceptable for consideration (i.e. given credit) in such test;
"Business Day" means any day of the year other than a Saturday, Sunday or any day on which banks are required or
authorised by Law to close in Düsseldorf, Federal Republic of Germany, London, United Kingdom, Dublin, Ireland
or New York, United States of America; provided that, in connection with the making of any payment or the transfer
of any security, the term "Business Day" shall mean any day of the year other than a Saturday, Sunday or any day on
which banks are required or authorised by Law to close in Düsseldorf, Federal Republic of Germany, London,
United Kingdom, Dublin, Ireland or New York, United States of America, or the city in which such payment is to be
made or such security is to be delivered;
"Business Day Convention" means a convention for adjusting any date if it would otherwise fall on a day that is not
a Business Day and the Business Day Conventions, where specified in the relevant Final Terms in relation to any
date applicable to any Medium Term Notes, shall have the meanings ascribed to them in the Conditions of the
Medium Term Notes;
(a)
"Floating Rate Convention" is defined in Condition 8(c)(ii);
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(b)
"Following Business Day Convention" means that the relevant date shall be postponed to the first
following day that is a Business Day;
(c)
"Modified Following Business Day Convention" or "Modified Business Day Convention" means that
the relevant date shall be postponed to the first following day that is a Business Day unless that day falls in
the next calendar month in which case that date will be the first preceding day that is a Business Day;
(d)
"Preceding Business Day Convention" means that the relevant date shall be brought forward to the first
preceding day that is a Business Day;
(e)
"FRN Convention" means that each relevant date shall be the date which numerically corresponds to the
preceding such date in the calendar month which is the number of months specified in the relevant Final
Terms after the calendar month in which the preceding such date occurred provided, however, that:
(i)
if there is no such numerically corresponding day in the calendar month in which any such date
should occur, then such date will be the last day which is a Business Day in that calendar month;
(ii)
if any such date would otherwise fall on a day which is not a Business Day, then such date will be
the first following day which is a Business Day unless that day falls in the next calendar month, in
which case it will be the first preceding day which is a Business Day; and
(iii)
if the preceding such date occurred on the last day in a calendar month which was a Business Day,
then all subsequent such dates will be the last day which is a Business Day in the calendar month
which is the specified number of months after the calendar month in which the preceding such
date occurred;
"Calculation Agent" means the Principal Paying Agent or such other person specified in the relevant Final Terms
as the party responsible for calculating the Rate(s) of Interest and Interest Amount(s) and/or such other amount(s) as
may be specified in the relevant Final Terms and any successor to such institution in its capacity as such;
"Capital Note Dealer Agreement" means the dealer agreement relating to the Capital Notes dated on or about the
Closing Date and entered into by the Issuers and the Capital Note Dealers;
"Capital Noteholder" means the holder of a Capital Note;
"Capital Note Obligations" means the aggregate unpaid principal of, and unpaid interest accrued and to accrue up
to the repayment date, if any, on, the Capital Notes and the obligations of the Issuers to any Term Note Agent in
respect of reimbursement obligations for advances made by such Term Note Agent on behalf of the Issuer in respect
of maturing Capital Notes provided for in the Term Note Agreements, and, except as otherwise restricted above, all
other amounts owing from time to time by the Issuers under the Term Note Agreements in respect of Capital Notes,
in each case regardless of whether such obligations and liabilities are absolute or contingent, due or not due,
liquidated or unliquidated and whether or not for the payment of money or the performance or non-performance of
any act;
"Cash Account" means the deposit account that is established or maintained in accordance with, or is subject to, the
Custody Agreement and maintained at The Bank of New York, London branch, as Custodian for all cash in any
currency received by the Custodian on behalf of the Issuer whether, in the case of the Issuer, in respect of the
issuance of Notes or Investments or otherwise under the account number of 2687558400;
"Cash Equivalents" means Investments which are either cash in any Eligible Currency, Breakable Deposits, Money
Market Funds or other Investments proposed by the Manager and in connection with which Rating Confirmation has
been obtained from time to time. All such Investments shall be considered to be from the Cash Equivalent
Investment Class;
"CDO Securities" means collateralised debt obligations;
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"Charge" means any Security Interest expressed to be created pursuant to the Security Trust Deed;
"Class" means the Senior Capital Notes, the Mezzanine Capital Notes, or the Junior Capital Notes, as the case may
be;
"Clearing System" means Clearstream, Luxembourg, Euroclear, Euroclear France S.A./N.V. as operator of the
Euroclear clearing system, DTC and such other clearance or depository systems or recognised exchanges for use in
connection with transactions relating to Debt Securities, Associated Derivatives and Investment Derivatives and any
depository or nominee for any of the foregoing;
"Closing Date" means 27 June 2007;
"CMBS Securities" means commercial mortgage-backed securities;
"Collateral" means the UK Collateral and the U.S. Collateral;
"Commercial Paper Programme Agreements" means the USCP Documents, the ECP Documents and, unless the
context requires or the Manager in good faith determines otherwise, each other document or an agreement entered
into by, the Issuer or Co-Issuer in connection therewith;
"Committed Liquidity" means any of (a) amounts available for drawing under Liquidity Facility Agreements
(other than Breakable Deposits) provided by an Eligible Liquidity Provider, (b) amounts available for drawing under
Breakable Deposits with Eligible Deposit Banks and meeting such criteria for Breakable Deposits the adoption or
amendment of which is subject to Rating Confirmation, and (c) amounts available for drawing under Liquidity
Arrangements (not described in (a)) and other liquidity arrangements that meet such criteria the adoption or
amendment of which is subject to Rating Confirmation;
"Committed Repo Agreement" means an agreement (other than a Repo Agreement) entered into by the Issuer on a
committed basis in accordance with guidelines the adoption or amendment of which is subject to Rating
Confirmation, pursuant to which the Issuer may sell, on a same-day basis, specified amounts of particular Debt
Securities at a pre-agreed price in return for an obligation on the part of the Issuer to repurchase such Debt Securities
(or Debt Securities equivalent thereto) at a future date for a pre-agreed repurchase price, together with any additional
documentation evidencing such Committed Repo Transactions;
"Committed Repo Facilities" means facilities under which the Issuer pays an ongoing commitment fee to an
Eligible Committed Repo Counterparty for the right, with same day availability, to enter into Committed Repo
Transactions (in accordance with criteria the adoption or amendment of which is subject to Rating Confirmation)
with such Eligible Committed Repo Counterparty on pre-agreed terms;
"Committed Repo Transactions" means transactions entered into by the Issuer pursuant to a Committed Repo
Facility;
"Compliance Tests" means the Investment Portfolio Parameter Tests, the Liquidity Tests, the Capital Tests, the
Market Sensitivity Tests, the Weighted Average Life of Senior Funding Test and the Put Redemption Tests. The list
of tests comprising the Compliance Tests may be amended from time to time provided that a Rating Confirmation is
obtained;
"Composite Deemed Rating" has the meaning ascribed thereto in paragraph 2.1(b) in Schedule 3 (Investment
Portfolio Parameters) to the Management Agreement;
"Corporates" means debt securities issued by corporations;
"Country of Investment" means:
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(a)
for Investments where the Investment Class is Structured Finance, the country or region within which, in
the reasonable commercial judgment of the Manager, the majority of underlying assets with respect to such
Structured Finance Investment is located;
(b)
for Investments where the Investment Class is either a Sovereign or U.S. Government Agency and for
certain other Investments the adoption or amendment of the criteria for which is subject to Rating
Confirmation, the jurisdiction of the issuer of the relevant security; or
(c)
for all other Investments, as determined using methodologies the adoption or amendment of which is
subject to Rating Confirmation;
"CP Documents" means, as the context may require, the ECP Documents and/or the USCP Documents;
"CP Obligations" means the aggregate unpaid face amount, or principal of and premium, if any, on, and unpaid
interest accrued and to accrue up to the Expected U.S. Liquidity Note Maturity Date in the case of U.S. Liquidity
Notes and the Final Maturity, in the case of USCP Notes which are not Liquidity Notes and ECP Notes (and, in the
case of U.S. Extended Notes, unpaid interest accrued and to accrue through repayment of such USCP Note), if any,
on the USCP Notes and ECP Notes and the obligations of the Issuer to any ECP Agent and the Issuer and the CoIssuer to any USCP Agent in respect of reimbursement obligations for advances made by such agents on behalf of
the Issuer and/or Co-Issuer in respect of maturing USCP Notes and ECP Notes provided for in the CP Documents,
and, except as otherwise restricted above, all other amounts owing from time to time under the CP Documents, in
each case regardless of whether such obligations and liabilities are absolute or contingent, due or not due, liquidated
or unliquidated and whether or not for the payment of money or the performance or non-performance of any act;
"Credit Portfolio" means the Investment Portfolio together with all outstanding Associated Derivatives;
"Credit Portfolio Value" means unless such definition is changed with Rating Confirmation (i) the sum of the
Value of all Investments (excluding Cash Equivalents) included in the Investment Portfolio and (ii) the aggregate
Value of all Associated Derivatives, except for certain Investments and those Associated Derivatives which may be
excluded from such calculation subject to Rating Confirmation from time to time. Credit Portfolio Value may also,
where the context so requires, include the Value of Investments which are subject to Repo Agreements, Reverse
Repo Agreements, Committed Repo Agreements, Securities Lending Agreements or Investment Derivatives, which
are posted to a counterparty under any such agreement;
"Custody Accounts" means, collectively, the deposit accounts and securities accounts, and all sub-accounts thereof,
if any, that are established or maintained in accordance with, or are subject to, the Custody Agreement and
designated as custody accounts, and any successor custody accounts established in accordance with Clause 14.1
(Establishment of Custody Accounts) of the Security Trust Deed;
"Dealers" means, as the context requires, any or all of the USCP Placement Agents, the ECP Dealers, the Capital
Note Dealers and the Medium Term Note Dealers;
"Debt Security" means, unless such definition is amended with Rating Confirmation, any bond, debenture, note or
other security evidencing debt and all moneys, rights or property which may at any time accrue or be offered
(whether by way of bonus, redemption, preference, option or otherwise) in respect of any of the foregoing and any
certificates, receipts, warrants or other instruments (whether in registered or unregistered form) representing rights
to receive, purchase or subscribe for any of the foregoing or evidencing or representing any other rights or interests
therein (including any of the foregoing not constituted, evidenced or represented by a certificate or other document
or instrument but an entry in the books or other permanent records of the issuer, a trustee or other fiduciary thereof,
a financial intermediary or a depository) but does not include any of the foregoing if issued by the Issuer or the CoIssuer;
"Deemed Rating" means for the relevant Rating Agency in respect of an Investment, either:
(a)
the public rating assigned by such Rating Agency;
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(b)
the credit estimate assigned by such Rating Agency; or
(c)
the rating assigned by such Rating Agency as the Deemed Rating using notching methodology the adoption
or amendment of which is subject to Rating Confirmation;
provided that, if a Fitch public rating is not available for an Investment, only the lower of the public ratings of S&P
and Moody's will be used in determining the Deemed Rating and provided, further, that the methodology for
determining the Deemed Rating is subject to modification upon Rating Confirmation.
