Mecenate S.r.l. (incorporated with limited liability under the laws of the Republic of Italy)

Transcription

1 Pursuant to article 2, paragraph 3, of Italian law No. 130 of 30 April 1999 Mecenate S.r.l. (incorporated with limited liability under the laws of the Republic of Italy) 160,000,000 Class A Residential Mortgage-Backed Floating Rate Notes due ,000,000 Class A Residential Mortgage-Backed Floating Rate Notes due ,400,000 Class A Residential Mortgage-Backed Floating Rate Notes due 2060 Issue Price for all Classes of Notes: 100 per cent. This Prospectus contains information relating to the issue by Mecenate S.r.l. (the Issuer ) of the 160,000,000 Class A Residential Mortgage-Backed Floating Rate Notes due 2060 (the Class A1 Notes ), the 90,000,000 Class A Residential Mortgage-Backed Floating Rate Notes due 2060 (the Class A2 Notes ) and the 99,400,000 Class A Residential Mortgage-Backed Floating Rate Notes due 2060 (the Class A3 Notes and, together with the Class A1 Notes and the Class A2 Notes, the Rated Notes ). In connection with the issue of the Rated Notes, the Issuer will also issue the 116,406,000 Class Z 2011 Residential Mortgage-Backed Floating Rate Notes due 2060 (the Junior Notes and, together with the Rated Notes, the Notes ). The Junior Notes will be subscribed by BancaEtruria Società Cooperativa, having its registered office at via Calamandrei, 255, Arezzo, Italy ( BancaEtruria or the Seller ). The Issuer is a limited liability company incorporated under the laws of the Republic of Italy under article 3 of Italian law No. 130 of 30 April 1999 (Disposizioni sulla cartolarizzazione dei crediti), as amended from time to time (the Securitisation Law ) having its registered office at via Calamandrei, 255, Arezzo, Italy and registered in the register of special purpose vehicles held by the Bank of Italy pursuant to the regulation issued by the Bank of Italy on 29 April 2011 under number The Issuer is directed and co-ordinated (soggetta all attività di direzione e coordinamento) by BancaEtruria and belongs to the Etruria Banking Group (as defined below) and its tax identification number (codice fiscale) and VAT number is This Prospectus is issued pursuant to article 2, paragraph 3 of the Securitisation Law and constitutes a prospetto informativo for all Classes of Notes in accordance with the Securitisation Law. The Junior Notes are not being offered pursuant to this Prospectus. The proceeds of the issue of the Notes will be applied by the Issuer to fund the purchase of monetary claims and other connected rights (the Claims ) arising from a portfolio of residential mortgage loans which qualify either as mutui fondiari (the Fondiari Mortgage Loans ) or as mutui ipotecari (the Ipotecari Mortgage Loans and, together with the Fondiari Mortgage Loans, the Mortgage Loans or the Portfolio ) owed to BancaEtruria. The Claims have been transferred to the Issuer pursuant to the terms of a transfer agreement dated 7 June 2011 between the Issuer and BancaEtruria. The principal source of funds available to the Issuer for the payment of interest and the repayment of principal on the Notes will be collections received in respect of the Claims. Interest on the Notes is payable by reference to successive interest periods (each an Interest Period ). Interest on the Notes will accrue on a daily basis and will be payable in arrear in euro on 24 October 2011, being the first Interest Payment Date (as defined below), and, thereafter, quarterly in arrear on 24 January, 24 April, 24 July and 24 October (in each case, subject to adjustment for non-business days as set out in Condition 6 (Interest)). Prior to the service of an Issuer Acceleration Notice, the rate of interest applicable to the Rated Notes for each Interest Period shall be the rate offered in the euro-zone inter-bank market (such rate as defined in Condition 1 (Definitions), EURIBOR ) for three-month deposits in euro (save that for the first Interest Period the rate will be obtained upon interpolation (on a straight line basis) of EURIBOR for two- and three-month deposits in euro) (as determined in accordance with Condition 6 (Interest)), plus the following margins in respect of each Class of Rated Notes: Class Applicable margin Class A1 Notes 1.90 per cent. per annum for the period from the Issue Date up to and including the last day of the Interest Period ending in October 2016 (the Step-Up Date ) and 3.80 per cent. per annum from the Step-Up Date (excluded); Class A2 Notes 2.25 per cent. per annum for the period from the Issue Date up to and including the Step-Up Date and 4.45 per cent. per annum from the Step-Up Date (excluded); Class A3 Notes 0.35 per cent. per annum. This Prospectus has been approved by the Central Bank of Ireland (the Central Bank ), as competent authority under Directive 2003/71/EC (the Prospectus Directive ). The Central Bank only approves this Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. Such approval relates only to the Rated Notes which are to be admitted to trading on the regulated market of the Irish Stock Exchange or other regulated markets for the purposes of Directive 2004/39/EC or which are to be offered to the public in any Member State of the European Economic Area. Application has been made to the Irish Stock Exchange for the Rated Notes to be admitted to the Official List and trading on its regulated market. No application has been made to list the Junior Notes on any stock exchange. The Class A1 Notes are expected, on issue, to be rated AAAsf by Fitch Ratings Ltd. ( Fitch ) and Aaa(sf) by Moody s Investors Service Inc. ( Moody s and, together with Fitch, the Rating Agencies, which expression shall include any successors). The Class A2 Notes are expected, on issue, to be rated AAAsf by Fitch and Aaa(sf) by Moody s. The Class A3 Notes are expected, on issue, to be rated AAAsf by Fitch and Aaa(sf) by Moody s. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by any one of the Rating Agencies. The Junior Notes will not be assigned a rating. The credit ratings included or referred to in this Prospectus have been issued by Fitch and Moody s, each of which is established in the European Union and each of which has applied to be registered under Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies. Payments under the Notes may be subject to withholding for or on account of tax, or to a substitute tax, in accordance with Italian legislative decree No. 239 of 1 April 1996, as subsequently amended. Upon the occurrence of any withholding for or on account of tax, whether or not in the form of a substitute tax, from any payments under the Notes, neither the Issuer nor any other person shall have any obligation to pay any additional amount to any holder of Notes of any Class. The Notes will be limited recourse obligations solely of the Issuer. In particular, the Notes will not be obligations or responsibilities of, or guaranteed by, the Representative of the Noteholders, the Principal Paying Agent, the Agent Bank, the Collection Account Bank, the Transaction Bank, the Corporate Servicer, the Custodian, the Computation Agent, the Servicer, the Swap Counterparty, the Stand-by Servicer (each as defined below in Key features The principal parties ), BancaEtruria (in any capacity), the Arranger nor the shareholders of the Issuer. Furthermore, none of such persons accepts any liability whatsoever in respect of any failure by the Issuer to make payment of any amount due on the Notes. The Notes will be issued in dematerialised form (emesse in forma dematerializzata) on the terms of, and subject to, the Conditions and will be held in such form on behalf of the beneficial owners, until redemption and cancellation thereof, by Monte Titoli S.p.A., with its registered office at via Mantegna, 6, Milan, Italy ( Monte Titoli ) for the account of the relevant Monte Titoli Account Holders. The expression Monte Titoli Account Holders means any authorised institution entitled to hold accounts on behalf of their customers with Monte Titoli (and includes any Relevant Clearing System which holds an account with Monte Titoli or any depository banks appointed by the Relevant Clearstream System), Clearstream Banking, société anonyme ( Clearstream, Luxembourg ) and Euroclear Bank S.A./N.V. ( Euroclear ). The Notes will be deposited by the Issuer with Monte Titoli on 26 July 2011 (the Issue Date ) and, will at all times be in book entry form, and title to the Notes will be evidenced by book entry in accordance with the provisions of article 83-bis of Italian legislative decree No. 58 of 24 February 1998 and with the regulation issued by the Bank of Italy and the Commissione Nazionale per le Società e la Borsa ( CONSOB ) on 22 February 2008, as subsequently amended. No physical document of title will be issued in respect of the Notes. The Notes will mature on the Interest Payment Date (as defined below) which falls in April 2060 (the Maturity Date ), subject as provided in Condition 8 (Payments). Before the Maturity Date, the Notes will be subject to mandatory and/or optional redemption in whole or in part in certain circumstances (as set out in Condition 7 (Redemption, purchase and cancellation)). The Class A1 Notes will be redeemed in priority to the Class A2 Notes, the Class A3 Notes and the Junior Notes. The Class A2 Notes will be redeemed in priority to the Class A3 Notes and the Junior Notes. The Class A3 will be redeemed in priority to the Junior Notes. If the Class A1 Notes, the Class A2 Notes, the Class A3 Notes and/or the Junior Notes cannot be redeemed in full on the Maturity Date as a result of the Issuer having insufficient funds available to it in accordance with the terms and conditions of the Notes (the Conditions, and each a Condition ) for application in or towards such redemption, including the proceeds of any sale of Claims or any enforcement of the Note Security (as defined below), any amount unpaid shall remain outstanding and the Conditions shall continue to apply in full in respect of the Notes until the earlier of (i) the date on which the Notes are redeemed in full and (ii) the Cancellation Date (as defined below), at which date any amounts remaining outstanding in respect of principal or interest on the Notes shall be reduced to zero and deemed to be released by the holder of the relevant Notes and the Notes shall be cancelled. The Issuer has no assets other than the Claims and the Issuer s Rights (as defined below) as described in this Prospectus and the Previous Portfolios (as defined below) and the agreements entered into by the Issuer in relation to the Previous Securitisations (as defined below) which, however, do not constitute collateral for the Notes and are not available to the Noteholders. The Seller will retain a material net economic interest of at least 5% in the Securitisation in accordance with Article 122(a) ( Article 122a ) of Directive 2006/48/EC (as amended by Directive 2009/111/EC), referred to as the Capital Requirements Directive ( CRD 2 ) and the Bank of Italy s guidelines No. 263 of 27 December 2006 (Nuove disposizioni di vigilanza prudenziale per le banche) as amended on 28 January 2011 to implement paragraph 7 of Article 122a of CRD2 so long as the Notes are outstanding. As at the Issue Date, such interest will comprise an interest in the Junior Notes which is not less than 5% of the nominal value of the securitised exposures. Any change to this manner in which this interest is held will be notified to investors. Please refer to the section entitled Article 122a of the Capital Requirements Directive for further information. For a discussion of certain risks and other factors that should be considered in connection with an investment in the Rated Notes, see the section entitled Risk factors beginning on page 39. The date of this Prospectus is 26 July Arranger UBS Investment Bank

2 This Prospectus comprises a prospectus for the purposes of article 5.3 of the Prospectus Directive and for the purpose of giving information with regard to the Issuer and the Rated Notes which, according to the particular nature of the Issuer and the Rated Notes, is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses and prospects of the Issuer. None of the Issuer, the Representative of the Noteholders, UBS Limited (the Arranger ) or any other party to any of the Transaction Documents (as defined below), other than the Seller, has undertaken or will undertake any investigations, searches or other actions to verify the details of the Claims sold by the Seller to the Issuer, nor has the Issuer, the Representative of the Noteholders, the Arranger or any other party to any of the Transaction Documents, other than the Seller, undertaken, nor will any of them undertake, any investigations, searches or other actions to establish the creditworthiness of any debtor in respect of the Claims. The Issuer accepts responsibility for the information contained in this Prospectus. To the best of the knowledge of the Issuer (which has taken all reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance with the facts and contains no omission likely to affect the import of such information. The Issuer, having made all reasonable enquiries, confirms that this Prospectus contains or incorporates all information which is material in the context of the issuance and offering of the Notes, that the information contained or incorporated in this Prospectus is true and accurate in all material respects and is not misleading, that the opinions and intentions expressed in this Prospectus are honestly held and that there are no other facts, the omission of which would make this Prospectus or any of such information or the expression of any such opinions or intentions misleading. The Issuer accepts responsibility accordingly. The Seller has provided the information under the sections headed The Portfolio, The Seller and Servicer, The servicing and collection policies and any other information contained in this Prospectus relating to itself, the collection and underwriting procedures relating to the Portfolio, the relevant Claims, Mortgage Loans and Mortgages (each as defined below) and, together with the Issuer, accepts responsibility for the information contained in those sections. The Seller has also provided the historical data used as assumptions to make the calculations contained in the section headed Estimated weighted average life of the Rated Notes and assumptions on the basis of which the information and assumptions contained in the same section have been extrapolated and, together with the Issuer, accepts responsibility for such historical data. The Issuer accepts responsibility for the other information and assumptions contained in such section as described above. To the best of the knowledge of the Seller (having taken all reasonable care to ensure that such is the case), the information and data in relation to which it is responsible as described above are in accordance with the facts and do not contain any omission likely to affect the import of such information and data. The Seller also accepts responsibility for the information contained in the section of this Prospectus headed Article 122a of the Capital Requirements Directive (but not, for the avoidance of doubt, any information set out in the sections referred to therein). To the best of the knowledge and belief of the Seller, which has taken all reasonable care to ensure that such is the case, such information is in accordance with the facts and contains no omission likely to affect the import of such information. Credit Suisse International has provided the information under the section headed The Swap Counterparty below and, together with the Issuer, accepts responsibility for the information contained in that section, and to the best of the knowledge and belief of Credit Suisse International (having taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and contains no omission likely to affect its import. Save as aforesaid, Credit Suisse International has not, however, been involved in the preparation of, and does not accept responsibility for, this Prospectus or any part hereof. BNP Paribas Securities Services has provided the information under the section headed The Transaction Bank and the Custodian below and, together with the Issuer, accepts responsibility for the information ii

