BUMPER 7 S.A. acting for and on behalf of its Compartment 1 and its Compartment 2

Transcription

1 BUMPER 7 S.A. acting for and on behalf of its Compartment 1 and its Compartment 2 (a public limited liability company (société anonyme) incorporated and existing under the laws of the Grand Duchy of Luxembourg) 500,000,000 Class A Floating Rate Notes due ,100,000 Class B Floating Rate Notes due 2026 The asset backed notes to be issued by Bumper 7 S.A., a public limited liability company (société anonyme) incorporated and existing under the laws of the Grand Duchy of Luxembourg and acting for and on behalf of its Compartment 1 and its Compartment 2 (the "Issuer") will comprise 500,000,000 class A floating rate notes (the "Class A Notes") and 49,100,000 class B floating rate notes (the "ClassB Notes" and together with the Class A Notes the "Notes"). The Notes will be issued on or about 28 April 2016 (the "Issue Date"). The Notes are backed by a portfolio of lease receivables and expectancy rights in an aggregate amount of EUR 720,543, arising out of the leases of Vehicles entered into by LeasePlan Deutschland GmbH as lessor (the "Originator"). Application has been made to the Luxembourg financial regulator (Commission de Surveillance du Secteur Financier) ("CSSF") in its capacity as competent authority (the "Competent Authority") for the approval of the Prospectus under the law relating to prospectuses for securities dated 10 July 2005, as amended (loi relative aux Prospectus pour valeurs mobilières (the "Prospectus Law")). By approving this Prospectus, the CSSF assumes no responsibility as to the economic or financial soundness of this transaction or the quality and solvency of the Issuer in line with the provisions of article 7(7) of the Prospectus Law. Application has also been made to the Luxembourg Stock Exchange for the Notes to be listed on the official list of the Luxembourg Stock Exchange on the Issue Date and to be admitted to trading on the Luxembourg Stock Exchange s regulated market. The Luxembourg Stock Exchange s regulated market is a regulated market for the purpose of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets and financial instruments amending Council Directives 85/611/EEC and 93/6/ECC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC. This Prospectus constitutes a prospectus for the purpose of article 5.3 of Directive 2003/71/EC (as amended). The Notes will be issued in new global note form, will be governed by German law and will each be represented by a global note in bearer form (each, a "Global Note"), without interest coupons attached. The Global Notes will be deposited with a common safekeeper (the "Common Safekeeper") appointed by the operator of Euroclear and Clearstream, Luxembourg on or before the Issue Date. The Common Safekeeper will hold the Global Notes in custody for Euroclear and Clearstream, Luxembourg. The Notes, issued in new global note form and represented by the Global Notes may be transferred in book-entry form only. The Notes will be issued in denominations of 100,000. Definitive Notes and interest coupons will not be issued. Interest will accrue on the Principal Outstanding Balance of each Note at a floating rate and will be payable in Euro by reference to successive interest accrual periods (each, an "Interest Period") monthly in arrear on the 23rd of each calendar month, unless such date is not a Business Day, in which case payment shall occur on the next following Business Day (each a "Payment Date"). The first Payment Date will fall on 23 May Amortisation of the Notes will commence on the first Payment Date falling after the expiration of the Revolving Period, which period starts on the Issue Date and ends on (but excluding) the earlier of (i) the Payment Date falling in May 2017 and (ii) the date on which an Early Amortisation Event has occurred. During the Revolving Period, the Originator may, at its option, offer to sell to the Issuer, on any Payment Date, from time to time, Additional Lease Receivables and Additional Expectancy Rights. Ratings will be assigned to the Notes by DBRS Ratings Limited ("DBRS"), Moody s Investor Service Limited ("Moody s") and Standard & Poor s Credit Market Services Europe Limited ("S&P"). Each of DBRS, Moody s and S&P is established in the European Community and according to the press release from the European Securities Markets Authority ("ESMA") dated 31 October 2011 each of DBRS, Moody s and S&P has been registered in accordance with Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (the "CRA Regulation"), as amended by Regulation (EU) No 531/2011 and by Regulation (EU) No 462/2013 (the "CRA III"). Reference is made to the list of registered or certified credit rating agencies as last updated on 1 December 2015 published by ESMA under The Rating Agencies rating of any Class addresses the likelihood that the holders of the Notes (the "Noteholders" or each a "Noteholder") of such class will receive all payments to which they are entitled, as described in this Prospectus. However, the assignment of ratings to the Notes or an outlook on these ratings is not a recommendation to invest in the Notes and may be revised, suspended or withdrawn at any time. The Originator will retain for the life of the transaction a material net economic interest of not less than 5% in the Transaction in accordance with Article 405 of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (the "CRR"), Article 51 of Regulation (EU) No. 231/2013 of 19 December 2012 referred to as the Alternative Investment Fund Manager Regulation (the "AIFM Regulation") and Article 254 of Regulation (EU) 2015/35 of 10 October 2014 (the "Solvency II Regulation"). Such interest will be comprised through the holding of the first loss tranche in the form of the Junior Subordinated Loan by the Originator. After the Issue Date, the Reporting Agent will prepare the Investor Reports wherein relevant information with regard to Purchased Lease 1

