avoca credit opportunities plc

AVOCA CREDIT OPPORTUNITIES PLC (a public limited company incorporated under the laws of Ireland with a registered number of 424581) €20,000,000 Class E-8 Subordinated Notes due 2086

Avoca Credit Opportunities PLC (the "Issuer") may from time to time issue further notes, the terms and conditions of which are described in this prospectus (the "Prospectus"). This Prospectus relates to the Class E-8 Subordinated Notes (as defined below).

The Issuer has already issued its €200,000,000 VF-1 Senior Secured Variable Funding Notes due 2014 (the "VF-1 Notes"), €70,000,000 Class A-1 Senior Secured Floating Rate Notes due 2014 (the "Initial Issuance Class A Notes"), €8,750,000 Class B-1 Second Senior Secured Floating Rate Notes due 2014 (the "Initial Issuance Class B Notes"), €8,750,000 Class C-1 Third Senior Secured Floating Rate Notes due 2014 (the "Initial Issuance Class C Notes"), €4,500,000 Class D-1 Fourth Senior Secured Floating Rate Notes due 2014 (the "Initial Issuance Class D Notes"), €30,500,000 Class E-1 Subordinated Notes due 2086 (the "Initial Issuance Class E-1 Subordinated Notes"), €10,000,000 Class E-2 Subordinated Notes due 2086 (the "Initial Issuance Class E-2 Subordinated Notes") and €10,000,000 Class E-3 Subordinated Notes due 2086 (the "Initial Issuance Class E-3 Subordinated Notes", which together with the Initial Issuance Class E-1 Subordinated Notes and the Initial Issuance Class E-2 Subordinated Notes comprise the "Initial Issuance Class E Subordinated Notes", and together with the VF-1 Notes, the Initial Issuance Class A Notes, the Initial Issuance Class B Notes, the Initial Issuance Class C Notes and the Initial Issuance Class D Notes comprise the "Initial Issuance Notes"). The Initial Issuance Notes were the subject of an offering circular dated 2 August 2007 (the "Initial Offering Circular") and were issued and secured pursuant to a master trust deed (the "Master Trust Deed") dated 2 August 2007 (the "Initial Closing Date"), made between (amongst others) the Issuer and Deutsche Trustee Company Limited in its capacity as trustee (the "Trustee"), together with various trust instruments dated the Initial Closing Date supplemental thereto (such trust instruments together with the Master Trust Deed, the "Initial Trust Deed").

The Issuer has also issued its €20,000,000 Class E-4 Subordinated Notes due 2086 (the "March 2008 Issuance Class E-4 Subordinated Notes") and €5,000,000 Class E-5 Subordinated Notes due 2086 (the "March 2008 Issuance Class E-5 Subordinated Notes", which together with the March 2008 Issuance Class E-4 Subordinated Notes comprise the "March 2008 Issuance Class E Subordinated Notes"). The March 2008 Issuance Class E Subordinated Notes were the subject of a supplemental offering circular dated 14 March 2008 (the "March 2008 Issuance Offering Circular") and were issued and secured pursuant to the Master Trust Deed and a trust instrument supplemental thereto dated 10 March 2008 (the "March 2008 Closing Date"), made between (amongst others) the Issuer and the Trustee.

The Issuer has also issued its €30,000,000 Class I-1 Intervening Notes due 2014 (the "November 2008 Issuance Class I-1 Intervening Notes"). The November 2008 Issuance Class I-1 Intervening Notes were the subject of a supplemental offering circular dated 11 November 2008 (the "November 2008 Issuance Offering Circular") and were issued and secured pursuant to the Master Trust Deed and a trust instrument supplemental thereto dated 11 November 2008 (the "November 2008 Closing Date") made between (amongst others) the Issuer and the Trustee.

The Issuer has also issued its €30,000,000 Class E-6 Subordinated Notes due 2086 (the "September 2009 Issuance Class E Subordinated Notes"). The September 2009 Issuance Class E Subordinated Notes were the subject of a supplemental offering circular dated 11 September 2009 (the "September 2009 Issuance Offering Circular") and were issued and secured pursuant to the Master Trust Deed and a trust instrument supplemental thereto dated 10 September 2009 (the "September 2009 Closing Date") made between (amongst others) the Issuer and the Trustee.

The Issuer has also issued its €30,000,000 Class E-7 Subordinated Notes due 2086 (the "December 2009 Issuance Class E Subordinated Notes" and, together with the Initial Issuance Notes, the March 2008 Issuance Class E Subordinated Notes, the November 2008 Issuance Class I-1 Intervening Notes and the September 2009 Issuance Class E Subordinated Notes, the "Issued Notes"). The December 2009 Issuance Class E Subordinated Notes were the subject of a supplemental offering circular dated 10 December 2009 (the "December 2009 Issuance Offering Circular") and were issued and secured pursuant to the Master Trust Deed and a trust instrument supplemental thereto dated 10 December 2009 (the "December 2009 Closing Date") made between (amongst others) the Issuer and the Trustee.

On 4 June 2009 the Issuer repurchased and cancelled €8,750,000 in principal amount of its Initial Issuance Class B Notes, €4,750,000 in principal amount of its Initial Issuance Class C Notes and €2,500,000 in principal amount of its Initial Issuance Class D Notes. On 10 December 2009 the Issuer redeemed €30,000,000 in principal amount of its November 2008 Issuance Class I-1 Intervening Notes.

This Prospectus does not change or amend the terms and conditions of the Initial Issuance Notes, the March 2008 Issuance Class E Subordinated Notes, the November 2008 Issuance Class I-1 Intervening Notes, the September 2009 Issuance Class E Subordinated Notes or the December 2009 Issuance Class E Subordinated Notes. The provisions of this Prospectus relate to the issuance of the Class E-8 Subordinated Notes. The Class E-8 Subordinated Notes will be issued and secured pursuant to a trust instrument which is supplemental to the Master Trust Deed (such trust instrument together with the Initial Trust Deed and the supplemental trust instruments dated 10 March 2008, 11 November 2008, 10 September 2009 and 10 December 2009 referred to above, the "Trust Deed").

The Issuer will issue €20,000,000 Class E-8 Subordinated Notes due 2086 (the "Class E-8 Subordinated Notes" or the "December 2010 Issuance Class E Subordinated Notes" and, together with the Issued Notes, the "Notes") on 10 December 2010 (the "December 2010 Closing Date"). For the purposes of this Prospectus, "Specified Notes", shall include the December 2010 Issuance Class E Subordinated Notes.

The December 2010 Issuance Class E Subordinated Notes will be initially offered at the prices specified in the section of this Prospectus headed "Overview" or such other prices as may be negotiated at the time of sale.

The assets securing the Issued Notes and the December 2010 Issuance Class E Subordinated Notes will consist primarily of a portfolio of loans, high yield securities and special opportunity investments in respect of which Avoca Capital Holdings is acting as investment manager (the "Investment Manager"). The acquisition of such portfolio was financed by advances made pursuant to the VF-1 Notes which rank pari passu with the Class A Notes and the issue proceeds of the other Issued Notes. Additional external financing may also be obtained prior to or subsequent to the December 2010 Closing Date which will also be secured on the portfolio and may rank pari passu with one or more classes of Notes.

The December 2010 Issuance Class E Subordinated Notes, at the Investment Manager’s discretion and providing certain conditions for disbursement of the same are met, will receive Class E Restricted Disbursements (as defined herein) on Payment Dates (see Condition 3(d) (Restricted Payments) and Condition 3(c) (Payment of Amounts)). The Rated Notes and the Class E Subordinated Notes will be subject to mandatory redemption and optional redemption, in each case, as described herein (see Condition 7 (Redemption)).

The Rated Notes, the Intervening Notes and the Class E Subordinated Notes will be subject to mandatory redemption and optional redemption, in each case, as described herein (see Condition 7 (Redemption))

See the section of this Prospectus headed "Risk Factors" for a discussion of certain factors to be considered in connection with an investment in the December 2010 Issuance Class E Subordinated Notes.

This Prospectus comprises a prospectus for the purposes of Article 5 of Directive 2003/71/EC (the "Prospectus Directive"). This Prospectus has been approved by the Central Bank of Ireland, as competent authority under the Prospectus Directive. The Central Bank of Ireland only approves this Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. Application has been made to the Irish Stock Exchange for the Class E-8 Subordinated Notes to be admitted to the Official List and trading on its regulated market.

A copy of this Prospectus has been or will be delivered to the Registrar of Companies in Ireland for registration in accordance with the Prospectus Directive and Regulation 38 of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005 (the "Prospectus Regulations").

The December 2010 Issuance Class E Subordinated Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or the securities laws of any state of the United States or any other jurisdiction. The December 2010 Issuance Class E Subordinated Notes will be offered only outside the United States to non-U.S. Persons in offshore transactions in compliance with Regulation S ("Regulation S") under the Securities Act ("Regulation S Notes"). The December 2010 Issuance Class E Subordinated Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Neither the Issuer nor the pool of underlying assets will be registered under the Investment Company Act. Interests in the December 2010 Issuance Class E Subordinated Notes will be subject to certain restrictions on transfer, and each purchaser of December 2010 Issuance Class E Subordinated Notes offered hereby in making its purchase will be deemed to have made certain acknowledgements, representations and agreements. See "Plan of Distribution" and "Transfer Restrictions".

Any investment in the December 2010 Issuance Class E Subordinated Notes does not have the status of a bank deposit and is not within the scope of the deposit protection scheme operated by the Central Bank of Ireland. The Issuer is not regulated by the Central Bank of Ireland.

The credit ratings included or referred to in this Prospectus have been issued by Fitch Ratings, Moody’s or S&P, 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.

Dated 17 December 2010

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PRIORITIES OF NOTES

The Class A Notes will rank pari passu with any External Senior Permitted Debt and the rights of any Secured Hedging Counterparties and rateably without any preference among themselves for all purposes and in priority to the Class B Notes and any External Second Senior Permitted Debt, the Class C Notes and any External Third Senior Permitted Debt, the Class D Notes and any External Fourth Senior Permitted Debt, the Intervening Notes and any External Intervening Permitted Debt and the Class E Subordinated Notes. The Class B Notes will rank pari passu with any External Second Senior Permitted Debt and rateably without any preference among themselves for all purposes and in priority to the Class C Notes and any External Third Senior Permitted Debt, the Class D Notes and any External Fourth Senior Permitted Debt, the Intervening Notes and any External Intervening Permitted Debt and the Class E Subordinated Notes. The Class C Notes will rank pari passu with any External Third Senior Permitted Debt and rateably without any preference among themselves for all purposes and in priority to the Class D Notes and any External Fourth Senior Permitted Debt, the Intervening Notes and any External Intervening Permitted Debt and the Class E Subordinated Notes. The Class D Notes will rank pari passu with any External Fourth Senior Permitted Debt and rateably without any preference among themselves for all purposes and in priority to the Intervening Notes and any External Intervening Permitted Debt and the Class E Subordinated Notes. The Intervening Notes and any External Intervening Permitted Debt will rank amongst itself in accordance with any Intervening Indebtedness Priority of Payments and in priority to the Class E Subordinated Notes. The Class E Subordinated Notes will rank rateably without any preference among themselves for all purposes but subordinate to the Rated Notes and any External Senior Permitted Debt, the rights of Secured Hedging Counterparties, External Second Senior Permitted Debt, External Third Senior Permitted Debt, External Fourth Senior Permitted Debt, the Intervening Notes and any External Intervening Permitted Debt.

LIMITED RECOURSE AND NON-PETITION

The VF Notes and the Notes are limited recourse obligations of the Issuer which are payable solely out of amounts received by or on behalf of the Issuer in respect of the Collateral. The net proceeds of the realisation of the security over the Collateral following a Transaction Default or the aggregate proceeds of liquidation of the Collateral may be insufficient to pay all amounts due to the VF Noteholders and Noteholders after making payments to other creditors (including any External Creditors) of the Issuer ranking prior thereto or pari passu therewith. In the event of a shortfall in such proceeds, the Issuer will not be obliged to pay, and the other assets (including the Issuer Irish Account and the rights of the Issuer under the Corporate Administration Agreement) of the Issuer will not be available for payment of, such shortfall and all claims in respect of which shall be extinguished (see Condition 4 (Security)).

RESPONSIBILITY

The Issuer accepts responsibility for the information contained in this Prospectus (save for the information contained in the sections of this Prospectus headed "Description of the Investment Manager" and "Description of the Collateral Administrator - General"). To the best of the knowledge and belief of the Issuer (which has taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. Neither Deutsche Bank AG, London Branch nor the Trustee accepts responsibility for the accuracy, adequacy, reasonableness or completeness of the information contained therein. 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.

The Investment Manager accepts responsibility for the information contained in the section of this Prospectus headed "Description of the Investment Manager". To the best of the knowledge and belief of the Investment Manager (which has taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. None of Deutsche Bank AG, London Branch, the Trustee and the Issuer accepts responsibility for the accuracy, adequacy, reasonableness or completeness of the information contained therein.

The Collateral Administrator accepts responsibility for the information contained in the section of this Prospectus headed "Description of the Collateral Administrator - General". To the best of the knowledge and belief of the Collateral Administrator (which has taken all reasonable care to ensure

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that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. None of Deutsche Bank AG, London Branch (other than in its capacity as Collateral Administrator), the Trustee and the Issuer accepts responsibility for the accuracy, adequacy, reasonableness or completeness of the information contained therein.

DISCLAIMER

None of the Initial Purchaser, the Trustee, the Investment Manager (save in respect of the section of this Prospectus headed "Description of the Investment Manager"), the Collateral Administrator (save in respect of the section of this Prospectus headed "Description of the Collateral Administrator - General"), any Agent or any other party (including any Secured Hedging Counterparty) has separately verified the information contained in this Prospectus and, accordingly, none of the Initial Purchaser, the Trustee, the Investment Manager (save as specified above), the Collateral Administrator (save as specified above), any Agent or the Issuer (save for the Issuer as specified above in relation to the acceptance of responsibility) or any other party (including any Secured Hedging Counterparty) makes any representation, recommendation or warranty, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information contained in this Prospectus or in any further notice or other document which may at any time be supplied in connection with the VF Notes or the Notes or accepts any responsibility or liability therefor. None of the Initial Purchaser, the Trustee, the Investment Manager, the Collateral Administrator (save as specified above), any Agent or any other party (including any Secured Hedging Counterparty) undertakes to review the financial condition or affairs of the Issuer during the life of the arrangements contemplated by this Prospectus nor to advise any investor or potential investor in the VF Notes or the Notes of any information coming to the attention of any of the aforementioned parties which is not included in this Prospectus.

OFFER/INVITATION/DISTRIBUTION RESTRICTIONS

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF, OR AN INVITATION BY OR ON BEHALF OF THE ISSUER, THE INITIAL PURCHASER OR ANY OF THEIR AFFILIATES, THE INVESTMENT MANAGER, THE COLLATERAL ADMINISTRATOR OR ANY OTHER PERSON TO SUBSCRIBE FOR OR PURCHASE ANY OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES. THE DISTRIBUTION OF THIS PROSPECTUS AND THE OFFERING OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW. PERSONS INTO WHOSE POSSESSION THIS PROSPECTUS COMES ARE REQUIRED BY THE ISSUER AND THE INITIAL PURCHASER TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS. IN PARTICULAR, THE COMMUNICATION CONSTITUTED BY THIS PROSPECTUS IS DIRECTED ONLY AT PERSONS WHO (I) ARE OUTSIDE THE UNITED KINGDOM AND ARE OFFERED AND ACCEPT THIS PROSPECTUS IN COMPLIANCE WITH SUCH RESTRICTIONS OR (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC.) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 OR WHO OTHERWISE FALL WITHIN AN EXEMPTION SET FORTH IN SUCH ORDER SO THAT SECTION 21(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 DOES NOT APPLY TO THE ISSUER (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS COMMUNICATION MUST NOT BE DISTRIBUTED TO, ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS COMMUNICATION RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. FOR A DESCRIPTION OF CERTAIN FURTHER RESTRICTIONS ON OFFERS AND SALES OF DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES AND DISTRIBUTION OF THIS PROSPECTUS, SEE "PLAN OF DISTRIBUTION" AND "TRANSFER RESTRICTIONS" BELOW.

UNAUTHORISED INFORMATION

IN CONNECTION WITH THE ISSUE AND SALE OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES, NO PERSON IS AUTHORISED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORISED BY OR ON BEHALF OF THE ISSUER, THE INITIAL

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PURCHASER, THE TRUSTEE, ANY AGENT, THE INVESTMENT MANAGER OR THE COLLATERAL ADMINISTRATOR. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION CONTAINED IN IT IS CORRECT AS AT ANY TIME SUBSEQUENT TO ITS DATE.

GENERAL NOTICE

FOR A DISCUSSION OF CERTAIN FACTORS REGARDING THE ISSUER AND THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES, SEE "RISK FACTORS".

SEE "TRANSFER RESTRICTIONS" BELOW FOR CERTAIN TERMS AND CONDITIONS OF THE OFFERING OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES HEREUNDER.

IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES AND THE OFFERING THEREOF DESCRIBED HEREIN, INCLUDING THE MERITS AND RISKS INVOLVED.

EACH PURCHASER OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES MUST COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN EACH JURISDICTION AT ANY TIME IN WHICH IT PURCHASES, OFFERS OR SELLS SUCH DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OR POSSESSES OR DISTRIBUTES THIS PROSPECTUS AND MUST OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED FOR THE PURCHASE, OFFER OR SALE BY IT OF SUCH DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES UNDER THE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTIONS TO WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH PURCHASES, OFFERS OR SALES, AND NONE OF THE ISSUER, THE INITIAL PURCHASER (OR ANY OF THEIR AFFILIATES), THE INVESTMENT MANAGER, THE TRUSTEE OR THE COLLATERAL ADMINISTRATOR SPECIFIED HEREIN SHALL HAVE ANY RESPONSIBILITY THEREFOR.

THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER APPLICABLE SECURITIES LAWS (INCLUDING UNITED STATES FEDERAL AND STATE SECURITIES LAWS). INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, EACH OFFEREE (AND EACH EMPLOYEE, REPRESENTATIVE, OR OTHER AGENT OF SUCH OFFEREE) MAY DISCLOSE TO ANY AND ALL OTHER PERSONS, WITHOUT LIMITATION OF ANY KIND, THE TAX TREATMENT AND TAX STRUCTURE OF THE TRANSACTIONS DESCRIBED HEREIN (INCLUDING THE OWNERSHIP AND DISPOSITION OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES) AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX ANALYSES) THAT ARE PROVIDED TO THE OFFEREE RELATING TO SUCH TAX TREATMENT AND TAX STRUCTURE. HOWEVER, ANY SUCH DISCLOSURE OF THE TAX TREATMENT, TAX STRUCTURE AND OTHER TAX-RELATED MATERIALS SHALL NOT BE MADE FOR THE PURPOSE OF OFFERING TO SELL THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OFFERED HEREBY OR SOLICITING AN OFFER TO PURCHASE ANY SUCH DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES AND IF SUCH INFORMATION IS REQUIRED TO BE KEPT CONFIDENTIAL TO THE EXTENT REASONABLY NECESSARY TO COMPLY WITH APPLICABLE SECURITIES LAWS. FOR PURPOSES OF THIS PARAGRAPH, THE TERMS "TAX TREATMENT" AND "TAX STRUCTURE" HAVE THE MEANING GIVEN TO SUCH TERMS UNDER UNITED STATES TREASURY REGULATION SECTION 1.6011-4(c) AND APPLICABLE U.S. STATE AND LOCAL LAW. IN GENERAL, THE TAX TREATMENT OF A TRANSACTION IS THE PURPORTED OR CLAIMED U.S. TAX TREATMENT OF THE TRANSACTION, AND THE TAX STRUCTURE OF A TRANSACTION IS ANY FACT THAT

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MAY BE RELEVANT TO UNDERSTANDING THE PURPORTED OR CLAIMED U.S. TAX TREATMENT OF THE TRANSACTION.

INFORMATION AS TO PLACEMENT WITHIN THE UNITED STATES

THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ARE TO BE PURCHASED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED BY AN INVESTOR DIRECTLY OR INDIRECTLY WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OF U.S. PERSONS (AS DEFINED IN REGULATION S) EXCEPT PURSUANT TO OR IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. FOR CERTAIN RESTRICTIONS ON RESALE, SEE "FORM OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES" AND "TRANSFER RESTRICTIONS". A TRANSFER OF DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IS SUBJECT TO THE RESTRICTIONS DESCRIBED HEREIN, INCLUDING THAT NO SALE, PLEDGE, TRANSFER OR EXCHANGE MAY BE MADE OF ANY DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES (1) EXCEPT AS PERMITTED UNDER (A) THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION AS DESCRIBED HEREIN, (B) APPLICABLE STATE SECURITIES LAWS AND (C) APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION, (2) EXCEPT IN COMPLIANCE WITH THE CERTIFICATION AND OTHER REQUIREMENTS SET FORTH IN THE TRUST DEED AND THE ISSUER CHARTER, RESPECTIVELY AND (3) IN A DENOMINATION LESS THAN THE AUTHORISED DENOMINATION. THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ARE SUBJECT TO FURTHER RESTRICTIONS ON TRANSFER. SEE "TRANSFER RESTRICTIONS".

THE ISSUER HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT COMPANY ACT"), BY REASON OF THE EXEMPTION FROM REGISTRATION CONTAINED IN SECTION 3(c)(7) THEREOF. NO TRANSFER OF DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES WHICH WOULD HAVE THE EFFECT OF REQUIRING THE ISSUER TO REGISTER AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT WILL BE PERMITTED.

THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH, OR APPROVED BY, ANY UNITED STATES FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES CANNOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. FOR A DESCRIPTION OF CERTAIN RESTRICTIONS ON RESALE AND TRANSFER, SEE "PLAN OF DISTRIBUTION" AND "TRANSFER RESTRICTIONS".

EACH PURCHASER OF DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES FROM THE INITIAL PURCHASER SOLD OUTSIDE THE UNITED STATES IN RELIANCE ON REGULATION S WILL BE DEEMED TO REPRESENT THAT IT (I) IS NOT A U.S. PERSON, (II) IS AWARE THAT THE SALE TO IT IS BEING MADE IN RELIANCE ON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY REGULATION S THEREUNDER, (III) IS ACQUIRING SUCH DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH IT EXERCISES SOLE INVESTMENT DISCRETION, NONE OF WHICH IS A U.S. PERSON, AND (IV) IS NOT PURCHASING SUCH DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES WITH A VIEW TO THE RESALE,

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DISTRIBUTION OR OTHER DISPOSITION THEREOF IN THE UNITED STATES OR TO A U.S. PERSON.

NEITHER THE ISSUER NOR THE PORTFOLIO HAS BEEN REGISTERED AS AN "INVESTMENT COMPANY" UNDER THE INVESTMENT COMPANY ACT, IN RELIANCE ON THE EXCLUSION CONTAINED IN SECTION 3(C)(7) THEREOF. NO TRANSFER OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES THAT WOULD HAVE THE EFFECT OF REQUIRING THE ISSUER OR THE PORTFOLIO TO REGISTER AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT WILL BE PERMITTED.

THIS PROSPECTUS HAS BEEN PREPARED BY THE ISSUER SOLELY FOR USE IN CONNECTION WITH THE OFFERING OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES DESCRIBED HEREIN (THE "OFFERING") AND THE ADMISSION TO TRADING OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ON THE REGULATED MARKET OF THE IRISH STOCK EXCHANGE. EACH OF THE ISSUER AND THE INITIAL PURCHASER RESERVES THE RIGHT TO REJECT ANY OFFER TO PURCHASE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IN WHOLE OR IN PART FOR ANY REASON, OR TO SELL LESS THAN THE STATED INITIAL PRINCIPAL AMOUNT OF ANY DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OFFERED HEREBY. THIS SUPPLEMENTAL OFFERING CIRCULAR IS PERSONAL TO EACH OFFEREE TO WHOM IT HAS BEEN DELIVERED BY THE ISSUER, THE INITIAL PURCHASER OR ANY AFFILIATE THEREOF AND DOES NOT CONSTITUTE AN OFFER TO ANY OTHER PERSON OR TO THE PUBLIC GENERALLY TO SUBSCRIBE FOR OR OTHERWISE ACQUIRE THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES. DISTRIBUTION OF THIS SUPPLEMENTAL OFFERING CIRCULAR TO ANY PERSONS OTHER THAN THE OFFEREE AND THOSE PERSONS, IF ANY, RETAINED TO ADVISE SUCH OFFEREE WITH RESPECT THERETO IS UNAUTHORISED AND ANY DISCLOSURE OF ANY OF ITS CONTENTS, WITHOUT THE PRIOR WRITTEN CONSENT OF THE ISSUER, IS PROHIBITED.

GENERAL NOTICE TO RESIDENTS OF THE EU AND EEA

IN RELATION TO EACH MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHICH HAS IMPLEMENTED THE PROSPECTUS DIRECTIVE (EACH, A "RELEVANT MEMBER STATE"), THE INITIAL PURCHASER HAS REPRESENTED AND AGREED THAT WITH EFFECT FROM AND INCLUDING THE DATE ON WHICH THE PROSPECTUS DIRECTIVE IS IMPLEMENTED IN THAT RELEVANT MEMBER STATE (THE "RELEVANT IMPLEMENTATION DATE") IT HAS NOT MADE AND WILL NOT MAKE AN OFFER OF DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED BY THIS PROSPECTUS TO THE PUBLIC IN THAT RELEVANT MEMBER STATE OTHER THAN: (A) AT ANY TIME TO LEGAL ENTITIES WHICH ARE AUTHORISED OR REGULATED TO OPERATE IN THE FINANCIAL MARKETS OR, IF NOT SO AUTHORISED OR REGULATED, WHOSE CORPORATE PURPOSE IS SOLELY TO INVEST IN SECURITIES, (B) AT ANY TIME TO ANY LEGAL ENTITY WHICH HAS TWO OR MORE OF (1) AN AVERAGE OF AT LEAST 250 EMPLOYEES DURING THE LAST FINANCIAL YEAR, (2) A TOTAL BALANCE SHEET OF MORE THAN €43,000,000 AND (3) AN ANNUAL NET TURNOVER OF MORE THAN €50,000,000, AS SHOWN IN ITS LAST ANNUAL OR CONSOLIDATED ACCOUNTS, (C) TO FEWER THAN 100 NATURAL OR LEGAL PERSONS (OTHER THAN QUALIFIED INVESTORS AS DEFINED IN THE PROSPECTUS DIRECTIVE) SUBJECT TO OBTAINING THE PRIOR CONSENT OF THE INITIAL PURCHASER, OR (D) AT ANY TIME IN ANY OTHER CIRCUMSTANCES WHICH DO NOT REQUIRE THE PUBLICATION BY THE ISSUER OF A PROSPECTUS PURSUANT TO ARTICLE 3 (2) OF THE PROSPECTUS DIRECTIVE. FOR THESE PURPOSES, THE EXPRESSION AN "OFFER OF DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES TO THE PUBLIC" IN RELATION TO ANY DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IN ANY RELEVANT MEMBER STATE MEANS THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER AND THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE OR SUBSCRIBE FOR THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES THE SAME MAY BE VARIED IN THAT

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MEMBER STATE BY ANY MEASURE IMPLEMENTING THE PROSPECTUS DIRECTIVE IN THAT MEMBER STATE AND THE EXPRESSION "PROSPECTUS DIRECTIVE" MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING MEASURE IN EACH RELEVANT MEMBER STATE.

NOTICE TO RESIDENTS OF GERMANY

THE INITIAL PURCHASER HAS AGREED TO COMPLY WITH THE FOLLOWING SELLING RESTRICTIONS APPLICABLE TO THE FEDERAL REPUBLIC OF GERMANY.

PURSUANT TO THE SUBSCRIPTION AGREEMENT, THE INITIAL PURCHASER HAS AGREED THAT IT SHALL NOT OFFER OR SELL THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IN THE FEDERAL REPUBLIC OF GERMANY OTHER THAN IN COMPLIANCE WITH THE RESTRICTIONS CONTAINED IN THE GERMAN SECURITIES PROSPECTUS ACT (WERTPAPIERPROSPEKTGESETZ) AND THE GERMAN INVESTMENT ACT (INVESTMENTGESETZ), RESPECTIVELY, AND ANY OTHER LAWS AND REGULATIONS APPLICABLE IN THE FEDERAL REPUBLIC OF GERMANY GOVERNING THE ISSUE, THE OFFERING AND THE SALE OF SECURITIES.

THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES MAY NEITHER BE, NOR BE INTENDED TO BE, DISTRIBUTED BY WAY OF PUBLIC OFFERING, PUBLIC ADVERTISEMENT OR IN A SIMILAR MANNER WITHIN THE MEANING OF THE GERMAN SECURITIES PROSPECTUS ACT AND THE GERMAN INVESTMENT ACT NOR SHALL THE DISTRIBUTION OF THIS PROSPECTUS OR ANY OTHER DOCUMENT RELATING TO THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES CONSTITUTE SUCH PUBLIC OFFER. IN ADDITION, THE INITIAL PURCHASER HAS AGREED THAT IT HAS OFFERED, SOLD OR ADVERTISED AND THAT IT WILL OFFER, SELL OR ADVERTISE THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ONLY TO PERMITTED INSTITUTIONAL INVESTORS ("INSTITUTIONAL INVESTORS") WITHIN THE MEANING OF THE LEAFLET OF THE GERMAN FEDERAL FINANCIAL SUPERVISORY AGENCY (BUNDESANSTALT FÜR FINANZDIENSTLEISTUNGSAUFSICHT - BAFIN) DATED APRIL 2005 IN THE FEDERAL REPUBLIC OF GERMANY AND THIS PROSPECTUS MAY NOT BE PASSED ON TO ANY OTHER PERSON OR ENTITY IN THE FEDERAL REPUBLIC OF GERMANY. FURTHERMORE, EACH SUBSEQUENT TRANSFEREE/PURCHASER OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES WILL BE DEEMED TO REPRESENT THAT IF IT IS A PERSON OR ENTITY IN THE FEDERAL REPUBLIC OF GERMANY IT IS AN INSTITUTIONAL INVESTOR AND TO AGREE NOT TO OFFER, SELL OR ADVERTISE THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES TO ANY PERSON OR ENTITY IN THE FEDERAL REPUBLIC OF GERMANY WHO IS NOT AN INSTITUTIONAL INVESTOR.

THE DISTRIBUTION OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES HAS NOT BEEN NOTIFIED AND THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ARE NOT REGISTERED OR AUTHORISED FOR PUBLIC DISTRIBUTION IN THE FEDERAL REPUBLIC OF GERMANY UNDER THE GERMAN INVESTMENT ACT. THIS PROSPECTUS HAS NOT BEEN FILED OR DEPOSITED WITH THE GERMAN FEDERAL FINANCIAL SUPERVISORY AGENCY.

PROSPECTIVE GERMAN INVESTORS IN THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ARE URGED TO SEEK INDEPENDENT TAX ADVICE AND TO CONSULT THEIR PROFESSIONAL ADVISORS AS TO THE LEGAL AND TAX CONSEQUENCES THAT MAY ARISE FROM THE APPLICATION OF THE GERMAN INVESTMENT TAX ACT TO THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES AND NEITHER THE ISSUER NOR THE INITIAL PURCHASER ACCEPTS ANY RESPONSIBILITY IN RESPECT OF THE GERMAN TAX POSITION OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES.

ANMERKUNG FÜR EINWOHNER VON DEUTSCHLAND

DER ERSTKÄUFER HAT SICH GEMÄß ZEICHNUNGSVERTRAG DAMIT EINVERSTANDEN ERKLÄRT, DASS ER DIE NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E

viii

SCHULDVERSCHREIBUNGEN ODER DIE SCHULDVERSCHREIBUNGEN NUR UNTER BEACHTUNG DER VORSCHRIFTEN DES WERTPAPIERPROSPEKTGESETZES, DES INVESTMENTGESETZES UND ALLER ANDEREN, IN DER BUNDESREPUBLIK DEUTSCHLAND ANWENDBAREN GESETZE UND VERORDNUNGEN ÜBER EMISSION, ANGEBOT UND VERKAUF VON WERTPAPIEREN ANBIETET ODER VERKAUFT.

DIE NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DIE SCHULDVERSCHREIBUNGEN DÜRFEN WEDER TATSÄCHLICH, NOCH DARF BEABSICHTIGT WERDEN, DASS SIE IM WEGE DES ÖFFENTLICHEN ANBIETENS, DER ÖFFENTLICHEN WERBUNG ODER IN ÄHNLICHER WEISE IM SINNE DES WERTPAPIERPROSPEKTGESETZES UND DES INVESTMENTGESETZES VERTRIEBEN WERDEN, NOCH SOLL DIE AUSHÄNDIGUNG DIESES VERKAUFSPROSPEKTES ODER EINES ANDEREN, MIT DEN NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN ODER DEN SCHULDVERSCHREIBUNGEN IN VERBINDUNG STEHENDEN DOKUMENTS EIN SOLCHES ÖFFENTLICHES ANGEBOT BZW. ÖFFENTLICHEN VERTRIEB DARSTELLEN. DER ERSTKÄUFER HAT SICH AUßERDEM DAMIT EINVERSTANDEN ERKLÄRT, DASS ER DIE NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN ODER DIE SCHULDVERSCHREIBUNGEN NUR INSTITUTIONELLEN INVESTOREN ("INSTITUTIONELLE ANLEGER") IM SINNE DES MERKBLATTES DER BUNDESANSTALT FÜR FINANZDIENSTLEISTUNGSAUFSICHT (BAFIN) VOM APRIL 2005 IN DER BUNDESREPUBLIK DEUTSCHLAND ANGEBOTEN, AN DIESE VERKAUFT ODER BEI IHNEN UM DEN KAUF DER NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DER SCHULDVERSCHREIBUNGEN GEWORBEN HAT, BZW. ANBIETEN, AN DIESE VERKAUFEN ODER BEI IHNEN UM DEN KAUF DER NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DER SCHULDVERSCHREIBUNGEN WERBEN WIRD. DIESER VERKAUFSPROSPEKT DARF NICHT AN ANDERE PERSONEN ODER RECHTSPERSONEN IN DER BUNDESREPUBLIK DEUTSCHLAND AUSGEHÄNDIGT WERDEN. DES WEITEREN SICHERT JEDER NACHFOLGENDE ERWERBER ODER KÄUFER DER NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DER SCHULDVERSCHREIBUNGEN, DER EINE PERSON ODER RECHTSPERSON IN DER BUNDESREPUBLIK DEUTSCHLAND IST, ZU, DASS ER EIN INSTITUTIONELLER INVESTOR IST UND ERKLÄRT SICH DAMIT EINVERSTANDEN, DIE NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DIE SCHULDVERSCHREIBUNGEN NUR PERSONEN ODER RECHTSPERSONEN IN DER BUNDESREPUBLIK DEUTSCHLAND ANZUBIETEN, AN DIESE ZU VERKAUFEN ODER BEI IHNEN UM DEN KAUF DER NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DER SCHULDVERSCHREIBUNGEN ZU WERBEN, DIE SOLCHE INSTITUTIONELLEN INVESTOREN SIND.

DER VERTRIEB DER NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DER SCHULDVERSCHREIBUNGEN WURDE NICHT ANGEZEIGT UND DIE NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DIE SCHULDVERSCHREIBUNGEN SIND AUCH NICHT REGISTRIERT ODER ZUM ÖFFENTLICHEN VERTRIEB IN DER BUNDESREPUBLIK DEUTSCHLAND IM SINNE DES INVESTMENTGESETZES ZUGELASSEN. DER VERKAUFSPROSPEKT IST NICHT BEI DER BUNDESANSTALT FÜR FINANZDIENSTLEISTUNGSAUFSICHT EINGEREICHT ODER HINTERLEGT WORDEN.

POTENTIELLEN DEUTSCHEN INVESTOREN WIRD DRINGEND EMPFOHLEN, UNABHÄNGIGEN STEUERRAT EINZUHOLEN UND IHRE BERATER ZU DEN RECHTLICHEN UND STEUERLICHEN FOLGEN ZU BEFRAGEN, DIE SICH AUS EINER ANWENDUNG DES DEUTSCHEN INVESTMENTSTEUERGESETZES AUF DIE NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DIE SCHULDVERSCHREIBUNGEN ERGEBEN KÖNNTEN. WEDER DER EMITTENT (NOCH DER ERSTKÄUFER) ÜBERNIMMT IRGENDEINE HAFTUNG HINSICHTLICH DER DEUTSCHEN STEUERLICHEN BEHANDLUNG DER NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DER SCHULDVERSCHREIBUNGEN.

ix

UNITED KINGDOM

EACH PURCHASER OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES (I) IS A PERSON WHOSE ORDINARY ACTIVITIES INVOLVE IT IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF ITS BUSINESS AND (II) HAS NOT OFFERED OR SOLD AND WILL NOT OFFER OR SELL THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OTHER THAN TO PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESSES OR WHO IT IS REASONABLE TO EXPECT WILL ACQUIRE, HOLD, MANAGE OR DISPOSE OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESSES WHERE THE ISSUE OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES WOULD OTHERWISE CONSTITUTE A CONTRAVENTION OF SECTION 19 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (THE "FSMA") BY THE ISSUER.

ANY INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FSMA) IN CONNECTION WITH THE ISSUE OR SALE OF ANY DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES MAY ONLY BE COMMUNICATED OR CAUSED TO BE COMMUNICATED IN CIRCUMSTANCES IN WHICH SECTION 21(1) OF THE FSMA DOES NOT APPLY TO THE ISSUER.

EACH PURCHASER OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES MUST COMPLY WITH ALL APPLICABLE PROVISIONS OF THE FSMA WITH RESPECT TO ANYTHING DONE BY IT IN RELATION TO THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IN, FROM, OR OTHERWISE INVOLVING THE UNITED KINGDOM.

NOTICE TO RESIDENTS OF IRELAND

THE INITIAL PURCHASER HAS REPRESENTED, WARRANTED AND AGREED THAT:

(a) IT WILL NOT UNDERWRITE THE ISSUE OF, OR PLACE THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES, OTHERWISE THAN IN CONFORMITY WITH THE PROVISIONS OF THE IRISH EUROPEAN COMMUNITIES (MARKETS IN FINANCIAL INSTRUMENTS) REGULATIONS 2007 ("MIFID REGULATIONS"), INCLUDING, WITHOUT LIMITATION, REGULATIONS 7 AND 152 THEREOF AND ANY CODES OF CONDUCT USED IN CONNECTION THEREWITH AND THE PROVISIONS OF THE INVESTOR COMPENSATION ACT 1998 (TO THE EXTENT APPLICABLE);

(b) IT WILL NOT UNDERWRITE THE ISSUE OF, OR PLACE, THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES, OTHERWISE THAN IN CONFORMITY WITH THE PROVISIONS OF THE IRISH CENTRAL BANK ACTS 1942 TO 2010 (AS AMENDED) AND ANY CODES OF CONDUCT RULES MADE UNDER SECTION 117(1) OF THE CENTRAL BANK ACT 1989;

(c) IT WILL NOT UNDERWRITE THE ISSUE OF, OR PLACE, OR DO ANYTHING IN IRELAND IN RESPECT OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OTHERWISE THAN IN CONFORMITY WITH THE PROVISIONS OF THE IRISH PROSPECTUS (DIRECTIVE 2003/71/EC) REGULATIONS 2005 AND ANY RULES ISSUED UNDER SECTION 51 OF THE IRISH INVESTMENT FUNDS, COMPANIES AND MISCELLANEOUS PROVISIONS ACT 2005, BY THE CENTRAL BANK OF IRELAND; AND

(d) IT WILL NOT UNDERWRITE THE ISSUE OF, PLACE OR OTHERWISE ACT IN IRELAND IN RESPECT OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES, OTHERWISE THAN IN CONFORMITY WITH THE PROVISIONS OF THE IRISH MARKET ABUSE (DIRECTIVE 2003/6/EC) REGULATIONS 2005 AND ANY RULES ISSUED UNDER SECTION 34 OF THE IRISH INVESTMENT FUNDS, COMPANIES AND MISCELLANEOUS PROVISIONS ACT 2005 BY THE CENTRAL BANK OF IRELAND.

x

THIS PROSPECTUS AND THE INFORMATION CONTAINED HEREIN IS FOR THE USE SOLELY OF THE PERSON TO WHOM IT IS ADDRESSED. ACCORDINGLY, IT MAY NOT BE REPRODUCED IN WHOLE OR IN PART, NOR MAY ITS CONTENTS BE DISTRIBUTED IN WRITING OR ORALLY TO ANY THIRD PARTY AND IT MAY BE READ SOLELY BY THE PERSON TO WHOM IT IS ADDRESSED AND HIS/HER PROFESSIONAL ADVISERS.

NOTICE TO RESIDENTS OF DENMARK

THIS PROSPECTUS HAS NOT BEEN AND WILL NOT BE FILED WITH OR APPROVED BY THE DANISH FINANCIAL SUPERVISORY AUTHORITY OR ANY OTHER REGULATORY AUTHORITY IN THE KINGDOM OF DENMARK. THE INITIAL PURCHASER HAS REPRESENTED AND AGREED THAT THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES HAVE NOT BEEN OFFERED OR SOLD AND MAY NOT BE OFFERED, SOLD OR DELIVERED DIRECTLY OR INDIRECTLY IN DENMARK, UNLESS IN COMPLIANCE WITH CHAPTERS 6 OR 12 OF THE DANISH ACT ON TRADING IN SECURITIES AND EXECUTIVE ORDERS ISSUED PURSUANT THERETO AS AMENDED FROM TIME TO TIME. ACCORDINGLY, THIS SUPPLEMENTAL OFFERING CIRCULAR MAY NOT BE MADE AVAILABLE NOR MAY INTERESTS IN THE ISSUER OTHERWISE BE MARKETED AND OFFERED FOR SALE IN DENMARK OTHER THAN IN CIRCUMSTANCES WHICH ARE DEEMED NOT TO BE A MARKETING OR AN OFFER TO THE PUBLIC IN DENMARK.

NOTICE TO RESIDENTS OF AUSTRALIA

NO OFFERING CIRCULAR, DISCLOSURE DOCUMENT, OFFERING MATERIAL OR ADVERTISEMENT IN RELATION TO THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES HAS BEEN LODGED WITH THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION OR THE AUSTRALIAN STOCK EXCHANGE LIMITED. ACCORDINGLY, A PERSON MAY NOT (A) MAKE, OFFER OR INVITE APPLICATIONS FOR THE ISSUE, SALE OR PURCHASE OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES WITHIN, TO OR FROM AUSTRALIA (INCLUDING AN OFFER OR INVITATION WHICH IS RECEIVED BY A PERSON IN AUSTRALIA) OR (B) DISTRIBUTE OR PUBLISH THIS PROSPECTUS OR ANY OTHER OFFERING CIRCULAR, DISCLOSURE DOCUMENT, OFFERING MATERIAL OR ADVERTISEMENT RELATING TO THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IN AUSTRALIA, UNLESS (I) THE MINIMUM AGGREGATE CONSIDERATION PAYABLE BY EACH OFFEREE IS THE U.S. DOLLAR EQUIVALENT OF AT LEAST AUD500,000 (DISREGARDING MONEYS LENT BY THE OFFEROR OR ITS ASSOCIATES) OR THE OFFER OTHERWISE DOES NOT REQUIRE DISCLOSURE TO INVESTORS IN ACCORDANCE WITH PART 6D.2 OF THE CORPORATIONS ACT 2001 (CWITH) OF AUSTRALIA AND (II) SUCH ACTION COMPLIES WITH ALL APPLICABLE LAWS AND REGULATIONS.

NOTICE TO RESIDENTS OF SWEDEN

THIS PROSPECTUS IS FOR THE RECIPIENT ONLY AND MAY NOT IN ANY WAY BE FORWARDED TO ANY OTHER PERSON OR TO THE PUBLIC IN SWEDEN. IT HAS NOT AND WILL NOT BE REGISTERED WITH THE SWEDISH FINANCIAL SUPERVISORY AUTHORITY PURSUANT TO THE SWEDISH FINANCIAL INSTRUMENTS TRADING ACT (1991:980, AS AMENDED). ACCORDINGLY, THIS PROSPECTUS MAY NOT BE MADE AVAILABLE, NOR MAY THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OTHERWISE BE MARKETED AND OFFERED IN SWEDEN, OTHER THAN IN CIRCUMSTANCES WHICH ARE DEEMED NOT TO BE AN OFFER TO THE PUBLIC IN SWEDEN UNDER THE FINANCIAL INSTRUMENTS TRADING ACT.

CURRENCIES

In this document, unless otherwise specified or the context otherwise requires, all references to "EUR", "Euro" and "€" are to the single currency introduced in January 1999 pursuant to the Treaty establishing the European Community as amended, and references to "U.S. Dollars" and "U.S.$" are to the lawful currency of the United States.

xi

The language of this Prospectus is English. Any foreign language text that is included with or within this document has been included for convenience purposes only and does not form part of this Prospectus.

STABILISATION

In connection with this issue, Deutsche Bank AG, London Branch (the "Stabilising Manager") (or persons acting on behalf of the Stabilising Manager) may over-allot December 2010 Issuance Class E Subordinated Notes (provided that the aggregate principal amount of December 2010 Issuance Class E Subordinated Notes allotted does not exceed 105 per cent. of the aggregate principal amount of the December 2010 Issuance Class E Subordinated Notes) or effect transactions with a view to supporting the market price of the December 2010 Issuance Class E Subordinated Notes at a level higher than that which might otherwise prevail. However, there is no obligation on the Stabilising Manager (or any person acting on behalf of the Stabilising Manager) to do this. Any stabilisation action may begin on or after the December 2010 Closing Date and, if begun may be ended at any time, but it must end no later than the earlier of 30 days after the December 2010 Closing Date and 60 days after the date of the allotment of the December 2010 Issuance Class E Subordinated Notes. Such stabilising shall be in compliance with all applicable laws, regulations and rules. For a description of these activities, see "Plan of Distribution".

xii

TABLE OF CONTENTS

Page

OVERVIEW.............................................................................................................................................. 1 RISK FACTORS..................................................................................................................................... 28 TERMS AND CONDITIONS................................................................................................................. 66 DESCRIPTION OF THE PORTFOLIO AND MARKET VALUATION METHODOLOGY............ 146 MARKET VALUATION MANUAL ................................................................................................... 150 USE OF PROCEEDS............................................................................................................................ 227 FORM OF THE VF NOTES AND THE NOTES................................................................................. 228 BOOK ENTRY CLEARANCE PROCEDURES.................................................................................. 231 RATINGS OF THE NOTES ................................................................................................................. 234 DESCRIPTION OF THE ISSUER........................................................................................................ 235 DESCRIPTION OF THE INVESTMENT MANAGER....................................................................... 237 DESCRIPTION OF THE COLLATERAL ADMINISTRATOR ......................................................... 241 DESCRIPTION OF THE ACCOUNTS................................................................................................ 242 DESCRIPTION OF THE INVESTMENT MANAGEMENT AGREEMENT..................................... 243 DESCRIPTION OF THE TERMS AND CONDITIONS OF THE VF-1 NOTES ............................... 250 DESCRIPTION OF THE SECURITY AND INTERCREDITOR DEED ............................................ 257 DESCRIPTION OF THE TRUST DEED NOTE ISSUANCE PROCEDURE..................................... 267 DESCRIPTION OF THE REPORTS.................................................................................................... 269 HEDGING ARRANGEMENTS ........................................................................................................... 271 TAX CONSIDERATIONS ................................................................................................................... 272 ERISA CONSIDERATIONS................................................................................................................ 284 PLAN OF DISTRIBUTION.................................................................................................................. 288 TRANSFER RESTRICTIONS.............................................................................................................. 292 GENERAL INFORMATION................................................................................................................ 296

1

OVERVIEW

The following overview ("Overview") does not purport to be complete and is qualified in its entirety by reference to the detailed information appearing elsewhere in this Prospectus and related documents referred to herein. Capitalised terms not specifically defined in this Overview have the meanings set out in Condition 1 (Definitions) of the section of this Prospectus headed "Terms and Conditions" or the "Market Valuation Manual" included herein or are defined elsewhere in this Prospectus. References to a "Condition" are to the specified Condition in the section of this Prospectus headed "Terms and Conditions" below. For a discussion of certain risk factors to be considered in connection with an investment in the December 2010 Issuance Class E Subordinated Notes, see the section of this Prospectus headed "Risk Factors". The terms of External Permitted Debt will be set out in the External Permitted Debt Document relating thereto.

Issuer Avoca Credit Opportunities PLC, a public company incorporated with limited liability under the laws of Ireland with a registered number of 424581.

The issued share capital of the Issuer is directly or indirectly owned by Deutsche International Finance (Ireland) Limited which holds such share capital on trust for certain charitable purposes. The Issuer will not have any assets other than (i) the assets that comprise the Collateral from time to time, (ii) its rights to the Issuer Irish Account and under the Corporate Administration Agreement and (iii) its rights as a parent in respect of any Hedging SPEs. The rights and assets of the Issuer (excluding its rights under the Corporate Administration Agreement or to the Issuer Irish Account) will be charged or assigned by way of security to the Trustee as security for the Issuer's obligations under the Notes and to its other Secured Creditors (see the section of this Overview headed "Security for the Notes" below).

Investment Manager Avoca Capital Holdings

VF-1 Notes and Notes:

Notes Principal Amount

Stated Interest Rate

Closing Date Initial S&P Rating1 of at least:

Initial Moody's Rating1 of at least:

Reduced Moody's Rating1,8:

Stated Maturity

Initial Offer Price2

VF-1 €200,000,000 Rate + 0.36%4 2 August 2007 "AAA" "Aaa" "A3" 10 September 2014

100%

Class A-1 €70,000,000 3m EUR + 0.30%5

2 August 2007 "AAA" "Aaa" "A3" 10 September 2014

100%

Class B-17 €8,750,000 3m EUR + 0.55%5

2 August 2007 "AA" "Aa2" n/a 10 September 2014

100%

Class C-17 €8,750,000 3m EUR + 0.80%5

2 August 2007 "A" "A2" "B3" 10 September 2014

100%

Class D-17 €4,500,000 3m EUR + 1.85%5

2 August 2007 "BBB" "Baa2" "Caa1" 10 September 2014

100%

Class I-17 €30,000,000 20.5%5 11 November 2008

- - 10 September 2014

100%

Class E-1 €30,500,000 -6 2 August 2007 - - 10 September 2086

100%


100%

2

Notes Principal Amount

Stated Interest Rate

Closing Date Initial S&P Rating1 of at least:

Initial Moody's Rating1 of at least:

Reduced Moody's Rating1,8:

Stated Maturity

Initial Offer Price2


100%

Class E-4 €20,000,000 -6 10 March 2008 - - 10 September 2086

100%

Class E-5 €5,000,000 -6 10 March 2008 - - 10 September 2086

100%

Class E-6 €30,000,000 -6 10 September 2009


100%

Class E-7 €30,000,000 -6 10 December 2009


100%

Class E-8 €20,000,000 -6 10 December 2010


100%

1 The ratings assigned to the VF-1 Notes, Class A-1 Notes, the Class B-1 Notes, the Class C-1 Notes and the Class D-1

Notes address the timely payment of interest and the ultimate payment of principal. The Class E-1 Subordinated Notes, the Class E-2 Subordinated Notes, the Class E-3 Subordinated Notes, the Class E-4 Subordinated Notes, the Class E-5 Subordinated Notes, the Class E-6 Subordinated Notes, the Class E-7 Subordinated Notes and the Class E-8 Subordinated Notes are not rated. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the applicable Rating Agency.

2 The Initial Purchaser may offer the VF-1 Notes and the Specified Notes at other prices as may be negotiated at the time of sale.

3 The Issuer issued the VF-1 Notes to the Initial Purchaser on or about the Initial Closing Date and the principal amount shown here represents the Total VF-1 Commitments as defined in the section of this Prospectus headed "Description of the Terms and Conditions of the VF-1 Notes". Following the transfer of the VF-1 Notes to an Eligible Transferee, the Issuer may serve an Increase Request in respect of the VF-1 Notes.

4 The rate applicable to the VF-1 Notes shall be either an Interbank Rate or a Cost of Funds Rate, each as defined in the section of this Prospectus headed "Description of the Terms and Conditions of the VF-1 Notes".

5 Adjusted for the first Interest Period in accordance with Condition 6(c) (Rate of Interest).

6 No interest is payable but the Noteholders may receive payments of Class E Restricted Disbursements on Payment Dates (see Condition 3(d) (Restricted Payments) and Condition 3(c) (Payment of Amounts)).

7 On 4 June 2009 the Issuer repurchased and cancelled €8,750,000 in principal amount of its Initial Issuance Class B Notes, €4,750,000 in principal amount of its Initial Issuance Class C Notes and €2,500,000 in principal amount of its Initial Issuance Class D Notes. On 10 December 2009 the Issuer redeemed €30,000,000 in principal amount of its November 2008 Issuance Class I-1 Intervening Notes.

8 On 13 August 2009, Moody's announced that the ratings assigned to the Rated Notes were reduced as detailed above.

Trustee Deutsche Trustee Company Limited

Registrar, Transfer Agent and Exchange Agent

Deutsche Bank Trust Company Americas

Collateral Administrator Deutsche Bank AG, London Branch

Custodian Deutsche Bank AG, London Branch

Principal Paying Agent Deutsche Bank AG, London Branch

Irish Paying Agent Deutsche International Corporate Services (Ireland) Limited

Initial Purchaser Deutsche Bank AG, London Branch

3

Eligible Purchasers Each Class of the Initial Issuance Notes, the VF-1 Notes and the March 2008 Issuance Class E Subordinated Notes were offered:

(a) outside of the United States to non-U.S. Persons (as defined in Regulation S under the Securities Act) in "offshore transactions" in reliance on Regulation S under the Securities Act; and

(b) to U.S. Persons who are both "qualified institutional buyers" (as defined in Rule 144A under the Securities Act) in reliance on Rule 144A under the Securities Act and Qualified Purchasers for purposes of Section 3(c)(7) of the Investment Company Act.

Each of the November 2008 Issuance Class I-1 Intervening Notes, the September 2009 Issuance Class E Subordinated Notes and the December 2009 Issuance Class E Subordinated Notes were offered and the December 2010 Issuance Class E Subordinated Notes will only be offered, outside the United States to non-U.S. Persons (as defined in Regulation S under the Securities Act) in "offshore transactions" in reliance on regulation S under the Securities Act.

Payment Dates 10 December, 10 March, 10 June and 10 September in each year, commencing (subject to adjustment for non Business Days in accordance with the Conditions) on the following dates:

(a) in respect of each Class of the Initial Issuance Notes and the VF-1 Notes, 10 December 2007;

(b) in respect of each Class of the March 2008 Issuance Class E Subordinated Notes, 10 June 2008;

(c) in respect of the September 2009 Issuance Class E Subordinated Notes, 10 December 2009;

(d) in respect of the December 2009 Issuance Class E Subordinated Notes, 10 March 2010; and

(e) in respect of the December 2010 Issuance Class E Subordinated Notes, 10 March 2011.

Note Interest and Disbursements

Interest in respect of the Notes of each Class (other than the Class E Subordinated Notes) will be payable quarterly in arrear on each Payment Date. Interest in respect of the Class E Subordinated Notes which are Interest Bearing Notes will be payable on each Class E Payment Date at the sole discretion of the Investment Manager and provided certain conditions for payment of the same are met. The Investment Manager (on behalf of the Issuer) shall not be obliged to pay any Interest Payment Amount to Holders of Class E Subordinated Notes which are Interest Bearing Notes on any Class E Payment Date. To the extent that the same are payable, any Class E Restricted Disbursements (see the section of this Overview headed "Restricted Payments" below) will be payable on each Payment Date.

Restricted Payments The only sums available to Class E Subordinated Noteholders (other than the Holders of Class E Subordinated Notes which are Interest Bearing Notes) in the nature of principal or interest

4

prior to the maturity of the Class E Subordinated Notes on or in respect of the Class E Subordinated Notes will be certain Class E Restricted Disbursements which will only be available if certain conditions are satisfied and only then, subject to the Investment Manager's discretion (see Condition 3(c) (Payment of Amounts)). Holders of Class E Subordinated Notes which are Interest Bearing Notes may also, at the Investment Manager's sole discretion and providing certain conditions are met, receive Interest Payment Amounts on each Class E Payment Date (see Condition 20 (Specific Conditions)). The Investment Manager (on behalf of the Issuer) shall not be obliged to pay any Interest Payment Amount to Holders of Class E Subordinated Notes which are Interest Bearing Notes on any Class E Payment Date.