3 contained in that section, and to the best of the knowledge and belief of BNP Paribas Securities Services (having taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and contains no omission likely to affect its import. Save as aforesaid, BNP Paribas Securities Services has not, however, been involved in the preparation of, and does not accept responsibility for, this Prospectus or any part hereof. No person has been authorised to give any information or to make any representation not contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been authorised by or on behalf of the Arranger, the Representative of the Noteholders, the Issuer, the Corporate Servicer, the shareholders of the Issuer, the Swap Counterparty, BancaEtruria (in any capacity) or any other person. Neither the delivery of this Prospectus nor any sale or allotment made in connection with the offering of any of the Notes shall, under any circumstances, constitute a representation or imply that there has been no change in the affairs of the Issuer, the Arranger or the Seller or in the information contained herein since the date hereof or that the information contained herein is correct as at any time subsequent to the date hereof. To the fullest extent permitted by law, the Arranger accepts no responsibility whatsoever for the contents of this Prospectus or for any other statement made or purported to be made by the Arranger, or on its behalf, in connection with the Issuer or BancaEtruria or the issue and offering of the Notes. The Arranger accordingly disclaims all and any liability, whether arising in tort or contract or otherwise (save as referred to above), which it might otherwise have in respect of this Prospectus or any such statement. This Prospectus does not constitute an offer and may not be used for the purpose of an offer to, or a solicitation by, anyone in any jurisdiction or in any circumstances in which such an offer or solicitation is not authorised or is unlawful. Neither the Arranger nor the Representative of the Noteholders has independently verified the information contained herein. Accordingly, no representation, warranty or undertaking, expressed or implied, is made and no responsibility or liability is accepted by each of the Arranger and the Representative of the Noteholders or any of them as to the accuracy or completeness of the information contained in this Prospectus or any other information provided by the Issuer or BancaEtruria in connection with the Notes or their distribution. The Notes constitute limited recourse obligations of the Issuer. Each Note will be secured, in each case, over certain of the assets of the Issuer pursuant to and as more fully described in the section entitled The other Transaction Documents below. Furthermore, by operation of Italian law, the Issuer s right, title and interest in and to the Claims will be segregated from all other assets of the Issuer and amounts deriving therefrom will only be available, both prior to and following a winding-up of the Issuer, to satisfy the obligations of the Issuer to the holders of the Notes, to pay any costs, fees, expenses and other amounts required to be paid to the Representative of the Noteholders, the Principal Paying Agent, the Agent Bank, the Collection Account Bank, the Transaction Bank, the Custodian, the Stand-by Servicer, the Corporate Servicer, the Computation Agent, the Servicer, the Swap Counterparty, BancaEtruria (in any capacity), the Arranger or the shareholders of the Issuer and to any third-party creditor in respect of any costs, fees, expenses or liabilities incurred by the Issuer to such third-party creditor in relation to the securitisation of the Claims contemplated by this Prospectus (the Securitisation ). Furthermore, none of such persons accepts any liability whatsoever in respect of any failure by the Issuer to make payment of any amount due on the Notes. Amounts derived from the Claims will not be available to any other creditors of the Issuer and will be applied by the Issuer in accordance with the applicable order of priority for the application of Issuer Available Funds (as defined below). The distribution of this Prospectus and the offer, sale and delivery of Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Prospectus comes are required by the Issuer and the Arranger to inform themselves about, and to observe, any such restrictions. Neither this Prospectus nor any iii

4 part of it constitutes an offer of, and may not be used for the purpose of an offer to sell, or a solicitation of an offer to buy, any of the Notes, by anyone in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or is unlawful. This Prospectus is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by the Issuer, BancaEtruria (in any capacity) or the Arranger that any recipient of this Prospectus should purchase any of the Notes. Each investor contemplating purchasing Notes should make its own independent investigation of the Claims, the Portfolio and the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act ), are in bearer form and are subject to U.S. tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act). For a further description of certain restrictions on the offering and sale of the Notes and on the distribution of this Prospectus, see Subscription and sale below. The Notes may not be offered or sold, directly or indirectly, and neither this Prospectus nor any other offering circular nor any prospectus, form of application, advertisement, other offering material nor other information relating to the Issuer or the Notes may be issued, distributed or published in any country or jurisdiction (including the Republic of Italy, the United Kingdom and the United States), except under circumstances that will result in compliance with all applicable laws, orders, rules and regulations. No action has or will be taken which could allow an offering (offerta al pubblico) of the Notes to the public in the Republic of Italy. For a further description of certain restrictions on offers and sales of the Notes and the distribution of this Prospectus, see Subscription and sale below. Each initial and each subsequent purchaser of a Note will be deemed, by its acceptance of such Note, to have made certain acknowledgements, representations and agreements intended to restrict the resale or other transfer thereof as described in this Prospectus and, in connection therewith, may be required to provide confirmation of its compliance with such resale or other transfer restrictions in certain cases. See Subscription and sale below. All references in this Prospectus to Euro, and euro refer to the currency introduced at the start of the third stage of the European Economic and Monetary Union pursuant to the Treaty establishing the European Community (signed in Rome on 25 March 1957), as amended. The language of this Prospectus is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law. iv

5 Table of contents Documents incorporated by reference... 2 Key features... 3 Structure diagram Risk factors Credit structure The Portfolio The Seller and Servicer The Servicing and collection policies The Issuer s bank accounts Terms and Conditions of the Notes Schedule - Rules of the Organisation of Noteholders Use of proceeds The Issuer The Transaction Bank and the Custodian The Swap Counterparty The Agency and Accounts Agreement The Transfer Agreement The Servicing Agreement The Warranty and Indemnity Agreement The other Transaction Documents Estimated weighted average life of the Rated Notes and assumptions Taxation in the Republic of Italy Subscription and sale Article 122a of the Capital Requirements Directive General information Index of defined terms

6 DOCUMENTS INCORPORATED BY REFERENCE This Prospectus should be read and construed in conjunction with the following documents: (i) the financial statements of the Issuer as at 31 December 2009; and (ii) the financial statements of the Issuer as at 31 December 2010, together in each case with the report of the auditors of the Issuer thereon, which have been previously published and which have been filed with the Irish Stock Exchange. Such documents shall be deemed to be incorporated in, and form part of, this Prospectus, save that any statement contained in a document which is deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Prospectus to the extent that a statement contained herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. Copies of documents deemed to be incorporated by reference in this Prospectus may be obtained (without charge), during usual office hours on any weekday, from the registered office of the Issuer and the Specified Offices of, respectively, the Representative of the Noteholders and the Principal Paying Agent (as set forth in Condition 17 (Notices)). The table below sets out the relevant page references for the financial statements of the Issuer for the financial years ended 31 December 2009 and 31 December 2010 and the report of the auditors of the Issuer on the financial statements of the Issuer as at 31 December 2009 and 31 December Information contained in the documents incorporated by reference other than information listed in the table below is for information purposes only, does not form part of this Prospectus and is either not relevant for any investor or covered elsewhere in this Prospectus. Documents Information contained Page Financial statements as at 31 December 2009 Report on the management 4 Balance sheet 12 Income statement 12 Notes to the financial statements 16 Auditors report Report of the auditors on the financial statements of the Issuer as at 31 December (attached to the financial statements) Documents Information contained Page Financial statements as at 31 December 2010 Report on the management 3 Balance sheet 10 Income statement 10 Notes to the financial statements 14 Auditors report Report of the auditors on the financial statements of the Issuer as at 31 December (attached to the financial statements) 2

7 KEY FEATURES The following information is a summary of the transactions and assets underlying the Notes. It has to be read as an introduction to this Prospectus and is qualified in its entirety by reference to the detailed information presented elsewhere in this Prospectus and in the Transaction Documents. Certain terms used in this section, but not defined, may be found in other sections of this Prospectus, unless otherwise stated. An index of defined terms is contained at the end of this Prospectus, commencing on page The principal parties Issuer Shareholders Mecenate S.r.l. (the Issuer ) is a limited liability company incorporated in the Republic of Italy under article 3 of Italian law No. 130 of 30 April 1999 (disposizioni sulla cartolarizzazione dei crediti), as amended from time to time (the Securitisation Law ). The Issuer is registered in the companies register of Arezzo under number and with the register of special purpose vehicles held by the Bank of Italy pursuant to the regulation issued by the Bank of Italy on 29 April 2011 under number The registered office of the Issuer is at via Calamandrei, 255, Arezzo, Italy and its tax identification number (codice fiscale) and VAT number is The Issuer is directed and co-ordinated (soggetta all attività di direzione e coordinamento) by BancaEtruria and belongs to the Banca Etruria Banking Group (as defined below). The Issuer has been established as a special purpose vehicle for the purposes of issuing asset-backed securities. The Issuer may carry out other securitisation transactions in addition to the one contemplated in this Prospectus, subject to certain conditions. In accordance with the Securitisation Law, the Issuer has already engaged in three securitisation transactions carried out in accordance with the Securitisation Law, one of them completed on 27 March 2002 was unwound in April The two transactions still outstanding were completed on 11 May 2007 and on 2 February 2009 and involving (i) the acquisition of monetary claims and other connected rights arising from a portfolio of performing residential mortgage loans acquired from BancaEtruria and (ii) the issue of asset-backed notes in an aggregate amount of 1,130,096, (the Previous Securitisations Notes ). The equity capital of the Issuer is held by BancaEtruria (having an equity interest of 9,000, being equal to 90 per cent. of the equity capital of the Issuer), ConEtruria S.p.A. (having an equity interest of 500, being equal to 5 per cent. of the equity capital of the Issuer) and Finanziaria Italiana S.p.A. (having an equity interest of 500, being equal to 5 per cent. of the equity capital of the Issuer). BancaEtruria Società Cooperativa is a bank organised as a co-operative company (società cooperativa) under the laws of the Republic of Italy, registered in the companies register of Arezzo under number and with the register of banks (albo delle banche) held by the Bank of Italy pursuant to article 13 of the Banking Act under number 3