In all cases the Deemed Rating of a Cash Equivalent shall be AAA or A-1+ with respect to S&P, AAA or F1+ for
Fitch and Aaa or P-1 with respect to Moody's;
"Definitive" means, with regard to a Note, that such Note is in definitive form;
"Deposited Funds" means all funds at any time, and from time to time, on deposit in or otherwise to the credit of
the Accounts, including proceeds drawn under Liquidity Arrangements;
"Derivative Counterparty" means, as the context may require, any Associated Derivative Counterparty or
Investment Derivative Counterparty;
"Derivative Obligations" means the aggregate unpaid amounts owing by the Issuer to the applicable Derivative
Counterparties, regardless of whether such amounts are absolute or contingent, due or not due, liquidated or
unliquidated and whether or not for the payment of money or the performance or non-performance of any act
(except in the case of a Derivative Transaction where the relevant Investment Counterparty has a claim over
Designated Investments and no further claims (over and above such designated investments) against the Issuer);
"Derivative Specified Default" means, with respect to a Derivative, (i) an event of default in relation to the Issuer
under Section 5(a)(i) or (ii) a non-payment by the Issuer under Section 6(d)(ii), in either case, of the ISDA Master
Agreement (1992 or 2002 Edition) relating to such Derivative or, as the case may be, pursuant to the equivalent
provisions of any similar master derivative document;
"Derivative Transaction" means an Associated Derivative, Repo Agreement, Reverse Repo Agreement,
Committed Repo Agreement, Securities Lending Agreement or, as the case may be, Investment Derivative under the
terms of which amounts payable or deliverable to the relevant counterparty are determined by reference to, relate to
or are limited to the payment of or from the proceeds of Designated Investments;
"Derivatives" means as the context may require, any Associated Derivatives and/or Investment Derivatives;
"Designated Investments" means Investments of the Issuer designated as such, on the records of the Issuer, for the
purposes of a Derivative Transaction;
"Distributable Profits" means the amount (expressed in Dollars) determined by the Issuer's board of directors
(upon the recommendation of the Manager) in its sole and absolute discretion two Business Days before each Profit
Distribution Date as being the amount prudent (in the interests of the holders of the Capital Notes outstanding as a
whole) to pay, having regard to the profits and any reserves of the Issuer (and after taking into account, inter alia,
accrued income on the Investments, accrued financing costs relating to the Senior Funding and the Capital Notes
(but excluding Variable Margin), realised losses and other fees, costs and expenses of the Issuers, including the
amortisation over time of the initial upfront costs of the Issuers) by way of Variable Margin on the Capital Notes
outstanding entitled to receive Variable Margin and as an Incentive Management Fee to the Manager. For the
avoidance of doubt Distributable Profits may be determined by the board of directors on the basis of net profit
expectations over a period of several previous and future Profit Accrual Periods, rather than purely on the actual
accrued net profits in the Profit Accrual Period then most recently concluded, in its sole discretion;
"Distribution Rate" means, in respect of any Series of Medium Term Notes, the rate specified as such in the
applicable Final Terms, as varied in accordance with the relevant Distribution Rate Schedule (if any);
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"Distribution Rate Schedule" means in relation to any Series of Medium Term Notes, the schedule identified as
such (if any) in the Final Terms in relation to such Series;
"Dollar Equivalent" means, on any day of determination, in relation to an amount denominated in Dollars, that
amount and, in relation to an amount denominated in an Optional Currency, the amount in Dollars equivalent to that
amount of such Optional Currency based upon the then Exchange Rate;
"DTC Rules" means the rules, regulations and procedures creating and affecting DTC, its operations and its
Participants;
"Dual Currency Interest Medium Term Note" means a Medium Term Note whose "Interest Basis" is designated
in the applicable Final Terms as "Dual Currency Interest;"
"Dual Currency Redemption Medium Term Note" means a Medium Term Note whose "Redemption/Payment
Basis" is designated in the applicable Final Terms as "Dual Currency Redemption;"
"ECP Agent" means each issue agent, paying agent, calculation agent, transfer agent, reference agent, registrar,
depositary, note trustee or other similar agent, depositary or trustee acting as an agent under an ECP Document;
"ECP Dealer" means each person from time to time acting as dealer for the ECP Notes under an ECP Dealer
Agreement;
"ECP Dealer Agreement" means each dealer agreement entered into by the Issuer in connection with the issuance
of ECP Notes;
"ECP Deed of Covenant" means each deed of covenant entered into by the Issuer in connection with the issuance
of ECP Notes;
"ECP Documents" means each ECP Note, each ECP Dealer Agreement, each ECP Deed of Covenant and each
ECP Issuing and Paying Agency Agreement and unless the context otherwise requires or the Manager in good faith
determines otherwise, each other document or agreement entered into by, or on behalf of, the Issuer in connection
therewith;
"ECP Issuing and Paying Agency Agreement" means each issuing and paying agency agreement entered into by
the Issuer in connection with the issuance of ECP Notes;
"ECP Notes" means the short-term promissory notes of the Issuer issued pursuant to the terms and conditions of the
ECP Documents, including all Liquidity Notes and Extended Maturity Notes thereunder;
"Effective Net Asset Value" means the Dollar Equivalent of the sum of the Market Value of Investments (excluding
Investment Derivatives unless Rating Confirmation is obtained) plus the sum of the Market Value of Associated
Derivatives minus, inter alia, the Senior Obligations provided that this definition may be amended from time to time
provided that a Rating Confirmation is obtained;
"Eligible Associated Derivative Counterparty" means a person who at the time of entering into any Associated
Derivatives shall be required to be (i) either (A) both a QIB and QP or (B) a Non-U.S. Person and (ii) whose shortterm unsecured and unsubordinated debt obligations (or those of any credit support provider or guarantor) are rated
at least A-1 by S&P, whose short-term and long-term (if any) unsecured and unsubordinated debt obligations (or
those of any credit support provider or guarantor) are rated at least F1 and A (if any) by Fitch and whose short-term
and long-term (if any) unsecured and unsubordinated debt obligations (or those of any credit support provider or
guarantor) are rated at least P-1 and A3 (if any) by Moody's, respectively, or a person who meets such other criteria
the adoption or amendment of which is subject to Rating Confirmation;
"Eligible Committed Repo Counterparty" means any counterparty to a Committed Repo Agreement, such
counterparty at the time of entering into the Committed Repo Agreement being required to (i) be (A) both a QIB and
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QP or (B) a Non-U.S. Person and (ii) have a short-term, unsecured and unsubordinated rating of at least A-1 or
above by S&P and F1 or above by Fitch and a short-term and long-term (if any) unsecured and unsubordinated
rating of P-1 and A3 by Moody's or to meet such other criteria, the adoption or amendment of which is subject to
Rating Confirmation from time to time;
"Eligible Counterparty" means a counterparty which at the time of entering into any Securities Lending
Agreement, Reverse Repo Agreement, Repo Agreement or Liquidity Arrangement shall be required to be (i) either
(A) both a QIB and QP or (B) a Non-U.S. Person and (ii) has a short-term, unsecured and unsubordinated rating of
A-1 or above by S&P and F1 or above by Fitch and a short-term and long-term (if any) unsecured and
unsubordinated rating of P-1 and A-3 (if any) by Moody's;
"Eligible Currency" means one of the following currencies or any currency that replaces such currency: Dollars,
Australian Dollars, Canadian Dollars, Danish Krone, Euro, Hong Kong Dollars, Japanese Yen, New Zealand
Dollars, Norwegian Krone, Pounds Sterling, Swedish Krone, Swiss Francs or any other currency the adoption or
amendment of criteria for which is subject to Rating Confirmation;
"Eligible Deposit Bank" means any bank or financial institution, which (i) is either (A) both a QIB and QP or (B) a
Non-U.S. Person and (ii) has a short-term, unsecured and unsubordinated rating of at least A-1 or above by S&P, a
short-term and long-term (if any) unsecured and unsubordinated rating of P-1 and A3 (if any) by Moody's and a
short-term, unsecured and unsubordinated rating of F1 or above by Fitch;
"Eligible Investment Derivative Counterparty" means a person who at the time of entering into any Investment
Derivatives shall be required to be (i) either (A) both a QIB and QP or (B) a Non-U.S. Person and (ii) whose shortterm, unsecured and unsubordinated debt obligations (or those of any credit support provider or guarantor) are rated
at least A-1 by S&P, whose short-term unsecured and unsubordinated debt obligations (or those of any credit
support provider or guarantor) are rated at least F1 by Fitch and whose short-term and long-term (if any) unsecured
and unsubordinated debt obligations (or those of any credit support provider or guarantor) are rated at least P-1 and
A-3 (if any) by Moody's, respectively, or a person who meets such other criteria the adoption or amendment of
which is subject to Rating Confirmation;
"Eligible Jurisdiction" means any country with a foreign currency sovereign rating of at least AA- by S&P, AA- by
Fitch and Aa3 by Moody's, and shall include those countries listed in the table under the heading "Maximum
Country of Investment Concentration Test" in Schedule 3 (Investment Portfolio Parameters) to the Management
Agreement or any other country subject to Rating Confirmation from time to time;
"Eligible Limit" means the limit described as such in each Investment Portfolio Parameter Test;
"Eligible Liquidity Provider" means any bank or financial institution which at the time of entering into any
Liquidity Arrangement shall be required to be (i) either (A) both a QIB and QP or (B) a Non-U.S. Person, (ii) has, or
whose payment obligations under a Liquidity Facility Agreement are guaranteed by a bank or financial institution
which has, a short-term, unsecured and unsubordinated rating of at least A-1 or above by S&P and F1 or above by
Fitch and a short-term and long-term (if any) unsecured and unsubordinated rating of P-1 and A3 (if any) by
Moody's and (iii) can receive payments from the Issuer free of Irish withholding tax;
"Eligible Puttable Investment Counterparty" means a counterparty which at the time of entering into any Puttable
Investment shall be required to be (i) either (A) both a QIB and QP or (B) a Non-U.S. Person and (ii) has a shortterm, unsecured and unsubordinated rating of at least A-1 or above by S&P and F1 or above by Fitch and a shortterm and long-term (if any) unsecured and unsubordinated rating of P-1 and A3 (if any) by Moody's;
"Emergency Back-Up Manager" means the Administrator or any other person with experience in managing
structured investment vehicles appointed in the capacity of Emergency Back-Up Manager under and pursuant to the
Management Agreement and as to which a Rating Confirmation has been received;
"Enforcement Date" means the earlier to occur of (a) the date on which the Security Trustee gives a Mandatory
Acceleration Event Notice or the Manager, the Enforcement Manager, or the Receiver, as the case may be,
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determines that a Senior Creditor Payment Event occurred and has given written notice thereof to the Security
Trustee, and (b) the date on which the Security Trustee gives an Enforcement Notice;
"Enforcement Event" means each of the following events:
(a)
the occurrence of a default, other than a Technical Default, in payment of any principal of, or interest on,
any Senior Notes when due;
(b)
the occurrence of (i) a default, other than a Technical Default, in payment of interest (excluding Variable
Margin) on any Capital Note (other than on any Junior Capital Note) on the Legal Maturity Date relating to
such Capital Note or (ii) the failure of the Issuer (for reasons other than Technical Default) to redeem any
Capital Note (other than any Junior Capital Note) in accordance with the Conditions of the Capital Notes
on the Legal Maturity Date relating to such Capital Note;
(c)
the occurrence of a Liquidity Specified Default, other than a Technical Default;
(d)
the occurrence of a Derivative Specified Default, other than a Technical Default;
(e)
the occurrence of a Repo Specified Default;
(f)
the occurrence of a Mandatory Acceleration Event; or
(g)
a breach of the Major Capital Loss Test if such breach remains unremedied immediately following the
expiry of a cure period of five Business Days commencing on the date of such breach;
"Enforcement Manager" means IKB Credit Asset Management GmbH, in its capacity as Enforcement Manager
under the Management Agreement, or any successor appointed pursuant to Clause 6.2 (Replacement of Manager) of
the Security Trust Deed;
"Enforcement Manager Fee" means the fee to be paid to the Enforcement Manager in accordance with the
Management Agreement, which fee shall be 0.05 per cent. of the average daily Market Value of the Investment
Portfolio (excluding Cash Equivalents) on the relevant Profit Distribution Date;
"Enforcement Notice" means a notice from the Security Trustee sent in accordance with Clause 6.3 (Notice of
Enforcement Events) of the Security Trust Deed;
"EU Insolvency Regulation" means the Council Regulation (EC) No. 1346/2000 of 29 May 2000 on insolvency
proceedings;
"EURIBOR" means the Euro-zone interbank offered rate;
"Euro Accounts" means the deposit accounts maintained at the Bank of New York, London branch, titled the ECP
Account, the Euro Medium Term Notes Account and the Euro Capital Notes Account, and having the account
numbers 431331, 431330 and 431332 respectively;
"Euroclear System" means the clearing system for internationally traded securities operated under contract by
Euroclear;
"Euro LIBOR" means LIBOR denominated in Euros;
"Euro zone" means the zone comprising the Member States of the European Union which adopt or have adopted the
Euro as their lawful currency;
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"Exchange Agent" means the Principal Paying Agent or such successor Exchange Agent as may be appointed
pursuant to Clause 18.5 (Term Note Agent’s appointment of successor) or Clause 18.4 (Additional and successor
Term Note Agents) to the Term Note Agency Agreement;
"Exchange Rate" means, for each currency and at any time, the value of that currency in Dollars using the spot rate
of exchange available to the Administrator or the Manager, as the context requires, acting on behalf of the Issuer, in
the foreign exchange markets at the relevant time on any Business Day (expressed such that one unit of the currency
equals a fraction or a number of Dollars);
"Expected Final Maturity" means the expected final maturity date of an Investment;
"Expected Final Maturity at Point of Purchase Condition" has the meaning ascribed to it in Schedule 4 of the
Management Agreement;
"Expected Maturity Date" for a Capital Note means, depending on the Maturity Type specified in the relevant
Final Terms:
(a)
in the case of a Fixed Maturity Capital Note, the Interest Payment Date specified as such in the relevant
Final Terms;
(b)
in the case of an Automatic Rolling Maturity Capital Note, the Interest Payment Date specified as such in
the relevant Final Terms, in each case as extended, if applicable, pursuant to Condition 13(b) (Automatic
Rolling Maturity Capital Note); and
(c)
in the case of an Optional Rolling Maturity Capital Note, the Interest Payment Date specified as such in the
relevant Final Terms or, if the Capital Noteholder has delivered a Maturity Extension Notice as described
in Condition 13(c) (Optional Rolling Maturity Capital Notes), the date specified as such in the Maturity
Extension Notice (or, if the Capital Noteholder has delivered more than one Maturity Extension Notice, the
date specified as such in the latest Maturity Extension Notice so delivered);
“Expected U.S. Liquidity Note Maturity Date” means the maturity date of the U.S. Liquidity Notes, as set forth in
the USCP Documents.