Deferral of Interest While any Class A Note is Outstanding, any interest payable on the Class B Notes that would be payable to Class B Noteholders on a Payment Date but is not paid by reason of the Intercreditor Arrangements shall be added to the Principal Amount Outstanding of the Class B Notes on such date and will thereafter cease to be payable as interest (but will, to the extent permitted by law, bear interest at the applicable Rate of Interest). The addition of interest on the Class B Notes to the Principal Amount Outstanding thereof in lieu of the cash payment of such interest as aforesaid shall be deemed to satisfy the payment of such interest and shall not constitute an Event of Default under the Conditions and shall (i) upon the payment of any principal on the Class B Notes be repaid prior to the repayment of the same, (ii) unless prohibited under the Trust Deed, any External Senior Permitted Debt Document, any External Second Senior Permitted Debt Document or the Intercreditor Arrangements, be repaid as soon as the Issuer (or the Investment Manager on the Issuer's behalf) deems such repayment prudent provided that the Issuer (or the Investment Manager on the Issuer's behalf) shall have delivered a written certificate to the Trustee stating that there will be sufficient funds available to pay all amounts due on the following Payment Date and (iii) not be entitled to the benefit of any make whole premium (see Condition 6(e) (Non Payment of Interest)).

While any Class A Note or any Class B Note is Outstanding, any interest payable on the Class C Notes that would be payable to Class C Noteholders on a Payment Date but is not paid by reason of the Intercreditor Arrangements shall be added to the Principal Amount Outstanding of the Class C Notes on such date and will thereafter cease to be payable as interest (but will, to the extent permitted by law, bear interest at the applicable Rate of Interest). The addition of interest on the Class C Notes to the Principal Amount Outstanding thereof in lieu of the cash payment of such interest as aforesaid shall be deemed to satisfy the payment of such interest and shall not constitute an Event of Default under the Conditions and shall (i) upon the payment of any principal on the Class C Notes be repaid prior to the repayment of the same, (ii) unless prohibited under the Trust Deed, any External Senior Permitted Debt Document, any External Second Senior Permitted Debt Document, any External Third Senior Permitted Debt Document or the Intercreditor Arrangements, be repaid as soon as the Issuer (or the Investment Manager on the Issuer's behalf)

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deems such repayment prudent provided that the Issuer (or the Investment Manager on the Issuer's behalf) shall have delivered a written certificate to the Trustee stating that there will be sufficient funds available to pay all amounts due on the following Payment Date and (iii) not be entitled to the benefit of any make whole premium (see Condition 6(e) (Non Payment of Interest)).

While any Class A Note, Class B Note or Class C Note is Outstanding, any interest payable on the Class D Notes that would be payable to Class D Noteholders on a Payment Date but is not paid by reason of the Intercreditor Arrangements shall be added to the Principal Amount Outstanding of the Class D Notes on such date and will thereafter cease to be payable as interest (but will, to the extent permitted by law, bear interest at the applicable Rate of Interest). The addition of interest on the Class D Notes to the Principal Amount Outstanding thereof in lieu of the cash payment of such interest as aforesaid shall be deemed to satisfy the payment of such interest and shall not constitute an Event of Default under the Conditions and shall (i) upon the payment of any principal on the Class D Notes be repaid prior to the repayment of the same, (ii) unless prohibited under the Trust Deed, any External Senior Permitted Debt Document, any External Second Senior Permitted Debt Document, any External Third Senior Permitted Debt Document, any External Fourth Senior Permitted Debt Document or the Intercreditor Arrangements, be repaid as soon as the Issuer (or the Investment Manager on the Issuer's behalf) deems such repayment prudent provided that the Issuer (or the Investment Manager on the Issuer's behalf) shall have delivered a written certificate to the Trustee stating that there will be sufficient funds available to pay all amounts due on the following Payment Date and (iii) not be entitled to the benefit of any make whole premium (see Condition 6(e) (Non Payment of Interest)).

While any Class A Note, Class B Note, Class C Note or Class D Note is Outstanding, any interest payable on any Intervening Notes that would be payable to Intervening Noteholders on a Payment Date but is not paid by reason of the Intercreditor Arrangements shall be added to the Principal Amount Outstanding of such Intervening Notes on such date and will thereafter cease to be payable as interest (but will, to the extent permitted by law, bear interest at the applicable Rate of Interest). The addition of interest on any Intervening Notes to the Principal Amount Outstanding thereof in lieu of the cash payment of such interest as aforesaid shall be deemed to satisfy the payment of such interest and shall not constitute an Event of Default under the Conditions and shall (i) upon the payment of any principal on such Intervening Notes be repaid prior to the repayment of the same, (ii) unless prohibited under the Trust Deed, any External Senior Permitted Debt Document, any External Second Senior Permitted Debt Document, any External Third Senior Permitted Debt Document, any External Fourth Senior Permitted Debt Document, any Intervening Permitted Debt Document or the Intercreditor Arrangements, be repaid as soon as the Issuer (or the Investment Manager on the Issuer's behalf) deems such repayment prudent provided that the Issuer (or the Investment Manager on the Issuer's behalf) shall have delivered a written certificate to the Trustee

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stating that there will be sufficient funds available to pay all amounts due on the following Payment Date and (iii) not be entitled to the benefit of any make whole premium (see Condition 6(e) (Non Payment of Interest)).

Failure to disburse any interest on Class E Subordinated Notes in accordance with Condition 20 (Specific Conditions) at any time shall not constitute an Event of Default. For the avoidance of doubt, any interest payable on any Class E Subordinated Note which is an Interest Bearing Note that would be payable to a Class E Subordinated Noteholder on a Class E Payment Date but is not paid by reason of the Intercreditor Arrangements or the terms outlined in Condition 20 (Specific Conditions) shall not be added to the Principal Amount Outstanding of such Class E Subordinated Note and shall cease to be payable thereon with effect from such Payment Date (see Condition 6 (Interest)).

Principal Payments on the Notes Principal payments on the Notes may be made in the following circumstances:

(a) on the applicable Maturity Date therefor,

(b) to Electing Class E Subordinated Noteholders in respect of Class E Subordinated Notes (i) on any Optional Redemption Date subject to the Liquidity Limitation Procedure and the Split Redemption Procedure (together with certain other conditions) and (ii) on any Delayed Payment Date,

(c) in relation to the Class E Subordinated Notes, if the Principal Amount Outstanding thereof falls below €25,000,000, subject to the Investment Manager's discretion and certain other conditions

(d) on any Payment Date following the occurrence of a Note Tax Event subject to certain conditions,

(e) following an offer by the Issuer to all the Noteholders of a Class or Classes of Notes to purchase such Class or Classes, subject to certain other conditions;

(f) following a breach of the Over-Collateralisation Tests in the event that the Prepayment Cure Methodology or Projection Cure Methodology is employed to remedy the same;

(g) to the Holders of any Interest Bearing Notes of an Associated Mandatory Redemption Class in the event of a mandatory redemption of the same, and

(h) on any Redemption Date following the exercise by the Issuer (upon the instruction of the Investment Manager) of its right to optionally redeem any Class of Rated Notes in whole or in part, subject to certain conditions as set out in Condition 7(c) (Redemption at the Option of the Issuer).

See Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates) and Condition 7 (Redemption).

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Redemption Prices The Redemption Price of each Class of Rated Notes will be (a) 100 per cent. of the Principal Amount Outstanding of the Notes to be redeemed, plus (b) accrued and unpaid interest thereon to the day of redemption (including any accrued and unpaid deferred interest and, in the case of the Class B Notes, the Class C Notes, the Class D Notes or Intervening Notes, any applicable Blocked Junior Note Interest).

The Redemption Price for each Class E Subordinated Note will be an amount equal to (i) the aggregate proceeds of liquidation of Collateral designated by reference to the Net Asset Value allocable to such Class E Subordinated Note, net of the Investment Manager’s good faith estimate of expenses for legal, accounting and administrative costs associated with redemption or (ii) as applicable, its pro rata share (based on the Net Asset Value allocable to it) of the aggregate proceeds of realisation of the security over the Collateral remaining following application thereof in accordance with the Intercreditor Priority of Payments, which amounts may comprise Class E Restricted Disbursements.

Non-Call Periods (a) In respect of the Rated Notes, the period from and including the Initial Closing Date to, but excluding, the Payment Date falling in September 2010, (b) in respect of the Initial Issuance Class E-1 Subordinated Notes and the Initial Issuance Class E-3 Subordinated Notes, the period from (and including) the Initial Closing Date to (but excluding) the Payment Date falling in September 2010 (in the case of Initial Issuance Class E-3 Subordinated Notes, subject to Condition 20 (Specific Conditions)), (c) in respect of the Initial Issuance Class E-2 Subordinated Notes, the period from (and including) the Initial Closing Date to (but excluding) the Payment Date falling in September 2008, (d) in respect of the March 2008 Issuance Class E-4 Subordinated Notes and the March 2008 Issuance Class E-5 Subordinated Notes, the period from (and including) the March 2008 Closing Date to (but excluding) the Payment Date falling in September 2010, (e) in respect of the November 2008 Issuance Class I-1 Intervening Notes, the period from (and including) the November 2008 Closing Date to (but excluding) the Payment Date falling in December 2009, (f) in respect of the September 2009 Issuance Class E Subordinated Notes, the period from (and including) the September 2009 Closing Date to (but excluding) the Payment Date falling in September 2010, (g) in respect of the December 2009 Issuance Class E Subordinated Notes, the period from (and including) the December 2009 Closing Date to (but excluding) the Payment Date falling in September 2011 and (h) in respect of the December 2010 Issuance Class E Subordinated Notes, the period from (and including) the December 2010 Closing Date to (but excluding) the Payment Date falling in December 2011.

Security for the Notes The Notes (together with the External Permitted Debt) will be secured in favour of the Security Trustee for the benefit of the Secured Creditors (including the External Creditors) by security over the Collateral. The Notes (together with the External Permitted Debt) will also be secured by charges or assignments by way of security over the Issuer's other rights and assets, including its rights under certain of the agreements described herein but excluding its rights in respect of the Issuer Irish Account and the Corporate Administration Agreement

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(see Condition 4 (Security)).

Credit Enhancement The Notes will have the benefit of limited credit enhancement in the form of over-collateralisation provided by the excess of the Market Value of Issuer Investments over the total outstanding amount of Permitted Indebtedness (see the section of this Overview headed "Over-Collateralisation Testing" below). In general, the amount of indebtedness that the Issuer will be able to incur will depend on the types of assets, the credit rating of such assets, the historical volatility in the market value of such assets and the respective obligor and industry concentration levels of such assets comprising Issuer Investments, as determined in accordance with the Market Valuation Manual. In addition, the Class A Notes will have additional credit enhancement in the form of the subordination of the Class B Notes, External Second Senior Permitted Debt, Class C Notes, External Third Senior Permitted Debt, the Class D Notes, External Fourth Senior Permitted Debt, any Intervening Indebtedness and Class E Subordinated Notes while the Class B Notes will have additional credit enhancement in the form of the subordination of the Class C Notes, External Third Senior Permitted Debt, the Class D Notes, External Fourth Senior Permitted Debt, any Intervening Indebtedness and the Class E Subordinated Notes, the Class C Notes will have additional credit enhancement in the form of the subordination of the Class D Notes, External Fourth Senior Permitted Debt, any Intervening Indebtedness and the Class E Subordinated Notes, the Class D Notes will have additional credit enhancement in the form of subordination of any Intervening Indebtedness and the Class E Subordinated Notes, and any Intervening Indebtedness will have additional credit enhancement in the form of the subordination of the Class E Subordinated Notes. There can be no assurance that the subordination mentioned in this paragraph will remain unchanged during the life of the Notes, nor that the credit enhancement in the form of over-collateralisation mentioned above will not be removed in the future following a decline in the Market Value of the Issuer’s investments. (See the section of this Prospectus headed "Risk Factors – Removal of Credit Enhancement").

VF-1 Senior Secured Variable Funding Notes

The Issuer has also funded itself through the issue of variable funding notes (the "VF-1 Notes") in accordance with the Trust Deed and a trust instrument supplemental thereto constituting the VF-1 Notes (the Trust Deed and such supplemental trust instrument being, together, the "VF-1 Instrument"). Pursuant to the VF-1 Instrument, each VF-1 Noteholder committed to advance funds (each such advance, a "COF Advance" or an "Interbank Advance", and each an "Advance"), as set out in the VF-1 Instrument, to the Issuer in Euro or an Optional Currency (as defined in the section of this Prospectus headed "Description of the Terms and Conditions of the VF-1 Notes"), in aggregate principal amount of up to the equivalent of €200,000,000. Each Advance under the VF-1 Notes will be applied by the Issuer (or the Investment Manager on the Issuer's behalf), in the acquisition of Issuer Investments or in order to pay any interest outstanding on the Notes or to pay Class E Restricted Disbursements. The VF-1 Noteholders must also satisfy certain ratings criteria. If any VF-1 Noteholder fails to satisfy the rating requirements set out in the

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VF-1 Instrument or otherwise defaults on its obligation to provide Advances under the VF-1 Instrument, (i) the Issuer may at its option upon at least ten Business Days' notice to the VFN Agent and such VF-1 Noteholder, replace such VF-1 Noteholder or (ii) (in the event of a failure to satisfy the rating requirements) such VF-1 Noteholder may, with the consent of the Issuer, post collateral for the benefit of the Issuer in an amount, in a manner and of a type reasonably acceptable to the Issuer and the Rating Agencies, subject to the VF-1 Noteholders maintaining a short-term S&P issuer credit rating of at least "A-3" or a short-term Moody’s rating of at least "P-3", provided that if such VF-1 Noteholder chooses not to post collateral, paragraph (i) above shall continue to apply. (See the section of this Prospectus headed "Description of the Terms and Conditions of the VF-1 Notes").

External Permitted Debt Pursuant to the Security Documents and Intercreditor Arrangements, the Issuer may, in addition to the VF-1 Notes, from time to time enter into new arrangements for the incurrence of other External Permitted Debt, secured on the Collateral (see the section of this Prospectus headed "Description of the Security and Intercreditor Deed" below). In the event that it does so, the Issuer, acting through the Listing Agent, will procure that details of the same are provided to the Irish Stock Exchange in such manner as the Irish Stock Exchange deems fit.

Types and Ranks of Indebtedness

Under the Transaction Documents the Issuer may, subject to the restrictions and conditions contained therein, incur Permitted Indebtedness with effect from the Initial Closing Date. Permitted Indebtedness may comprise Senior Indebtedness, Second Senior Indebtedness, Third Senior Indebtedness, Fourth Senior Indebtedness, Intervening Indebtedness and Subordinated Indebtedness. Each such level of Permitted Indebtedness may comprise both debt issued in the form of Notes and debt advanced by External Creditors, as follows: (i) Senior Indebtedness may comprise Class A Notes (as defined in the Conditions) and External Senior Permitted Debt, (ii) Second Senior Indebtedness may comprise Class B Notes (as defined in the Conditions) and External Second Senior Permitted Debt, (iii) Third Senior Indebtedness may comprise Class C Notes (as defined in the Conditions) and External Third Senior Permitted Debt, (iv) Fourth Senior Indebtedness may comprise Class D Notes (as defined in the Conditions) and External Fourth Senior Permitted Debt, (v) Intervening Indebtedness may comprise Intervening Notes and Intervening Indebtedness advanced by an External Creditor and (vi) Subordinated Indebtedness may comprise Class E Subordinated Notes and Subordinated Indebtedness advanced by an External Creditor. All such Permitted Indebtedness will be subject to the terms of and, after the Initial Closing Date, may only be issued in accordance with, the Security and Intercreditor Deed. The Permitted Indebtedness which the Issuer intends to issue and enter into on the Initial Closing Date will be (x) the VF-1 Notes and (y) the Class A-1 Notes, the Class B-1 Notes, the Class C-1 Notes, the Class D-1 Notes and the Class E Subordinated Notes. After the Initial Closing Date the Issuer may incur further Permitted Indebtedness in the form of Notes (see Condition 17 (Further Issues) and the section of this Prospectus headed "Description of the Trust Deed Note

10

Issuance Procedure") and in the form of advances made by External Creditors (see the section of this Prospectus headed "Description of the Security and Intercreditor Deed – Additional Permitted Credit").

Intercreditor Arrangements The Security Documents will contain certain intercreditor arrangements pursuant to which the rights of Noteholders and Holders of other Permitted Indebtedness from time to time will be established. Pursuant to these arrangements the Class A Notes will rank pari passu with, inter alia, any External Senior Permitted Debt and the rights of any Secured Hedging Counterparties in priority to the Class B Notes and any External Second Senior Permitted Debt that will in turn rank pari passu and in priority to the Class C Notes and any External Third Senior Permitted Debt that will in turn rank pari passu and in priority to the Class D Notes and any External Fourth Senior Permitted Debt that will in turn rank pari passu and in priority to any Intervening Indebtedness, which will rank amongst itself in accordance with the Intervening Indebtedness Priority of Payments and will in turn rank in priority to any Subordinated Indebtedness (including the Class E Subordinated Notes) which will also in turn rank pari passu. Upon enforcement of the security created pursuant to the Security Documents the liquidation proceeds will be applied in accordance with the Intercreditor Priority of Payments (see the section of this Prospectus headed "Description of the Security and Intercreditor Deed" below).

Prepayment Amounts Senior Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods) (see the section of this Overview headed "Blockage Periods") if, at any time, any Senior Indebtedness is required to be prepaid, (x) no payment shall be made on account of the principal of, premium (if any) or interest on, or commitment fees (if any) or breakage costs (if any) with respect to, the Class B Notes, External Second Senior Permitted Debt, Class C Notes, External Third Senior Permitted Debt, Class D Notes, External Fourth Senior Permitted Debt or any Intervening Indebtedness and (y) no payment, including in respect of Class E Restricted Disbursements and any Interest Payment Amount in respect of the Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made (see Condition 3(i) (Prepayment Amounts)).

Second Senior Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods) (see the section of this Overview headed "Blockage Periods") if, at any time, any Second Senior Indebtedness is required to be prepaid, (x) no payment shall be made on account of the principal of, premium (if any) or interest on, or commitment fees (if any) or breakage costs (if any) with respect to, the Class C Notes, External Third Senior Permitted Debt, Class D Notes, External Fourth Senior Permitted Debt or any Intervening Indebtedness and (y) no payment, including in respect of Class E Restricted Disbursements and any Interest Payment Amount in respect of the Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made (see

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Condition 3(i) (Prepayment Amounts)).

Third Senior Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods) (see the section of this Overview headed "Blockage Periods") if, at any time, any Third Senior Indebtedness is required to be prepaid, (x) no payment shall be made on account of the principal of, premium (if any) or interest on, or commitment fees (if any) or breakage costs (if any) with respect to, Class D Notes, External Fourth Senior Permitted Debt, any Intervening Indebtedness and (y) no payment, including in respect of Class E Restricted Disbursements and any Interest Payment Amount in respect of the Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made (see Condition 3(i) (Prepayment Amounts)).

Fourth Senior Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods) (see the section of this Overview headed "Blockage Periods") if, at any time, any Fourth Senior Indebtedness is required to be prepaid, (x) no payment shall be made on account of the principal of, premium (if any) or interest on, or commitment fees (if any) or breakage costs (if any) with respect to any Intervening Indebtedness and (y) no payment, including in respect of Class E Restricted Disbursements and any Interest Payment Amount in respect of the Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made (see Condition 3(i) (Prepayment Amounts)).

Intervening Indebtedness Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods) (see the section of this Overview headed "Blockage Periods") if, at any time, any Intervening Indebtedness is required to be prepaid, no payment, including in respect of Class E Restricted Disbursements and Interest Payment Amount in respect of the Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made (see Condition 3(i) (Prepayment Amounts)).

The Portfolio The portfolio of Collateral that the Issuer may acquire from time to time may consist of high yield securities, loans and special opportunity investments such as distressed debt. Other than the certain restrictions on the characteristics that Issuer Investments must have when the Issuer (or Investment Manager on its behalf) enters into a binding commitment to acquire them ("Acquisition Criteria") (see the section of this Prospectus headed "Description of the Portfolio and Market Valuation Methodology – Acquisition Criteria for Issuer Investments"), the Investment Management Agreement does not prescribe specific eligibility criteria with which Issuer Investments must comply, however the Market Valuation Manual includes certain limitations on the concentrations of Issuer Investments that will be taken into account for the purpose of computing compliance with the Over-Collateralisation Tests (see the section of this Overview

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headed "Portfolio Excesses" below).

Issuer Investments For the purpose of the Market Valuation Manual, Issuer Investments may include Cash, Cash Equivalents, Government Securities, Loans, Securities, and Hedging Transactions (each as defined in the Market Valuation Manual).

Ongoing Acquisition and Disposal of Issuer Investments

Pursuant to the Investment Management Agreement and the Trust Deed, the Issuer is at liberty (subject to the Acquisition Criteria) to acquire and dispose of investments constituting Issuer Investments on a rolling basis throughout the life of the VF Notes and the Notes. Whether such Issuer Investments will be taken into account in determining compliance with the Over-Collateralisation Tests established pursuant to the Market Valuation Manual (see the section of this Overview headed "The Market Valuation Manual" below) will depend on the same not comprising Excluded Issuer Investments (see also the section of this Overview headed "Portfolio Excesses" below). In addition, pursuant to the Intercreditor Arrangements (see the section of this Overview headed "Intercreditor Arrangements" above), the Issuer is permitted to enter into borrowing arrangements additional to those provided under the VF Notes. The amount of such additional debt, together with amounts Outstanding under the VF Notes and the Notes at any time is, in addition to the composition of Issuer Investments at any time, factored into the calculations determining compliance or otherwise with the Over-Collateralisation Tests (see definition of "Over-Collateralisation Tests" in the Market Valuation Manual).

The Market Valuation Manual The Issuer's investment strategy is governed by the Over-Collateralisation Tests set out in the Market Valuation Manual. The Over-Collateralisation Tests comprise formulae according to which the Rating Agencies determine the permitted amount of Senior Indebtedness, Second Senior Indebtedness, Third Senior Indebtedness and Fourth Senior Indebtedness based upon the composition of its assets in the form of Issuer Investments at any time. For each level of seniority of such indebtedness, each of the Asset Categories between A-1 and K-2 is allocated a specific Advance Rate (see the matrices referred to in the definition of "Advance Rate" in the Market Valuation Manual). The Advance Rates obtained by application of these matrices in turn determine the applicable S&P Advance Amount and Moody's Advance Amount by reference to which (together with reference to the Market Value of Issuer Investments (see the section of this Overview headed "Ascertaining Market Value and Market Price" below) in the relevant Asset Categories) the Over-Collateralisation Tests are then computed (see definition of "Over-Collateralisation Tests", "Senior Advance Amount", "Second Senior Advance Amount", "Third Senior Advance Amount", "Fourth Senior Advance Amount" and "Market Value" in the Market Valuation Manual). The Market Valuation Manual is included in full in this Prospectus and annexed to each of the Trust Deed and the Investment Management Agreement of which, respectively, it forms a part.

Portfolio Excesses Although certain concentration parameters are contained in the Market Valuation Manual (see definition of "Excess Issuer Investments" in the Market Valuation Manual) they are not strict limitations in themselves but determine which Issuer

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Investments at any time may be taken into consideration when computing compliance with the Over-Collateralisation Tests. Any Issuer Investments which are acquired in such percentages that their concentration exceeds the relevant parameters will be deemed Excess Issuer Investments and excluded from the Over-Collateralisation Tests (see definitions of "Excluded Issuer Investments", "Non Excluded Issuer Investments", "S&P Advance Amount", "Moody's Advance Amount", "Fourth Senior Advance Amount", "Third Senior Advance Amount", "Second Senior Advance Amount", "Senior Advance Amount", "Fourth Senior Over-Collateralisation Test", "Third Senior Over-Collateralisation Test", "Second Senior Over-Collateralisation Test", "Senior Over-Collateralisation Test" and "Over-Collateralisation Tests" in the Market Valuation Manual).

Ascertaining Market Value and Market Price

The Market Valuation Manual provides a mechanism for obtaining the Market Value of Cash, Cash Equivalents, Unquoted Investments and other Issuer Investments. The Market Value of certain Issuer Investments is calculated by reference to the Market Value Price of the same. The Market Value Price is the bid price for each Issuer Investment at such date obtained from an Approved Source (as defined in the Market Valuation Manual), namely any of (a) the lower of two, or the average of three, prices quoted by Approved Dealers or Approved Investment Banking Firms, (b) in the case of an Approved Exchange, the closing price on such Approved Exchange (or if such Approved Exchange is closed for business at such date, then the most recent available closing price) or (c) the price obtained from an Approved Pricing Service (see definition of "Market Value" and "Market Value Price" in the Market Valuation Manual).

The principal purpose of ascertaining the relevant Market Value of Issuer Investments is to employ the same in determining compliance with the Over-Collateralisation Tests.

Over-Collateralisation Testing Pursuant to the Trust Deed and the Security and Intercreditor Deed, the Issuer will procure that the Investment Manager, on behalf of the Issuer, shall, on each Business Day that any Rated Notes remain Outstanding, determine whether the Over-Collateralisation Tests have been satisfied on such Business Day. This supports the Issuer's obligation pursuant to the Market Valuation Manual to (A)(i) calculate (or procure calculation by the Investment Manager of) the Market Value of each Issuer Investment that is not an Unquoted Investment on (x) the Valuation Date for each calendar week and (y) to the extent that a Market Value Price therefor is determined using an Approved Pricing Service, on each Business Day and (ii) to calculate the Market Value of each Issuer Investment that is an Unquoted Investment at least quarterly, or with respect to Unquoted Investments having an aggregate Market Value in excess of four per cent. of Total Capitalisation, at least monthly and (B) on each Business Day on which any Rated Notes or other Over-Collateralisation Test Dependent Indebtedness remain Outstanding, determine whether the Over-Collateralisation Tests have been satisfied by reference to the then most recent Quoted Issuer Investment Valuation and/or the then most recent Unquoted Issuer Investment Valuation (see Condition 5(b) (Over-Collateralisation Testing and

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Reporting)).

The Over-Collateralisation Tests

Compliance with the Over-Collateralisation Tests is an obligation of the Issuer under the Trust Deed. Subject to certain provisos the Over-Collateralisation Tests are satisfied when either: (1)(a) the Senior Advance Amount (as defined in the Market Valuation Manual) is greater than or equal to the Principal Amount Outstanding of Senior Indebtedness, (b) the Second Senior Advance Amount (as defined in the Market Valuation Manual) is greater than or equal to the sum of the Principal Amount Outstanding of Senior Indebtedness and the Principal Amount Outstanding of Second Senior Indebtedness, (c) the Third Senior Advance Amount (as defined in the Market Valuation Manual) is greater than or equal to the sum of the Principal Amount Outstanding of Senior Indebtedness, the Principal Amount Outstanding of Second Senior Indebtedness and the Principal Amount Outstanding of Third Senior Indebtedness (as defined in Condition 1 (Definitions)) and (d) the Fourth Senior Advance Amount (as defined in the Market Valuation Manual) is greater than or equal to the Principal Amount Outstanding of Senior Indebtedness, the Principal Amount Outstanding of Second Senior Indebtedness, the Principal Amount Outstanding of Third Senior Indebtedness and the Principal Amount Outstanding of Fourth Senior Indebtedness (as defined in Condition 1 (Definitions)) or (2) the Issuer has complied with Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates). In the event that the Over-Collateralisation Tests are not satisfied, the Issuer (or the Investment Manager on its behalf) is obliged to employ certain strategies to attempt to ensure compliance within specific timeframes (see Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates)).

Over-Collateralisation Failure and Collateralisation Shortfall Dates

On the occurrence of a failure to comply with the Over-Collateralisation Tests, the Issuer will procure that the Investment Manager, on behalf of the Issuer, shall, not later than the Business Day following the date on which the breach occurred (such day being referred to in the Conditions as a Collateralisation Shortfall Date), furnish the Rating Agencies, the VFN Agent (for furnishing to the VF Noteholders) and the Trustee with a Collateralisation Shortfall Valuation Statement. Upon the occurrence of a Collateralisation Shortfall Date, the Issuer (or the Investment Manager on its behalf) shall, inter alia, also employ either the Prepayment Cure Methodology or the Projection Cure Methodology in order to remedy the breach of the Over-Collateralisation Tests. Pursuant to the Prepayment Cure Methodology, the Issuer, or the Investment Manager on its behalf, is obliged to make prepayments of the Issuer's External Permitted Debt and Outstanding Notes (see Condition 7(f)(i) (Mandatory Redemption upon Over-Collateralisation Failure)) by reference to the seniority of the same up to the level necessary to cure the relevant under collateralisation (see paragraph (i) of Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates)). Pursuant to the Projection Cure Methodology which the Issuer, or the Investment Manager on its behalf, may elect to adopt instead of the Prepayment Cure Methodology, the Issuer (or the Investment Manager on its behalf) is obliged to furnish the Rating Agencies, the VFN Agent (for furnishing to

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the VF Noteholders) and the Trustee with a Projection Cure Statement, within seven Business Days of such Collateralisation Shortfall Date, showing projected compliance with the Over-Collateralisation Tests by the Long Stop Date by means of disposing of certain Issuer Investments and acquiring others in accordance with a specific set of timelines and redeeming External Permitted Debt and Notes with the net proceeds of such disposals and acquisitions and other liquidity available to the Issuer (see paragraph (ii) of Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates). In the event that the application of the Under Collateralisation Cure Methodologies fails to cure an Over-Collateralisation Failure, the Issuer (or the Investment Manager on its behalf) shall make payments in accordance with the Prepayment Cure Methodology in order to cure the resulting Supervening Shortfall by the Long Stop Date. Failure to do so will give rise to an Under Collateralisation Event, which constitutes an Event of Default for the purpose of the Conditions (see Condition 10 (Events of Default)).

Blockage Periods Upon the occurrence of a Senior Payment Default or in the event that the Issuer fails to be in compliance with the Senior Over-Collateralisation Test (before giving effect to any grace period set forth in the applicable Permitted Debt Document), the Issuer and, upon receipt of actual knowledge thereof, the Representative of the Holders of the applicable Senior Indebtedness shall provide written notice (or telephone notice promptly confirmed in writing) thereof to the Custodian, the Security Trustee and the other Representatives (or all Representatives in the case of a notice by the Issuer) and, unless and until such Senior Payment Default shall have been cured or waived or shall have ceased to exist or the Issuer shall have come into compliance with the Senior Over-Collateralisation Test, as the case may be, no payment may be made by the Issuer, or on behalf of the Issuer, on account of the Second Senior Obligations, Third Senior Obligations, Fourth Senior Obligations, Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Second Senior Indebtedness, Third Senior Indebtedness, Fourth Senior Indebtedness, Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase). Any failure of the Issuer or any Representative to furnish such notice, or any defect therein, shall not have any effect on the consequences of such Senior Payment Default or such failure to comply with the Senior Over-Collateralisation Test, in each case as provided in the applicable Senior Permitted Debt Document. (See Condition 3(h)(i) (Blockage Periods).

If a Senior Blockage Trigger Event shall occur and be continuing, the Security Trustee shall, if directed in writing by the Controlling Class to do so, provide a Senior Blockage Notice to the Custodian, the Issuer and each Representative stating that no payment may be made by the Issuer, or on behalf of the Issuer, on account of Second Senior Obligations, Third Senior Obligations, Fourth Senior Obligations, Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Second Senior Indebtedness, Third Senior Indebtedness, Fourth Senior Indebtedness, Intervening Indebtedness or Subordinated

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Indebtedness (including pursuant to an Offer to Purchase) and until the end of the Senior Blockage Period, no such payment shall be made by either the Issuer or the Security Trustee. No more than one Senior Blockage Notice may be given during any period of 365 consecutive days. (See Condition 3(h)(i) (Blockage Periods)).

Upon the occurrence of a Second Senior Payment Default or in the event that the Issuer fails to be in compliance with the Second Senior Over-Collateralisation Test (before giving effect to any grace period set forth in the applicable Permitted Debt Document), the Issuer and, upon receipt of actual knowledge thereof, the Representative of the Holders of the applicable Second Senior Indebtedness shall provide written notice (or telephone notice promptly confirmed in writing) thereof to the Custodian, the Security Trustee and the other Representatives (or all Representatives in the case of a notice by the Issuer) and, unless and until such Second Senior Payment Default shall have been cured or waived or shall have ceased to exist or the Issuer shall have come into compliance with the Second Senior Over-Collateralisation Test, as the case may be, no payment may be made by the Issuer, or on behalf of the Issuer, on account of Third Senior Obligations, Fourth Senior Obligations, Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Third Senior Indebtedness, Fourth Senior Indebtedness, Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase), payments being made only on account of: (x) first interest in the following order of priority: first to the Holders of Senior Indebtedness and second to the Holders of Second Senior Indebtedness and (y) second (i) such amounts of principal as are required to ensure compliance with the Second Senior Over-Collateralisation Test in accordance with the order of priorities set out in Condition 3(i) (Prepayment Amounts) or (ii) the purchase or other acquisition of Senior Indebtedness or, if no Senior Indebtedness is then Outstanding, Second Senior Indebtedness (including pursuant to an Offer to Purchase). Any failure of the Issuer or any Representative to furnish such notice, or any defect therein, shall not have any effect on the consequences of such Second Senior Payment Default or such failure to comply with the Second Senior Over-Collateralisation Test, in each case as provided in the applicable Second Senior Permitted Debt Document. (See Condition 3(h)(ii) (Blockage Periods)).

If a Second Senior Blockage Trigger Event shall occur and be continuing, the Security Trustee shall, if directed in writing by the Controlling Class to do so, provide a Second Senior Blockage Notice to the Custodian, the Issuer and each Representative stating that no payment may be made by the Issuer, or on behalf of the Issuer, on account of Third Senior Obligations, Fourth Senior Obligations, Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Third Senior Indebtedness, Fourth Senior Indebtedness, Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase) and until the end of the Second Senior Blockage Period, no such payment shall be made by either the Issuer or the Security Trustee. No more than one Second Senior

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Blockage Notice may be given during any period of 365 consecutive days. (See Condition 3(h)(ii) (Blockage Periods)).

Upon the occurrence of a Third Senior Payment Default or in the event that the Issuer fails to be in compliance with the Third Senior Over-Collateralisation Test (before giving effect to any grace period set forth in the applicable Permitted Debt Document), the Issuer and, upon receipt of actual knowledge thereof, the Representative of the Holders of the applicable Third Senior Indebtedness shall provide written notice (or telephone notice promptly confirmed in writing) thereof to the Custodian, the Security Trustee and the other Representatives (or all Representatives in the case of a notice by the Issuer) and, unless and until such Third Senior Payment Default shall have been cured or waived or shall have ceased to exist or the Issuer shall have come into compliance with the Third Senior Over-Collateralisation Test, as the case may be, no payment may be made by the Issuer, or on behalf of the Issuer, on account of Fourth Senior Obligations, Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Fourth Senior Indebtedness, Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase), payments being made only on account of: (x) first interest in the following order of priority: first to the Holders of Senior Indebtedness, second to the Holders of Second Senior Indebtedness and, third to the Holders of Third Senior Indebtedness and (y) second (i) such amounts of principal as are required to ensure compliance with the Third Senior Over-Collateralisation Test in accordance with the order of priorities set out in Condition 3(i)(Prepayment Amounts) or (ii) the purchase or other acquisition of Senior Indebtedness or, if no Senior Indebtedness is then Outstanding, Second Senior Indebtedness or, if no Senior Indebtedness or Second Senior Indebtedness is then Outstanding, Third Senior Indebtedness (including pursuant to an Offer to Purchase). Any failure of the Issuer or any Representative to furnish such notice, or any defect therein, shall not have any effect on the consequences of such Third Senior Payment Default or such failure to comply with the Third Senior Over-Collateralisation Test, in each case as provided in the applicable Third Senior Permitted Debt Document. (See Condition 3(h)(iii) (Blockage Periods)).

If a Third Senior Blockage Trigger Event shall occur and be continuing, the Security Trustee shall, if directed in writing by the Controlling Class to do so, provide a Third Senior Blockage Notice to the Custodian, the Issuer and each Representative stating that no payment may be made by the Issuer, or on behalf of the Issuer, on account of Fourth Senior Obligations, Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Fourth Senior Indebtedness, Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase) and until the end of the Third Senior Blockage Period no such payment shall be made by either the Issuer or the Security Trustee. No more than one Third Senior Blockage Notice may be given during any period of 365 consecutive days. (See Condition 3(h)(iii) (Blockage Periods)).

Upon the occurrence of a Fourth Senior Payment Default or in the event that the Issuer fails to be in compliance with the

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Fourth Senior Over-Collateralisation Test (before giving effect to any grace period set forth in the applicable Permitted Debt Document), the Issuer and, upon receipt of actual knowledge thereof, the Representative of the Holders of the applicable Fourth Senior Indebtedness shall provide written notice (or telephone notice promptly confirmed in writing) thereof to the Custodian, the Security Trustee and the other Representatives (or all Representatives in the case of a notice by the Issuer) and, unless and until such Fourth Senior Payment Default shall have been cured or waived or shall have ceased to exist or the Issuer shall have come into compliance with the Fourth Senior Over-Collateralisation Test, as the case may be, no payment may be made by the Issuer, or on behalf of the Issuer, on account of Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase), payments being made only on account of: (x) first interest in the following order of priority: first to the Holders of Senior Indebtedness, second to the Holders of Second Senior Indebtedness, third to the Holders of Third Senior Indebtedness and fourth to the Holders of Fourth Senior Indebtedness and (y) second (i) such amounts of principal as are required to ensure compliance with the Fourth Senior Over-Collateralisation Test in accordance with the order of priorities set out in Condition 3(i) (Prepayment Amounts) or (ii) the purchase or other acquisition of Senior Indebtedness or, if no Senior Indebtedness is then Outstanding, Second Senior Indebtedness or, if no Senior Indebtedness or Second Senior Indebtedness is then Outstanding, Third Senior Indebtedness or, if no Senior Indebtedness, Second Senior Indebtedness or Third Senior Indebtedness is then Outstanding, Fourth Senior Indebtedness (including pursuant to an Offer to Purchase). Any failure of the Issuer or any Representative to furnish such notice, or any defect therein, shall not have any effect on the consequences of such Fourth Senior Payment Default or such failure to comply with the Fourth Senior Over-Collateralisation Test, in each case as provided in the applicable Fourth Senior Permitted Debt Document. (See Condition 3(h)(iv) (Blockage Periods)).

If a Fourth Senior Blockage Trigger Event shall occur and be continuing, the Security Trustee shall, if directed in writing by the Controlling Class to do so, provide a Fourth Senior Blockage Notice to the Custodian, the Issuer and each Representative stating that no payment may be made by the Issuer, or on behalf of the Issuer, on account of Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Fourth Senior Obligations, Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase) and until the end of the Fourth Senior Blockage Period no such payment shall be made by either the Issuer or the Security Trustee. No more than one Fourth Senior Blockage Notice may be given during any period of 365 consecutive days. (See Condition 3(h)(iv) (Blockage Periods)).

Upon the occurrence of an Intervening Payment Default or in the event that the Issuer fails to be in compliance with an over-collateralisation test (if any) relating to Intervening Indebtedness (before giving effect to any grace period set forth

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in the applicable Permitted Debt Document), the Issuer and, upon receipt of actual knowledge thereof, the Representative of the Holders of the applicable Intervening Indebtedness shall provide written notice (or telephone notice promptly confirmed in writing) thereof to the Custodian, the Security Trustee and the other Representatives (or all Representatives in the case of a notice by the Issuer) and, unless and until such Intervening Payment Default shall have been cured or waived or shall have ceased to exist or the Issuer shall have come into compliance with such over-collateralisation test, as the case may be, no payment may be made by the Issuer, or on behalf of the Issuer, on account of Subordinated Obligations or on account of the purchase or other acquisition of Subordinated Indebtedness (including pursuant to an Offer to Purchase) payments being made only on account of: (x) first interest in the following order of priority: first to the Holders of Senior Indebtedness, second to the Holders of Second Senior Indebtedness, third to the Holders of Third Senior Indebtedness, fourth to the Holders of Fourth Senior Indebtedness and fifth to the Holders of Intervening Indebtedness and (y) second (i) such amounts of principal as are required to ensure compliance with the over-collateralisation test (if any) relating to Intervening Indebtedness in accordance with the order of priorities set out in Condition 3(i)(Prepayment Amounts) or (ii) the purchase or other acquisition of Senior Indebtedness or, if no Senior Indebtedness is then Outstanding, Second Senior Indebtedness or, if no Senior Indebtedness or Second Senior Indebtedness is then Outstanding, Third Senior Indebtedness or, if no Senior Indebtedness, Second Senior Indebtedness or Third Senior Indebtedness is then Outstanding, Fourth Senior Indebtedness or, if no Senior Indebtedness, Second Senior Indebtedness, Third Senior Indebtedness or Fourth Senior Indebtedness is then Outstanding, Intervening Indebtedness (including pursuant to an Offer to Purchase). Any failure of the Issuer or any Representative to furnish such notice, or any defect therein, shall not have any effect on the consequences of such Intervening Payment Default or such failure to comply with the over-collateralisation test relating to Intervening Indebtedness (if any), in each case as provided in the applicable Intervening Permitted Debt Document. (See Condition 3(h)(v) (Blockage Periods)).

If an Intervening Blockage Trigger Event shall occur and be continuing, the Security Trustee shall, if directed in writing by the Controlling Class to do so, provide an Intervening Blockage Notice to the Custodian, the Issuer and each Representative stating that no payment may be made by the Issuer, or on behalf of the Issuer, on account of Subordinated Obligations or on account of the purchase or other acquisition of Subordinated Indebtedness (including pursuant to an Offer to Purchase) and until the end of the Intervening Blockage Period, no such payment shall be made by either the Issuer or the Security Trustee. No more than one Intervening Blockage Notice may be given during any period of 365 consecutive days. (See Condition 3(h)(v) (Blockage Periods)).

Investment Manager Pursuant to the Investment Management Agreement, the Investment Manager is required to act on behalf of the Issuer to carry out the duties and functions described herein generally and as more specifically set out in the Investment Management

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Agreement by reference, inter alia, to the Market Valuation Manual, the terms and conditions of the Notes and the Over-Collateralisation Tests. Pursuant to the Investment Management Agreement, the Issuer delegates authority to the Investment Manager to carry out certain functions in relation to the Collateral and the hedging arrangements without the requirement for specific approval by the Issuer, the Collateral Administrator or the Trustee (see the sections of this Prospectus headed "Description of the Investment Management Agreement" and "Description of the Portfolio and Market Valuation Methodology").

Investment Management Fees The fee paid to the Investment Manager pursuant to the Investment Management Agreement will be comprised of a Management Fee and an Incentive Fee which will be calculated and paid as follows.

Management Fee: The Management Fee will be payable in arrear on each Payment Date. It will be pro rated for partial periods and be in an amount of 0.375 per cent. (being, for the avoidance of doubt, equivalent to 1.5 per cent. per annum) of the Net Asset Value (excluding, for the avoidance of doubt, any Management Fee in determining the Net Accrual Amount) allocable to the Holders of the Initial Issuance Class E Subordinated Notes and the December 2010 Issuance Class E Subordinated Notes as at the Determination Date falling immediately before such Payment Date. For the avoidance of doubt, no Management Fee will be allocable to reduce the Net Asset Value of the Class E-4 Subordinated Notes and the Class E-5 Subordinated Notes.

Additionally, in respect of the Class E-6 Subordinated Notes and the Class E-7 Subordinated Notes only (for the avoidance of doubt, in respect of which the Management Fee described above shall not apply), the Management Fee will be payable in arrear on each Payment Date as follows: it will be pro rated for partial periods and be in an amount of 0.125 per cent. (being, for the avoidance of doubt, equivalent to 0.5 per cent. per annum) of the Net Asset Value (excluding, for the avoidance of doubt, any Management Fee in determining the Net Accrual Amount) allocable to the Holders of the Class E-6 Subordinated Notes and the Class E-7 Subordinated Notes as at the Determination Date falling immediately before such Payment Date.

In respect of all Class E Subordinated Notes, the Management Fee will rank in priority to the rights of the Holders of Senior Indebtedness.

Incentive Fee: Commencing on the Payment Date falling in September 2008, the Issuer will pay the Investment Manager an Incentive Fee (as defined in the section of this Prospectus headed "Description of the Investment Management Agreement - Fees") calculated by reference to (I) each Initial Issuance Class E Subordinated Note Outstanding on the Determination Date prior to the Incentive Fee Payment Date or (II) in the event that any Initial Issuance Class E Subordinated Note is redeemed on a date other than an Incentive Fee Payment Date, by reference to the Determination Date prior to the date on which it is redeemed. The Incentive Fee so referable to each Initial Issuance Class E Subordinated Note will be equal to the

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product of (A) up to 20 per cent. (at the discretion of the Investment Manager) and (B) the positive difference, if any, between (a) the Net Asset Value (as defined in the Market Valuation Manual excluding, for the avoidance of doubt, the Incentive Fee from the calculation of the Net Accrual Amount) allocable to such Initial Issuance Class E Subordinated Note (in the case of (I) above) on the Determination Date prior to the relevant Incentive Fee Payment Date or (in the case of (II) above) the Determination Date prior to the relevant Redemption Date, without, in either case, giving effect to any decreases in such Net Asset Value due to the payment of Class E Restricted Disbursements since the later of the date of issuance of such Initial Issuance Class E Subordinated Note and the Valuation Date following the Incentive Fee Payment Date on which an Incentive Fee was last paid in respect thereof and (b) the product of (i) 101.227 per cent. raised to the power of the number of Interest Periods (being, for the avoidance of doubt, equivalent to 105 per cent. per annum) since the later of the date of issuance of such Initial Issuance Class E Subordinated Note and the Incentive Fee Payment Date on which an Incentive Fee was last paid in respect of such Initial Issuance Class E Subordinated Note and (ii) the Net Asset Value (excluding, for the avoidance of doubt, the Incentive Fee from the calculation of the Net Accrual Amount) allocable to such Initial Issuance Class E Subordinated Note as of the later of the date of issuance of such Initial Issuance Class E Subordinated Note and the Valuation Date following the Incentive Fee Payment Date on which an Incentive Fee was last paid in respect thereof.

Commencing on the Payment Date falling in September 2011, the Issuer will pay the Investment Manager an Incentive Fee (as defined in the section of this Prospectus headed "Description of the Investment Management Agreement - Fees") calculated by reference to (I) each December 2010 Issuance Class E Subordinated Note Outstanding on the Determination Date prior to the Incentive Fee Payment Date or (II) in the event that any December 2010 Issuance Class E Subordinated Note is redeemed on a date other than an Incentive Fee Payment Date, by reference to the Determination Date prior to the date on which it is redeemed. The Incentive Fee so referable to each December 2010 Issuance Class E Subordinated Note will be equal to the product of (A) up to 20 per cent. (at the discretion of the Investment Manager) and (B) the positive difference, if any, between (a) the Net Asset Value (as defined in the Market Valuation Manual excluding, for the avoidance of doubt, the Incentive Fee from the calculation of the Net Accrual Amount) allocable to such December 2010 Issuance Class E Subordinated Note (in the case of (I) above) on the Determination Date prior to the relevant Incentive Fee Payment Date or (in the case of (II) above) the Determination Date prior to the relevant Redemption Date, without, in either case, giving effect to any decreases in such Net Asset Value due to the payment of Class E Restricted Disbursements since the later of the date of issuance of such December 2010 Issuance Class E Subordinated Note and the Valuation Date following the Incentive Fee Payment Date on which an Incentive Fee was last paid in respect thereof and (b) the product of (i) 101.227 per cent. raised to the power of the number of Interest Periods (being, for the avoidance of doubt,

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equivalent to 105 per cent. per annum) since the later of the date of issuance of such December 2010 Issuance Class E Subordinated Note and the Incentive Fee Payment Date on which an Incentive Fee was last paid in respect of such December 2010 Issuance Class E Subordinated Note and (ii) the Net Asset Value (excluding, for the avoidance of doubt, the Incentive Fee from the calculation of the Net Accrual Amount) allocable to such December 2010 Issuance Class E Subordinated Note as of the later of the date of issuance of such December 2010 Issuance Class E Subordinated Note and the Valuation Date following the Incentive Fee Payment Date on which an Incentive Fee was last paid in respect thereof

Additionally, in respect of the Class E-6 Subordinated Notes only (for the avoidance of doubt, in respect of which the Incentive Fees described above shall not apply), the Incentive Fee will be payable as follows. Commencing on the Payment Date falling in September 2010, the Issuer will pay the Investment Manager the Incentive Fee calculated by reference to (I) each Class E-6 Subordinated Note Outstanding on the Determination Date prior to the Incentive Fee Payment Date or (II) in the event that any Class E-6 Subordinated Note is redeemed on a date other than an Incentive Fee Payment Date, in the case of such Class E-6 Subordinated Note, by reference to the Determination Date prior to the date on which it is redeemed. The Incentive Fee so referable to each Class E-6 Subordinated Note will be equal to the product of (A) up to 20 per cent. (at the discretion of the Investment Manager) and (B) the positive difference, if any, between (a) the Net Asset Value (as defined in the Market Valuation Manual excluding, for the avoidance of doubt, the Incentive Fee from the calculation of the Net Accrual Amount) allocable to such Class E-6 Subordinated Note (in the case of (I) above) on the Determination Date prior to the relevant Incentive Fee Payment Date or (in the case of (II) above) the Determination Date prior to the relevant Redemption Date, without, in either case, giving effect to any decreases in such Net Asset Value due to the payment of Class E Restricted Disbursements since the later of the date of issuance of such Class E-6 Subordinated Note and the Valuation Date following the Incentive Fee Payment Date on which an Incentive Fee was last paid in respect thereof and (b) the product of (i) 101.94265 per cent. raised to the power of the number of Interest Periods (being, for the avoidance of doubt, equivalent to 108 per cent. per annum) since the later of the date of issuance of such Class E-6 Subordinated Note and the Incentive Fee Payment Date on which an Incentive Fee was last paid in respect of such Class E-6 Subordinated Note and (ii) the Net Asset Value (excluding, for the avoidance of doubt, the Incentive Fee from the calculation of the Net Accrual Amount) allocable to such Class E-6 Subordinated Note as of the later of the date of issuance of such Class E-6 Subordinated Note and the Valuation Date following the Incentive Fee Payment Date on which an Incentive Fee was last paid in respect thereof.

The Incentive Fee will rank senior in right of payment to the Class E Subordinated Notes but junior in right of payment to the entitlements of all other Secured Creditors. As used in the Investment Management Agreement, "Incentive Fee Payment Date" means the Payment Date falling in September in each

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year, starting in, in relation to the Initial Issuance Incentive Fee, 2008, in relation to the Class E-6 Incentive Fee, 2010 and in relation to the Class E-8 Incentive Fee, 2011. The Management Fee and/or the Incentive Fee may be waived or reduced for any series of Initial Issuance Class E Subordinated Notes, the Class E-6 Subordinated Notes or the December 2010 Issuance Class E Subordinated Notes by the Investment Manager in its sole discretion.

For the avoidance of doubt, no Incentive Fee will be payable by the Holders of the Class E-4 Subordinated Notes, the Class E-5 Subordinated Notes or the Class E-7 Subordinated Notes.

(See the section of this Prospectus headed "Description of the Investment Management Agreement – Fees").

Secured Hedging Transactions Swap Transactions Generally The types of swap transactions in which the Issuer may engage as contemplated by the Market Valuation Manual is broad and includes: (i) any rate, basis, currency, debt or equity swap, futures or forward agreement, (ii) any put, call, cap, floor or collar agreement, (iii) any option representing an obligation to buy or sell a security, currency, debt or equity and (iv) any other similar agreement (see definition of "Swap Transaction" in the Market Valuation Manual). In particular it is anticipated that the Issuer may engage in currency and interest rate hedging transactions to hedge its exposures from time to time and minimise that element of the Collateral that is characterised as "Excluded Issuer Investments" for the purpose of determining compliance with the Over-Collateralisation Tests.

Currency Hedging Transactions During the life of the Notes, the Issuer (or the Investment Manager on behalf of the Issuer) may enter into Currency Hedging Transactions with Eligible Counterparties in order to hedge currency exchange rate risks arising out of currency mismatches between assets and liabilities of the Issuer from time to time (see definitions of "Currency Hedging Transactions", "Hedging Transactions", "Unhedged Currency Investments", sub paragraph (ix) of "Excess Issuer Investments" and sub paragraph (iv) of "Excluded Issuer Investments" in the Market Valuation Manual). The entry into any Currency Hedging Transaction, other than a Form Approved Swap, shall be subject to Rating Agency Confirmation.

Interest Rate Hedging Transactions During the life of the Notes, the Issuer (or the Investment Manager on behalf of the Issuer) may enter into Interest Rate Hedging Transactions with Eligible Counterparties in order to manage the interest rate related risks in connection with the Issuer's issuance of, and making of payments on, the Notes and ownership and disposition of the Issuer Investments. Such Interest Rate Hedging Transactions shall be documented pursuant to Form Approved Swaps or a form of documentation otherwise approved by means of a Rating Agency Confirmation (see definitions of "Interest Rate Hedging Transactions" and "Hedging Transactions" in the Market Valuation Manual).

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Priority of Secured Hedging Counterparties Payments required to be made by the Issuer under any Secured Hedging Transaction will rank senior in priority to payments on each Class of Notes and External Permitted Debt other than the Class A Notes and External Senior Permitted Debt with which they will rank pari passu.

Eligible Counterparties The Market Valuation Manual establishes a set of eligibility criteria for any Eligible Counterparty with which the Issuer may enter into Hedging Transactions from time to time (see definition of "Eligible Counterparty" in the Market Valuation Manual).

See the section of this Prospectus headed "Hedging Arrangements".

Hedging SPEs Pursuant to the Security Documents and the Intercreditor Arrangements the Issuer may also, in accordance with all applicable laws and within prescribed limits, establish subsidiaries (each, a "Hedging SPE") organised for the purpose of (i) holding and acquiring investments similar to Issuer Investments, (ii) incurring indebtedness on a secured or unsecured basis, (iii) entering into Hedging Transactions and (iv) any other activity incidental, necessary, ancillary or appropriate to the foregoing and which have provisions for bankruptcy remote special purpose entities in their organisational documents and/or any documents into which they enter. In the event that any Hedging SPE is established, the Issuer, acting through the Listing Agent, will procure that the necessary disclosure in relation thereto is made to the Irish Stock Exchange by way of supplement hereto or such other means as the Irish Stock Exchange may require. Pursuant to the Investment Management Agreement, the Issuer will covenant that it will not establish any such Hedging SPEs if to do so would adversely affect the Irish tax treatment or status of the Issuer itself.

Form, Registration and Transfer of the VF Notes and the Notes

The Regulation S Notes of each Class of Notes sold outside the United States to non-U.S. Persons in reliance on Regulation S under the Securities Act will each be represented on issue by beneficial interests in one or more permanent global certificates of such Class (each, a "Regulation S Global Certificate" and, together, the "Regulation S Global Certificates") in fully registered form, without interest coupons or principal receipts, deposited on or about their relevant Closing Date with, and registered in the name of, BT Globenet Nominees Limited as nominee of Deutsche Bank AG, London Branch as common depositary for Euroclear Bank S.A./N.V., as operator of the Euroclear System ("Euroclear") and Clearstream Banking, société anonyme ("Clearstream, Luxembourg"). Beneficial interests in a Regulation S Global Certificate may be held only through, and transfers thereof will only be effected through, records maintained by Euroclear or Clearstream, Luxembourg at any time. See "Form of the VF Notes and the Notes" and "Book - Entry Clearance Procedures".

The Regulation S Notes representing the VF Notes sold outside the United States to non-U.S. Persons in reliance on Regulation S (the "Regulation S Definitive VF Certificates") will be represented on issue by a definitive note certificate in fully

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registered form, without interest coupons or principal receipts, and registered in the name of the owner thereof (or its nominee).

Interests in any Regulation S Note may not at any time be held by or on behalf of a U.S. Person (as defined in Regulation S).

The Rule 144A Notes of each Class of Notes sold in reliance on Rule 144A to U.S. Persons who are QIBs for the purposes of Rule 144A of the Securities Act and QPs for the purposes of the Investment Company Act will each be represented on issue by beneficial interests in one or more permanent global certificates of such Class (each, a "Rule 144A Global Certificate" and, together, the "Rule 144A Global Certificates" and, together with the Regulation S Global Certificates, the "Global Certificates"), in fully registered form, without interest coupons or principal receipts attached, registered in the name of Cede & Co as nominee of The Depository Trust Company ("DTC" and, together with Euroclear and Clearstream, Luxembourg, the "Clearing Systems") and will be deposited on or about their relevant Closing Date with Deutsche Bank Trust Company Americas as custodian of the Rule 144A Global Certificates for DTC (the "DTC Custodian"). DTC will record the beneficial interests in the Rule 144A Global Certificates ("Book-Entry Interests"). Book-Entry Interests in such Rule 144A Global Certificates will be shown on, and transfers thereof will be effected only through, records maintained in book-entry form by DTC and its participants.