2 Receivables and Purchased Expectancy Rights will be disclosed publically together with, among other things, an overview of the retention of the material net economic interest. For a discussion of certain significant factors affecting investments in the Notes, see the section headed "Risk Factors" Notes Initial Principal Amount Interest Rate Legal Maturity Date Issue Price Class A Notes 500,000,000 EURIBOR plus 0.63% 23 March % Class B Notes 49,100,000 EURIBOR plus 1.00% 23 March % Co-Arrangers LeasePlan Corporation N.V. and Société Générale S.A. Joint Lead Managers Société Générale S.A. and Citigroup Manager LeasePlan Corporation N.V. Prospectus dated 25 April

3 RESPONSIBILITY ATTACHING TO THE PROSPECTUS The Notes represent obligations of the Issuer only and do not represent an interest in or obligations of the Co-Arrangers, the Joint Lead Managers, the Manager, the Originator, the Maintenance Coordinator, the Realisation Agent, the Servicer, the Swap Counterparty, the Trustee, the ER Trustee, the Account Bank, the Paying Agent, the Cash Manager, the Data Trustee, the Listing Agent, the Reserves Funding Provider, the Reporting Agent, the Subordinated Lenders, the Back-Up Maintenance Coordinator Facilitator, the Back-Up Servicer Facilitator or any of their respective affiliates or any other party (other than the Issuer) to the Transaction Documents. The Issuer accepts responsibility for the information contained in this Prospectus. To the best of the knowledge and belief of the Issuer (having taken all reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance with the facts and does not omit anything which is likely to affect the import of such information or which would make misleading any statement (whether it is a statement of fact or of opinion) in this Prospectus. The delivery of this Prospectus at any time does not imply that the information herein is correct at any time subsequent to the date of this Prospectus. Wilmington Trust SP Services (Frankfurt) GmbH accepts responsibility for the information contained in the section entitled "The Trustee and the Data Trustee". To the best of the Trustee's and the Data Trustee's knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained therein is in accordance with the facts and does not omit anything likely to affect the import of such information. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Trustee and the Data Trustee as to the accuracy or completeness of any other information contained in this Prospectus or any other information supplied in connection with the Notes or their distribution. LeasePlan Deutschland GmbH accepts responsibility for the information contained in the sections entitled "Retention of Net Economic Interest", "Overview of German Vehicle Lease Market", "Characteristics of the Portfolio" and " The Originator, The Servicer, The Realisation Agent, The Maintenance Coordinator and The Junior Subordinated Lender". To the best of LeasePlan Deutschland GmbH's knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained therein is in accordance with the facts and does not omit anything likely to affect the import of such information. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Originator as to the accuracy or completeness of any other information contained in this Prospectus or any other information supplied in connection with the Notes or their distribution. LeasePlan Corporation N.V. accepts responsibility for the information contained in the section entitled "The Subordinated Lender and the Reserves Funding Provider". To the best of LeasePlan Corporation N.V.'s knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained therein is in accordance with the facts and does not omit anything likely to affect the import of such information. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by LeasePlan Corporation N.V. as to the accuracy or completeness of any other information contained in this Prospectus or any other information supplied in connection with the Notes or their distribution. The ER Trustee accepts responsibility for the information contained in the section entitled "The ER Trustee". To the best of the ER Trustee's knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained therein is in accordance with the facts and does not omit anything likely to affect the import of such information. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the ER Trustee as to the accuracy or completeness of any other information contained in this Prospectus or any other information supplied in connection with the Notes or their distribution. The Reporting Agent accepts responsibility for the information contained in the section entitled "The Reporting Agent". To the best of the Reporting Agent's knowledge and belief (having taken all 3