"Exposure" means, unless such definition is modified with Rating Confirmation, the Dollar Equivalent of (a) in
relation to an Investment, the principal amount outstanding of such Investment, (b) in relation to a Single Obligor
Group comprising Investments, the sum of the principal amount outstanding of the Investments included in such
Single Obligor Group, provided that, in both cases, such principal amount outstanding may be amended by a
conversion factor for certain Investments the adoption or amendment of criteria for which is subject to Rating
Confirmation from time to time (or, for (a) and (b) above, where the Investment is an Investment Derivative, the
principal amount outstanding of the reference obligation under such Investment Derivative) and (c) in relation to a
Derivative Counterparty, the most recent net Market Value of all Associated Derivatives or Investment Derivatives,
as the case may be, with such Derivative Counterparty unless, in each case, Rating Confirmation is obtained;
"Extended Maturity Note" means each Liquidity Note the maturity of which has been extended pursuant to, and in
accordance with, the relevant CP Documents;
"Financial Institutions" means debt securities issued by financial institutions;
"Fixed Applicable Exchange Rate" means, in respect of each Capital Note denominated in a currency other than
Dollars, the exchange rate between such other currency and Dollars specified as such in the applicable Final Terms
or otherwise in the terms of issue of such Capital Notes;
"Fixed Dollar Equivalent Nominal Amount" means, in relation to a Capital Note denominated in Dollars, the
nominal amount thereof and, in relation to a Capital Note denominated in a currency other than Dollars, the amount
in Dollars equivalent to the nominal amount thereof based upon the Fixed Applicable Exchange Rate;
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"Fixed Rate Medium Term Note" means a Medium Term Note whose "Interest Basis" is designated in the
applicable Final Terms as "Fixed Rate;"
"Floating Rate Medium Term Note" means a Medium Term Note whose "Interest Basis" is designated in the
applicable Final Terms as "Floating Rate;"
"FSA" means the Financial Services Authority of the United Kingdom;
"FSMA" means the Financial Services and Markets Act 2000;
"Global Note" means a Term Note in global form;
"Indemnity Cap" means, in respect of any indemnity payments by the Issuer (but excluding any indemnity payment
to the Security Trustee, the Administrator, Receiver or Insolvency Administrator), within any 12-month period (such
12-month period to be measured on a rolling basis), an amount equal to 0.25 per cent. of the average Dollar
Equivalent principal amount outstanding of the Capital Notes, subject to a maximum of U.S. $1 million, during that
period;
"Indemnity Cap Excess" means, for any period, in respect of any indemnity payments payable by the Issuer to, or
with regard to the Co-Issuer in respect of payments by the Co-Issuer, respectively, the amount (if any) by which
such indemnity payments exceed the relevant Indemnity Cap for that period;
"Index Linked Interest Medium Term Note" means a Medium Term Note whose "Interest Basis" is designated in
the applicable Final Terms as "Index Linked Interest;"
"Index Linked Redemption Medium Term Note" means a Medium Term Note whose "Redemption/Payment
Basis" is designated in the applicable Final Terms as "Index Linked Redemption;"
"Insolvency Administrator" means an administrator appointed under the Insolvency Act 1986;
"Insolvency Event" means (a) the Issuer, the Co-Issuer or the Manager, as applicable, shall commence a voluntary
case under any applicable bankruptcy, insolvency, examinership or other similar law, or shall consent to the entry of
an order for relief in an involuntary case under any such law, or shall consent to the appointment of, or taking
possession by, a Receiver, custodian, examiner, liquidator, assignee, trustee (other than the Security Trustee or the
Custodian) or sequestrator (or other similar official) of itself or any substantial part of its property, or shall make a
general assignment for the benefit of creditors (other than pursuant to the Security Trust Deed), or the Issuer or
Manager shall fail generally to pay its debts as they become due, or the Issuer, the Co-Issuer, or the directors and
shareholders or member, respectively, of the Issuer, the Co-Issuer or the Manager, as applicable, shall take any
action to authorise or commence any of the foregoing, or an involuntary case under any applicable bankruptcy,
insolvency, examinership or other similar law now or hereafter in effect, is commenced and remains undismissed for
a period of 60 days, or a court having jurisdiction in the premises shall enter a decree or order for relief in respect of
the Issuer, the Co-Issuer or the Manager, as applicable, in such case or a decree or order appointing a Receiver,
custodian, examiner, liquidator, assignee, trustee, sequestrator (or other similar official) of the Issuer, the Co-Issuer
or the Manager, as applicable or of any substantial part of their respective property, or ordering the winding up or
liquidation of the affairs of the Issuer, the Co-Issuer, or the Manager, as applicable, and the continuance of such
decree or order unstayed and in effect for a period of 60 days; (b) proceedings are commenced or an effective
resolution shall be passed for winding up the Issuer, the Co-Issuer or the Manager, as applicable; or (c) a distress,
execution, attachment or other legal process is levied or enforced against all or any substantial part of the assets of
the Issuer, the Co-Issuer or the Manager, as applicable (other than pursuant to the Security Trust Deed) and is not
discharged within 14 days of being levied or enforced;
"Instalment Medium Term Note" means a Medium Term Note whose "Redemption/Payment Basis" is designated
in the applicable Final Terms as "Instalment;"
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"Interest Commencement Date" means the Issue Date of the Medium Term Notes or such other date as may be
specified as the Interest Commencement Date in the relevant Final Terms;
"Interest Determination Date" means, with respect to a Rate of Interest and Interest Period, the date specified as
such in the relevant Final Terms or, if none is so specified, (i) the first day of such Interest Period if the Specified
Currency is Sterling or (ii) the day falling two London Business Days for the Specified Currency prior to the first
day of such Interest Period if the Specified Currency is neither Sterling nor Euro or (iii) the day falling two London
Business Days prior to the first day of such Interest Period if the Specified Currency is Euro;
"Interest Payment Date" means the date or dates specified as such in, or determined in accordance with the
provisions of, the relevant Final Terms and, if an Applicable Business Day Convention is specified in the relevant
Final Terms:
(a)
as the same may be adjusted in accordance with the relevant Applicable Business Day Convention; or
(b)
if the Applicable Business Day Convention is the FRN Convention and an interval of a number of calendar
months is specified in the relevant Final Terms as being the Interest Period, each of such dates as may
occur in accordance with the FRN Convention at such specified period of calendar months following the
Interest Commencement Date (in the case of the first Interest Payment Date) or the previous Interest
Payment Date (in any other case);
"Interest Period" means, in relation to a Medium Term Note, the period beginning on (and including) the Interest
Commencement Date for such Medium Term Note and ending on (but excluding) the first Interest Payment Date for
such Medium Term Note and each successive period beginning on (and including) an Interest Payment Date and
ending on (but excluding) the next succeeding Interest Payment Date;
"Investment" means:
(a)
any Debt Security issued by any person (including, any asset-backed security); or
(b)
any Investment Derivative; or
(c)
any Cash Equivalent; or
(d)
any Financing Transaction,
Acquired (or, where the context so requires, to be Acquired, being considered for Acquisition, being referenced
under an Investment Derivative or then subject to a Repo Transaction, a Committed Repo Transaction or a
Securities Lending Transaction) by the Issuer.
Where any reference is made in this Information Memorandum or in any other Transaction Document to
Investments being Acquired, purchased or held, this shall be construed, in the case of Investment Derivatives, as
being a reference to such Investments being entered into and to Exposure being maintained under such Investments;
"Investment Class" means the class of Investments that a particular Investment shall belong to as determined in the
reasonable discretion of the Manager;
"Investment Derivative" means:
(a)
any derivative transaction (excluding an Associated Derivative and any Financing Transaction) entered into
for investment purposes (including credit default swaps, total return swaps and similar transactions where
the Issuer is a seller of protection (howsoever described) or where the Issuer is a buyer of protection
(howsoever described) in respect of reference obligations which are not included in the Investment
Portfolio at the relevant time); or
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(b)
any other transaction (excluding an Associated Derivative and any Financing Transaction) entered into by
the Issuer with any person for the purpose of earning income or realising a capital appreciation or both,
which has or may have the effect of the Issuer assuming credit risk or benefiting from credit deterioration;
"Investment Derivative Concentration at Point of Purchase Condition" has the meaning ascribed to it in
Schedule 4 of the Management Agreement;
"Investment Derivative Counterparty" means any Eligible Investment Derivative Counterparty with which the
Issuer has entered into an Investment Derivative;
"Investment Portfolio" means the cash or Cash Equivalents standing from time to time to the credit of the Accounts
together with the Investments and Related Rights Acquired from time to time therewith and the income arising
therefrom and the proceeds thereof. The Investment Portfolio may also, where the context so requires, include
Investments which are subject to Repo Agreements, Committed Repo Agreements, Reverse Repo Agreements,
Securities Lending Agreements or Investment Derivatives which are posted to a counterparty under any such
agreement or otherwise, the adoption or amendment of criteria for which is subject to Rating Confirmation from
time to time;
"Investment Portfolio Exposure" means the sum of the Exposure to all Investments included in the Investment
Portfolio except for certain Investments which may be excluded from such calculation the adoption or amendment
of criteria for which is subject to Rating Confirmation from time to time. Investment Portfolio Exposure may also,
where the context so requires, include Exposure to Investments which are subject to Repo Agreements, Reverse
Repo Agreements, Committed Repo Agreements, Securities Lending Agreements or Derivatives, which are posted
to a counterparty under any such agreement or otherwise, the adoption or amendment of criteria for which is subject
to Rating Confirmation from time to time;
"Investment Portfolio Parameter Tests" means (as such may be amended from time to time upon Rating
Confirmation):
(a)
the Maximum Single Obligor Percentage of Investment Portfolio Exposure Test;
(b)
the Maximum Single Obligor Percentage of Net Asset Value Test;
(c)
the Minimum Ratings Concentration Test;
(d)
the Maximum Investment Class Concentration Test;
(e)
the Maximum Structured Finance Sector Concentration Test;
(f)
the Maximum Country of Investment Concentration Test;
(g)
the Minimum Currency Concentration Test; and
(h)
the Maximum Fixed Rate Investments Test, the Maximum Servicer Concentration Test and the Maximum
Non Public Nor Shadow Rated Investments Test;
"Investment Switch" means a series of transactions whereby an Investment (or portion of the proceeds thereof) is
sold and replaced by another Investment and, following such investment switch, (a) each of the Investment Portfolio
Parameter Tests remains in compliance or, if any such tests were not in compliance prior to such investment switch,
the non-compliance of such test shall not be worsened following such investment switch and (b) the capital
requirement shall be reduced as measured in accordance with criteria the adoption or amendment of which is subject
to Rating Confirmation from time to time;
"Investment Weighted Average Life at Point of Purchase Condition" has the meaning ascribed to it in Schedule
4 of the Management Agreement;
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"ISDA Definitions" means the 2006 ISDA Definitions as amended and updated from time to time, published by the
International Swaps and Derivatives Association, Inc;
"Issue Date" has the meaning given in the relevant Final Terms;
"Issuer Call Option Date" means, the applicable date on which Medium Term Notes may be redeemed pursuant to
Condition 9(c) (Redemption at the option of the Issuer), as such date may be specified in the applicable Final Terms;
"Issuer Call Option Redemption Amount" means, in respect of any Medium Term Note, its principal amount
outstanding or such other amount as may be specified in, or determined in accordance with, the relevant Final
Terms;
"Issuer Capital Account" means the account of the Issuer which the Issuer has opened, inter alia, for the purpose
of holding the Issuer Share Proceeds;
"Issuer Share Proceeds" means €10,005.25, which represents a portion of the proceeds of the Issuer's share capital;
"Junior Capital Noteholders" means the holders for the time being of the Junior Capital Notes;
"Junior Capital Notes Subordinated Payments" means the payment of any amounts designated as such in any of
the Transaction Documents;
"Junior Management Fee" means, collectively, the Subordinated Management Fees and the Incentive Management
Fees;
"Junior Secured Obligations" means (a) the Capital Note Obligations, (b) the Junior Management Fee, (c) the
Junior Capital Notes Subordinated Payments, (d) the Mezzanine Capital Notes Subordinated Payments, and (e)
obligations in respect of securities issued by or on behalf of the Issuer and/or the Co-Issuer or other obligations
undertaken by the Issuer, in each case, that, by their terms, are to be included within the "Secured Obligations" but
are subordinated to the Senior Obligations;
"Law" means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order,
injunction, writ, decree, judgment or award of any Official Body or any fiscal, monetary or other authority having
jurisdiction over or the ability (either directly or indirectly) to otherwise control, regulate or bind any person or its
property or assets;
"Legal Final Maturity" means the legal maturity date of an Investment;
"Legal Final Maturity at Point of Purchase Condition" has the meaning ascribed to it in Schedule 4 of the
Management Agreement;
"Legal Maturity Date" means, in respect of each Capital Note, either (i) the Interest Payment Date specified as
such in the relevant Final Terms or (ii) the Interest Payment Date that falls within the designated period (as specified
in the relevant Final Terms) after the Expected Maturity Date for that Capital Note, provided that in each case the
Legal Maturity Date shall fall no earlier than three years after the Expected Maturity Date (regardless of any
Business Day adjustments) without obtaining Rating Confirmation;
"LIBOR" means the London interbank offered rate;
"Liquidity Agent" means any institution acting as agent for or on behalf of the Liquidity Providers party to a
Liquidity Arrangement;
"Liquidity Arrangements" means the Liquidity Facility Agreements, Breakable Deposits, Liquidity Notes,
Committed Repo Facilities, Money Market Funds, Puttable Investments and, provided that a Rating Confirmation is
obtained, any other forms of liquidity arrangements entered into or extended to the Issuer;
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"Liquidity Bank" means any bank or financial institution with which the Issuer has entered into a Liquidity
Arrangement;
"Liquidity Facility Agreements" means (a) loan agreements which the Issuer has entered into, on terms the
adoption or amendment of which are subject to Rating Confirmation, with a single institution or syndicate of
institutions pursuant to which the Issuer has the ability to require such institution or institutions to make loans to the
Issuer and (b) any other liquidity facility agreements entered into by the Issuer on substantially the same terms as
such loan agreements;
"Liquidity Note" means each ECP Note or USCP Note the maturity date of which may be extended pursuant to the
terms and conditions of the relevant CP Documents;
"Liquidity Obligations" means the aggregate unpaid principal of, and premium, if any, on, and accrued but unpaid
interest on, any amounts outstanding under the Liquidity Arrangements (including the repurchase obligation of the
Issuer under any Liquidity Arrangement that is a Repo Agreement (including Committed Repo Agreements) and the
delivery obligation of the Issuer under any Liquidity Arrangement that is a Reverse Repo Agreement as designated
by the Manager), and the fees, costs, losses, damages, expenses (including reasonable legal fees and expenses) and
indemnification obligations of the Issuer to the Liquidity Providers and Liquidity Agents provided for under the
terms of the applicable Liquidity Arrangement, and all other amounts owing from time to time under or in
connection with the Liquidity Arrangements, in each case regardless of whether such obligations and liabilities are
absolute or contingent, due or not due, liquidated or unliquidated and whether or not for the payment of money or
the performance or non-performance of any act;
"Liquidity Provider" means a Liquidity Bank, an Eligible Committed Repo Counterparty (including a Repo
Counterparty or Reverse Repo Counterparty if designated as such by the Manager), a counterparty in respect of
Puttable Investments, the bank of deposit in respect of Breakable Deposits or, in respect of any other Liquidity
Arrangements, the relevant counterparty under such Liquidity Arrangements;
"Liquidity Specified Default" means the occurrence of a default in payment of any principal or interest due and
payable by the Issuer to a Liquidity Provider under a Liquidity Facility Agreement or a Committed Repo Agreement
and such default shall continue for three (3) Business Days after the Liquidity Provider has notified the Issuer of
such default in writing;
"Liquidity Tests" means the tests set out in paragraph 2 (Liquidity Tests) in Schedule 10 (Liquidity Tests) to the
Management Agreement, as amended from time to time following Rating Confirmation;
"Major Capital Tests" means the Major Capital Adequacy Test, the Maximum Leverage Tests, the Relative
Leverage Test and the Major Capital Loss Test, each of which may be amended from time to time provided that a
Rating Confirmation is obtained. The list of tests which comprise the Major Capital Tests may also be amended
from time to time provided that a Rating Confirmation is obtained;
"Majority Medium Term Noteholders" means, on any date of determination, the holders of more than 50 per cent.