The Rule 144A Notes representing the VF Notes sold in reliance on Rule 144A to U.S. Persons that are QIBs and QPs (the "Rule 144A Definitive VF Certificates") and, together with the Regulation S Definitive VF Certificates, the "VF Certificates") will be represented on issue by a definitive note certificate in fully registered form, without interest coupons or principal receipts and registered in the name of the owner thereof or its nominee. See "Book Entry Clearance Procedures." The Noteholder in respect of the Rule 144A Definitive VF Certificate will represent, among other things, that it is (i) a U.S. Person that is also a QIB and a QP and that it shall not transfer its ownership of such VF Note unless such transfer is made in accordance with restrictions set forth in the Trust Instrument. See "Transfer Restrictions".

The Global Certificates will bear a legend and such Global Certificates, or any interest therein, may not be transferred except in compliance with the transfer restrictions set out in such legend. See "Transfer Restrictions".

No beneficial interest in a Rule 144A Global Certificate may be transferred to a person who takes delivery thereof through an interest in a Regulation S Global Certificate unless the transferor provides the Trustee with a written certification substantially in the form set out in the Trust Deed regarding compliance with certain of such transfer restrictions. Any transfer of a beneficial interest in a Regulation S Global Certificate to a person who takes delivery through an interest in a Rule 144A Global Certificate is also subject to certification requirements substantially in the form set out in the Trust Deed and each purchaser thereof shall be deemed to

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represent that such purchaser is a QIB for the purposes of Rule 144A of the Securities Act and also a QP for the purposes of Section 3(c)(7) of the Investment Company Act. In addition, interests in any of the Regulation S Notes may not at any time be held by or on behalf of any U.S. Person (as defined in Regulation S). See "Form of the VF Notes and the Notes" and "Book Entry Clearance Procedures".

Except in the limited circumstances described herein, Notes in definitive, certificated, fully registered form ("Definitive Certificates") will not be issued in exchange for beneficial interests in either the Regulation S Global Certificates or the Rule 144A Global Certificates. See "Form of the VF Notes and the Notes - Exchange for Definitive Certificates".

Transfers of interests in the Notes are subject to certain restrictions and must be made in accordance with the procedures set forth in the Trust Deed. See "Form of the VF Notes and the Notes", "Book Entry Clearance Procedures" and "Transfer Restrictions". Each purchaser of Notes in making its purchase will be required to make, or will be deemed to have made, certain acknowledgements, representations and agreements. See "Transfer Restrictions". The transfer of Notes in breach of certain of such representations and agreements will result in affected Notes becoming subject to certain forced transfer provisions. See Condition 2(h) (Forced Transfer of Certain Notes).

Authorised Denominations The Regulation S Notes, other than the Regulation S Notes which are Class E Subordinated Notes, will be issued in minimum denominations of €50,000 and integral multiples of €1,000 in excess thereof. Regulation S Notes which are Class E Subordinated Notes will be issued in minimum denominations of €250,000 and integral multiples of €1,000 in excess thereof.

The Rule 144A Notes will be issued in minimum denominations of €250,000 and integral multiples of €1,000 in excess thereof.

Governing Law The VF Notes, the Notes and the other Transaction Documents entered into on or before the December 2010 Closing Date will be governed by English law except the Corporate Administration Agreement, which will be governed by Irish law, and the Pledge Agreement, which will be governed by Belgian law.

Listing and Trading Application has been made to the Irish Stock Exchange for the Class E-8 Subordinated Notes to be admitted to the Official List and trading on its regulated market (see the section of this Prospectus headed "General Information"). There is currently no market for the VF Notes or the Notes and no assurance can be given that such a market will develop (see the section of this Prospectus headed "Risk Factors – 3.1 Limited Liquidity and Restrictions on Transfer").

Tax Status See the section of this Prospectus headed "Tax Considerations".

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Certain Employee Benefit Plan Considerations

See "ERISA Considerations" below. See further "Form of the VF Notes and the Notes" and "Book-Entry Clearance Procedures".

Limited Recourse The VF Notes and the Notes are limited recourse obligations of the Issuer which are payable solely out of amounts received by, or on behalf of, the Issuer in respect of the Collateral. Payments on the Notes and External Permitted Debt, both prior to and following enforcement of the security over the Collateral, are subordinated to the prior payment of certain fees and expenses of the Issuer. The net proceeds of the realisation of the security over the Collateral, following an Event of Default, may be insufficient to pay all amounts due to the Noteholders and other Secured Creditors (including External Creditors) after making payments to other creditors (including External Creditors) of the Issuer ranking prior to, or pari passu with, the Noteholders and other Secured Creditors. In the event of a shortfall in such proceeds, the Issuer will not be obliged to pay, and no other assets of the Issuer will be available for payment of, such shortfall and all claims in respect of any such shortfall shall be extinguished. Such shortfall will be borne first by the Holders of Subordinated Indebtedness (including Class E Subordinated Noteholders), then by the Holders of any Intervening Indebtedness (according to the Intervening Indebtedness Priority of Payments, if any), then by the Class D Noteholders and External Fourth Senior Creditors, pari passu amongst themselves, then by the Class C Noteholders and External Third Senior Creditors, pari passu amongst themselves and then by the Class B Noteholders and External Second Senior Creditors, pari passu amongst themselves and then by the Class A Noteholders, External Senior Creditors and Secured Hedging Counterparties pari passu amongst themselves, in each case in accordance with the priority of payments specified in the Intercreditor Arrangements.

Withholding Tax Payments of interest and principal on the VF-1 Notes and the Specified Notes may be subject to income taxes, including applicable withholding taxes and other taxes and the Issuer will not be obliged to gross up any payments to the Holders of the VF Notes or the Notes as a result of withholding taxes and other taxes (see Condition 9 (Taxation)). The VF Notes and the Notes are subject to redemption at the option of the Controlling Class pursuant to an Intercreditor Approval and the Class E Subordinated Noteholders acting by Extraordinary Resolution upon the occurrence of a Note Tax Event, all subject to, and in accordance with, the terms of Condition 7(d) (Redemption for Tax Reasons).

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RISK FACTORS

An investment in the VF Notes and the Notes of any Class involves certain risks, including risks relating to the Collateral securing such Notes and risks relating to the structure and rights of such VF Notes and the Notes and the related arrangements. Prospective investors should carefully consider the following factors, in addition to the matters set forth elsewhere in this Prospectus, prior to investing in the VF Notes and the Notes of any Class. The following discussion is not exhaustive of all possible risks relating to the matters contained in this Prospectus. Terms not defined in this section and not otherwise defined above have the meanings set out in Condition 1 (Definitions).

1. GENERAL

1.1 General

It is intended that the Issuer will invest in Issuer Investments with certain risk characteristics as described below. There can be no assurance that the Issuer's investments will be successful, that its investment objectives will be achieved, that the VF Noteholders and the Noteholders will receive the full amounts payable by the Issuer under the VF Notes or the Notes or that they will receive any return on their investment in the VF Notes or the Notes. Prospective investors are therefore advised to review this entire Prospectus carefully and should consider, among other things, the risk factors set out in this section before deciding whether to invest in the VF Notes or the Notes. Except as is otherwise stated below, such risk factors are generally applicable to the VF Notes and all Classes of Notes, although the degree of risk associated with each Class of Notes will vary in accordance with the degree of subordination of the same. Neither the Initial Purchaser nor the Trustee undertakes to review the financial condition or affairs of the Issuer or the Investment Manager during the life of the arrangements contemplated by this Prospectus nor to advise any investor or potential investor in the VF Notes or the Notes of any information coming to the attention of the Initial Purchaser or the Trustee which is not included in this Prospectus.

1.2 Suitability

Prospective purchasers of the VF Notes or the Notes of any Class should ensure that they understand the nature of such VF Notes or the Notes and the extent of their exposure to risk, that they have sufficient knowledge, experience and access to professional advisers to make their own legal, tax, accounting and financial evaluation of the merits and risks of investment in such VF Notes or Notes and that they consider the suitability of such VF Notes or Notes as an investment in light of their own circumstances and financial condition and that of any accounts for which they are acting.

1.3 Investment and Trading Risks

All investments risk the loss of capital. No guarantee or representation is made that the Issuer's programme will be successful. Consistently with the limitations set out in the Market Valuation Manual and the Investment Management Agreement, the Issuer's investment strategy may utilise such investment techniques as margin transactions, leverage and the use of synthetic instruments, swaps, options on securities, forward contracts and other derivative instruments, which practices can, in certain circumstances, magnify the adverse impact to the Issuer.

1.4 Unspecified Use of Proceeds

Purchasers of VF Notes or Notes will not have an opportunity to evaluate for themselves the relevant economic, financial and other information regarding the investments in which the proceeds of the Offering will be invested and, accordingly, will be dependent upon the judgment and ability of the Investment Manager in investing and managing the funds of the Issuer. No assurance can be given that the Issuer will be successful in obtaining suitable investments or that, if such investments are made, the objectives of the Issuer will be achieved. The allocation of Issuer's assets to different Asset Categories will vary over time and from time to time depending upon the availability of investments, the Investment Manager's assessment of market conditions, prevailing interest rates, relative values and other factors.

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1.5 Potential for Insufficient Investment Opportunities

The Investment Manager may not be able to identify and obtain a sufficient number of investment opportunities to invest the full amount of funding that may be committed to the Issuer.

1.6 Issuer's Limited Assets

The VF Notes and the Notes have recourse only to the assets of the Issuer (other than the Issuer Irish Account and the rights of the Issuer under the Corporate Administration Agreement). The Issuer is not expected to have any substantial assets other than the Collateral assigned to secure the VF Notes, any Notes, any Secured Hedging Transactions and any other Permitted Indebtedness. In addition, the Issuer will not have any direct claim to any assets of any Hedging SPEs. Hedging SPEs will be permitted to incur indebtedness and enter into Hedging Transactions. Any rights of the Issuer to distributions from any Hedging SPE will be subject to the prior claims of such Hedging SPE's creditors, including its lenders and counterparties to any Hedging Transactions it enters into and creditors in respect of the costs of establishing, administering and, as the case may be, liquidating such Hedging SPEs.

1.7 Removal of Credit Enhancement

The VF Notes and Notes will have the benefit of limited credit enhancement in the form of over-collateralisation provided by the excess of the Market Value of Issuer Investments over the total outstanding amount of the Issuer's Permitted Indebtedness. In addition, VF Notes and Class A Notes will initially have additional credit enhancement in the form of the subordination of the Class B Notes, Class C Notes, Class D Notes and Class E Subordinated Notes, the Class B Notes will initially have additional credit enhancement in the form of the subordination of the Class C Notes, Class D Notes and Class E Subordinated Notes, the Class C Notes will initially have additional credit enhancement in the form of the subordination of the Class D Notes and the Class E Subordinated Notes and the Class D Notes will initially have additional credit enhancement in the form of the subordination of the Class E Subordinated Notes. The amount of credit enhancement provided by the subordination is subject to change at any time. The VF Notes, the Class A Notes, the Class B Notes, the Class C Notes and/or the Class D Notes could lose the benefit of credit enhancement if the Class B Notes, the Class C Notes, the Class D Notes and/or the Class E Subordinated Notes, as applicable, are redeemed or otherwise repaid prior to repayment of the VF Notes, the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes. If the outstanding amount of the Class B Notes, the Class C Notes, the Class D Notes and/or the Class E Subordinated Notes, as applicable, is reduced, the credit enhancement afforded to the VF Notes, the Class A Notes, the Class B Notes, the Class C Notes and/or the Class D Notes will decrease and the credit exposure will increase. Thus prospective purchasers of the VF Notes and Notes should not rely upon the subordination in the capital structure and should look only to the credit enhancement provided by the over-collateralisation of the Market Value of Issuer Investments provided by compliance with the Over-Collateralisation Tests. In particular, prospective purchasers of VF Notes, Class A Notes, Class B Notes, Class C Notes and Class D Notes should be aware that, subject to certain restrictions (see the section of these Risk Factors headed "3.17 Split Redemptions on Class E Subordinated Notes" below), Holders of Class E Subordinated Notes may elect optionally to redeem their Class E Subordinated Notes prior to the maturity of the VF Notes, the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes. Prospective purchasers of VF Notes and Class A Notes should also be aware that Class B Notes, the Class C Notes and the Class D Notes may be the subject of an optional redemption or a mandatory redemption prior to their maturity (and the maturity of the VF Notes and Class A Notes) (see the sections of these Risk Factors headed "3.3 Subordination of the Class B Notes, the Class C Notes, the Class D Notes and Class E Subordinated Notes, 3.6 Mandatory Redemption of the Notes and 3.7 Optional Redemption and Market Volatility" below) provided that, in each case, such redemptions do not, by their occurrence, cause (i) a Transaction Default or (ii) the Over-Collateralisation Tests to be breached. Further, in the event that any Notes with a maturity which is shorter than that of the VF Notes, the Class A Notes, the Class B Notes, the Class C Notes or the Class D Notes are issued pursuant to the Trust Deed and the Conditions (see Condition 17 (Further Issues)), such Notes may, subject to certain restrictions, be finally redeemed prior to the VF Notes, the Class A Notes, the Class B

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Notes, the Class C Notes or the Class D Notes (see Condition 7(a) (Final Redemption)). Equally, in the event that any External Permitted Debt with a maturity which is shorter than the VF Notes, Class A Notes, Class B Notes, Class C Notes, Class D Notes or Class E Subordinated Notes is incurred pursuant to the Security and Intercreditor Deed, the same will be subject to redemption prior to the redemption of such Notes.

1.8 Collateral Coverage and Withdrawal

So long as no event of default under the External Permitted Debt Documents or the Conditions has occurred and is continuing, upon request by the Issuer (or the Investment Manager on its behalf), all or any portion of an Issuer Investment or other asset in the Collateral may be released from the portfolio of Issuer Investments if certain conditions are satisfied. Any Issuer Investment withdrawn or substituted may be of a higher credit quality or be more liquid than the remaining Issuer Investments. In addition, the Transaction Documents permit the Issuer, subject to compliance with certain terms, to redeem Notes or discharge other Indebtedness that, in each case, may rank lower in priority than more senior Notes or Indebtedness which remain outstanding at the time of such redemption or discharge. Equally, the Issuer (or the Investment Manager on its behalf) may make capital contributions on the establishment of and other payments to or for the benefit of Hedging SPEs.

1.9 Business and Regulatory Risks for Vehicles with Investment Strategies such as the Issuer's

Legal, tax and regulatory changes could occur during the term of the Issuer that may adversely affect the Issuer. The regulatory environment for vehicles of the nature of the Issuer is evolving, and changes in the regulation of the same may adversely affect the value of investments held by the Issuer and the ability of the Issuer to obtain the leverage it might otherwise obtain or to pursue its investment and trading strategies. In addition, the securities and futures markets are subject to comprehensive statutes, regulations and margin requirements. Certain regulators and self regulatory organisations and exchanges are authorised to take extraordinary actions in the event of market emergencies. The regulation of derivatives transactions and vehicles that engage in such transactions is an evolving area of law and is subject to modification by government and judicial action. The effect of any future regulatory change on the Issuer could be substantial and adverse.

1.10 Third Party Involvement

The Issuer may co invest with third parties in partnerships, joint ventures or other entities. Such investments may involve risks not present in investments where a third party is not involved, including the possibility that a third party co venturer or partner may at any time have economic or business interests or goals which are inconsistent with those of the Issuer, or may be in a position to take action contrary to the investment objective of the Issuer. In addition, the Issuer may in certain circumstances be liable for actions of its third party co venturer or partner.

1.11 Third Party Litigation

The Issuer's investment activities subject it to the normal risks of becoming involved in litigation by third parties. This risk is somewhat greater where the Issuer exercises control or significant influence over a company's direction as in the case of Hedging SPEs. The expense of defending against claims by third parties and paying any amounts pursuant to settlements or judgments would generally be borne by the Issuer and would reduce net assets.

2. RELATING TO THE COLLATERAL

2.1 Risks associated with a Leveraged Structure and Sale of Collateral

The Issuer will be substantially leveraged. The pro forma fully funded indebtedness of the Issuer under the VF-1 Notes and the Specified Notes following the issuance of the December 2010 Issuance Class E Subordinated Notes (collectively, the "Initial Borrowing Arrangements") is expected to be approximately €431.5 million. In addition to indebtedness under the Initial Borrowing Arrangements, the Initial Borrowing Arrangements permit the

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Issuer (including through special purpose, bankruptcy remote subsidiaries (each, a "Hedging SPE") established to hold certain assets, incur certain indebtedness and enter into Hedging Transactions) to (i) incur certain other indebtedness including External Permitted Debt secured by the Collateral and (ii) engage in Hedging Transactions. Utilisation of leverage is a speculative investment technique and involves certain risks to investors. The leverage provided to the Issuer under the Initial Borrowing Arrangements and any other Permitted Indebtedness will result in interest expense and other costs incurred in connection with such borrowings that may not be covered by the net interest income, dividends and appreciation of Issuer Investments.

The Initial Borrowing Arrangements permit the Issuer to incur External Permitted Debt upon the satisfaction of certain conditions set forth in the Intercreditor Arrangements and, in the case of additional Notes, without the consent of any Noteholders. Depending on the terms and conditions of any such future additional Notes or External Permitted Debt, the Issuer may be more or less leveraged than the Issuer would be with the Initial Borrowing Arrangements alone. The terms of any such additional Notes or External Permitted Debt may provide for a higher or lower interest rate than the interest rate under the Initial Borrowing Arrangements. The issue of such additional Notes or the incurrence of such External Permitted Debt will result in interest expense and other costs incurred in connection with such financing(s) that may not be covered by the net interest income, dividends and appreciation of Issuer Investments.

The use of leverage will increase the volatility of the Net Asset Value from time to time. While the use of borrowed funds will increase returns to the Issuer if the Issuer earns a greater return on the incremental investments purchased with borrowed funds than it pays for such funds, the use of leverage will decrease returns if the Issuer fails to earn as much on such incremental investments as it pays for such funds. The effect of leverage may therefore result in a greater decrease in the Net Asset Value than if the Issuer was not so leveraged. The extent of the Issuer's permitted leveraging at any time will be determined by reference to the Market Value of the Issuer Investments established in accordance with the Market Valuation Manual. As a consequence, if there is a substantial decline in the Market Value of the Issuer Investments, the Issuer (or the Investment Manager on its behalf) may be required to liquidate investments in order to maintain compliance with its debt covenants and, as a result, the occurrence of a sudden, precipitous drop in value of Issuer Investments could force the Issuer (or the Investment Manager on its behalf) to liquidate the same quickly, and not for fair value, in order to maintain compliance with such debt covenants.

The VF Instrument will contain events of default which, under certain circumstances, could result in early amortisation or in the acceleration of the maturities of these obligations. In the event of acceleration of any debt under a VF Instrument in whole or in part, the Issuer may be required to dispose of all or a significant portion of the Issuer Investments. Depending upon the liquidity of the Issuer Investments, such a forced disposal of Issuer Investments could result in realisation of value of such investments significantly below the anticipated Market Values for such Issuer Investments.

The substantial indebtedness of the Issuer could limit its ability to respond to changing business conditions or to execute its investment programme. The VF Instrument imposes, and it is anticipated that future External Permitted Debt will impose, operating and financing restrictions on the Issuer. Therefore, no assurance can be given that additional debt financing will be available when needed or, if available, will be obtainable on terms that are favourable to the Issuer. It is possible that the Issuer would need to sell Issuer Investments to repay indebtedness in order to meet such restrictions, and these sales could occur when the value of the Issuer Investments is depressed.

If an event of default occurs under the VF Notes, the Trust Deed or any External Permitted Debt Document and the Collateral is sold, there can be no assurance that the proceeds of such sale will be sufficient to pay in full the principal of and accrued interest on the VF Notes (or amounts payable under any Secured Hedging Transactions) and the Notes or other External Permitted Debt. In addition, under such circumstances, pursuant to the subordination provisions contained in the Security Documents and the Intercreditor Arrangements, no payment on the Class B Notes will be made until payment in full of obligations senior thereto,

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no payment on the Class C Notes will be made until payment in full of obligations senior thereto, no payment on the Class D Notes will be made until payment in full of obligations senior thereto and no payment on the Class E Subordinated Notes will be made until payment in full of all other liabilities of the Issuer. Relative rights of Holders of the Senior Obligations, the Class B Notes, the Class C Notes and the Class D Notes with respect to the Collateral will be governed by the provisions of the Intercreditor Arrangements. Relative rights of the Holders of the Second Senior Indebtedness, Third Senior Indebtedness, Fourth Senior Indebtedness and the Subordinated Indebtedness with respect to the Collateral will also be governed by the Intercreditor Arrangements.

2.2 The Portfolio

The decision by any prospective Holder of VF Notes or Notes to invest in such VF Notes or Notes should be based, among other things, on an evaluation of the Market Valuation Manual and the Over-Collateralisation Tests. This Prospectus does not contain any information regarding the individual Issuer Investments on which the VF Notes and Notes will be secured from time to time, however the Market Valuation Manual is set out in full herein.

Neither the Issuer nor the Initial Purchaser has made, or will make, any investigation into the obligors under the Issuer Investments. The value of Issuer Investments comprised in the Issuer's portfolio of the same (the "Portfolio") may fluctuate from time to time and none of the Issuer, the Trustee, the Initial Purchaser, the Custodian, the Collateral Administrator, any Secured Hedging Counterparty or any of their Affiliates are under any obligation to maintain the value of the Issuer Investments at any particular level, although under the Investment Management Agreement the Investment Manager is obliged to use reasonable care to ensure compliance by the Issuer with the Over-Collateralisation Tests. On breach of the Over-Collateralisation Tests, the Investment Manager is obliged to ensure that one or more of the Under Collateralisation Cure Methodologies is employed in accordance with the Conditions. None of the Issuer, the Trustee, the Custodian, the Investment Manager, the Collateral Administrator, any Secured Hedging Counterparty, the Initial Purchaser or any of their Affiliates has any liability to the VF Noteholders or Noteholders as to the amount or value of, or any decrease in the value of, the Issuer Investments from time to time. Purchasers of any of the VF Notes or Notes will not have an opportunity to evaluate for themselves the relevant economic, financial and other information regarding the investments to be made by the Investment Manager, acting on behalf of the Issuer, and accordingly will be dependent upon the judgment and ability of the Investment Manager in acquiring investments for purchase on behalf of the Issuer over time. No assurance can be given that the Investment Manager, acting on behalf of the Issuer, will be successful in obtaining suitable investments or that, if such investments are made, the objectives of the Issuer will be achieved. The Issuer does not intend to provide post issuance transaction information regarding securities to be admitted to trading and the performance of the underlying collateral.

2.3 Concentration of Issuer Investments

The diversification and concentration restrictions applicable to the Issuer Investments operate only indirectly by causing Issuer Investments in excess of applicable diversification or concentration restrictions to be excluded from the calculation of the Over-Collateralisation Tests. The Issuer is not prohibited from holding Issuer Investments in excess of diversification and concentration restrictions subject to such exclusion.

2.4 Nature of the Collateral

The Issuer will invest in a portfolio of Issuer Investments consisting at the time of acquisition of predominantly below investment grade loans and High Yield Securities as well as certain other investments, all of which will have greater credit and liquidity risk than investment grade sovereign or corporate bonds or loans. The Acquisition Criteria do not contain any restrictions relating to the maturity, liquidity or amount of Issuer Investments with which the Issuer (or the Investment Manager on its behalf) must comply. The Collateral is subject to credit, liquidity, interest rate risks, currency risks, structural risks and operational risks. The prices of financial instruments in which the Issuer may invest can be highly volatile. Price movements of High Yield Securities and other instruments in which the Issuer's assets may be

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invested are influenced by, among other things, interest rates and currencies, changing supply and demand relationships, trade, fiscal, monetary and exchange control programmes and policies of governments, and national and international political and economic events and policies. In addition, governments from time to time intervene, directly and by regulation, in certain markets, particularly those in currencies and financial instrument options. Such intervention is often intended to influence prices directly and may, together with other factors, cause all of such markets to move rapidly in the same direction because of, among other things, interest rate fluctuations. The Issuer Investments are also subject to the risk of the failure of any exchange on which its positions trade or of their clearing houses.

2.5 Nature of Below Investment Grade Collateral

The Market Value of the Issuer Investments may be volatile and may fluctuate with, among other things, changes in prevailing interest rates (particularly in the case of fixed rate Issuer Investments), general economic conditions, the condition of certain financial markets, international political events, developments or trends in any particular industry and the financial condition of the borrowers or issuers, as the case may be, of the Issuer Investments. The rating of below investment grade loans reflects a greater possibility that adverse changes in the financial condition of a borrower or an issuer or in general economic conditions or both may impair the ability of the relevant borrower or issuer, as the case may be, to make payments of principal or interest. Such investments may be speculative.

A decrease in the Market Value of the Issuer Investments would adversely affect the proceeds that could be obtained upon the sale of the Issuer Investments and could, ultimately, affect the ability of the Issuer to effect an optional redemption of the VF Notes or the Notes or pay the principal of the VF Notes or the Notes upon a liquidation of the Issuer Investments following the occurrence of an Event of Default.

The financial markets may experience substantial fluctuations in prices for High Yield Securities and loans of the nature which the Issuer may acquire and limited liquidity for such obligations. No assurance can be made that the conditions giving rise to such price fluctuations and limited liquidity will not occur, subsist or become more acute following the relevant Closing Date. During periods of limited liquidity and higher price volatility, the Issuer's ability to acquire or dispose of Issuer Investments at a price and time that the Issuer deems advantageous may be impaired. As a result, in periods of rising market prices the Issuer may be unable to participate in price increases fully to the extent that it is either unable to dispose of Issuer Investments whose prices have risen or to acquire Issuer Investments whose prices are on the increase. The Issuer's inability to dispose fully and promptly of positions in declining markets will conversely cause the Net Asset Value to decline as the value of unsold positions is marked to lower prices. A decrease in the Market Value of the Issuer Investments would also adversely affect the proceeds of sale that could be obtained upon the sale of the Issuer Investments and could ultimately affect the ability of the Issuer to pay in full or redeem the VF Notes or the Notes.

2.6 Risks associated with Below Investment Grade Investments and Investments in High Yield Securities

The Issuer may invest in private and government debt securities and instruments, which may be unrated or below investment grade. It is likely that many of the debt instruments in which the Issuer invests may be unrated, and whether or not rated, the debt instrument may have speculative characteristics. The issuers of such instruments may face significant ongoing uncertainties and exposure to adverse conditions that may undermine the issuer's ability to make timely payment of interest and principal. Such instruments are regarded as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations and involve major risk exposure to adverse conditions. In addition, an economic recession could severely disrupt the market for most of these securities and may have an adverse impact on the value of such instruments. It is also likely that any such economic downturn could adversely affect the ability of the issuers of such securities to repay principal and pay interest thereon and increase the incidence of default for such securities.

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The Issuer may invest significantly in High Yield Securities. Such securities are not generally exchange traded and, as a result, these instruments trade in a smaller secondary market than exchange traded bonds. In addition, the Issuer may invest in bonds of issuers that do not have publicly traded equity securities, making it more difficult to hedge the risks associated with such investments. High Yield Securities face ongoing uncertainties and exposure to adverse business, financial or economic conditions which could lead to the issuer's inability to meet timely interest and principal payments. High Yield Securities are generally unsecured and may be subordinate to other obligations of their issuers. The Market Values of certain of these lower rated and unrated debt securities tend to reflect individual corporate developments to a greater extent than do higher rated securities, which react primarily to fluctuations in the general level of interest rates, and tend to be more sensitive to economic conditions than are higher rated securities. As a result (and as noted above), the market prices of such securities can be subject to abrupt and erratic market movements and changes in liquidity and above average price volatility, and the spread between the bid and asked prices of such securities may be greater than those prevailing in other securities markets. Companies that issue such securities are often highly leveraged and may not have available to them more traditional methods of financing. Overall declines in below investment grade securities and other markets may adversely affect such issuers by inhibiting their ability to refinance their debt at maturity. It is also possible that a major economic recession could severely disrupt the market for such securities and may have an adverse impact on the value of such securities. In addition any such economic downturn could adversely affect the ability of the issuers of such securities to repay principal and pay interest thereon and increase the incidence of default of such securities. The potentially concentrated nature of the Issuer's investment programme could magnify the effects of such risks.

High Yield Securities have historically experienced greater default rates than investment grade securities. Although several studies have been made of historical default rates in the U.S. and European high yield markets, such studies do not necessarily provide a basis for drawing definitive conclusions with respect to default rates and, in any event, do not necessarily provide a basis for predicting future default rates in any of the high yield markets which may exceed the hypothetical default rates assumed by investors in determining whether to purchase the VF Notes or Notes.

European High Yield Securities may be subordinated structurally as opposed to contractually to senior secured debt holders. Structural subordination takes place when a high yield bond investor lends to a holding company whose primary asset is ownership of a cash generating operating company or companies. The debt investment of the High Yield Securities investor is serviced by passing the revenues and tangible assets from the operating companies upstream through the holding company (which typically has no revenue generating capacity of its own) to the bondholders. In the absence of inter company guarantees such a process leaves the High Yield Securities investors deeply subordinated to secured and unsecured creditors of the operating companies and means that investors therein will not necessarily have access to the same security package as the senior lenders (even on a second priority charge basis) or be able to participate directly in insolvency proceedings or pre insolvency discussions relating to the operating companies within the group. This facet of the European high yield market differs from the U.S. high yield market, where structured subordination is markedly less prevalent.

In the case of High Yield Securities issued by issuers with their principal place of business in Europe, structural subordination leads European High Yield Securities defaults to realise lower average recoveries than their U.S. counterparts. Another factor affecting recovery rates for European High Yield Securities is the bankruptcy regimes applicable in different European jurisdictions and the enforceability of claims against the High Yield Securities issuer (see the section of these Risk Factors headed "2.16 Insolvency Considerations relating to Issuer Investments" below). It must be noted, however, that the overall probability of default (based on credit rating) remains the same for both U.S. and European credits. It is the severity of the effect of any default that differs between the two markets as a result of the aforementioned factors.

In addition to the characteristics described above, High Yield Securities frequently have call or redemption features that permit the issuer thereof to redeem such obligations prior to their final maturity date. If such a call or redemption were exercised by an issuer during a period of

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declining interest rates, the Investment Manager, acting on behalf of the Issuer, may only be able to replace such called obligation with a lower yielding obligation or be obliged to pay a premium for a similarly yielding obligation, thus decreasing the net investment income from the Portfolio.

2.7 Risks relating to Loans

Senior loans and mezzanine loans of the type in which the Issuer may invest are often incurred by obligors in connection with highly leveraged transactions, often (although not exclusively) to finance internal growth, acquisitions, mergers and/or equity purchases. As a result of the additional debt incurred by the obligor in the course of such a transaction, its creditworthiness is frequently judged by the rating agencies to be below investment grade. Higher levels of debt in an obligor may make it more susceptible to adverse changes in the financial condition of its business and/or in general economic conditions (including a sustained period of rising interest rates or an economic downturn) and may affect the ability of the obligor to make payments of principal and interest on its debt.

Senior loans are typically senior in the capital structure, with mezzanine loans being subordinated to any senior debt of the obligor. Senior loans are often secured by specific collateral, including but not limited to trademarks, patents, accounts receivable, inventory, equipment, buildings, real estate, franchises and common and preferred equity of the obligor and its subsidiaries, although the security granted in respect of some senior loans may be limited to share security over the obligor group and some senior loans may also be unsecured. In continental Europe security is often limited to shares in certain group companies, accounts receivable, bank account balances and intellectual property rights. This security may well not be perfected. Mezzanine loans often have the benefit of a second charge (or, if second lien loans feature in the capital structure, third) over such assets on which more senior ranking obligations are secured. Senior loans usually have shorter terms than more junior obligations and may require mandatory prepayments from excess cash flow, asset dispositions and offerings of debt and/or equity securities on a priority basis.

Mezzanine loans generally take the form of medium term loans repayable shortly (perhaps six months or one year) after the senior debt of the obligor thereunder. Because mezzanine loans are only repayable after the senior debt of an obligor (and interest payments may be blocked to protect the position of senior debt interest in certain circumstances), they will carry higher rates of interest to reflect the greater risk of their not being repaid. Due to the greater risk associated with mezzanine loans as a result of their subordination below senior debt of an obligor, mezzanine lenders may be granted share options, warrants in or higher cash paying instruments or payments in kind by the obligor which can be exercised in certain circumstances, principally being immediately prior to the obligor's shares being sold or floated in an initial public offering.

No assurance can be given as to the levels of default and/or recoveries that may apply to any senior loans and mezzanine loans purchased by the Issuer. Recoveries on both senior loans and mezzanine loans may also be affected by the different bankruptcy regimes applicable in different jurisdictions and the enforceability of claims against the Obligors thereunder. See 2.16 (Insolvency Considerations relating to Issuer Investments) below.

The economic downturn has resulted in an increase in default rates which may continue to fluctuate, this could in turn affect the ability of finance providers to protect their investments in a default situation. See also 2.27 (Events in the CDO and Leveraged Finance Markets) below.

Furthermore, the holders of senior loans and mezzanine loans are more diverse than ever before, including not only banks and specialist finance providers but also potentially alternative investment managers, specialist debt and distressed debt investors and other financial institutions. The increasing diversification of the investor base has also been accompanied by an increase in the use of hedges, swaps and other derivative instruments to protect against or spread the economic risk of defaults. All of these developments may further increase the risk that historical recovery levels will not be realised. The returns on senior loans

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and/or mezzanine loans, therefore, may not adequately reflect the risk of future defaults and the ultimate recovery rates.

A below investment grade loan or debt obligation or an interest in a below investment grade loan is generally considered speculative in nature and may become a defaulted obligation for a variety of reasons. Upon any Issuer Investment becoming a defaulted obligation, such defaulted obligation may become subject to either substantial workout negotiations or restructuring, which may entail, among other things, a substantial reduction in the interest rate, a substantial write down of principal or a substantial change in the terms, conditions and covenants with respect to such defaulted obligation. In addition, such negotiations or restructuring may be extensive and protracted, and may result in uncertainty as to the ultimate recovery on such defaulted obligation. The liquidity of defaulted obligations may be limited and, to the extent that defaulted obligations are sold, the proceeds from such sale may not be equal to the amount of unpaid principal and interest thereon. Furthermore, there can be no assurance that the ultimate recovery on any defaulted obligation will be at least equal either to the minimum recovery rate assumed by the Rating Agencies in rating the VF Notes or the Notes or any recovery rate used in the analysis of the VF Notes or the Notes by investors in determining whether to purchase the VF Notes or the Notes.

Senior loans and mezzanine loans also generally provide for restrictive covenants designed to limit the activities of the obligors thereunder in an effort to protect the rights of lenders to receive timely payments of interest on, and repayment of, principal of the loans. Such covenants may include restrictions on dividend payments, specific mandatory minimum financial ratios, limits on total debt and other financial tests. A breach of a covenant (after giving effect to any cure period) under a senior loan or mezzanine loan which is not waived by the lending syndicate normally is an event of acceleration which allows the syndicate to demand immediate repayment in full of the outstanding loan. The unique nature of the loan documentation may also create a degree of complexity in negotiating a secondary market purchase or sale which may not exist, for example, in the High Yield Securities market.

The fact that mezzanine loans are generally subordinated to any senior loan and potentially other indebtedness of the relevant obligor thereunder, usually have a longer maturity than such other indebtedness and will generally only have a second ranking security interest over any security granted in respect thereof, increases the risk of non payment thereunder of such mezzanine loans in an enforcement situation.

Senior loans and mezzanine loans are unique and customised in nature and, along with the provision of confidential information and the private syndication of the instruments, this means that senior loans and mezzanine loans are not as easily purchased or sold as a publicly traded security and historically the trading volume for loans in the loan market has been small relative to other public markets. As secondary market trading volumes increase, new loans are frequently adopting standardised documentation to facilitate loan trading which should improve market liquidity. There can be no assurance, however, that future levels of supply and demand in loan trading will provide an adequate degree of liquidity or that the current level of liquidity will continue. This means that such assets will be subject to greater disposal risk in the event that such assets are sold following enforcement of the security over the Collateral or otherwise. The European market for mezzanine loans is also generally less liquid than that for senior loans, resulting in increased disposal risk for such obligations.

Loans are generally repayable in whole or in part at any time at the option of the obligor thereunder at par plus accrued and unpaid interest thereon. Prepayments on loans may be caused by a variety of factors, which are difficult to predict. Accordingly, there exists a risk that loans purchased at a price greater than par may experience a capital loss as a result of such a prepayment. In addition, proceeds received upon such a prepayment are subject to reinvestment risk.

The Loans invested in by the Issuer will be term loans and revolving loans, may pay interest at a fixed or floating rate and may be senior or subordinated. Purchasers of Loans are predominantly commercial banks, investment funds and investment banks. In addition, the Issuer may make investments in stressed or distressed Loans which are often less liquid than performing Loans. The Loans acquired by the Issuer are likely to be below investment grade.

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2.8 Risks relating to Fixed Income Securities

The Issuer may invest in bonds or other fixed income securities including, without limitation, bank debt, bonds, notes, debentures and commercial paper, as well as derivatives. Fixed income securities pay fixed, variable or floating rates of interest. The value of fixed income securities in which the Issuer invests will change in response to fluctuations in interest rates. In addition, the value of certain fixed income securities and loans can fluctuate in response to perceptions of creditworthiness, foreign exchange rates, political stability or soundness of economic policies. Fixed income securities are subject to the risk of the issuer's inability to meet principal and interest payments on its obligations (i.e. credit risk) and are subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity (i.e. market risk).

2.9 Participations and Assignments

The Issuer may acquire interests in Issuer Investments which are loans either directly (by way of novation or assignment) or indirectly (by way of participation). Each institution from which such an interest is acquired is referred to herein as a "Selling Institution". Interests in loans acquired directly by way of novation or assignment are referred to herein as "Assignments". Interests in loans acquired indirectly by way of participation are referred to herein as "Participations". As described in more detail below, holders of participations are subject to additional risks not applicable to a holder of a direct interest in a loan.

The purchaser of an Assignment typically succeeds to all the rights of the assigning Selling Institution and becomes entitled to the benefit of the loans and the other rights of the lender under the loan agreement. The Issuer, as an assignee, will generally have the right to receive directly from the borrower all payments of principal and interest to which it is entitled, provided that notice of such Assignment has been given to the borrower. As a purchaser of an Assignment, the Issuer typically will have the same voting rights as other lenders under the applicable loan agreement and will have the right to vote to waive enforcement of breaches of covenants. The Issuer will generally also have the same rights as other lenders to enforce compliance by the borrower with the terms of the loan agreement, to set off claims against the borrower and to have recourse to collateral supporting the loan. As a result, the Issuer will generally not bear the credit risk of the Selling Institution and the insolvency of the Selling Institution should have no effect on the ability of the Issuer to continue to receive payment of principal or interest from the borrower. The Issuer will, however, assume the credit risk of the borrower.

Participations by the Issuer in a Selling Institution's portion of the loan typically results in a contractual relationship only with such Selling Institution and not with the borrower under such loan. The Issuer would, in such case, only be entitled to receive payments of principal and interest to the extent that the Selling Institution has received such payments from the borrower. In purchasing Participations, the Issuer generally will have no right to enforce compliance by the borrower with the terms of the applicable loan agreement and the Issuer may not directly benefit from the collateral supporting the loan in respect of which it has purchased a Participation. As a result, the Issuer will assume the credit risk of both the borrower and the Selling Institution selling the Participation. In the event of the insolvency of the Selling Institution, the Issuer may be treated as a general creditor of the Selling Institution and may not benefit from any set off between the Selling Institution and the borrower and the Issuer may suffer a loss to the extent that the borrower sets off claims against the Selling Institution. The Issuer may purchase a Participation from a Selling Institution that does not itself retain any economic interest in the loan, and therefore may have limited interest in monitoring the terms of the loan agreement and the continuing creditworthiness of the borrower. When the Issuer holds a Participation in a loan it generally will not have the right to participate directly in any vote to waive enforcement of any covenants breached by a borrower. A Selling Institution voting in connection with a potential waiver of a restrictive covenant may have interests which are different from those of the Issuer and such Selling Institutions may not be required to consider the interests of the Issuer in connection with the exercise of its votes. Additional risks are therefore associated with the purchase of Participations by the Issuer as opposed to Assignments. See also 2.27 (Events in the CDO and Leveraged Finance Markets) below

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2.10 Synthetic Securities

In addition to the credit risks associated with holding loans which are reference obligations under synthetic securities, the Issuer will usually have a contractual relationship with the relevant synthetic counterparty only, and not with the reference entity of the reference obligation (in each case as defined in the relevant synthetic security). The Issuer generally will have no right directly to enforce compliance by the reference entity with the terms of the reference obligation nor any rights of set off against the reference entity, nor have any voting rights with respect to the reference obligation. The Issuer will not directly benefit from the collateral supporting the reference obligation and will not have the benefit of the remedies that would normally be available to a holder of such reference obligation. In addition, in the event of the insolvency of the synthetic counterparty, the Issuer will be treated as a general unsecured creditor of such synthetic counterparty, and will not have any claim with respect to the reference obligation. Consequently, the Issuer will be subject to the credit risk of the synthetic counterparty as well as that of the reference entity. As a result, concentrations of synthetic securities entered into with any one synthetic counterparty subject the VF Notes and the Notes to an additional degree of risk with respect to default by such synthetic counterparty as well as by the reference entity. Although the Investment Manager will not perform independent credit analyses of the synthetic counterparties on behalf of the Issuer, any such synthetic counterparty, or an entity guaranteeing such synthetic counterparty, individually and in the aggregate, will be required to satisfy, at the time of purchase, the applicable rating requirement for Eligible Counterparties for purposes of the Market Valuation Manual.

The Issuer expects that the returns on a synthetic security will generally reflect those of the related reference obligation. However, as a result of the terms of the synthetic security and the assumption of the credit risk of the applicable synthetic counterparty, a synthetic security may have a different expected return, a different (and potentially greater) probability of default, a different (and potentially greater) expected loss characteristic following a default and a different (and potentially lower) expected recovery following default. Additionally, the terms of a synthetic security may provide for different maturities, payment dates, interest rates, interest rate references and credit exposures and non credit related exposures for the Issuer than those of the reference obligation relating thereto.

Generally, upon the occurrence of certain specified credit events under a synthetic security relating to the credit of the applicable reference entity, the relevant synthetic security will become repayable and its terms will permit or require the synthetic counterparty to satisfy its repayment obligations under the synthetic security in such circumstances by delivering to the Issuer a principal amount of reference obligations or other deliverable obligations of the applicable reference entity equal to the original principal amount of the applicable synthetic security or cash in an amount equal to the current Market Value of such reference obligations. The value of such obligations or such amounts may be significantly less than the original principal amount of such synthetic security or, in certain circumstances, equal zero.

2.11 Collateral Valuation

Certain of the Collateral valuation procedures provided for by the Market Valuation Manual may cause the calculated Market Value of the Collateral on any date to vary from the actual Market Value of the Collateral. The Market Value of Issuer Investments (other than Cash or Cash Equivalents) for which a Market Value has not been obtained from an Approved Source (each as defined in the Market Valuation Manual) on the preceding Valuation Date ("Unquoted Investments") will be either (x) (i) the lower of the bid prices from two Approved Investment Banking Firms or Approved Dealers (each as defined in the Market Valuation Manual) or (ii) the average of the bid prices quoted by three Approved Investment Banking Firms or Approved Dealers, in each case obtained at least monthly or quarterly, as applicable or (y) appraised by an Approved Third Party Appraiser (as defined in the Market Valuation Manual) obtained at least monthly or quarterly, as applicable. The valuations of Unquoted Investments will be provided on a less frequent basis than those for the remainder of the Collateral, with Unquoted Investments being valued on a monthly or quarterly basis, as applicable. In addition, the Investment Manager will have wide discretion in selecting Approved Investment Banking Firms and Approved Third Party Appraisers (which may include the Initial Purchaser, a Holder or dealer in some or all of the VF Notes or Notes or any

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of their respective Affiliates). The actual Market Value of the Issuer's Unquoted Investments may increase or decrease between the required valuations or appraisals obtained by the Investment Manager. With respect to the Class E Subordinated Notes, additional time may elapse between the occurrence of an event of default and the exercise of remedies on behalf of the Class E Subordinated Noteholders by reason of the subordination provisions contained in the Intercreditor Arrangements.

Although the various Advance Rates applicable to each Asset Category (as defined in the Market Valuation Manual), will produce a discounted Market Value of all Issuer Investments in the Collateral (other than Excluded Issuer Investments) that is intended to take account of potential declines in the Market Value of Collateral between the date of the most recent valuations thereof made in accordance with the Trust Deed and any sale or other realisation thereof, there is no assurance that (i) the Advance Rates will be sufficient to protect against any actual decline in Market Value over that period or (ii) there will not be adverse changes after the relevant Closing Date in asset price volatility or other economic factors relative to the assumptions employed in determining such Advance Rates.

2.12 Potential Illiquidity of Issuer Investments

The Market Value of Issuer Investments will fluctuate with, among other things, changes in market interest rates, general economic conditions, economic conditions in particular industries, the condition of financial markets and the financial condition of the issuers of Issuer Investments. In addition, the lack of an established, liquid secondary market for some of the Issuer Investments may have an adverse effect on the Market Value of Issuer Investments and on the Issuer's ability to dispose of them. Additionally, Issuer Investments may be subject to certain transfer restrictions that may also contribute to illiquidity. Therefore, no assurance can be given that, if the Issuer is determined to dispose of a particular investment, it could dispose of such investment at the previously prevailing market price. Such illiquidity may adversely affect the price and timing of liquidation of Issuer Investments upon the maturity of any Permitted Indebtedness or in connection with the redemption of one or more tranches of External Permitted Debt, upon the liquidation of the Collateral following the occurrence of an event of default with respect to the VF Notes, the Notes or any External Permitted Debt or if it is necessary for the Issuer to sell Issuer Investments to repay Indebtedness in order to meet the Over-Collateralisation Tests in the Initial Borrowing Arrangements or equivalent tests in any other Permitted Debt Document.

2.13 Concentration Risk

The Market Valuation Manual sets out certain limitations as to the concentration of Issuer Investments that may be acquired from time to time. Issuer Investments acquired in excess of these concentration limits will constitute Excess Issuer Investments and will be disregarded for the purpose of establishing compliance with the Over-Collateralisation Tests.

In addition, however, the concentration of the Portfolio in any one obligor would subject the VF Notes and the Notes to a greater degree of risk with respect to defaults by such obligor, and the concentration of the Portfolio in any one industry, region or country could subject the VF Notes and the Notes to a greater degree of risk with respect to economic downturns relating to such industry, region or country.

2.14 Interest Rate Risk

The VF Notes and the Notes issued on the Initial Closing Date bear interest at floating rates. VF Notes and Notes issued following the Initial Closing Date may bear interest at fixed or floating rates. However, the amount or proportion of the Issuer Investments securing the VF Notes and Notes that bear interest at fixed or floating rates may not correspond to the amount or proportion of the VF Notes and Notes that bear interest on such respective bases, and there will be no requirement as to the amount or proportion of the Issuer Investments securing the VF Notes and Notes that must bear interest on a particular basis. In addition, any payments of principal or interest received in respect of Issuer Investments and not otherwise reinvested in further Issuer Investments or used to repay Advances under VF Notes will generally be invested in Cash or Cash Equivalents. There is no requirement that such Cash or Cash

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Equivalents bear interest on a particular basis, and the interest rates available for such are inherently uncertain.

There may also be mismatches due to floating rate Issuer Investments and VF Notes and Notes having their interest rates reset based on different dates, frequencies and indices. As a result of such mismatches, fluctuations in interest rates could adversely impact the ability of the Issuer to make payments on the VF Notes and Notes. The Issuer may enter into one or more Secured Hedging Transactions to reduce the impact of the interest rate mismatch. There can be no assurance however that such Secured Hedging Transactions entered into by the Issuer will achieve the intended results. It is expected that the Initial Purchaser and/or one or more of its Affiliates and/or one or more Affiliates of the Investment Manager, with acceptable credit support arrangements, if necessary, may act as counterparty with respect to all or some of the Secured Hedging Transactions, which may create certain conflicts of interest (see the section of these Risk Factors headed "4. Certain Conflicts of Interest" below).

In the event of the insolvency of a Secured Hedging Counterparty, the Issuer will be treated as a general creditor of the applicable Secured Hedging Counterparty. Consequently, the Issuer will be subject to the credit risk of such Secured Hedging Counterparty as well as that of the Issuer Investments.

2.15 Currency Risk

It is anticipated that a portion of the Issuer Investments will not be denominated in Euro. The percentage of the Portfolio that is comprised of these types of securities may increase or decrease over the life of the VF Notes and Notes. Notwithstanding that Issuer Investments not denominated in Euro may have an associated Secured Hedging Transaction which will include currency protection provisions, losses may be incurred due to fluctuations in the Euro exchange rates in the event of a default under any such Secured Hedging Transaction.

In addition, fluctuations in Euro exchange rates may result in a decrease in value of the Portfolio for the purposes of sale thereof upon enforcement of the security over it. The Investment Manager may also be limited at the time of reinvestment in its choice of Issuer Investments because of the cost of entry into such Secured Hedging Transactions and due to restrictions in the Investment Management Agreement with respect thereto.

The Issuer's ongoing payment obligations under such Secured Hedging Transactions (including termination payments) may be significant. The payments associated with such hedging arrangements generally rank senior to payments on the Class B Notes, the Class C Notes, the Class D Notes and the Class E Subordinated Notes.

The Issuer will depend upon each Secured Hedging Counterparty to perform its obligations under any applicable Secured Hedging Transactions. If any such Secured Hedging Counterparty defaults or becomes unable to perform due to insolvency or otherwise, the Issuer may not receive payments it would otherwise be entitled to from such Secured Hedging Counterparty to cover its foreign exchange exposure.

2.16 Insolvency Considerations relating to Issuer Investments

Issuer Investments may be subject to various laws enacted for the protection of creditors in the countries of the jurisdictions of incorporation of obligors and, if different, in which the obligors conduct business and in which they hold assets, which may adversely affect such obligors' abilities to make payment on a full or timely basis. These insolvency considerations will differ depending on the country in which each obligor is located or domiciled and may differ depending on whether the obligor is a non sovereign or a sovereign entity. In particular, it should be noted that a number of continental European jurisdictions operate "debtor friendly" insolvency regimes which could result in delays in payments under Issuer Investments where obligations thereunder are subject to such regimes, in the event of their insolvency.

The different insolvency regimes applicable in the different European jurisdictions may result in a corresponding variability of recovery rates for senior loans, mezzanine loans and High

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Yield Securities entered into or issued by obligors in such jurisdictions. Reliable historical data is limited.

2.17 Future Funding of Commitments to the Issuer

In addition to the commitments under the VF Notes, the Issuer from time to time may obtain new commitments for loans under any External Permitted Debt Documents. Any Advances made under the VF Notes will be subject to satisfaction of certain conditions and any commitments to lend under any other External Permitted Debt Document will likely be subject to satisfaction of certain conditions. In addition, the Issuer may rely upon the liquidity provided by the commitments for payments of interest and principal on Permitted Indebtedness, including the VF Notes and the Notes. In the event that the commitments are terminated under the VF Notes or any other External Permitted Debt Document, the Issuer could lose borrowing capacity due to the disposition of Issuer Investments against which such borrowing could be secured. In the event that the commitments are terminated or any conditions to borrowing under either of the VF Notes or any other External Permitted Debt Document have not been met, the Issuer may experience a liquidity crunch and lack cash to meet its current expenses and obligations in respect of Permitted Indebtedness.

2.18 Changes in Tax Law, No Gross Up

Following acquisition by the Issuer, payments of interest on the Issuer Investments either will not be subject to any withholding tax imposed by any jurisdiction (including pursuant to the operation of an applicable tax treaty and, in some cases, the completion of procedural formalities) or, if and to the extent that any such withholding tax does apply, the relevant obligor will be obliged to make gross up payments to the Issuer that cover the full amount of such withholding tax. However, there can be no assurance that, as a result of any change in any applicable law, rule or regulation or interpretation thereof, the payments on the Issuer Investments might not in the future become subject to withholding tax or increased withholding rates in respect of which the relevant obligor will not be obliged to gross up to the Issuer. In such circumstances, the Issuer may be able, but will not be obliged, to take advantage of (a) a double taxation treaty between Ireland and the jurisdiction from which the relevant payment is made, or (b) the fact that the Issuer has taken a Participation in such Issuer Investments from a Selling Institution which is able to pay interest payable under such Participation gross if paid in the ordinary course of its business.

In addition, where the Issuer, in order to receive payments of interest without any deduction for withholding, applies for the benefit of relevant double taxation treaties, there can be no guarantee that the Issuer will actually obtain such benefit either in a timely manner or at all. The application and procedure for relief from withholding tax is treaty specific and the approval process can, for example, take time, many months in certain jurisdictions. Until such time as the applicable approval process is complete and a clearance notice (or the equivalent) is issued to the applicable obligor, the obligor will be required to withhold tax on payments of interest if so required under applicable law. Any such withholding will reduce the funds available to the Issuer to pay its liabilities and may not be recoverable.

There can be no assurances that the Issuer will be permitted to take the benefit of any double taxation treaty. In the event that the Issuer receives any interest payments on any Issuer Investments net of any applicable withholding tax, the Over-Collateralisation Tests will be determined by reference to such net receipts. Such tax would also reduce the amounts available to make payments on the VF Notes and the Notes. There can be no assurance that remaining payments on the Issuer Investments would be sufficient to make timely payments of interest, principal on each Maturity Date and other amounts payable in respect of the VF Notes or the Notes of each Class.

See also the section of these Risk Factors headed "8. New U.S. Tax Law" below for a discussion on recent changes in U.S. tax law which may affect payments on the Collateral and to Noteholders.

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2.19 Investment Manager

The Investment Manager is given authority in the Investment Management Agreement to act as Investment Manager to the Issuer in respect of the Portfolio pursuant to and in accordance with the parameters and criteria set out in the Investment Management Agreement. The powers and duties of the Investment Manager in relation to the Portfolio include acting on behalf of the Issuer in relation to the acquisition and sale of Issuer Investments and monitoring compliance with the Over-Collateralisation Tests in accordance with the provisions of the Investment Management Agreement (see the section of this Prospectus headed "Description of the Portfolio and Market Valuation Methodology"). Any analysis by the Investment Manager (on behalf of the Issuer) of obligors under Issuer Investments which it is intending to purchase or which comprise Collateral from time to time will, in respect of Issuer Investments which are publicly listed bonds, be limited to a review of readily available public information and, in respect of Issuer Investments which are Assignments or Participations of senior and mezzanine loans and in relation to which the Investment Manager has non public information, such analysis will include due diligence of the kind common in relation to senior and mezzanine loans of such kind.

The performance of any investment in the VF Notes and the Notes will be dependent in part on the ability of the Investment Manager to monitor the Portfolio and manage the sale and acquisition of Issuer Investments and the performance of the Investment Manager of its obligations under the Investment Management Agreement.

The Investment Manager will covenant and agree in the Investment Management Agreement to perform its obligations and exercise its discretions under the Investment Management Agreement in good faith and will exercise a standard of care which the Investment Manager (and its Affiliates) exercises with respect to comparable assets and liabilities that it manages for itself and others (if any), in each case, in a manner consistent with practices and procedures generally followed by prudent institutional investment managers of international standing managing assets and liabilities similar in nature and character to those which comprise the Collateral, except as otherwise expressly provided in the Investment Management Agreement. The Investment Manager is exempted from liability arising out of or in connection with the performance of its duties under the Investment Management Agreement except by reason of acts or omissions of the Investment Manager constituting wilful misconduct, negligence or other breach of the terms of the Investment Management Agreement having a material adverse effect on the interest of the Issuer, the VF Noteholders, any Class of Noteholders (acting as a Class) or the Trustee.