4 reasonable care to ensure that such is the case), the information contained therein is in accordance with the facts and does not omit anything likely to affect the import of such information. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Reporting Agent as to the accuracy or completeness of any other information contained in this Prospectus or any other information supplied in connection with the Notes or their distribution. The Swap Counterparty accepts responsibility for the information contained in the section entitled "The Swap Counterparty". To the best of the Swap Counterparty's knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained therein is in accordance with the facts and does not omit anything likely to affect the import of such information. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Swap Counterparty as to the accuracy or completeness of any other information contained in this Prospectus or any other information supplied in connection with the Notes or their distribution. BNP Paribas Securities Services, Luxembourg Branch accepts responsibility for the information contained in the section entitled "The Account Bank, the Cash Manager, the Paying Agent, the Back- Up Servicer Facilitator and the Back-Up Maintenance Coordinator Facilitator". To the best of BNP Paribas Securities Services, Luxembourg Branch knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained therein is in accordance with the facts and does not omit anything likely to affect the import of such information. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by BNP Paribas Securities Services, Luxembourg Branch as to the accuracy or completeness of any other information contained in this Prospectus or any other information supplied in connection with the Notes or their distribution. The Back-Up Maintenance Coordinator Facilitator accepts responsibility for the information contained in the section entitled "The Back-Up Maintenance Coordinator Facilitator". To the best of the Back-Up Maintenance Coordinator Facilitator's knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained therein is in accordance with the facts and does not omit anything likely to affect the import of such information. No representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Back-Up Maintenance Coordinator Facilitator as to the accuracy or completeness of any other information contained in this Prospectus or any other information supplied in connection with the Notes or their distribution. Each initial and subsequent purchaser of the Notes will be deemed, by its acceptance of such Notes, to have made certain acknowledgements, representations and agreements intended to restrict the resale or other transfer thereof as set forth therein and described in this Prospectus and, in connection therewith, may be required to provide confirmation of its compliance with such resale and other transfer restrictions in certain cases. THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND, SUBJECT TO CERTAIN EXCEPTIONS, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES. Neither the delivery of this Prospectus nor any offering, sale or delivery of any Notes shall, under any circumstances, create any implication (i) that the information in this Prospectus is correct as of any time subsequent to the date hereof, or (ii) that there has been no adverse change in the financial situation of the Issuer or with respect to the Originator since the date of this Prospectus or the balance sheet date of the most recent relevant financial statements, or (iii) that any other information supplied in connection with the issue of the Notes is correct at any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same. This does not affect the obligation of the Issuer to file a supplement in accordance with the Luxembourg law relating to 4

5 prospectuses for securities dated 10 July 2005 (loi relative aux Prospectus pour valeurs mobilières) as amended. No action has been taken by the Issuer, the Co-Arrangers, the Manager or the Joint Lead Managers other than as set out in this Prospectus that would permit a public offering of the Notes, or possession or distribution of this Prospectus or any other offering materials in any country or jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold directly or indirectly, and neither this Prospectus (nor any part hereof) nor any information memorandum, prospectus, form of application, advertisement or other offering materials may be issued, distributed or published in any country or jurisdiction except in compliance with applicable laws, orders rules and regulations, and the Issuer, the Co-Arrangers, the Manager and the Joint Lead Managers have represented that all offers and sales by them have been made on such terms. This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities other than the securities to which it relates or an offer to sell or the solicitation of any offer to buy any of the securities offered hereby in any circumstances in which such offer or solicitation is unlawful. The distribution of this Prospectus (or of any part thereof) and the offering and sale of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Prospectus (or any part thereof) comes are required by the Issuer, the Co-Arrangers, the Manager or the Joint Lead Managers to inform themselves about and to observe any such restrictions. This Prospectus does not constitute, and may not be used for, or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. For a further description of certain restrictions on offerings and sales of the Notes and distribution of this Prospectus (or of any part thereof) see "SUBSCRIPTION AND SALE". Neither of the Joint Lead Managers, the Co-Arrangers or the Manager has independently verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Joint Lead Managers, the Co- Arrangers or the Manager (in its capacity as Manager) as to the accuracy or completeness of the information contained in this Prospectus. In making an investment decision, investors must rely on their own examination of the terms of this offering, including the merits and risks involved. The contents of this Prospectus should not be construed as providing legal, business, accounting or tax advice. Each prospective investor should consult its own legal, business, accounting and tax advisers prior to making a decision to invest in the Notes. Any investor in the Notes should be able to bear the economic risk of an investment in the Notes for an indefinite period of time. No person has been authorised to give any information or to make any representation concerning the issue of the Notes other than those contained in this Prospectus. Nevertheless, if any such information is given by any broker, seller or any other person, it must not be relied upon as having been authorised by the Issuer, the Co-Arrangers, the Manager, the Joint Lead Managers or any of the other Transaction Parties. Neither the delivery of this Prospectus nor any offer, sale or solicitation made in connection herewith shall, in any circumstances, imply that the information contained herein is correct at any time subsequent to the date of this Prospectus. Any website referred to in this Prospectus does not form part of this Prospectus. Payments of interest and principal in respect of the Notes will be subject to any applicable withholding taxes. The Issuer will not be obliged to pay additional amounts therefor. In connection with the issue of the Notes, any of the Joint Lead Managers or the Co-Arrangers may over-allot or effect transactions that stabilise or maintain the market price of the Notes at a level that might not otherwise prevail. However, there is no obligation on a Joint Lead Manager or the Co-Arrangers to undertake these actions. Any stabilisation action may be discontinued at any time but will, in accordance with the rules of Luxembourg Stock Exchange, in any event be discontinued at the earlier of thirty (30) days after the issue date of the Notes and sixty (60) days 5