8 Seller Representative of the Noteholders Corporate Servicer Subordinated Loan Provider (codice meccanografico) ( BancaEtruria ). BancaEtruria is the parent company of the Gruppo Banca Etruria registered in the register of banking groups held by the Bank of Italy pursuant to article 64 of the Banking Act under number (the BancaEtruria Banking Group ). BancaEtruria s registered office is at via Calamandrei, 255, Arezzo, Italy. ConEtruria S.p.A. is an Italian joint stock company (società per azioni), registered in the companies register of Arezzo under number , with the register held by the Bank of Italy pursuant to article 106 of the Banking Act under number The registered office of ConEtruria S.p.A. is at via Calamandrei, 255, Arezzo, Italy and its tax identification number (codice fiscale) is ConEtruria S.p.A. is directed and co-ordinated (soggetta all attività di direzione e coordinamento) by BancaEtruria and belongs to the BancaEtruria Banking Group. Finanziaria Italiana S.p.A. is an Italian joint stock company (società per azioni), registered in the companies register of Arezzo under number The registered office of Finanziaria Italiana S.p.A. is at via Ernesto Rossi, 28, Arezzo, Italy and its tax identification number (codice fiscale) is BancaEtruria (in such capacity, the Seller ) sold the Claims to the Issuer pursuant to the terms of a transfer agreement dated 7 June 2011 (the Initial Execution Date ) between the Issuer and the Seller (the Transfer Agreement ). BNP Paribas Securities Services, a French société en commandite par actions with capital stock of 165,279,835, having its registered office at Rue d Antin, Paris, France, operating for the purposes hereof through its Milan Branch located in via Ansperto, 5, Milan, Italy, registered in the companies register held in Milan, Italy at number , fiscal code and VAT number , enrolled in register of banks (albo delle banche) held by the Bank of Italy at number 5483 ( BNPSS ), or any other person for the time being acting as such, is the representative of the holders of the Notes (the Representative of the Noteholders ) pursuant to the terms of the Intercreditor Agreement dated 22 July 2011 (the Signing Date ). BancaEtruria is the corporate services provider to the Issuer (in such capacity, the Corporate Servicer ). Pursuant to the terms of a corporate services agreement dated the Signing Date (the Corporate Services Agreement ), the Corporate Servicer has agreed to provide certain administrative and secretarial services to the Issuer. BancaEtruria is the subordinated loan provider (in such capacity, the Subordinated Loan Provider ) pursuant to the terms of a subordinated loan agreement dated the Signing Date (the Subordinated Loan Agreement ) between the Issuer, the Representative of the Noteholders and the Subordinated Loan Provider pursuant to which the Subordinated Loan Provider has agreed to grant to the Issuer (i) a subordinated loan in 4

9 Servicer Stand-by Servicer Computation Agent an amount equal to 17,517, set out in the Subordinated Loan Agreement (the First Subordinated Loan ) and (ii) an additional subordinated loan (the Additional Subordinated Loan and, together with the First Subordinated Loan, the Subordinated Loan ) to be documented in the Subordinated Loan Agreement which may be drawn down up to a maximum amount equal to 17,467, (the Additional Commitment Limit ). The First Subordinated Loan will be drawn down by the Issuer on the Issue Date and immediately credited to the Cash Reserve Account, except for 50, which will be credited to the Expenses Account. Subject to the Additional Commitment Limit, the Additional Subordinated Loan shall be drawn down by the Issuer for an amount equal to the Required Amount by no later than five Business Days of the Servicer Downgrade Date and immediately credited to the Cash Reserve Account. Required Amount means, at any date, the difference, if positive, between the Target Cash Reserve Amount, as at the Servicer Downgrade Date, and the Cash Reserve available as at such date. Servicer Downgrade Date means any date on which, following the day on which a previous Servicer Event ceased to be outstanding, a Servicer Event occurs again. The Subordinated Loan will be repaid in accordance with the applicable Priority of Payments. See Credit structure below. BancaEtruria (in such capacity, the Servicer ) will administer the Portfolio on behalf of the Issuer pursuant to the terms of a servicing agreement dated the Initial Execution Date between the Issuer and the Servicer, as amended on the Signing Date (the Servicing Agreement ). Cassa di Risparmio di Volterra S.p.A., a bank organised as a joint stock company (società per azioni) under the laws of the Republic of Italy, with registered office at Piazza dei Priori, 16, Volterra (PI), Italy, and registered in the companies register of Pisa under number and with the register of banks (albo delle banche) held by the Bank of Italy pursuant to article 13 of the Banking Act under number 6370, is the stand-by servicer (the Stand-by Servicer ) pursuant to the terms of a stand-by servicing agreement dated the Signing Date and entered into between the Issuer, the Servicer, the Representative of the Noteholders and the Stand-by Servicer (the Stand-by Servicing Agreement ). Pursuant to the Stand-by Servicing Agreement, the Stand-by Servicer has agreed to replace the Servicer and to perform the duties and obligations set forth in the Servicing Agreement, in the event of BancaEtruria ceasing to act as Servicer under the Servicing Agreement. BNPSS, or any other person for the time being acting as such, is the computation agent to the Issuer (in such capacity, the Computation Agent ) pursuant to the terms of an agency and accounts agreement 5

10 Collection Account Bank Transaction Bank Custodian Principal Paying Agent Agent Bank dated the Signing Date between the Issuer, the Representative of the Noteholders, the Computation Agent, the Collection Account Bank, the Transaction Bank, the Principal Paying Agent and the Agent Bank (the Agency and Accounts Agreement ). See Key features The Portfolio and The Agency and Accounts Agreement below. BancaEtruria, or any other person for the time being acting as such, is the collection account bank to the Issuer in respect of the Collection Account (in such capacity, the Collection Account Bank ) pursuant to the terms of the Agency and Accounts Agreement. The Collection Account Bank has opened, and will maintain, the Collection Account and the Expenses Account in the name of the Issuer and will operate such accounts in the name and on behalf of the Issuer. See Key features The Accounts, The Agency and Accounts Agreement, The Issuer s bank accounts and The Seller and Servicer below. BNP Paribas Securities Services, London branch, a French société en commandite par actions with capital stock of 165,279,835, having its registered office at Rue d Antin, Paris, France, operating for the purposes hereof through its London Branch located in 55 Moorgate, London EC2R 6PA, United Kingdom, or any other person for the time being acting as such, is the transaction bank to the Issuer in respect of certain of the Issuer s bank accounts (in such capacity, the Transaction Bank ) pursuant to the terms of the Agency and Accounts Agreement. The Transaction Bank has opened, and will maintain, certain bank accounts in the name of the Issuer which will be operated, in the name and on behalf of the Issuer, by the Computation Agent. See Key features The Accounts, The Agency and Accounts Agreement, The Issuer s bank accounts and The Transaction Bank below. BNPSS, or any other person for the time being acting as such, is the custodian to the Issuer in respect of certain financial investments or other investments held by the Issuer (in such capacity, the Custodian ) pursuant to the terms of the Agency and Accounts Agreement. The Custodian has opened, and will maintain, a securities account in the name of the Issuer and will operate such account in the name and on behalf of the Issuer. See Key Features - The Accounts of the Issuer, The Agency and Accounts Agreement, The Issuer s Bank Accounts and The Transaction Bank and the Custodian below. BNPSS, or any other person for the time being acting as such, is the principal paying agent (in such capacity, the Principal Paying Agent ) pursuant to the terms of the Agency and Accounts Agreement. In addition to the above, the Principal Paying Agent has opened, and will maintain, the Payments Account in the name of the Issuer and will operate such account in the name and on behalf of the Issuer. See Key features The Accounts and The Agency and Accounts Agreement below. BNPSS, or any other person for the time being acting as such, is the 6

11 Swap Counterparty 2. Summary of the Notes The Notes Form and denomination of the Notes agent bank (in such capacity, the Agent Bank ) pursuant to the terms of the Agency and Accounts Agreement. See Key features The Accounts and The Agency and Accounts Agreement below. Credit Suisse International, having its registered office at One Cabot Square, London E14 4QJ, United Kingdom, or any other person for the time being acting as such, is the swap counterparty (in such capacity, the Swap Counterparty ) pursuant to the terms of a 1992 ISDA Master Agreement (Multicurrency-Cross Border) and the Schedule thereto, as published by the International Swaps and Derivatives Association, Inc., ( ISDA ), two confirmations and a credit support annex, each governed by English law, each executed on or around the Issue Date (the Swap Agreement ). On 26 July 2011 (the Issue Date ), the Issuer will issue: (a) 160,000,000 Class A Residential Mortgage-Backed Floating Rate Notes due 2060 (the Class A1 Notes ); (b) 90,000,000 Class A Residential Mortgage-Backed Floating Rate Notes due 2060 (the Class A2 Notes ); (c) 99,400,000 Class A Residential Mortgage-Backed Floating Rate Notes due 2060 (the Class A3 Notes and, together with the Class A1 Notes and the Class A2 Notes, the Rated Notes ); and (d) 116,406,000 Class Z 2011 Residential Mortgage-Backed Floating Rate Notes due 2060 (the Junior Notes and, together with the Rated Notes, the Notes ). The Notes will constitute direct, secured, limited recourse obligations of the Issuer. It is not anticipated that the Issuer will make any profits from this transaction. The Notes will be governed by Italian law. The authorised denomination of the Notes will be 100,000 and integral multiples of 1,000 in excess thereof. The Notes are issued in dematerialised form (emesse in forma dematerializzata) and will be wholly and exclusively deposited with Monte Titoli in accordance with article 83-bis of Italian legislative decree No. 58 of 24 February 1998, through the authorised institutions listed in article 83-quater of such legislative decree. The Notes will be held by Monte Titoli on behalf of the Noteholders until redemption and cancellation for the account of each relevant Monte Titoli Account Holder. Monte Titoli shall act as depository for Clearstream, Luxembourg and Euroclear. The Notes will at all times be in book entry form and title to the Notes will be evidenced by, and title thereto will be transferred by means of, book entries in accordance with: (i) the provisions of article 83-bis of Italian legislative decree No. 58 of 24 February 1998; and (ii) the regulation issued by the Bank of Italy and CONSOB on 22 February 2008, as subsequently amended. No physical 7

12 Ranking document of title will be issued in respect of the Notes. In respect of the obligations of the Issuer to pay interest and repay principal on the Notes, the terms and conditions of the Notes (the Conditions ) and the Intercreditor Agreement provide that: (i) in respect of the obligations of the Issuer to pay interest on the Notes prior to the service of an Issuer Acceleration Notice: (A) (D) the Class A1 Notes, the Class A2 Notes and the Class A3 Notes will rank pari passu without any preference or priority among themselves and in priority to the Junior Notes; the Junior Notes will rank pari passu without any preference or priority among themselves, but subordinate to payment of interest on the Rated Notes; (ii) in respect of the obligations of the Issuer to repay principal on the Notes prior to the service of an Issuer Acceleration Notice: (A) (B) (C) (D) the Class A1 Notes will rank pari passu without any preference or priority among themselves, but subordinate to payment of interest in respect of all Classes of Rated Notes and in priority to repayment of principal on the Class A2 Notes, the Class A3 Notes and the Junior Notes; the Class A2 Notes will rank pari passu without any preference or priority among themselves, but subordinate to payment of interest in respect of all Classes of Rated Notes and repayment of principal on the Class A1 Notes and in priority to repayment of principal on the Class A3 Notes and the Junior Notes, and no amount of principal in respect of the Class A2 Notes shall become due and payable or be repaid until redemption in full of the Class A1 Notes; the Class A3 Notes will rank pari passu without any preference or priority among themselves, but subordinate to payment of interest in respect of all Classes of Rated Notes and repayment of principal on the Class A1 Notes and the Class A2 Notes and in priority to repayment of principal on the Junior Notes, and no amount of principal in respect of the Class A3 Notes shall become due and payable or be repaid until redemption in full of the Class A1 Notes and the Class A2 Notes; and the Junior Notes will rank pari passu without any preference or priority among themselves, but subordinate to payment of interest in respect of all Classes of Notes and repayment of principal on the 8

13 Rated Notes, and no amount of principal in respect of the Junior Notes shall become due and payable or be repaid until redemption in full of the Rated Notes, (iii) in respect of the obligations of the Issuer (a) to pay interest and (b) to repay principal on the Notes following the service of an Issuer Acceleration Notice or, in the event that the Issuer opts for the early redemption of the Notes under Condition 7(e) (Optional redemption) or Condition 7(f) (Optional redemption for taxation, legal or regulatory reasons): (A) (B) (C) the Class A1 Notes, the Class A2 Notes and the Class A3 Notes, as to interest payments, will rank pari passu without any preference or priority among themselves and in priority to (i) repayment of principal on the Rated Notes and (ii) payment of interest and repayment of principal on the Junior Notes; the Class A1 Notes, the Class A2 Notes and the Class A3 Notes, as to principal payments, will rank pari passu without any preference or priority among themselves and in priority to payment of interest and repayment of principal on the Junior Notes; and the Junior Notes will rank pari passu without any preference or priority among themselves, but subordinate to payment in full of all amounts due under the Rated Notes. Limited recourse nature of the Issuer s obligations under the Notes Costs Interest on the Notes The obligations of the Issuer to each of the holders of the Notes will be limited recourse obligations of the Issuer. The Noteholders will have a claim against the Issuer only to the extent of the Issuer Available Funds, in each case subject to and as provided in the Intercreditor Agreement and the other Transaction Documents. The costs of the transaction (with the exception of certain initial costs of setting up the transaction which will be paid by the Seller pursuant to the Underwriting Agreement) including the amounts payable to the various agents of the Issuer appointed in connection with the issue of the Notes, will be funded from the Issuer Available Funds and will therefore be included in the Priority of Payments. The Notes will bear interest on their Principal Amount Outstanding from and including the Issue Date at a rate equal to EURIBOR (as determined by the Agent Bank in accordance with the Conditions) plus the following margins: (a) in respect of the Class A1 Notes, a margin of (i) 1.90 per cent. per annum for the period from the Issue Date up to and including the last day of the Interest Period (as defined below) ending in October 2016 (the Step-Up Date ) and (ii) from the Step-Up Date (excluded) 3.80 per cent. per annum; 9