The Investment Manager may under certain circumstances resign as described under the section of this Prospectus headed "Description of the Investment Management Agreement". However, subject to and in accordance with the terms of the Investment Management Agreement, such resignation will not be effective unless and until the Issuer, or, under certain circumstances, the Trustee, or, under certain circumstances, the Holders of the Class E Subordinated Notes, acting independently by Ordinary Resolution, or, under certain circumstances, the Holders of the Controlling Class, acting by two-thirds majority in accordance with the terms of the Security and Intercreditor Deed, has, or have, as the case may be, appointed a successor Investment Manager (see the section of this Prospectus headed "Description of the Investment Management Agreement"). No purported resignation of the Investment Manager shall be effective until a successor Investment Manager has been appointed.

The Investment Manager will be dependent upon the financial and managerial experience of certain individuals associated with the Investment Manager in the management of portfolios of fixed income assets. The loss of key individuals from the Investment Manager could have a material adverse effect on the performance of the Portfolio and consequently, the performance of the VF Notes and the Notes. Although the Investment Manager is required, pursuant to its entry into the Investment Management Agreement, to commit an appropriate amount of its business efforts to the management of the Portfolio, the Investment Manager is not required to devote all of its time to such affairs and may continue to advise and manage other investment funds in the future.

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Prior investment results and returns achieved by the Investment Manager are not likely to be indicative of the Issuer's investment results. In addition, the nature of, and risks associated with, the Issuer Investments to be acquired by the Issuer may differ materially from those investments and strategies undertaken historically by the Investment Manager, including by reason of the diversity and other parameters required by the Investment Management Agreement. There can be no assurance that the Issuer Investments will perform as well as the past investments for any such account.

2.20 Security: Fixed Charge

Security over the Issuer Investments held in Clearing Systems

The Issuer Investments which are securities will be held by the Custodian. The Custodian will hold certain of such securities (i) through its accounts with DTC, Euroclear or Clearstream, Luxembourg, as appropriate and (ii) through its sub custodians who will in turn hold such securities both directly and through any appropriate clearing system. Those securities held in clearing systems will not be held in special purpose accounts and will be fungible with other securities from the same issue held in the same accounts on behalf of the other customers of the Custodian or its sub custodian, as the case may be. A first fixed charge over such securities was created under English law pursuant to the Security Documents on the Initial Closing Date and takes effect as a security interest over the right of the Issuer to require delivery of equivalent securities from the Custodian in accordance with the terms of the Agency Agreement (see "Terms and Conditions" below).

The Issuer Investments pursuant to the Security Documents which are securities held by the Custodian on behalf of the Issuer through its account with Euroclear are also the subject of a commercial pledge under Belgian law created by the Issuer on the Initial Closing Date. The effect of this security interest will be to enable the Custodian, on enforcement, to sell the securities in the pledged account on behalf of the Trustee. Such Belgian law pledge does not entitle the Trustee to require delivery of the relevant securities from the depositary or depositaries that have physical custody of such securities or allow the Trustee to rehypothecate such securities.

However, the English law charge and Belgian law pledge created pursuant to the Security Documents may be insufficient to secure or ineffective in securing the Issuer Investments which are securities for the benefit of Noteholders and External Creditors, particularly in the event of any insolvency or liquidation of the Custodian or any sub custodian that has priority over the right of the Issuer to require delivery of such assets from the Custodian in accordance with the terms of the Agency Agreement. Any risk of loss arising from any insufficiency or ineffectiveness of the security for the VF Notes or Notes must be borne by the VF Noteholders or Noteholders without recourse to the Issuer, the Trustee, the Initial Purchaser, the Investment Manager, the Collateral Administrator or any other party.

In addition, custody and clearance risks may be associated with Issuer Investments which are securities that do not clear through DTC, Euroclear or Clearstream, Luxembourg. There is a risk, for example, that such securities could be counterfeit, or subject to a defect in title or claims to ownership by other parties.

Fixed Security

Although the English law security constituted by the Security Documents over the Issuer Investments held from time to time, including the security over the Accounts, is expressed to take effect as fixed security, it may (as a result of the substitutions of Issuer Investments contemplated by the Investment Management Agreement and the payments to be made from the Accounts in accordance with the Conditions and the Trust Deed) take effect as a floating charge which, in particular, would rank after a subsequently created fixed security interest. However, the Issuer has covenanted not to create any such subsequent security interests without the prior written consent of the Trustee.

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Governing Law of Portfolio

The Security Documents other than the Pledge Agreement (which will be governed by Belgian law) will be governed by English law. Some of the Issuer Investments may be obligations governed by laws of jurisdiction other than England (or, as the case may be, Belgium) and which may require different and/or additional procedures and/or documentation to create or perfect any security interest.

2.21 Event Orientated Trading and Special Situation Investments

The Investment Manager may cause the Issuer to engage in event orientated trading and investment in special situation investments, which often involve the purchase of a company's securities after the company's announcement of a significant event.

The Issuer may invest and trade in securities of companies that it believes are undervalued because, although such companies are not the subject of an announced tender offer, merger or acquisition transaction, in the Investment Manager's view such companies are likely candidates for such a transaction. In such a case, if the anticipated transaction does not in fact occur, the Issuer may sell the securities at a loss.

The Issuer may invest in securities of issuers in weak financial condition, experiencing poor operating results, having substantial capital needs or negative net worth, facing special competitive or product obsolescence problems, or that are involved in bankruptcy or reorganisation proceedings. Investments of this type may involve financial and business risks that can result in losses. Among the risks inherent in investments in troubled entities is the inability to obtain information as to the true condition of such issuers. Such investments may also be affected adversely by laws relating to, among other things, fraudulent transfers and other voidable transfers or payments, lender liability and the courts' power to disallow, reduce, subordinate or disenfranchise particular claims. The market prices of such securities are also subject to abrupt and erratic market movements and above average price volatility, and the spread between the bid and asked prices of such securities may be greater than normally expected with respect to non troubled issuers. It may take a number of years for the market price of such securities to reflect their intrinsic value.

Securities of financially troubled companies require active monitoring and may, at times, require participation in bankruptcy or reorganisation proceedings by the Investment Manager. To the extent that the Investment Manager becomes involved in such proceedings, the Issuer may have a more active participation in the affairs of the issuer than that assumed generally by an investor.

In liquidation (both in and out of bankruptcy) and other forms of corporate reorganisation, there exists the risk that the reorganisation either will be unsuccessful (due to, for example, failure to obtain requisite approvals), will be delayed (for example, until various liabilities, actual or contingent, have been satisfied) or will result in a distribution of cash or a new security the value of which will be less than the purchase price to the Issuer of the security in respect of which such distribution was made.

In certain transactions, the Issuer may not be hedged against the risk of market fluctuations or, in liquidation situations, may not assess accurately the value of the assets of the company being liquidated. This can result in losses, even if the proposed transaction is consummated.

The Investment Manager attempts to assess all of the foregoing risk factors, and others, in determining the extent of the position the Issuer will take in the relevant securities and the price it is willing to pay for such securities. However, such risks cannot be eliminated.

2.22 Zero Coupon and Deferred Interest Bonds

The Issuer may invest in zero coupon bonds and deferred interest bonds, which are debt obligations issued at a significant discount from face value. The original discount approximates the total amount of interest the bonds will accrue and compound over the period until maturity or the first interest accrual date at a rate of interest reflecting the market rate of the security at the time of issuance. While zero coupon bonds do not require the periodic

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payment of interest, deferred interest bonds generally provide for a period of delay before the regular payment of interest begins. Such investments experience greater volatility in the Market Value due to changes in interest rates in comparison to debt obligations which provide for regular payments of interest.

2.23 "Spread Widening" Risk

For reasons not necessarily attributable to any of the risks set forth herein (for example, supply/demand imbalances or other market forces), the prices of the securities in which the Issuer invests may decline substantially. In particular, purchasing assets at what may appear to be "undervalued" levels is no guarantee that these assets will not be trading at even lower levels at a time of valuation or at the time of sale. It may not be possible to predict, or to hedge against, such "spread widening" risk.

2.24 Other Hedging Transactions

Subject to compliance with the Initial Borrowing Arrangements, the Issuer, directly or indirectly, may opt to, or may be required to, utilise a variety of financial instruments such as derivatives, options, swaps, caps and floors and forward contracts, both for investment purposes and for risk management purposes in order to: (i) protect against possible changes in the market value of the Portfolio resulting from fluctuations in the securities markets and changes in interest rates, (ii) protect the Issuer's unrealised gains in the value of the Portfolio, (iii) facilitate the sale of any such investments, (iv) establish a position as a temporary substitute for other Issuer Investments, (v) enhance or preserve returns, spreads or gains on any investment in the Portfolio, (vi) hedge the interest rate or currency exchange rate on any of the Issuer's liabilities or assets, (vii) protect against any increase in the price of any Issuer Investments the Issuer anticipates purchasing at a later date or (viii) for any other reason that the Investment Manager deems appropriate.

The Investment Manager is not required to attempt to hedge all the financial risks of the Issuer and, for various reasons, may determine not to do so. Furthermore, the Investment Manager may not anticipate a particular risk so as to hedge against it. While the Issuer may enter into hedging transactions in seeking to reduce risk, such transactions may result in a poorer overall performance for the Issuer than if it had not engaged in any such hedging transaction. For a variety of reasons, the Investment Manager may not seek to establish a perfect correlation between such hedging instruments and the assets or liabilities being hedged. Such imperfect correlation may prevent the Issuer from achieving the intended hedge or expose the Issuer to risk of loss. The success of the hedging strategy of the Issuer is subject to the Investment Manager's ability to assess correctly the degree of correlation between the performances of the instruments used in the hedging strategy and the performance of the Issuer Investments or Debt being hedged. Since the characteristics of many investments change as markets change or time passes, the success of the Issuer's hedging strategy is also subject to the Investment Manager's ability to recalculate continually, readjust and execute hedges in an efficient and timely manner.

2.25 Disclosure of Portfolio

The Issuer's audited financial statements will not include a detailed listing of positions held by the Issuer. Such confidentiality is maintained for the purpose of preventing third parties from using information concerning the Issuer's positions to its detriment. Examples of ways in which such information could be used adversely to the Issuer include: (i) to "front run" the Issuer on sales, or additional purchases, of such positions, (ii) to make it more difficult for the Issuer to protect its positions by withholding, or causing others to withhold, prospective trades, (iii) to make it difficult to acquire or borrow Issuer Investments or (iv) otherwise to interfere with the Issuer's investment objectives. For this reason, the Investment Manager believes it is important to take extra precautions to maintain the confidentiality of the positions in the Portfolio. In addition, the Investment Manager may be required to enter into confidentiality agreements when purchasing assets which will comprise the Portfolio.

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2.26 Lender Liability Considerations; Equitable Subordination

In recent years, a number of judicial decisions in the United States and other jurisdictions have upheld the right of borrowers to sue lenders or bondholders on the basis of various evolving legal theories (collectively, termed "lender liability"). Generally, lender liability is founded upon the premise that an institutional lender or bondholder has violated a duty (whether implied or contractual) of good faith and fair dealing owed to the borrower or issuer or has assumed a degree of control over the borrower or issuer resulting in the creation of a fiduciary duty owed to the borrower or issuer or its other creditors or shareholders. Although it would be a novel application of the lender liability theories, the Issuer may be subject to allegations of lender liability. However, neither the Issuer nor the Investment Manager acting on its behalf intend to engage in any conduct that would form the basis for a successful cause of action based upon lender liability.

In addition, under common law principles that in some cases form the basis for lender liability claims, if a lender or bondholder (a) intentionally takes an action that results in the under-capitalisation of a borrower to the detriment of other creditors of such borrower, (b) engages in other inequitable conduct to the detriment of such other creditors, (c) engages in fraud with respect to, or makes misrepresentations to, such other creditors or (d) uses its influence as a stockholder to dominate or control a borrower to the detriment of other creditors of such borrower, a court may elect to subordinate the claim of the offending lender or bondholder to the claims of the disadvantaged creditor or creditors, a remedy called "equitable subordination". Because of the nature of the Issuer Investments, the Issuer may be subject to claims from creditors of an obligor that Issuer Investments issued by such obligor that are held by the Issuer should be equitably subordinated. However, the Issuer does not intend to engage in, and the Investment Manager does not intend to advise the Issuer with respect to, any conduct that would form the basis for a successful cause of action based upon the equitable subordination doctrine described above.

The preceding discussion is based upon principles of United States federal and state laws. Insofar as Issuer Investments that are obligations of non-United States obligors are concerned, the laws of certain foreign jurisdictions may impose liability upon lenders or bondholders under factual circumstances similar to those described above, with consequences that may or may not be analogous to those described above under United States federal and state laws.

2.27 Events in the CDO and Leveraged Finance Markets

The global economy is currently being affected by a crisis in the credit markets and as a result many countries are experiencing slow and sporadic growth or are currently still in recession.

There exist significant risks for the Issuer and investors as a result of the current economic conditions. These risks include, among others, (i) the likelihood that the Issuer will find it more difficult to sell any of its assets or to purchase new assets in the secondary market, (ii) the possibility that, on or after the December 2010 Closing Date, the price at which assets can be sold by the Issuer will have deteriorated from their effective purchase price and (iii) the illiquidity of the Notes. These additional risks may affect the returns on the Notes to investors and/or the ability of investors to realise their investment in the Notes prior to their stated maturity.

In addition, the primary market for a number of financial products including leveraged loans has stalled. As well as reducing opportunities for the Issuer to purchase assets in the primary market, this is likely to increase the refinancing risk in respect of maturing assets. Although there have recently been signs that the primary market for certain financial products is recovering, particularly in the United States of America, the impact of the current economic crisis on the primary market may adversely affect the flexibility of the Investment Manager to invest and, ultimately, the returns on the Notes to investors.

The credit crisis has had an increasingly negative impact on global economic conditions. The current economic climate may have an adverse effect on the ability of consumers and businesses to repay or refinance their existing debt. Although there have been recent reports of the stabilisation or improvement of certain leading economic indicators, there still remains a

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risk of a "double-dip" recession in countries which have experienced modest growth over previous quarters and continued recession in countries which have not yet experienced positive growth since the onset of the global recession.

Difficult macro economic conditions may adversely affect the rating, performance and the realisation value of the Collateral. Default rates on loans and other investments may continue to fluctuate and accordingly the performance of many CDO transactions and other types of investment funds may suffer as a result. It is also possible that the Collateral will experience higher default rates than anticipated and that performance will suffer. In addition, payments under the Notes may be restricted by operation of the Restricted Payment Provisos and other related provisions if a fall in the Market Value of the Collateral results in a breach of one or more Over-Collateralisation Tests.

Some leading global financial institutions have been forced into mergers with other financial institutions, partially or fully nationalised or have gone bankrupt or insolvent. The bankruptcy or insolvency of a major financial institution may have an adverse effect on the Issuer, particularly if such financial institution is a grantor of a participation in an asset or is a hedge counterparty to a swap or hedge involving the Issuer, or a counterparty to a buy or sell trade that has not settled with respect to an asset. The bankruptcy or insolvency of another financial institution may result in the disruption of payments to the Issuer. In addition, the bankruptcy or insolvency of one or more additional financial institutions may trigger additional crises in the global credit markets and overall economy which could have a significant adverse effect on the Issuer, the Collateral and the Notes.

It is possible that one of the effects of the global credit crisis and the failure of financial institutions will be an introduction of a significantly more restrictive regulatory environment including the implementation of new accounting and capital adequacy rules in addition to further regulation of derivative instruments. Such additional rules and regulations could, among other things, adversely affect Noteholders as well as the flexibility of the Investment Manager in managing and administering the Collateral.

While it is possible that current conditions may improve for certain sectors of the global economy, there can be no assurance that the CDO, leveraged finance or structured finance markets will recover at the same time or to the same degree as such other recovering sectors.

Due in large part to the turbulent market conditions discussed in the paragraphs above, as of 13 October 2008, this transaction had a Collateralisation Shortfall Amount (as defined in the Conditions). In accordance with the Transaction Documents the Investment Manager (acting on behalf of the Issuer) proposed that the Issuer issue, and the Issuer issued, the Class I-1 Intervening Notes in order to cure such Collateralisation Shortfall Amount. The failure to cure a Collateralisation Shortfall Amount may result in an Event of Default.

3. RELATING TO THE NOTES

3.1 Limited Liquidity and Restrictions on Transfer

Although there is currently a limited market for notes similar to the VF Notes and the Notes there is currently no market for the VF Notes and the Notes themselves. Although the Initial Purchaser has advised the Issuer that it intends to make a market for the VF Notes and the Notes, the Initial Purchaser is not obliged to do so, and any such market making may be discontinued at any time without notice. There can be no assurance that any secondary market for any of the VF Notes or the Notes will develop or, if a secondary market does develop, that it will provide the VF Noteholders or the Noteholders with liquidity of investment or that it will continue for the life of such VF Notes and the Notes although Holders of Class E Subordinated Notes may exercise an optional redemption right following the expiry of the Non-Call Period applicable to the Class E Subordinated Notes held by them, subject to certain restrictions. Consequently, a purchaser of VF Note or a Rated Note must be prepared to hold such VF Note or Rated Note for an indefinite period of time or until the Maturity Date of such VF Note or Rated Note and a purchaser of a Class E Subordinated Note must be prepared to hold such Class E Subordinated Note subject to the limitations on the optional redemption terms imposed thereon and, if so required, up to the Maturity Date of the Class E Subordinated

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Notes. In addition, no sale, assignment, participation, pledge or transfer of the VF Notes or the Notes may be effected if, among other things, it would require the Issuer or any of its officers or directors to register under, or otherwise be subject to the provisions of, the Investment Company Act or any other similar legislation or regulatory action. Furthermore, the VF Notes and the Notes will not be registered under the Securities Act or any U.S. state securities laws, and the Issuer has no plans, and is under no obligation, to register the VF Notes or the Notes under the Securities Act. The VF Notes and the Notes are subject to certain transfer restrictions and can be transferred only to certain transferees (see the sections of this Prospectus headed "Plan of Distribution" and "Transfer Restrictions"). Such restrictions on the transfer of the Notes may further limit their liquidity. Consequently, a purchaser of VF Notes or Notes must be prepared to hold such VF Notes or Notes, as applicable, for an indefinite period of time or until the Maturity Date.

3.2 Limited Recourse Obligations

The VF Notes and the Notes are limited recourse obligations of the Issuer and are payable solely from amounts received in respect of the Collateral securing the VF Notes and the Notes. Payments on the VF Notes and the Notes both prior to and following enforcement of the security over the Collateral are subordinated to the prior payment of certain fees and expenses of, or payable by, the Issuer and to payment of principal and interest on the VF Notes and prior ranking Classes of Notes and other Transaction Creditors (see Condition 4(c) (Limited Recourse)). None of the Investment Manager, the Noteholders of any Class, the Initial Purchaser, any Secured Hedging Counterparty, the Trustee, the Collateral Administrator, the Custodian, the Registrar, any Agent or any Affiliates of any of the foregoing, the Issuer's Affiliates or any other person or entity (other than the Issuer) will be obliged to make payments on the VF Notes or the Notes of any Class. Consequently, VF Noteholders and Noteholders must rely solely on distributions in respect of, and liquidation proceeds of, Collateral securing the VF Notes and the Notes for the payment of principal, interest and premium, if any, thereon. There can be no assurance that the distributions on, or the sale proceeds of, the Collateral received and amounts received under the Secured Hedging Transactions will be sufficient to make payments on the VF Notes or on any Class of Notes, after making payments on more senior Classes of Notes, more senior External Permitted Debt and certain other required amounts to other creditors including External Creditors ranking senior to or pari passu with such VF Notes or such Class. If distributions on the Collateral are insufficient to make payments on the VF Notes, Notes and any other External Permitted Debt, no other assets (and, in particular, no assets of the Investment Manager, the Noteholders, the Initial Purchaser, any Secured Hedging Counterparty, the Trustee, the Collateral Administrator, the Custodian, any Agent or any Affiliates of any of the foregoing) will be available for payment of the deficiency and following realisation of the Collateral and the application of the proceeds thereof in accordance with the Intercreditor Priority of Payments, the obligations of the Issuer to pay such deficiency shall be extinguished. Such shortfall will be borne first by (a) Holders of Subordinated Indebtedness (including the Class E Subordinated Noteholders), (b) thereafter, by Holders of Intervening Indebtedness (according to the Intervening Indebtedness Priority of Payments, if any), (c) thereafter, the Class D Noteholders and Holders of External Fourth Senior Permitted Debt, (d) thereafter, the Class C Noteholders and Holders of External Third Senior Permitted Debt, (e) thereafter, the Class B Noteholders and Holders of External Second Senior Permitted Debt and (f) thereafter, the Class A Noteholders, Holders of External Senior Permitted Debt, Secured Hedging Counterparties and other Secured Creditors in accordance with the Intercreditor Priority of Payments.

In addition, at any time while the VF Notes and the Notes are Outstanding, none of the VF Noteholders, the Noteholders, the Trustee nor any other Secured Creditor (nor any other person acting on behalf of any of them) shall be entitled at any time to institute against the Issuer, or join in any institution against the Issuer of, any bankruptcy, reorganisation, arrangement, insolvency, winding up, liquidation or other proceedings under any applicable bankruptcy or similar law in connection with any obligations of the Issuer relating to the VF Notes, the Notes or the Trust Deed or otherwise owed to the VF Noteholders or the Noteholders, save for lodging a claim in the liquidation of the Issuer which is initiated by another party, or taking proceedings to obtain a declaration or judgment as to the obligations

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of the Issuer, nor shall any of them have a claim arising in respect of the share capital of the Issuer.

3.3 Subordination of the Class B Notes, the Class C Notes, the Class D Notes and the Class E Subordinated Notes

Except as described below, the Class B Noteholders are fully subordinated to the Class A Noteholders and the External Senior Creditors, the Class C Noteholders are fully subordinated to the Class A Noteholders, the External Senior Creditors, the Class B Noteholders and the External Second Senior Creditors, the Class D Noteholders are fully subordinated to the Class A Noteholders, the External Senior Creditors, the Class B Noteholders, the External Second Senior Creditors, the Class C Noteholders and the External Third Senior Creditors and the Class E Subordinated Noteholders are fully subordinated to the Holders of the Rated Notes, External Senior Creditors, External Second Senior Creditors, External Third Senior Creditors, External Fourth Senior Creditors and the Holders of any Intervening Indebtedness. No payments of interest will be made on the Class B Notes on any Payment Date until interest which is due and payable on the Class A Notes and External Senior Permitted Debt has been paid. No payments of interest will be made on the Class C Notes on any Payment Date until interest which is due and payable on the Class A Notes, External Senior Permitted Debt, the Class B Notes and External Second Senior Permitted Debt has been paid. No payments of interest will be made on the Class D Notes on any Payment Date until interest which is due and payable on the Class A Notes, External Senior Permitted Debt, the Class B Notes, External Second Senior Permitted Debt, the Class C Notes and External Third Senior Permitted Debt has been paid.

Other than on a Premature Redemption Date and in certain specified circumstances on final redemption pursuant to an optional redemption (see Condition 7 (Redemption)) and as permitted under the Intercreditor Arrangements, no payment of principal on the Class B Notes will be made until the Class A Notes, External Senior Permitted Debt and any Outstanding Issuer Swap Termination Payments have been paid in full, no payment of principal on the Class C Notes will be made until the Class A Notes, External Senior Permitted Debt, any Outstanding Issuer Swap Termination Payments, the Class B Notes and External Second Senior Permitted Debt have been paid in full, no payment of principal on the Class D Notes will be made until the Class A Notes, External Senior Permitted Debt, any Outstanding Issuer Swap Termination Payments, the Class B Notes, External Second Senior Permitted Debt, the Class C Notes and External Third Senior Permitted Debt have been paid in full and no payment in the nature of principal will be made on the Class E Subordinated Notes until the Rated Notes, the External Senior Permitted Debt, any Outstanding Issuer Swap Termination Payments, any External Second Senior Permitted Debt, External Third Senior Permitted Debt, External Fourth Senior Permitted Debt and any Intervening Indebtedness have been paid in full. The risk of delays in payments or ultimate non-payment of interest and/or principal will be borne disproportionately by the Holders to the Class E Subordinated Notes as compared to the Notes of each other Class, and as among the Holders of the other Classes of Notes will be borne disproportionately by the Holders of the more junior Classes of Notes as compared to the more senior Classes of Notes.

In the event of any acceleration of any Class of Notes occasioned by any enforcement action in respect of the Collateral then all other Notes will also be subject to automatic redemption/acceleration and the Collateral may, in either case, be liquidated. Liquidation of the Collateral at such time and/or remedies pursued by the Trustee upon enforcement of the security over the Collateral could be adverse to the interests of the Class A Noteholders, the Class B Noteholders, the Class C Noteholders, the Class D Noteholders or the Class E Subordinated Noteholders and the External Creditors, as the case may be. To the extent that any losses are incurred by the Issuer in respect of any Collateral, such losses will be borne first by the Class E Subordinated Noteholders, then by the Holders of any Intervening Indebtedness (according to the Intervening Indebtedness Priority of Payments, if any), then by Class D Noteholders and External Fourth Senior Creditors, then by the Class C Noteholders and External Third Senior Creditors, then by the Class B Noteholders and External Second Senior Creditors, and, finally, by the Class A Noteholders, External Senior Creditors and other Secured Creditors. Remedies pursued by the Class A Noteholders and the External Senior Creditors could be adverse to the interests of the Class B Noteholders and External Second

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Senior Creditors, the Class C Noteholders and External Third Senior Creditors, the Class D Noteholders and External Fourth Senior Creditors, the Holders of any Intervening Indebtedness and the Class E Subordinated Noteholders. Remedies pursued by the Class B Noteholders and External Second Senior Creditors could be adverse to the interests of the Class C Noteholders and External Third Senior Creditors, the Class D Noteholders and External Fourth Senior Creditors, Holders of any Intervening Indebtedness and the Class E Subordinated Noteholders. Remedies pursued by the Class C Noteholders and External Third Senior Creditors could be adverse to the interests of the Class D Noteholders and External Fourth Senior Creditors, Holders of any Intervening Indebtedness and the Class E Subordinated Noteholders. Remedies pursued by the Class D Noteholders and External Fourth Senior Creditors could be adverse to the interests of the Holders of any Intervening Indebtedness and the Class E Subordinated Noteholders. Remedies pursued by the Holders of any Intervening Indebtedness could be adverse to the interests of the Class E Subordinated Noteholders.

3.4 Subordination through Conflicts between Classes

The Controlling Class at a given time (which while any External Permitted Debt remains outstanding, will include the External Creditors in respect of the same) will be entitled to determine the remedies to be exercised under the Security Documents if events of default occur thereunder and to exercise certain other voting rights. Such remedies, or actions taken pursuant to such other voting rights, could be adverse to the interests of the Holders of the Classes of Notes not entitled to vote, and the Controlling Class entitled to vote at any time will have no obligation to consider the effect of any such vote on the Holders of any Classes of Notes not comprising such Controlling Class. As the Controlling Class operates in most circumstances by majority and may at any time comprise the Holders of External Permitted Debt as well as Noteholders (see definition of "Controlling Class" in Condition 1 (Definitions)), there is the possibility that the Holders of External Permitted Debt may out vote the applicable Noteholders and therefore determine the outcome of a Controlling Class decision irrespective of the wishes of such Noteholders.

3.5 Liquidity and Cash Flow

The Issuer expects to obtain funds to pay its expenses and to pay the principal and interest on the VF Notes, the Notes and all other Permitted Indebtedness from the cash flow generated on, and trading gains from, sales of the Issuer Investments. The Issuer's ability to meet its obligations under the VF Notes, the Notes or other External Permitted Debt Documents will depend upon the future performance of the Issuer Investments managed by the Investment Manager. The VF Noteholders and Noteholders and Holders of all other Permitted Indebtedness must rely upon the skills of the Investment Manager as the Investment Manager of the Issuer Investments to properly plan for expected and unexpected cash requirements of the Issuer, including any obligation to make future extensions of credit or otherwise fund any Issuer Investment. If the Investment Manager does not obtain a sufficient number of investment opportunities or if the investments made by the Investment Manager do not generate the expected level of returns (whether from trading or income), the Issuer's cash flow may not be sufficient to meet its funding obligations in respect of Issuer Investments or to allow it to pay principal and interest in a timely manner on the VF Notes, the Notes or any other Permitted Indebtedness. The failure to generate sufficient liquidity could therefore cause defaults under the Permitted Debt Documents and significantly adversely affect the value of the VF Notes and the Notes.

In addition, in the event that the Issuer's cash flows are not sufficient to pay expenses incurred by the Issuer, the ability of the Issuer to operate effectively may be impaired, and it may not be able to defend or prosecute legal proceedings brought against it or which it might otherwise bring to protect its interests or be able to pay the expenses of legal proceedings against persons it has indemnified.

3.6 Mandatory Redemption of the Notes

Under the Transaction Documents the Issuer is obliged to observe the Over-Collateralisation Tests established by reference to the Market Valuation Manual which in turn reflects coverage

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expectations of the Rating Agencies. Failure by the Issuer to comply with the Over-Collateralisation Tests may, assuming the same does not give rise to an event of default under the Notes or that the Issuer does not otherwise remedy the failure, result in mandatory redemption in whole or part of the Notes of each Class. Such redemptions will take place in order of seniority, with Class A Notes being paid out prior to Class B Notes, Class B Notes prior to Class C Notes, Class C Notes prior to Class D Notes and Class D Notes prior to Class E Subordinated Notes. Such redemptions could result in the elimination, deferral or reduction of interest and/or principal payments made to the Holders of the Class B Notes, the Class C Notes, the Class D Notes and the Class E Subordinated Notes, as the case may be, and may also reduce the leverage ratio of the Class E Subordinated Notes to the Collateral, which could adversely impact the level of returns to the Holders of the Class E Subordinated Notes. Depending on the timing of the Issuer's breach of the Over-Collateralisation Tests, amounts of principal so paid may not be paid on Payment Dates (see Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates)). The Class E Subordinated Notes may also, if the Investment Manager in its discretion so determines, be redeemed on a mandatory basis if the aggregate Principal Amount Outstanding thereof falls below €25,000,000 (see Condition 7(f)(ii) (Mandatory Class E Subordinated Note Redemptions for Liquidity Reasons)) and may also be redeemed on a mandatory basis, as regards any relevant Class E Subordinated Noteholder, as a consequence of the application of the Split Redemption Procedure (see Condition 7(b)(v) (Class E Subordinated Note Split Redemption Procedure)). If on the occasion of the optional redemption of any Class E Subordinated Notes the Issuer so elects, the Class A Notes and/or the Class B Notes and/or the Class C Notes and/or the Class D Notes may also be redeemed in whole or in part on a mandatory basis (see Condition 7(f)(iii) (Mandatory Redemption of Interest Bearing Notes other than Class E Subordinated Notes on Optional Redemption of Class E Subordinated Notes)).

3.7 Optional Redemption and Market Volatility

A form of liquidity for the Class E Subordinated Notes is provided by the optional redemption provision set out in Condition 7(b)(i) (Optional Redemption Requirements). There can be no assurance however that such optional redemption provision will be capable of exercise in accordance with the conditions set out in Condition 7(b)(iii) (Formalities for Optional Redemption and Associated Mandatory Redemption). The Market Value of the Issuer Investments may fluctuate with, among other things, changes in prevailing interest rates, foreign exchange rates, general economic conditions, the conditions of financial markets (particularly the markets for senior and mezzanine loans), European and international political events, events in the home countries of the obligors under the Issuer Investments or the countries in which their assets and operations are based, developments or trends in any particular industry and the financial condition of such issuers. The secondary market for senior and mezzanine loans is still limited. A decrease in the Market Value of the Portfolio would adversely affect the amount of proceeds which could be realised upon liquidation of the Portfolio and ultimately the ability of the Issuer to redeem the Class E Subordinated Notes pursuant to the right of optional redemption set out in Condition 7(b)(i) (Optional Redemption Requirements). There can be no assurance that, upon any such redemption, the proceeds realised would permit any payment on the Class E Subordinated Notes after required payments are made in respect of the Rated Notes and to the other creditors of the Issuer which rank in priority to the Holders of the Class E Subordinated Notes.

Subject to the provisions of the Security and Intercreditor Deed (including the subordination provisions therein), pursuant to Condition 7(c) (Redemption at the Option of the Issuer), the Issuer may upon the instructions of the Investment Manager redeem any Rated Notes, in whole or in part, at the Redemption Price on any Payment Date after the end of the relevant non-call period mentioned in Condition 20 (Specific Conditions) provided that the Class B Notes may not be redeemed, nor may other payments of principal be made on the Class B Notes, until all Outstanding Senior Indebtedness that is due and payable on such Redemption Date under any Senior Permitted Debt Document has been paid in full and the Class C Notes may not be redeemed, nor may other payments of principal be made on the Class C Notes, until all Outstanding Senior Indebtedness and Second Senior Indebtedness that is due and payable on such Redemption Date under any Senior Permitted Debt Document or Second Senior Permitted Debt Document, as the case may be, has been paid in full and the Class D Notes may not be redeemed, nor any payments of principal be made on the Class D Notes,

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until all Outstanding Senior Indebtedness, Second Senior Indebtedness and Third Senior Indebtedness that is due and payable on such Redemption Date under any Senior Permitted Debt Document, Second Senior Permitted Debt Document or Third Senior Permitted Debt Document, as the case maybe, has been paid in full and the Intervening Notes may not be redeemed, nor may other payments of principal be made on the Intervening Notes, until all Outstanding Senior Indebtedness, Second Senior Indebtedness, Third Senior Indebtedness and Fourth Senior Indebtedness that is due and payable on such Redemption Date under any Senior Permitted Debt Document, Second Senior Permitted Debt Document, Third Senior Permitted Debt Document or Fourth Senior Permitted Debt Document, as the case may be, has been paid in full.

3.8 Future Ratings of the VF Notes and Rated Notes Not Assured and Limited in Scope

A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal by any Rating Agency at any time. Credit ratings represent a Rating Agency's opinion regarding the credit quality of an asset but are not a guarantee of such quality. There is no assurance that a rating accorded to any of the VF Notes and Rated Notes will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a Rating Agency if, in its judgment, circumstances in the future so warrant. In the event that a rating initially assigned to any of the VF Notes or Rated Notes is subsequently lowered for any reason, no person or entity is required to provide any additional support or credit enhancement with respect to any such VF Notes or Notes and the market value of such VF Notes or Notes is likely to be adversely affected.

3.9 Noteholders' Resolutions

The Trust Deed includes provisions for the passing of Resolutions (whether at a Noteholders' meeting by way of vote or by Written Resolution) of the Noteholders in respect of (among any other matters) amendments to the Conditions and/or the Transaction Documents. Such provisions include, among other things, (i) quorum requirements for the holding of Noteholders' meetings and (ii) voting thresholds required to pass Resolutions at such meetings (or through Written Resolutions). The quorum required for a meeting of Noteholders (other than an adjourned meeting or a meeting of a particular Class) to pass an Ordinary Resolution or an Extraordinary Resolution is two or more persons holding or representing not less than, respectively, 10 per cent. or 50 per cent. of the aggregate Principal Amount Outstanding of each Class of Notes. In both cases, the quorum is less at an adjourned meeting. The voting threshold at any Noteholders' meeting in respect of an Ordinary Resolution or an Extraordinary Resolution of all Noteholders is, respectively, 50 per cent. or 66⅔ per cent. of the aggregate Principal Amount Outstanding of the Notes of each Class of those Notes represented at the meeting. Accordingly, it is possible that, at any meeting of the Noteholders, an Ordinary Resolution or an Extraordinary Resolution may be passed with less than 50 per cent. or 66⅔ per cent. of all the Noteholders of each Class represented (see Condition 14 (Meetings of Noteholders, Modification, Waiver and Substitution)).

3.10 Average Life and Prepayment Considerations

The Maturity Date of the VF Notes and the Rated Notes is 10 September 2014 and the Maturity Date of the Class E Subordinated Notes is 10 September 2086 (subject, in each case, to adjustment for non Business Days in accordance with the Conditions), however, the principal of the Notes of each Class may be paid in full prior to the applicable Maturity Date. Average life refers to the average amount of time that will elapse from the date of issue of each Class of Notes until each Euro of the principal of such Note will be repaid to the investor. In addition, the average life of each Class of Notes will be subject to any early redemption of the Notes in accordance with the Conditions.

The average lives of each Class of Notes will be determined by the amount and frequency of principal payments thereon, which are dependent upon, among other things, the amount of payments received at or in advance of the scheduled maturity of any Issuer Investments (whether through sale, maturity, redemption, default or other liquidation or disposition) which may be applied in redemption of the Notes and whether any redemptions of the Notes occur pursuant to a mandatory redemption event. The actual average lives and actual maturities of

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the Notes will be affected by the financial condition of the obligors under the underlying Issuer Investments and the characteristics of such obligations, including the existence and frequency of exercise of any optional or mandatory redemption features, the prevailing level of interest rates, the redemption price, the actual default rate, the actual level of recoveries on any defaulted obligations and the timing of defaults and recoveries and the frequency of tender or exchange offers for such Issuer Investments. The Issuer Investments are generally expected to be subject to optional redemption or prepayment by the obligor thereunder. Dispositions of any Issuer Investments may change the composition and characteristics of the Issuer Investments comprising Collateral from time to time and the rate of payment thereon and, accordingly, may affect the actual average lives of the Notes. The rate and timing of future defaults and the amount and timing of any cash realisation from any Issuer Investments also will affect the maturity and average lives of the Notes as will the ability and discretion of the Investment Manager, on behalf of the Issuer, to dispose of or make investments in Issuer Investments.

3.11 Control by Controlling Class

The Controlling Class may generally direct the time, method and place of conducting any proceeding for any remedy available to the Security Trustee or exercising any trust or power conferred on the Security Trustee under the Security and Intercreditor Deed. While the Class A Notes are Outstanding, the Controlling Class will generally consist of the Holders of the VF Notes, the Holders of the Class A Notes, the Holders of any External Senior Permitted Debt and the counterparties under any Secured Hedging Transactions to the extent that they have claims against the Issuer. As noted above however, the Holders of Class A Notes (or, as the case may be, any other Senior Outstanding Class) may nevertheless not be in a position to determine the outcome of a Controlling Class decision.

3.12 Volatility of the Class E Subordinated Notes

The Class E Subordinated Notes represent an investment in the underlying Issuer Investments with a greater degree of leveraging than that of the other Notes. Accordingly, it is expected that changes in the market value of the Class E Subordinated Notes will be greater than changes in the Market Value of the underlying Issuer Investments, which themselves are subject to credit, liquidity, interest rate and other risks. Utilisation of leverage is a speculative investment technique and involves certain risks to investors and will generally magnify the Class E Subordinated Noteholders' opportunities for gain and risk of loss.

3.13 Net Proceeds less than Aggregate Amount of the Notes

It is anticipated that the proceeds received by the Issuer on the December 2010 Closing Date from the issuance of the December 2010 Issuance Class E Subordinated Notes, net of certain fees and expenses, will be less than the aggregate Principal Amount Outstanding of the December 2010 Issuance Class E Subordinated Notes.

Prior to the December 2010 Closing Date, the Issuer may have entered into binding commitments to purchase Collateral which may not settle until after the December 2010 Closing Date. Any increase or decrease in the Market Value of such Collateral between the date of entry into such binding commitment and the settlement date will be for the benefit or to the detriment (as the case may be) of the Holders of Class E Subordinated Notes.

The Investment Manager (on behalf of the Issuer) shall establish, on the Determination Date prior to the December 2010 Closing Date, the Net Asset Value allocable between the Holders of existing Class E Subordinated Notes and the Holders of the December 2010 Issuance Class E Subordinated Notes. Consequently, any increase or decrease in Market Value of the Collateral between such Determination Date and the Closing Date will be shared by both the Holders of existing Class E Subordinated Notes and the Holders of the December 2010 Issuance Class E Subordinated Notes as a whole.

3.14 Projections, Forecasts and Estimates

Estimates of the weighted average lives of the VF Notes and the Notes, together with any other projections, forecasts and estimates provided to prospective purchasers of the VF Notes

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and the Notes, are forward looking statements. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialise or will vary significantly from actual results. Accordingly, the projections are only an estimate. Actual results may vary from the projections, and the variations may be material.

Some important factors that could cause actual results to differ materially from those in any forward looking statements include changes in interest rates, market, financial or legal uncertainties, the timing of acquisitions of the Issuer Investments, differences in the actual allocation of the Portfolio among Asset Categories from those assumed and the effectiveness of any Secured Hedging Transactions, among others.

None of the Issuer, the Initial Purchaser, the Investment Manager, the Collateral Administrator, the Trustee, any Secured Hedging Counterparty, the Custodian, the Agents or any of their respective Affiliates has any obligation to update or otherwise revise any projections, including any revisions to reflect changes in economic conditions or other circumstances arising after the date hereof or to reflect the occurrence of unanticipated events, even if the underlying assumptions do not come to fruition.

3.15 Certain ERISA Considerations

Under a regulation of the United States Department of Labor, if certain employee benefit plans or other retirement arrangements subject to the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of the United States Internal Revenue Code of 1986, as amended, (the "Code") or entities whose underlying assets are treated as assets of such plans or arrangements (collectively, "Plans") invest in the Notes, certain transactions involving the assets of the Issuer could be considered "prohibited transactions" under Section 406 of ERISA or Section 4975 of the Code.

See the sections of this Prospectus headed "Certain ERISA Considerations" and "Transfer Restrictions" for a more detailed discussion of certain ERISA, Code and related considerations with respect to an investment in the Notes.

3.16 Further Issuances of Non Fungible VF Notes and Notes

Prospective purchasers of VF Notes should be aware that, in addition to any issuance of VF Notes which are fungible with the VF Notes, the Issuer may from time to time during the life of the VF Notes (but subject to certain restrictions) issue further VF Notes which rank pari passu in right of payment with, and which comprise the same class as, the VF Notes but which have different terms (including maturities) to the VF Notes and which are not fungible therewith ("Further VF Notes"). Accordingly, notwithstanding that the Holders of the VF Notes and the Holders of Further VF Notes may have differing or competing economic interests (in particular if any Further VF Notes were to have maturities shorter than that of the VF Notes), any Resolutions passed, or actions taken, by the Holders of VF Notes and the Further VF Notes as a class will bind the VF Noteholders and Holders of Further VF Notes equally. Prospective purchasers of VF Notes should also be aware that, in addition to any issuance of VF Notes which are fungible or non fungible (as the case may be) with the VF Notes then Outstanding, the Issuer may from time to time during the life of the VF Notes (but subject to certain restrictions) issue further Class A Notes which rank pari passu in right of payment with the VF Notes.

Prospective purchasers of Class A Notes should be aware that, in addition to any issuance of Notes which are fungible with the Class A Notes, the Issuer may from time to time during the life of the Class A Notes (but subject to certain restrictions) issue further Notes which rank pari passu in right of payment with, and which comprise the same Class as, the Class A Notes but which have different terms (including maturities) to the Class A Notes and which are not fungible therewith ("Further Class A Notes"). Accordingly, notwithstanding that the Holders of the Class A Notes and the Holders of Further Class A Notes may have differing and/or competing economic interests (in particular if any Further Class A Notes were to have maturities shorter than that of the Class A Notes), any Resolutions passed, or actions taken, by the Class comprising the Class A Notes and the Further Class A Notes as a Class will bind the

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Class A Noteholders and Holders of Further Class A Notes equally. Prospective purchasers of Class A Notes should also be aware that, in addition to any issuance of Class A Notes which are fungible or non fungible (as the case may be) with the Class A Notes then Outstanding, the Issuer may from time to time during the life of the Class A Notes (but subject to certain restrictions) issue further VF Notes which rank pari passu in right of payment with the Class A Notes.

Prospective purchasers of Class B Notes should be aware that, in addition to any issuance of Notes which are fungible with the Class B Notes, the Issuer may from time to time during the life of the Class B Notes (but subject to certain restrictions) issue further Notes which rank pari passu in right of payment with, and which comprise the same Class as, the Class B Notes but which have different terms (including maturities) to the Class B Notes and which are not fungible therewith ("Further Class B Notes"). Accordingly, notwithstanding that the Holders of the Class B Notes and the Holders of Further Class B Notes may have differing and/or competing economic interests (in particular if any Further Class B Notes were to have maturities shorter than that of the Class B Notes), any Resolutions passed, or actions taken, by the Class comprising the Class B Notes and the Further Class B Notes as a Class will bind the Class B Noteholders and Holders of Further Class B Notes equally.

Prospective purchasers of Class C Notes should be aware that, in addition to any issuance of Notes which are fungible with the Class C Notes, the Issuer may from time to time during the life of the Class C Notes (but subject to certain restrictions) issue further Notes which rank pari passu in right of payment with, and which comprise the same Class as, the Class C Notes but which have different terms (including maturities) to the Class C Notes and which are not fungible therewith ("Further Class C Notes"). Accordingly, notwithstanding that the Holders of the Class C Notes and the Holders of Further Class C Notes may have differing and/or competing economic interests (in particular if any Further Class C Notes were to have maturities shorter than that of the Class C Notes), any Resolutions passed, or actions taken, by the Class comprising the Class C Notes and the Further Class C Notes as a Class will bind the Class C Noteholders and Holders of Further Class C Notes equally.

Prospective purchasers of Class D Notes should be aware that, in addition to any issuance of Notes which are fungible with the Class D Notes, the Issuer may from time to time during the life of the Class D Notes (but subject to certain restrictions) issue further Notes which rank pari passu in right of payment with, and which comprise the same Class as, the Class D Notes but which have different terms (including maturities) to the Class D Notes and which are not fungible therewith ("Further Class D Notes"). Accordingly, notwithstanding that the Holders of the Class D Notes and the Holders of Further Class D Notes may have differing and/or competing economic interests (in particular if any Further Class D Notes were to have maturities shorter than that of the Class D Notes), any Resolutions passed, or actions taken, by the Class comprising the Class D Notes and the Further Class D Notes as a Class will bind the Class D Noteholders and Holders of Further Class D Notes equally.

Prospective purchasers of Intervening Notes should be aware that, in addition to any issuance of Notes which are fungible with the Intervening Notes, the Issuer may from time to time during the life of the Intervening Notes (but subject to certain restrictions) issue further Notes which rank pari passu in right of payment with, and which comprise the same Class as, the Intervening Notes but which have different terms (including maturities) to the Intervening Notes and which are not fungible therewith ("Further Intervening Notes"). Accordingly, notwithstanding that the Holders of the Intervening Notes and the Holders of Further Intervening Notes may have differing and/or competing economic interests (in particular if any Further Intervening Notes were to have maturities shorter than that of the Intervening Notes), any Resolutions passed, or actions taken, by the Class comprising the Intervening Notes and the Further Intervening Notes as a Class will bind the Intervening Noteholders and Holders of Further Intervening Notes equally.

Prospective purchasers of Class E Subordinated Notes should be aware that, in addition to any issuance of Notes which are fungible with the Class E Subordinated Notes, the Issuer may from time to time during the life of the Class E Subordinated Notes (but subject to certain restrictions) issue further Notes which rank pari passu in right of payment with, and which comprise the same Class as, the Class E Subordinated Notes but which have different terms

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(including redemption rights and rights to receive Class E Restricted Disbursements and any Interest Payment Amount on the Class E Subordinated Notes) and which are not fungible therewith ("Further Class E Subordinated Notes"). Accordingly, notwithstanding that the Holders of the Class E Subordinated Notes and the Holders of Further Class E Subordinated Notes may have differing and/or competing economic interests (in particular if any Further Class E Subordinated Notes were to have differing redemption rights or rights to Class E Restricted Disbursements and any Interest Payment Amount on the Class E Subordinated Notes), any Resolutions passed, or actions taken, by the Class comprising the Class E Subordinated Notes and the Further Class E Subordinated Notes as a Class will bind the Class E Subordinated Noteholders and Holders of Further Class E Subordinated Notes equally.

In relation to the issuance of any Further Class E Subordinated Notes, the Investment Manager (on behalf of the Issuer) shall establish, on the Determination Date prior to the Payment Date on which such Further Class E Subordinated Notes are to be issued, the Net Asset Value allocable between the Holders of the Class E Subordinated Notes and the Holders of Further Class E Subordinated Notes. Consequently, any increase or decrease in Market Value of the Collateral between such Determination Date and such Payment Date will be shared by both the Holders of Class E Subordinated Notes and the Holders of Further Class E Subordinated Notes as a whole.

In relation to the above see Condition 17 (Further Issues), the section of this Prospectus headed "Description of the Trust Deed Note Issuance Procedure", the section of this Prospectus headed "Description of the Security and Intercreditor Deed – Additional Permitted Credit" and the sections of these Risk Factors headed "1.7 Removal of Credit Enhancement" and "3.4 Subordination through Conflicts between Classes".

3.17 Split Redemptions on Class E Subordinated Notes

In the event that any Class E Subordinated Notes are redeemed prior to their maturity, up to 15 per cent. of the Principal Amount Outstanding of the Class E Subordinated Notes comprising the relevant Permitted Redemption Amount in respect of which any Holder is entitled to redemption may be withheld for up to 18 months following the applicable Optional Redemption Date at the option of the Investment Manager. Such holding will take the form of Delayed Redemption Notes and may be redeemed on any Payment Date during such 18-month period on notice from the Issuer. Delayed Redemption Notes will cease to be fungible with any other Class E Subordinated Notes (other than equivalent Delayed Redemption Notes). Accordingly, relevant Class E Subordinated Noteholders may not receive 100 per cent. of their entitlement on the relevant Optional Redemption Date, may lose any secondary market liquidity in that element of their holding represented by Delayed Redemption Notes and will have no control over the Payment Date on which Delayed Redemption Notes may be redeemed in the applicable 18-month period. Further, the amount of Class E Subordinated Notes that may be redeemed on any Optional Redemption Date may be limited (see Condition 7(b) (Optional Redemption) and Condition 20 (Specific Conditions) relating to the Class E-3 Subordinated Notes and the Class E-5 Subordinated Notes).

In the event that any Class E Subordinated Notes are redeemed prior to their maturity, Holders of such Class E Subordinated Notes should be aware that the Market Value of the Collateral will be determined on the Determination Date prior to the Optional Redemption Date. Consequently, any increase or decrease in Market Value of the Collateral between such Determination Date and Optional Redemption Date will be solely to the benefit or detriment (as the case may be) of the Holders of Class E Subordinated Notes remaining after such Optional Redemption Date.

3.18 Interest Payment Amounts and Class E Restricted Disbursements

Prospective purchasers of Class E Subordinated Notes should be aware that the Class E Payment Date on which discretionary payments of Interest Payment Amounts are made to Holders of Class E Subordinated Notes which are Interest Bearing Notes may not coincide with the Payment Date on which Class E Restricted Disbursements are made to Class E Subordinated Noteholders. Subject to certain restrictions, the Investment Manager in its sole discretion may choose to pay Interest Payment Amounts to Holders of Class E Subordinated

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Notes which are Interest Bearing Notes on a Class E Payment Date without making any Class E Restricted Disbursements to Holders of Class E Subordinated Notes on such date provided that the amount of Class E Restricted Disbursements which is to be paid to the Holders of Class E Subordinated Notes which are Interest Bearing Notes on a subsequent Payment Date may be reduced by the Interest Payment Amounts previously received by such Holders (see Condition 3(d) (Restricted Payments)). The Investment Manager in its sole discretion may choose to make Class E Restricted Disbursements on a Class E Payment Date without paying any Interest Payment Amounts on such date to the Holders of Class E Subordinated Notes which are Interest Bearing Notes (see Condition 3(d) (Restricted Payments)).

3.19 Withholding Tax on the VF Notes and the Specified Notes

Although no withholding tax is currently imposed on payments of interest on the VF Notes or the Notes, there can be no assurance that the law will not change.

In the event that any withholding tax or deduction for tax is imposed on payments of interest on the VF Notes or the Specified Notes, the holders of the VF Notes or the Specified Notes, respectively, will not be entitled to receive grossed-up amounts to compensate for such withholding tax and no Event of Default shall occur as a result of any such withholding or deduction.

In the event of the occurrence of a Note Tax Event pursuant to which any payment on the VF Notes or the Notes of any Class becomes properly subject to any withholding tax or deduction on account of tax, the VF Notes and the Notes may be redeemed in whole but not in part at the direction of the Controlling Class Agent in accordance with the Intercreditor Arrangements and the Class E Subordinated Notes, acting by Extraordinary Resolution, subject to the Premature Redemption Requirements being met, including compliance with the Over-Collateralisation Tests.

See also the section of these Risk Factors headed "8. New U.S. Tax Law" below for a discussion on recent changes in U.S. tax law which may affect payments on the Collateral and to Noteholders.

4. CERTAIN CONFLICTS OF INTEREST

With respect to the Notes and External Permitted Debt, conflicts of interest may arise as a result of various factors involving the Investment Manager, the Initial Purchaser, the Collateral Administrator, the Trustee, their Affiliates and others. The following briefly summarises some of these conflicts, but is not intended to be an exhaustive list of all such potential conflicts.

Various potential and actual conflicts of interest may arise from the overall advisory, investment and other activities of the Investment Manager, its Affiliates and their respective clients and from the conduct by the Initial Purchaser and its Affiliates of other transactions with the Issuer, including, without limitation, acting as counterparty with respect to Secured Hedging Transactions, Participations and Synthetic Securities or as party to or in connection with the investment of any funds in Cash or Cash Equivalents.

The Investment Manager and/or its Affiliates and its clients may invest in securities that would be appropriate as security for the VF Notes and Notes. Such investments may be different from those made on behalf of the Issuer. The Investment Manager and its Affiliates may also have ongoing relationships with, render services to or engage in transactions with, companies whose securities are pledged to secure the VF Notes and Notes and may own equity or debt securities issued by obligors on Issuer Investments. As a result, officers or Affiliates of the Investment Manager may possess information relating to issuers of Issuer Investments which is not known to the individuals at the Investment Manager responsible for monitoring the Issuer Investments and performing the other obligations under the Investment Management Agreement. In addition, Affiliates and clients of the Investment Manager may invest in loans and securities that are senior to, or have interests different from or adverse to, the Issuer Investments that are pledged to secure the VF Notes and Notes. The Investment Manager and/or its Affiliates may at certain times be simultaneously seeking to purchase or

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dispose of investments for its or their own account, for the Issuer, for any similar entity for which it serves as manager or adviser and for its clients or Affiliates. It is intended that all Issuer Investments will be purchased and sold by the Issuer on terms prevailing in the market. Neither the Investment Manager nor any of its Affiliates is under any obligation to offer investment opportunities of which they have become aware to the Issuer or to account to the Issuer for (or share with the Issuer or inform the Issuer of) any such transaction or any benefit received by them from any such transaction. Furthermore, the Investment Manager and/or its Affiliates may make an investment on behalf of any account that they manage or advise without offering the investment opportunity to, or making any investment on behalf of, the Issuer. The Investment Manager and/or its Affiliates have no affirmative obligation to offer any investments to the Issuer or to inform the Issuer of any investments before offering any investments to other funds or accounts that the Investment Manager and/or its Affiliates manage or advise. Furthermore, Affiliates of the Investment Manager may make an investment on their own behalf without offering the investment opportunity to, or the Investment Manager making any investment on behalf of, the Issuer. Affirmative obligations may exist or may arise in the future, whereby Affiliates of the Investment Manager are obliged to offer certain investments to funds or accounts that such Affiliates manage or advise before or without the Investment Manager offering those investments to the Issuer. Affiliates of the Investment Manager have no affirmative obligation to offer any investments to the Issuer or to inform the Issuer of any investments before engaging in any investments for themselves. The Investment Manager will endeavour to resolve conflicts with respect to investment opportunities in a manner which it deems equitable to the extent possible under the prevailing facts and circumstances. Although the professional staff of the Investment Manager will devote as much time to the Issuer as the Investment Manager deems appropriate to perform its duties in accordance with the Investment Management Agreement, those staff may have conflicts in allocating their time and services among the Issuer and the Investment Manager's other accounts.

The Investment Manager or one or more of its Affiliates may, subject to all applicable laws, purchase interests in certain of the Notes for its own account or for the account of one or more of its Affiliates or one or more directors thereof.