6 after the date of allotment of the Notes. Stabilisation transactions will be conducted in compliance with all applicable laws and regulations, as amended from time to time. This Prospectus contains certain forward-looking statements. A forward-looking statement is any statement that does not relate to historical facts and events. This applies, in particular, to statements in this Prospectus containing information on future earning capacity, plans and expectations regarding the business and management, the growth and profitability, and general economic and regulatory conditions and other factors that may affect the Issuer and/or a Transaction Party. Forward-looking statements in this Prospectus are based on current estimates and assumptions that the Issuer and the relevant Transaction Party make to the best of their present knowledge. These forwardlooking statements are subject to risks, uncertainties and other factors which could cause actual results, including the financial conditions and results of operations of the Issuer and the relevant Transaction Party, to differ materially from and be worse than the results that have been expressly or implicitly assumed or described in these forward-looking statements. In particular, the business of the Originator is subject to a number of risks and uncertainties that could cause a forward-looking statement, estimate or prediction in this Prospectus to become inaccurate. Accordingly, investors are strongly advised to read the following sections of this Prospectus: "Transaction Overview", "Risk Factors", "Overview of German Vehicle Lease Market", "Characteristics of the Portfolio" and "The Originator, the Servicer, the Maintenance Coordinator, the Realisation Agent and the Junior Subordinated Lender". These sections include more detailed descriptions of factors that might have an impact on the business of the Originator and the markets in which it operates. In light of these risks, uncertainties and assumptions, future events described in this Prospectus may not occur. In addition, neither the Issuer nor any Transaction Party assumes any obligation, except as required by law, to update any forward-looking statements or to conform these forward-looking statements to actual events or developments. 6

7 TABLE OF CONTENTS RISK FACTORS... 9 TRANSACTION STRUCTURE LEGAL STRUCTURE OF THE TRANSACTION TRANSACTION OVERVIEW PCS LABEL RETENTION OF NET ECONOMIC INTEREST OVERVIEW OF GERMAN VEHICLE LEASE MARKET CHARACTERISTICS OF THE PORTFOLIO DESCRIPTION OF CERTAIN TRANSACTION AGREEMENTS THE NOTES THE TRUST AGREEMENT DEFINITIONS, INTERPRETATION AND COMMON TERMS APPOINTMENT OF TRUSTEE AND THE ER TRUSTEE, GRANT OF SECURITY SECURED OBLIGATIONS ISSUER REMAINS LIABLE TRUSTEE'S AND ER TRUSTEE'S RIGHTS REPRESENTATIONS AND COVENANTS OF THE ISSUER IDENTIFICATION OF SECURITY ADMINISTRATION PRIOR TO ENFORCEMENT ENFORCEMENT OF SECURITY BY TRUSTEE TRUSTEE APPOINTED ATTORNEY-IN-FACT REMEDIES AVAILABLE TO TRANSACTION CREDITORS PAYMENTS TO THE ISSUER ACCOUNT THE TRUSTEE'S AND THE ER TRUSTEE'S DUTIES AND LIABILITY INDEMNITY AND EXPENSES CONTINUING SECURITY INTEREST, RELEASE THE TRUSTEE AND THE ER TRUSTEE WEIGHTED AVERAGE LIFE OF THE NOTES THE ISSUER CORPORATE SERVICES PROVIDER THE TRUSTEE AND THE DATA TRUSTEE THE ER TRUSTEE THE ORIGINATOR, THE SERVICER, THE REALISATION AGENT, THE MAINTENANCE COORDINATOR AND THE JUNIOR SUBORDINATED LENDER THE SUBORDINATED LENDER AND RESERVES FUNDING PROVIDER THE SWAP COUNTERPARTY

8 THE ACCOUNT BANK, THE CASH MANAGER, THE PAYING AGENT, THE BACK-UP SERVICER FACILITATOR AND THE BACK-UP MAINTENANCE COORDINATOR FACILITATOR THE REPORTING AGENT RATING OF THE NOTES TAXATION SUBSCRIPTION AND SALE USE OF PROCEEDS GENERAL INFORMATION TRANSACTION DEFINITIONS SCHEDULE