14 (b) (b) in respect of the Class A2 Notes, a margin of (i) 2.25 per cent. per annum for the period from the Issue Date up to and including the Step-Up Date and (ii) from the Step-Up Date (excluded) 4.45 per cent. per annum; and in respect of the Class A3 Notes, a margin of 0.35 per cent. per annum. The Junior Notes will bear interest in accordance with Conditions 6(c) (Interest on the Notes) and 6(d) (Junior Notes Interest Amount and Junior Notes Remuneration). Interest on each Class of Notes will be payable in euro in arrear on each Interest Payment Date subject to the applicable Priority of Payments and subject as provided in Condition 8 (Payments). Interest Payment Date means (a) prior to the service of an Issuer Acceleration Notice, 24 October 2011 (being the first Interest Payment Date) and, thereafter, 24 January, 24 April, 24 July and 24 October in each year (or, if any such date is not a Business Day, the first following day that is a Business Day) and (b) following the service of an Issuer Acceleration Notice, the day falling 10 Business Days after the Accumulation Date (if any) or any other day on which any payment is due to be made in accordance with the Post-Enforcement Priority of Payments, the Conditions and the Intercreditor Agreement. Business Day means a day on which banks are open for business in Milan, Dublin and London and which is a TARGET Settlement Day. Principal Amount Outstanding means, on any day: (a) (b) in relation to each Class, the aggregate principal amount outstanding of all Notes in such Class; and in relation to a Note, the principal amount of that Note upon issue less the aggregate amount of all Principal Payments in respect of that Note which have become due and payable (and which have actually been paid) on or prior to that day. Legal maturity date of the Notes Principal Payment has the meaning given in Condition 7(d) (Principal Payments and Principal Amount Outstanding). Save as described below and unless previously redeemed in full and cancelled as provided in the Conditions, the Issuer shall redeem the Notes on the Interest Payment Date which falls in April 2060 (the Maturity Date ) at their Principal Amount Outstanding, plus any accrued but unpaid interest. If the Notes cannot be redeemed in full on the Maturity Date, as a result of the Issuer having insufficient funds available to it in accordance with the Conditions for application in or towards such redemption, including the proceeds of any sale of Claims or any enforcement of the Note Security, any amount unpaid shall remain outstanding and the Conditions shall continue to apply in full in respect of the Notes until the earlier of (i) the date on which the Notes are redeemed in full and (ii) the last 10

15 Withholding tax on the Notes Security for the Notes Business Day in December 2065 (the Cancellation Date ), at which date, in the absence of gross negligence (colpa grave) or wilful misconduct (dolo) on the part of the Issuer, any amount outstanding, whether in respect of interest, principal or other amounts in respect of the Notes, shall be finally and definitively cancelled. The Issuer has no assets other than those described in this Prospectus. The Issuer has no assets other than the Claims and the Issuer s Rights as described in this Prospectus and the Previous Portfolio and the agreements entered into by the Issuer in relation to the Previous Securitisation which, however, do not constitute collateral for the Notes and are not available to the Noteholders for any purpose. A Noteholder who is resident for tax purposes in a country which does not allow for a satisfactory exchange of information will receive amounts of interest payable on the Notes net of Italian withholding tax referred to as a substitute tax (any such withholding or deduction for or on account of Italian tax under Decree 239, a Decree 239 Withholding ). Upon the occurrence of any withholding for or on account of tax, whether or not through a substitute tax, from any payments of amounts due under the Notes, neither the Issuer, the Seller, the Representative of the Noteholders, the Principal Paying Agent nor any other person shall have any obligation to pay any additional amount to any Noteholders. By operation of Italian law, the Issuer s right, title and interest in and to the Claims will be segregated from all other assets of the Issuer and amounts deriving therefrom will only be available, both prior to and following a winding-up of the Issuer, to satisfy the obligations of the Issuer to the holders of the Class A1 Notes (the Class A1 Noteholders ), the holders of the Class A2 Notes (the Class A2 Noteholders ), the holders of the Class A3 Notes (the Class A3 Noteholders and, together with Class A1 Noteholders and the Class A2 Noteholders, the Rated Noteholders ) and the holders of the Junior Notes (the Junior Noteholders and, together with the Rated Noteholders, the Noteholders ) each of the Other Issuer Creditors and any third-party creditor to whom the Issuer has incurred costs, fees, expenses or liabilities in relation to the securitisation of the Claims (together, the Issuer Creditors ). The Issuer will grant the following security: (a) an Italian law deed of pledge to be executed on or around the Issue Date (the Italian Deed of Pledge ) pursuant to which the Issuer will grant in favour of the Representative of the Noteholders for itself and on behalf of the Noteholders and the other Issuer Secured Creditors, concurrently with the issue of the Notes, (i) an Italian law pledge over all monetary claims and rights and all the amounts (including payment for claims, indemnities, damages, penalties, credits and guarantees) to which the Issuer is entitled from time to time pursuant to the Italian Law Transaction Documents (other than the Conditions, the Rules of the Organisation of Noteholders, the 11

16 Intercreditor Agreement Mandate Agreement Purchase of the Notes Listing of the Notes Italian Deed of Pledge, the provisions of the Agency and Accounts Agreement which are governed by English law and the Mandate Agreement); and (ii) an Italian law pledge over the securities from time to time owned by it as a result of investing in Eligible Investments deposited, from time to time, in the Eligible Investments Securities Account; and (b) an English law deed of charge and assignment to be executed on or around the Issue Date (the English Deed of Charge and Assignment and the security created thereunder, together with the security created under the Italian Deed of Pledge, the Note Security ) pursuant to which the Issuer will grant in favour of the Representative of the Noteholders for itself and as trustee for the Noteholders and the other Issuer Secured Creditors, inter alia, (i) an English law assignment by way of security of all the Issuer s rights under the Swap Agreement, the English-law governed provisions of the Agency and Accounts Agreement and all present and future contracts, agreements, deeds and documents governed by English law to which the Issuer may become a party in relation to the Notes, the Claims and the Portfolio; (ii) an English law charge over the Transaction Accounts, any amounts standing to the credit of, or deposited in, such accounts and the rights and benefits arising from such accounts; and (iii) a floating charge over all of the Issuer s assets which are subject to the charge and assignments described under (i) and (ii) above and not effectively assigned thereunder. On the Signing Date, the Issuer, the Representative of the Noteholders on its own behalf and on behalf of the Noteholders, the Principal Paying Agent, the Agent Bank, the Computation Agent, the Collection Account Bank, the Transaction Bank, the Swap Counterparty, BancaEtruria (in any capacity), the Corporate Servicer, the Stand-by Servicer, the Subordinated Loan Provider, the Servicer and the Arranger (with the exception of the Issuer and the Noteholders, the Other Issuer Creditors ) have entered into an intercreditor agreement (the Intercreditor Agreement ) pursuant to which the Other Issuer Creditors have agreed to the limited recourse nature of the obligations of the Issuer and to the Priority of Payments described below. The Intercreditor Agreement is governed by Italian law. Pursuant to the terms of a mandate agreement dated the Signing Date (the Mandate Agreement ), the Representative of the Noteholders is empowered to take such action in the name of the Issuer, following the delivery of an Issuer Acceleration Notice, as the Representative of the Noteholders may deem necessary to protect the interests of the Noteholders and the Other Issuer Creditors. The Mandate Agreement is governed by Italian law. The Issuer may not purchase any Notes at any time. Application has been made to the Irish Stock Exchange for the Rated Notes to be admitted to the Official List and trading on its regulated 12

17 Ratings Selling restrictions Governing law 3. The Portfolio Transfer of the Claims Warranties in relation to the Portfolio market. No application has been made to list the Junior Notes on any stock exchange. Upon issue it is expected that: (a) the Class A1 Notes will be rated AAAsf by Fitch Ratings Ltd. ( Fitch ) and Aaa(sf) by Moody s Investors Service Inc. ( Moody s and, together with Fitch, the Rating Agencies, which expression shall include any successor); (b) the Class A2 Notes will be rated AAAsf by Fitch and Aaa (sf) by Moody s; and (c) the Class A3 Notes will be rated AAAsf by Fitch and Aaa (sf) by Moody s. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by any one of the Rating Agencies. The Junior Notes will not be assigned a rating. The credit ratings included or referred to in this Prospectus have been issued by Fitch and Moody s, each of which is established in the European Union and each of which has applied to be registered under Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies. There are restrictions on the sale of the Notes and on the distribution of information in respect thereof. The Notes are governed by, and shall be construed in accordance with, Italian law. On the Initial Execution Date, pursuant to the Transfer Agreement, the Issuer purchased without recourse (pro soluto) from BancaEtruria the monetary claims and other connected rights (the Claims ) arising from a portfolio of (i) residential mortgage loans which qualify as mutui fondiari (the Fondiari Mortgage Loans ) and (ii) other residential mortgage loans which do not qualify as mutui fondiari (the Ipotecari Mortgage Loans and, together with the Fondiari Mortgage Loans, the Mortgage Loans or the Portfolio ) owed to BancaEtruria. The payment of the purchase price of the Claims to the Seller will be financed by, and will be limited recourse to, the proceeds of the issue of the Notes on the Issue Date. See The Portfolio and The Transfer Agreement below. On the Initial Execution Date, the Issuer and the Seller entered into a warranty and indemnity agreement (the Warranty and Indemnity Agreement ), pursuant to which BancaEtruria has given certain representations and warranties in favour of the Issuer in relation to the Portfolio and the Claims and has agreed to indemnify the Issuer in respect of certain liabilities of the Issuer incurred in connection with the purchase and ownership of the Claims. Pursuant to the Warranty and 13

18 Servicing and collection procedures Indemnity Agreement, the Issuer may, in specific limited circumstances relating to a breach of representations in relation to the Mortgage Loans, require BancaEtruria to repurchase certain Claims. The Warranty and Indemnity Agreement is governed by Italian law. See The Warranty and Indemnity Agreement below. Pursuant to the terms of the Servicing Agreement, the Servicer has agreed to administer and service the Portfolio on behalf of the Issuer and, in particular, to administer and manage each Claim as well as the relationship with any person who is a borrower under a Mortgage Loan (a Borrower ). Monies received or recovered in respect of the Mortgage Loans and related Claims (the Collections ) are initially paid to BancaEtruria in its capacity as Servicer. The Collections are required to be transferred by the Servicer into the Collection Account by 10:00 a.m. (Milan time) of the Business Day immediately following the day of receipt, in accordance with the procedure described in the Servicing Agreement, provided that, in the case of exceptional circumstances causing an operational delay in the transfer, the Collections are required to be transferred to the Collection Account by 10:00 a.m. (Milan time) of the Business Day immediately following the day on which the operational delay in the transfer has been solved and, in any case, within 10 Business Days of the date in which the exceptional circumstance has been verified. The Servicing Agreement provides that if monies already transferred to the Collection Account are identified as having not been paid, in whole or in part, by the relevant Borrower, following the verification activity carried out by the Servicer, the Servicer may deduct those unpaid amounts from the Collections not yet transferred to the Issuer. The Collection Account Bank is then required to transfer by 4.00 p.m. (London time) on each Business Day all amounts standing to the credit of the Collection Account into the Claims Transaction Account which is held with the Transaction Bank. Collections in respect of the Mortgage Loans will be calculated by reference to successive three-month periods. Collection Date means 6 January, 6 April, 6 July and 6 October of each year. Collection Period means (a) prior to the service of an Issuer Acceleration Notice, each period commencing on (but excluding) a Collection Date and ending on (and including) the next succeeding Collection Date up to the redemption in full of the Notes, the first Collection Period commencing on (but excluding) the Valuation Date and ending on (and including) 6 October 2011; and (b) following the service of an Issuer Acceleration Notice, each period commencing on (but excluding) the last day of the preceding Collection Period and ending on (and including) the immediately following Accumulation Date. 14