In the event of the termination of the appointment of the Investment Manager, the Issuer shall use its best endeavours to appoint a successor Investment Manager, acceptable to the Issuer and the Trustee and subject to satisfaction of certain conditions, within 30 days after the date of notice of termination of appointment and, failing which, the Trustee shall be entitled (but not obliged) to appoint a successor Investment Manager on behalf of the Issuer subject to satisfaction of certain conditions, and if neither the Issuer nor the Trustee shall have appointed a successor in such circumstances prior to the day on which the Investment Manager would otherwise have vacated its post had such a successor been appointed, the Holders of the Class E Subordinated Notes, acting independently by Ordinary Resolution, will be entitled to appoint a successor and will so appoint a successor within 60 days after the date of notice of such termination of appointment, subject to the requirements relating to any successor Investment Manager having been satisfied. Where, in such circumstance, the Controlling Class shall have disapproved two proposed successors put forward by the Class E Subordinated Noteholders or the Class E Subordinated Noteholders have otherwise failed to appoint a successor within such 60-day period the Holders of the Controlling Class, acting by two-thirds majority in accordance with the terms of the Security and Intercreditor Deed, will be entitled to appoint such successor, subject to the requirements relating to any successor Investment Manager having been satisfied. The appointment of any successor Investment Manager, in each case, shall be subject, amongst other things, to the Holders of the Controlling Class and the Class E Subordinated Notes (including any Class E Subordinated Notes held by or on behalf of the Investment Manager, one or more of its Affiliates or one or more directors thereof), acting independently by Ordinary Resolution, not vetoing such appointment within 30 days of the notice of such appointment being given.

Any Notes held by the Investment Manager, one or more of its Affiliates or one or more directors thereof will have no voting rights with respect to any vote (or written direction or consent) in connection with the removal of the Investment Manager and will be deemed not to be Outstanding in connection with any such vote; provided, however, that any Notes held by the Investment Manager, one or more of its Affiliates or one or more directors thereof will,

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save as otherwise expressly provided, have voting rights (including in respect of written directions and consents) with respect to all other matters as to which Noteholders are entitled to vote, including, without limitation, any vote in connection with the appointment of a replacement Investment Manager which is not Affiliated with the Investment Manager in accordance with the Investment Management Agreement.

The Investment Manager, on behalf of the Issuer, may conduct principal trades with itself and its Affiliates, subject to applicable law. The Investment Manager may also effect client cross transactions where the Investment Manager causes a transaction to be effected between the Issuer and another account advised by the Investment Manager or any of its Affiliates. Client cross transactions enable the Investment Manager to purchase or sell a block of securities for the Issuer at a set price and possibly avoid an unfavourable price movement that may be created through entrance into the market with such purchase or sell order. In addition, with the prior authorisation of the Issuer, which may be revoked at any time, the Investment Manager may enter into agency cross transactions where any of its Affiliates acts as broker for the Issuer and for the other party to the transaction, in which case any such Affiliate will receive commissions from, and have a potentially conflicting division of loyalties and responsibilities towards both parties to the transaction.

It is expected that the Initial Purchaser or its Affiliates will have, respectively, underwritten or placed certain of the Issuer Investments at original issuance, will own equity or other securities of obligors under Issuer Investments and will have provided investment banking services, advisory, banking and other services to issuers of Issuer Investments. In addition, the Investment Manager and/or its Affiliates may own equity or other securities of obligors under Issuer Investments and may have provided investment advice and other services to issuers of Issuer Investments. From time to time, the Investment Manager may, on behalf of the Issuer, purchase or sell Issuer Investments through the Initial Purchaser or its Affiliates. The Issuer may invest in the securities of companies affiliated with the Initial Purchaser, the Investment Manager or their respective Affiliates or companies in which the Initial Purchaser, the Investment Manager or their respective Affiliates have an equity or participation interest. The purchase, holding and sale of such investments by the Issuer may enhance the profitability of the Initial Purchaser's, the Investment Manager's or their Affiliates' own investments in such companies. In addition, it is expected that the Initial Purchaser or one or more Affiliates thereof may also act as counterparty with respect to one or more Synthetic Securities or Participations or act as Secured Hedging Counterparty with respect to one or more Secured Hedging Transactions.

It is also possible that one or more Affiliates of the Investment Manager may also act as counterparty with respect to one or more Synthetic Securities, Participations or Secured Hedging Transactions. This may result in a conflict of interest between the Investment Manager in its role as such and any Affiliate thereof acting as a counterparty under one or more such instruments as a result of the Investment Manager's position as manager on behalf of the Issuer in respect of such instruments and the authority delegated to it to take action on the Issuer's behalf in respect of such instruments.

There is no limitation or restriction on the Investment Manager, the Initial Purchaser or any of their respective Affiliates with regard to acting as Investment Manager (or in a similar role) to other parties or persons. This and other future activities of the Investment Manager, the Initial Purchaser and/or their Affiliates may give rise to additional conflicts of interest.

5. INVESTMENT COMPANY ACT

The Issuer has not registered with the United States Securities and Exchange Commission (the "SEC") as an investment company pursuant to the Investment Company Act, in reliance on an exemption under Section 3(c)(7) of the Investment Company Act for investment companies (a) whose outstanding securities are beneficially owned only by "QPs" (within the meaning given to such term in the Investment Company Act and the regulations of the SEC thereunder) and certain transferees thereof identified in Rule 3(c)(6) of the Investment Company Act and (b) which do not make a public offering of their securities in the United States.

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If the SEC or a court of competent jurisdiction were to find that the Issuer or the pool of Collateral is required, but in violation of the Investment Company Act had failed, to register as an investment company, possible consequences include, but are not limited to, the following: (i) the SEC could apply to a district court to enjoin the violation, (ii) investors in the Issuer could sue the Issuer and recover any damages caused by the violation and (iii) any contract to which the Issuer is party that is made in, or whose performance involves, violation of the Investment Company Act would be unenforceable by any party to the contract unless a court were to find that under the circumstances enforcement would produce a more equitable result than non enforcement and would not be inconsistent with the purposes of the Investment Company Act. Should the Issuer be subjected to any or all of the foregoing, the Issuer would be materially and adversely affected.

6. CERTAIN PROVISIONS OF IRISH LAW

6.1 Preferred Creditors

Under Irish law, the claims of a limited category of preferential creditors will take priority over the claims of unsecured creditors and holders of floating security in the event of the appointment of a liquidator or a receiver to an Irish company such as the Issuer. These preferred claims include taxes, such as income tax and corporation tax payable before the date of appointment of the liquidator or receiver and arrears of VAT, together with accrued interest thereon and claims of employees.

It is of the essence of a fixed charge that the person creating the charge does not have liberty to deal with the assets which are the subject matter of the security in the sense of disposing of such assets or expending or appropriating the monies or claims constituting such assets and accordingly, if and to the extent that such liberty is given to the Issuer, any charge constituted by the Trust Deed may operate as a floating, rather than a fixed charge.

In particular, the Irish courts have held that in order to create a fixed charge on receivables it is necessary to oblige the chargor to pay the proceeds of collection of the receivables into a designated bank account and to prohibit the chargor from withdrawing or otherwise dealing with the monies standing to the credit of such account without the consent of the chargee.

Floating charges have certain weaknesses, including the following:

(a) they have weak priority against purchasers (who are not on notice of any negative pledge contained in the floating charge) and chargees of the assets concerned and against lien holders, execution creditors and creditors with rights of set off;

(b) as discussed above, they rank after certain preferential creditors, such as claims of employees and certain taxes on winding up;

(c) they rank after certain insolvency remuneration expenses and liabilities;

(d) the examiner of a company has certain rights to deal with the property covered by the floating charge; and

(e) they rank after fixed charges.

In addition, there is a further limited category of super preferential creditors which take priority, not only over unsecured creditors and holders of floating security, but also over holders of fixed security. These super preferential claims include the remuneration, costs and expenses properly incurred by an examiner appointed to a company which claims have been approved by the Irish courts and any capital gains tax payable on the disposition of an asset of the company by a liquidator, receiver or mortgagee in possession.

The holder of a fixed security over the book debts (which would include the Trustee) of an Irish tax resident company (which would include the Issuer) may be required by the Irish Revenue Commissioners, by notice in writing, to pay to them sums equivalent to those which the holder thereafter receives in payment of debts due to it by the company. Where the holder of the security has given notice to the Irish Revenue Commissioners of the creation of the

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security within 21 days of its creation, the holder's liability is limited to the amount of certain outstanding Irish tax liabilities of the company (including liabilities in respect of VAT) arising after the issue of a notice by the Irish Revenue Commissioners to the holder of the fixed security.

The Irish Revenue Commissioners may also attach any debt due to an Irish tax resident by another person in order to discharge any liabilities of such Irish tax resident in respect of outstanding tax whether the liabilities are due on its own account or as an agent or trustee. The scope of this right of the Irish Revenue Commissioners has not yet been considered by the Irish courts and it may override the rights of holders of security (whether fixed or floating) over the debt in question.

In relation to the disposal of assets of an Irish tax resident company which are subject to security, a person entitled to the benefit of the security may be liable for tax in relation to any capital gains made by the company on a disposal of those assets on exercise of the security.

6.2 Examination

Examination is a court procedure available under the Irish Companies (Amendment) Act 1990, as amended (the "1990 Act") to facilitate the survival of Irish companies in financial difficulties.

The examiner, once appointed, has the power to set aside contracts and arrangements entered into by the company after his appointment and, in certain circumstances, can avoid a negative pledge given by the company prior to his appointment. Furthermore, he may sell assets which are the subject of a fixed charge. However, if such power is exercised he must account to the holders of the fixed charge for the amount realised and discharge the amount due to them out of the proceeds of sale.

During the period of protection, the examiner will compile proposals for a compromise or scheme of arrangement to assist the survival of the company or the whole or any part of its undertaking as a going concern. A scheme of arrangement may be approved by the High Court when at least one class of creditors has voted in favour of the proposals and the High Court is satisfied that such proposals are fair and equitable in relation to any class of members or creditors who have not accepted the proposals and whose interests would be impaired by implementation of the scheme of arrangement.

In considering proposals by the examiner, it is likely that secured and unsecured creditors would form separate classes of creditors. In the case of the Issuer, if the Trustee represented the majority in number and value of claims within the secured creditor class (which would be likely given the restrictions agreed to by the Issuer in the Transaction Documents), the Trustee would be in a position to vote against any proposal not in favour of the VF Noteholders and Noteholders. The Trustee would also be entitled to argue at the High Court hearing at which the proposed scheme of arrangement is considered that the proposals are unfair and inequitable in relation to the VF Noteholders and Noteholders, especially if such proposals included a writing down to the value of amounts due by the Issuer to the VF Noteholders and Noteholders.

The primary risks to the VF Noteholders and Noteholders if any examiner were to be appointed with respect to the Issuer are as follows:

(a) the potential for a scheme of arrangement being approved involving the writing down of the debt due by the Issuer to the VF Noteholders and Noteholders as secured by the Security and Intercreditor Deed;

(b) the potential for the examiner to seek to set aside any negative pledge in the Notes or the Transaction Documents prohibiting the creation of security or the incurring of borrowings by the Issuer to enable the examiner to borrow to fund the Issuer during the protection period; and

(c) in the event that a scheme of arrangement is not approved and the Issuer subsequently goes into liquidation, the examiner's remuneration and expenses (including certain borrowings

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incurred by the examiner on behalf of the Issuer and approved by the Irish High Court) will take priority over the amounts secured by the security granted pursuant to the Trust Deed.

7. GERMAN INVESTMENT TAX ACT

The German Investment Tax Act (Investmentsteuergesetz) (the "Investment Tax Act") applies only (i) to "units" (Investmentanteile) in investment funds held by investors who are resident in Germany for German tax purposes, (ii) to an investor holding units through a permanent establishment (or a permanent representative) in Germany or (iii) to an investor (other than a foreign credit institution or a foreign financial services institution) physically presenting units at the office of a German Disbursing Agent (as defined below) (an "over-the-counter-transaction" – Tafelgeschäft). A "German Disbursing Agent" means a German credit institution or a German financial services institution each as defined in the German Banking Act (Kreditwesengesetz), including a German branch of a non-German credit institution or a non-German financial services institution (but excluding a non-German branch of a German credit institution or a German financial services institution), or a German securities trading bank or business.

According to the German Investment Act (Investmentgesetz) (the "Investment Act"), a participation in an investment only qualifies as a "unit" in a foreign investment fund if the individual investor is entitled to a redemption of the notes, or the fund is subject to a regulatory authority in respect to collective investment schemes in the jurisdiction of its residence.

For the purposes of determining whether the Investment Tax Act may be applied to the holding of the Notes, the Decree of the Federal Ministry of Finance on the interpretation of the Investment Tax Act (Schreiben betreffend Zweifels- und Auslegungsfragen des InvStG) of 18 August 2009 (the "Decree") states that the question whether foreign investment funds or units in foreign investment funds are subject to the Investment Tax Act has to be decided on the basis of supervisory law and the interpretations of the BaFin in its Circular (each as defined below). Therefore, with regard to the terms "foreign investment funds" and "units in foreign investment funds" the Investment Tax Act interpretation follows the supervisory law.

The Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - "BaFin") has published a Circular on the Scope of the Investment Act pursuant to section 1 sentence 1 No. 3 Investment Act on 22 December 2008 (Rundschreiben 14/2008 (WA) zum Anwendungsbereich des Investmentgesetzes nach § 1 Satz 1 Nr. 3 InvG) (the "Circular"). In this Circular the BaFin stated that Collateralised Debt Obligations ("CDOs") are generally not participations in a foreign investment fund, but rather CDOs are debt instruments which a special purpose vehicle issues for the financing of its portfolio assets. Only in the case where the purpose of the special purpose vehicle is the investment and administration of its funds for the joint account of the investors would CDOs qualify as units in a foreign investment fund. Given the Issuer holds investments in its own right and for its own account, it is likely that holding Notes issued by the Issuer would not be considered a participation in a foreign investment fund in the view of the BaFin. If this is the case, neither under the Decree nor under the Circular should holding Notes issued by the Issuer qualify as a participation in a foreign investment fund.

Under the Investment Act and the Investment Tax Act as amended in 2007, a participation in a collective investment qualifies as a "unit" in a foreign investment fund if the investor is entitled to a redemption of its participation, or the fund is subject to a regulatory authority in respect to collective investment schemes in the jurisdiction of its residence. The BaFin commented in its Circular on the term "redemption" within the meaning of the Investment Act. The BaFin stated that in order for investors to be considered as having a right of redemption, a majority of all participations in the collective investment should have an entitlement to redeem the participation. According to the BaFin, no differentiation is made between different classes of participation.

Only the Class E Subordinated Noteholders have the right of optional redemption provided for under Condition 7(b). Other than redemption for tax reasons at the direction of the Controlling Class, which is not generally seen as an optional redemption within the meaning

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of the law, only the Issuer may call for optional early redemption of the Notes of any Class under certain circumstances. The Circular of the BaFin gives no guideline on which basis it should be decided whether or not a majority of investors have a redemption feature within the meaning of the law. A determination on the basis of the nominal values of the instruments is likely to be appropriate, given that a determination on the basis of the market or current value of the instruments is volatile and would lead to constantly changing results. Accordingly, it is likely that only if the Class E Subordinated Notes constitute the majority of the nominal amount of the Notes issued would it be possible to assume a right of redemption within the meaning of the BaFin with regard to the Issuer's Notes.

Since the Issuer is not subject to a regulatory authority in respect to collective investment schemes in the jurisdiction of its residence and for the majority of the Notes no optional redemption is available, it is likely that the Investment Tax Act should not apply.

The Issuer will use its reasonable efforts to comply with the minimum statutory reporting and publication requirements of the Investment Tax Act (if applicable) for "semi-transparent" funds (the "Minimum Reporting Requirements") provided always that (i) compliance with such Minimum Reporting Requirements is not, in the opinion and at the entire discretion of the Issuer or Investment Manager in consultation with the Collateral Administrator, unduly onerous, (ii) the Issuer may satisfy such Minimum Reporting Requirements by providing the requisite financial information (upon such information being made available to it) to a professional German tax adviser with instructions to such adviser to re-format the relevant information as required as well as to certify the re-formatted information and to publish such information in the Electronic Federal Gazette in accordance with section 5 of the Investment Tax Act on behalf of the Issuer and (iii) neither the Issuer, the Trustee, the Collateral Administrator, the Investment Manager nor any Agent shall have any liability whatsoever for any such information prepared and/or published under the Minimum Reporting Requirements or for any tax consequences to any Noteholder or other party. Any Holder of Notes who requests the Issuer to comply with the Minimum Reporting Requirements must make such request not later than three months prior to the beginning of the fiscal year of the Issuer and such request shall only relate to such disclosure and certification pursuant to the Investment Tax Act for the immediately following fiscal year of the Issuer. In addition, such Holder of Notes shall bear all expenses (including, without limitation, all fees, costs and payments) as any such expenses accrue, become due or are otherwise payable in connection with (or incidental to) such reporting. It is believed that, in consequence of compliance with such Minimum Reporting Requirements, investors holding Notes which are subject to the Investment Tax Act will not be subject to the lump-sum taxation provisions of section 6 of the Investment Tax Act, but that in principle the rules for semi-transparent funds will apply. Under the rules of the Investment Tax Act for semi-transparent funds, the Issuer's taxable earnings (e.g. payments of interest received) are in principle taxed in the hands of investors. Certain earnings retained by the Issuer (e.g., retained interest income) (if any) would be deemed to be distributed to investors holding Notes which are subject to the Investment Tax Act at the end of the Issuer's financial year in which the income was earned by the Issuer. Therefore, a tax liability for investors could arise before payments have actually been received.

However, if the Issuer does not comply with the Minimum Reporting Requirements, or if the German tax authorities do not accept the validity of such reporting, the investors holding Notes which are subject to the Investment Tax Act will be subject to the adverse lump-sum taxation provisions of section 6 of the Investment Tax Act pursuant to which the higher of (i) distributions on such Notes, the interim profit (Zwischengewinn) and 70 per cent. of the annual surplus amount which is calculated as the positive difference between the last determined redemption price of a calendar year and the first determined redemption price of the same calendar year and (ii) 6 per cent. of the last determined redemption price of a calendar year, (the "Assumed Profits") will be taxed. If no redemption price is determined, the stock exchange price or the market price is applicable. The interim profit represents mainly interest accrued or received by an investment fund (within the meaning of the Investment Tax Act) but not yet distributed or attributed to the investors in the fund.

Where units to which the Investment Tax Act applies are kept in a custodial account maintained with a German Disbursing Agent, such German Disbursing Agent would be

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required to withhold tax at a rate of 25 per cent. (plus solidarity surcharge (Solidaritätszuschlag) thereon at a rate of 5.5 per cent. plus, as the case may be, church tax) not only of the gross amount of interest paid, but in addition at the point of time the units are sold or redeemed by the Issuer also of the aggregate amount of income deemed to have accrued to investors holding units which are subject to the Investment Tax Act and not yet otherwise subject to taxation. In the case of an over-the-counter-transaction (Tafelgeschäft), withholding tax will arise on the gross amount of interest paid by a German Disbursing Agent upon presentation of a coupon (whether or not presented with the Note to which it appertains) to a holder of such coupon (other than a non-German bank or financial services institution). In this case, withholding tax will apply on 30 per cent. of the proceeds from the disposition, assignment or redemption of a coupon or of the Note. Accrued interest previously paid and losses will in such case not be taken into consideration when determining the withholding tax base.

Moreover, there is a risk that investments made by or on behalf of the Issuer qualify as units in foreign investment funds (within the meaning of the Investment Tax Act) which do not satisfy the Minimum Reporting Requirements and therefore qualify as "non-transparent" (sub-)funds. In this case the Issuer may be deemed to have earned Assumed Profits from these investments according to the lump-sum taxation provisions of section 6 of the Investment Tax Act and such Assumed Profits may accordingly be attributed to investors holding Notes which are subject to the Investment Tax Act, resulting in adverse tax and liquidity consequences for such investors.

Investors should be aware that there are a number of uncertainties regarding the interpretation of the tax provisions contained in the Investment Tax Act (including those relating to the Minimum Reporting Requirements). Prospective German investors in the Notes are urged to seek independent tax advice and to consult their professional advisers as to the legal and tax consequences that may arise from the application of the Investment Tax Act to the Notes, in particular the Class E Subordinated Notes, and neither the Issuer nor any other party accepts any responsibility in respect of the German regulatory or tax position of the Notes or the Holders of the Notes.

This section should be read in conjunction with the section entitled "Taxation in Germany – Investors subject to the German Investment Tax Act".

8. NEW U.S. TAX LAW

On 18 March 2010, the United States Foreign Account Tax Compliance Act was enacted ("FATCA"). Under certain circumstances, FATCA could require a 30 per cent. withholding tax to be imposed (i) on payments to Noteholders with respect to interest, dividends and sales proceeds from certain Collateral held by the Issuer or (ii) on payments to the Issuer with respect to interest, dividends and sales proceeds from certain Collateral with U.S. source income ("U.S. CDOs") held by the Issuer. This 30 per cent. U.S. withholding tax, which generally is not refundable, arises if the Issuer does not (because it is unable to or decides not to) enter into an agreement with the Internal Revenue Service (an “IRS Agreement”) to obtain and report information about the Noteholders, fails to comply with the IRS Agreement or, potentially, if any Noteholder fails to provide certain required information. The Issuer does not intend to comply with FATCA. FATCA is applicable to payments made after 31 December 2012, but does not apply to payments with respect to obligations outstanding ("Grandfathered Obligations") on or before 18 March 2012 (although it may apply to such Grandfathered Obligations if they are modified after such date and deemed to be reissued for U.S. federal income tax purposes). It is unclear, however, if the Issuer can shield itself from withholding with respect to the Grandfathered Obligations that it owns in the event the Issuer issues additional Notes after 18 March 2012.

Because FATCA was enacted so recently, its application to the Issuer is uncertain and the Internal Revenue Service has not yet provided any regulatory guidance as to its application . Thus, it is not clear at this time what actions, if any, will be required to minimise the impact of FATCA on the Issuer and the Noteholders. No assurance can be given that the Issuer will take any actions or that if actions are taken, they will be successful to minimise the new withholding tax. For example, FATCA currently is not effective until 2013 and also does not

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apply with respect to obligations issued prior to 18 March 2012, the Issuer will have to consider whether complying with FATCA will be more burdensome than the possible U.S. withholding taxes that could apply. Also, even if the Issuer takes certain actions, whether these actions are effective might depend on the compliance of Noteholders. In accordance with the Trust Deed, the Issuer is permitted, subject to the consent of the Trustee, to make any modifications to the provisions of the Trust Deed and the Transaction Documents in order to minimise or eliminate any withholding tax imposed on the Issuer as a result of FATCA. The Issuer is also permitted, subject to the consent of the Trustee, to enter into an IRS Agreement if required. It is uncertain what (if any) changes will need to be effected in order to comply with FATCA and minimise any withholding tax. Any strategy adopted by the Issuer may have an adverse affect on the Notes including but not limited to the market value of the Notes in the secondary market.

If the Issuer is able to (and chooses to) comply with the new reporting requirements, it will be required to, among other things, (i) either agree to withhold 30 per cent. of payments made to any Recalcitrant Holders (as defined below) or to instruct withholding agents to withhold on payments to it that are deemed to be allocated to such Recalcitrant Holders, and (ii) provide certain information to the Internal Revenue Service about its holders. Consequently, based on the current legislation of FATCA, the Issuer may – and each Noteholder should assume that the Issuer will – require each (i) non-U.S. Noteholder to provide satisfactory documentation (to be determined) that it is not a U.S. person and (ii) U.S. Noteholder to provide its name, address and taxpayer identification number. If a Noteholder is an entity or otherwise not the beneficial owner of the Notes, such Noteholder generally will have to provide the relevant information about all of the U.S. persons and non-U.S. persons who are the owners of the entity or otherwise the beneficial owners of the Notes. Thus, for example, a non-U.S. entity that owns Notes will have to provide satisfactory documentation for all of its non-U.S. owners establishing their non-U.S. status and will have to provide the name, address and taxpayer identification number of some or all of its U.S. owners. Although certain exceptions to these disclosure requirements may apply, each Noteholder also should assume that the failure to provide the required information generally will result in a 30 per cent. U.S. withholding tax applying to any payments made to such holder (a "Recalcitrant Holder")attributable to interest, dividends or proceeds from certain U.S. CDOs held by the Issuer. If a non-U.S. law prohibits a Noteholder from providing information, such Noteholder generally must execute a waiver of this non-U.S. law (and then provide such information) or dispose of its Notes (or otherwise have its interest in the Notes cancelled) within a reasonable period of time. It is also possible that in order to comply with the new U.S. reporting requirements, the Issuer will need to agree to effect a "forced transfer" in relation to any Noteholder that fails to respond to its reasonable requests for information that will help enable the Issuer to comply with the new U.S. reporting requirements. In the event the Issuer does effect a "forced transfer" in relation to any Noteholder's interest, it may do so in any reasonable manner. Any such "forced transfer" could be below fair market value, and such Noteholder may suffer a material loss on its investment. Further, failure to comply with the new reporting requirements may preclude certain of the Issuer's affiliates from complying therewith. For this purpose, "affiliates" are generally persons or entities that possess (directly or indirectly) 50 per cent. or more common ownership.

If the Issuer attempts to comply with FATCA, there is no assurance that the Issuer will be able to withhold on payments to its Recalcitrant Holders. And if the Issuer instructs (which it may effectively be compelled to do) its withholding agents to withhold on payments to it that are deemed to be allocated to its Recalcitrant Holders, the Issuer generally would have less cash to pay Noteholders. Consequently, such withholding may be allocated disproportionately to a particular class of Noteholders (including Noteholders that have fully complied with the Issuer's request for the requisite information).

FATCA is particularly complex and its application to the Issuer is uncertain at this time. Each Noteholder should consult its own tax advisor to obtain a more detailed explanation of FATCA and to learn how it might affect such holder in its particular circumstance.

It is also unlikely that any withholding tax applicable to the Notes as a result of FATCA would constitute a Note Tax Event.

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TERMS AND CONDITIONS

The following (excluding sections of text in italics appearing between any of the same) are the terms and conditions of each of the Specified Notes, substantially in the form in which they will be endorsed on such Specified Notes if issued in definitive certificated form, which will be incorporated by reference into the Global Certificates of each Class representing the Notes, subject to the provisions of such Global Certificates, some of which will modify the effect of these Conditions. See the section of this Prospectus headed "Form of the VF Notes and the Notes".

The Specified Notes are constituted by a trust instrument dated the Closing Date (as amended or supplemented from time to time, the "Relevant Trust Instrument") pursuant to a master trust deed dated the Initial Closing Date (as amended from time to time, the "Master Trust Deed" and together with each Relevant Trust Instrument and the other Trust Instruments, the "Trust Deed") in each case between (amongst others) the Issuer and Deutsche Trustee Company Limited, in its capacity as trustee (the "Trustee", which expression shall include any successor and all persons for the time being the trustee or trustees under the Trust Deed) for the Noteholders from time to time.

The issue of the December 2010 Issuance Class E Subordinated Notes of Avoca Credit Opportunities PLC (the "Issuer" which term shall include any successor thereto or substitute therefor) was authorised by resolution of the board of directors of the Issuer dated 8 December 2010. The December 2010 Issuance Class E Subordinated Notes are constituted by a Relevant Trust Instrument dated the December 2010 Closing Date (as amended and supplemented from time to time, pursuant to the Master Trust Deed).

These Conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed (which includes the forms of the certificates representing the Specified Notes). The following agreements, amongst others, will be, or have been, entered into in relation to the Specified Notes: (a) an agency agreement dated on or about the Initial Closing Date (as amended from time to time, the "Agency Agreement") between, amongst others, the Issuer, Deutsche Bank Trust Company Americas as registrar (in such capacity, the "Registrar", which term shall include any successor or substitute registrar appointed pursuant to the terms of the Agency Agreement), Deutsche International Corporate Services (Ireland) Limited (the "Irish Paying Agent", which term shall include any successor thereto or substitute therefor appointed pursuant to the terms of the Agency Agreement) and Deutsche Bank Trust Company Americas as the initial transfer agent and together with the Registrar, (the "Transfer Agent"), Deutsche Bank AG, London Branch as principal paying agent, calculation agent and custodian (respectively, the "Principal Paying Agent" and, together with the Irish Paying Agent, the "Paying Agents", the "Calculation Agent" and the "Custodian", which terms shall include any successor thereto or substitute therefor, appointed pursuant to the terms of the Agency Agreement) and the Trustee, (b) a Investment Management Agreement dated on or about the Initial Closing Date (as amended from time to time, the "Investment Management Agreement") between Avoca Capital Holdings (the "Investment Manager", which term shall include any successor thereto or substitute therefor appointed pursuant to the terms of the Investment Management Agreement) as manager of the portfolio of Issuer Investments (as defined in the Market Valuation Manual), the Issuer, Deutsche Bank AG, London Branch as collateral administrator (the "Collateral Administrator", which term shall include any successor thereto or substitute therefor appointed pursuant to the terms of the Collateral Administration Agreement) and the Trustee, (c) a collateral administration agreement dated on or about the Initial Closing Date (as amended from time to time, the "Collateral Administration Agreement") between the Collateral Administrator, the Issuer, the Trustee and the Investment Manager, (d) certain Secured Hedging Agreements (as defined in Condition 1 (Definitions)) each between the Issuer and a Secured Hedging Counterparty, (e) the security and intercreditor deed dated on or about the Initial Closing Date (as amended from time to time, the "Security and Intercreditor Deed") between, amongst others, the Trustee in its capacity as Security Trustee (the "Security Trustee", which term shall include any successor thereto or substitute therefor appointed pursuant to the terms of the Security and Intercreditor Deed) and the Issuer, (f) a corporate administration agreement dated on or about the Initial Closing Date (as amended from time to time, the "Corporate Administration Agreement") between the Issuer and Deutsche International Corporate Services (Ireland) Limited (the "Administrator", which term shall include any successor thereto or substitute therefor appointed pursuant to the terms of the Corporate Administration Agreement), and (g) the Pledge Agreement (as defined in Condition 1 (Definitions)). Copies of the Trust Deed, the Agency Agreement, the Investment Management Agreement, the Collateral Administration Agreement, the Security and Intercreditor Deed, each Secured Hedging Agreement, the Corporate Administration Agreement and

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the Pledge Agreement are available for inspection during usual business hours at the principal office of the Trustee (presently at Winchester House, 1 Great Winchester Street, London EC2N 2DB, England) and at the Specified Offices of the Transfer Agent for the time being. The Holders of each Class of Notes are entitled to the benefit of, are bound by and are deemed to have notice of all the provisions of, the Security and Intercreditor Deed, the Trust Deed and the Trust Instrument pursuant to which their Notes are issued and are deemed to have notice of all the provisions of the Agency Agreement, the Investment Management Agreement, the Collateral Administration Agreement and the other Transaction Documents applicable to them.

1. Definitions

(a) In these terms and conditions, capitalised terms not defined below have the meanings given to them in the Market Valuation Manual and the following definitions apply throughout these terms and conditions unless the context requires otherwise:

"Acceleration Notice" has the meaning given thereto in the Security and Intercreditor Deed.

"Account Holding Bank" means (a) in respect of the Paying Agent Account, the Principal Paying Agent and (b) in respect of the Custody Cash Account and the Custody Account, the Custodian.

"Accounts" means the Custody Account, the Custody Cash Account(s) and the Paying Agent Account.

"Administrative Expenses" means the Issuer Fee together with amounts due and payable by the Issuer to:

(a) the independent accountants, agents and counsel of the Issuer, including amounts payable to the Agents each pursuant to the Agency Agreement;

(b) any Rating Agency in respect of the monitoring or surveillance of any VF Notes and Rated Notes as the case may be or a confidential credit estimate in relation to any of the Issuer Investments for fees and expenses in connection with any such monitoring, surveillance or confidential credit estimate;

(c) the Directors pursuant to the Corporate Administration Agreement;

(d) the Investment Manager pursuant to the Investment Management Agreement ((including indemnities provided for therein) but excluding any Investment Management Fees and any VAT payable in respect thereof);

(e) the Collateral Administrator pursuant to the Collateral Administration Agreement;

(f) the Irish Stock Exchange;

(g) any other person in respect of any governmental fee or charge (other than, for the avoidance of doubt, taxes and statutory fees);

(h) any other person in respect of any other fees or expenses permitted under these Conditions and/or the Transaction Documents;

(i) the Intercreditor Agents in respect of services rendered by the same pursuant to the Intercreditor Arrangements;

(j) the Administrator, pursuant to the Corporate Administration Agreement;

(k) the Initial Purchaser, pursuant to each Arrangement Fee Letter and

(l) the payments of any applicable VAT required to be paid by the Issuer in respect of the foregoing,

provided, however, that Administrative Expenses shall not include Trustee Fees and Expenses or amounts due or accrued with respect to the actions taken on or in connection with any

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Closing Date which are payable out of the proceeds of issue of the Notes on such Closing Date.

"Affiliate" or "Affiliated" means, in relation to any person, any other person who, directly or indirectly, is in control of, or controlled by, or is under common control with, such person (and, for the purposes of this definition, "control" of a person means the power, direct or indirect, (i) to vote more than 50 per cent. of the securities having ordinary voting power for the election of directors of such person or (ii) to direct or cause the direction of the management and policies of such person, whether by contract or otherwise).

"Agent" means each of the Registrar, the Transfer Agent, the Intercreditor Agents, the Principal Paying Agent, the Calculation Agent and the Custodian and each of their permitted successors and assignees.

"Applicable Currency Amendments" means, in relation to any Notes denominated in a currency other than Euro, such consequential amendments to the Base Conditions as are required to permit the issuance of such Notes in such currency, provided that such amendments shall not prejudice the rights of the Holders of any other Class of Notes Outstanding as at the date of such issuance.

"Arrangement Fee Letter" means each letter agreement between the Initial Purchaser and Issuer in respect of the issuance of any Notes.

"Arrangement Fees" means any fees payable by the Issuer to the Initial Purchaser (or successor thereto) pursuant to any Arrangement Fee Letter.

"Associated Mandatory Redemption Class" has the meaning given thereto in Condition 7(f)(iii) (Mandatory Redemption of Interest Bearing Notes other than Class E Subordinated Notes on Optional Redemption of Class E Subordinated Notes).

"Authorised Denomination" means, in respect of any Note, the Minimum Denomination and any denomination equal to one or more multiples of the Authorised Integral Amount in excess of the Minimum Denomination.

"Authorised Integral Amount" means €1,000.

"Base Conditions" means Conditions 1 (Definitions) to 19 (Governing Law) inclusive.

"Blockage Period" means a Senior Blockage Period, a Second Senior Blockage Period, a Third Senior Blockage Period, a Fourth Senior Blockage Period or an Intervening Blockage Period, as the context may require.

"Blocked Junior Note Interest" means any payment of interest which is due to be paid on any Class of Junior Interest Bearing Notes but is not paid by virtue of the existence of a Blockage Period.

"Business Day" means (save to the extent otherwise defined) a day:

(a) on which the TARGET System is open

(b) on which commercial banks and foreign exchange markets settle payments in London (other than a Saturday, Sunday or public holiday) and

(c) for the purposes of the definition of Presentation Date, on which commercial banks and foreign exchange markets settle payments in the place where the Holder presents or is entitled to present a Note for payment.

"Class" means each or any class of Notes, being the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Intervening Notes and the Class E Subordinated Notes whether or not issued pursuant to the same Trust Instrument and whether or not the same are fungible with other Notes of the same class at any given time and "Class of Noteholders" and "Class of Notes" shall be construed accordingly.

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"Class A Noteholders" means the Holders of any Class A Notes from time to time.

"Class A Notes" means the Initial Issuance Class A Notes and any other Notes issued pursuant to the Trust Deed which are designated as comprising "Senior Indebtedness" for the purposes of the Security and Intercreditor Deed.

"Class B Noteholders" means the Holders of any Class B Notes from time to time.

"Class B Notes" means the Initial Issuance Class B Notes and any other Notes issued pursuant to the Trust Deed which are designated as comprising "Second Senior Indebtedness" for the purposes of the Security and Intercreditor Deed.

"Class C Noteholders" means the Holders of any Class C Notes from time to time.

"Class C Notes" means the Initial Issuance Class C Notes and any other Notes issued pursuant to the Trust Deed which are designated as comprising "Third Senior Indebtedness" for the purposes of the Security and Intercreditor Deed.

"Class D Noteholders" means the Holders of any Class D Notes from time to time.

"Class D Notes" means the Initial Issuance Class D Notes and any other Notes issued pursuant to the Trust Deed which are designated as comprising "Fourth Senior Indebtedness" for the purposes of the Security and Intercreditor Deed.

"Class E Interest Period" means in respect of Class E Subordinated Notes which are Interest Bearing Notes the period from and including the Closing Date to but excluding the first Class E Payment Date and each successive period from and including each Class E Payment Date to but excluding the following Class E Payment Date.

"Class E Mandatory Redemption Date" has the meaning given thereto in Condition 7(f)(ii) (Mandatory Class E Subordinated Note Redemptions for Liquidity Reasons).

"Class E Payment Date" means the Payment Date falling in September of each year, commencing in 2008.

"Class E Restricted Disbursements" means any disbursement to Holders of Class E Subordinated Notes (for the avoidance of doubt, other than any Interest Payment Amount).

"Class E Subordinated Noteholder Investment Manager Termination Right" has the meaning given thereto in Condition (4)(d) (Acquisition and Sale of Issuer Investments and Termination of Investment Manager Appointment by Class E Subordinated Noteholders).

"Class E Subordinated Note Maturity Date" means, in relation to any Class E Subordinated Notes, 10 September 2086, or such other date as may be specified in Condition 20 (Specific Conditions) applicable thereto.

"Class E Subordinated Noteholders" means the Holders of any Class E Subordinated Notes from time to time.

"Class E Subordinated Notes" means the Initial Issuance Class E Subordinated Notes and any other Notes issued pursuant to the Trust Deed which are designated as comprising "Subordinated Indebtedness" for the purposes of the Security and Intercreditor Deed.

"Clearing System" means any of Euroclear, Clearstream, Luxembourg and DTC, as the case may be, and includes any additional or alternative clearing systems specified in Condition 20 (Specific Conditions).

"Clearstream, Luxembourg" means Clearstream Banking, société anonyme.

"Closing Date" means, with respect to any Notes, the date specified as such in Condition 20 (Specific Conditions) applicable thereto.

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"Collateral" means the property, assets, rights and benefits of the Issuer which are secured from time to time for the benefit of the Secured Creditors pursuant to the Security Documents.

"Collateral Acquisition Agreements" means each of the agreements entered into by the Issuer in relation to the purchase by the Issuer of Loans, High Yield Securities, Cash Equivalents and other Issuer Investments from time to time.

"Collateralisation Shortfall Amount" as of any Business Day, means an amount equal to any of: (a) the excess, if any, of the Principal Amount Outstanding of Senior Indebtedness over the Senior Advance Amount, (b) the excess, if any, of the sum of the Principal Amount Outstanding of Senior Indebtedness and the Principal Amount Outstanding of Second Senior Indebtedness over the Second Senior Advance Amount, (c) the excess, if any, of the sum of the Principal Amount Outstanding of Senior Indebtedness, the Principal Amount Outstanding of Second Senior Indebtedness and the Principal Amount Outstanding of Third Senior Indebtedness over the Third Senior Advance Amount and (d) the excess, if any, of the sum of the Principal Amount Outstanding of Senior Indebtedness, the Principal Amount Outstanding of Second Senior Indebtedness, the Principal Amount Outstanding of Third Senior Indebtedness and the Principal Amount Outstanding of Fourth Senior Indebtedness over the Fourth Senior Advance Amount, in each case as of the close of business on such Business Day, as applicable.

"Collateralisation Shortfall Date" means the first Business Day in any period of one or more consecutive Business Days on each of which, as of the close of business, there is a Collateralisation Shortfall Amount.

"Collateralisation Shortfall Valuation Statement" has the meaning given thereto in Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Commitment" means each Loan Commitment and each Note Commitment.

"Committed Unsettled Status" means, at any time, in respect of the acquisition or disposal of any investment which will, on acquisition or disposal, respectively, comprise or cease to comprise Collateral, that the Issuer has and is committed to honour the terms of such acquisition or disposal but that at such time (i) payment has not been received by the relevant transferor (being the Issuer in the case of a disposal) or (ii) the transferee (being the Issuer in the case of an acquisition) has not taken delivery and acquired beneficial ownership of the same.

"Conditions" means these terms and conditions and/or those applicable to any other Notes, as the context may require.

"Controlling Class" means:

(a) if the Senior Discharge Date has not occurred (i) at any time prior to any Liquidation Direction (x) the Holders of Senior Indebtedness and (y) the parties committed to fund the Unused Senior Commitments at such time representing in aggregate more than 50 per cent. of all Senior Indebtedness and Unused Senior Commitments outstanding at such time and (ii) on and after the date of a Liquidation Direction (and for purposes of issuing or revoking a Liquidation Direction), the Holders of Senior Indebtedness representing in aggregate more than 50 per cent. of all Senior Indebtedness outstanding at such time,

(b) if the Senior Discharge Date has occurred but the Second Senior Discharge Date has not occurred (i) at any time prior to any Liquidation Direction (x) the Holders of Second Senior Indebtedness and (y) the parties committed to fund the Unused Second Senior Commitments at such time representing in aggregate more than 50 per cent. of all Second Senior Indebtedness and Unused Second Senior Commitments outstanding at such time and (ii) on and after the date of a Liquidation Direction (and for purposes of issuing or revoking a Liquidation Direction), the Holders of Second Senior Indebtedness representing in aggregate more than 50 per cent. of all Second Senior Indebtedness outstanding at such time,

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(c) if the Senior Discharge Date and the Second Senior Discharge Date have each occurred but the Third Senior Discharge Date has not occurred, (i) at any time prior to any Liquidation Direction (x) the Holders of Third Senior Indebtedness and (y) the parties committed to fund the Unused Third Senior Commitments at such time representing in aggregate more than 50 per cent. of all Third Senior Indebtedness and Unused Third Senior Commitments outstanding at such time and (ii) on and after the date of a Liquidation Direction (and for purposes of issuing or revoking a Liquidation Direction), the Holders of Third Senior Indebtedness representing in aggregate more than 50 per cent. of all Third Senior Indebtedness outstanding at such time,

(d) if the Senior Discharge Date, the Second Senior Discharge Date and the Third Senior Discharge Date have each occurred but the Fourth Senior Discharge Date has not occurred, (i) at any time prior to any Liquidation Direction (x) the Holders of Fourth Senior Indebtedness and (y) the parties committed to fund the Unused Fourth Senior Commitments at such time representing in aggregate more than 50 per cent. of all Fourth Senior Indebtedness and Unused Fourth Senior Commitments outstanding at such time and (ii) on and after the date of a Liquidation Direction (and for purposes of issuing or revoking a Liquidation Direction), the Holders of Fourth Senior Indebtedness representing in aggregate more than 50 per cent. of all Fourth Senior Indebtedness outstanding at such time,

(e) if the First Interim Discharge Date has occurred but the Second Interim Discharge Date has not occurred (i) at any time prior to any Liquidation Direction (x) the Holders of Intervening Indebtedness and (y) the parties committed to fund the Unused Intervening Commitments at such time representing in aggregate more than 50 per cent. of all Intervening Indebtedness and Unused Intervening Commitments outstanding at such time and (ii) on and after the date of a Liquidation Direction (and for purposes of issuing or revoking a Liquidation Direction), the Holders of Intervening Indebtedness representing in aggregate more than 50 per cent. of all Intervening Indebtedness outstanding at such time,

(f) if the Second Interim Discharge Date has occurred but the Subordinated Discharge Date has not occurred (i) at any time prior to any Liquidation Direction (x) the Holders of Subordinated Indebtedness and (y) the parties committed to fund the Unused Subordinated Commitments at such time representing in aggregate more than 50 per cent. of all Subordinated Indebtedness and Unused Subordinated Commitments outstanding at such time and (ii) on and after the date of a Liquidation Direction (and for purposes of issuing or revoking a Liquidation Direction), the Holders of Subordinated Indebtedness representing in aggregate more than 50 per cent. of all Subordinated Indebtedness outstanding at such time or

(g) if the Senior Discharge Date, the Second Senior Discharge Date, the Third Senior Discharge Date, the Fourth Senior Discharge Date, the Intervening Discharge Date (if applicable) and the Subordinated Discharge Date have occurred, the Investment Manager or the Issuer, acting in accordance with the provisions of the Transaction Documents.

"Controlling Class Agent" means the representative of the Controlling Class having authority to provide notices from the Controlling Class to the Security Trustee as required under the Security and Intercreditor Deed.

"Counterparty Downgrade Collateral" means any cash or securities delivered to the Issuer as collateral for the obligations of the Secured Hedging Counterparty under a Secured Hedging Transaction.

"Credit Default Protection Contract Exposure" means, as of any date of determination, the sum, for each Credit Default Protection Contract, of the present values of the payments scheduled to be made by the Issuer under such Credit Default Protection Contract using a discount rate equal to the applicable Reinvestment Yield as determined by the Investment Manager on behalf of the Issuer.

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"Credit Impaired Obligation" means any Issuer Investment which, in the Investment Manager’s judgement, has a significant risk of declining (or has declined) in credit quality and/or Market Value provided, however, that a Synthetic Purchase Contract shall constitute a Credit Impaired Obligation in the event the Reference Security to which such Issuer Investment is linked would constitute a Credit Impaired Obligation if it were itself an Issuer Investment.

"Custody Account" means the custody account or accounts (including any cash account relating to any securities account (each, a "Custody Cash Account")) established on the books of the Custodian in accordance with the provisions of the Agency Agreement.

"Custody Cash Account" has the meaning given thereto in the definition of Custody Account.

"Custody Cash Deposit" means the balance from time to time standing to the credit of the Custody Cash Account, including all interest credited to the Custody Cash Account and the Issuer's rights, title and interest in and to the benefit of the Custody Cash Account and to the Indebtedness represented by such credit balance.

"Custody Deposit" means the Issuer Investments from time to time deposited in the Custody Account, including all Related Rights and the Issuer's right, title and interest in and to the benefit of the Custody Account.

"Debt" of any Person means, at any date, without duplication: (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee under capital leases, (v) all non contingent obligations of such Person to reimburse or prepay any bank or other Person in respect of amounts paid under a letter of credit, banker's acceptance or similar instrument, (vi) all of the foregoing obligations of others secured on any asset of such Person, whether or not such debt is assumed by such Person and (vii) all of the foregoing obligations of others guaranteed by such Person, provided that Debt shall in no event include any obligations under any other Hedging Transactions.

"December 2009 Issuance Class E Subordinated Notes" means the €30,000,000 Class E-7 Subordinated Notes due 2086 issued on 10 December 2009.

"December 2010 Closing Date" means 10 December 2010.

"December 2010 Issuance Class E Subordinated Notes" means the €20,000,000 Class E-8 Subordinated Notes due 2086 issued on the December 2010 Closing Date.

"Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

"Definitive Certificate" means a certificate representing one or more Notes in definitive, fully registered, form.

"Delayed Payment Date" has the meaning given thereto in Condition 7(b)(v) (Class E Subordinated Note Split Redemption Procedure).

"Delayed Redemption Notes" means, in relation to any Electing Class E Subordinated Noteholder, a Principal Amount Outstanding of Class E Subordinated Notes held by such Electing Class E Subordinated Noteholder equal to its pro rata share of the Reduction Amount as at the applicable Split Date.

"Delivery Deadline" has the meaning given thereto in Condition 5(b) (Over-Collateralisation Testing and Reporting).

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"Deposits" means (a) the Custody Cash Deposit, (b) the Custody Deposit and (c) the Principal Paying Agent Deposit.

"Determination Date" means the last Business Day of each Due Period, or in the event of any redemption of the Notes, following the occurrence of an Event of Default, two Business Days prior to the applicable Redemption Date.

"Directors" means Carmel Naughton and Jennifer Coyne, or such other person(s) who may be appointed as Director(s) of the Issuer from time to time.

"Diversity Compliance Period" means the period commencing on the Payment Date falling in September 2008 and ending one year prior to the latest maturity date of any rated Permitted Indebtedness.

"Diversity Compliance Requirement" has the meaning given thereto in Condition 5(a)(viii) (Minimum Investment Diversification Requirement).

"DTC" means The Depository Trust Company.

"Due Period" means, with respect to any Payment Date, the period commencing on and including the day immediately following the sixth Business Day prior to the preceding Payment Date (or on the Closing Date, in the case of the Due Period relating to the first Payment Date) and ending on the sixth Business Day prior to such Payment Date.

"Elected Amount" has the meaning given thereto in Condition 7(b)(iv) (Class E Subordinated Note Optional Redemption Liquidity Limitation Procedure).

"Elected Class E Global Redemption Amount" has the meaning given thereto in Condition 7(b)(iv) (Class E Subordinated Note Optional Redemption Liquidity Limitation Procedure).

"Electing Class E Subordinated Noteholder" has the meaning given thereto in 7(b)(iv) (Class E Subordinated Note Optional Redemption Liquidity Limitation Procedure).

"Equivalent or Shorter Maturity" means, in respect of any Notes being redeemed pursuant to Condition 7(a) (Final Redemption), any more senior Notes having a Maturity Date which is the same as, or falls before, the Notes being so redeemed.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"ERISA Debt Notes" means the VF Notes, the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes.

"ERISA Limited Notes" means the Class E Notes.

"EURIBID" means the arithmetic mean of the bid quotations of leading banks (rounded to four decimal places with the mid point rounded up) for Euro deposits in the Euro zone Interbank market of a duration equivalent to assets in respect of which such quotations are from time to time sought.

"EURIBOR" means the rate determined in accordance with Condition 6(c)(i) (Determination of Floating Rates of Interest).

"EURIBOR Swaps" has the meaning given thereto in the definition of Reinvestment Yield.

"Euroclear" means Euroclear Bank S.A./N.V. as operator of the Euroclear System.

"Euro zone" means the region comprised of Member States that have adopted the single currency in accordance with the Treaty establishing the European Community, as amended.

"Event of Default" has the meaning given thereto in Condition 10 (Events of Default).

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"Exchange Date" means a day falling not less than 30 days after that on which the notice requiring exchange is given and on which banks are open for business in the city in which the specified office of the Register and any Transfer Agent is located.

"Excluded Assets" means all of the Issuer's rights, title and interest in and to (a) the Issuer Irish Account and (b) the Corporate Administration Agreement, as applicable from time to time.

"External Creditors" means the External Senior Creditors, the External Second Senior Creditors, the External Third Senior Creditors, the External Fourth Senior Creditors, the External Intervening Creditors and the External Subordinated Creditors.

"External Fourth Senior Creditors" means the party or parties to which at any time External Fourth Senior Permitted Debt is owed by the Issuer.

"External Fourth Senior Permitted Debt" means any indebtedness under an External Fourth Senior Permitted Debt Document.

"External Fourth Senior Permitted Debt Document" means any instrument pursuant to which indebtedness which (i) is secured on the Collateral pursuant to the Security Documents and (ii) under its terms and in accordance with the Intercreditor Arrangements ranks pari passu with Class D Notes, is incurred.

"External Intervening Creditors" means the party or parties to which at any time External Intervening Permitted Debt is owed by the Issuer.

"External Intervening Permitted Debt" means any indebtedness under an External Intervening Permitted Debt Document.

"External Intervening Permitted Debt Document" means any investment pursuant to which indebtedness which (i) is secured on the Collateral pursuant to the Security Documents and (ii) under its terms and in accordance with the Intercreditor Arrangements ranks pari passu with the Intervening Notes, is incurred.

"External Permitted Debt" means any indebtedness of the Issuer under an External Permitted Debt Document.

"External Permitted Debt Document" means any External Senior Permitted Debt Document, External Second Senior Permitted Debt Document, External Third Senior Permitted Debt Document, External Fourth Senior Permitted Debt Document, External Intervening Permitted Debt Document or External Subordinated Permitted Debt Document.

"External Second Senior Creditors" means the party or parties to which at any time External Second Senior Permitted Debt is owed by the Issuer.

"External Second Senior Permitted Debt" means any indebtedness under an External Second Senior Permitted Debt Document.

"External Second Senior Permitted Debt Document" means any instrument pursuant to which indebtedness which (i) is secured on the Collateral pursuant to the Security Documents and (ii) under its terms and in accordance with the Intercreditor Arrangements ranks pari passu with Class B Notes, is incurred.

"External Senior Creditors" means the party or parties to which at any time the Issuer is indebted under any External Senior Permitted Debt Document together with any Secured Hedging Counterparty in respect of any Outstanding Issuer Swap Termination Payments.

"External Senior Permitted Debt" means any indebtedness under an External Senior Permitted Debt Document.

"External Senior Permitted Debt Document" means (a) any VF Instrument and (b) any instrument pursuant to which indebtedness, which (i) is secured on the Collateral pursuant to

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the Security Documents and (ii) under its terms and in accordance with the Intercreditor Arrangements ranks pari passu with Class A Notes, is incurred.

"External Subordinated Creditors" means the party or parties to which at any time External Subordinated Permitted Debt is owed by the Issuer.

"External Subordinated Permitted Debt" means any indebtedness under an External Subordinated Permitted Debt Document .

"External Subordinated Permitted Debt Document" means any instrument pursuant to which indebtedness which (i) is secured on the Collateral pursuant to the Security Documents and (ii) under its terms and in accordance with the Intercreditor Arrangements ranks pari passu with Class E Subordinated Notes, is incurred.

"External Third Senior Creditors" means the party or parties to which at any time External Third Senior Permitted Debt is owed by the Issuer.

"External Third Senior Permitted Debt" means any indebtedness under an External Third Senior Permitted Debt Document.

"External Third Senior Permitted Debt Document" means any instrument pursuant to which indebtedness, which (i) is secured on the Collateral pursuant to the Security Documents and (ii) under its terms and in accordance with the Intercreditor Arrangements ranks pari passu with Class C Notes, is incurred.

"Extraordinary Resolution" means an extraordinary resolution as described in Condition 14 (Meetings of Noteholders, Modification, Waiver and Substitution) and as further described in, and as defined in, the Trust Deed.

"First Interim Discharge Date" means the first date on which each of (a) the Senior Discharge Date, (b) the Second Senior Discharge Date, (c) the Third Senior Discharge Date and (d) the Fourth Senior Discharge Date have occurred.

"First Issued Intervening Notes" means (x) if any Intervening Notes are issued on the Initial Closing Date, the same or (y) if no Intervening Notes are issued on the Initial Closing Date, the first Intervening Notes issued after the Initial Closing Date.

"Fixed Rate Notes" means any Notes providing for the payment of a fixed rate of interest pursuant to Condition 20 (Specific Conditions).

"Fixed Rate of Interest" has the meaning given thereto in Condition 6(c)(ii) (Interest on Fixed Rate Notes).

"Floating Rate Notes" means any Notes providing for the payment of a floating rate of interest pursuant to Condition 20 (Specific Conditions).

"Floating Rate of Interest" has the meaning given thereto in Condition 6(c)(i) (Determination of Floating Rates of Interest).

"Form Approved Swap" means a Secured Hedging Transaction the documentation for and structure of which conforms (save for the amount and timing of periodic payments, the name and the economics of the relevant Issuer Investment or reference entity, the notional amount, the effective date, the termination date and other consequential and immaterial changes) to a form previously approved by the Rating Agencies.

"Fourth Senior Blockage Notice" has the meaning given thereto in Condition 3(h)(iv) (Blockage Periods).

"Fourth Senior Blockage Period" means the period commencing on the date of service of a Fourth Senior Blockage Notice and ending on the earliest of (a) 180 days after the date of such service, (b) the date on which the default referred to in the definition of Fourth Senior Blockage Trigger Event shall be cured or otherwise waived, (c) the date on which the

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Representative of the Secured Creditors (at the direction of the Controlling Class) shall otherwise give notice to the Issuer of the termination of the Fourth Senior Blockage Period and (d) the Fourth Senior Discharge Date.

"Fourth Senior Blockage Trigger Event" means the occurrence of a Trigger Event with respect to any Fourth Senior Indebtedness.

"Fourth Senior Discharge Date" means the date on which all Fourth Senior Indebtedness has been fully discharged and all commitments of the Holders of Fourth Senior Indebtedness to the Issuer have been terminated or cancelled in accordance with the Fourth Senior Permitted Debt Documents.

"Fourth Senior Indebtedness" means all money and liabilities from time to time due, owing or incurred by the Issuer in any currency or currencies, whether present or future, actual or contingent, whether incurred solely or jointly with any other person and whether as principal or surety, together with all interest accruing thereon and all costs, charges and expenses incurred in connection therewith, pursuant to the Initial Issuance Class D Notes and any other amounts designated as "Fourth Senior Indebtedness" from time to time pursuant to and in accordance with the Security and Intercreditor Deed.

"Fourth Senior Obligations" means, with respect to all Fourth Senior Indebtedness, all obligations for principal, interest, fees, indemnities or premiums owing in respect of Fourth Senior Indebtedness, whether arising at law or in equity pursuant to a Fourth Senior Permitted Debt Document or any other Transaction Document.

"Fourth Senior Payment Default" means a Payment Default with respect to any Fourth Senior Indebtedness.