9 RISK FACTORS THE PURCHASE OF THE NOTES MAY INVOLVE SUBSTANTIAL RISKS AND IS SUITABLE ONLY FOR INVESTORS WHO HAVE THE KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS NECESSARY TO ENABLE THEM TO EVALUATE THE RISKS AND THE MERITS OF AN INVESTMENT IN THE NOTES. PRIOR TO MAKING AN INVESTMENT DECISION, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER IN LIGHT OF THEIR OWN FINANCIAL CIRCUMSTANCES AND INVESTMENT OBJECTIVES ALL THE INFORMATION SET FORTH IN THIS PROSPECTUS AND, IN PARTICULAR, THE CONSIDERATIONS SET FORTH BELOW. PROSPECTIVE INVESTORS SHOULD MAKE SUCH INQUIRIES AS THEY DEEM NECESSARY WITHOUT RELYING ON THE ISSUER, THE CO- ARRANGERS, THE MANAGER OR THE JOINT LEAD MANAGERS. The Issuer believes that the following factors may affect its ability to fulfil its obligations under the Notes. These factors are contingencies which may or may not occur, and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring. The Issuer believes that the risks described herein are the principal risks inherent in the transaction for Noteholders, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with the Notes may occur for other unknown reasons, and the Issuer does not represent that the below statements regarding the risks of holding the Notes are exhaustive. Although the Issuer believes that the various structural elements described in this document mitigate some of these risks for Noteholders, there can be no assurance that these measures will be sufficient to ensure payment to Noteholders of interest, principal or any other amounts on or in connection with the Notes on a timely basis or at all. Risk Factors Relating to the Notes 1. Liability and Limited Recourse Obligations The Notes represent obligations of the Issuer only and do not represent obligations of LeasePlan Deutschland GmbH (acting in any capacity), the Co-Arrangers, the Joint Lead Managers, the Trustee, the ER Trustee, LeasePlan Corporation N.V. ("LPC") or any other third party or entity. Neither the Joint Lead Managers, the Co-Arrangers, the Trustee, the ER Trustee, LeasePlan Deutschland GmbH (acting in any capacity) or LPC (acting in any capacity), nor any other third person or entity assumes any liability to the Noteholders if the Issuer fails to make a payment due under the Notes. All payment obligations of the Issuer under the Notes constitute limited recourse obligations to pay only the Available Distribution Amount which includes, inter alia, amounts received by the Issuer from the Purchased Lease Receivables, from the Purchased Expectancy Rights and under the Transaction Documents. The Available Distribution Amount may not be sufficient to pay amounts accrued under the Notes, which may result in an interest shortfall, however, only an interest shortfall on the most senior Class when the same becomes due and payable, and if such default continues for a period of ten (10) Business Days will constitute an Enforcement Event. The non-payment of principal due and payable in accordance with the Pre-Enforcement Priority of Payments will also constitute an Issuer Event of Default. The Notes shall not give rise to any payment obligation in addition to the foregoing. The enforcement of the payment obligations under the Notes shall only be effected by the Trustee or the ER Trustee in accordance with the Trust Agreement. If the Trustee or the ER Trustee enforces the claims under the Notes, such enforcement will be limited to the assets which were transferred to the Trustee or the ER Trustee for security purposes. To the extent that such assets, or the proceeds of the realisation thereof, prove ultimately insufficient to satisfy the claims of all Noteholders in full, then any shortfall arising shall be extinguished and none of the Noteholders, the Trustee or the ER Trustee shall have any further claims against the Issuer. Such assets and proceeds shall be deemed to be "ultimately insufficient" at such time 9

10 when no further assets are available and no further proceeds can be realised therefrom to satisfy any outstanding claims of the Noteholders. If any events occur that require the Trustee or the ER Trustee, as applicable, to take action, they will have access to the security only. Other than as provided in the Transaction Documents, none of the Issuer, the Expectancy Rights Purchaser, the Trustee or the ER Trustee will have recourse to the Originator. 2. Repayment of the Notes During the Revolving Period, the Issuer will not use Available Distribution Amounts for the repayment of principal under the Notes. Instead, the Issuer shall use such funds to acquire Additional Portfolios in accordance with the Lease Receivables Purchase Agreement and the Expectancy Rights Purchase Agreement. From (and including) the end of the Revolving Period, the amount of repayment of principal under the Notes on any given Payment Date will depend on the Available Distribution Amounts, in particular the funds received by the Issuer on the Portfolio, including: the aggregate amount which the Lessees have paid in the Collection Period immediately preceding such Payment Date; and the proceeds deriving from the Purchased Expectancy Rights which (i) are attributable to the Vehicle Realisation Proceeds and (ii) ultimately depend on the repurchase of the Transformed Title Vehicles by the Originator and/or the realisation of the Vehicles (as the case may be). There is no assurance that the Lease Receivables or the Expectancy Rights can be realised by or on behalf of the Issuer at their purchase price, or at all. While each Lease Agreement has due dates for scheduled payments thereunder, there is no assurance that the Lessees under those Lease Agreements will pay on time, or at all. In addition, Lessees may prepay the aggregate principal amount outstanding under a Lease Agreement on the terms specified in the Lease Agreement. To the extent the Transformed Title Vehicles are sold by the Realisation Agent in the open market, there is no assurance that such Vehicles can be realised at a price at least equal to the present value of the Lease Receivables and Estimated RV of the Purchased Expectancy Rights relating to such Vehicles, or at all. However, in order to mitigate this risk, the Expectancy Rights Purchaser may, at its option, request the Originator to purchase the Vehicles that have become Transformed Title Vehicles under the Put Option Agreement. The Originator has agreed to guarantee the Estimated RV under the Put Option Agreement. To the extent such Vehicles are acquired by the Originator, there is no assurance that the Originator will fulfil its payment obligations in respect of the repurchase of the relevant Vehicles. Accordingly, there are no scheduled dates for payment of specified amounts of principal under the Notes. A loss arises under a Lease Agreement if: the Lessee does not make the payments scheduled thereunder; and the Vehicle under that Lease Agreement is sold for less than the sum of unpaid payments and the Estimated RV under the Lease Agreement. 10