19 Servicing fees The Servicer has undertaken to prepare and submit to the Computation Agent, the Swap Counterparty, the Rating Agencies, the Representative of the Noteholders, the Arranger, the Corporate Servicer, the Stand-by Servicer and the Issuer by no later than 15 January, 15 April, 15 July and 15 October in each calendar year (or, if any such date is not a day on which banks are open for general business in Arezzo, the immediately preceding day that is a day on which banks are open for general business in Arezzo) (each such date, a Reporting Date ) quarterly reports (each, a Servicer Report ) in the form set out in the Servicing Agreement and containing information as to the Portfolio and any Collections in respect of the preceding Collection Period. The Servicer is obliged to appoint a firm of internationally recognised auditors acceptable to the Issuer, or the same auditors auditing the financial statements of the Servicer which will, by the date set for the approval of the Issuer s annual accounts, issue a report on the auditing procedure carried out as agreed with the Servicer. Such procedure will be carried out for the purposes of verifying that the information and the figures contained in two Servicer Reports chosen by the appointed auditors out of the last four Servicer Reports prepared, accurately reflect the accounting records of the Issuer and that the procedures applied by it in administering and monitoring the collections are such as to ensure that the collections are properly and accurately recorded and applied in accordance with the Servicing Agreement. See The Servicing Agreement and The servicing and collection Policies below. In return for the services provided by the Servicer in relation to the ongoing management of the Portfolio, on each Interest Payment Date and in accordance with the Priority of Payments, the Issuer will pay to the Servicer the following servicing fees: (a) an annual fee equal to 0.07 per cent. of the Collections received in respect of the Claims (other than Crediti ad Incaglio, Crediti in Sofferenza and Defaulted Claims) in the immediately preceding Collection Period (including VAT or other taxes where applicable) for the collection activity of the Claims (other than Crediti ad Incaglio, Crediti in Sofferenza and Defaulted Claims) to be provided under the Servicing Agreement; (b) an annual fee equal to 0.08 per cent. of the Collections received in respect of the Claims (other than Crediti ad Incaglio, Crediti in Sofferenza and Defaulted Claims) in the immediately preceding Collection Period (including VAT or other taxes where applicable) for the administration activity of the Claims (other than Crediti ad Incaglio, Crediti in Sofferenza and Defaulted Claims) to be provided under the Servicing Agreement; (c) an annual fee equal to 1.00 per cent. of the Collections received in respect of Crediti ad Incaglio collected in the immediately preceding Collection Period (including VAT where applicable); 15

20 (d) an annual fee equal to 3.00 per cent. of the Collections received in respect of Crediti in Sofferenza collected in the immediately preceding Collection Period (including VAT where applicable); (e) an annual fee equal to 0.8 per cent. of the Collections received in respect of Defaulted Claims collected in the immediately preceding Collection Period (including VAT where applicable); and (f) a quarterly fee of 1,000 (excluding VAT or other taxes where applicable and including expenses sustained by the Servicer) for the advising activities and technical assistance to be provided under the Servicing Agreement, (the Servicing Fees ). Defaulted Claims means those Claims (A) under which there are at least (i) 6 (six) Delinquent Instalments (in case of monthly payment) or (ii) 2 (two) Delinquent Instalments (in case of quarterly payment) or (iii) 2 (two) Delinquent Instalment (in case of semi-annual payment) or (B) are classified as Crediti in Sofferenza by the Servicer. Delinquent Claims means (A) those Claims under which there is 1 (one) Delinquent Instalment and (B) which are not classified as Defaulted Claims. Delinquent Instalment means an instalment which, at a given date, is due but not fully paid and remains such for at least 30 days, following the date on which it should have been paid, under the terms of the relevant Mortgage Loan. Unpaid Instalment means an instalment which, at a given date, is due but not fully paid and remains such for at least 15 days, following the date on which it should have been paid, under the terms of the relevant Mortgage Loan. Crediti ad Incaglio means those Claims (A)(i) under which there are at least 6 (six) Unpaid Instalments (in case of monthly payment) or at least 4 (four) Unpaid Instalments (in case of quarterly payment) or at least 2 (two) Unpaid Instalments (in case of semi-annual payment) or (ii) which are classified as delinquent (crediti ad incaglio) by the Servicer on behalf of the Issuer in accordance with the Bank of Italy s supervisory regulations and (B) which are not classified as Crediti in Sofferenza yet. Crediti in Sofferenza means those Claims classified as such by the Servicer on behalf of the Issuer in accordance with the regulation of the Bank of Italy. See The Servicing Agreement and The servicing and collection policies below. 4. The Accounts of the Issuer Pursuant to the terms of the Agency and Accounts Agreement, the Issuer has opened with the Collection Account Bank for the purposes of this Securitisation the following accounts: (a) a euro-denominated current account into which, inter alia, the 16

21 Servicer will be required to transfer all the Collections as they are collected in accordance with the Servicing Agreement (the Collection Account ); and (b) a euro-denominated current account into which the Issuer will deposit 50, (the Retention Amount ) on the Issue Date (the Expenses Account ). The Expenses Account will be replenished on each Interest Payment Date, in accordance with the Pre-Enforcement Priority of Payments and subject to the availability of sufficient Issuer Available Funds, up to the Retention Amount and such amount will be applied by the Issuer to pay all fees, costs, expenses and taxes required to be paid in order to preserve the corporate existence of the Issuer or to maintain it in good standing or to comply with applicable legislation. Pursuant to the terms of the Agency and Accounts Agreement, the Issuer has opened an eligible investments securities account with the Custodian (the Eligible Investments Securities Account ), into which will be deposited, inter alia, all Eligible Investments (as defined below), from time to time made by or on behalf of the Issuer. Pursuant to the terms of the Agency and Accounts Agreement, the Issuer has opened with the Principal Paying Agent a euro-denominated current account into which, inter alia, will be credited (i) on the second Business Day preceding each Interest Payment Date and any other Business Day on which any payment of principal and/or interest in respect of any of the Notes becomes due and payable, all the amounts standing to the credit of the Claims Transaction Account on the last day of the immediately preceding Collection Period (including any interest paid on the Claims Transaction Account); and (ii) on, or immediately prior to, each Interest Payment Date, payments made by the Swap Counterparty under the Swap Agreement (the Payments Account ). Pursuant to the terms of the Agency and Accounts Agreement, the Issuer has opened the following accounts with the Transaction Bank (collectively, the Transaction Accounts and, together with the Collection Account, the Expenses Account, the Payments Account and the Eligible Investments Securities Account, the Accounts ): (a) a euro-denominated account into which the Collection Account Bank will be required to transfer, on a daily basis, the balance standing to the credit of the Collection Account (the Claims Transaction Account ); (b) a euro-denominated current account into which the Issuer will be required to deposit, inter alia, (i) on the Issue Date, 17,467,739.24, being a portion of the amount drawn down by the Issuer under the Subordinated Loan Agreement; (ii) on each Interest Payment Date, in accordance with the Pre-Enforcement Priority of Payments and subject to the availability of sufficient Issuer Available Funds, the amount necessary (if any) to replenish it so that the balance of the Cash Reserve Account equals the Target Cash 17

22 Provisions relating to the Transaction Bank Reserve Amount and (iii) by no later than five Business Days of the Servicer Downgrade Date, subject to the Additional Commitment Limit, an amount equal to the Required Amount shall be drawn down under the Subordinated Loan Agreement and credited to the Cash Reserve Account (the Cash Reserve Account ); (c) a euro-denominated account into which will be deposited the collateral posted pursuant to the Swap Agreement (the Collateral Account ); and (d) a euro-denominated current account into which the Issuer will be required to deposit, inter alia, any amount available for such purpose on each Interest Payment Date to be credited to such account in accordance with the applicable Priority of Payments (the Principal Account ). In accordance with the Securitisation Law, the Issuer is a multi-purpose vehicle and in the context of the issuance of the Previous Securitisations Notes has opened certain bank accounts. The sums standing from time to time to the credit of such bank accounts will not be available to the Issuer Creditors because, pursuant to the Securitisation Law, the assets relating to each securitisation transaction will constitute assets segregated for all purposes from the assets of the Issuer and from the assets relating to other securitisation transactions. The assets relating to a particular securitisation transaction will not be available to the holders of notes issued to finance any other securitisation transaction or to the general creditors of the Issuer. The Issuer has also opened with BancaEtruria a euro-denominated account (the Equity Capital Account ) into which the sum representing 100 per cent of the Issuer s equity capital (equal to 10,000) has been deposited and will remain deposited for so long as all notes issued (including the Previous Securitisation Notes) or to be issued by the Issuer (including the Notes) have been paid in full. Pursuant to the Agency and Accounts Agreement, the Transaction Bank has agreed to provide the Issuer with certain services in connection with account handling and reporting requirements in relation to the monies and securities, as applicable, from time to time standing to the credit of the Transaction Accounts. If the Transaction Bank ceases to be an Eligible Institution: (a) the Transaction Bank will notify the Representative of the Noteholders, the Issuer and the Rating Agencies thereof and use, by no later than 30 (thirty) calendar days from the date on which the relevant downgrading occurs, commercially reasonable efforts to select a leading bank which is (i) a depository institution or a branch of a depository institution acting through an office or branch located in the United Kingdom and (ii) an Eligible Institution willing to act as successor Transaction Bank hereunder; and (b) the Issuer undertakes to the Representative of the Noteholders, and the Transaction Bank acknowledges, that it will, by no later than 30 18

23 Provisions relating to the Custodian (thirty) calendar days from the date on which the relevant downgrading occurs, (i) appoint that bank specified above as successor Transaction Bank (and will promptly after so doing notify the Representative of the Noteholders and the Rating Agencies thereof) which, on or before the replacement of the Transaction Bank, shall agree to become bound by the provisions of the Agency and Accounts Agreement, the Intercreditor Agreement and of any other agreement providing for, mutatis mutandis, the same obligations contained in the Agency and Accounts Agreement for the Transaction Bank; (ii) open a replacement Claims Transaction Account, a replacement Cash Reserve Account, a replacement Collateral Account and a replacement Principal Account with the successor Transaction Bank specified in (i) above; (iii) transfer and/or securities the funds standing to the credit of, or deposited with, respectively, the Claims Transaction Account, the Cash Reserve Account, the Collateral Account and the Principal Account to the credit of the relevant replacement accounts set out above; (iv) close the Claims Transaction Account, the Cash Reserve Account, the Collateral Account and the Principal Account once the steps under (i), (ii) and (iii) are completed; and (v) terminate the appointment of the Transaction Bank (and will promptly after so doing notify the Representative of the Noteholders and the Rating Agencies thereof) once the steps under (i), (ii), (iii) and (iv) are completed, provided that the administrative costs incurred with respect to the selection of a successor Transaction Bank (which, for the avoidance of doubt, shall not include any fees payable to, or costs and expenses of, the successor Transaction Bank) under (a) above shall be borne by the outgoing Transaction Bank. Pursuant to the Agency and Accounts Agreement, the Custodian has agreed: (i) to provide the Issuer with certain services in connection with account handling and reporting requirements in relation to the securities from time to time deposited in the Eligible Investments Securities Account and (ii) to invest on behalf of the Issuer funds standing to the credit of the Claims Transaction Account, the Principal Account and the Cash Reserve Account in Eligible Investments. See Credit Structure Eligible Investments below. If the Custodian ceases to be an Eligible Institution: (a) the Custodian will notify the Issuer, the Representative of the Noteholders and the Rating Agencies thereof and use, by no later than 30 (thirty) calendar days from the date on which the relevant downgrading occurs, commercially reasonable efforts to select a leading bank which is (i) an Italian depository institution or an 19