"Fourth Senior Permitted Debt Document" means any Permitted Debt Document pursuant to which outstanding Fourth Senior Indebtedness has been issued or incurred or pursuant to which a Commitment in respect of Fourth Senior Indebtedness remains in place.

"Fourth Senior Prepayment Cure Priority" has the meaning given thereto in Condition 5(c)(i) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Hedging Arrangement" means any arrangement in respect of an interest rate swap, currency swap, forward foreign exchange transaction, cap, floor, collar or option transaction entered into or in connection with protection against or benefit from fluctuation in any rate or price.

"Hedging Representative" means the Trustee, Paying Agent or other similar Representative for the Secured Hedging Counterparties from time to time appointed by and on behalf of Secured Hedging Counterparties.

"Holder" means, on any date, with respect to any Permitted Indebtedness outstanding, the holder of (or, as the case may be, the holder of record of) such Permitted Indebtedness or the person registered on any register for such Permitted Indebtedness as determined by the Permitted Debt Documents governing such outstanding Permitted Indebtedness, including, as the case may be, Noteholders.

"Incentive Fee" has the meaning given thereto in the Investment Management Agreement.

"Indebtedness" means any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent (including the payment of interest, fees, costs and expenses and other charges).

"Initial Closing Date" means 2 August 2007 (or such other date as may shortly follow such date as may be agreed between the Issuer and the Initial Purchaser and is notified to the Noteholders in accordance with Condition 16 (Notices) and the Irish Stock Exchange).

"Initial Issuance Class A Notes" means the €70,000,000 Class A-1 Senior Secured Floating Rate Notes due 2014 issued on the Initial Closing Date.

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"Initial Issuance Class B Notes" means the €8,750,000 Class B-1 Second Senior Secured Floating Rate Notes due 2014 issued on the Initial Closing Date.

"Initial Issuance Class C Notes" means the €8,750,000 Class C-1 Third Senior Secured Floating Rate Notes due 2014 issued on the Initial Closing Date.

"Initial Issuance Class D Notes" means the €4,500,000 Class D-1 Fourth Senior Secured Floating Rate Notes due 2014 issued on the Initial Closing Date.

"Initial Issuance Class E Subordinated Notes" means the Initial Issuance Class E-1 Subordinated Notes, the Initial Issuance Class E-2 Subordinated Notes and the Initial Issuance Class E-3 Subordinated Notes.

"Initial Issuance Class E-1 Subordinated Notes" means the €30,500,000 Class E-1 Subordinated Notes due 2086 issued on the Initial Closing Date.



"Initial Issuance Notes" means the Initial Issuance Class A Notes and/or the Initial Issuance Class B Notes and/or the Initial Issuance Class C Notes and/or the Initial Issuance Class D Notes and/or the Initial Issuance Class E Subordinated Notes, as the context may require.

"Initial Purchaser" means Deutsche Bank AG, London Branch, its successors and assigns.

"Intercreditor Agents" means the persons from time to time fulfilling such function pursuant to the Security and Intercreditor Deed.

"Intercreditor Approval" means an instruction duly authorised by the Controlling Class from time to time in accordance with the Intercreditor Arrangements.

"Intercreditor Arrangements" means the subordination arrangements between, inter alios, the External Senior Creditors, External Second Senior Creditors, External Third Senior Creditors, External Fourth Senior Creditors, External Intervening Creditors, External Subordinated Creditors and the Trustee on behalf of the Noteholders established pursuant to the Security Documents.

"Intercreditor Priority of Payments" means the priority of payments in respect of enforcement distributions as set out and defined in the Security and Intercreditor Deed.

"Interest Bearing Notes" means any Floating Rate Notes and/or any Fixed Rate Notes which bear interest in accordance with Condition 6 (Interest).

"Interest Determination Date" has the meaning given thereto in Condition 6(c)(i) (Determination of Floating Rates of Interest).

"Interest Payment Amount" means on each Payment Date or Class E Payment Date (as the case may be), the amount of interest payable in respect of each Minimum Denomination and Authorised Integral Amount in original principal amount of the Notes of any Class or series within a Class indicated for any Interest Period or Class E Interest Period (as the case may be) being, in the case of Interest Bearing Notes, the amount calculated by the Calculation Agent as soon as practicable after 11:00 a.m. (Brussels time) on the relevant Interest Determination Date in accordance with Condition 6(c) (Rate of Interest) and Condition 6(d) (Determination of Rates of Interest and Calculation of Interest Payment Amounts), excluding, for the avoidance of doubt, any Blocked Junior Note Interest, but including any amounts payable under Condition 6(d)(iii) (Determination of Rates of Interest and Calculation of Interest Payment Amounts).

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"Interest Period" means the period from and including the Closing Date to but excluding the first Payment Date and each successive period from and including each Payment Date to but excluding the following Payment Date.

"Intervening Blockage Notice" has the meaning given thereto in Condition 3(h)(iv) (Blockage Periods).

"Intervening Blockage Period" means the period commencing on the date of service of an Intervening Blockage Notice and ending on the earliest of (a) 180 days after the date of such service, (b) the date on which the default referred to in the definition of Intervening Blockage Trigger Event shall be cured or otherwise waived, (c) the date on which the Representative of the Secured Creditors (at the direction of the Controlling Class) shall otherwise give notice to the Issuer of the termination of the Intervening Blockage Period and (d) the Intervening Discharge Date.

"Intervening Blockage Trigger Event" means the occurrence of a Trigger Event with respect to any Intervening Indebtedness.

"Intervening Discharge Date" means the first date on which all Intervening Indebtedness has been fully discharged and all commitments of the Holders of Intervening Indebtedness to the Issuer have been terminated or cancelled in accordance with the Intervening Permitted Debt Documents.

"Intervening Indebtedness" means all money and liabilities from time to time due, owing or incurred by the Issuer in any currency or currencies, whether present or future, actual or contingent, whether incurred solely or jointly with any other person and whether as principal or surety, together with all interest accruing thereon and all costs, charges and expenses incurred in connection therewith, pursuant to any Intervening Permitted Debt Document from time to time pursuant to and in accordance with the Security and Intercreditor Deed.

"Intervening Indebtedness Priority of Payments" means in respect of any Intervening Indebtedness which does not rank pari passu amongst itself, the ranking, inter se, of the same as elected and specified in accordance with the Intercreditor Arrangements.

"Intervening Noteholders" means the Holders of any Intervening Notes from time to time.

"Intervening Notes" means any Intervening Indebtedness issued by the Issuer in the form of Notes on the Initial Closing Date, pursuant to Condition 17 (Further Issues) or otherwise in accordance with the Trust Deed.

"Intervening Obligations" means, with respect to all Intervening Indebtedness, all obligations for principal, interest, fees, indemnities or premiums owing in respect of Intervening Indebtedness, whether arising at law or in equity or pursuant to an Intervening Permitted Debt Document or any other Transaction Document.

"Intervening Payment Default" means a Payment Default with respect to any Intervening Indebtedness.

"Intervening Permitted Debt Document" means any Permitted Debt Document pursuant to which outstanding Intervening Indebtedness has been issued or incurred or pursuant to which a Commitment in respect of Intervening Indebtedness remains in place.

"Investment Company Act" means the United States Investment Company Act of 1940, as amended.

"Investment Management Fees" means the Management Fee and the Incentive Fee.

"Investment Manager Advance" means an advance made by the Investment Manager to the Issuer pursuant to the Investment Management Agreement.

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"Investment Tax Act Report" means each report prepared by the Collateral Administrator on behalf of the Issuer in order to comply with the minimum statutory reporting and publication requirements of the German Investment Tax Act for "semi transparent funds".

"Irish Stock Exchange" means the Irish Stock Exchange Limited.

"Issuer Fee" means €1,000 per annum (or such other amount as may from time to time be notified by the Administrator to the Trustee).

"Issuer Irish Account" means an account in the name of the Issuer with Bank of Ireland, into which, amongst other things, the Issuer Fee and €40,000 representing the fully paid up share capital of the Issuer has been and will be paid.

"Junior Interest Bearing Notes" means (i) while any Class A Notes remain Outstanding, Class B Notes, Class C Notes, Class D Notes and any Intervening Notes which are Interest Bearing Notes, (ii) while Class B Notes remain Outstanding but no Class A Notes remain Outstanding, Class C Notes, Class D Notes and any Intervening Notes which are Interest Bearing Notes, (iii) while Class C Notes remain Outstanding but no Class A Notes or Class B Notes remain Outstanding, Class D Notes or any Intervening Notes which are Interest Bearing Notes, and (iv) while Class D Notes remain Outstanding but no Class A Notes, Class B Notes or Class C Notes remain Outstanding, any Intervening Notes which are Interest Bearing Notes.

"Liquidation Direction" means a notice delivered by the Controlling Class Agent to the Security Trustee following the occurrence of an Event of Default which is continuing (taking into account any related grace periods), instructing the Security Trustee to proceed to enforce the Collateral or any part of it.

"Liquidity Limitation Procedure" means the procedure described in Condition 7(b)(iv) (Class E Subordinated Note Optional Redemption Liquidity Limitation Procedure).

"Loan Commitment" means a commitment of any Holder of Permitted Indebtedness to make loans under and pursuant to the terms of a Permitted Debt Document.

"Long Stop Date" means the thirtieth day following a Collateralisation Shortfall Date provided that if such date is not a Business Day, it shall be the deemed to be the next Business Day following such thirtieth day.

"Management Fee" has the meaning given thereto in the Investment Management Agreement.

"March 2008 Issuance Class E Subordinated Notes" means the €20,000,000 Class E-4 Subordinated Notes due 2086 and the €5,000,000 Class E-5 Subordinated Notes due 2086, in each case issued on 10 March 2008.

"Market Valuation Manual" means, at any time, the manual of the same name in the form appearing at Schedule 8 to the Trust Deed amended from time to time in accordance with the provisions of the Trust Deed and the Security and Intercreditor Deed (including for the avoidance of doubt (x) by the Rating Agencies in respect of any Advance Rates contained or to be contained therein (provided that any increase in an Advance Rate shall be subject to the consent of the Controlling Class Agent) and (y) at the direction of the Trustee to modify references to the applicable Specified Notes).

"Material Agreement" means each of (a) the Agency Agreement, (b) the Investment Management Agreement, (c) each Subscription Agreement, (d) any Collateral Acquisition Agreements (e) the Trust Deed, (f) each Trust Instrument and (g) the Collateral Administration Agreement.

"Maturity Date" means, as the context may require, the Class E Subordinated Note Maturity Date and/or, with respect to any Notes which are not Class E Subordinated Notes, the Specified Maturity Date.

"Member State" means any member state of the European Union.

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"Minimum Denomination" means, unless otherwise specified in Condition 20 (Specific Conditions):

(a) in the case of the Regulation S Notes which are Rated Notes, €50,000,

(b) in the case of the Regulation S Notes which are Class E Subordinated Notes, €250,000, and

(c) in the case of all Rule 144A Notes, €250,000.

"Modified Following Business Day Convention" means the convention for adjusting any relevant date if it would otherwise fall on a day that is not a Business Day, which provides that the relevant date shall be the following day that is a Business Day unless that day falls in the next calendar month, in which case that date will be the first preceding day that is a Business Day.

"Moody's" means Moody's Investors Service Inc. and any successor to its rating business.

"New Holders" has the meaning given thereto in Condition 17(a)(ix) (Further Issues).

"Non-Call Period" means such period designated as a "Non-Call Period" in Condition 20 (Specific Conditions) applicable to Notes issued pursuant to the Trust Deed from time to time.

"Non-Permitted Holder" has the meaning given thereto in Condition 2(h) (Forced Transfer of Certain Notes).

"Non-Petition Covenant" means a written covenant by a Person to the effect that, prior to the date that is two years and one day after the payment in full of all Permitted Indebtedness (or, if longer, the preference period then in effect under applicable law), it will not commence or otherwise institute against the Issuer or any of its subsidiaries any bankruptcy, examination, reorganization, arrangement, insolvency or liquidation proceeding or other similar proceedings.

"Note Commitment" means a commitment by any Holders of Permitted Indebtedness to purchase, subscribe for or pay any amounts in respect of any Notes, VF Notes or other External Permitted Debt in the form of notes, or additional interests therein.

"Noteholders" means the Holders of any Notes from time to time.

"Notes" means any Class A Notes, Class B Notes, Class C Notes, Class D Notes, Intervening Notes (if any) and/or Class E Subordinated Notes (whether or not the same constitute Specified Notes for the purposes of these Conditions), as the context may require.

"Note Tax Event" means, at any time, the introduction of a new, or any change in, home jurisdiction or foreign tax statute, treaty, regulation, rule, ruling, practice, procedure or judicial decision or interpretation (whether proposed, temporary or final) which results in (or would on the next Payment Date result in) any payment on the VF Notes or the Notes of any Class becoming properly subject to any withholding tax or deduction on account of tax.

"November 2008 Issuance Class I-1 Intervening Notes" means the €30,000,000 Class I-1 Intervening Notes due 2014 issued on 11 November 2008.

"Offer to Purchase" has the meaning given thereto in Condition 7(e) (Issuer Offer to Purchase).

"Optional Redemption" means redemption by the Issuer of any Class E Subordinated Notes pursuant to Condition 7 (Redemption).

"Optional Redemption Date" has the meaning given thereto in Condition 7(b)(i) (Optional Redemption Requirements).

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"Ordinary Resolution" means an ordinary resolution as described in Condition 14 (Meetings of Noteholders, Modification, Waiver and Substitution) and as further described in, and as defined in, the Trust Deed.

"Outstanding" means in relation to the Notes of a Class as of any date of determination, all of the Notes of such Class issued and not previously redeemed as further defined in the Trust Deed and, in relation to any other Permitted Indebtedness, the extent of the same outstanding under the applicable Permitted Debt Document.

"Outstanding Issuer Swap Termination Payments" means, at any time, any amounts payable by the Issuer to a Secured Hedging Counterparty upon termination or modification of a Secured Hedging Transaction, pursuant to, and in accordance with, the terms thereof which are, at such time, outstanding.

"Over-Collateralisation Failure" means the existence of a Collateralisation Shortfall Date which has not at any time been remedied provided that the same does not qualify as an Under Collateralisation Event.

"Over-Collateralisation Test Dependent Indebtedness" means any Permitted Indebtedness which pursuant to its terms requires compliance with certain of the Over-Collateralisation Tests.

"Over-Collateralisation Test Report" means the report substantially in the form set out in the Investment Management Agreement certified by the Issuer (or the Investment Manager on its behalf).

"Paying Agent Account" means the account of the Issuer (if any) maintained with the Principal Paying Agent pursuant to the Agency Agreement.

"Payment Date" means, unless otherwise specified in Condition 20 (Specific Conditions) applicable to any Notes, 10 December, 10 March, 10 June and 10 September in each year, commencing 10 December 2007, until and including the Class E Subordinated Note Maturity Date and, to the extent not a Business Day, adjusted in accordance with the Modified Following Business Day Convention.

"Payment Default" means, with respect to any Permitted Indebtedness, an Event of Default under the related Permitted Debt Document resulting from the failure of the Issuer to pay any principal, interest or premium on, or commitment fees or breakage costs in connection with such Permitted Indebtedness (whether due by acceleration, mandatory prepayment or otherwise).

"Permitted Debt Document" means any document under which any Permitted Indebtedness is advanced or which otherwise relates to Permitted Indebtedness at any time.

"Permitted Indebtedness" means Senior Indebtedness, Second Senior Indebtedness, Third Senior Indebtedness, Fourth Senior Indebtedness, Intervening Indebtedness and Subordinated Indebtedness (excluding, for the avoidance of doubt, any amounts owing under any Secured Hedging Transaction).

"Permitted Redemption Amount" has the meaning given thereto in Condition 7(b)(iv) (Class E Subordinated Note Optional Redemption Liquidity Limitation Procedure).

"Permitted Security Interest" has the meaning given thereto in Condition 5(a)(ii) (Limitations on Security Interests).

"Pledge Agreement" means the pledge agreement governed by Belgian law between the Issuer and the Trustee in respect of Issuer Investments held in Euroclear and dated on or about the Initial Closing Date.

"Post Redemption Default Due Period" has the meaning given thereto in Condition 6(b) (Post Redemption Default Interest).

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"Post Redemption Default Payment Date" has the meaning given thereto in Condition 6(b) (Post Redemption Default Interest).

"Premature Redemption Date" has the meaning given thereto in Condition 7(f)(iii) (Mandatory Redemption of Interest Bearing Notes other than Class E Subordinated Notes on Optional Redemption of Class E Subordinated Notes).

"Premature Redemption Requirements" has the meaning given thereto in Condition 7(b)(i) (Optional Redemption Requirements).

"Prepayment Cure Methodology" has the meaning given thereto in Condition 5(c)(i) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Prepayment Date" has the meaning given thereto in Condition 5(c)(i) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Prepayment Priorities" has the meaning given thereto in Condition 5(c)(i) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Prepayment Priority Disapplication Mechanic" has the meaning given thereto in Condition 5(d) (Insufficiency of Projection Cure Methodology).

"Prepayment Priority Levels" has the meaning given thereto in Condition 5(c)(i) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Prepayment Provisos" has the meaning given thereto in Condition 5(c)(i) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Presentation Date" means a day on which a Holder presents, or is entitled to present (as the case may be), a Note for payment and which (subject to Condition 12 (Prescription)) is a Business Day.

"Principal Amount Outstanding" means the principal amount of Permitted Indebtedness (which for the purposes of the Over-Collateralisation Tests and the Collateralisation Shortfall Amount shall, if applicable, be converted into Euros at the then current spot rate, after taking into account the effect of any Currency Hedging Transactions which can be associated with such Permitted Indebtedness), increased as a result of the addition of any blocked or unpaid interest being added to the principal thereof (including, as applicable, any Blocked Junior Note Interest) and decreased by the cumulative sum of all principal payments made on such Permitted Indebtedness.

"Principal Paying Agent Deposit" means the balance from time to time standing to the credit of the Paying Agent Account, including all interest credited to the Paying Agent Account and the Issuer's right, title and interest in and to the benefit of the Paying Agent Account and to the Indebtedness represented by such credit balance.

"Projection Cure Methodology" has the meaning given thereto in Condition 5(c)(ii) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Projection Cure Settlement Default" has the meaning given thereto in Condition 5(d) (Insufficiency of Projection Cure Methodology).

"Projection Cure Statement" has the meaning given thereto in Condition 5(c)(ii) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"pro rata" means, when used in respect of any payment of any amount to two or more persons or of two or more obligations (each "Pro Rated Obligations") which is to be allocated between such Pro Rated Obligations "pro rata", the allocation of the amount available for payment between such Pro Rated Obligations in proportions equal to the proportion that the notional amount of each such Pro Rated Obligation represents of the sum of the notional amounts of all such Pro Rated Obligations.

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"Qualified Institutional Buyer" or "QIB" means a Person who is a qualified institutional buyer as defined in Rule 144A.

"QIB/QP" means a Person who is both a QIB and a QP.

"Qualified Purchaser" or "QP" means a Person who is a qualified purchaser as defined in Section 2(a)(51)(A) of the Investment Company Act.

"Rated Notes" means any Notes at any time Outstanding which have been awarded a Rating by one or more Rating Agencies.

"Rate of Interest" means the Floating Rate of Interest and/or the Fixed Rate of Interest, as the context may require.

"Rating" with respect to any Rated Notes means that specified in Condition 20 (Specific Conditions) applicable thereto.

"Rating Agencies" means Moody's and/or S&P as specified in Condition 20 (Specific Conditions), provided that if at any time Moody's and/or S&P cease(s) to provide rating services, any other internationally recognised statistical rating organisation selected by the Issuer (or the Investment Manager on its behalf) and approved by the Designated Approval Representative (a "Replacement Rating Agency"). In the event that at any time a Rating Agency is replaced by a Replacement Rating Agency, references to rating categories of the original Rating Agency in these Conditions, the Trust Deed and the Investment Management Agreement shall be deemed instead to be references to the equivalent categories of the relevant Replacement Rating Agency as of the most recent date on which such other Rating Agency published ratings for the type of security in respect of which such Replacement Rating Agency is used and all references herein to "Rating Agencies" shall be construed accordingly.

"Rating Agency Confirmation" means, with respect to any specified action or determination, receipt by the Issuer (or the Investment Manger on its behalf) and the Trustee of written confirmation by each Rating Agency which has assigned ratings to the Notes that are Outstanding (or, if applicable, the Rating Agency specified) that such specified action, determination or appointment will not result in the reduction or withdrawal of any of the ratings currently assigned to the Notes rated by such Rating Agency.

"Rating Requirement" means in the case of:

(a) the Custodian, that the same has a short-term S&P issuer credit rating of at least "A-1" and a short-term Moody's rating of "P-1" or a long-term Moody's senior unsecured rating of at least "A2" or

(b) a counterparty to a Currency Hedging Transaction, that the same has a short-term S&P issuer credit rating of "A-1+" and a short-term Moody's rating of "P-1" or a long-term Moody's senior unsecured rating of at least "Aa2" or

(c) in the case of any other Person, either such Person has a short-term S&P issuer credit rating of at least "A-1" or a long-term S&P issuer credit rating of at least "AA-" and a short-term Moody's rating of "P-1" or a long-term Moody's senior unsecured rating of at least "Aa3".

or, in each case, if any of the requirements are not satisfied by any of the parties referred to above, Rating Agency Confirmation is received in respect of such party or the obligations of such party are guaranteed by an entity satisfying the applicable Rating Requirement.

"Redemption Breakage Costs" means, with respect to any Rated Note, losses sustained as a result of a redemption pursuant to Condition 7(f)(i) (Mandatory Redemption upon Over-Collateralisation Failure) occurring on a date other than a Payment Date, equal to the product of (a) a rate equal to the excess, if any, of (i) EURIBOR for such Note and the Interest Period during which such redemption occurs over (ii) EURIBID, for the period from and including the applicable Redemption Date to but excluding the first Payment Date following the Redemption Date (b) the amount of such redemption of such Note and (c) the ratio of (i) the

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number of days from and including the applicable Redemption Date to, but excluding, the first Payment Date following such Redemption Date and (ii) 360.

"Redemption Date" means each date specified for a redemption of the Notes of any Class pursuant to Condition 7 (Redemption) or the date on which the Notes of such Class are accelerated pursuant to Condition 10 (Events of Default) and, in each case, if such day is not a Business Day, as adjusted in accordance with the Modified Following Business Day Convention.

"Redemption Price" means, when used with respect to:

(a) any Note other than a Class E Subordinated Note to be redeemed pursuant to Condition 7(c) (Redemption at the Option of the Issuer), Condition 7(d) (Redemption for Tax Reasons), Condition 7(f)(i) (Mandatory Redemption upon Over-Collateralisation Failure), 7(f)(iii) (Mandatory Redemption of Interest Bearing Notes other than Class E Subordinated Notes on Optional Redemption of Class E Subordinated Notes) or Condition 10 (Events of Default), 100 per cent. of the Principal Amount Outstanding of such Note, together with accrued and unpaid interest thereon to the date of redemption (including any accrued and unpaid deferred interest and, as the case may be in the case of the Class B Notes, Class C Notes, Class D Notes or Intervening Notes (as the case may be), the applicable Blocked Junior Note Interest), or

(b) any Class E Subordinated Note to be redeemed pursuant to (x) Condition 7(b) (Optional Redemption), Condition 7(d) (Redemption for Tax Reasons) or 7(f)(ii) (Mandatory Class E Subordinated Note Redemptions for Liquidity Reasons), the aggregate proceeds of liquidation of Collateral designated by reference to the Net Asset Value allocable to such Class E Subordinated Note (determined as of the Determination Date prior to the proposed Redemption Date, in the case of a redemption in part, or determined as of the Redemption Date, in the case of a redemption in whole), net of the Investment Manager’s good faith estimate of expenses for legal, accounting and administrative costs associated with redemption (including for the avoidance of doubt, any costs, charges or expenses of the Collateral Administrator as notified by the Collateral Administrator to the Investment Manager) or (y) an enforcement of the security over the Collateral pursuant to Condition 10 (Events of Default), its pro rata share (based on the Net Asset Value allocable to it) of the aggregate proceeds of realisation of the security over the Collateral remaining following application thereof in accordance with the Intercreditor Priority of Payments.

"Reduction Amount" has the meaning given thereto in Condition 7(b)(v) (Class E Subordinated Note Split Redemption Procedure).

"Reference Banks" has the meaning given thereto in Condition 6(i) (Reference Banks and Calculation Agent).

"Register" means the register of holders of the legal title to the Definitive Certificates kept by the Registrar pursuant to the terms of the Agency Agreement.

"Regulation S" means Regulation S under the Securities Act.

"Regulation S Notes" means the VF Notes or Notes offered for sale outside the United States in offshore transactions to non-U.S. Persons in reliance on Regulation S.

"Reinvestment Yield" means, in relation to a Hedging Transaction, the rate on the European Interbank offered rate swap agreement ("EURIBOR Swaps") (determined, if necessary, by interpolating linearly between (1) the arithmetic mean of the annual bid and offered rates for the EURIBOR Swap with the term closest to and greater than the maturity of the applicable Hedging Transaction and (2) the arithmetic mean of the annual bid and offered rates for the EURIBOR Swap with the term closest to and less than the maturity of the applicable Hedging Transaction) corresponding to that on Reuters Screen ICAPEURO Page under the heading "EURIBOR vs 6mth" (or any successor page on such service), expressed as a rate with a frequency equal to that of such Hedging Transaction.

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"Related Rights" means, as the context may require, in relation to any Issuer Investments or the Issuer's other assets (a) any proceeds of and any right to receive any dividend, distribution, interest or other income paid or payable in relation to such Issuer Investments, (b) any right to receive, call for delivery of or otherwise acquire any stocks, shares, securities, monies or other property of any kind, accruing or offered at any time and all amounts relating thereto, whether in addition to or in substitution for such Issuer Investments and (c) to the extent falling outside of (i) paragraph (a) and (b) of this definition and (ii) the definition of Issuer Investments, any credit agreements, promissory notes, security agreements, leases, financing statements, guaranties and other contracts, agreements, instruments and other papers evidencing, securing, guaranteeing or otherwise relating to any Issuer Investment, together with all of the Issuer's rights, title and interest in and to all inventory and other goods (including returned or repossessed goods) securing, guaranteeing or otherwise relating to any Issuer Investments, in each case, not including the Excluded Assets.

"Relevant Margin" in respect of any Floating Rate Notes means the margin specified as such in Condition 20 (Specific Conditions) applicable thereto.

"Relevant Outstanding Class" has the meaning given thereto in Condition 17 (Further Issues).

"Replacement Rating Agency" has the meaning given thereto within the definition of "Rating Agencies".

"Report" means the Over-Collateralisation Test Report or the Investment Tax Act Report together with any other report furnished by the Issuer pursuant to the Investment Management Agreement.

"Representative" means (i) the VFN Agent under a VF Instrument, (ii) the Trustee, (iii) the Hedging Representative and (iv) the Persons identified as such in relation to Permitted Indebtedness issued after the Initial Closing Date.

"Resolution" means any Ordinary Resolution or Extraordinary Resolution.

"Restricted Payment Provisos" means in relation to the making of any payment to which these provisos are specified to apply that, immediately after making the same: (i) no Transaction Default or Transaction Event of Default shall have occurred and be continuing, (ii) no Over-Collateralisation Failure shall have occurred and be continuing and (iii) no circumstances have arisen which would call into question the accuracy, as at the date that the same was given, in any material respect of any representation or warranty of the Issuer in the Security Documents and the Permitted Debt Documents.

"Restriction Notice" means any of an Acceleration Notice and/or Liquidation Direction.

"Rule 144A" means Rule 144A of the Securities Act.

"Rule 144A Notes" means the VF Notes and the Notes offered for sale within the United States or to U.S. Persons in reliance on Rule 144A.

"September 2009 Issuance Class E Subordinated Notes" means the €30,000,000 Class E-6 Subordinated Notes due 2086 issued on 10 September 2009.

"S&P" means Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. and any successor to its rating business.

"Second Interim Discharge Date" means the first date on which each of (a) the First Interim Discharge Date and (b), if applicable, the Intervening Discharge Date have occurred.

"Second Senior Blockage Notice" has the meaning given thereto in Condition 3(h)(ii) (Blockage Periods).

"Second Senior Blockage Period" means the period commencing on the date of service of a Second Senior Blockage Notice and ending on the earliest of (a) 180 days after the date of

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such service, (b) the date on which the default referred to in the definition of Second Senior Blockage Trigger Event shall be cured or otherwise waived, (c) the date on which the Representative of the Secured Creditors (at the direction of the Controlling Class) shall otherwise give notice to the Issuer of the termination of the Second Senior Blockage Period and (d) the Second Senior Discharge Date.

"Second Senior Blockage Trigger Event" means the occurrence of a Trigger Event with respect to any Second Senior Indebtedness.

"Second Senior Discharge Date" means the date on which all Second Senior Indebtedness has been fully discharged and all commitments of the Holders of Second Senior Indebtedness to the Issuer have been terminated or cancelled in accordance with the Second Senior Permitted Debt Documents.

"Second Senior Indebtedness" means all money and liabilities from time to time due, owing or incurred by the Issuer in any currency or currencies, whether present or future, actual or contingent, whether incurred solely or jointly with any other person and whether as principal or surety, together with all interest accruing thereon and all costs, charges and expenses incurred in connection therewith, pursuant to the Initial Issuance Class B Notes and any other amounts designated as "Second Senior Indebtedness" from time to time pursuant to and in accordance with the Security and Intercreditor Deed.

"Second Senior Obligations" means, with respect to all Second Senior Indebtedness, all obligations for principal, interest, fees, indemnities or premiums owing in respect of Second Senior Indebtedness, whether arising at law or in equity pursuant to a Second Senior Permitted Debt Document or any other Transaction Document.

"Second Senior Payment Default" means a Payment Default with respect to any Second Senior Indebtedness.

"Second Senior Permitted Debt Document" means any Permitted Debt Document pursuant to which outstanding Second Senior Indebtedness has been issued or incurred or pursuant to which a Commitment in respect of Second Senior Indebtedness remains in place.

"Second Senior Prepayment Cure Priority" has the meaning given thereto in Condition 5(c)(i) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Secured Creditors" means the Initial Purchaser, the Noteholders, the External Creditors, the Investment Manager, the Collateral Administrator, the Trustee, any receiver appointed by the Trustee pursuant to the terms of any security document, the Security Trustee, any Secured Hedging Counterparty and the Agents.

"Secured Hedging Agreement" means any agreement evidencing or documenting a Secured Hedging Transaction.

"Secured Hedging Counterparty" means a counterparty to a Secured Hedging Transaction which satisfies the relevant Rating Requirement for the same.

"Secured Obligations" means all present and future obligations and liabilities (whether in respect of principal, interest or otherwise, whether actual or contingent, whether owed jointly or severally and whether owed as principal or surety or in any other capacity) of the Issuer to the Secured Creditors (or any of them) under or in relation to any one or more of the Transaction Documents.

"Securities Act" means the United States Securities Act of 1933, as amended.

"Security Documents" means the Security and Intercreditor Deed, Pledge Agreement and any other document which purportedly creates security in favour of the Security Trustee from time to time executed by the Issuer including, without limitation, the security created pursuant to Condition 4(a) (Security).

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"Security Interest" means (a) a mortgage, charge, pledge, lien or other encumbrance or security interest securing any obligation of any person, (b) any arrangement under which money or claims to, or the benefit of, a bank or other account may be applied, set off or made subject to a combination of accounts so as to effect payment of sums owed or payable to any person or (c) any other type of preferential arrangement (including title transfer and retention arrangements) having a similar effect.

"Senior Blockage Notice" has the meaning given thereto in Condition 3(h)(i) (Blockage Periods).

"Senior Blockage Period" means the period commencing on the date of service of a Senior Blockage Notice and ending on the earliest of (a) 180 days after the date of such service, (b) the date on which the default referred to in the definition of Senior Blockage Trigger Event shall be cured or otherwise waived, (c) the date on which the Representative of the Secured Creditors (at the direction of the Controlling Class) shall otherwise give notice to the Issuer of the termination of the Senior Blockage Period and (d) the Senior Discharge Date.

"Senior Blockage Trigger Event" means the occurrence of a Trigger Event with respect to any Senior Obligations.

"Senior Discharge Date" means the date on which all Senior Indebtedness has been fully discharged and all commitments of the Holders of Senior Indebtedness to the Issuer have been terminated or cancelled in accordance with the Senior Permitted Debt Documents (including, but not limited to, any commitment or other obligation of a Secured Hedging Counterparty under a Secured Hedging Agreement).

"Senior Indebtedness" means all money and liabilities from time to time due, owing or incurred by the Issuer in any currency or currencies, whether present or future, actual or contingent, whether incurred solely or jointly with any other person and whether as principal or surety, together with all interest accruing thereon and all costs, charges and expenses incurred in connection therewith, pursuant to (a) the Class A Notes and (b) for so long as the same remain Outstanding, any advances made by a VF Noteholder under and in accordance with any VF Instrument and (c) any other amounts designated as "Senior Indebtedness" from time to time pursuant to and in accordance with the Security and Intercreditor Deed.

"Senior Obligations" means collectively (i) with respect to all Senior Indebtedness, all obligations for principal, interest, fees, indemnities or premiums owing in respect of Senior Indebtedness, whether arising at law or in equity pursuant to a Senior Permitted Debt Document, or any other Transaction Document and (ii) the obligations of the Issuer under Secured Hedging Transactions.

"Senior Outstanding Class" means Class A Notes, or if no Class A Notes remain outstanding, Class B Notes, or if no Class A Notes or Class B Notes remain outstanding, Class C Notes, or if no Class A Notes, Class B Notes or Class C Notes remain outstanding, Class D Notes, or if no Class A Notes, Class B Notes, Class C Notes or Class D Notes remain outstanding, Intervening Notes, or if no Class A Notes, Class B Notes, Class C Notes, Class D Notes or Intervening Notes remain outstanding, Class E Subordinated Notes.

"Senior Payment Default" means a Payment Default with respect to any Senior Obligations.

"Senior Permitted Debt Document" means any Permitted Debt Document pursuant to which outstanding Senior Indebtedness has been issued or incurred or pursuant to which a Commitment in respect of Senior Indebtedness remains in place.

"Senior Prepayment Cure Priority" has the meaning given thereto in Condition 5(c)(i) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Specific Conditions" means the conditions contained in Condition 20 (Specific Conditions).

"Specified Maturity Date" means in relation to any Notes which are not Class E Subordinated Notes, the date specified as such in Condition 20 (Specific Conditions) applicable to the same.

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"Specified Notes" means any Class A Notes, Class B Notes, Class C Notes, Class D Notes, Intervening Notes and/or Class E Subordinated Notes constituted by the Relevant Trust Instrument and issued on the Closing Date as specified in Condition 20 (Specific Conditions) of these Conditions.

"Specified Office" means, in relation to any Agent:

(a) the office specified against its name in the Agency Agreement or

(b) such other office as such Agent may specify in accordance with the Agency Agreement.

"SPE Hedging Arrangement" means all rights and remedies of the Issuer arising from time to time:

(a) against each Hedging SPE in relation to any Hedging Arrangement and/or

(b) by virtue of the ownership of share capital of such Hedging SPE,

including, as applicable, any dividends and other distributions, any termination or other payments and any right to receive any of the same.

"Split Date" means each Optional Redemption Date on which a Reduction Amount becomes subject to the operation of Condition 7(b)(v) (Class E Subordinated Note Split Redemption Procedure).

"Split Redemption Procedure" means the procedure described in Condition 7(b)(v) (Class E Subordinated Note Split Redemption Procedure).

"Statement Date" has the meaning given thereto in Condition 5(c)(ii) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Subordinated Discharge Date" means the date on which all Subordinated Indebtedness has been fully discharged and all commitments of the Holders of Subordinated Indebtedness to the Issuer have been terminated or cancelled in accordance with the Subordinated Permitted Debt Documents.

"Subordinated Indebtedness" means all money and liabilities from time to time due, owing or incurred by the Issuer in any currency or currencies, whether present or future, actual or contingent, whether incurred solely or jointly with any other person and whether as principal or surety, together with all interest accruing thereon and all costs, charges and expenses incurred in connection therewith, pursuant to the Initial Issuance Class E Subordinated Notes and any other amounts designated as "Subordinated Indebtedness" from time to time pursuant to and in accordance with the Security and Intercreditor Deed.

"Subordinated Obligations" means, with respect to all Subordinated Indebtedness, all obligations for principal, interest, fees, indemnities or premiums owing in respect of Subordinated Indebtedness, whether arising at law or in equity pursuant to a Subordinated Permitted Debt Document or any other Transaction Document.

"Subordinated Permitted Debt Document" means any Permitted Debt Document pursuant to which outstanding Subordinated Indebtedness has been issued or incurred or pursuant to which a Commitment in respect of Subordinated Indebtedness remains in place.

"Subscription Agreement" means with respect to the issue of any Notes, the subscription agreement between the Issuer and the Initial Purchaser applicable thereto.

"Supervening Shortfall" has the meaning given thereto in Condition 5(d) (Insufficiency of Projection Cure Methodology).

"Synthetic Collateral" means any collateral which shall be in the form of cash or securities which is required to be delivered by the Issuer as security for its obligations to any Synthetic

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Counterparty under any Synthetic Security pursuant to the terms thereof. References to the price payable upon the acquisition of or entry into a Synthetic Security acquired or entered into by the Issuer on an unfunded basis shall be deemed to be the aggregate price of Synthetic Collateral required to be delivered by the Issuer to the applicable Synthetic Counterparty.

"Synthetic Counterparty" means any Secured Hedging Counterparty required to make or receive payments on a Synthetic Security.

"Synthetic Security" means either a Synthetic Purchase Contract or a credit linked note in respect of which each supporting credit default swap is a Form Approved Swap or is in a form which has been the subject of a Rating Agency Confirmation.

"TARGET System" means the Trans European Automated Real Time Gross Settlement Express Transfer System (or, if such system ceases to be operative, such other system (if any) determined by the Trustee to be a suitable replacement).

"Third Senior Blockage Notice" has the meaning given thereto in Condition 3(h)(iii) (Blockage Periods).

"Third Senior Blockage Period" means the period commencing on the date of service of a Third Senior Blockage Notice and ending on the earliest of (a) 180 days after the date of such service, (b) the date on which the default referred to in the definition of Third Senior Blockage Trigger Event shall be cured or otherwise waived, (c) the date on which the Representative of the Secured Creditors (at the direction of the Controlling Class) shall otherwise give notice to the Issuer of the termination of the Third Senior Blockage Period and (d) the Third Senior Discharge Date.

"Third Senior Blockage Trigger Event" means the occurrence of a Trigger Event with respect to any Third Senior Indebtedness.

"Third Senior Discharge Date" means the date on which all Third Senior Indebtedness has been fully discharged and all commitments of the Holders of Third Senior Indebtedness to the Issuer have been terminated or cancelled in accordance with the Third Senior Permitted Debt Documents.

"Third Senior Indebtedness" means all money and liabilities from time to time due, owing or incurred by the Issuer in any currency or currencies, whether present or future, actual or contingent, whether incurred solely or jointly with any other person and whether as principal or surety, together with all interest accruing thereon and all costs, charges and expenses incurred in connection therewith, pursuant to the Initial Issuance Class C Notes and any other amounts designated as "Third Senior Indebtedness" from time to time pursuant to and in accordance with the Security and Intercreditor Deed.

"Third Senior Obligations" means, with respect to all Third Senior Indebtedness, all obligations for principal, interest, fees, indemnities or premiums owing in respect of Third Senior Indebtedness, whether arising at law or in equity pursuant to a Third Senior Permitted Debt Document or any other Transaction Document.

"Third Senior Payment Default" means a Payment Default with respect to any Third Senior Indebtedness.

"Third Senior Permitted Debt Document" means any Permitted Debt Document pursuant to which outstanding Third Senior Indebtedness has been issued or incurred pursuant to which a Commitment in respect of Third Senior Indebtedness remains in place.

"Third Senior Prepayment Cure Priority" has the meaning given thereto in Condition 5(c)(i) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Transaction Creditors" means each of the Secured Creditors, the Directors and any other Person (other than any creditor of the Issuer who is not bound by any limited recourse and non-petition provisions vis à vis the Issuer) to whom the Issuer owes any obligations from time to time.

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"Transaction Default" means any condition or event which constitutes a Transaction Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become a Transaction Event of Default.

"Transaction Documents" means the Trust Deed, the Security Documents, all Outstanding Notes, each Subscription Agreement, the Agency Agreement, each Collateral Acquisition Agreement, the Investment Management Agreement, the Collateral Administration Agreement, the Corporate Administration Agreement, any Secured Hedging Agreements, each External Permitted Debt Document, the VF Notes, the VF-1 Instrument and any document supplemental thereto or issued in connection therewith together with any other documents specified as such in Condition 20 (Specific Conditions) with respect to any Notes (each as amended, replaced or supplemented from time to time).

"Transaction Event of Default" means an Event of Default or any event of default under and as defined in each or any Permitted Debt Document.

"Trigger Event" means, with respect to any Permitted Indebtedness, a Transaction Event of Default (other than a Payment Default) under the Permitted Debt Document (including any such Transaction Event of Default relating to a cross default) which would give the Holders of such Permitted Indebtedness the right to accelerate such Permitted Indebtedness prior to its stated maturity.

"Trust Instrument" means the Relevant Trust Instrument or any other trust instrument pursuant to which Notes or External Permitted Debt in the form of notes are constituted from time to time, as the context may require.

"Trustee Fees and Expenses" means the fees, costs, claims, indemnities, charges, disbursements, liabilities and expenses and all other amounts payable by the Issuer to the Trustee and the Security Trustee and any receiver, agent, delegate or other appointee appointed by it pursuant to the Trust Deed or any other Transaction Document from time to time under or pursuant to the Trust Deed or any other Transaction Document plus any applicable VAT required to be paid by the Issuer in respect of the foregoing.

"Under Collateralisation Cure Methodologies" has the meaning given thereto in Condition 5(c)(ii) (Over-Collateralisation Failure and Collateralisation Shortfall Dates).

"Under Collateralisation Cure Timeline" means the timelines specified in each of the Under Collateralisation Cure Methodologies curing the existence of a Collateralisation Shortfall Amount.

"Under Collateralisation Event" means the failure by the Issuer following a Collateralisation Shortfall Date to eliminate the Collateralisation Shortfall Amount that gave rise to such Collateralisation Shortfall Date by employing one of the Under Collateralisation Cure Methodologies (or any combination of the same) within the applicable Under Collateralisation Cure Timeline.

"Unquoted Issuer Investment Valuation" has the meaning given thereto in Condition 5(b) (Over-Collateralisation Testing and Reporting).

"Unused Fourth Senior Commitments" means the aggregate of available Commitments in respect of Fourth Senior Indebtedness which are applicable for the time being.

"Unused Intervening Commitments" means the aggregate of available Commitments in respect of Intervening Indebtedness which are applicable for the time being.

"Unused Second Senior Commitments" means the aggregate of available Commitments in respect of Second Senior Indebtedness which are applicable for the time being.

"Unused Senior Commitments" means the aggregate of available Commitments in respect of Senior Indebtedness which are applicable for the time being.

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"Unused Subordinated Commitments" means the aggregate of available Commitments in respect of Subordinated Indebtedness which are applicable for the time being.

"Unused Third Senior Commitments" means the aggregate of available Commitments in respect of Third Senior Indebtedness which are applicable for the time being.

"U.S. Person" has the meaning given thereto in Regulation S.

"U.S. Source Income" means income that is treated for U.S. income tax purposes as being from sources within the United States.

"VAT" shall be construed as a reference to value added tax including any similar tax which may be imposed in place thereof from time to time.

"VF Instrument" means, together, the Trust Deed and a Trust Instrument pursuant to which VF Notes are issued and constituted.

"VF Notes" means any notes which are designated as VF Notes and are issued and constituted pursuant to a Trust Instrument.

"VF Noteholders" means any Holder of a VF Note, as such Holder may be more particularly described in the relevant VF Instrument.

(b) Without prejudice to references to specified Agents or the Investment Manager undertaking the same on its behalf, references in these Conditions and the Market Valuation Manual to the Issuer effecting any action shall be construed to include such actions being undertaken on its behalf by the Agents and/or the Investment Manager pursuant to the terms of the Transaction Documents.

2. Form, Denomination, Title and Transfer

(a) Form and Denomination

The Notes are in definitive fully registered form, without interest coupons or principal receipts attached, in the applicable Authorised Denomination. A Definitive Certificate will be issued to each Noteholder in respect of its registered holding or holdings of Notes. Each Definitive Certificate will be numbered serially with an identifying number which will be recorded in the Register which shall be kept by the Registrar on behalf of the Issuer.

(b) Title to the Definitive Registered Notes

Title to the Notes passes upon registration of transfers in the Register in accordance with the provisions of the Agency Agreement and the Trust Deed. Notes will be transferable only on the books of the Issuer and its agents. The registered Holder of any Note will (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it, any writing on it, or its theft or loss) and no person will be liable for so treating the Holder.

(c) Transfer of Definitive Certificates

One or more Notes may be transferred in whole or in part in nominal amounts of the applicable Authorised Denomination only upon the surrender, at the specified office of the Registrar or any Transfer Agent, of the Definitive Certificate representing such Note(s) to be transferred, with the form of transfer endorsed on such Definitive Certificate duly completed and executed and together with such other evidence as the Registrar or Transfer Agent may reasonably require. In the case of a transfer of part only of a holding of Notes represented by one Definitive Certificate, a new Definitive Certificate will be issued to the transferee in respect of the part transferred and a further new Definitive Certificate in respect of the balance of the holding not transferred will be issued to the transferor.

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(d) Delivery of New Definitive Certificates

Each new Definitive Certificate to be issued pursuant to Condition 2(c) (Transfer of Definitive Certificates) will be available for delivery within five Business Days of receipt of such form of transfer or of surrender of an existing Definitive Certificate upon partial redemption. Delivery of new Definitive Certificate(s) shall be made at the specified office of the Transfer Agent or of the Registrar, as the case may be, to whom delivery or surrender shall have been made or, at the option of the holder making such delivery or surrender as aforesaid and as specified in the form of transfer or otherwise in writing, shall be mailed by pre paid first class post, at the risk of the holder entitled to the new Definitive Certificate, to such address as may be so specified. In this Condition 2(d), "Business Day" means a day, other than a Saturday or Sunday, on which banks are open for business in the place of the specified offices of the Transfer Agent and the Registrar.

(e) Transfer Free of Charge

Transfer of Notes and Definitive Certificates representing such Notes in accordance with these Conditions of the Notes on registration or transfer will be effected without charge by or on behalf of the Issuer, the Registrar or the Transfer Agent, but upon payment (or the giving of such indemnity as the Registrar or the relevant Transfer Agent may require in respect thereof) of any tax or other governmental charges which may be imposed in relation to it.

(f) Closed Periods

No Noteholder may require the transfer of a Note to be registered (i) during the period of 15 calendar days ending on the due date for redemption (in full) of that Note or (ii) during the period of seven calendar days ending on (and including) any Record Date.

(g) Regulations Concerning Transfer and Registration

All transfers of Notes and entries on the Register will be made subject to the detailed regulations concerning the transfer of Notes scheduled to the Trust Deed, including without limitation, that a transfer of Notes in breach of certain of such regulations will result in such transfer being void ab initio. The regulations may be changed by the Issuer in any manner which is reasonably required by the Issuer (after consultation with the Trustee) to reflect changes in legal or regulatory requirements or in any other manner which, in the opinion of the Issuer (after consultation with the Trustee and subject to not less than 60 days’ notice of any such change having been given to the Noteholders in accordance with Condition 16 (Notices)), is not prejudicial to the interests of the holders of the relevant Class of Notes. A copy of the current regulations may be inspected at the offices of any Transfer Agent during usual business hours on any Business Day for the term of the Notes and will be sent by the Registrar to any Noteholder who so requests.

(h) Forced Transfer of Certain Notes

If the Issuer determines at any time that a U.S. holder of Rule 144A Notes is not a QIB/QP or that any holder of ERISA Limited Notes has made or been deemed to have made an ERISA related representation that is false or misleading (any such person, a "Non-Permitted Holder"), the Issuer may direct such Non-Permitted Holder to sell or transfer its Notes outside the United States to a non-U.S. Person or within the United States to a U.S. Person that is a QIB/QP within 14 days following receipt of such notice. If such Non-Permitted Holder fails to sell or transfer its Notes within such period, such Non-Permitted Holder may be required by the Issuer to sell such Notes to a purchaser selected by the Issuer on such terms as the Issuer may choose, subject to the transfer restrictions described herein. The Issuer may select the purchaser by soliciting one or more bids from one or more brokers or other market professionals that regularly deal in securities similar to such Notes and selling such Notes to the highest such bidder. However, the Issuer may select a purchaser by any other means determined by it in its sole discretion. Each Noteholder and each other Person in the chain of title from the permitted Noteholder to the Non-Permitted Holder by its acceptance of an interest in such Notes agrees to co-operate with the Issuer and the Transfer Agent to effect such transfers. The proceeds of such sale, net of any commissions, expenses and taxes due in

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connection with such sale shall be remitted to the selling Noteholder. The terms and conditions of any sale hereunder shall be determined in the sole discretion of the Issuer, subject to the transfer restrictions set out herein, and neither the Issuer nor the Transfer Agent shall be liable to any Person having an interest in the Notes sold as a result of any such sale or the exercise of such discretion. The Issuer and the Transfer Agent reserve the right to require any holder of Rule 144A Notes to submit a written certification substantiating that it is a QIB/QP or a non-U.S. Person. If such holder fails to submit any such requested written certification on a timely basis, the Issuer and the Transfer Agent have the right to assume that the holder of the Notes from whom such a certification is requested is not a QIB/QP or a non-U.S. Person. Furthermore, the Issuer and the Transfer Agent reserve the right to refuse to honour a transfer of beneficial interests in (a) a Rule 144A Note to any person who is not either a non-U.S. Person or a U.S. Person that is a QIB/QP and (b) ERISA Limited Notes to a person with respect to whom the ERISA representations would be false or misleading.

3. Status

(a) Status

The Notes of each Class constitute direct, general, secured, unconditional obligations of the Issuer, recourse in respect of which is limited in the manner described in Condition 4(c) (Limited Recourse). The Notes of each Class are secured in the manner described in Condition 4(a) (Security) and, within each Class, shall at all times rank pari passu and without any preference amongst themselves.

(b) Relationship among the Classes and Payments on the Notes

The Notes of each Class are constituted by the Trust Deed and are secured on the Collateral as further described in the Security Documents and subject always to the Intercreditor Arrangements. Subject to any payment of the same which (w) is permitted to be made pursuant to Condition 7(c) (Redemption at the Option of the Issuer), (x) is permitted to be made on a Premature Redemption Date, (y) is permitted to be made pursuant to Condition 7(a) (Final Redemption) or (z) is otherwise permitted pursuant to the Intercreditor Arrangements: (I) payments of interest and principal on Class A Notes on each Payment Date will rank senior to payments of interest and principal in respect of each other Class of Notes, (II) payments of interest (including any applicable Blocked Junior Note Interest) and principal on Class B Notes will be subordinated in right of payment to payments of interest and principal on Class A Notes, any External Senior Permitted Debt and any Outstanding Issuer Swap Termination Payments, (III) payments of interest (including any applicable Blocked Junior Note Interest) and principal on Class C Notes will be subordinated in right of payment to (x) payments of interest and principal on the Class A Notes, any External Senior Permitted Debt and any Outstanding Issuer Swap Termination Payments and (y) payments of interest and principal on Class B Notes and any External Second Senior Permitted Debt, (IV) payments of interest (including any applicable Blocked Junior Note Interest) and principal on Class D Notes will be subordinated in right of payment to (x) payments of interest and principal on the Class A Notes, any External Senior Permitted Debt and any Outstanding Issuer Swap Termination Payments, (y) payments of interest and principal on Class B Notes and any External Second Senior Permitted Debt and (z) payments of interest and principal on Class C Notes and any External Third Senior permitted Debt, (V) payments of interest (including any applicable Block Junior Notes Interest) and principal on any Intervening Notes will be subordinated in right of payment to (w) payments of interest and principal on Class A Notes, any External Senior Permitted Debt and any Outstanding Issuer Swap Termination Payments, (x) payments of interest and principal on Class B Notes and any External Second Senior Permitted Debt, (y) payments of interest and principal on Class C Notes and any External Third Senior Permitted Debt and (z) payments of interest and principal on Class D Notes and any External Fourth Senior Permitted Debt, and (VI) payments of any Class E Restricted Disbursements or Interest Payment Amounts on Class E Subordinated Notes will be subordinated in right of payment to (v) payments of interest and principal on Class A Notes, any External Senior Permitted Debt and any Outstanding Issuer Swap Termination Payments, (w) payments of interest and principal on Class B Notes and any External Second Senior Permitted Debt, (x) payments of interest and principal on Class C Notes and any External Third Senior Permitted Debt, (y) payments of interest and principal on Class D Notes and any External Fourth Senior Permitted

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Debt, and (z) payments of interest and principal on any Intervening Notes and any other Intervening Indebtedness.

Subject to any payment of the same which (w) is permitted to be made pursuant to Condition 7(c) (Redemption at the Option of the Issuer), (x) is permitted to be made on a Premature Redemption Date, (y) is permitted to be made pursuant to Condition 7(a) (Final Redemption) or (z) is otherwise permitted pursuant to the Intercreditor Arrangements: (I) no amount of principal (for the avoidance of doubt, excluding any applicable Blocked Junior Note Interest) in respect of any Class B Notes shall become due and payable until redemption and payment in full of any Class A Notes, (II) no amount of principal (for the avoidance of doubt, excluding any applicable Blocked Junior Note Interest) in respect of any Class C Notes shall become due and payable until redemption and payment in full of any Class A Notes and any Class B Notes, (III) no amount of principal (for the avoidance of doubt, excluding any applicable Blocked Junior Note Interest) in respect of any Class D Notes shall become due and payable until redemption and payment in full of any Class A Notes, any Class B Notes and any Class C Notes, (IV) no amount of principal (for the avoidance of doubt, excluding any applicable Blocked Junior Note Interest) in respect of any Intervening Notes shall become due and payable until redemption and payment in full of any Class A Notes, any Class B Notes, any Class C Notes and any Class D Notes, and (V) no Class E Restricted Disbursements in respect of Class E Subordinated Notes shall become due and payable or be paid until redemption and payment in full of each of the other Classes of Notes and payment of all other liabilities of the Issuer in accordance with Condition 7 (Redemption) and the Intercreditor Arrangements.

(c) Payment of Amounts

On each Payment Date (unless otherwise specified), the Issuer shall (a) in relation to any Class A Notes, pay or procure the payment of the Interest Payment Amount payable to Class A Noteholders on such date, (b) subject to Condition 3(d) (Restricted Payments) in relation to any Class B Notes, pay or procure the payment of the Interest Payment Amount payable to Class B Noteholders on such date, (c) subject to Condition 3(d) (Restricted Payments) in relation to any Class C Notes, pay or procure the payment of the Interest Payment Amount payable to Class C Noteholders on such date, (d) subject to Condition 3(d) (Restricted Payments) in relation to any Class D Notes, pay or procure the payment of the Interest Payment Amount payable to Class D Noteholders on such date, (e) subject to Condition 3(d) (Restricted Payments) in relation to any Intervening Notes, pay or procure the payment of the Interest Payment Amount payable to Intervening Noteholders on such date and (f) subject to Condition 3(d) (Restricted Payments) in relation to the Class E Subordinated Notes, at the direction of the Investment Manager (acting in its sole discretion), pay or procure the payment of (i) the Interest Payment Amount payable in respect of those Class E Subordinated Notes which are Interest Bearing Notes on a Class E Payment Date and (ii) any Class E Restricted Disbursements then available for disbursement to the relevant Class E Subordinated Noteholders, and, in the case of both (i) and (ii), the Net Asset Value allocable to such Class E Subordinated Noteholders shall be adjusted accordingly.

(d) Restricted Payments

Restrictions on Repayment or Purchases of Class B Notes and External Second Senior Permitted Debt While any Class A Notes are Outstanding, any External Senior Permitted Debt is Outstanding or there are any Outstanding Issuer Swap Termination Payments, the Issuer may only make any purchase or repayment in respect of any Class B Notes or External Second Senior Permitted Debt if (i) the same is permitted by the Restricted Payment Provisos and (ii) on the date each such purchase or repayment is made and immediately after giving effect thereto, no amount remains due and payable in respect of any Class A Notes, External Senior Permitted Debt or Outstanding Issuer Swap Termination Payments.