11 For a description of how losses/gains may be shared between the Originator and the relevant Lessee under the Lease Agreements, see the paragraph headed "Characteristics of the Portfolio". There is no guarantee that the Noteholders will ultimately receive the full principal amount of the Notes and interest thereon as a result of losses incurred in respect of the Lease Agreements or the Transformed Title Vehicles. The expectations expressed in the paragraph headed "WEIGHTED AVERAGE LIFE OF THE NOTES" should be viewed as estimates only, and no assurance is given that the expectations expressed therein will be realised. 3. Limited Resources of the Issuer The Issuer is a special purpose vehicle with limited resources and with no business operations other than to acquire the Lease Receivables and the Expectancy Rights, to issue and repay or redeem the Notes and to finance the Portfolio, in each case in accordance with the Transaction Documents. In order to meet its obligations under the Transaction Documents, the Issuer has appointed certain Transaction Parties to perform certain of the Issuer s obligations under or in connection with the Transaction Documents. Therefore, the ability of the Issuer to meet the obligations under the Notes will depend, inter alia, upon receipt of: (c) (d) (e) (f) amounts due from Lessees under the Lease Receivables and collected on behalf of the Issuer by the Servicer; payments under the Purchased Expectancy Rights that will depend on proceeds arising out of the repurchase of the Transformed Title Vehicles by the Originator and/or the realisation by the Expectancy Rights Purchaser (or by its agent on its behalf) of the Transformed Title Vehicles; Deemed Collections due from the Originator; amounts (if any) due and payable by the Swap Counterparty under the Swap Agreement; interest earned on the Issuer Account (including any ledgers) and the Swap Replacement Account; and payments under the other Transaction Documents in accordance with the terms thereof. 4. Yield to Maturity The yield to maturity of a Class will depend on, among other things, the amount and timing of payments under the Portfolio (including early terminations of Lease Agreements, sale proceeds arising from the sale of Transformed Title Vehicles, etc.) and the price paid by the Noteholders for the Notes. The amount and timing of payments under the Portfolio cannot be predicted and are influenced by a wide variety of economic, social and other factors, including prevailing interest rates, the availability of alternative fleet financing, local and regional economic conditions, the market for vehicles, etc. See the paragraph headed "WEIGHTED AVERAGE LIFE OF THE NOTES". 11

12 5. Early Redemption by the Issuer The Issuer will be entitled but not obliged to redeem the Notes upon the occurrence of an Optional Redemption Event (see the paragraph entitled "THE NOTES"). In the event it exercises its option, the Issuer is under no obligation to pay to the Noteholders a premium or any other form of compensation for the redemption prior to the Legal Maturity Date. 6. Interest Rate Risk / Risk of Swap Counterparty Insolvency The Lease Receivables bear interest at fixed rates while the Notes will bear interest at floating rates based on 1-month EURIBOR. Because of this, the Issuer might have to pay higher interest under the Notes than the Issuer receives from the Lease Receivables, depending, inter alia, on the development of 1-month EURIBOR. The Issuer will hedge the afore-described interest rate risk and will use payments made by the Swap Counterparty to make payments on the Notes on each Payment Date, in each case calculated with respect to the swap notional amount which is equal to the outstanding Notes balance on the immediately preceding Payment Date (after taking into account any principal payments made on such date). During those periods in which the floating rates payable by a Swap Counterparty under the Swap Agreement are substantially greater than the fixed rates payable by the Issuer under such Swap Agreement, the Issuer will be more dependent on receiving payments from such Swap Counterparty in order to make interest payments on the Notes. If the Swap Counterparty fails to pay any amounts when due under the Swap Agreement, the Collections may be insufficient to make the required payments on the Notes and the Noteholders may experience delays and/or reductions in the interest and principal payments on the Notes. During those periods in which the floating rates payable by a Swap Counterparty under the Swap Agreement are less than the fixed rates payable by the Issuer under such Swap Agreement, the Issuer will be obliged under such Swap Agreement to make a payment to such Swap Counterparty. The Swap Counterparty s claims for payment (including certain termination payments required to be made by the Issuer upon a termination of the Swap Agreement) under the Swap Agreement will be higher in priority than all payments on the Notes, provided that the Swap Counterparty is not in default of its obligations under the Swap Agreement. If a payment under the Swap Agreement is due to the Swap Counterparty on any Payment Date, the Collections may be insufficient to make the required payments on the Notes and the Noteholders may experience delays and/or reductions in the interest and principal payments under the Notes. The Swap Counterparty may terminate the Swap Agreement upon the occurrence of certain bankruptcy events in relation to the Issuer, if the Issuer fails to make a payment under such Swap Agreement when due and such failure is not remedied within ten (10) Business Days of notice of such failure being given, if performance of the respective Swap Agreement becomes illegal, if an Enforcement Event occurs, if the Notes are redeemed or if payments to the Swap Counterparty are reduced or payments from the Swap Counterparty are increased for a set period of time due to tax reasons. The Issuer may terminate the Swap Agreement if, among other things, the Swap Counterparty becomes insolvent, the Swap Counterparty fails to make a payment under the Swap Agreement when due and such failure is not remedied within ten (10) Business Days of notice of such failure being given, performance of the Swap Agreement becomes illegal or payments to the Issuer are reduced or payments from the Issuer are increased due to tax for a period of time. If the Swap Agreement is terminated by either party, then, depending on the mark-to market value of the hedging arrangement, a termination payment may be due to the Issuer or to the Swap Counterparty. Any such termination payment could, if market interest rates and other conditions have changed materially, be substantial. Under certain circumstances, termination payments required to be made by the Issuer to the Swap Counterparty will rank higher in priority than all payments on the Notes. In such event, the Collections may be insufficient to 12