of the outstanding principal amount of the Medium Term Notes (provided that any Medium Term Notes held by the
Manager or any account for which the Manager has discretionary voting authority will not have voting rights with
respect to the removal of a Manager or the appointment or succession of a substitute manager for the Manager);
"Management Agreement" means the Management Agreement dated on or before the Closing Date between the
Issuer and the Manager;
"Management Expenses" shall have the meaning set out in Section 13.2 (Reimbursement of expenses) of the
Management Agreement;
"Manager Standard" means, in relation to the Manager and the performance of its responsibilities, duties and
obligations under the Transaction Documents: (i) the performance of such responsibilities, duties and obligations in
a manner consistent with the customary practices and procedures followed by, and exercising a standard of care and
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degree of skill as would be exercised by, a prudent institutional manager of recognised standing in connection with
(x) the performance of duties similar to the duties of the Manager under the Transaction Documents and (y) assets of
the general nature and character of those comprised in the Collateral; (ii) acting in good faith; (iii) subject to and
where no less exacting than the foregoing, by following its customary standards, policies and procedures and in
accordance with any relevant regulatory standards to which the Manager is subject; provided that, in any event, the
Manager shall exercise no less care and skill than the Manager would exercise if the Manager were performing its
duties for its own benefit or for other clients (if any) in substantially similar transactions;
"Mandatory Acceleration Event" means the occurrence of (a) an Insolvency Event of the Issuer or (b) a Senior
Creditor Payment Event;
"Mandatory Acceleration Event Notice" means an Enforcement Notice served by the Security Trustee pursuant to
Clause 6.3 (Notice of Enforcement Events) of the Security Trust Deed specifying that a Mandatory Acceleration
Event has occurred;
"Margin" means, in respect of any Medium Term Note, the percentage specified as such in the applicable Final
Terms;
"Market Sensitivity Tests" means the Interest Rate Sensitivity Tests together with the Currency Sensitivity Tests;
"Market Value" means the most recent market value, sourced by either the Administrator or the Manager, using
valuation sources and methodologies the adoption or amendment of criteria for which is subject to Rating
Confirmation from time to time and including, inter alia, third party dealer quotes;
"Maturity Date" has the meaning given in the relevant Final Terms;
"Maturity Type" means, in respect of a Capital Note:
(a)
a Fixed Maturity Capital Note;
(b)
an Automatic Rolling Maturity Capital Note; or
(c)
an Optional Rolling Maturity Capital Note;
in each case as specified in the relevant Final Terms;
"Maximum Single Obligor at Point of Purchase – Percentage of Investment Portfolio Exposure Condition"
has the meaning ascribed to it in Schedule 4 to the Management Agreement;
"Maximum Single Obligor at Point of Purchase Percentage of Net Asset Value Test" has the meaning ascribed
to it in Schedule 4 to the Management Agreement;
"Maximum Single Obligor Percentage of Investment Portfolio Exposure Purchase Limit" has the meaning
ascribed to it in Schedule 4 to the Management Agreement;
"Maximum Single Obligor Percentage of Net Asset Value Purchase Limit" has the meaning ascribed to it in
Schedule 4 to the Management Agreement;
"Medium Term Note Dealer Agreement" means the dealer agreement entered into by the Issuers and the Medium
Term Note Dealers, dated on or about the Closing Date, in connection with the issuance of Medium Term Notes;
"Medium Term Note Dealers" means each person from time to time acting as dealer under a Medium Term Note
Dealer Agreement;
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"Medium Term Note Obligations" means the aggregate unpaid face amount or principal of and premium, if any,
on, and unpaid interest accrued and to accrue up to the repayment date, if any, on, the Medium Term Notes and the
obligations of the Issuer, or as the case may be, the Issuer and the Co-Issuer, to any Term Note Agent in respect of
reimbursement obligations for advances made by such agents on behalf of the Issuer and/or Co-Issuer in respect of
maturing Medium Term Notes provided for in the Term Note Agreements, and, except as otherwise restricted above,
all other amounts owing from time to time under the Term Note Agreements, in each case regardless of whether
such obligations and liabilities are absolute or contingent, due or not due, liquidated or unliquidated and whether or
not for the payment of money or the performance or non-performance of any act;
"Mezzanine Capital Noteholders" means the holders for the time being of the Mezzanine Capital Notes;
"Mezzanine Capital Notes Subordinated Payments" means the payment of any Indemnity Cap Excess, the
Subordinated Management Fee and any other payment obligations designated as Mezzanine Capital Notes
Subordinated Payments in any of the Transaction Documents;
"Minor Capital Tests" means the Minor Capital Adequacy Test, the Minor Capital Loss Test, the Capital Note
Simulation Model Rating Test, the Capital Note Maturity Test, the Senior Notes Rating Test and the Net Asset
Value Leverage Test, each of which may be amended from time to time with Rating Confirmation. The list of tests
which comprise the Minor Capital Tests may also be amended from time to time with Rating Confirmation;
"Net Asset Value" means the Dollar Equivalent of the sum of the Market Value of Investments plus the sum of the
Market Value of Investment Derivatives (or for Investment Derivatives which meet certain criteria the adoption or
amendment of which is subject to Rating Confirmation, a factor of such Market Value reflecting the risk of default
of the relevant Derivative Counterparty) plus the sum of the Market Value of Associated Derivatives (such Dollar
Equivalent sum, the "Asset Value"), minus inter alia, the Senior Obligations. The definition of Net Asset Value
may be amended from time to time provided that a Rating Confirmation is obtained;
"Noteholders" means beneficial owners of a particular Class and Series of Notes, unless otherwise specified;
"Obligations" means, collectively, the Senior Obligations and the Junior Obligations;
"Obligor" means (a) in respect of any Debt Security, Associated Derivative, Investment Derivative, Repo
Agreement, Reverse Repo Agreement or Money Market Fund, the person determined to be the obligor for such
Investment pursuant to criteria the adoption or amendment of which is subject to Rating Confirmation; or (b) in the
absence of the criteria referred to in clause (a), in respect of a Debt Security or Money Market Fund, the issuer of
such Debt Security or Money Market Fund or, if the payment obligations of such issuer under such Debt Security or
Money Market Fund are fully, unconditionally and irrevocably guaranteed by another person having a higher rating
than such issuer, such guarantor; and in respect of an Associated Derivative, Investment Derivative, Repo
Agreement or Reverse Repo Agreement, the counterparty to the Issuer under such Associated Derivative,
Investment Derivative, Repo Agreement or Reverse Repo Agreement or, if the payment obligations of such
counterparty under such Associated Derivative, Investment Derivative, Repo Agreement or Reverse Repo
Agreement are fully, unconditionally and irrevocably guaranteed by another person having a higher rating than such
counterparty, such guarantor;
"Official Body" means any government or political subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality of any such government or political subdivision, or any court, tribunal,
grand jury or arbitrator, or any accounting board or authority (whether or not part of government) which is
responsible for the establishment or interpretation of national or international accounting principles or any
recognised stock exchange or listing authority, in each case whether foreign or domestic;
"Operating Expenses" means all fees, costs and expenses (including indemnity payments not exceeding the
Indemnity Cap) of the Issuer and the Co-Issuer that have not been paid pursuant to Clauses 14.2(a) and (b) or 14.3
(a) and (b) of the Security Trust Deed, including (a) the Senior Management Fee and the Management Expenses (but
not the Junior Management Fee), (b) any such fees, costs, expenses and payments (including indemnity payments)
due to any Dealer or other underwriter, placement agent or dealer, (c) all fees, costs, losses, damages and expenses
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(including indemnity payments) of (i) the Securities Intermediary under any Account Control Agreement, (ii) a TriParty Custodian under a Tri-Party Agreement, (iii) the Securities Agents under the applicable Transaction
Documents, (iv) the Liquidity Providers under the Liquidity Arrangements (for the avoidance of doubt, not
including any payments of interest and principal payable to the Liquidity Providers thereunder), (v) the Irish
Corporate Services Provider under the Irish Corporate Services Agreement and the U.S. Corporate Services Provider
under the U.S. Corporate Services Agreement, (vi) the Verification Agent under the Verification Services
Agreement and (d) the Administrator's Fee; provided that (y) "Operating Expenses" shall not include any fees, costs
or expenses that represent a participation in the profits or similar cash flow of the Issuer or the Co-Issuer, any other
expenses of the Issuer specifically designated as "Administrative Expenses" or "Senior Obligations" or any
indemnity obligations of the Issuer to present or former officers pursuant to the Articles of Association of the Issuer;
and (z) the Indemnity Cap available hereunder shall be the amount not previously utilised by any indemnity
payments designated as "Administrative Expenses";
"Operating Rules" means those investment guidelines and operating parameters from time to time approved by the
Issuer's board of directors and identified by the Manager and the Issuer as the "Operating Rules" and with respect to
which a Rating Confirmation shall have been received from time to time;
"Optional Currency" means any currency other than Dollars.
"Optional Rolling Maturity Capital Note" means a Capital Note in respect of which the Capital Noteholder has
the right to elect to roll the Expected Maturity Date forward up to the Optional Rolling Maturity Maximum
Expected Maturity Date, as described in Condition 13(c) (Optional Rolling Maturity Capital Note), such Capital
Note being neither an Automatic Rolling Maturity Capital Note nor a Fixed Maturity Capital Note;
"Optional Rolling Maturity Maximum Expected Maturity Date" means, in respect of a Tranche of Capital
Notes, the date specified as such in the relevant Final Terms.
"Outstanding Balance" means, at any time of determination, (i) for any Medium Term Notes other than Medium
Term Notes issued at a discount, the outstanding principal amount plus accrued and unpaid interest thereon at such
time, and (ii) for Medium Term Notes issued at a discount, the issue price of such Medium Term Note plus accreted
and unpaid discount and/or accrued and unpaid interest.