Restrictions on Repayment or Purchases of Class C Notes and External Third Senior Permitted Debt While (x) any Class A Notes are Outstanding, any External Senior Permitted Debt is Outstanding or there are any Outstanding Issuer Swap Termination Payments or (y) any Class B Notes are Outstanding or any External Second Senior Permitted Debt is Outstanding, the Issuer may only make any purchase or repayment in respect of any Class C Notes or External Third Senior Permitted Debt if (i) the same is permitted by the Restricted Payment Provisos

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and (ii) on the date each such purchase or repayment is made and immediately after giving effect thereto, no amount remains due and payable in respect of any Class A Notes, External Senior Permitted Debt, Outstanding Issuer Swap Termination Payments, Class B Notes or External Second Senior Permitted Debt.

Restrictions on Repayment or Purchases of Class D Notes and External Fourth Senior Permitted Debt While (x) any Class A Notes are Outstanding, any External Senior Permitted Debt is Outstanding or there are any Outstanding Issuer Swap Termination Payments, (y) any Class B Notes are Outstanding or any External Second Senior Permitted Debt is Outstanding or (z) any Class C Notes are Outstanding or any External Third Senior Permitted Debt is Outstanding, the Issuer may only make any purchase or repayment in respect of any Class D Notes or External Fourth Senior Permitted Debt if (i) the same is permitted by the Restricted Payment Provisos and (ii) on the date each such purchase or repayment is made and immediately after giving effect thereto, no amount remains due and payable in respect of any Class A Notes, External Senior Permitted Debt, Outstanding Issuer Swap Termination Payments, Class B Notes, External Second Senior Permitted Debt, Class C Notes or External Third Senior Permitted Debt.

Restrictions on Repayment or Purchases of Intervening Indebtedness While (w) any Class A Notes are Outstanding, any External Senior Permitted Debt is Outstanding or there are any Outstanding Issuer Swap Termination Payments, (x) any Class B Notes are Outstanding or any External Second Senior Permitted Debt is Outstanding, (y) any Class C Notes are Outstanding or any External Third Senior Permitted Debt is Outstanding or (z) any Class D Notes are Outstanding or any External Fourth Senior Permitted Debt is Outstanding, the Issuer may only make any purchase or repayment in respect of any Intervening Notes or Intervening Indebtedness (in accordance with the Intervening Indebtedness Priority of Payments, if any) if (i) the same is permitted by the Restricted Payment Provisos and (ii) on the date each such purchase or repayment is made and immediately after giving effect thereto, no amount remains due and payable in respect of any Class A Notes, External Senior Permitted Debt, Outstanding Issuer Swap Termination Payments, Class B Notes, External Second Senior Permitted Debt, Class C Notes, External Third Senior Permitted Debt, Class D Notes or External Fourth Senior Permitted Debt.

Restrictions on Payments on Class E Subordinated Notes While (v) any Class A Notes are Outstanding, any External Senior Permitted Debt is Outstanding or there are any Outstanding Issuer Swap Termination Payments, (w) any Class B Notes are Outstanding or any External Second Senior Permitted Debt is Outstanding, (x) any Class C Notes are Outstanding or any External Third Senior Permitted Debt is Outstanding, (y) any Class D Notes are Outstanding or any External Fourth Senior Permitted Debt is Outstanding or (z) any Intervening Indebtedness (including any Intervening Notes) is Outstanding, the Issuer may only pay or procure the payment of the Interest Payment Amount payable in respect of those Class E Subordinated Notes which are Interest Bearing Notes or make any Class E Restricted Disbursement if (i) the same is permitted by the Restricted Payment Provisos and (ii) on the date each such payment is made and immediately after giving effect thereto, no amount remains due and payable in respect of any Class A Notes, External Senior Permitted Debt, Outstanding Issuer Swap Termination Payments, Class B Notes, External Second Senior Permitted Debt, Class C Notes, External Third Senior Permitted Debt, Class D Notes, External Fourth Senior Permitted Debt or Intervening Indebtedness (including any Intervening Notes). If on any Payment Date a Class E Restricted Disbursement is to be made, the amount payable to each Class E Subordinated Noteholder will be determined by the Investment Manager by reference to the Net Asset Value allocable to the Class E Subordinated Notes held by each Class E Subordinated Noteholder, taking into account any disparity created by virtue of the payment from time to time of any Interest Payment Amounts in respect of Class E Subordinated Notes which are Interest-Bearing Notes.

(e) De Minimis Amounts

The Collateral Administrator may, in consultation with the Investment Manager, adjust the amounts required to be applied in payment of principal on Class A Notes, Class B Notes, Class C Notes, Class D Notes, Intervening Notes (if any) and Class E Subordinated Notes so that the amount to be so applied in respect of each Class A Note, Class B Note, Class C Note,

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Class D Note, Intervening Note and Class E Subordinated Note is a whole amount, not involving any fraction of one cent or, at the discretion of the Collateral Administrator, part of one Euro (or equivalent).

(f) Publication of Amounts

The Collateral Administrator will cause details as to the amounts of interest and principal to be paid, and any amounts of interest payable but not paid, on each Payment Date in respect of the Notes to be notified at the expense of the Issuer to the Issuer, the Trustee, the Principal Paying Agent, the Registrar and the Irish Stock Exchange by no later than 11.00 a.m. (London time) on the second Business Day following the applicable Determination Date and the Registrar shall procure that details of such amounts are notified at the expense of the Issuer to the Noteholders of each Class in accordance with Condition 16 (Notices) as soon as possible after notification thereof to the Registrar in accordance with the above but in no event later than (to the extent applicable) the third Business Day following the applicable Determination Date.

(g) Notifications to be Final

All notifications, opinions, determinations, certificates, quotations and decisions given, expressed, made or obtained or discretions exercised for the purposes of the provisions of this Condition 3 (Status) will (in the absence of manifest error) be binding on the Issuer, the Collateral Administrator, the Trustee, the Registrar, the Principal Paying Agent, the Transfer Agent and all Noteholders and (in the absence as referred to above) no liability to the Issuer or the Noteholders shall attach to the Collateral Administrator in connection with the exercise or non exercise by it of its powers, duties and discretions under Condition 3 (Status).

(h) Blockage Periods

(i) Senior Blockage Upon the occurrence of a Senior Payment Default or in the event that the Issuer fails to be in compliance with the Senior Over-Collateralisation Test (before giving effect to any grace period set forth in the applicable Permitted Debt Document), the Issuer and, upon receipt of actual knowledge thereof, the Representative of the Holders of the applicable Senior Indebtedness shall provide written notice (or telephone notice promptly confirmed in writing) thereof to the Custodian, the Security Trustee and the other Representatives (or all Representatives in the case of a notice by the Issuer) and, unless and until such Senior Payment Default shall have been cured or waived or shall have ceased to exist or the Issuer shall have come into compliance with the Senior Over-Collateralisation Test, as the case may be, no payment may be made by the Issuer, or on behalf of the Issuer, on account of the Second Senior Obligations, Third Senior Obligations, Fourth Senior Obligations, Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Second Senior Indebtedness, Third Senior Indebtedness, Fourth Senior Indebtedness, Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase). Any failure of the Issuer or any Representative to furnish such notice, or any defect therein, shall not have any effect on the consequences of such Senior Payment Default or such failure to comply with the Senior Over-Collateralisation Test, in each case as provided in the applicable Senior Permitted Debt Document.

If a Senior Blockage Trigger Event shall occur and be continuing, the Security Trustee shall, if directed in writing by the Controlling Class to do so, provide written notice (or telephone notice promptly confirmed in writing) (a "Senior Blockage Notice") thereof to the Custodian, the Issuer and each Representative stating that no payment may be made by the Issuer, or on behalf of the Issuer, on account of Second Senior Obligations, Third Senior Obligations, Fourth Senior Obligations, Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Second Senior Indebtedness, Third Senior Indebtedness, Fourth Senior Indebtedness, Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase) and until the end of the Senior Blockage Period, no such payment shall be made by either the Issuer or the Security Trustee. No more than one Senior Blockage Notice may be given during any period of 365 consecutive days.

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(ii) Second Senior Blockage Upon the occurrence of a Second Senior Payment Default or in the event that the Issuer fails to be in compliance with the Second Senior Over-Collateralisation Test (before giving effect to any grace period set forth in the applicable Permitted Debt Document), the Issuer and, upon receipt of actual knowledge thereof, the Representative of the Holders of the applicable Second Senior Indebtedness shall provide written notice (or telephone notice promptly confirmed in writing) thereof to the Custodian, the Security Trustee and the other Representatives (or all Representatives in the case of a notice by the Issuer) and, unless and until such Second Senior Payment Default shall have been cured or waived or shall have ceased to exist or the Issuer shall have come into compliance with the Second Senior Over-Collateralisation Test, as the case may be, no payment may be made by the Issuer, or on behalf of the Issuer, on account of Third Senior Obligations, Fourth Senior Obligations, Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Third Senior Indebtedness, Fourth Senior Indebtedness, Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase), payments being made only on account of: (x) first interest in the following order of priority: first to the Holders of Senior Indebtedness and second to the Holders of Second Senior Indebtedness and (y) second (i) such amounts of principal as are required to ensure compliance with the Second Senior Over-Collateralisation Test in accordance with the order of priorities set out in Condition 3(i) (Prepayment Amounts) or (ii) the purchase or other acquisition of Senior Indebtedness or, if no Senior Indebtedness is then Outstanding, Second Senior Indebtedness (including pursuant to an Offer to Purchase). Any failure of the Issuer or any Representative to furnish such notice, or any defect therein, shall not have any effect on the consequences of such Second Senior Payment Default or such failure to comply with the Second Senior Over-Collateralisation Test, in each case as provided in the applicable Second Senior Permitted Debt Document.

If a Second Senior Blockage Trigger Event shall occur and be continuing, the Security Trustee shall, if directed in writing by the Controlling Class to do so, provide written notice (or telephone notice promptly confirmed in writing) (a "Second Senior Blockage Notice") thereof to the Custodian, the Issuer and each Representative stating that no payment may be made by the Issuer, or on behalf of the Issuer, on account of Third Senior Obligations, Fourth Senior Obligations, Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Third Senior Indebtedness, Fourth Senior Indebtedness, Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase) and until the end of the Second Senior Blockage Period, no such payment shall be made by either the Issuer or the Security Trustee. No more than one Second Senior Blockage Notice may be given during any period of 365 consecutive days.

(iii) Third Senior Blockage Upon the occurrence of a Third Senior Payment Default or in the event that the Issuer fails to be in compliance with the Third Senior Over-Collateralisation Test (before giving effect to any grace period set forth in the applicable Permitted Debt Document), the Issuer and, upon receipt of actual knowledge thereof, the Representative of the Holders of the applicable Third Senior Indebtedness shall provide written notice (or telephone notice promptly confirmed in writing) thereof to the Custodian, the Security Trustee and the other Representatives (or all Representatives in the case of a notice by the Issuer) and, unless and until such Third Senior Payment Default shall have been cured or waived or shall have ceased to exist or the Issuer shall have come into compliance with the Third Senior Over-Collateralisation Test, as the case may be, no payment may be made by the Issuer, or on behalf of the Issuer, on account of Fourth Senior Obligations, Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Fourth Senior Indebtedness, Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase), payments being made only on account of: (x) first interest in the following order of priority: first to the Holders of Senior Indebtedness, second to the Holders of Second Senior Indebtedness and third to the Holders of Third Senior Indebtedness and (y) second (i) such amounts of principal as are required to ensure compliance with the Third Senior Over-Collateralisation Test

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in accordance with the order of priorities set out in Condition 3(i) (Prepayment Amounts) or (ii) the purchase or other acquisition of Senior Indebtedness or, if no Senior Indebtedness is then Outstanding, Second Senior Indebtedness or, if no Senior Indebtedness or Second Senior Indebtedness is then Outstanding, Third Senior Indebtedness (including pursuant to an Offer to Purchase). Any failure of the Issuer or any Representative to furnish such notice, or any defect therein, shall not have any effect on the consequences of such Third Senior Payment Default or such failure to comply with the Third Senior Over-Collateralisation Test, in each case as provided in the applicable Third Senior Permitted Debt Document.

If a Third Senior Blockage Trigger Event shall occur and be continuing, the Security Trustee shall, if directed in writing by the Controlling Class to do so, provide written notice (or telephone notice promptly confirmed in writing) (a "Third Senior Blockage Notice") thereof to the Custodian, the Issuer and each Representative stating that no payment may be made by the Issuer, or on behalf of the Issuer, on account of Fourth Senior Obligations, Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Fourth Senior Indebtedness, Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase) and until the end of the Third Senior Blockage Period, no such payment shall be made by either the Issuer or the Security Trustee. No more than one Third Senior Blockage Notice may be given during any period of 365 consecutive days.

(iv) Fourth Senior Blockage Upon the occurrence of a Fourth Senior Payment Default or in the event that the Issuer fails to be in compliance with the Fourth Senior Over-Collateralisation Test (before giving effect to any grace period set forth in the applicable Permitted Debt Document), the Issuer and, upon receipt of actual knowledge thereof, the Representative of the Holders of the applicable Fourth Senior Indebtedness shall provide written notice (or telephone notice promptly confirmed in writing) thereof to the Custodian, the Security Trustee and the other Representatives (or all Representatives in the case of a notice by the Issuer) and, unless and until such Fourth Senior Payment Default shall have been cured or waived or shall have ceased to exist or the Issuer shall have come into compliance with the Fourth Senior Over-Collateralisation Test, as the case may be, no payment may be made by the Issuer, or on behalf of the Issuer, on account of Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase), payments being made only on account of: (x) first interest in the following order of priority: first to the Holders of Senior Indebtedness, second to the Holders of Second Senior Indebtedness, third to the Holders of Third Senior Indebtedness and fourth to the Holders of Fourth Senior Indebtedness and (y) second (i) such amounts of principal as are required to ensure compliance with the Fourth Senior Over-Collateralisation Test in accordance with the order of priorities set out in Condition 3(i) (Prepayment Amounts) or (ii) the purchase or other acquisition of Senior Indebtedness or, if no Senior Indebtedness is then Outstanding, Second Senior Indebtedness or, if no Senior Indebtedness or Second Senior Indebtedness is then Outstanding, Third Senior Indebtedness or, if no Senior Indebtedness, Second Senior Indebtedness or Third Senior Indebtedness is then Outstanding, Fourth Senior Indebtedness (including pursuant to an Offer to Purchase). Any failure of the Issuer or any Representative to furnish such notice, or any defect therein, shall not have any effect on the consequences of such Fourth Senior Payment Default or such failure to comply with the Fourth Senior Over-Collateralisation Test, in each case as provided in the applicable Fourth Senior Permitted Debt Document.

If a Fourth Senior Blockage Trigger Event shall occur and be continuing, the Security Trustee shall, if directed in writing by the Controlling Class to do so, provide written notice (or telephone notice promptly confirmed in writing) (a "Fourth Senior Blockage Notice") thereof to the Custodian, the Issuer and each Representative stating that no payment may be made by the Issuer, or on behalf of the Issuer, on account of Intervening Obligations or Subordinated Obligations or on account of the purchase or other acquisition of Intervening Indebtedness or Subordinated Indebtedness (including pursuant to an Offer to Purchase) and until the end of the Fourth Senior Blockage

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Period, no such payment shall be made by either the Issuer or the Security Trustee. No more than one Fourth Senior Blockage Notice may be given during any period of 365 consecutive days.

(v) Intervening Blockage Upon the occurrence of an Intervening Payment Default or in the event that the Issuer fails to be in compliance with an over-collateralisation test (if any) relating to Intervening Indebtedness (before giving effect to any grace period set forth in the applicable Permitted Debt Document), the Issuer and, upon receipt of actual knowledge thereof, the Representative of the Holders of the applicable Intervening Indebtedness shall provide written notice (or telephone notice promptly confirmed in writing) thereof to the Custodian, the Security Trustee and the other Representatives (or all Representatives in the case of a notice by the Issuer) and, unless and until such Intervening Payment Default shall have been cured or waived or shall have ceased to exist or the Issuer shall have come into compliance with such over-collateralisation test, as the case may be, no payment may be made by the Issuer, or on behalf of the Issuer, on account of Subordinated Obligations or on account of the purchase or other acquisition of Subordinated Indebtedness (including pursuant to an Offer to Purchase), payments being made only on account of: (x) first interest in the following order of priority: first to the Holders of Senior Indebtedness, second to the Holders of Second Senior Indebtedness, third to the Holders of Third Senior Indebtedness, fourth to the Holders of Fourth Senior Indebtedness and fifth to the Holders of Intervening Indebtedness and (y) second (i) such amounts of principal as are required to ensure compliance with the over-collateralisation test (if any) relating to Intervening Indebtedness in accordance with the order of priorities set out in Condition 3(i) (Prepayment Amounts) or (ii) the purchase or other acquisition of Senior Indebtedness or, if no Senior Indebtedness is then Outstanding, Second Senior Indebtedness or, if no Senior Indebtedness or Second Senior Indebtedness is then Outstanding, Third Senior Indebtedness or, if no Senior Indebtedness, Second Senior Indebtedness or Third Senior Indebtedness is then Outstanding, Fourth Senior Indebtedness or, if no Senior Indebtedness, Second Senior Indebtedness, Third Senior Indebtedness or Fourth Senor Indebtedness is then Outstanding, Intervening Indebtedness (including pursuant to an Offer to Purchase). Any failure of the Issuer or any Representative to furnish such notice, or any defect therein, shall not have any effect on the consequences of such Intervening Payment Default or such failure to comply with the over-collateralisation test relating to Intervening Indebtedness (if any), in each case as provided in the applicable Intervening Permitted Debt Document.

If an Intervening Blockage Trigger Event shall occur and be continuing, the Security Trustee shall, if directed in writing by the Controlling Class to do so, provide written notice (or telephone notice promptly confirmed in writing) (an "Intervening Blockage Notice") thereof to the Custodian, the Issuer and each Representative stating that no payment may be made by the Issuer, or on behalf of the Issuer, on account of Subordinated Obligations or on account of the purchase or other acquisition of Subordinated Indebtedness (including pursuant to an Offer to Purchase) and until the end of the Intervening Blockage Period no such payment shall be made by either the Issuer or the Security Trustee. No more than one Intervening Blockage Notice may be given during any period of 365 consecutive days.

(vi) Payment of Blocked Junior Note Interest Blocked Junior Note Interest will be added to the Principal Amount Outstanding of each Class of Junior Interest Bearing Notes on which the same is owed and thereafter interest will accrue on the Principal Amount Outstanding thereof as so increased in accordance with these Conditions provided that any Blocked Junior Note Interest rolled up as aforesaid shall, to the extent permitted by any External Permitted Debt Document or the Intercreditor Arrangements, be repaid prior to the repayment of any other principal on the applicable Junior Interest Bearing Notes (on the Payment Date next following the end of the Blockage Period or such other Payment Date as the Issuer, at the direction of the Investment Manager, may deem prudent) provided that such payment shall not, as applicable, be entitled to any make whole premium.

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(i) Prepayment Amounts

Senior Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods), if at any time any Senior Indebtedness is required to be prepaid, (x) no payment shall be made on account of the principal of, premium (if any) or interest on, or commitment fees (if any) or breakage costs (if any) with respect to, any Second Senior Indebtedness, Third Senior Indebtedness, Fourth Senior Indebtedness or Intervening Indebtedness and (y) no payment, including in respect of Class E Restricted Disbursements and the payment of any Interest Payment Amount on Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made.

Second Senior Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods), if at any time any Second Senior Indebtedness is required to be prepaid (x) no payment shall be made on account of the principal of, premium (if any) or interest on, or commitment fees (if any) or breakage costs (if any) with respect to, any Third Senior Indebtedness, Fourth Senior Indebtedness or Intervening Indebtedness and (y) no payment, including in respect of Class E Restricted Disbursements and the payment of any Interest Payment Amount on Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made.

Third Senior Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods), if at any time any Third Senior Indebtedness is required to be prepaid (x) no payment shall be made on account of the principal of, premium (if any) or interest on, or commitment fees (if any) or breakage costs (if any) with respect to, any Fourth Senior Indebtedness or Intervening Indebtedness and (y) no payment, including in respect of Class E Restricted Disbursements and the payment of any Interest Payment Amount on Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made.

Fourth Senior Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods), if at any time any Fourth Senior Indebtedness is required to be prepaid (x) no payment shall be made on account of the principal of, premium (if any) or interest on, or commitment fees (if any) or breakage costs (if any) with respect to, any Intervening Indebtedness and (y) no payment, including in respect of Class E Restricted Disbursements and the payment of any Interest Payment Amount on Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made.

Intervening Indebtedness Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods), if at any time any Intervening Indebtedness is required to be prepaid, no payment, including in respect of Class E Restricted Disbursements and the payment of any Interest Payment Amount on Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made.

4. Security

(a) Security

Pursuant to the Security and Intercreditor Deed, with full title guarantee and as continuing security for the discharge of its Secured Obligations, the Issuer has:

(i) charged, in favour of the Security Trustee, by way of first fixed charge, to the extent not effectively assigned pursuant to the Security and Intercreditor Deed: (A) all (x) Issuer Investments and (y) Counterparty Downgrade Collateral at any time beneficially and/or legally owned by the Issuer and all Related Rights, (B) all of the Issuer's rights, title, interest and benefits in, to or in respect of (x) each Material Agreement, (y) each Secured Hedging Agreement including any rights of the Issuer under any credit support

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annex entered into pursuant to such Secured Hedging Agreement and (z) each SPE Hedging Arrangement, (C) all of the Issuer's rights, title, interest and benefits in, to or in respect of the Accounts; and (D) the Deposits, provided that, in the case of (A) above: (i) any Synthetic Collateral required to be paid or delivered to a Synthetic Counterparty from time to time pursuant to the terms of any Synthetic Security shall be automatically released from such charge simultaneously upon such payment or delivery, (ii) any Counterparty Downgrade Collateral required to be paid or delivered to a Secured Hedging Counterparty from time to time pursuant to the terms of any Secured Hedging Agreement shall be automatically released from such charge simultaneously upon such payment or delivery and (iii) such charge is subject to any Security Interest in any Synthetic Collateral or Counterparty Downgrade Collateral (as applicable) granted by the Issuer from time to time for the benefit of a Synthetic Counterparty or Secured Hedging Counterparty pursuant to the relevant Synthetic Security or Secured Hedging Agreement (as the case may be),

(ii) assigned to the Security Trustee by way of security: (A) all rights, title, interest and benefit, present and future in, to and under (x) the Issuer Investments and (y) the Counterparty Downgrade Collateral, at any time beneficially and/or legally owned by the Issuer and all Related Rights, (B) all of the Issuer's rights, title and interest in, to and in respect of (x) each Material Agreement, (y) each Secured Hedging Agreement (including any rights of the Issuer under any credit support annex entered into pursuant to such Secured Hedging Agreement) and (z) each SPE Hedging Arrangement, (C) all rights, title, interest and benefit in, to or in respect of the Accounts and (D) at any time while the Security Trustee and an Account Holding Bank are not the same legal entity, the Deposits held with that Account Holding Bank; provided that, in the case of (A) above: (i) any Synthetic Collateral required to be paid or delivered to a Synthetic Counterparty from time to time pursuant to the terms of any Synthetic Security shall be automatically reassigned by the Security Trustee to the Issuer simultaneously upon such payment or delivery, (ii) any Counterparty Downgrade Collateral required to be paid or delivered to a Secured Hedging Counterparty from time to time pursuant to the terms of any Secured Hedging Agreement shall be automatically reassigned by the Security Trustee to the Issuer simultaneously upon such payment or delivery and (iii) such assignment is subject to any Security Interest in any Synthetic Collateral or Counterparty Downgrade Collateral (as applicable) granted by the Issuer from time to time for the benefit of a Synthetic Counterparty or Secured Hedging Counterparty pursuant to the relevant Synthetic Security or Secured Hedging Agreement (as the case may be), and

(iii) charged, in favour of the Security Trustee, by way of a first floating charge all its undertaking and assets whatsoever and wheresoever, both present and future, not otherwise expressed to be charged or effectively assigned pursuant to the Security and Intercreditor Deed, except for the Excluded Assets provided that any Synthetic Collateral, Counterparty Downgrade Collateral or collateral provided by a VF Noteholder required to be paid or delivered to a Synthetic Counterparty, Secured Hedging Counterparty or VF Noteholder (as applicable) from time to time pursuant to the terms of any Synthetic Security, Secured Hedging Agreement or External Permitted Debt Document (as the case may be) shall be automatically released from the charge created hereunder simultaneously upon such payment or delivery and such charge is subject to any Security Interest in any Synthetic Collateral, Counterparty Downgrade Collateral or collateral provided by a VF Noteholder (as applicable) granted by the Security Trustee from time to time for the benefit of a Synthetic Counterparty, Secured Hedging Counterparty or VF Noteholder (as applicable) pursuant to the relevant Synthetic Security, Secured Hedging Agreement or External Permitted Debt Document (as the case may be).

The Security and Intercreditor Deed also contains provisions relating to the manner in which notices and acknowledgments of assignment are to be effected, together with procedures for converting floating charges to fixed charges.

In the event that the ratings of the Custodian are downgraded to below the Rating Requirement or withdrawn, the Issuer shall use reasonable endeavours to procure that a replacement

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Custodian satisfying the Rating Requirement and who is acceptable to the Trustee is appointed in accordance with the provisions of the Agency Agreement.

Pursuant to the terms of the Security Documents, the Trustee and the Security Trustee are exempted from any liability in respect of any loss or theft or reduction in value of the Collateral or reduced payments on the Collateral, from any obligation to insure the Collateral and from any claim arising from the fact that the Collateral is held in a clearing system or in safe custody by the Custodian, a bank or other custodian. The Trustee and the Security Trustee have no responsibility for the management of the Collateral by the Investment Manager or to supervise the administration of the Collateral by the Collateral Administrator or any other party and is entitled to rely on the certificates or notices of any relevant party without further enquiry. The Security Documents also provide that the Trustee and the Security Trustee shall accept without investigation, requisition or objection such right, benefit, title and interest, if any, the Issuer may have in and to any of the Collateral and are not bound to make any investigation into the same or into the Collateral in any respect.

Pursuant to the Pledge Agreement, the Issuer has also created a Belgian law pledge over any Issuer Investments from time to time held by the Custodian on behalf of the Issuer in Euroclear.

(b) Application of Proceeds upon Enforcement

The Intercreditor Arrangements provide that the net proceeds of realisation of, or enforcement with respect to the security over, the Collateral constituted by the Security Documents shall be applied in accordance with the Intercreditor Priority of Payments.

(c) Limited Recourse

The obligations of the Issuer to pay amounts due and payable in respect of any Notes and to the other Transaction Creditors at any time shall be limited to the proceeds available at such time to make such payment in accordance with the Security Documents. If the net proceeds of realisation of the security constituted by the Security Documents, upon enforcement thereof in accordance with Condition 11 (Enforcement) and the provisions of the Security Documents, are less than the aggregate amount payable in such circumstances by the Issuer in respect of the Notes and to the other Transaction Creditors (such negative amount being referred to herein as a "shortfall"), the obligations of the Issuer in respect of the Notes of each Class and its obligations to the other Transaction Creditors in such circumstances will be limited to such net proceeds, which shall be applied in accordance with the Intercreditor Priority of Payments. In such circumstances, the other assets of the Issuer (being the Issuer Irish Account and its rights under the Corporate Administration Agreement) will not be available for payment of such shortfall which shall be borne by Class A Noteholders, Class B Noteholders, Class C Noteholders, Class D Noteholders, Intervening Noteholders (if any) and Class E Subordinated Noteholders, the Trustee, the Security Trustee and the other Transaction Creditors in inverse order of the Intercreditor Priority of Payments, the rights of the Transaction Creditors to receive any further amounts in respect of such obligations shall be extinguished and none of the Noteholders of any Class, the Trustee, or the other Transaction Creditors may take any further action to recover such amounts. None of the Noteholders of any Class, the Trustee or the other Transaction Creditors (nor any other person acting on behalf of any of them) shall be entitled at any time to institute against the Issuer, or join in any institution against the Issuer of, any bankruptcy, reorganisation, arrangement, insolvency, winding up or liquidation proceedings or other proceedings under any applicable bankruptcy or similar law in connection with any obligations of the Issuer relating to the Notes of any Class, the Trust Deed or otherwise owed to the Transaction Creditors, save for lodging a claim in the liquidation of the Issuer which is initiated by another party or taking proceedings to obtain a declaration or judgment as to the obligations of the Issuer.

None of the Trustee, the Security Trustee, the Directors, the Initial Purchaser, any Secured Hedging Counterparty, the Investment Manager, the Collateral Administrator, the Principal Paying Agent, the Registrar or the Custodian has any obligation to any Noteholder of any Class or other Transaction Creditor for payment of any amount by the Issuer in respect of the Notes of any Class.

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(d) Acquisition and Sale of Issuer Investments and Termination of Investment Manager Appointment by Class E Subordinated Noteholders

Pursuant to the Investment Management Agreement the Investment Manager will acquire, dispose of and manage Issuer Investments on behalf of the Issuer by reference to the Market Valuation Manual so as to comply with the Over-Collateralisation Tests subject to the parameters set out in the Investment Management Agreement.

Pursuant to the Investment Management Agreement, the Class E Subordinated Noteholders acting by Extraordinary Resolution, may on the third Incentive Fee Payment Date following the Initial Closing Date and on each anniversary thereof, instruct the Issuer to terminate the appointment of the Investment Manager upon 90 days written notice from the Issuer to the Investment Manager (the "Class E Subordinated Noteholder Investment Manager Termination Right"), subject to a successor Investment Manager being appointed and approved pursuant to the terms of the Investment Management Agreement. In the event that a replacement Investment Manager is appointed, the Class E Subordinated Noteholders, acting by Extraordinary Resolution, may approve such amendments to the Class E Subordinated Noteholder Investment Manager Termination Right as they deem necessary.

(e) Exercise of Rights in Respect of the Collateral

Pursuant to the Investment Management Agreement, the Issuer authorises the Investment Manager, prior to enforcement of the security over the Collateral, to exercise all rights and remedies of the Issuer in its capacity as a holder of, or person beneficially entitled to, the Collateral. In particular, the Investment Manager is authorised, subject to any specific direction given by the Issuer, to attend and vote at any meeting of holders of, or other persons interested or participating in, or entitled to the rights or benefits (or a part thereof) under, the Collateral and to give any consent, waiver, indulgence, time or notification, make any declaration or agree any composition, compounding or other similar arrangement with respect to any asset forming part of the Collateral.

Subject to the Intercreditor Arrangements and the Security Documents, the Investment Manager on behalf of the Issuer will generally be permitted to instruct the Custodian: (A) to (i) invest any interest, dividends, sale proceeds and other cash flow from the Collateral, (ii) sell any of the Collateral and (iii) invest the net proceeds from the offering of the Notes and any borrowings under any other Permitted Indebtedness and (B) to use any cash in the Custody Cash Account to (i) pay any expenses or obligations of the Issuer, (ii) purchase Issuer Investments or other assets, (iii) make payments in respect of Synthetic Purchase Contracts or (iv) reduce the amount of any Debt of the Issuer provided that the Investment Manager's ability to exercise such rights on behalf of the Issuer with respect to the Collateral (or to instruct the Custodian in relation thereto) will be eliminated upon a Liquidation Direction and substantially limited after an Acceleration Notice has been served in accordance with the Intercreditor Arrangements as, in such events, the Controlling Class may exercise significant rights with respect to the Collateral and the authority of the Custodian in respect of the Collateral will be limited accordingly.

(f) Information regarding the Collateral

For so long as any Rated Notes remain Outstanding, the Issuer will be required (i) to provide (or procure provision by the Collateral Administrator) to the Trustee, the Security Trustee, the Irish Paying Agent, the Investment Manager and the Rating Agencies the Over-Collateralisation Test Report in accordance with Condition 5(b) (Over-Collateralisation Testing and Reporting) and (ii) to procure that, as promptly as practicable after production of the same (and in any event not later than 180 days following the end of the relevant fiscal year) each VF Noteholder and Noteholder, the Trustee, the Rating Agencies and the Irish Stock Exchange are supplied, annually, with a copy of the audited accounts for the foregoing fiscal year. The Collateral Administrator shall forward each of the items referred to in (i) and (ii) to the Holders of the Notes and Holders of other Permitted Indebtedness in accordance with the terms of the Collateral Administration Agreement.

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(g) Payment of Administrative Expenses etc.

Other than in the event that a Restriction Notice is in effect, the Investment Manager will instruct the Custodian to arrange for payment of all Administrative Expenses, Trustee Fees and Expenses, Investment Management Fees, Investment Manager Advances and any commitment fees payable in respect of any Permitted Indebtedness together with any taxes to which the Issuer is subject as each of the same become due and payable. In the event that a Restriction Notice is in effect (i) all such amounts (other than any Incentive Fee and Investment Manager Advances) shall be paid prior to any application to the other Secured Creditors and (ii) any Incentive Fee and Investment Manager Advances shall be paid prior to any application to Holders of Subordinated Indebtedness, whether pursuant to the Intercreditor Priority of Payments or otherwise. In the event that following the service of a Liquidation Direction the security over the Collateral is enforced in accordance with Condition 11 (Enforcement) and there are insufficient amounts available to meet the foregoing liabilities, the same shall be paid in accordance with the Intercreditor Priority of Payments, and any Incentive Fee and Investment Manager Advances shall be paid in seniority to any amounts owing to Class E Subordinated Noteholders but after the entitlements of all other Secured Creditors.

5. Covenants of and Restrictions on the Issuer

(a) General covenants of the Issuer

The Trust Deed contains, inter alia, representations, warranties and covenants in favour of the Trustee which, amongst other things, require the Issuer to comply with its obligations under the Transaction Documents and restrict the ability of the Issuer to create or incur any Indebtedness (other than as contemplated by the Transaction Documents) or to dispose of assets (other than as contemplated by the Transaction Documents), change the nature of its business or to take, or fail to take, any action which may adversely affect the priority or enforceability of the security interest in the Collateral. In particular, the Issuer makes the following covenants.

(i) Limitations on Debt The Issuer covenants that it will not, and will not permit any of its subsidiaries to, create, incur, assume or, directly or indirectly, guarantee the payment of any Debt except: (a) Permitted Indebtedness (including refinancings, refundings or replacements thereof permitted by the Trust Deed and the addition of blocked interest to the Principal Amount Outstanding thereof) and (b) Debt arising from any advances made (or deemed to be made) by the Custodian pursuant to the Agency Agreement to facilitate settlement thereunder provided that such Debt under this Condition 5(a)(i) is extinguished within five Business Days of its incurrence provided that for each of these purposes "Debt" does not include any obligations under any Hedging Transactions.

(ii) Limitations on Security Interests The Issuer covenants that it will not, and will not permit any of its subsidiaries to, create, assume or suffer to exist any security interest on any asset included in the Collateral whether now owned or hereafter acquired by the Issuer provided, however, that such restriction shall not apply to any of the following (collectively, "Permitted Security Interests"): (i) security interests in favour of the Security Trustee for its benefit and the benefit of the Holders of Permitted Indebtedness, the Custodian (and any sub custodian appointed by or on behalf of the Custodian) and the other Secured Creditors granted under the Security and Intercreditor Deed, (ii) any security interest or other encumbrance for taxes, assessments or other governmental charges or levies not yet subject to penalties for non payment or the validity, applicability or amount of which is being contested in good faith by appropriate legal proceedings and with respect to which adequate reserves in accordance with the applicable Irish accounting standards have been established by the Issuer, (iii) security interests of broker dealers and clearing systems incurred in the ordinary course of business, but excluding security interests created in connection with the purchase of securities on margin, or securities lending transactions (other than Securities Lending Transactions involving Government Securities entered into as interest rate hedging transactions permitted under the Transaction Documents), provided, however, that in the case of broker dealer security interests relating to trades

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not settled in the ordinary course of business, such security interests shall be Permitted Security Interests under this clause (iii) only if such security interests are discharged within five Business Days of the Issuer's obtaining actual knowledge thereof and (iv) (x) judgments against the Issuer in existence less than 30 days after the entry thereof or with respect to which execution has been stayed so long as the aggregate amount of all such judgments at any time does not exceed €10,000,000 or (y) judgments, the payment of which is covered in full (subject to a customary deductible) by insurance.

(iii) Limitations on Use of Proceeds The Issuer covenants that none of the proceeds from the offering of the Notes will be used, directly or indirectly, to extend "Purpose Credit" or to acquire or carry "Margin Stock" in any manner that would result in a violation of Regulations T, U or X of the Federal Reserve Board.

(iv) Limitations on Registration as or Becoming an Investment Company The Issuer covenants that it will take or cause to be taken, such actions as are required in order for the Issuer to qualify for, and maintain its qualification for, the exemption from registration as an investment company provided by Section 3(c)(7) of the Investment Company Act.

(v) Limitations on Hedging Transactions The Issuer covenants that: (a) the only Interest Rate Hedging Transactions or Currency Hedging Transactions that it (or, as the case may be, any Hedging SPE) will enter into will be Interest Rate Hedging Transactions or Currency Hedging Transactions that, in the Issuer's judgment (or the Investment Manager's judgment on the Issuer's behalf), are intended to hedge or mitigate risks to which the Issuer is exposed in the conduct of its business or management of its liabilities and in the event that such transactions cease to hedge or mitigate such risks, the Issuer shall, or shall procure that the Investment Manager shall, use all reasonable endeavours to unwind the transactions so affected forthwith, (b) it will not enter into any Interest Rate Hedging Transaction or Currency Hedging Transaction if, as a result of entering into such transaction, the notional amount of either (i) all Interest Rate Hedging Transactions or (ii) all Currency Hedging Transactions, as the case may be, would be greater than the aggregate Market Value of all Non Excluded Issuer Investments, (c) it will not, and will not permit any Hedging SPE to, enter into any Hedging Transaction with any Person unless (i) the documentation governing such Hedging Transaction contains a Non-Petition Covenant and (ii) (x) in the case of the Issuer, such Person is an Eligible Counterparty and (y) in the case of any Hedging SPE, the documentation for such Hedging Transaction provides that the counterparty thereto does not have recourse to the Issuer or the assets of the Issuer for amounts owing to such counterparty thereunder, (d) it will not purchase or sell, acquire or otherwise enter into any Hedging Transaction having a Reference Security that, if it were an Issuer Investment, would be an Excluded Issuer Investment, (e) it will not enter into any Credit Default Protection Contract for which the Reference Security has a price (expressed as a percentage of the principal amount outstanding) of less than 65 per cent., and (f) it will not enter into any Credit Default Exposure Contract having a spread that is greater than 1000 basis points over the credit default swap index for securities with comparable ratings to the Reference Security under such Credit Default Exposure Contract that is the Cheapest to Deliver Security.

(vi) Maximum Synthetic Exposure The Issuer covenants that it will not permit: (i) the Credit Default Protection Contract Exposure to exceed 20 per cent. of the Total Capitalisation, (ii) the notional amount of all Credit Default Exposure Contracts to exceed 20 per cent. of the Total Capitalisation or (iii) the aggregate market value of the Reference Securities of all Single Asset Total Return Swaps to exceed 5 per cent. of the Total Capitalisation.

(vii) Limitations on Funding Obligations The Issuer covenants that it will not itself or acting through the Investment Manager hold Loans, Participations or Hedging Transactions that oblige it to extend credit to a borrower, to purchase and deliver an asset to a third party, to make a settlement payment based upon a decline in the creditworthiness or default of an asset or the obligor under such asset, or to make payments based upon a change in the value of a security, unless the Issuer maintains Cash, Cash Equivalents

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and/or the availability to make borrowings under a VF Instrument or under other Permitted Debt Documents in an aggregate amount sufficient to satisfy simultaneously all such obligations in full on a marked to market basis.

(viii) Minimum Investment Diversification Requirement The Issuer covenants that during the Diversity Compliance Period it will not own Issuer Investments from fewer than 30 different issuers or own Issuer Investments from issuers in fewer than 15 different Industries in the case of S&P or fewer than 12 different Industries in the case of Moody's, as determined in accordance with the Market Valuation Manual and the Investment Management Agreement (the "Diversity Compliance Requirement") provided that if any Issuer Investments acquired by the Issuer (or the Investment Manager on its behalf) in fulfilment of the Diversity Compliance Requirement are redeemed (other than in the case of a scheduled redemption or a disposal by the Investment Manager acting on behalf of the issuer of an Issuer Investment) or prepaid during the Diversity Compliance Period and amounts equal to the monies received by the Issuer as a consequence of such redemption or prepayment are retained by or on behalf of the Issuer in the form of Cash or Cash Equivalents, the Issuer shall be deemed still to retain the Issuer Investments which were the subject of such redemption or prepayment for the purpose of determining compliance with the Diversity Compliance Requirement notwithstanding their redemption or prepayment as aforesaid.

(ix) Limitations on Assignment of Investment Management Agreement The Issuer covenants that it will not, subject as provided in Condition 4(a) (Security), without the written consent of the Noteholders of each Class of Notes, consent to an assignment of the Investment Management Agreement except in connection with (x) an assignment that results from any reorganisation, merger, consolidation or conversion of the Investment Manager or where the Investment Manager sells or otherwise transfers all or substantially all the assets of the business to a third party provided that the resulting, surviving or transferee Person assumes all of the Investment Manager’s obligations under the Investment Management Agreement and satisfies the tests specified therein which are applicable to a Successor Investment Manager, (y) an assignment to an Affiliate of the Investment Manager or (z) the appointment of an Affiliate of the Investment Manager as a delegate thereof.

(x) Consolidations, Mergers and Sales of Assets The Issuer covenants that it will not (i) consolidate or merge with or into any other Person or (ii) sell, lease or otherwise transfer its assets and properties substantially as an entirety to any Person, unless Rating Agency Confirmation is received in respect thereof and unless: (a) the Issuer shall be the surviving entity or the successor entity shall be organised under the laws of Ireland and such successor entity shall expressly assume in writing the due and punctual performance of all obligations and liabilities of the Issuer under the Notes and the Transaction Documents, (b) immediately after such transaction no Transaction Default or Transaction Event of Default shall exist, (c) the Trustee shall have received an opinion of counsel in form and substance satisfactory to it (and the Trustee shall be entitled to accept and rely upon such opinion as sufficient evidence of the satisfaction of the circumstances set out in this Condition 5(a) in which event it shall be conclusive and binding on the Noteholders) to the effect that the Noteholders will be subject to Irish income tax in the same amounts, in the same manner, and at the same time had no such consolidation, merger, sale, lease or other transfer occurred and (d) certain other conditions specified in the Trust Deed are met.

(xi) Limitations on disposal of Issuer Investments Otherwise than in the event of a Collateralisation Shortfall Amount, the Investment Manager acting on behalf of the Issuer may not dispose of any Issuer Investment (other than a Credit Impaired Obligation) if the Market Value of Issuer Investments sold in any year (with each year commencing on the Initial Closing Date or, as the case may be, an anniversary thereof, and ending in the next succeeding anniversary thereof) when aggregated with the aggregate Market Value of any Issuer Investment to be sold (in each case excluding any Credit Impaired Obligations) exceeds 20 per cent. of Total Capitalisation, measured as at the beginning of each such year. In the event of a Collateralisation

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Shortfall Amount, the Investment Manager acting on behalf of the Issuer may dispose of any Issuer Investment, including Credit Impaired Obligations.

(b) Restrictions The Issuer shall not, for so long as any Note remains Outstanding, save as contemplated in any Transaction Document, without the prior written consent of the Trustee:

(i) engage in any business other than:

(A) acquiring, holding, selling or disposing of the Collateral pursuant to the Investment Management Agreement (including by participation) and performing its obligations in respect of any Permitted Indebtedness or Hedging Transactions;

(B) issuing and performing its obligations under any Notes and any other Permitted Indebtedness;

(C) entering into, exercising its rights under, performing its obligations under or enforcing its rights under any Transaction Documents; or

(D) performing any act incidental to or necessary in connection with any of the above;

(ii) amend its constitutional documents;

(iii) have any subsidiaries other than Hedging SPEs;

(iv) have any employees (for the avoidance of doubt, the Directors do not constitute employees of the Issuer);

(v) issue any shares (other than such shares as are in issue as at the Initial Closing Date) nor redeem or purchase any of its issued share capital;

(vi) amend any term or condition of any Notes of any Class (save in accordance with the provisions of this Deed or with the Conditions of any Notes);

(vii) incur any indebtedness for borrowed money other than in respect of the Notes or any other Permitted Indebtedness;

(viii) enter into any reconstruction, amalgamation, merger or consolidation;

(ix) convey or transfer all or a substantial part of its properties or assets (in one or a series of transactions) to any person, otherwise than as contemplated in the Conditions;

(x) agree to any amendment to any provision of, or grant any waiver or consent under, the Transaction Documents other than in accordance with the respective terms thereof;

(xi) otherwise than as contemplated in any Conditions, this Deed or any Trust Instrument or Supplemental Trust Instrument, release from or terminate the appointment of (i) the Custodian under the Agency Agreement, (ii) the Investment Manager under the Investment Management Agreement (except as provided therein), (iii) the Collateral Administrator under the Collateral Administration Agreement, (iv) any Secured Hedging Counterparty (except as provided for therein) or any guarantor under any Secured Hedging Transaction or (v) any obligor from its duties and obligations under any agreement entered into or in connection with the Portfolio, or, in each case, from any executory obligation thereunder; or

(xii) have its centre of main interest (as referred to in Article 3(1) of Council Regulation (EC) No 1346/2000 of 29 May 2000 on Insolvency Proceedings) or an establishment (as such term is defined in Article 2(h) of Council Regulation (EC) No 1346/2000 of 29 May 2000 on Insolvency Proceedings) in any jurisdiction other than Ireland.

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(c) Over-Collateralisation Testing and Reporting

Over-Collateralisation Testing Pursuant to the Trust Deed, the Issuer will use all reasonable endeavours to procure that the Investment Manager, on behalf of the Issuer, shall: (A)(i) calculate the Market Value of each Issuer Investment that is not an Unquoted Investment (x) as of the Valuation Date for each calendar week and (y) to the extent that a Market Value Price therefor is determined using an Approved Pricing Service, on each Business Day (such valuation, a "Quoted Issuer Investment Valuation") and (ii) calculate the Market Value of each Issuer Investment that is an Unquoted Investment on at least a quarterly basis or, with respect to Unquoted Investments having an aggregate Market Value in excess of four per cent. of Total Capitalisation, at least monthly (such valuation, an "Unquoted Issuer Investment Valuation") and (B) on each Business Day on which any Rated Notes or other Over-Collateralisation Test Dependent Indebtedness remains Outstanding, determine whether the Over-Collateralisation Tests have been satisfied by reference to the then most recent Quoted Issuer Investment Valuation and/or the then most recent Unquoted Issuer Investment Valuation.

Over-Collateralisation Test Reports Pursuant to the Trust Deed, the Issuer will procure (subject always to the requirement, as applicable, to procure delivery by the Investment Manager of a Collateralisation Shortfall Valuation Statement to the same) that, as soon as it is available and in any event within three Business Days of the Valuation Date (such third Business Day, the "Delivery Deadline"), an Over-Collateralisation Test Report is delivered (at the Issuer's expense) to the Issuer, Trustee and Rating Agencies by the Collateral Administrator, which Over-Collateralisation Test Report shall confirm compliance or otherwise with the Over-Collateralisation Tests and shall contain further information relating to, among other things, the then Market Value of Issuer Investments and the calculation of such tests provided that in the event that any such Over-Collateralisation Test Report is not so furnished on or before the relevant Delivery Deadline, but is furnished within four Business Days thereof such omission shall not constitute a Transaction Event of Default for the purpose of paragraph (a)(vii) (Breach of Materiality Qualifications, Representations and Warranties) of Condition 10 (Events of Default) if, on the date of the relevant Delivery Deadline, the Investment Manager on behalf of the Issuer furnishes the Issuer, Trustee and Rating Agencies with a written statement, certified by the Investment Manager on behalf of the Issuer, to the effect that it and the Issuer reasonably believe that, as of the date of such Delivery Deadline, the Over-Collateralisation Tests have been satisfied, and the Trustee may rely on such statement without further enquiry.

Provision of Over-Collateralisation Test Reports Pursuant to the Security and Intercreditor Deed, on behalf of and at the expense of the Issuer, the Collateral Administrator will undertake, in accordance with the Collateral Administration Agreement, to furnish Noteholders (and Holders of External Permitted Debt) with the relevant Over-Collateralisation Test Report. By its acceptance of the same each Noteholder and Holder of other Permitted Indebtedness will be deemed to acknowledge: (i) that the information contained in each Over-Collateralisation Test Report is furnished solely for the purpose of providing information to such Noteholder and Holder of other Permitted Indebtedness as to whether or not the Over-Collateralisation Tests are satisfied at the relevant time and (ii) that such information shall not be used for trading purposes or furnished for such purposes to trading personnel or to any other Person for any purpose which is inconsistent with the basis on which such Over-Collateralisation Test Report has been so furnished.

Method of Furnishing Over-Collateralisation Test Reports The Issuer's obligation to furnish (or procure the furnishing of) any Over-Collateralisation Test Report (whether directly or through the Trustee) to any Person shall be deemed satisfied to the extent that the same is delivered by email or other means of electronic transmission by the Delivery Deadline.

(d) Over-Collateralisation Failure and Collateralisation Shortfall Dates

Collateralisation Shortfall Dates Pursuant to the Trust Deed, the Issuer will procure that the Investment Manager on behalf of the Issuer shall, not later than the Business Day following any Collateralisation Shortfall Date, furnish the Rating Agencies, the VFN Agent (for furnishing to the VF Noteholders) and the Trustee with a supplement to the most recent Over-

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Collateralisation Test Report certified by the Investment Manager on behalf of the Issuer, setting forth each of the items included in such most recent Over-Collateralisation Test Report stated as of such Collateralisation Shortfall Date (each such statement, a "Collateralisation Shortfall Valuation Statement").

Collateralisation Shortfall Date Remedial Actions Upon the occurrence of a Collateralisation Shortfall Date, the Issuer (or the Investment Manager on its behalf) shall, in addition to delivering the relevant Collateralisation Shortfall Valuation Statement to the same, promptly notify the Rating Agencies and the Trustee of the occurrence of such Collateralisation Shortfall Date and either:

(i) within ten Business Days of such Collateralisation Shortfall Date, prepay External Permitted Debt, pay and discharge any Outstanding Issuer Swap Termination Payments and redeem the Notes in such amounts and to the relevant Prepayment Priority Level as is necessary to ensure that on the date of their application (the "Prepayment Date") hereunder, the Over-Collateralisation Tests are satisfied, in the following order of priority: (i) first on a pro rata basis (I) in redemption of the Class A Notes, (II) in prepayment of External Senior Permitted Debt and (III) in payment of any Outstanding Issuer Swap Termination Payments provided that amounts comprising the pro rata entitlement of the Holders of External Senior Permitted Debt shall be applied in prepayment (A) first of External Senior Permitted Debt that may be re-borrowed and (B) second of External Senior Permitted Debt that may not be re-borrowed (such priority in (i)(A) and (i)(B), the "Senior Prepayment Cure Priority"), (ii) second on a pro rata basis (I) in redemption of the Class B Notes and (II) in prepayment of External Second Senior Permitted Debt provided that amounts comprising the pro rata entitlement of the Holders of External Second Senior Permitted Debt hereunder shall be applied in prepayment (A) first of External Second Senior Permitted Debt that may be re-borrowed and (B) second of External Second Senior Permitted Debt that may not be re-borrowed (such priority in (ii)(A) and (ii)(B), the "Second Senior Prepayment Cure Priority"), (iii) third on a pro rata basis (I) in redemption of the Class C Notes and (II) in prepayment of External Third Senior Permitted Debt provided that amounts comprising the pro rata entitlement of the Holders of External Third Senior Permitted Debt hereunder shall be applied in prepayment (A) first of External Third Senior Permitted Debt that may be re-borrowed and (B) second of External Third Senior Permitted Debt that may not be re-borrowed (such priority in (iii)(A) and (iii)(B), the "Third Senior Prepayment Cure Priority"), (iv) fourth on a pro rata basis (I) in redemption of the Class D Notes and (II) in prepayment of External Fourth Senior Permitted Debt provided that amounts comprising the pro rata entitlement of the Holders of External Fourth Senior Permitted Debt hereunder shall be applied in prepayment (A) first of External Fourth Senior Permitted Debt that may be re-borrowed and (B) second of External Fourth Senior Permitted Debt that may not be re-borrowed (such priority in (iv)(A) and (iv)(B), the "Fourth Senior Prepayment Cure Priority") and (v) fifth in redemption of any Intervening Indebtedness (including any Intervening Notes) which has an associated over-collateralisation test on a pro rata basis (or, if an Intervening Indebtedness Priority of Payments exists, rateably on a descending basis at each successive level of the same) provided that (x) as regards subparagraphs (i) to (iv) of this Condition 5(c)(i) any such application shall be made, in the case of External Permitted Debt, subject to the Prepayment Priority Disapplication Mechanic and (y) any such application shall be paid free of any make whole premiums or breakage costs (the foregoing procedure, the "Prepayment Cure Methodology", the foregoing priority of payments, the "Prepayment Priorities", the five levels thereof in (i) to (v), the "Prepayment Priority Levels" and the foregoing provisos in (x) and (y) the "Prepayment Provisos") or

(ii) provide, or procure the provision of, a written statement (the "Projection Cure Statement") to the Trustee, the VFN Agent (for furnishing to the VF Noteholders) and the Rating Agencies within seven Business Days of such Collateralisation Shortfall Date (such date, a "Statement Date") showing projected compliance with the Over-Collateralisation Tests on the Long Stop Date based upon (x) acquisition or disposal of Issuer Investments which either (i) had Committed Unsettled Status on or (ii) were effected on or after, such Over-Collateralisation Shortfall Date and which (in the case

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of transactions with Committed Unsettled Status as at the Statement Date) the Issuer or the Investment Manager on its behalf reasonably believes will be settled by the Long Stop Date and (y) the anticipated prepayments of its External Permitted Debt and Note redemptions to be completed (in accordance with the Prepayment Priorities and Prepayment Provisos) with the net proceeds, once settled, of such disposals and acquisitions or other liquidity available to the Issuer in each case in (x) and (y) calculated, as applicable, by reference to the Market Values, Market Value Prices, Over-Collateralisation Tests, Notes and External Permitted Debt in effect or Outstanding, as the case may be, as of such Statement Date (the foregoing procedure, "Projection Cure Methodology" and together with the Prepayment Cure Methodology, the "Under Collateralisation Cure Methodologies").

(e) Insufficiency of Projection Cure Methodology

Projection Cure Settlement Default In the event the Issuer (or the Investment Manager on its behalf) elects to adopt the Projection Cure Methodology but, notwithstanding the Committed Unsettled Status of the same, certain acquisitions or disposals of Issuer Investments specified in the Projection Cure Statement have failed to settle by, or have been subject to an incurable settlement failure prior to, the Long Stop Date (a "Projection Cure Settlement Default"), then the Issuer (or the Investment Manager on its behalf) shall, no later than the Long Stop Date, make (or procure the making of) such prepayments of its External Permitted Debt and Note redemptions (in accordance with the Prepayment Priorities and Prepayment Provisos) as are required to satisfy the Over-Collateralisation Tests, on or prior to the Long Stop Date, pursuant to the Prepayment Cure Methodology.

Supervening Shortfall In the event that the Issuer (or the Investment Manager on its behalf) elects to adopt the Projection Cure Methodology specified in the same, and furnishes the Trustee, the VFN Agent (for furnishing to the VF Noteholders) and the Rating Agencies with a Projection Cure Statement, but it subsequently becomes evident to the Issuer (or the Investment Manager on its behalf) that, notwithstanding the potential absence of a Projection Cure Settlement Default, the Issuer will, by reason of events which had not existed on compilation and delivery of the relevant Projection Cure Statement, be unable to comply with the Over-Collateralisation Tests on, or at any time prior to, the Long Stop Date (the relevant shortfall over and above the Collateralisation Shortfall Amount, the "Supervening Shortfall"), then the Issuer (or the Investment Manager on its behalf) shall continue with employing the Projection Cure Methodology in the manner set out in the relevant Projection Cure Statement and, not later than the Long Stop Date, in addition cure the Supervening Shortfall by employing the Prepayment Cure Methodology.