13 make the required payments on the Notes and the Noteholders may experience delays and/or reductions in the interest and principal payments on the Notes. The Issuer is exposed to the risk that the Swap Counterparty may become insolvent. In the event that the Swap Counterparty suffers a ratings downgrade, the Issuer may terminate the related Swap Agreement if the Swap Counterparty fails, within a set period of time, to take certain actions intended to mitigate the effects of such downgrade. Such actions could include the Swap Counterparty collateralising its obligations as a referenced amount calculated in accordance with a credit support annex to the ISDA master agreement, transferring its obligations to a replacement Swap Counterparty or procuring a guarantee. However, in the event the Swap Counterparty is downgraded or becomes insolvent there can be no assurance that a guarantor or replacement Swap Counterparty will be found or that the amount of collateral will be sufficient to meet the Swap Counterparty s obligations. If a downgrade event has occurred to the Swap Counterparty in accordance with the Swap Agreement, the Swap Counterparty shall post collateral in accordance with the Swap Agreement or transfer its obligations under the Swap Agreement to a third party which is an Eligible Swap Counterparty. Any failure or delay in the posting of collateral or obtaining a guarantee with the required ratings could result in lower amounts being available to pay the Noteholders. Upon the termination of the Swap Agreement prior to the repayment of the Notes, the Issuer will use its reasonable efforts to find a replacement which is an Eligible Swap Counterparty. 7. Subordination of Payments There is uncertainty as to the validity and/or enforceability of a provision which (based on contractual and/or trust principles) subordinates certain payment rights of a creditor to the payment rights of other creditors of its counterparty upon the occurrence of insolvency proceedings relating to that creditor (flip clause). In particular, recent cases have focused on provisions involving the subordination of a swap counterparty s payment rights in respect of certain termination payments upon the occurrence of insolvency proceedings or other default on the part of such counterparty. Such provisions are similar in effect to the terms included in the Transaction Documents relating to the subordination of certain payments under the Swap Agreement. The Supreme Court of the United Kingdom in Belmond Park Investments PTY Limited (Respondent) v BNY Corporate Trustee Services Limited and Lehman Brothers Special Finance Inc. [2011] UKSC 38 unanimously upheld the decision of the Court of Appeal in upholding the validity of similar priorities of payment, stating that, provided that such provisions form part of a commercial transaction entered into in good faith which does not have, as its predominant purpose or one of its main purposes, the deprivation of the property of one of the parties on bankruptcy, the anti-deprivation principle was not breached by such provisions. In parallel proceedings in New York, Judge Peck of the U.S. Bankruptcy Court for the Southern District of New York granted Lehman Brothers Special Finance Inc. s ("LBSF") motion for summary judgement on the basis that the effect was that the provisions represent unenforceable ipso facto clauses under sections 365(e)(1) and 541(c)(1)(B) of the U.S. Bankruptcy Code, that do not enjoy the "safe harbour" protections granted under section 560 of the U.S. Bankruptcy Code which permit swap counterparties to liquidate, terminate, accelerate or set off notwithstanding section 365(e)(1). As a result, the flip clause was not enforced and LBSF was permitted to retain its payment priority over noteholders notwithstanding the bankruptcy default. Judge Peck acknowledged that his interpretation of U.S. bankruptcy law in this manner yielded an outcome "directly at odds with the judgement of the English Courts". In New York, whilst leave to appeal was granted, the case was settled before an appeal was heard. 13