24 Provisions relating to the Principal Paying Agent Italian branch of a depository institution and (ii) an Eligible Institution, willing to act as successor Custodian thereunder; and (b) the Issuer will, by no later than 30 (thirty) calendar days from the date on which the relevant downgrading occurs, (i) appoint the successor Custodian which meets the requirements set out above (and will promptly after so doing notify the Representative of the Noteholders and the Rating Agencies thereof) which, on or before the replacement of the Custodian, shall agree to become bound by the provisions of the Agency and Accounts Agreement, the Intercreditor Agreement and of any other agreement providing for, mutatis mutandis, the same obligations contained in the Agency and Accounts Agreement for the Custodian; (ii) open a replacement Eligible Investments Securities Account with the successor Custodian specified in (i) above; (iii) transfer the securities deposited with the Eligible Investments Securities Account to the credit of the replacement Eligible Investments Securities Account set out above; (iv) close the Eligible Investments Securities Account once the steps under (i), (ii) and (iii) are completed; and (v) terminate the appointment of the Custodian (and will promptly after so doing notify the Representative of the Noteholders and the Rating Agencies thereof) once the steps under (i), (ii), (iii) and (iv) are completed, provided that the administrative costs incurred with respect to the selection of a successor Custodian (which, for the avoidance of doubt, shall not include any fees payable to, or costs and expenses of, the successor Custodian) under (a) above and the transfer of the securities referred under (b) above shall be borne by the Custodian. Pursuant to the Agency and Accounts Agreement, the Principal Paying Agent has agreed to provide the Issuer with (i) certain services for the purpose of, inter alia, establishing and maintaining the Payments Account and (ii) providing directions as to the payment, or making payment, of interest and the repayment of principal in respect of the Notes. If the Principal Paying Agent ceases to be an Eligible Institution: (a) the Principal Paying Agent will notify the Representative of the Noteholders, the Issuer and the Rating Agencies thereof and use, by no later than 30 (thirty) calendar days from the date on which the relevant downgrading occurs, commercially reasonable efforts to select a leading bank which is (i) an Italian depository institution or an Italian branch of a depository institution and (ii) an Eligible Institution willing to act as successor Principal Paying Agent hereunder; and (b) the Issuer will, by no later than 30 (thirty) calendar days from the date on which the relevant downgrading occurs: 20

25 Computation Agency (i) appoint that bank specified above as successor Principal Paying Agent (and will promptly after so doing notify the Representative of the Noteholders and the Rating Agencies thereof) which, on or before the replacement of the Principal Paying Agent, shall agree to become bound by the provisions of the Agency and Accounts Agreement, the Intercreditor Agreement and of any other agreement providing for, mutatis mutandis, the same obligations contained in the Agency and Accounts Agreement for the Principal Paying Agent; (ii) open a replacement Payments Account with the successor Principal Paying Agent specified in (i) above; (iii) transfer the funds standing to the credit of, or deposited with, the Payments Account to the credit of the relevant replacement account set out above; (iv) close the Payments Account once the steps under (i), (ii) and (iii) are completed; and (v) terminate the appointment of the Principal Paying Agent (and will promptly after so doing notify the Representative of the Noteholders and the Rating Agencies thereof) once the steps under (i), (ii), (iii) and (iv) are completed, provided that the administrative costs incurred with respect to the selection of a successor Principal Paying Agent (which, for the avoidance of doubt, shall not include any fees payable to, or costs and expenses of, the successor Principal Paying Agent) under (a) above shall be borne by the outgoing Principal Paying Agent Eligible Institution means any depository institution organised under the laws of any state which is a member of the European Union or of the United States of America (i) whose unsecured and unsubordinated debt obligations are rated at least P-1 by Moody s and F1 by Fitch, respectively, in respect of short-term debt and at least A2 by Moody s and A by Fitch, respectively, in respect of long-term debt (and, should the relevant rating be A by Fitch, any such rating has not been placed by Fitch in negative watch ) or (ii) whose obligations under the Transaction Documents to which it is a party are guaranteed by a depository institution organised under the laws of any state which is a member of the European Union or of the United States of America, whose unsecured and unsubordinated debt obligations are rated at least P-1 by Moody s and F1 by Fitch, respectively, in respect of shortterm debt and at least A2 by Moody s and A by Fitch, respectively, in respect of long-term debt (and, should the relevant rating be A by Fitch, any such rating has not been placed by Fitch in negative watch ). Pursuant to the Agency and Accounts Agreement, the Computation Agent has agreed to provide the Issuer with certain calculation, notification and reporting services in relation to the Portfolio and the Notes. By no later than the third Business Day prior to each Interest Payment Date (each such date, a Calculation Date ), the Computation Agent will calculate, 21

26 Payments under the Notes 5. Priority of Payments Issuer Available Funds inter alia, the Issuer Available Funds and the payments to be made under the Priority of Payments set out below based, inter alia, on the statements of the relevant Accounts and the Servicer Reports and will prepare a report (the Payments Report ) setting forth, inter alia, each of the above amounts and will deliver the Payments Report to, inter alia, the Issuer, the Servicer, the Arranger, the Corporate Servicer, the Rating Agencies, the Principal Paying Agent, the Collection Account Bank, the Swap Counterparty and the Representative of the Noteholders. In addition, the Computation Agent has agreed to prepare and deliver (by no later than five calendar days immediately following each Interest Payment Date) to, inter alia, the Issuer, the Representative of the Noteholders, the Arranger, the Servicer, the Rating Agencies, any stock exchange on which the Rated Notes are listed, the Corporate Servicer, the Swap Counterparty, a report substantially in the form set out in the Agency and Accounts Agreement (the Investor Report ) containing details of, inter alia, the Portfolio, amounts received by the Issuer from any source during the preceding Collection Period, amounts paid by the Issuer during such Collection Period and amounts paid by the Issuer on the immediately preceding Interest Payment Date. The first Investor Report will be available by no later than the calendar day immediately following the Interest Payment Date falling in October The Investor Report will be also freely available on the website of the Computation Agent, currently at The Computation Agent will also provide Bloomberg and Intex with the Investor Report unless such disclosure would at that time breach any law, regulation, Irish Stock Exchange requirement or rules of any applicable regulatory body to which the Computation Agent is subject. In carrying out its duties, the Computation Agent will be entitled to rely on certain information provided to it by the Servicer, the Collection Account Bank, the Transaction Bank, the Agent Bank, the Principal Paying Agent, the Custodian, the Swap Counterparty, the Corporate Servicer and the Issuer. Based on the Payments Report, the Principal Paying Agent will make the payments under the Notes set forth in the relevant Priority of Payments described below. On each Calculation Date, the Computation Agent will calculate the Issuer Available Funds which will be used by the Issuer to make the payments contained in the Priority of Payments set out below. Issuer Available Funds means: (i) as at each Calculation Date prior to the service of an Issuer Acceleration Notice, an amount equal to the sum of: (a) the amount standing to the credit of the Claims Transaction Account and of the Payments Account as 22

27 at the end of the Collection Period immediately preceding the relevant Calculation Date consisting of, inter alia, (i) payment of interest and repayment of principal under the Mortgage Loans, (ii) any collections and/or recovery in respect of Defaulted Claims including any disposal proceeds deriving from the sale of any Defaulted Claims, (iii) any amount received by the Issuer under any of the Transaction Documents during the preceding Collection Period and (iv) all amounts of interest accrued in respect of any of the Transaction Accounts (other than the Collateral Account) and paid during the Collection Period immediately preceding such Calculation Date; (b) (c) (d) (e) (f) (g) (h) the Cash Reserve as at the relevant Calculation Date; any amount due and payable, although not yet paid, to the Issuer by the Swap Counterparty in accordance with the terms of the Swap Agreement on, or immediately prior to, the Interest Payment Date immediately following the relevant Calculation Date; without duplication of (a) and (b) above, an amount equal to the monies invested in Eligible Investments during the immediately preceding Collection Period from the Claims Transaction Account and the Cash Reserve Account, following liquidation thereof on the preceding Liquidation Date; without duplication of (a) above, the Revenue Eligible Investments Amount realised on the preceding Liquidation Date; on the Calculation Date immediately preceding the First Amortisation Interest Payment Date, the amount standing to the credit of the Principal Account as at the end of the immediately preceding Collection Period; without duplication of (f) above, on the Calculation Date immediately preceding the First Amortisation Interest Payment Date, an amount equal to the monies invested in Eligible Investments during the immediately preceding Collection Period from the Principal Account, following liquidation thereof on the preceding Liquidation Date; any refund or repayment obtained by the Issuer from any tax authority in respect of the Claims, the Transaction Documents or, otherwise, the Securitisation during the immediately preceding 23

28 Collection Period; and (i) on the Calculation Date immediately preceding the Final Redemption Date and on any Calculation Date thereafter, the amount standing to the balance of the Expenses Account, but excluding (i) any amount paid by the Swap Counterparty upon termination of the Swap Transactions in respect of any termination payment and, until a replacement swap counterparty has been found, exceeding the net amounts which would have been due and payable by the Swap Counterparty on, or immediately prior to, the next Interest Payment Date, had the Swap Transactions not been terminated; and (ii) the Collateral (if any); and (ii) as at each Calculation Date following the service of an Issuer Acceleration Notice, the aggregate of the amounts received or recovered by or on behalf of the Issuer or the Representative of the Noteholders in respect of the Claims, the Note Security and the Issuer s Rights under the Transaction Documents (but excluding the Collateral (if any)). Pre-Enforcement Priority of Payments Up to (but excluding) the Interest Payment Date falling in April 2013 (the First Amortisation Interest Payment Date ), funds which might otherwise have been used to redeem the Notes will not be distributed to the Noteholders or the Other Issuer Creditors but will instead be deposited by the Issuer into the Principal Account in accordance with the Pre-Enforcement Priority of Payments. Rateo Amounts means an amount equal to all interest accrued but not paid in respect of the Mortgage Loans as at the Valuation Date (inclusive) being equal to 225,026.56, which will be paid to the Seller in accordance with the applicable Priority of Payments. Seller s Claims means, collectively, the monetary claims that the Seller may have from time to time against the Issuer under the Transfer Agreement (other than in respect of the Purchase Price) and the Warranty and Indemnity Agreement, and including, without limitation, the Rateo Amounts, the Insurance Premia and all amounts due and payable to the Seller for the repayment of any loan extended to the Issuer under clause 12.4 (Finanziamento spese di arbitraggio) of the Transfer Agreement and clause (Risoluzione delle controversie) of the Warranty and Indemnity Agreement. Servicer s Advance means those amounts due to the Servicer under clauses 3.8 and of the Servicing Agreement. Prior to the service of an Issuer Acceleration Notice, the Issuer Available Funds as calculated on each Calculation Date will be applied by the Issuer on the Interest Payment Date immediately following such Calculation Date in making payments or provisions in the following order of priority (the Pre-Enforcement Priority of Payments ) but, in 24

29 each case, only if and to the extent that payments or provisions of a higher priority have been made in full: (i) (ii) first, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of any and all outstanding taxes due and payable by the Issuer in relation to this Securitisation (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs and to the extent not paid by BancaEtruria under the Letter of Undertaking); second, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of: (A) any and all outstanding fees, costs, liabilities and any other expenses to be paid in order to preserve the corporate existence of the Issuer, to maintain it in good standing, to comply with applicable legislation and to fulfil obligations to third parties (not being Other Issuer Creditors) incurred in the course of the Issuer s business in relation to this Securitisation (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs and to the extent not paid by BancaEtruria under the Letter of Undertaking); (B) (C) (D) any and all outstanding fees, costs, expenses and taxes required to be paid in connection with the listing, deposit or ratings of the Notes, or any notice to be given to the Noteholders or the other parties to the Transaction Documents (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs); any and all outstanding fees, costs and expenses of and all other amounts due and payable to the Representative of the Noteholders, or any appointee thereof; and the amount necessary to replenish the Expenses Account up to the Retention Amount; (iii) (iv) third, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of any and all outstanding fees, costs and expenses of, and all other amounts due and payable to, the Principal Paying Agent, the Agent Bank, the Computation Agent, the Servicer, the Stand-by Servicer, the Custodian, the Corporate Servicer, the Collection Account Bank and the Transaction Bank, each under the Transaction Document(s) to which it is a party; fourth, in or towards satisfaction of all amounts due and payable to the Swap Counterparty under the terms of the Swap Agreement 25