"Partly Paid Medium Term Note" means a Medium Term Note whose "Redemption/Payment Basis" is designated
in the applicable Final Terms as "Partly Paid;"
"Paying Agents" means the Registrar, BNY Fund Services (Ireland) Limited, as Irish Paying Agent and The Bank
of New York, London branch as Principal Paying Agent and The Bank of New York, New York branch as New
York Paying Agent and such paying agent or agents as are appointed under the Term Note Agency Agreement from
time to time;
"Permitted Associated Derivative" means an Associated Derivative with a party that on the date on which the
Associated Derivative is entered into is an Eligible Associated Derivative Counterparty;
"Permitted Investment" means an Investment which meets the Investment Purchase Criteria in Schedule 4
(Investment Purchase Criteria) to the Management Agreement at the time the Issuer commits to Acquire such
Investment;
"person" means an individual, partnership, corporation, business trust, joint stock company, limited liability
company, trust, unincorporated association, joint venture, Official Body or other entity of whatever nature;
"Portfolio" means the Credit Portfolio together with all Senior Funding and Capital Notes;
"Preferred Order of Sale" means an order of sale of Investments excluding, inter alia, Investment Derivatives
ordered in accordance with the Restricted Funding Capital Requirement Haircuts, starting with the lowest Restricted
Funding Capital Requirement Haircut, or otherwise subject to Rating Confirmation from time to time;
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"Principal Paying Agent" means The Bank of New York, London branch, and such other Principal Paying Agent
as is appointed under the Term Note Agency Agreement from time to time;
"Priority of Payments" means the provisions relating to payment priorities in respect of the Issuer's assets as set out
in Clause 14.2 (Distribution from Custody Accounts before enforcement) or 14.3 (Distribution from Custody
Accounts following enforcement) of the Security Trust Deed, as appropriate;
"Profit Accrual Period" means the period from (and including) a Profit Distribution Date (or, for the first Profit
Accrual Period for any Capital Notes the related Issue Date) to (but excluding) the next (or first) Profit Distribution
Date;
"Profit Distribution Date" means the 25th day of January, April, July and October in each year or, if such Profit
Distribution Date is not a Business Day, the next following Business Day;
"Programme Agreements" means the Commercial Paper Programme Agreements and the Term Note Agreements;
"Put Option Date" means, in connection with any Medium Term Note which was to be redeemed pursuant to
Condition 9(b) (Redemption at the option of the Medium Term Noteholders), the Interest Payment Date on which
such redemption was originally scheduled to be effected;
"Put Option Redemption Amount" means, in respect of any Medium Term Note, its principal amount outstanding
or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;
"Put Redemption Tests" means a set of rules and tests which measure (using a methodology the adoption or
amendment in respect of which is subject to Rating Confirmation) the capital adequacy and the rating maintenance
of the Capital Notes upon exercise of a redemption;
"Ramp-Up Period" means a period from the Closing Date to the earlier of (i) 6 months from the Closing Date or
(ii) the occurrence of any of a Restricted Investment Event, a Restricted Funding Event or an Enforcement Event;
"Rate of Interest" means the rate or rates (expressed as a percentage per annum) of interest payable in respect of the
Medium Term Notes specified in the relevant Final Terms or calculated or determined in accordance with the
provisions of the Conditions and/or the relevant Final Terms;
"Rating Confirmation" means, with respect to the related transaction or other action, circumstance or event to be
taken by the Issuer or any other person, a written confirmation to the Issuer by each relevant Rating Agency that
such proposed transaction or other action, circumstance or event if performed or occurred, as the case may be, shall
not affect such Rating Agency's then current ratings of any outstanding Notes (if rated) or Programme rating, or, if
the context clearly specifies, of any outstanding Notes of a particular Class or Series, as applicable;
"Receipt" means a receipt for a Medium Term Note;
"Receiver" means any receiver, manager or administrative receiver appointed by the Security Trustee over all or any
of the Collateral under the Security Trust Deed whether solely, jointly, severally or jointly and severally with any
other or additional person and includes any substitute for any of them appointed from time to time;
"Redemption Amount" means, in respect of each Series of Medium Term Notes, the amount specified as such in
the relevant Final Terms;
"Redemption Date" has the meaning ascribed to it in the relevant Final Terms;
"Redemption Net Asset Value" means on any date of determination (subject to a minimum of zero) in respect of
the Medium Term Notes, the lesser of the Dollar Equivalent of (i) the sum of the Market Value of Investments plus
the sum of the Market Value of Associated Derivatives and (ii) the outstanding principal amount of Medium Term
Notes outstanding;
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"Reference Rate" has the meaning given in the relevant Final Terms;
"Registered Medium Term Note" means a Medium Term Note which has been entered on the Register;
"Registrar" means The Bank of New York, New York branch, and such other registrar as is appointed under the
Term Note Agency Agreement from time to time;
"Regulation S Medium Term Note" means a Medium Term Note issued pursuant to Regulation S;
"Related Rights" means any dividend, interest or other sum paid or payable (including any sum paid or payable
under any relevant insurance policy) in relation to any Investment (including any Investment Derivative), Repo
Transaction, Reverse Repo Transaction, Committed Repo Transaction or Associated Derivative in the Credit
Portfolio and any rights (including voting rights), moneys or property accruing or offered at any time in relation to
any Investment or Associated Derivative in the Credit Portfolio by way of redemption, substitution, exchange,
conversion, bonus or preference, under option rights or otherwise;
"Relevant Date" means, in relation to any payment, whichever is the later of (a) the date on which the payment in
question first becomes due and (b) if the full amount payable has not been received in the Relevant Financial Centre
of the currency of payment by the Principal Paying Agent on or prior to such due date, the date on which (the full
amount having been so received) notice to that effect has been given to the Medium Term Noteholders;
"Relevant Financial Centre" means such financial centre or centres as may be specified in relation to the relevant
currency for the purposes of the definition of Business Day in the ISDA Definitions, as modified or supplemented in
the relevant Final Terms;
"Relevant Time" has the meaning given in the relevant Final Terms;
"Repo Agreement" means an agreement (other than a Committed Repo Agreement) between the Issuer and a Repo
Counterparty, pursuant to which the parties may from time to time enter into Repo Transactions, together with any
additional documentation evidencing such Repo Transactions;
"Repo Counterparty" means a counterparty to a Repo Agreement, such counterparty (or its credit support provider
or guarantor) at the time of entering into the Repo Agreement being an Eligible Counterparty or a counterparty
which meets such other criteria the adoption or amendment of which is subject to Rating Confirmation from time to
time;
"Repo Obligations" means the aggregate unpaid amounts owing by the Issuer to the applicable Repo Counterparties
with respect to Repo Transactions that remain unsatisfied after the exercise by any such Repo Counterparty of
remedies (including set off) pursuant to the applicable Repo Agreement, whether for the payment of money,
delivery of securities or the performance or non-performance of any other act;
"Repo Specified Default" means the occurrence of a default as agreed between the Issuer and a relevant Repo
Counterparty, a Reverse Repo Counterparty or a Securities Lending Counterparty and subject to Rating
Confirmation, which is specified in the relevant Repo Agreement, Reverse Repo Agreement or Securities Lending
Agreement;
"Repo Transaction" means repurchase transactions (other than Committed Repo Transactions) entered into by the
Issuer pursuant to a Repo Agreement, under which the Issuer agrees to sell its interest in an Investment held in the
Investment Portfolio to a Repo Counterparty and the subsequent purchase by the Issuer of an equivalent Investment;
"Responsible Officer" means, when used with respect to the Security Trustee, any officer assigned to the Security
Trustee's corporate trust office, including any vice president, any assistant vice president, any assistant treasurer or
any other trust officer of the Security Trustee customarily performing functions similar to those performed by any of
the above-designated officers, and also means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with the particular subject;
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"Restricted Funding" has the meaning ascribed to such term under the section "The Issuer's Business – Restricted
Funding Procedures"
"Restricted Funding Capital Requirement Haircut" means an Investment specific or counterparty specific
haircut, the adoption or amendment of criteria for which is subject to Rating Confirmation, which is used in the
calculation of the capital required to be held by the Issuer in order to avoid breaching the Major Capital Adequacy
Test;
"Restricted Funding Event" means each of the following events:
(i)
a breach of any of the Major Capital Tests (other than the Major Capital Loss Test) if such breach remains
unremedied immediately following the expiry of a cure period of five Business Days commencing on the
date of such breach;
(ii)
a breach of the Major Capital Loss Test;
(iii)
a breach of any of the Market Sensitivity Tests, if such breach remains unremedied immediately following
the expiry of a cure period of five Business Days commencing on the date of such breach; or
(iv)
a breach of any of the Liquidity Tests if such breach remains unremedied immediately following the expiry
of a cure period of five Business Days commencing on the date of such breach;
"Restricted Investment" has the meaning ascribed to such term under the section "The Issuer's Business –
Restricted Investment Procedures".
"Restricted Investment Capital Requirement Haircut" means an Investment specific or counterparty specific
haircut, the adoption or amendment of criteria for which is subject to Rating Confirmation, which is used in the
calculation of capital required to be held by the Issuer in order to avoid breaching the Minor Capital Adequacy Test;
"Restricted Investment Event" means each of the following events:
(i)
a breach of any of the Minor Capital Tests or the Weighted Average Life of Senior Funding Test if such
breach remains unremedied immediately following the expiry of a cure period of five Business Days
commencing on the date of such breach;
(ii)
a failure by the Issuer to redeem any Capital Note on or by its Expected Maturity Date if such failure
remains unremedied immediately following the expiry of a cure period of five Business Days commencing
on the date of such failure;
(iii)
a breach of any of the Market Sensitivity Tests; or
(iv)
a breach of any of the Liquidity Tests;
"Reuters Screen" means, when used in connection with a designated page and any designated information, the
display page so designated on the Reuters Monitor Money Rates Service (or such other page as may replace that
page on that service for the purpose of displaying such information);
"Reverse Repo Agreement" means an agreement between the Issuer and a Reverse Repo Counterparty pursuant to
which the Issuer and such Reverse Repo Counterparty may enter into Reverse Repo Transactions, together with any
additional documentation evidencing such Reverse Repo Transactions;
"Reverse Repo Counterparty" means a counterparty to a Reverse Repo Agreement, such counterparty (or its credit
support provider or guarantor) at the time of entering into the Reverse Repo Agreement being required to be an
Eligible Counterparty or a counterparty which meets such other criteria the adoption or amendment of which is
subject to Rating Confirmation from time to time;
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"Reverse Repo Obligations" means the aggregate unpaid amounts owing by the Issuer to the applicable Reverse
Repo Counterparties with respect to Reverse Repo Transactions that remain unsatisfied after the exercise by any
such Reverse Repo Counterparty of remedies (including set-off) pursuant to the applicable Reverse Repo
Agreement, whether or not for the payment of money, delivery of Reverse Repo Securities or the performance or
non-performance of any other act;
"Reverse Repo Securities" means, with respect to any Reverse Repo Transaction, the securities purchased by, or
delivered by way of margin to, the Issuer (or a Tri-Party Custodian on its behalf) pursuant thereto, or securities
equivalent thereto held on behalf of the Issuer under the related Tri-Party Agreement, which, at such time, have not,
or securities equivalent thereto have not, been transferred to the Reverse Repo Counterparty (or the Tri-Party
Custodian on its behalf) pursuant to such Reverse Repo Transaction;
"Reverse Repo Transaction" means a transaction between the Issuer and a Reverse Repo Counterparty pursuant to
which (a) the Issuer will purchase, borrow or otherwise receive a transfer from the counterparty of, specific amounts
of particular securities or other assets in return for an obligation on the part of the Reverse Repo Counterparty to
repurchase or otherwise make a payment to the Issuer in exchange for a return or re-transfer of such securities or
other assets (or securities or other assets equivalent thereto) at a future date for an agreed price or amount and (b)
provides that the Issuer has the right to sell, re-loan, re-transfer or pledge such securities or other assets prior to such
repurchase, return or re-transfer, and includes a Securities Lending Agreement and a Securities Purchase and Resale
Agreement;
"Rule 144A Medium Term Note" means a Medium Term Note issued pursuant to Rule 144A;
"Secured Creditors" means, collectively, each of the following (in no order of priority and without duplication):
(a)
all holders of Notes;
(b)
all other holders of obligations for borrowed money constituting Secured Obligations;
(c)
the Security Trustee, as security trustee and any Receiver or Insolvency Administrator appointed under the
Security Trust Deed;
(d)
all Securities Agents acting in such capacity under the applicable Transaction Documents;
(e)
the Custodian under the Custody Agreement and each Tri-Party Custodian under a Tri-Party Agreement;
(f)
any Securities Intermediary under any Account Control Agreement;
(g)
all Derivative Counterparties with respect to Derivatives, Repo Counterparties with respect to Repo
Transactions, Reverse Repo Counterparties with respect to Reverse Repo Transactions, Committed Repo
Counterparties with respect to Committed Repo Transactions, and Securities Lending Counterparties with
respect to Securities Lending Transactions;
(h)
all Liquidity Providers and Liquidity Agents under the Liquidity Arrangements;
(i)
the Administrator;
(j)
the Irish Corporate Services Provider and the U.S. Corporate Services Provider;
(k)
the Manager;
(l)
the Dealers;
(m)
the Seller under the Forward Sale Agreement;
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(n)
the Verification Agent under the Verification Services Agreement;
(o)
the shareholders of the Issuer in respect of the Equity Amount; and
(p)
all other holders of Secured Obligations;
"Secured Obligations" means, all obligations and liabilities (whether actual or contingent and whether owed jointly
or severally or in any other capacity whatsoever) of the Issuer under the Transaction Documents, including but not
limited to, and in no order of priority, (a) the CP Obligations, (b) the Medium Term Note Obligations, (c) the Junior
Secured Obligations, (d) the Forward Sale Obligations (e) the Liquidity Obligations, (f) the Derivative Obligations,
(g) the Repo Obligations, (h) Reverse Repo Obligations, (i) the Administrative Expenses, (j) the Operating
Expenses, (k) obligations of the Issuer and/or the Co-Issuer in respect of other debt securities issued by the Issuer
and/or the Co-Issuer and other obligations of the Issuer or the Co-Issuer for borrowed money, in each case notice of
which shall have been given to the Security Trustee and the Rating Agencies by the Issuer, (l) all obligations of the
Issuer to the Security Trustee under the Security Documents and (m) all other obligations of the Issuer or the CoIssuer that by their terms are to be included within "Secured Obligations" and notice of which shall have been given
to the Security Trustee by the Issuer; provided that "Secured Obligations" shall not include (A) obligations of the
Issuer to the Co-Issuer or of the Co-Issuer to the Issuer, as the case may be, or (B) indemnity obligations of the
Issuer to present and former officers pursuant to the Articles of Association of the Issuer;
"Securities Agents" means, as the context requires, any or all of the USCP Agents, the ECP Agents and the Term
Note Agents;
"Securities Lending Agreement" means an agreement, on terms the adoption or amendment of criteria for which is
subject to Rating Confirmation, whereby the Issuer agrees to the transfer by it of its interest in an Investment held in
the Investment Portfolio and the subsequent transfer to it of an equivalent Investment;
"Securities Lending Counterparty" means any counterparty with which the Issuer enters into a Securities Lending
Agreement, such counterparty being required either to be an Eligible Counterparty or to meet such other criteria the
adoption or amendment of which is subject to Rating Confirmation from time to time;
"Securities Lending Transactions" means transactions entered into by the Issuer pursuant to a Securities Lending