14 On 8 February 2012, Belmond Park Investments PTY Limited and others commenced proceedings in the U.S. Bankruptcy Court in relation to Lehman Brothers Special Financing Inc. seeking an order recognising and enforcing the English judgment on noteholder priority. Declaratory relief that the noteholder priority is valid and that the collateral can be distributed accordingly and without liability to the trustee, is also being sought. Those proceedings remain pending and are subject to a request to be transferred to the District Court. This is an aspect of cross border insolvency law which remains untested. So whilst the priority issue is considered largely resolved in England and Wales, concerns still remain that the English and U.S. courts will diverge in their approach, which, in the case of an unfavourable decision in the U.S., may adversely affect the Issuer s ability to make payments on the Notes. If a creditor of the Issuer (such as the Swap Counterparty) or a related entity becomes subject to insolvency proceedings in any jurisdiction outside England and Wales (including, but not limited to, the US), and it is owed a payment by the Issuer, a question arises as to whether the insolvent creditor or any insolvency official appointed in respect of that creditor could successfully challenge the validity and/or enforceability of subordination provisions included in the Transaction Documents (such as a provision of the Applicable Priority of Payments which refers to the ranking of the Swap Counterparty s rights in respect of certain amounts under the Swap Agreement). In particular, based on the decision of the US Bankruptcy Court referred to above, there is a risk that such subordination provisions would not be upheld under US bankruptcy law. Such laws may be relevant in certain circumstances with respect to a range of entities which may act as a Swap Counterparty, including US established entities and certain non-us established entities with assets or operations in the US (although the scope of any such proceedings may be limited if the relevant non-us entity is a bank with a licensed branch in a US state). In general, if a subordination provision included in the Transaction Documents was successfully challenged under the insolvency laws of any relevant jurisdiction outside England and Wales and any relevant foreign judgment or order were recognised by the English courts, there can be no assurance that such actions would not adversely affect the rights of the Noteholders, the market value of the Notes and/or the ability of the Issuer to satisfy its obligations under the Notes. As far as the Issuer is concerned, Article 63(1) of the Luxembourg Securitisation Law upholds the validity and enforceability of subordination clauses ("flip clauses") against the Issuer. 8. Conflicts of Interest The Originator as Servicer may hold and/or service claims against the Lessees other than the Lease Receivables. The interests or obligations of the Servicer in its respective capacities with respect to such other claims may in certain aspects conflict with the interests of the Noteholders. This conflict of interest, however, is mitigated in part by the fact that the Originator as the Servicer is entitled to the Servicer Success Fee which is paid junior to the Notes in accordance with the Applicable Priority of Payments. Hence, the Originator as Servicer is incentivised to act in the interest of the Noteholders, since otherwise there may be a negative impact on the amount of the Servicer Success Fee that the Originator as Servicer would receive. In addition, under the Servicing Agreement, the Originator as Servicer is under the obligation, when performing its services, not to distinguish between the securitised and non-securitised exposures and undertakes to always act in the manner of a prudent merchant and to act in accordance with the Collection and Servicing Procedures. The Realisation Agent may realise (e.g., sell in the open market) assets other than the Transformed Title Vehicles. The interests or obligations of the Realisation Agent in its respective capacities with respect to such other assets may in certain aspects conflict with the interests of the Noteholders. Under the Realisation Agreement, the 14

15 Realisation Agent is under the obligation, when performing its services, to not distinguish between the securitised and non-securitised exposures and undertakes to always act in the manner of a prudent merchant. (c) Each Transaction Party may engage in commercial relationships with the Lessees, the purchasers of Transformed Title Vehicles and other parties. In such relationships, such Transaction Parties are not obliged to take into account the interests of the Noteholders. Accordingly, conflicts of interest may arise. 9. Realisation of Security The ability of the Issuer to redeem all the Notes in full and to pay all amounts due to the Noteholders, including after the occurrence of an Issuer Event of Default, will depend upon whether the Portfolio can be realised in an amount sufficient to redeem the Notes and satisfy claims ranking in priority to the Notes in accordance with the Applicable Priority of Payments. There is not at present an active and liquid secondary market for lease receivables and residual value claims with characteristics similar to assets forming part of the Portfolio. Therefore, it may not be possible for the Issuer or, as the case may be, the Trustee, the ER Trustee or a receiver appointed to the Issuer to realise the Portfolio on appropriate terms should such a course of action be required. 10. Market and Liquidity Risks Presently, there is no secondary market for the Notes and there is no guarantee that a liquid secondary market will develop in future. Although the Joint Lead Managers may establish a secondary market for the Notes, they are not obliged to do so, and any market activity which has been there in the past can be terminated without prior notice. If there are no market activities (i.e. bids and offers), it is unlikely that a liquid secondary market will develop. It is therefore not guaranteed that a secondary market will be established and even if such market was established that it would provide sufficient liquidity to absorb any bids. Accordingly, investors should be prepared to invest in the Notes until the Legal Maturity Date. Further, the secondary markets in general are currently experiencing reduced investor demand for asset-backed securities and increased investor yield requirements for those securities. As a result, the secondary market for asset-backed securities is experiencing extremely limited liquidity. These conditions may continue or worsen in the future. Limited liquidity in the secondary market for asset-backed securities has had a severe adverse effect on the market value of asset-backed securities and may continue to have a severe adverse effect on the market value of asset-backed securities, especially those securities that are more sensitive to prepayment, credit or interest rate risk and those securities that have been structured to meet the investment requirements of limited categories of investors. Consequently, any purchaser of the Notes must be prepared to hold such Notes for an indefinite period of time or until the Legal Maturity Date. The market value of the Notes is likely to fluctuate. Any such fluctuation may be significant and could result in significant losses to investors in the Notes. In addition, the forced sale into the market of asset-backed securities held by structured investment vehicles, hedge funds, issuers of collateralised debt obligations and other similar entities that are currently experiencing funding difficulties could adversely affect an investor s ability to sell, and/or the price an investor receives for, the Notes in the secondary market. 11. Economic conditions in the Eurozone Concerns relating to credit risk (including that of sovereigns and of those entities which have exposure to sovereigns), despite easing in some Member States recently, remain significant throughout the Eurozone. In particular, concerns have been raised with respect to continuing economic, monetary and political conditions in the Eurozone. If such concerns do not ease further and/or such conditions further deteriorate (including as may be demonstrated by any relevant credit rating agency action, any default or restructuring of indebtedness by one or 15