30 (v) other than any termination payment due to the Swap Counterparty following the occurrence of a Swap Trigger but including, in any event, the amount of any termination payment due and payable to the Swap Counterparty in relation to the termination of the Swap Transactions to the extent of any premium received (net of any costs reasonably incurred by the Issuer to find a replacement swap counterparty), if any, by the Issuer from a replacement swap counterparty in consideration for entering into swap transactions with the Issuer on the same terms as the Swap Transactions; fifth, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of: (A) all amounts of interest due and payable on the Class A1 Notes; (B) (C) all amounts of interest due and payable on the Class A2 Notes; all amounts of interest due and payable on the Class A3 Notes; (vi) (vii) sixth, in or towards satisfaction of all amounts due and payable to the Seller as Purchase Price Residual Interest Amount (if any) under the terms of the Transfer Agreement; seventh, for so long as there are Rated Notes outstanding, to credit the Cash Reserve Account with the amount required, if any, such that the Cash Reserve equals the Target Cash Reserve Amount; (viii) eighth, following the occurrence of a Servicer Report Delivery Failure Event, but only if on such Interest Payment Date the Servicer Report Delivery Failure Event is still outstanding, to credit the remainder to the Claims Transaction Account; (ix) (x) (xi) (xii) ninth, prior to the First Amortisation Interest Payment Date (and not on the First Amortisation Interest Payment Date nor on any Interest Payment Date thereafter), to credit the remainder (if any) to the Principal Account; tenth, on the First Amortisation Interest Payment Date and on each Interest Payment Date thereafter, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of the Class A1 Notes until the Class A1 Notes are repaid in full; eleventh, on the First Amortisation Interest Payment Date and on each Interest Payment Date thereafter, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of the Class A2 Notes until the Class A2 Notes are repaid in full; twelfth, on the First Amortisation Interest Payment Date and on each Interest Payment Date thereafter, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of the Class A3 Notes until the Class A3 Notes are repaid in full; 26

31 (xiii) thirteenth, in or towards satisfaction of all amounts due and payable to the Arranger under the terms of the Underwriting Agreement; (xiv) fourteenth, in or towards satisfaction of any termination payment due and payable to the Swap Counterparty under the terms of the Swap Agreement following the occurrence of a Swap Trigger other than the payments referred to under item (iv) above; (xv) fifteenth, in or towards satisfaction of all amounts of interest due and payable to the Subordinated Loan Provider under the terms of the Subordinated Loan Agreement; (xvi) sixteenth, in or towards satisfaction of all amounts of principal due and payable to the Subordinated Loan Provider under the terms of the Subordinated Loan Agreement; (xvii) seventeenth, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of: (A) all amounts due and payable to the Seller in respect of the Seller s Claims (if any) under the terms of the Transaction Documents; (B) (C) (D) all amounts due and payable to the Servicer as Servicer s Advance (if any) under the terms of the Servicing Agreement; all amounts due and payable in connection with a limited recourse loan under the Letter of Undertaking; and in or towards satisfaction of all amounts due and payable to the Underwriter under the terms of the Underwriting Agreement; (xviii) eighteenth, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of any and all outstanding fees, costs, liabilities and any other expenses to be paid to fulfil obligations to any Other Issuer Creditor incurred in the course of the Issuer s business in relation to this Securitisation (other than amounts already provided for in this Pre-Enforcement Priority of Payments); (xix) nineteenth, in or towards satisfaction, pro rata and pari passu, of all amounts of interest due and payable on the Junior Notes (other than the Junior Notes Remuneration); (xx) twentieth, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of the Junior Notes until the Principal Amount Outstanding of the Junior Notes is equal to 50,000; (xxi) twenty-first, on the Final Redemption Date and on any Interest Payment Date thereafter, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of the Junior 27

32 Post-Enforcement Priority of Payments Notes until the Junior Notes are redeemed in full; (xxii) twenty-second, up to but excluding the Final Redemption Date, upon repayment in full of the Rated Notes, in or towards satisfaction, pro rata and pari passu, of the Junior Notes Remuneration (if any) due and payable on the Junior Notes; and (xxiii) twenty-third, to credit the remainder (if any) to the Claims Transaction Account. From time to time, during an Interest Period, the Issuer shall, in accordance with the Agency and Accounts Agreement, be entitled to apply amounts standing to the credit of the Expenses Account in respect of certain monies which properly belong to third parties, other than the Noteholders and the Other Issuer Creditors, in order to preserve the corporate existence of the Issuer or to maintain it in good standing or to comply with applicable legislation, and in payment of sums due to third parties, other than the Noteholders and the Other Issuer Creditors, under obligations incurred in the course of the Issuer s business. Following the service of an Issuer Acceleration Notice, or, in the event that the Issuer opts for the early redemption of the Notes under Condition 7(e) (Optional redemption) or Condition 7(f) (Optional redemption for taxation, legal or regulatory reasons), the Issuer Available Funds as calculated on each Calculation Date will be applied by or on behalf of the Representative of the Noteholders on the Interest Payment Date immediately following such Calculation Date in making payments or provisions in the following order (the Post-Enforcement Priority of Payments ) but, in each case, only if and to the extent that payments of a higher priority have been made in full: (i) (ii) first, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of any and all outstanding taxes to be paid in order to preserve the corporate existence of the Issuer, to maintain it in good standing and to comply with applicable legislation (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs and to the extent not paid by BancaEtruria under the Letter of Undertaking); second, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of: (A) any and all outstanding fees, costs, liabilities and any other expenses to be paid in order to preserve the corporate existence of the Issuer, to maintain it in good standing, to comply with applicable legislation and to fulfil obligations of the Issuer to third parties (not being Other Issuer Creditors) incurred in relation to this Securitisation (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs and to the extent not paid by 28

33 BancaEtruria under the Letter of Undertaking); (B) (C) any and all outstanding fees, costs, expenses and taxes required to be paid in connection with the listing, deposit or ratings of the Notes, or any notice to be given to the Noteholders or the other parties to the Transaction Documents (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs); and any and all outstanding fees, costs and expenses of, and all other amounts due and payable to, the Representative of the Noteholders or any appointee thereof; (iii) (iv) (v) (vi) (vii) third, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of any and all outstanding fees, costs and expenses of, and all other amounts due and payable to the Principal Paying Agent, the Agent Bank, the Computation Agent, the Servicer, the Stand-by Servicer, the Corporate Servicer, the Collection Account Bank, the Custodian and the Transaction Bank, each under the Transaction Document(s) to which it is a party; fourth, in or towards satisfaction of all amounts due and payable to the Swap Counterparty under the terms of the Swap Agreement other than any termination payment due to the Swap Counterparty following the occurrence of a Swap Trigger but including, in any event, the amount of any termination payment due and payable to the Swap Counterparty in relation to the termination of the Swap Transactions to the extent of any premium received (net of any costs reasonably incurred by the Issuer to find a replacement swap counterparty), if any, by the Issuer from a replacement swap counterparty in consideration for entering into swap transactions with the Issuer on the same terms as the Swap Transactions; fifth, in or towards satisfaction, pro rata and pari passu, of all amounts due and payable in respect of interest (including any interest accrued but unpaid) on the Rated Notes at such date; sixth, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of the Rated Notes; seventh, in or towards satisfaction of all amounts due and payable to the Arranger under the terms of the Underwriting Agreement; (viii) eighth, in or towards satisfaction of any termination payment due and payable to the Swap Counterparty under the terms of the Swap Agreement following the occurrence of a Swap Trigger other than the payments referred to under item (iv) above; (ix) ninth, in or towards satisfaction of all amounts due and payable to the Seller as Purchase Price Residual Interest Amount (if any) 29

34 (x) (xi) (xii) under the terms of the Transfer Agreement; tenth, in or towards satisfaction of all amounts of interest due and payable to the Subordinated Loan Provider under the terms of the Subordinated Loan Agreement; eleventh, in or towards satisfaction of all amounts of principal due and payable to the Subordinated Loan Provider under the terms of the Subordinated Loan Agreement; twelfth, in or towards satisfaction pro rata and pari passu, according to the respective amounts thereof, of: (A) all amounts due and payable to the Seller in respect of the Seller s Claims (if any) under the terms of the Transaction Documents; (B) (C) (D) all amounts due and payable to the Servicer as Servicer s Advance (if any) under the terms of the Servicing Agreement; all amounts due and payable in connection with a limited recourse loan under the Letter of Undertaking; and in or towards satisfaction of all amounts due and payable to the Underwriter under the terms of the Underwriting Agreement; (xiii) thirteenth, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of the Junior Notes until the Principal Amount Outstanding of the Junior Notes is equal to 50,000; (xiv) fourteenth, on the Post-Enforcement Final Redemption Date and on any date thereafter, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of the Junior Notes until the Junior Notes are redeemed in full; and (xv) fifteenth, up to but excluding the Post-Enforcement Final Redemption Date, in or towards satisfaction, pro rata and pari passu, of all amounts due and payable in respect of the Junior Notes Remuneration at such date, provided, however, that if the amount of the monies at any time available to the Issuer or to the Representative of the Noteholders for the payments above shall be less than 10 per cent. of the Principal Amount Outstanding of all Classes of Notes, the Representative of the Noteholders may at its discretion invest such monies in some or one of the investments authorised pursuant to the Intercreditor Agreement. The Representative of the Noteholders at its discretion may vary such investments and may accumulate such investments and the resulting income until the immediately following Accumulation Date. The Issuer is entitled, pursuant to the Intercreditor Agreement, to dispose 30

35 6. Redemption of the Notes Optional redemption of the Notes of the Claims in order to finance the redemption of the Notes following the service of an Issuer Acceleration Notice. In the event that the Issuer redeems any Notes in whole or in part prior to the date which is 18 months after the Issue Date, the Issuer will be required to pay a tax in Italy equal to 20 per cent. of all interest accrued on such principal amount repaid early up to the relevant repayment date. This requirement will apply whether or not the redemption takes place following an Event of Default under the Notes or pursuant to any requirement of the Issuer to redeem Notes following the service of an Issuer Acceleration Notice in connection with any such Event of Default. Consequently, following the service of an Issuer Acceleration Notice in connection with the occurrence of an Event of Default, the Issuer may, with the consent of the Representative of the Noteholders, and shall, if so instructed by the Representative of the Noteholders, delay the redemption of the Notes until the end of such 18-month period. Prior to the service of an Issuer Acceleration Notice, on the earlier of (A) any Interest Payment Date on which the Portfolio Outstanding Amount is equal to, or less than, 10 per cent. of the lower of: (i) the Initial Portfolio Outstanding Amount; and (ii) the Purchase Price and (B) the Step-Up Date and, in each case, on each Interest Payment Date thereafter, the Issuer may redeem the Notes of all Classes (in whole but not in part) at their Principal Amount Outstanding (plus any accrued but unpaid interest) in accordance with the Post-Enforcement Priority of Payments and subject to the Issuer having sufficient funds to redeem all the Notes (or the Rated Notes only, if all the Junior Noteholders consent) and to make all payments ranking in priority, or pari passu, thereto, subject to the Issuer: (a) giving not more than 60 nor less than 30 days notice to the Representative of the Noteholders and the Noteholders, in accordance with Condition 17 (Notices), of its intention to redeem all Classes of Notes (in whole but not in part); and (b) having provided, prior to giving any such notice, to the Representative of the Noteholders a certificate signed by the chairman of the board or the sole director of the Issuer (as applicable) to the effect that it will have the funds on such Interest Payment Date to discharge its obligations under the Notes (or the Rated Notes only, if all the Junior Noteholders consent) and any obligations ranking in priority, or pari passu, thereto; and (c) giving not more than 60 nor less than 30 days written notice to the Bank of Italy of its intention to redeem all Classes of Notes (in whole but not in part). Portfolio Outstanding Amount, means, on each Interest Payment Date, the aggregate Outstanding Principal of all the Claims as at the end of the immediately preceding Collection Period, and Initial Portfolio 31