Agreement;
"Security Documents" has the meaning given to such term in the Security Trust Deed;
"Security Interest" means a mortgage, charge, pledge, lien or other encumbrance securing any obligation of any
person or any other type of preferential arrangement (including any sale and leaseback or title transfer and retention
arrangement) having a similar economic effect (including any "hold back" or "flawed asset" arrangement);
"Senior Capital Noteholders" means the holders for the time being of the Senior Capital Notes;
"Senior Creditor Payment Event" means solely with regard to the Issuer, a determination by the Manager, the
Enforcement Manager or any Receiver as the case may be that the Issuer is, or is about to become, unable to pay its
debts as they fall due to Senior Creditors and any other persons whose claims against the Issuer are required to be
paid in priority thereto, as contemplated by Section 123(1) of the United Kingdom Insolvency Act 1986 (such
subsection being applied for this purpose only as if the Issuer's only liabilities were those to Senior Creditors in
respect of Senior Obligations and liabilities to any other persons whose claims against the Issuer are required under
the Security Trust Deed to be paid in priority thereto);
"Senior Creditors" means the holders of the Senior Obligations;
"Senior Funding" means the CP Obligations, the Medium Term Note Obligations, and sums due by the Issuer
under the Repo Obligations, the Liquidity Arrangements, the Securities Lending Transactions, and under the
Committed Repo Transactions;
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"Senior Obligations" means, at any time of determination, collectively, without duplication, the following items
that have not theretofore been paid pursuant to Clauses 14.2 (a) and (b) or 14.3 (a) and (b) of the Security Trust
Deed, (a) the CP Obligations and the Medium Term Note Obligations, (b) the Liquidity Obligations, (c) the
Settlement Obligations, (d) the Derivative Obligations (except in the case of a Derivative Transaction where the
relevant Investment Derivative Counterparty has a claim over Designated Investments and no further claims (over
and above such Designated Investments) against the Issuer), (e) the Forward Sale Obligations, (f) the Repo
Obligations and Reverse Repo Obligations, (g) sums due to Securities Lending Counterparties under Securities
Lending Agreements; and (h) sums due to the Enforcement Manager in respect of the Enforcement Manager Fee
provided that "Senior Obligations" shall not include, without limitation, Mezzanine Capital Notes Subordinated
Payments, Junior Capital Notes Subordinated Payments or any subordinated obligations that, by their terms, are to
be excluded from "Senior Obligations";
"Senior Ranking Obligation" means, with respect to any payment obligation of the Issuer (the "Relevant Payment
Obligation"), any outstanding payment obligations of the Issuer (whether or not then due and payable) which, if an
Enforcement Event were to occur, would rank in priority to the Relevant Payment Obligation under the Priority of
Payments. For the avoidance of doubt, Senior Ranking Obligations which are fee-based shall be deemed to have
been paid and/or provisioned for in full on any date, if all such Senior Ranking Obligations which have accrued to
such date and/or which are payable at their next scheduled date for payment have been paid and/or provisioned for
in full;
"Settlement Obligations" means the aggregate unpaid amounts owing by the Issuer (a) with respect to the purchase
of Investments (except for Associated Derivatives and Investment Derivatives) to be Acquired by the Issuer and (b)
to the applicable Reverse Repo Counterparties with respect to Reverse Repo Transactions in connection with the
entry into the applicable Reverse Repo Agreement, in each case, regardless of whether such amounts are absolute or
contingent, due or not due, liquidated or unliquidated and whether or not for the payment of money or the
performance or non-performance of any act;
"Single Obligor Group" unless specified below means a group of Investments where the same entity is responsible
for the payment of interest and repayment of principal. Where the Investment is a guaranteed Investment, the Single
Obligor Group of the Investment may be determined with reference to the issuer or the guarantor of such
Investment. Where an Investment is an Investment Derivative, the Single Obligor Group of the Investment may be
determined with reference to the issuer or the guarantor (if applicable) of the reference obligation;
"Sovereign" means, with respect to an Investment, an Investment Class comprising (a) any Debt Security issued by
any state, political subdivision or government, or any agency, instrumentality, ministry, department or other
authority (including, the central bank) thereof and (b) any other Debt Security which the Manager classifies in its
reasonable judgment as belonging to the Sovereign Investment Class, the adoption or amendment of criteria for
which is subject to Rating Confirmation from time to time;
"Specified Currency" has the meaning given in the relevant Final Terms;
"Specified Denomination(s)" has the meaning given in the relevant Final Terms;
"Specified Office" has the meaning given in the Term Note Agency Agreement;
"Sterling LIBOR" means LIBOR denominated in Sterling;
"Structured Finance" means, with respect to an Investment, an Investment Class comprising (a) any Debt Security
which is secured directly by, or representing ownership of, a pool of consumer receivables, auto loans, auto leases,
equipment leases, residential or commercial mortgages, corporate debt or sovereign debt obligations or similar
assets, including, collateralised bond obligations, collateralised loan obligations or any similar security and (b) any
other debt security which the Manager classifies in its reasonable judgment as belonging to the Structured Finance
Investment Class, the adoption or amendment of criteria for which is subject to Rating Confirmation from time to
time;
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"Structured Finance Sector" means the sector of Structured Finance that a particular Investment belongs to as
determined in the reasonable discretion of the Manager;
"Substitute Manager" means any party appointed in accordance with the Management Agreement, who has agreed
to replace IKB Credit Asset Management GmbH, London branch (or any substitute thereof) as Manager or
Enforcement Manager as the case may be and who meets the conditions for appointment as Substitute Manager set
out in the Management Agreement;
"Supranational" means, with respect to an Investment, an Investment Class comprising (a) any Debt Security
issued by any entity or organisation established by treaty or other arrangement between two or more Sovereigns or
the Sovereign Agencies of two or more Sovereigns and includes the International Monetary Fund, the European
Central Bank, the International Bank for Reconstruction and Development and the European Bank for
Reconstruction and Development and (b) any other Debt Security which the Manager classifies in its reasonable
judgment as belonging to the Supranational Investment Class, the adoption or amendment of criteria for which is
subject to Rating Confirmation from time to time;
"TARGET Business Day" means a day on which the Trans-European Automated Real-time Gross Settlement
Express Transfer (TARGET) System, or any successor thereto, is operating credit and transfer instructions in respect
of payments in Euro;
"Term Note Agency Agreement" means each agency agreement entered into by the Issuer in connection with the
issuance of Medium Term Notes and Capital Notes, including each issuing and paying agency agreement or other
similar agreement;
"Term Note Agent" means each person from time to time acting for the Issuer as an issue agent, calculation agent,
transfer agent, exchange agent, reference agent, registrar, depositary, note trustee or other similar agent, depositary
or trustee under a Term Note Agency Agreement;
"Term Note Agreements" means the Capital Note Dealer Agreement, the Medium Term Note Dealer Agreement,
the Term Note Agency Agreement, the Conditions, the Conditions of the Medium Term Notes, the U.S. Note CoIssuance Agreement (if applicable) and, unless the context requires or the Manager in good faith determines
otherwise, each other document or agreement entered into by, or on behalf of, the Issuer in connection therewith;
"Top Rated" or "Top Ratings" means, in the case of S&P, AAA for notes with original term maturities exceeding
364 days and A-1+ for commercial paper, in the case of Fitch, AAA for notes with original maturities exceeding 364
days and F1+ for commercial paper, and, in the case of Moody's, Aaa for notes with original maturities exceeding
364 days and P-1 for commercial paper;
"Transaction Documents" means the Transaction Terms Agreement, the Security Trust Deed, the Security
Documents, the Management Agreement, the Custody Agreement, each Tri-Party Agreement, the Administrative
Services Agreement, the Programme Agreements, the Forward Sale Agreement, the Verification Services
Agreement, each Repo Agreement, each Reverse Repo Agreement, each Committed Repo Agreement, each
agreement relating to an Investment Derivative, each Associated Derivative, each Securities Lending Agreement and
each Liquidity Facility Agreement and each other document or agreement evidencing or otherwise entered into in
connection with any Liquidity Arrangement, and each other document or agreement entered into in connection
therewith from time to time, in each case as amended or supplemented from time to time;
"Transaction Terms Agreement" means the Transaction Terms Agreement dated on or before the Closing Date
between, among others, the Issuer, the Co-Issuer, the Administrator, Wilmington Trust Company as U.S. Corporate
Services Provider, the Irish Corporate Services Provider, the Security Trustee, the Manager, the initial Dealers and
the initial Liquidity Providers;
"Transfer Agent" means The Bank of New York, New York branch, and such other transfer agent as is appointed
under the Term Note Agency Agreement from time to time;
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"Treaty" means the Treaty establishing the European Communities, as amended;
"Tri-Party Agreement" means, with respect to any Reverse Repo Agreement, an agreement among the Issuer, the
applicable Reverse Repo Counterparty and an Eligible Tri-Party Custodian pursuant to which the Eligible Tri-Party
Custodian will (a) act as custodian of all Reverse Repo Securities subject thereto and may act as deposit bank in
respect of all cash delivered to, and accepted by such custodian in connection therewith, and (b) as agent to provide
services to the Issuer and Reverse Repo Counterparty in respect of the related Reverse Repo Transactions and to
establish and maintain accounts on behalf of the Issuer and the Reverse Repo Counterparty in connection therewith;
"UK Collateral" means all property, assets, rights, revenues, income, uncalled capital, licences, business and
undertakings and any interest therein, in each case whatsoever and wheresoever situate, present and future from time
to time subject or expressed or intended to be subject to the Security Interests under or pursuant to the Security Trust
Deed or which the Security Trust Deed from time to time purports to create, and "UK Collateral" includes any part
of any of them and any right, title, interest or benefit therein or in respect thereof;
"USCP Agent" means each issue agent, paying agent, calculation agent, transfer agent, exchange agent, reference
agent, registrar, depositary, note trustee or other similar agent, depositary or trustee acting as an agent under a USCP
Document;
"USCP Depositary" means The Bank of New York, New York branch, in its capacity as "USCP Depositary" under
the USCP Depositary Agreement.
"USCP Depositary Agreement" means each depositary agreement entered into by the Issuer and the Co-Issuer in
connection with the issuance of USCP Notes;
"USCP Documents" means each USCP Note, each USCP Note Co-Issuance Agreement, the USCP Depositary
Agreement, the USCP Placement Agreement, and, unless the context otherwise requires or the Manager in good
faith determines otherwise, each other document or agreement entered into by, or on behalf of, the Issuer or CoIssuer in connection therewith;
"USCP Notes" means the commercial paper co-issued by the Issuer and the Co-Issuer pursuant to, and in
accordance with, the terms and conditions of the USCP Documents, including all Liquidity Notes and Extended
Maturity Notes thereunder;
"USCP Placement Agency Agreement" means the placement agency agreement entered into by the Issuers and the
USCP Placement Agents in connection with the issuance of USCP Notes;
"USCP Placement Agents" means each person from time to time acting as placement agent under the USCP
Placement Agreement;
"U.S. Accounts" means the deposit accounts maintained at The Bank of New York, New York branch, titled the
USCP Account, the U.S. Medium Term Notes Account and the U.S. Capital Notes Account, and having the account
numbers 430821, 430823 and 430822, respectively;
"U.S. Collateral" means all property, assets, rights, revenues, income, uncalled capital, licences, business and
undertakings and any interest therein, in each case whatsoever and wheresoever situate, present and future from time
to time subject or expressed or intended to be subject to the U.S. Security Interests under or pursuant to any Account
Control Agreement and "U.S. Collateral" includes any part of any of them and any right, title, interest or benefit
therein or in respect thereof;
"U.S. Extended Note" means each U.S. Liquidity Note the maturity of which has been extended pursuant to, and in
accordance with, the relevant USCP Documents;
"U.S. Government Agency" means, with respect to an Investment, an Investment Class comprising (a) any Debt
Security issued by any Sovereign Agency of the United States of America and (b) any other Debt Security which the
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Manager classifies in its reasonable judgment as belonging to the U.S. Government Agency Investment Class, the
adoption or amendment of criteria for which is subject to Rating Confirmation from time to time;
"U.S. Liquidity Note" means each USCP Note the maturity date of which may be extended pursuant to the terms
and conditions of the relevant USCP Documents;
"U.S. Medium Term Note Dealers" means the dealers of the Medium Term Notes offered pursuant to Rule 144A;
"Valuation Date" means the date, which shall be a Business Day, specified in the relevant Final Terms;
"Value" means the Dollar Equivalent of (i) in relation to an Investment, the most recent Market Value sourced for
such Investment or, where the Investment is an Investment Derivative, the most recent Market Value sourced for the
relevant reference obligation, (ii) in relation to Associated Derivatives, the Market Value thereof and (iii) in relation
to a Derivative Counterparty, the most recent net Market Value of all Derivatives outstanding with such Derivative
Counterparty unless, in each case, Rating Confirmation is obtained;
"Variable Margin" in relation to each Series of Capital Notes means, in respect of any Profit Accrual Period, to the
extent applicable as set out in the relevant Final Terms:
(a)
(b)
(c)
in respect of a Senior Capital Note, an amount equal to the product of:
(i)
the Average Outstanding Capital Note Fraction;
(ii)
the Distributable Profits; and
(iii)
the relevant Distribution Rate for that Series;
in respect of a Mezzanine Capital Note, an amount equal to the product of:
(i)
the Average Outstanding Capital Note Fraction;
(ii)
the Distributable Profits minus the Variable Margin payable in respect of the Senior Capital Notes
Outstanding; and
(iii)
the relevant Distribution Rate for that Series; and
in respect of a Junior Capital Note, an amount equal to the product of:
(i)
the Average Outstanding Capital Note Fraction;
(ii)
the Distributable Profits minus the Variable Margin payable in respect of the Senior Capital Notes
Outstanding and the Mezzanine Capital Notes Outstanding; and
(iii)
the relevant Distribution Rate for that Series,
in each case as converted into the Specified Currency using the Exchange Rate as at the relevant Interest Payment
Date;
"Verification Agent" means Wilmington Trust SP Services (London) Limited in its capacity as "Verification
Agent" under the Verification Services Agreement;
"Verification Services Agreement" means the Verification Services Agreement dated on or about the Closing Date
among the Verification Agent and the Issuer;
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"Weighted Average Life of an Investment" means the remaining weighted average life of an Investment as
determined in the reasonable judgment of the Manager in accordance with market convention, utilising the market's
long-term prepayment expectations for the relevant Investment and taking account of the market's expectations of
the exercise of calls relating to such Investment;
"Weighted Average Life of Senior Funding" means, as determined by the Manager (or the Administrator on its
behalf), the weighted average of the expected maturity of the Senior Fundings then outstanding;
"Weighted Average Life of Senior Funding Limit" means either (i) 3 months or (ii) 1 month during the Ramp-Up
Period or as amended from time to time with Rating Confirmation;
"Weighted Average Life of Senior Funding Test" has the meaning ascribed thereto in Schedule 11 (Weighted
Average Life of Senior Funding Test) to the Management Agreement, as amended from time to time following
Rating Confirmation;
"Weighted Average Life of the Investment Portfolio" means the weighted average of the Weighted Average Life
of an Investment in the Investment Portfolio. Certain Investments may be excluded from the calculation of the
Weighted Average Life of the Investment Portfolio, the adoption or amendment of criteria for which is subject to
Rating Confirmation from time to time; and
"Wholly-Owned Subsidiary" of a person shall be construed as a reference to any person which has no other
members except that other person and that other person's wholly-owned subsidiaries or persons acting on behalf of
that other person or its wholly-owned subsidiaries.
"Zero Coupon Medium Term Note" means a Medium Term Note designated as such in the applicable Final
Terms, which is offered and sold at a discount to its nominal amount and will not bear interest;
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INDEX OF DEFINITIONS
"n" Day MNCO .....................................................109
£ viii
€ viii
1997 Act ................................................................133
Account Control Agreement..................................181
Accounts ................................................................181
Accrual Period .........................................................40
Accrued Interest.....................................................137
Acquire ..................................................................181
Acquired ................................................................181
Acquiring...............................................................181
acquisition................................................................96
Acquisition ............................................................181
Acquisition Procedures............................................89
Administrative Expenses .......................................181
Administrative Services Agreement ......................181
Administrator............................................................vi
Administrator's Fee................................................181
Affiliate..................................................................181
Aggregate Maximum Amount ....................................i
Agreed-Upon Investments .....................................181
Amortised Face Amount..........................................49
Applicable Business Day Convention ...................182
Applicable Procedures.............................................71
Application ............................................................182
Approved Bank......................................................182
Approved Investor ...............................................4, 48
Approved Short-Term Investment Schedule .........122
Asset Value............................................................197
Assigned Documents ...............................................38
Associated Derivative............................................182
Associated Derivative Counterparty......................182
Automatic Rolling Maturity Capital Note .............182
Automatic Rolling Maturity Maximum Expected
Maturity Date.....................................................182
Available Liquidity................................................182
BaFin .....................................................................116
Block .......................................................................46
Breakable Deposits ................................................110
business day.............................................................37
Business Day ...................................................41, 182
Business Day Convention......................................182
Calculation Agent ..................................................183
Capital Note Dealer Agreement.............................183
Capital Note Maturity Test ....................................112
Capital Note Maximum Amount ................................i
Capital Note Obligations .......................................183
Capital Note Programme ............................................i
Capital Note Simulation Model Rating Test..........112
Capital Noteholder.................................................183
Capital Notes ........................................................i, 33
Capital Notes Maximum Leverage Test ................111
Capital Tests ..........................................................111
Cash Account.........................................................183
Cash Equivalents ...................................................183
CDO Collateral ........................................................17
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CDO Securities ......................................................183
CDS Buffer ............................................................110
Charge ...................................................................184
Class ......................................................................184
Clearing System.....................................................184
Clearstream, Luxembourg ....................................... iii
Closing Date ..........................................................184
CMBS Securities ...................................................184
Code.................................................96, 139, 156, 162
Co-Issuer...............................................i, 32, 152, 157
Collateral ...............................................................184
collecting agent......................................................136
Combination Capital Notes.........................................i
Commercial Paper ......................................................i
Commercial Paper Programme...................................i
Commercial Paper Programme Agreements..........184
Committed Liquidity .............................................184
Committed Repo Agreement .................................184
Committed Repo Facilities ............................110, 184
Committed Repo Transactions ..............................184
Companies Law .......................................................76
Compliance Tests ..................................................184
Composite Deemed Rating ....................................184
Conditions................................................................33
Confirmation....................................................85, 131
Consent Limits.......................................................104
Consumer Protected Securities ................................29
Corporates..............................................................184
Country of Investment ...........................................184
CP Documents .......................................................185
CP Obligations.......................................................185
Credit Portfolio ......................................................185
Credit Portfolio Value ...........................................185
Currency Sensitivity Limit ....................................108
Currency Sensitivity Test ......................................109
Custodian.............................................................7, 33
Custody Accounts..................................................185
Custody Agreement .............................................7, 33
CVM ......................................................................173
Day Count Fraction ...........................................39, 43
Dealers...................................................................185
Debt Securities.......................................................138
Debt Security .........................................................185
Declaration of Trust.................................................76
Deemed Rating ......................................................185
Default Notice .......................................................131
Definitive...............................................................186
Definitive Medium Term Notes...............................70
Definitive Regulation S Medium Term Note...72, 150
Definitive Rule 144A Medium Term Note72, 147, 149
Deposit Account Control and Security
Agreement .........................................................132
Deposit Bank .........................................................132
Deposited Funds ....................................................186
Derivative Counterparty ........................................186
Derivative Obligations...........................................186
209
Derivative Specified Default .................................186
Derivative Transaction ..........................................186
Derivatives.............................................................186
Designated Investments .........................................186
Determination Period.......................................40, 131
DG Hyp .................................................................117
Directors ..................................................................77
Disbursing Agent...................................................137
Disputes ...................................................................58
Distributable Profits...............................................186
Distribution Rate....................................................186
Distribution Rate Schedule ....................................187
Dollar Equivalent...................................................187
dollars .................................................................... viii
DTC ................................................................. iii, 152
DTC Rules .............................................................187
Dual Currency Interest Medium Term Note..........187
Dual Currency Redemption Medium Term Note ..187
Dutch Resident ......................................................172
Dutch Residents.....................................................172
ECP Agent .............................................................187
ECP Dealer ............................................................187
ECP Dealer Agreement .........................................187
ECP Deed of Covenant..........................................187
ECP Documents.....................................................187
ECP Issuing and Paying Agency Agreement.........187
ECP Notes ..........................................................i, 187
ECP Programme .........................................................i
Effective Net Asset Value .....................................187
Eligible Associated Derivative Counterparty ........187
Eligible Committed Repo Counterparty ................187
Eligible Counterparty ............................................188
Eligible Currency...................................................188
Eligible Deposit Bank............................................188
Eligible Investment Classes...................................100
Eligible Investment Derivative Counterparty ........188
Eligible Jurisdiction...............................................188
Eligible Limit.........................................................188
Eligible Liquidity Provider ....................................188
Eligible Puttable Investment Counterparty............188
Emergency Back-Up Manager ..............................188
Enforcement Date ..................................................188
Enforcement Event ....................................54, 81, 189
Enforcement Manager .....................................85, 189
Enforcement Manager Fee.....................................189
Enforcement Notice ...............................................189
Enforcement Procedures..........................................86
Equity Amount ......................................................130
ERISA ...........................................150, 156, 162, 177
ERISA Plan ...........................................150, 156, 162
EU Insolvency Regulation.....................................189
EURIBOR........................................................42, 189
Euro ....................................................................... viii
Euro Accounts .......................................................189
Euro Exchange Date ................................................36
Euro Exchange Notice .............................................36
Euro LIBOR ..........................................................189
Euro zone...............................................................189
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Euroclear.................................................................. iii
Euroclear System...................................................189
Exchange Act............................................................ix
Exchange Agent.....................................................190
Exchange Event .......................................................72
Exchange Rate .......................................................190
Expected Final Maturity ........................................190
Expected Final Maturity at Point of Purchase
Condition ...........................................................190
Expected Maturity Date.........................................190
Expected U.S. Liquidity Note Maturity Date ........190
Exposure ................................................................190
Extended Maturity Note ........................................190
Final Terms....................................................... vii, 33
Financial Institutions .............................................190
Financial Regulator........................................... ii, 179
Financing Transactions..........................................101
first currency............................................................58
Fitch............................................................................i
Fixed Applicable Exchange Rate...........................190
Fixed Coupon Amount ............................................39
Fixed Dollar Equivalent Nominal Amount............190
Fixed Interest Period................................................39
Fixed Rate Medium Term Note .............................191
Floating Rate Convention ................................41, 182
Floating Rate Medium Term Note.........................191
Following Business Day Convention ....................183
Foreign Currency Note ..........................................141
Forward Sale Agreement .........................................77
FRN Convention....................................................183
FSA........................................................................191
FSMA ............................................................163, 191
Funding Objectives..................................................79
Global Medium Term Notes.................................... iii
Haircut Market Value of Liquidity Eligible
Investments........................................................110
holder.......................................................................34
IA.............................................................................38
IKB AG .................................................................116
IKB CAM ..............................................................116
Incentive Management Fee....................................114
Indemnity Cap .......................................................191
Indemnity Cap Excess ...........................................191
Index Linked Interest Medium Term Note ............191
Index Linked Redemption Medium Term Note.....191
Indirect Participants.................................................75
Individual Point Shift Tests ...................................108
Initial Offerees.......................................................146
Insolvency Administrator ......................................191
Insolvency Event ...................................................191
Instalment Medium Term Note .............................191
Interest Amount .......................................................39
Interest Commencement Date................................192
Interest Determination Date...................................192
Interest Payment Date......................................40, 192
Interest Period..................................................41, 192
Interest Rate Sensitivity Limit ...............................108
Interest Rate Sensitivity Test .................................108
210
Investment .............................................................192
Investment Class....................................................192
Investment Company Act .......ii, ix, 32, 153, 157, 158
Investment Derivative............................................192
Investment Derivative Concentration at Point of
Purchase Condition............................................193
Investment Derivative Counterparty......................193
Investment Objectives .............................................88
Investment Portfolio ..............................................193
Investment Portfolio Exposure ..............................193
Investment Portfolio Parameter Tests....................193
Investment Purchase Criteria .................................101
Investment Services Directive .......................... ii, 179
Investment Switch .................................................193
Investment Weighted Average Life at Point of
Purchase Condition............................................193
Investor Redemption Notice ....................................46
Irish Corporate Services Provider..........................125
Irish Paying Agent ...................................................33
Irish Stock Exchange .................................. ii, 33, 179
IRS.........................................................................139
ISDA........................................................................92
ISDA Definitions.............................................42, 194
ISDA Rate ...............................................................42
Issue Date ..............................................................194
issue price ..............................................................141
Issuer ...............................................i, ix, 32, 152, 157
Issuer Call Option....................................................66
Issuer Call Option Date .........................................194
Issuer Call Option Date(s) .......................................66
Issuer Call Option Redemption Amount .....4, 66, 194
Issuer Capital Account...........................................194
Issuer Share Proceeds ............................................194
Issuers ...................................................................i, 32
Junior Capital Noteholders ....................................194
Junior Capital Notes ...................................................i
Junior Capital Notes Maximum Leverage Test .....112
Junior Capital Notes Subordinated Payments........194
Junior Management Fee.........................................194
Junior Secured Obligations....................................194
Law........................................................................194
Legal Final Maturity..............................................194
Legal Final Maturity at Point of Purchase
Condition ...........................................................194
Legal Maturity Date...............................................194
LIBOR .............................................................42, 194
Liquidity Agent .....................................................194
Liquidity Arrangements.........................................194
Liquidity Bank.......................................................195
Liquidity Eligible Committed Repo ......................110
Liquidity Eligible Investments ..............................111
Liquidity Facility Agreements ...............................195
Liquidity Note .......................................................195
Liquidity Obligations.............................................195
Liquidity Provider..................................................195
Liquidity Specified Default ...................................195
Liquidity Tests.......................................................195
Local Banking Day..................................................51
9122016.23 06095153
London and New York Business Day....................109
Major Capital Adequacy Test................................111
Major Capital Loss Test ........................................111
Major Capital Tests ...............................................195
Majority Medium Term Noteholders.....................195
Management Agreement..................................33, 195
Management Expenses ..........................................195
Manager ...........................................................33, 116
Manager Information .................................................v
Manager Standard..................................................195
Manager Transition Date .......................................119
Mandatory Acceleration Event ..............................196
Mandatory Acceleration Event Notice ..................196
Margin ...................................................................196
Market ...................................................................179
Market Sensitivity Tests ........................................196
Market Value .........................................................196
Maturity Date.........................................................196
Maturity Type ........................................................196
Maximum Country of Investment Concentration
Test ....................................................................107
Maximum Fixed Rate Investments Test ................108
Maximum Investment Class Concentration Test...106
Maximum Leverage Tests .....................................111
Maximum Non Public Nor Shadow Rated
Investments Test ................................................108
Maximum Servicer Concentration Test.................108
Maximum Single Obligor at Point of Purchase –
Percentage of Investment Portfolio Exposure
Condition ...........................................................196
Maximum Single Obligor at Point of Purchase
Percentage of Net Asset Value Test ..................196