36 Optional redemption for taxation, legal or regulatory reasons Outstanding Amount means the aggregate Outstanding Principal of all the Claims as at the Valuation Date, being equal to 465,806, The Issuer is entitled, pursuant to the Intercreditor Agreement, to dispose of the Claims in order to finance the redemption of the Notes in the circumstances described above. Prior to the service of an Issuer Acceleration Notice, the Issuer may redeem the Notes of all Classes (in whole but not in part) at their Principal Amount Outstanding (plus any accrued but unpaid interest) in accordance with the Post-Enforcement Priority of Payments and subject to the Issuer having sufficient funds to redeem all the Notes (or the Rated Notes only, if all the Junior Noteholders consent) and to make all payments ranking in priority, or pari passu, thereto, on any Interest Payment Date if, by reason of a change in law or the interpretation or administration thereof since the Issue Date: (a) the assets of the Issuer in respect of this Securitisation (including the Claims, the Collections and the other Issuer s Rights) become subject to taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the Republic of Italy or by any political sub-division thereof or by any authority thereof or therein or by any applicable taxing authority having jurisdiction; or (b) either the Issuer or any paying agent appointed in respect of the Rated Notes or any custodian of the Rated Notes is required to deduct or withhold any amount (other than in respect of a Decree 239 Withholding) in respect of any Class of Notes, from any payment of principal or interest on such Interest Payment Date for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the Republic of Italy or by any political sub-division thereof or by any authority thereof or therein or by any other applicable taxing authority having jurisdiction and provided that such deduction or withholding may not be avoided by appointing a replacement paying agent or custodian in respect of the Rated Notes before the Interest Payment Date following the change in law or the interpretation or administration thereof; or (c) any amounts of interest payable on the Mortgage Loans to the Issuer are required to be deducted or withheld from the Issuer for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the Republic of Italy or by any political sub-division thereof or by any authority thereof or therein or by any other applicable taxing authority having jurisdiction; or (d) it is or will become unlawful for the Issuer to perform or comply with any of its obligations under or in respect of the Notes or any of the Transaction Documents to which it is a party; subject to the Issuer: 32

37 (i) giving not more than 60 days nor less than 30 days written notice (which notice shall be irrevocable) to the Representative of the Noteholders and the Noteholders, pursuant to Condition 17 (Notices), of its intention to redeem all (but not some only) the Notes; and (ii) providing to the Representative of the Noteholders: (A) a legal opinion (in form and substance satisfactory to the Representative of the Noteholders) from a firm of lawyers of international repute (approved in writing by the Representative of the Noteholders) opining on the relevant change in law or interpretation or administration thereof; (B) (C) a certificate from the chairman of the board of directors or the sole director of the Issuer (as applicable) stating that the obligation to make such deduction or withholding or the suffering by the Issuer of such deduction or withholding cannot be avoided or, as the case may be, the events under paragraph (d) above will apply on the next Interest Payment Date and cannot be avoided by the Issuer making reasonable endeavours; and a certificate from the chairman of the board of directors or the sole director of the Issuer (as applicable) to the effect that it will have the funds on such Interest Payment Date to discharge its obligations under: (i) the Notes (or the Rated Notes only, if all the Junior Noteholders consent) and any obligations ranking in priority, or pari passu, thereto; and (ii) any additional taxes payable by the Issuer by reason of such early redemption of the Notes. Mandatory redemption The Issuer is entitled, pursuant to the Intercreditor Agreement, to dispose of the Claims in order to finance the redemption of the Notes in the circumstances described above. Prior to the service of an Issuer Acceleration Notice, if, on the Calculation Date immediately preceding the First Amortisation Interest Payment Date and on each Calculation Date thereafter, there are Issuer Available Funds, the Issuer will apply such Issuer Available Funds on the immediately following Interest Payment Date in or towards the mandatory redemption of the Notes of each Class (in whole or in part) in accordance with the Pre-Enforcement Priority of Payments. The principal amount redeemable in respect of each Note on any Interest Payment Date (each, a Principal Payment ) shall be a pro rata share of the Issuer Available Funds determined in accordance with the provisions of Condition 7(d) (Principal Payments and Principal Amount Outstanding) and the Pre-Enforcement Priority of Payments to be available to redeem Notes of the relevant Class on such date, calculated 33

38 Estimated weighted average life of the Rated Notes and assumptions 7. Credit Structure Cash Reserve by reference to the ratio borne by the then Principal Amount Outstanding of such Note to the then Principal Amount Outstanding of the Notes of such Class (rounded down to the nearest cent), provided always that no such Principal Payment may exceed the Principal Amount Outstanding of the relevant Note. On the First Amortisation Interest Payment Date and on each Interest Payment Date thereafter, prior to the service of an Issuer Acceleration Notice: (i) the Class A1 Notes will amortise in an amount equal to the Issuer Available Funds available for such purpose in accordance with the Pre-Enforcement Priority of Payment until the Class A1 Notes are repaid in full; and (ii) upon redemption in full of the Class A1 Notes, the Class A2 Notes will amortise in an amount equal to the Issuer Available Funds available for such purpose in accordance with the Pre-Enforcement Priority of Payment until the Class A2 Notes are repaid in full; (iii) upon redemption in full of the Class A1 Notes and the Class A2 Notes, the Class A3 Notes will amortise in an amount equal to the Issuer Available Funds available for such purpose in accordance with the Pre-Enforcement Priority of Payment until the Class A3 Notes are repaid in full. The actual weighted average life of the Rated Notes cannot be predicted as the actual rate at which the Mortgage Loans will be repaid and a number of other relevant factors are unknown. Calculations of the estimated weighted average life of the Rated Notes have been based on certain assumptions including, inter alia, the assumption that the Mortgage Loans are subject to a constant payment rate as shown in Estimated weighted average life of the Rated Notes and assumptions. The estimated weighted average life of the Rated Notes, at various assumed constant payment rates for the Mortgage Loans, is set out under Estimated weighted average life of the Rated Notes and assumptions. The Issuer will establish a reserve fund in the Cash Reserve Account. Cash Reserve means the monies standing to the credit of the Cash Reserve Account at any given time. A portion of the amount drawn down under the Subordinated Loan Agreement equal to 17,467, will be credited to the Cash Reserve Account on the Issue Date. Subject to the Additional Commitment Limit, an amount equal to the Required Amount shall be drawn down under the Subordinated Loan Agreement and credited to the Cash Reserve Account by no later than five Business Days of the Servicer Downgrade Date. The Cash Reserve will be increased or replenished, as the case may be, up to the Target Cash Reserve Amount (i) out of the Issuer Available Funds and in accordance with the Pre-Enforcement Priority of Payments 34

39 Performance Criteria on each Interest Payment Date, and (ii) out of the sums drawn down under the Additional Subordinated Loan by no later than five Business Days of the Servicer Downgrade Date. On each Calculation Date, the Cash Reserve (or part of it) will be used to augment the Issuer Available Funds. Target Cash Reserve Amount means, in respect of each Interest Payment Date: (i) (ii) if the Performance Criteria are satisfied as at the immediately preceding Calculation Date, (a) 11,645, (being an amount equal to 2.50 per cent. of the Outstanding Principal of all the Claims as at the Valuation Date) if the Servicer Event was not outstanding as at the relevant Calculation Date; or (b) 17,467, (being an amount equal to 3.75 per cent. of the Outstanding Principal of all the Claims as at the Valuation Date) if the Servicer Event was outstanding as at the relevant Calculation Date; or if the Performance Criteria were not satisfied as at the immediately preceding Calculation Date, 18,632, (being an amount equal to 4.00 per cent. of the Outstanding Principal of all the Claims as at Valuation Date), provided however that the Target Cash Reserve Amount shall be zero starting from, and including, the earlier of (x) the Interest Payment Date on which the Rated Notes will be redeemed in full and (y) the Interest Payment Date on which the Principal Amount Outstanding of the Rated Notes (after deducting any Principal Payment made on that Interest Payment Date) will be equal to, or lower than, the Cash Reserve as at the relevant Interest Payment Date. A Servicer Event will be outstanding for so long as the unsecured, unsubordinated debt obligations of the Servicer are not rated at least as high as (i) P2 by Moody s and F1 by Fitch in respect of short-term debt and (ii) A3 by Moody s and A by Fitch in respect of long-term debt provided that for so long as the Servicer is rated A by Fitch, a Servicer Event will be deemed to be outstanding also if such rating has been placed by Fitch in negative watch. For the avoidance of doubt, in the absence of a public rating from any one of the Rating Agencies, the Servicer Event will be deemed to be outstanding, unless otherwise provided for by the then applicable rating criteria published by Fitch and unless otherwise confirmed by Moody s. The Performance Criteria will be deemed satisfied in respect of a Calculation Date if the following cumulative conditions are met: (a) the amount standing to the credit of the Cash Reserve Account on the immediately preceding Interest Payment Date (in each case after deducting any Principal Payment made on that Interest Payment Date) is equivalent to the Target Cash Reserve Amount 35

40 Eligible Investments Swap Agreement (b) (c) (d) applicable to that immediately preceding Interest Payment Date; the Loss Ratio is lower than 3.5 per cent.; the Delinquency Ratio is lower than nine per cent.; and the Servicer Report Delivery Failure Event is not outstanding. Delinquency Ratio means the percentage (rounded downwards to two decimal places), as calculated on each Calculation Date, equivalent to the fraction between: (a) (b) the aggregate Outstanding Principal of each Delinquent Claim as at the end of the Collection Period immediately preceding the relevant Calculation Date; and the Outstanding Principal of the Claims as at the relevant Calculation Date. Loss Ratio means the percentage (rounded downwards to two decimal places), as calculated on each Calculation Date, equivalent to the fraction between: (a) (b) the Principal Loss as at the end of the Collection Period immediately preceding such Calculation Date; and the sum of the Outstanding Principal of all Claims as at the Valuation Date. Principal Loss means, as at any given date, the aggregate of: (a) (b) the Outstanding Principal of each Claim qualified as a Defaulted Claim (as calculated on the date on which such Claim has been qualified as a Defaulted Claim) after the Valuation Date; less any amounts recovered by the Servicer in relation to each Defaulted Claim (including any disposal proceeds deriving from the sale of any Defaulted Claims) after the Valuation Date. Pursuant to the Agency and Accounts Agreement, the Transaction Bank shall, if so instructed in writing by the Seller, on behalf of the Issuer, invest amounts standing to the credit of the Cash Reserve Account, the Principal Account and the Claims Transaction Account in Eligible Investments as follows: (a) the balance of the Cash Reserve Account which may be invested in Eligible Investments on the Business Day immediately following each Interest Payment Date; (b) the balance of the Principal Account which may be invested in Eligible Investments on the Business Day immediately following each Interest Payment Date; and (c) the balance of the Claims Transaction Account which may be invested in Eligible Investments on a monthly basis on the last Business Day of each month, each such date, being an Investment Date. The Issuer has entered into the Swap Agreement with the Swap Counterparty in order to mitigate the potential interest rate exposure of 36

41 Letter of Undertaking the Issuer in relation to its floating rate interest obligations under the Rated Notes. Pursuant to a letter of undertaking in relation to the Issuer (the Letter of Undertaking ) dated the Signing Date between the Issuer, the Representative of the Noteholders and BancaEtruria (in such capacity, the Financing Bank ), the Financing Bank has undertaken to provide the Issuer with all necessary monies (in any form of financing deemed appropriate by the Representative of the Noteholders, for example by way of a subordinated loan, the repayment of which is effected in compliance with item (xvii)(c) of the Pre-Enforcement Priority of Payments or, as the case may be, item (xii)(c) of the Post-Enforcement Priority of Payments) in order for the Issuer to pay any losses, costs, expenses or liabilities in respect of certain exceptional liabilities set out in the Letter of Undertaking. Prospective Noteholders attention is drawn to the fact that the Letter of Undertaking does not and will not constitute a guarantee by BancaEtruria or any of the shareholders of the Issuer of any obligation of a Borrower or the Issuer. 37

42 STRUCTURE DIAGRAM The following structure diagram does not purport to be complete and is taken from, and is qualified in its entirety by, the remainder of this Prospectus. Words and expressions defined elsewhere in this Prospectus shall have the same meanings in this structure diagram. 38