Maximum Single Obligor Percentage of
Investment Portfolio Exposure Purchase Limit .196
Maximum Single Obligor Percentage of
Investment Portfolio Exposure Test ..................105
Maximum Single Obligor Percentage of Net
Asset Value Purchase Limit...............................196
Maximum Single Obligor Percentage of Net
Asset Value Test................................................106
Medium Term Note Certificate ...............................37
Medium Term Note Dealer....................................... ii
Medium Term Note Dealer Agreement .................196
Medium Term Note Dealers ............................. ii, 196
Medium Term Note Maximum Amount.....................i
Medium Term Note Obligations............................197
Medium Term Note Programme...........................i, 32
Medium Term Noteholder .......................................34
Medium Term Notes.......................................i, 32, 33
Mezzanine Capital Noteholders.............................197
Mezzanine Capital Notes............................................i
Mezzanine Capital Notes Maximum Leverage
Test ....................................................................111
Mezzanine Capital Notes Subordinated Payments 197
Minimum Currency Concentration Test ................107
Minimum Ratings Concentration Test...................106
Minor Capital Adequacy Test................................112
Minor Capital Loss Test ........................................112
211
Minor Capital Tests ...............................................197
MNCO ...................................................................109
Modified Business Day Convention ......................183
Modified Following Business Day Convention.....183
Money Market Funds.............................................110
Monthly Investor Report .......................................122
Moody's ......................................................................i
Net Asset Value .....................................................197
Net Asset Value Leverage Test .............................112
New York Paying Agent..........................................33
Non-U.S. Person ........................................ iii, 32, 158
Normal Operations ..................................................80
Noteholders............................................................197
Notes...........................................................................i
Notice of Exclusive Control ..................................127
Notice Period .........................................................131
Notifying Party ......................................................131
Obligations ............................................................197
Obligor...................................................................197
Offering Documents ..............................................146
Official Body .........................................................197
Official List ...................................................... ii, 179
OID........................................................................141
OID Regulations ....................................................141
Operating Expenses ...............................................197
Operating Rules ...............................................88, 198
Operational Limits.................................................103
Operatori Qualificati..............................................169
Optional Currency .................................................198
Optional Rolling Maturity Capital Note ................198
Optional Rolling Maturity Maximum Expected
Maturity Date.....................................................198
Original Issue...........................................................32
originate...................................................................96
origination................................................................96
other Plan...............................................................150
Other Plan......................................................156, 162
outstanding ..............................................................34
Outstanding Balance....................................4, 47, 198
PAC Method ..........................................................142
Parallel Yield Curve Shift Tests ............................108
Participants ..............................................................70
Participating Member State .................................3, 35
Partly Paid Medium Term Note.............................198
paying agent...........................................................136
Paying Agents..................................................33, 198
Permitted Associated Derivative ...........................198
Permitted Investment .............................................198
person ....................................................................198
Plan........................................................................177
Plan Assets Regulation ..................150, 156, 162, 177
Portfolio.................................................................198
Potential Investment ..............................................101
Preceding Business Day Convention.....................183
Preferred Order of Sale..........................................198
Principal Paying Agent ....................................33, 199
Priority of Payments ..............................................199
Proceedings..............................................................58
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Profit Accrual Period .............................................199
Profit Distribution Date .........................................199
Profit Extraction Agreement..................................117
Programme .................................................................i
Programme Agreements ........................................199
Prospectus Directive ............................ii, 61, 170, 179
PTCE .....................................................................177
purchase...................................................................96
Purchaser's Letter.....................................................73
Put Option................................................................66
Put Option Date .....................................................199
Put Option Date(s) ...................................................66
Put Option Redemption Amount .................4, 67, 199
Put Redemption Tests ............................................199
Puttable Investments..............................................110
QIB .................................................. iii, 148, 153, 160
QP.................................................... iii, 148, 153, 160
QSR ..........................................................................vi
QSR Information ......................................................vi
qualified institutional buyer ..................................... iii
qualified purchaser .................................................. iii
Qualified Purchasers................................................24
quoted Eurobonds ..................................................133
Ramp-Up Period ....................................................199
Rate of Interest ......................................................199
Rating Agencies..........................................................i
Rating Confirmation ..............................................199
Receipt...................................................................199
Receiver .................................................................199
Record Date .............................................................50
Redeemed Medium Term Notes ..............................46
Redemption Amount..............................................199
Redemption Date ...................................................199
Redemption Net Asset Value.................................199
Redenomination Date ..............................................35
Reference Rate.......................................................200
Register..............................................................37, 70
Registered Medium Term Note .............................200
Registrar ....................................................33, 70, 200
Regulated Market ............................................. ii, 179
Regulation S ................................................. i, viii, 32
Regulation S Global Medium Term Notes .............. iii
Regulation S Medium Term Note..........................200
Regulation S Medium Term Notes .......................... iii
Regulatory Redemption Date ..................................48
Related Rights .......................................................200
Relative Leverage Test ..........................................112
Relevant Banking Day.............................................51
Relevant Date ..................................................53, 200
Relevant Entity ........................................................22
Relevant Factor........................................................20
Relevant Financial Centre......................................200
Relevant Financial Centre Day ................................51
Relevant Payment Obligation ................................204
Relevant Time .......................................................200
Repo Agreement ....................................................200
Repo Counterparty.................................................200
Repo Margin Call Buffer .......................................110
212
Repo Obligations ...................................................200
Repo Specified Default..........................................200
Repo Transaction...................................................200
Requirements .........................................................123
Residual Distributable Profits................................114
Responsible Officer ...............................................200
Restricted Funding...........................................83, 201
Restricted Funding Capital Requirement Haircut..201
Restricted Funding Event ................................81, 201
Restricted Funding Procedures ................................84
Restricted Investment ......................................82, 201
Restricted Investment Capital Requirement
Haircut ...............................................................201
Restricted Investment Event ............................80, 201
Restricted Investment Procedures............................82
Restricted Transaction Affiliate...............................96
Reuters Screen .......................................................201
Reverse Repo Agreement ......................................201
Reverse Repo Counterparty...................................201
Reverse Repo Obligations .....................................202
Reverse Repo Securities ........................................202
Reverse Repo Transaction .....................................202
Rhineland...............................................................116
RSA ...........................................................................v
Rule 144A.....................................................i, 32, 153
Rule 144A Global Medium Term Notes.................. iii
Rule 144A Medium Term Note .............................202
Rule 144A Medium Term Notes ............................. iii
S&P ............................................................................i
Scheduled Payments ..............................................109
Scheduled Receipts................................................109
Seasoned ..................................................................97
SEC..........................................................................24
second currency .......................................................58
Secured Creditors ..................................................202
Secured Obligations...............................................203
Securities Act...................................... i, viii, 152, 157
Securities Agents ...................................................203
Securities and Exchange Commission ................... viii
Securities and Futures Act .....................................174
Securities Intermediary..........................................127
Securities Lending Agreement ..............................203
Securities Lending Counterparty ...........................203
Securities Lending Transactions............................203
Security..................................................................126
Security Documents...............................................203
Security Interest.....................................................203
Security Margin .......................................................77
Security Trust Deed ............................................ ii, 33
Security Trustee.................................................. ii, 33
Selection Date..........................................................46
Seller........................................................................77
Senior Capital Noteholders....................................203
Senior Capital Notes ...................................................i
Senior Creditor Payment Event .............................203
Senior Creditors.....................................................203
Senior Funding ......................................................203
Senior Management Fee ........................................114
9122016.23 06095153
Senior Note Maximum Amount .................................i
Senior Notes ...............................................................i
Senior Notes Rating Test .......................................112
Senior Notes Simulation Model Rating Test .........104
Senior Obligations .................................................204
Senior Ranking Obligation ....................................204
Series ...................................................................1, 33
Settlement Obligations ..........................................204
Share Trustee ...........................................................76
Shares ......................................................................76
Short-Term Investments ........................................123
Short-Term Medium Term Notes ..........................143
Single Obligor Group ............................................204
Sovereign...............................................................204
Specified Currency ............................................3, 204
Specified Denomination(s) ....................................204
Specified Office.....................................................204
Specified Period.......................................................40
SRPM ....................................................................141
Stabilising Manager(s)........................................... viii
stated redemption price at maturity .......................141
Sterling .................................................................. viii
Sterling LIBOR .....................................................204
Structured Finance.................................................204
Structured Finance Sector......................................205
Structured Finance Securities ..................................12
Subordinated Management Fee .............................114
Substitute Manager ................................................205
sub-unit ....................................................................40
Supplemental Information Memorandum................31
Supranational .........................................................205
TARGET Business Day.........................................205
TARGET System.....................................................41
Taxing Jurisdiction ..................................................52
Technical Default ..............................................54, 82
Term Note Agency Agreement........................33, 205
Term Note Agent ...................................................205
Term Note Agreements .........................................205
Term Notes .................................................................i
The Securities Law ................................................169
Top Rated ..............................................................205
Top Ratings ...........................................................205
Tranche ................................................................1, 33
Transaction Documents .........................................205
Transaction Terms Agreement ..............................205
Transfer Agent...........................................33, 70, 205
Treasury Department ...............................................30
Treaty.....................................................................206
Tri-Party Agreement..............................................206
U.S. Accounts ........................................................206
U.S. Collateral .......................................................206
U.S. Corporate Services Agreement ......................125
U.S. Corporate Services Provider ..........................125
U.S. dollars ............................................................ viii
U.S. Extended Note ...............................................206
U.S. Government Agency......................................206
U.S. Holder............................................................139
U.S. Liquidity Note ...............................................207
213
U.S. Medium Term Note Dealers ....................58, 207
U.S. Person ......................................................... iii, ix
U.S. Residential Structured Finance Securities .......13
U.S. Securities Account.........................................127
U.S.$ ...................................................................... viii
UK Collateral.........................................................206
UK interest.............................................................135
USA PATRIOT Act.................................................29
USCP Agent ..........................................................206
USCP Depositary...................................................206
USCP Depositary Agreement ................................206
USCP Documents ..................................................206
USCP Notes........................................................i, 206
USCP Placement Agency Agreement....................206
USCP Placement Agents .......................................206
9122016.23 06095153
USCP Programme.......................................................i
Valuation Date.......................................................207
Value .....................................................................207
Variable Margin.....................................................207
Verification Agent .................................................207
Verification Services Agreement...........................207
Weighted Average Life of an Investment..............208
Weighted Average Life of Senior Funding............208
Weighted Average Life of Senior Funding Limit..208
Weighted Average Life of Senior Funding Test....208
Weighted Average Life of the Investment
Portfolio.............................................................208
Wholly-Owned Subsidiary ....................................208
Zero Coupon Medium Term Note .........................208
214
REGISTERED OFFICE OF
THE ISSUER
Rhinebridge Plc
First Floor
7 Exchange Place
International Financial Services
Centre
Dublin 1
REGISTERED OFFICE OF
THE CO-ISSUER
Rhinebridge LLC
2711 Centerville Road
Wilmington, DE 19808
United States of America
MANAGER
IKB Credit Asset Management GmbH,
London branch
80 Cannon Street
London EC4N 6HL
United Kingdom
EURO MEDIUM TERM
NOTE DEALERS
Morgan Stanley & Co.
International plc
25 Cabot Square
Canary Wharf
London E14 4QA
United Kingdom
U.S. MEDIUM TERM NOTE
DEALERS
Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, NY 10036
United States of America
Goldman Sachs International
Peterborough Court
133 Fleet Street
London EC4A 2BB
United Kingdom
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Citibank Global Markets
Limited
Citigroup Global Markets Inc.
390 Greenwich Street,
5th Floor
New York, NY 10036
Citigroup Centre,
Canada Square
Canary Wharf
London E14 5LB
United Kingdom
SECURITY TRUSTEE
The Bank of New York,
London branch
One Canada Square
London E14 5AL
United Kingdom
PRINCIPAL PAYING
AGENT
The Bank of New York,
London branch
One Canada Square
London E14 5AL
United Kingdom
LEGAL ADVISORS
To the Issuer and Manager as to Irish Law
A&L Goodbody Solicitors
International Financial Services Centre
North Wall Quay
Dublin 1
Ireland
To the Medium Term Note Dealers as to New York
and English Law
Sidley Austin (UK) LLP
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA
United Kingdom
Sidley Austin LLP
787 Seventh Avenue
New York, NY 10019
United States of America
9122016.23 06095153
To the Issuer and Manager
as to New York and English Law
Mayer, Brown, Rowe & Maw LLP
11 Pilgrim Street
London EC4V 6RW
United Kingdom
Mayer, Brown, Rowe & Maw LLP
71 S. Wacker Drive
Chicago, IL 60606
United States of America
To the Security Trustee as to New York and
English Law
Lovells LLP
Atlantic House
50 Holborn Viaduct
London EC1A 2FG
United Kingdom
9122016.23 06095153
ADMINISTRATOR
QSR Management
Limited
One Canada Square
London E14 5AA
United Kingdom
AUDITORS
PricewaterhouseCoopers
1 Spencer Dock
North Wall Quay
Dublin 1
Ireland
9122016.23 06095153
LISTING AGENT
A&L Listing Limited
A&L Goodbody
Solicitors
International Financial Services Centre
North Wall Quay
Dublin 1
Ireland