Disapplication of Certain Prepayment Cure Priorities In the event that immediately following, and after giving effect to, any prepayment of External Permitted Debt pursuant to either the Prepayment Cure Methodology or the Projection Cure Methodology in accordance with, respectively, the Senior Prepayment Cure Priority, the Second Senior Prepayment Cure Priority, the Third Senior Prepayment Cure Priority and the Fourth Senior Prepayment Cure Priority, the Issuer (or the Investment Manager on its behalf) determines that the Issuer would not be in compliance with the Over-Collateralisation Tests, then to the extent it makes any further prepayment pursuant to either the Prepayment Cure Methodology or the Projection Cure Methodology, all External Permitted Debt at such time remaining to be repaid pursuant to either the Prepayment Cure Methodology or the Projection Cure Methodology shall be repaid as follows: first External Senior Permitted Debt that may be re-borrowed and External Senior Permitted Debt that may not be re-borrowed on a pro rata basis, second External Second Senior Permitted Debt that may be re-borrowed and External Second Senior Permitted Debt that may not be re-borrowed on a pro rata basis, third External Third Senior Permitted Debt that may be re-borrowed and External Third Senior Permitted Debt that may not be re-borrowed on a pro rata basis and fourth External Fourth Senior Permitted Debt that may be re-borrowed and External Fourth Senior Permitted Debt that may not be re-borrowed on a pro rata basis and each of the Senior Prepayment Cure Priority, the Second Senior Prepayment Cure Priority, the Third Senior Prepayment Cure Priority and the Fourth Senior Prepayment Cure Priority shall, for the purpose of such prepayment, be disapplied accordingly (the foregoing mechanic, the "Prepayment Priority Disapplication Mechanic").

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6. Interest

(a) Accrual of Interest

Class A Notes, Class B Notes, Class C Notes, Class D Notes and Intervening Notes (if any) bear interest at the relevant Rate of Interest on their Principal Amount Outstanding from (and including) the Closing Date for the same, payable in respect of each Interest Period quarterly in arrear on each Payment Date. Class E Subordinated Notes which are not Interest Bearing Notes shall bear no interest but shall, together with those Class E Subordinated Notes which are Interest Bearing Notes, be entitled to Class E Restricted Disbursements in accordance with Condition 3(d) (Restricted Payments) and Condition 3(c) (Payment of Amounts).

The Investment Manager (on behalf of the Issuer) may, in its sole discretion and in accordance with Condition 3(d) (Restricted Payments), Condition 3(c) (Payment of Amounts) and Condition 20 (Specific Conditions), make a disbursement to the Holders of Class E Subordinated Notes which are Interest Bearing Notes on a Class E Payment Date in an amount equal to the Interest Payment Amount applicable to such Notes.

(b) Post Redemption Default Interest

Each Interest Bearing Note (other than Class E Subordinated Notes which are Interest Bearing Notes) will cease to bear interest from the due date for final redemption of the Notes unless, upon due presentation, payment is improperly withheld or refused, in which case the unpaid amount will bear interest in accordance with this Condition 6 (Interest) until whichever is the earlier of (a) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (b) the day which is seven days after the Trustee has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment). Accrued interest payable under this Condition 6(b) shall be payable on each date (each a "Post Redemption Default Payment Date") on which it remains unpaid and which is an integral multiple of three months after the due date for payment. (Each period beginning on (and including) the date on which the relevant payment is improperly withheld or refused or any Post Redemption Default Payment Date and ending on (but excluding) the next Post Redemption Default Payment Date or the date of payment (as the case may be) is herein called a "Post Redemption Default Due Period"). The amount of interest payable in respect of each Interest Bearing Note (other than Class E Subordinated Notes which are Interest Bearing Notes) for any Post Redemption Default Due Period shall be calculated on the basis of the actual number of days in such Post Redemption Default Due Period divided by 360, in each case with the resultant figure rounded to the nearest cent (or half a cent being rounded up). The Investment Manager shall not pay any Interest Payment Amount in respect of Class E Subordinated Notes which are Interest Bearing Notes in respect of any period commencing on or following the due date for final redemption of such Notes.

(c) Rate of Interest

(i) Determination of Floating Rates of Interest

Interest payable from time to time in respect of the Notes of any Class which are Floating Rate Notes (each, a "Floating Rate of Interest") will be determined by the Calculation Agent. In the case of Floating Rate Notes other than Class E Subordinated Notes, the Floating Rate of Interest will be determined two Business Days prior to each Payment Date in respect of the Interest Period commencing on that date. In the case of Class E Subordinated Notes which are Floating Rate Notes, the Floating Rate of Interest will be determined two Business Days prior to each Class E Payment Date in respect of the Class E Interest Period commencing on that date. The date of determination of the Floating Rate of Interest in respect of Floating Rate Notes is an "Interest Determination Date". The Floating Rate of Interest applicable to any Floating Rate Notes for each Interest Period shall be the aggregate of the Relevant Margin specified in Condition 20 (Specific Conditions) as being applicable thereto and

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(A) the arithmetic mean of the offered quotations to leading banks (rounded to four decimal places with the mid point rounded up) for twelve month Euro deposits in the case of Floating Rate Notes which are Class E Subordinated Notes and for three-month Euro deposits in the case of all other Floating Rate Notes, in each case in the Euro zone Interbank market which appear on Moneyline Telerate Monitor Screen Page No. 248 (or such other page as may replace Moneyline Telerate Monitor Screen Page No. 248 on that service for the purpose of displaying such information or, if that service ceases to display such information, such page as displays such information on such equivalent service or, if more than one, that one which is approved in writing by the Trustee to replace the Moneyline Telerate Monitor);

(B) if a Floating Rate of Interest cannot be calculated pursuant to paragraph (A), (x) in the case of Floating Rate Notes which are Class E Subordinated Notes, the arithmetic mean (rounded to four decimal places with the mid point rounded up) of the rates notified to the Calculation Agent at its request by each of the Reference Banks as the rate at which twelve month Euro deposits, in a representative amount are offered by that Reference Bank to leading banks in the Euro zone Interbank market at or about 11.00 a.m. (Brussels time) on the relevant Interest Determination Date, or if, on any such Interest Determination Date, only one or none of the Reference Banks provides the Calculation Agent with such an offered quotation, the arithmetic mean of the rates quoted to the Calculation Agent by four major banks in the Euro zone Interbank market selected by the Calculation Agent at or about 11.00 a.m. (Brussels time) on the relevant Interest Determination Date for twelve month Euro deposits, in an amount that is representative for a single transaction in the relevant market at the relevant time or (y) in the case of Floating Rate Notes which are not Class E Subordinated Notes, the arithmetic mean (rounded to four decimal places with the mid point rounded up) of the rates notified to the Calculation Agent at its request by each of the Reference Banks as the rate at which three-month Euro deposits, in a representative amount are offered by that Reference Bank to leading banks in the Euro zone Interbank market at or about 11.00 a.m. (Brussels time) on the relevant Interest Determination Date, or if, on any such Interest Determination Date, only one or none of the Reference Banks provides the Calculation Agent with such an offered quotation, the arithmetic mean of the rates quoted to the Calculation Agent by four major banks in the Euro zone Interbank market selected by the Calculation Agent at or about 11.00 a.m. (Brussels time) on the relevant Interest Determination Date for three-month Euro deposits, in an amount that is representative for a single transaction in the relevant market at the relevant time.

(C) There shall be no maximum or minimum Floating Rate of Interest.

(ii) Interest on Fixed Rate Notes

Fixed Rate Notes bear interest on the Principal Amount Outstanding thereof at the rate (each, a "Fixed Rate of Interest") specified in Condition 20 (Specific Conditions) applicable thereto. The Fixed Rate of Interest in respect of each Fixed Rate Note (other than the Class E Subordinated Notes which are Fixed Rate Notes) will be payable on each Payment Date. The Fixed Rate of Interest in respect of each Class E Subordinated Note which is an Interest Bearing Note is payable on each Class E Payment Date specified in Condition 20 (Specific Conditions) applicable thereto.

(d) Determination of Rates of Interest and Calculation of Interest Payment Amounts

(i) The Calculation Agent shall, on each Interest Determination Date, determine the Floating Rate of Interest applicable to the Interest Period or the Class E Interest Period (as the case may be) beginning two Business Days after such Interest Determination Date in respect of each Class of Notes.

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(ii) Subject to Condition 6(d)(iii) below, the Interest Payment Amount payable on each Class of Floating Rate Notes in respect of the Interest Period or the Class E Interest Period (as the case may be) shall be calculated by applying the relevant Floating Rate of Interest to the aggregate Principal Amount Outstanding of the relevant Class of Interest Bearing Notes on the Payment Date on which such Interest Period or such Class E Interest Period (as the case may be) commences (or in the case of the first Interest Period or the first Class E Interest Period (as the case may be), the Initial Closing Date) (in each case after deduction therefrom of any payment of principal due on that Payment Date) and, in each case, multiplying the product of such calculation by the actual number of days in the Interest Period or the Class E Interest Period (as the case may be) and dividing by 360, and in each case rounding the resultant figure to the nearest cent (half a cent being rounded up).

(iii) Interest on Fixed Rate Notes will be calculated on the basis of a 360-day year consisting of 12 months of 30 days each.

(e) Non Payment of Interest

Subject to the second paragraph of this Condition 6(e), non payment of interest on the Class A Notes or, following redemption in full of the Class A Notes, non payment of interest (excluding any Blocked Junior Note Interest applicable thereto) on the Class B Notes or, following redemption in full of the Class A Notes and the Class B Notes, non payment of interest (excluding any Blocked Junior Note Interest applicable thereto) on the Class C Notes or, following redemption in full of the Class A Notes, the Class B Notes and the Class C Notes, non payment of interest (excluding any Blocked Junior Note Interest applicable thereto) on the Class D Notes, shall constitute an Event of Default and following redemption in full of all Class A Notes, all Class B Notes, all Class C Notes and all Class D Notes, non payment of interest (excluding any Blocked Junior Note Interest applicable thereto) on any Intervening Notes, shall, if so specified in Condition 20 (Specific Conditions) of the same, constitute an Event of Default in respect of the same. Failure to disburse any interest on Class E Subordinated Notes in accordance with Condition 20 (Specific Conditions) or Class E Restricted Disbursements at any time shall not constitute an Event of Default other than if such Class E Restricted Disbursements comprise sums payable in satisfaction of the Redemption Price in respect of a Class E Subordinated Note.

Without prejudice to Condition 3(h) (Blockage Periods) and any Blocked Junior Note Interest accruing thereunder, while (w) any Class A Note is Outstanding any interest payable on any Class B Notes that would be payable to Class B Noteholders on a Payment Date but is not paid by reason of the Intercreditor Arrangements shall be added to the Principal Amount Outstanding of such Class B Notes on such Payment Date and will thereafter cease to be payable as interest (but will, to the extent permitted by law, bear interest at the applicable Rate of Interest), (x) any Class A Note or Class B Note is Outstanding, any interest payable on any Class C Notes that would be payable to Class C Noteholders on a Payment Date but is not paid by reason of the Intercreditor Arrangements shall be added to the Principal Amount Outstanding of such Class C Notes on such Payment Date and will thereafter cease to be payable as interest (but will, to the extent permitted by law, bear interest at the applicable Rate of Interest) (y) any Class A Note, Class B Note or Class C Note is Outstanding, any interest payable in any Class D Notes that would be payable to Class D Noteholders on a Payment Date but is not paid by reason of the Intercreditor Arrangements shall be added to the Principal Amount Outstanding of such Class D Notes on such Payment Date and will thereafter cease to be payable as interest (but will, so the extent permitted by law, bear interest at the applicable Rate of Interest) and (z) any Class A Note, Class B Note, Class C Note or Class D Note is Outstanding, any interest payable on any Intervening Notes that would be payable to Intervening Noteholders on a Payment Date but is not paid by reason of the Intercreditor Arrangements shall be added to the Principal Amount Outstanding of such Intervening Notes on such Payment Date and will thereafter cease to be payable as interest (but will, to the extent permitted by law, bear interest at the applicable Rate of Interest). For the avoidance of doubt, any interest payable on any Class E Subordinated Note which is an Interest Bearing Note that would be payable to a Class E Subordinated Noteholder on a Class E Payment Date but is not paid by reason of the Intercreditor Arrangements or the terms outlined in Condition 20 (Specific Conditions) shall not be added to the Principal Amount Outstanding of such Class E

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Subordinated Note and shall cease to be payable thereon with effect from such Payment Date. The addition of interest on any Notes to the Principal Amount Outstanding thereof in lieu of the cash payment of such interest as aforesaid shall be deemed to satisfy the payment of such interest and shall not constitute an Event of Default under these Conditions and shall (i) upon the payment of any principal on such Notes be repaid prior to the repayment of the same and (ii) unless prohibited under the Security and Intercreditor Deed, any External Permitted Debt Document or the Intercreditor Arrangements, be repaid as soon as the Issuer (or the Investment Manager on its behalf) deems such repayment prudent provided that the Issuer (or the Investment Manager on its behalf) shall have delivered a written certificate to the Trustee stating that there will be sufficient funds available to pay all amounts due on the following Payment Date and (iii) shall not be entitled to the benefit of any make whole premium.

(f) Publication

The Calculation Agent will cause each Rate of Interest for each Class of Interest Bearing Notes and Interest Payment Amount determined by it, together with the relevant Payment Date, to be notified to the Issuer, the Transfer Agent, the Registrar, the Trustee, the Investment Manager and, for so long as the Notes are listed on the Irish Stock Exchange, the Irish Stock Exchange as soon as practicable after such determination but in any event not later than the first day of the relevant Interest Period or the Class E Interest Period (as the case may be). Notice thereof shall also promptly be given to the Noteholders by the Issuer. The Calculation Agent will be entitled to recalculate any Interest Payment Amount (on the basis of the foregoing provisions) without notice (save that notice shall be given to the Trustee) in the event of an extension or shortening of the relevant Interest Period or the Class E Interest Period (as the case may be).

(g) Notifications etc.

All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition 6 (Interest) by the Calculation Agent will (in the absence of manifest error) be binding on the Issuer, the Paying Agents, the Transfer Agent, the Investment Manager, the Registrar, the Trustee and the Noteholders (subject as aforesaid). No liability to any such person will attach to the Calculation Agent or (in the circumstances referred to in Condition 6(h) (Determination or Calculation by Trustee) below) the Trustee in connection with the exercise or non exercise by it of its powers, duties and discretions for such purposes.

(h) Determination or Calculation by Trustee

If the Calculation Agent fails at any time to determine a Rate of Interest in respect of a Class of Interest Bearing Notes or to calculate an Interest Payment Amount as aforesaid, the Trustee (or a person appointed by it for the purpose) will determine or procure the determination of such Rate of Interest as it in its discretion considers appropriate in the circumstances (having such regard as it thinks fit to Condition 6(c) (Rate of Interest) above) or (as the case may be) calculate such Interest Payment Amount in accordance with Condition 6(d) (Determination of Rates of Interest and Calculation of Interest Payment Amounts) above.

(i) Reference Banks and Calculation Agent

The Issuer will procure that, so long as any of the Notes remain Outstanding, there will at all times be four reference banks (the "Reference Banks") and a Calculation Agent. The initial Reference Banks shall be the principal London office of the four reference banks selected and notified by the Investment Manager to the Issuer and the Calculation Agent prior to the Initial Closing Date. The initial Calculation Agent shall be Deutsche Bank AG, London Branch which shall be entitled to delegate any of its functions to any of its departments. Subject as hereafter provided, the Issuer reserves the right at any time (with the prior written consent of the Trustee and in accordance with the terms of the Agency Agreement) to terminate the appointment of the Calculation Agent or of any Reference Bank. Notice of any such termination will be given to Noteholders in accordance with Condition 16 (Notices). If any person shall be unable or unwilling to continue to act as a Reference Bank or as the Calculation Agent (as the case may be), or if the appointment of any Reference Bank or the

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Calculation Agent shall be terminated, the Issuer will, with the prior written approval of the Trustee, appoint a successor reference bank or successor calculation agent (as the case may be) to act as such in its place, provided that neither the resignation nor removal of the Calculation Agent shall take effect until a successor approved by the Trustee has been appointed.

7. Redemption

(a) Final Redemption

Save to the extent previously redeemed or purchased and cancelled, the Notes of each Class will be redeemed on the Maturity Date of such Notes. In the case of a redemption pursuant to this Condition 7(a), Class A Notes, Class B Notes, Class C Notes, Class D Notes and Intervening Notes will be redeemed at their Principal Amount Outstanding and Class E Subordinated Notes will be redeemed at the amount equal to their pro rata share (based on the Net Asset Value allocable to each Class E Subordinated Note) of the amounts of Class E Restricted Disbursements available after payments of all other liabilities of the Issuer (including all taxes, Administrative Expenses, Investment Management Fees and Trustee Fees and Expenses) as at the applicable Redemption Date provided that (v) no Class B Notes may be redeemed under this Condition 7(a) nor may other payments of principal be made on any Class B Notes until all payments in respect of any Class A Notes that are due and payable have been paid, all Class A Notes with an Equivalent or Shorter Maturity have been redeemed, all outstanding External Senior Permitted Debt that is due and payable and any Outstanding Issuer Swap Termination Payments have been paid and all applicable taxes, Administrative Expenses and Trustee Fees and Expenses and Management Fees that are due and payable have been satisfied, in each case, in full, (w) no Class C Notes may be redeemed under this Condition 7(a) nor may other payments of principal be made on any Class C Notes until (i) all payments in respect of any Class A Notes that are due and payable have been paid, all Class A Notes with an Equivalent or Shorter Maturity have been redeemed, all outstanding External Senior Permitted Debt that is due and payable and any Outstanding Issuer Swap Termination Payments have been paid, and (ii) all payments in respect of any Class B Notes that are due and payable have been paid, all Class B Notes with an Equivalent or Shorter Maturity have been redeemed, all outstanding External Second Senior Permitted Debt that is due and payable has been paid and all applicable taxes, Administrative Expenses and Trustee Fees and Expenses and Management Fees that are due and payable have been satisfied, in each case, in full, (x) no Class D Notes may be redeemed under this Condition 7(a) nor may other payments of principal be made on any Class D Notes until (i) all payments in respect of any Class A Notes that are due and payable have been paid, all Class A Notes with an Equivalent or Shorter Maturity have been redeemed and all outstanding External Senior Permitted Debt that is due and payable and any Outstanding Issuer Swap Termination Payments have been paid, (ii) all payments in respect of any Class B Notes that are due and payable have been paid, all Class B Notes with an Equivalent or Shorter Maturity have been redeemed and all outstanding External Second Senior Permitted Debt that is due and payable has been paid, (iii) all payments in respect of any Class C Notes that are due and payable have been paid, all Class C Notes with an Equivalent or Shorter Maturity have been redeemed, all outstanding External Third Senior Permitted Debt that is due and payable has been paid and all applicable taxes, Administrative Expenses and Trustee Fees and Expenses and Management Fees that are due and payable have been satisfied, in each case, in full (y) no Intervening Notes may be redeemed under this Condition 7(a) nor may other payments of principal be made on any Intervening Notes until (i) all payments in respect of any Class A Notes that are due and payable have been paid, all Class A Notes with an Equivalent or Shorter Maturity have been redeemed and all outstanding External Senior Permitted Debt that is due and payable and any Outstanding Issuer Swap Termination Payments have been paid, (ii) all payments in respect of any Class B Notes that are due and payable have been paid, all Class B Notes with an Equivalent or Shorter Maturity have been redeemed and all outstanding External Second Senior Permitted Debt that is due and payable has been paid, (iii) all payments in respect of any Class C Notes that are due and payable have been paid, all Class C Notes with an Equivalent or Shorter Maturity have been redeemed, all outstanding External Third Senior Permitted Debt that is due and payable has been paid, (iv) all payments in respect of Class D Notes that are due and payable have been paid, all Class D Notes with an Equivalent or Shorter Maturity have been redeemed, all outstanding External Fourth Senior Permitted Debt

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that is due and payable has been paid and all applicable taxes, Administrative Expenses and Trustee Fees and Expenses and Management Fees that are due and payable have been satisfied, in each case, in full and (z) no Class E Subordinated Notes may be redeemed under this Condition 7(a) nor may other payments of Class E Restricted Disbursements be made on Class E Subordinated Notes by way of final redemption until (i) all payments in respect of any Class A Notes that are due and payable have been paid, all Class A Notes with an Equivalent or Shorter Maturity have been redeemed and all outstanding External Senior Permitted Debt that is due and payable and any Outstanding Issuer Swap Termination Payments have been paid, (ii) all payments in respect of any Class B Notes that are due and payable have been paid, all Class B Notes with an Equivalent or Shorter Maturity have been redeemed and all outstanding External Second Senior Permitted Debt that is due and payable has been paid, (iii) all payments in respect of any Class C Notes that are due and payable have been paid, all Class C Notes with an Equivalent or Shorter Maturity have been redeemed and all outstanding External Third Senior Permitted Debt that is due and payable has been paid (iv) all payments in respect of any Class D Notes that are due and payable have been paid, all Class D Notes with an Equivalent or Shorter Maturity have been redeemed and all outstanding External Fourth Senior Permitted Debt that is due and payable has been paid and (v) all payments in respect of any Intervening Notes that are due and payable have been paid, all Intervening Notes with an Equivalent or Shorter Maturity have been redeemed, all other outstanding Intervening Indebtedness that is due and payable has been paid, all applicable taxes, Administrative Expenses and Trustee Fees and Expenses and Management Fees that are due and payable have been satisfied and all other liabilities of the Issuer that are then due and payable have been discharged, in each case, in full in accordance with the priority appearing in the Intercreditor Priority of Payments. Any redemption of less than all of the outstanding Notes of a Class having the same Maturity Date (other than the Class E Subordinated Notes) shall be redeemed pro rata in accordance with the Principal Amounts Outstanding thereof.

(b) Optional Redemption

(i) Optional Redemption Requirements

Subject to the conditions set out in Condition 7(b)(iii) (Formalities for Optional Redemption and Associated Mandatory Redemption) applicable to Class E Subordinated Notes and the Intercreditor Arrangements, Class E Subordinated Notes shall be redeemed by the Issuer, in whole or in part (but in an Authorised Denomination), on any Payment Date at the applicable Redemption Prices or such other price outlined in Condition 20 (Specific Conditions) after the end of the relevant Non-Call Period (each date of such redemption, an "Optional Redemption Date") provided that Class E Subordinated Notes may only be optionally redeemed (x) in accordance with the Liquidity Limitation Procedure and Split Redemption Procedure and (y) if, after giving effect to any such redemption, (i) no Transaction Default shall have occurred and be continuing and (ii) the Issuer is in compliance with the Over-Collateralisation Tests and the over-collateralisation test(s) (if any) applicable to any Intervening Indebtedness that will, in each case, remain outstanding after giving effect to such redemption and any mandatory redemption of Interest Bearing Notes as described in Condition 7(f)(iii) (Mandatory Redemption of Interest Bearing Notes other than Class E Subordinated Notes on Optional Redemption of Class E Subordinated Note) (the foregoing requirements in (i) and (ii), the "Premature Redemption Requirements").

(ii) Election to Redeem

The election by any Class E Subordinated Noteholders to effect an Optional Redemption shall be evidenced by the delivery of the applicable redemption notices in the form annexed to the Trust Deed to the Trustee not less than 90 days prior to the Payment Date on which the applicable Optional Redemption will, if permitted, occur.

(iii) Formalities for Optional Redemption and Associated Mandatory Redemption

(A) Notice Period In the event of: (x) receipt of any redemption notice delivered pursuant to Condition 7(b)(ii) (Election to Redeem), (y) a determination

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requiring mandatory redemption of all Outstanding Class E Subordinated Notes pursuant to Condition 7(f)(ii) (Mandatory Class E Subordinated Note Redemptions for Liquidity Reasons) or (z) a determination to effect a mandatory redemption pursuant to Condition 7(f)(iii) (Mandatory Redemption of Interest Bearing Notes other than Class E Subordinated Notes on Optional Redemption of Class E Subordinated Notes), the Issuer shall procure the dispatch of an irrevocable written notice of redemption in relation to the same not less than 35 days prior to the applicable Premature Redemption Date, to each relevant Class E Subordinated Noteholder and, as the case may be, each Holder of Notes of the applicable Associated Mandatory Redemption Class.

(B) Form of Notice Each notice dispatched pursuant to Condition 7(b)(iii)(A) shall state: (a) the applicable Redemption Date, (b) the estimated Redemption Price, (c) if less than all of the Notes in a given Class which are then Outstanding are to be redeemed, the Principal Amounts Outstanding of the Notes of such Class to be redeemed (being, in the case of an Optional Redemption, that element of each Class E Subordinated Noteholder's holding which will be subject to Optional Redemption), (d) with respect to the relevant Class to be redeemed, (x) the portion of the amount to be redeemed that consists of any blocked interest and (y) the aggregate amount of principal of such Class of Notes previously redeemed (or scheduled to be redeemed) prior to the proposed Redemption Date, (e) that on the Redemption Date, the Redemption Price will become due and payable upon each such Outstanding Note (or portion thereof) to be redeemed and that (subject to Condition 6(b) (Post Redemption Default Interest)), as applicable, interest thereon will cease to accrue on and after such Redemption Date and (f) the place or places where such Notes are to be surrendered for payment of the relevant Redemption Price.

(C) Service of Notice on Rating Agencies A notice of each Premature Redemption Date shall be given by, or on behalf of, the Issuer, at the expense of the Issuer, to the Rating Agencies not less than ten days prior to such Premature Redemption Date. Unless otherwise specified herein, all notices served under this Condition 7(b) (Optional Redemption) shall be given in accordance with Condition 16 (Notices).

(iv) Class E Subordinated Note Optional Redemption Liquidity Limitation Procedure

Class E Subordinated Notes may, subject to Condition 7(b)(i) (Optional Redemption Requirements), Condition 7(b)(ii) (Election to Redeem) and Condition 7(b)(iii) (Formalities for Optional Redemption and Associated Mandatory Redemption) and the Split Redemption Procedure, be optionally redeemed on any Optional Redemption Date provided the following requirements are satisfied. The Principal Amount Outstanding of Class E Subordinated Notes redeemed on any Optional Redemption Date shall not exceed 20 per cent. of the Principal Amount Outstanding of Class E Subordinated Notes as at such Optional Redemption Date, unless the Investment Manager, in its discretion, permits an amount in excess thereof to be redeemed on such Optional Redemption Date. In the event that the amount of Class E Subordinated Notes in respect of which Class E Subordinated Noteholders have requested redemption in accordance with Condition 7(b)(ii) (Election to Redeem) on such Optional Redemption Date (the amount so requested, the "Elected Class E Global Redemption Amount") is in excess of 20 per cent. of the Principal Amount Outstanding of Class E Subordinated Notes as at such Optional Redemption Date and the Investment Manager elects not to increase the percentage of the Principal Amount Outstanding of Class E Subordinated Notes that may be redeemed on such Optional Redemption Date, then the total principal amount of Class E Subordinated Notes that may be redeemed on such Optional Redemption Date shall be reduced from the Elected Class E Global Redemption Amount to an amount equal to 20 per cent. of the Principal Amount Outstanding of Class E Subordinated Notes on such Optional Redemption Date (or such other percentage in excess thereof that the Investment Manager may determine hereunder) (the amount so permitted, including, as the case may be, the Elected Class E Global Redemption Amount, the "Permitted Redemption Amount") which reduction

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shall be borne pro rata by the Holders of Class E Subordinated Notes who had elected to redeem on such Optional Redemption Date (each, an "Electing Class E Subordinated Noteholder") according to the amount of Class E Subordinated Notes they had nominated for redemption on such Optional Redemption Date (the "Elected Amount"), subject to Condition 20 (Specific Conditions) relating to the Class E-3 Subordinated Notes.

(v) Class E Subordinated Note Split Redemption Procedure

Without prejudice to the Liquidity Limitation Procedure, in the event that the Investment Manager, in its discretion, so determines, the aggregate Principal Amount Outstanding of Class E Subordinated Notes which any Electing Class E Subordinated Noteholder may redeem pursuant to Condition 7(b)(iii) (Formalities for Optional Redemption and Associated Mandatory Redemption) and 7(b)(iv) (Class E Subordinated Note Optional Redemption Liquidity Limitation Procedure) may be reduced (subject as follows, in addition to any reduction arising from the application of the Liquidity Limitation Procedure) by an amount equal to up to 15 per cent. of the Permitted Redemption Amount, which reduction shall be borne among Electing Class E Subordinated Noteholders by reference to their respective Elected Amounts and rounded, in the case of relevant Class E Subordinated Notes, to the applicable Authorised Denomination (the global amount of such rounded amounts being, the "Reduction Amount"). In the event of a reduction in the Principal Amount Outstanding of Class E Subordinated Notes redeemed pursuant to Condition 7(b)(iii) (Formalities for Optional Redemption and Associated Mandatory Redemption) and 7(b)(iv) (Class E Subordinated Note Optional Redemption Liquidity Limitation Procedure) by reason of the operation of this Condition 7(b)(v), each Electing Class E Subordinated Noteholder's Delayed Redemption Notes will, subject to compliance with the Premature Redemption Requirements, be subject to automatic mandatory redemption at the Redemption Price on any Payment Date falling after the Optional Redemption Date on which the relevant Reduction Amount arose up to and including the Payment Date falling 18 months after such Payment Date (any such date, a "Delayed Payment Date") provided that (x) the Issuer shall give, or procure the giving of (at the expense of the Issuer), the relevant Electing Class E Subordinated Noteholders at least 30 Business Days' notice of the Delayed Payment Date, (y) there shall be no more than one Delayed Payment Date with respect to any one Reduction Amount and (z) subject to compliance with the Premature Redemption Requirements as aforesaid, all relevant Delayed Redemption Notes shall, if not redeemed prior to such date, be redeemed on the Delayed Payment Date falling 18 months after the Payment Date on which the relevant Reduction Amount arose at the Redemption Price as of such date.

(vi) Non Fungibility of Delayed Redemption Notes with Class E Subordinated Notes

Without prejudice to the fact that the same will still comprise one and the same Class with Class E Subordinated Notes, Delayed Redemption Notes shall, from the Split Date applicable thereto, cease to be fungible with, and shall form a separate series from, any Class E Subordinated Notes and any Delayed Redemption Notes with a differing Split Date and shall have no right to payment other than that arising by reason of their mandatory redemption pursuant to the Split Redemption Procedure but will rank pari passu with, and have rights (including voting rights) equal to, Class E Subordinated Notes in all other respects provided that they may not be optionally redeemed pursuant to Condition 7(b)(i) (Optional Redemption Requirements).

(c) Redemption at the Option of the Issuer

(i) Rights of Redemption. Subject to the provisions of the Security and Intercreditor Deed (including the subordination provisions therein), the Issuer may acting on the instructions of the Investment Manager redeem any Rated Notes or any other Intervening Notes, in whole or in part, at the relevant Redemption Price on any Payment Date after the end of the relevant Non-Call Period mentioned in Condition 20 (Specific Conditions); provided that the Class B Notes may not be redeemed pursuant

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to this Condition 7(c), nor may other payments of principal be made on the Class B Notes, until all outstanding Senior Indebtedness that is due and payable on such Redemption Date under any Senior Permitted Debt Document has been paid in full, the Class C Notes may not be redeemed pursuant to this Condition 7(c), nor may other payments of principal be made on the Class C Notes, until all outstanding Senior Indebtedness and Second Senior Indebtedness that is due and payable on such Redemption Date under any Senior Permitted Debt Document or Second Senior Permitted Debt Document, as the case may be, has been paid in full, the Class D Notes may not be redeemed pursuant to this Condition 7(c), nor may other payments of principal be made on the Class D Notes, until all outstanding Senior Indebtedness, Second Senior Indebtedness and Third Senior Indebtedness that is due and payable on such Redemption Date under any Senior Permitted Debt Document, Second Senior Permitted Debt Document or Third Senior Permitted Debt Document, as the case may be, has been paid in full and the Intervening Notes may not be redeemed pursuant to this Condition 7(c), nor may other payments of principal be made on the Intervening Notes, until all outstanding Senior Indebtedness, Second Senior Indebtedness, Third Senior Indebtedness and Fourth Senior Indebtedness that is due and payable on such Redemption Date under any Senior Permitted Debt Document, Second Senior Permitted Debt Document, Third Senior Permitted Debt Document or Fourth Senior Permitted Debt Document, as the case may be, has been paid in full. For the avoidance of doubt, the forgoing provisions shall not prevent the redemption of the Intervening Notes on any Redemption Date if on that Redemption Date any Senior Indebtedness, Second Senior Indebtedness, Third Senior Indebtedness and Fourth Senior Indebtedness remains Outstanding provided that none of such Indebtedness is due and payable on such Redemption Date.

Each Rated Note and/or Intervening Note called for redemption must be surrendered to the Registrar and/or Transfer Agent in order to receive the relevant Redemption Price. The Class A Notes may not be optionally redeemed at any time if, after giving effect to such redemption, (i) a Default or an Event of Default shall have occurred and be continuing under the Relevant Trust Instrument with respect to the Class A Notes or a default or an event of default shall have occurred and be continuing under any Senior Permitted Debt Document or (ii) the Issuer would not be in compliance with the Senior Over-Collateralisation Test. The Class B Notes may not be optionally redeemed at any time if, after giving effect to such redemption, (i) a Default or an Event of Default shall have occurred and be continuing under the Relevant Trust Instrument with respect to the Class A Notes or Class B Notes or a default or an event of default shall have occurred and be continuing under any Senior Permitted Debt Document or any Second Senior Permitted Debt Document or (ii) the Issuer would not be in compliance with the Senior Over-Collateralisation Test or Second Senior Over-Collateralisation Test. The Class C Notes may not be optionally redeemed at any time if, after giving effect to such redemption, (i) a Default or an Event of Default shall have occurred and be continuing under the Relevant Trust Instrument with respect to the Class A Notes, Class B Notes or Class C Notes or a default or an event of default shall have occurred and be continuing under any Senior Permitted Debt Document, Second Senior Permitted Debt Document or Third Senior Permitted Debt Document or (ii) the Issuer would not be in compliance with the Senior Over-Collateralisation Test, Second Senior Over-Collateralisation Test or Third Senior Over-Collateralisation Test. The Class D Notes may not be optionally redeemed at any time if, after giving effect to such redemption, (i) a Default or an Event of Default shall have occurred and be continuing under the Relevant Trust Instrument with respect to the Class A Notes, Class B Notes, Class C Notes or Class D Notes or a default or an event of default shall have occurred and be continuing under any Senior Permitted Debt Document, Second Senior Permitted Debt Document, Third Senior Permitted Debt Document or Fourth Senior Permitted Debt Document or (ii) the Issuer would not be in compliance with the Senior Over-Collateralisation Test, Second Senior Over-Collateralisation Test, Third Senior Over-Collateralisation Test or Fourth Senior Over-Collateralisation Test. The Intervening Notes may not be optionally redeemed at any time if, after giving effect to such redemption, (i) a Default or an Event of Default shall have occurred and be continuing under the Relevant Trust Instrument with respect to the Class A Notes, Class B Notes,

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Class C Notes, Class D Notes or Intervening Notes or a default or an event of default shall have occurred and be continuing under any Senior Permitted Debt Document, Second Senior Permitted Debt Document, Third Senior Permitted Debt Document, Fourth Senior Permitted Debt Document or Intervening Permitted Debt Document or (ii) the Issuer would not be in compliance with the Senior Over-Collateralisation Test, Second Senior Over-Collateralisation Test, Third Senior Over-Collateralisation Test, Fourth Senior Over-Collateralisation Test or the over-collateralisation test applicable to such Intervening Indebtedness.

(ii) Applicability of Condition. Redemptions of any Rated Notes and/or other Intervening Notes at the election of the Issuer, as permitted by any provision of the relevant Trust Instrument, shall be made in accordance with such provision and this Condition 7(c).

(iii) Election to Redeem; Notice to Trustee. The election of the Issuer to redeem any Rated Notes and/or other Intervening Notes outstanding at any time pursuant to Condition 7(c)(i) (Rights of Redemption) shall be evidenced by a certificate signed by a Director of the Issuer delivered to the Trustee not less than five Business Days prior to the date when sending of notice under Condition 7(c)(v) (Notice of Redemption) is required; provided, however, that in case of any redemption at the election of the Issuer of less than all the Outstanding Notes, the Issuer shall, at least five Business Days prior to the sending of notice under Condition 7(c)(v) hereof, notify the Trustee of such Redemption Date and of the Principal Amount Outstanding of such Outstanding Rated Notes and/or other Outstanding Intervening Notes to be redeemed.

(iv) Outstanding Rated Notes to be Redeemed Pro Rata. If less than all of the Outstanding Rated Notes of a Class or the other Outstanding Intervening Notes of a Class are to be redeemed, the Outstanding Rated Notes or other Outstanding Intervening Notes of such Class, as applicable, shall be redeemed pro rata in accordance with the Principal Amount Outstanding thereof. For all purposes of the Trust Deed, unless the context otherwise requires, all provisions relating to the redemption of Outstanding Rated Notes and/or other Outstanding Intervening Notes shall relate, in the case of any Outstanding Rated Notes and/or other Outstanding Intervening Notes redeemed or to be redeemed only in part, to the portion of the principal amount of such Outstanding Rated Notes and/or other Outstanding Intervening Notes, as applicable, which has been or is to be redeemed. The Issuer may revoke such redemption by notifying the Trustee at least four Business Days prior to the mailing of such notice.

(v) Notice of Redemption. An irrevocable written notice of redemption shall be given by the Issuer by first class mail, postage prepaid, mailed not less than 30 days, nor more than 60 days prior to the Redemption Date, to each Noteholder and the Trustee or by any other method acceptable to such Noteholder and published in accordance with Condition 16 (Notices).

All notices of redemption shall state:

(a) the Redemption Date;

(b) the Redemption Price;

(c) if less than all the Outstanding Rated Notes or other Outstanding Intervening Notes of a Class are to be redeemed, the Principal Amount Outstanding of the Outstanding Rated Notes or other Outstanding Intervening Notes of such Class, as applicable, to be redeemed;

(d) with respect to the Class of Rated Notes or other Class of Intervening Notes, as applicable to be redeemed, the portion of the principal amount to be redeemed, in the case of the Class B Notes, Class C Notes, Class D Notes or Intervening Notes, as applicable, that consists of any Blocked Junior Note Interest and the Principal Amount Outstanding of such Class redeemed prior to the proposed Redemption Date; and

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(e) that on the Redemption Date, the Redemption Price will become due and payable upon each such Outstanding Rated Note or other Outstanding Intervening Note (or portion thereof) to be redeemed and that interest thereon will cease to accrue on and after said Redemption Date.

A notice of the Redemption Date of Outstanding Rated Notes or other Outstanding Intervening Notes shall be given by or on behalf of the Issuer, at the expense of the Issuer, to Moody’s and S&P not less than ten days prior to such Redemption Date.

(vi) Rated Notes or Other Intervening Notes Payable on Redemption Date

(a) Notice of redemption having been given as aforesaid, the Outstanding Rated Notes or other Outstanding Intervening Notes, as applicable, (or portions thereof) to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Issuer shall default in the payment of the Redemption Price) such Outstanding Rated Notes or other Outstanding Intervening Notes, as applicable, (or portions thereof) shall cease to bear interest. Upon surrender of any Outstanding Rated Note or other Outstanding Intervening Note for redemption in accordance with said notice, such Outstanding Rated Note or other Outstanding Intervening Note, as applicable, (or portions thereof) shall be paid by the Issuer at the Redemption Price.

(b) If any Outstanding Rated Note or other Outstanding Intervening Note, as applicable, called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) and accrued interest due on the Redemption Date shall, until paid, bear interest from the Redemption Date at the applicable interest rate.

(vii) Outstanding Principal Amount; Notes Redeemed in Part. The Registrar shall maintain a record of the actual Principal Amount Outstanding with respect to each Note on any date of determination, which, absent manifest error, shall constitute prima facie evidence of the Principal Amount Outstanding of such Note from time to time. On any date upon which a Rated Note or other Intervening Note, as applicable, is redeemed only in part, the Registrar shall, upon direction in writing from the Issuer or the Investment Manager, reduce the Principal Amount Outstanding of such Note being redeemed in part on such date.

(d) Redemption for Tax Reasons

The Notes shall be redeemed, in whole, but not in part, by the Issuer on any Payment Date falling after the occurrence of a Note Tax Event, acting on the direction of the Controlling Class Agent in accordance with the Intercreditor Arrangements and the Class E Subordinated Noteholders acting by Extraordinary Resolution, subject to the Issuer giving not less than 30 nor more than 60 days' notice to the Noteholders (which notice shall be irrevocable), at the relevant Redemption Prices, if, immediately before giving such notice, the Issuer satisfies the Trustee or the Trustee is otherwise satisfied, that (a) a substitution or relocation of the Issuer or other reasonable measures would fail to remedy such Note Tax Event and (b) the Premature Redemption Requirements are met provided, however, that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to make a withholding or deduction if a payment in respect of the Notes were then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Trustee (A) a certificate signed by any Director of the Issuer stating that the Premature Redemption Requirements will be met and setting out details of the same and (B) an opinion in form and substance satisfactory to the Trustee of independent legal advisers of recognised standing to the effect that the Issuer has or will become obliged to make the withholding or deduction referred to in the definition of "Note Tax Event". The Trustee shall be entitled to accept such certificate and opinion as sufficient evidence of the satisfaction of the circumstances set out in this Condition 7(d) in which event they shall be conclusive and binding on the Noteholders. Upon the expiry of any such notice as is referred to in this

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Condition 7(d), the Issuer shall be bound to redeem the Notes in accordance with this Condition 7(d).

(e) Issuer Offer to Purchase

The Issuer, at the direction of the Investment Manager, may make a written offer to all Noteholders of a specified Class to purchase all or a portion of such Class of Notes at or below the par amount of such Class. The terms of such offer shall be set forth in a notice to all Noteholders of such Class ("Notice of Offer to Purchase"). The Notice of Offer to Purchase shall contain identical terms for each Noteholder of such Class. Any Notes which are purchased by the Issuer shall be subsequently cancelled.

(f) Additional Mandatory Redemption

(i) Mandatory Redemption upon Over-Collateralisation Failure

If, on breach of the Over-Collateralisation Tests as contemplated by Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates), the Issuer (or the Investment Manager on its behalf) employs one of the Under Collateralisation Cure Methodologies such that payments to Noteholders are made pursuant to Condition 5(c)(i) (Over-Collateralisation Failure and Collateralisation Shortfall Dates), the Notes shall be redeemed on a pro rata and mandatory basis in accordance with the Prepayment Priorities, subject to the payment of any Redemption Breakage Costs, to the Prepayment Priority Level required under Condition 5(c)(i) (Over-Collateralisation Failure and Collateralisation Shortfall Dates) on the Prepayment Date.

(ii) Mandatory Class E Subordinated Note Redemptions for Liquidity Reasons

In the event that the Principal Amount Outstanding of Class E Subordinated Notes falls below €25,000,000 and the Investment Manager, in its discretion, so determines, 100 per cent. of the Principal Amount Outstanding of Class E Subordinated Notes shall be redeemed by the Issuer on the next following Payment Date (such date, the "Class E Mandatory Redemption Date") provided that the Premature Redemption Requirements are met and that the Investment Manager's determination hereunder shall have been made so as to allow the Issuer to procure that the Class E Subordinated Noteholders are given not less than 35 days' prior notice thereof in accordance with Condition 7(b)(iii)(A) (Formalities for Optional Redemption and Associated Mandatory Redemption).

(iii) Mandatory Redemption of Interest Bearing Notes other than Class E Subordinated Notes on Optional Redemption of Class E Subordinated Notes

In the event that any Class E Subordinated Notes are subject to an Optional Redemption pursuant to Condition 7(b) (Optional Redemption) or a Mandatory Redemption pursuant to Condition 7(f)(ii) (Mandatory Class E Subordinated Note Redemptions for Liquidity Reasons), the Issuer (or the Investment Manager on the Issuer's behalf) may at its discretion elect to mandatorily redeem any Class A Notes, Class B Notes, Class C Notes, Class D Notes or Intervening Notes (if any) which are then Outstanding (each such Class, an "Associated Mandatory Redemption Class") in whole or in part at the applicable Redemption Price therefor on the Optional Redemption Date, Delayed Payment Date or, as the case may be, Class E Mandatory Redemption Date on which such Class E Subordinated Notes are redeemed (each such date, a "Premature Redemption Date") provided that: (a) if less than 100 per cent. of the Principal Amount Outstanding of any Associated Mandatory Redemption Class is to be so redeemed, it shall be redeemed pro rata according to the respective holdings of the Holders of such Interest Bearing Notes comprising such Associated Mandatory Redemption Class as at the relevant Premature Redemption Date and (b) no such mandatory redemption may occur if, immediately after giving effect to the same, the Premature Redemption Requirements are not, or would fail to be, fulfilled.

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(g) Redemption

All Notes in respect of which any notice of redemption is given shall be redeemed on the Redemption Date at their applicable Redemption Prices, in an Authorised Denomination only, and to the extent specified in such notice and in accordance with the requirements of this Condition 7 (Redemption). Each Note falling to be redeemed must be surrendered to the Registrar in order to receive the Redemption Price therefor.

If the Class E Subordinated Notes are to be redeemed in whole, such redemption shall be subject to the establishment of a reasonable reserve as determined by the Issuer and the Trustee in consultation with the Investment Manager and the Collateral Administrator for all administrative and other fees and expenses payable in such circumstances prior to the payment of principal on the Notes of each Class. The Trustee shall have no liability to any person in connection with the establishment of any reserve made pursuant to this Condition 7(g).

(h) No other Redemption

The Issuer shall not be entitled to redeem any Notes otherwise than as provided in this Condition 7.

(i) Notice of Redemption

Subject, in addition, to compliance with the specific notification procedures contained in such Conditions, the Issuer will procure that notice of any redemption in accordance with Condition 7(b) (Optional Redemption), Condition 7(d) (Redemption for Tax Reasons) or Condition 7(f) (Additional Mandatory Redemption) is given to the Noteholders in accordance with Condition 16 (Notices) and promptly in writing to the Rating Agencies.

(j) Cancellation

All Notes so redeemed in full in accordance with this Condition 7 by the Issuer shall be cancelled and may not be reissued or resold.

8. Payments

(a) Method of Payment

Payments of principal upon final redemption in respect of each Note will be made against presentation and surrender (or, in the case of part payment only, endorsement) of any certificate representing such Notes at the Specified Office of the Principal Paying Agent or any Transfer Agent by Euro cheque drawn on a bank in London. Payments of interest on each Note and, prior to redemption in full thereof, principal in respect of each Note, will be made against presentation and surrender (or, in the case of part payment, only endorsement) of any certificate representing such Notes at the Specified Office of the Principal Paying Agent or any Transfer Agent by Euro cheque drawn on a bank in London. Upon application of the Holder to the Specified Office of the Principal Paying Agent or any Transfer Agent not less than ten Business Days before the due date for any payment in respect of a Note, the payment may be made (in the case of any payment of principal against presentation and surrender (or, in the case of part payment only of such payment, endorsement) of the relevant Note as provided above) by wire transfer in immediately available funds on the due date to a Euro account maintained by the payee with a Euro clearing bank in London.

(b) Payments Subject to Fiscal Laws

All payments are subject in all cases to any applicable fiscal or other laws, regulations and directives, but without prejudice to the provisions of Condition 9 (Taxation). No commission shall be charged to the Noteholders.

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(c) Payments on Presentation Dates

A Holder shall be entitled to present a Note for payment only on a Presentation Date and shall not, except as provided in Condition 6 (Interest), be entitled to any further interest or other payment if a Presentation Date is after the due date.

If a Note is presented for payment at a time when, as a result of differences in time zones, it is not practicable to transfer the relevant amount to an account as referred to above for value on the relevant Presentation Date, the Issuer shall not be obliged to do so but shall be obliged to transfer the relevant amount to the account for value on the first practicable date after the Presentation Date.

(d) Principal Paying Agent and Transfer Agent

The names of the initial Principal Paying Agent and Transfer Agent and their initial Specified Offices are listed below. The Issuer reserves the right at any time with the prior written approval of the Trustee to vary or terminate the appointment of the Principal Paying Agent and any Transfer Agent and appoint additional or other Agents, provided that it will maintain Transfer Agent having Specified Offices in at least two major European cities approved by the Trustee (including Dublin for so long as the Notes of any Class are listed on the Irish Stock Exchange and the rules of that exchange so require) and shall at all times procure that it shall maintain a Custodian, an Investment Manager and a Collateral Administrator. Notice of any change in any Agent or their respective Specified Offices or in the Investment Manager or the Collateral Administrator will promptly be given to the Noteholders by the Issuer in accordance with Condition 16 (Notices).

9. Taxation

All payments of principal and interest in respect of the Notes shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Ireland, or any political sub division or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law. For the avoidance of doubt, the Issuer shall not be required to gross up any payments made to Noteholders of any Class and shall withhold or deduct from any such payments any amounts on account of tax where so required by law or any relevant taxing authority. Any such withholding or deduction shall not constitute an Event of Default under paragraph (a) of Condition 10 (Events of Default) or under the Security Documents.

Subject as provided below, if the Issuer satisfies the Trustee that it has or will on the occasion of the next payment due in respect of the Notes of any Class become obliged by the laws of Ireland to withhold or account for tax so that it would be unable to make payment of the full amount that would otherwise be due but for the imposition of such tax, the Issuer (with the prior written consent of the Trustee and save as provided below) shall, in order to avoid such obligation, use all reasonable endeavours to arrange for the substitution of a company incorporated in another jurisdiction approved by the Trustee as the principal obligor under the Notes of such Class, or to change its tax residence to another jurisdiction approved by the Trustee, subject to receipt by the Trustee of Rating Agency Confirmation in relation to such change.

Notwithstanding the above, if any taxes referred to in this Condition 9 arise:

(a) due to any present or former connection of any Noteholder (or between a fiduciary, settlor, beneficiary, member or shareholder of such Noteholder if such Noteholder is an estate, a trust, a partnership or a corporation) with Ireland (including, without limitation, such Noteholder (or such fiduciary, settlor, beneficiary, member or shareholder) being or having been a citizen or resident thereof or being or having been engaged in a trade or business or present therein or having or having had a permanent establishment therein) otherwise than by reason only of the holding of any Note or receiving principal or interest in respect thereof; or

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(b) by reason of the failure by the relevant Noteholder to comply with any applicable procedures required to establish non residence or other similar claim for exemption from such tax or to provide information concerning nationality, residence or connection with Ireland; or

(c) in respect of a payment to an individual which is required to be made pursuant to the European Council Directive 2003/48/EC on taxation of savings; or

(d) as a result of presentation for payment by or on behalf of a Noteholder who would have been able to avoid such withholding or deduction by presenting the relevant Note to another Transfer Agent in a Member State of the European Union; or

(e) any combination of the immediately preceding paragraphs (a) to (d) inclusive,

the requirement to substitute the Issuer as a principal obligor and/or change its residence for taxation purposes shall not apply.

10. Events of Default

(a) The occurrence of any of the following events shall constitute an "Event of Default":

(i) Non-Payment of Interest on the Notes

A default for five consecutive Business Days in the payment in full, when due and payable, of any interest on (I) any Class A Notes, (II) any Class B Notes, (III) any Class C Notes, (IV) any Class D Notes or (V) any Intervening Notes which are both Rated Notes and Interest Bearing Notes save that (a) the failure by the Issuer to pay an amount of interest or commitment fees to the extent that it has been required to deduct or withhold such amount pursuant to Condition 9 (Taxation) or (b) the addition of any Blocked Junior Note Interest to the Principal Amount Outstanding of any Class of Junior Interest – Bearing Notes on which the same is owed in accordance with Condition 3(h)(v) (Blockage Periods) shall be deemed to satisfy the payment of such interest for all purposes hereof and shall in the case of each of (a) and (b) not constitute an Event of Default;

(ii) Non-Payment of Interest under the External Permitted Debt Documents

A default in the payment when due of any instalment of interest on any External Permitted Debt or breakage costs or commitment fees when due and payable for a period of five consecutive Business Days, in the case of such payments with respect to any External Senior Permitted Debt, External Second Senior Permitted Debt, External Third Senior Permitted Debt or External Fourth Senior Permitted Debt or, subject to Condition 10(a)(i) (Non Payment of Interest on the Notes), 30 consecutive days, in the case of such payments with respect to any other indebtedness;

(iii) Non-Payment of Principal on the Notes

A default in the payment of principal of any Class A Note, Class B Note, Class C Note, Class D Note or Intervening Note which is a Rated Note at its Maturity Date or any date set for redemption;

(iv) Non-Payment of Principal under the External Permitted Debt Documents

A default in the payment of the principal (or premium, if any) on any External Permitted Debt when due and payable;

(v) Non-Payment of Debt

An aggregate principal amount outstanding of €10,000,000 or more of any Debt of the Issuer or any subsidiary shall become due and payable (whether at maturity, by acceleration or otherwise) and not be paid or satisfied in full in the manner provided for under the terms of such Debt, or the holder of such Debt in excess of €10,000,000 shall be entitled to require the Issuer or any such subsidiary to repay, repurchase, redeem,

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defease or otherwise retire for value such indebtedness, in whole or in part, prior to its scheduled Payment Date (in each case, after giving effect to any applicable grace periods);

(vi) Default under any Hedging Transactions or Issuer Investments

A default in the payment when due (after any applicable grace period) of any amount in excess of €10,000,000 required to be paid by the Issuer under any Hedging Transaction or under any obligation to make funds available under any Issuer Investment (other than any such amount that is being contested in good faith and for which adequate reserves have been set aside) and such default shall remain unremedied for ten Business Days after the occurrence of such default;

(vii) Breach of Materiality Qualifications, Representations and Warranties

The failure of the Issuer to comply with any provisions of any Transaction Document or these Conditions that have a materiality qualification, or to comply in all material respects with (or with a representation or warranty in) any Transaction Document or these Conditions or the failure of any representation or warranty made by the Issuer in any certificate or other writing delivered pursuant to the Trust Deed, the Security Documents or these Conditions to be correct in all material respects when the same shall have been made and continuance of either of such failures above (if remediable) for a period of 30 consecutive days (subject to applicable grace periods) after the Issuer knew of such failure or notice has been given to the Issuer by the Trustee of the same (excluding, in each case, defaults and breaches which are otherwise specifically described as an "Event of Default" under other paragraphs of this Condition 10);

(viii) Under Collateralisation Event

The occurrence of an Under Collateralisation Event;

(ix) Insolvency

(A) The Issuer becomes insolvent, is adjudicated bankrupt (or applies for an order of bankruptcy or moratorium of payments) or is unable to pay its debts as they fall due or

(B) an administrator or liquidator of the Issuer for the whole or part of the undertaking, assets and revenues of the Issuer is appointed (or application for any such appointment is made) or

(C) the Issuer takes any action for a readjustment or deferment of any of its obligations or makes a general assignment or an arrangement or composition with or for the benefit of its creditors or

(D) the Issuer ceases or threatens to cease to carry on all or any substantial part of its business (other than as a result of a substitution in accordance with Condition 14(d) (Substitution));

(x) Winding up etc.

An order is made or an effective resolution is passed for the winding up, liquidation or dissolution of the Issuer;

(xi) Final judgments or orders etc.

The entry against the Issuer by one or more courts of competent jurisdiction of one or more final judgments or orders (not subject to appeal) in an aggregate amount in excess of €10,000,000 (after giving effect to insurance, if any, available with respect thereto) which judgment(s) or order(s) remain unstayed or undischarged for a period of 30 days after the date on which the right to appeal has expired;

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(xii) External Debt Acceleration

The acceleration of any External Permitted Debt;

(xiii) Investment Company Act

The Issuer would be required to be registered as an investment company under the Investment Company Act (unless such requirement (if remediable) is eliminated within 45 days).

Proof that, as regards any specified Note, the Issuer has made a default in paying any amount due in respect of such Note shall (unless the contrary be proved) be sufficient evidence that the Issuer has made similar defaults as regards all other Notes in respect of which a corresponding payment is then due and, for the purposes of the foregoing, a payment shall be a "corresponding" payment notwithstanding that it is due in respect of a Note of a different denomination from that in respect of the above specified Note.

(b) Acceleration and Curing Default

(i) Subject to the right of the Controlling Class to direct enforcement of the Transaction Documents against the Collateral pursuant to the Intercreditor Arrangements and the subordination restrictions therein, if an Event of Default occurs and is continuing, the Trustee, subject to it being indemnified and/or secured to its satisfaction, (x) may by written notice to the Issuer and the Noteholders, or (y) upon the written request of the Holders of a Class of Notes pursuant to an Extraordinary Resolution shall, declare all unpaid principal of any Class of Notes, or, in the case of an Extraordinary Resolution, such Class, together with all accrued and unpaid premium (if any) and interest thereon to and including the date of payment thereof, to be due and payable and, upon any such declaration, the same shall become and be immediately due and payable. Notwithstanding the foregoing, if any Event of Default specified in paragraphs (x) or (xi) of the definition of "Event of Default" above occurs with respect to the Issuer, then the principal of all the Notes, together with all premium and interest accrued thereon, shall become, and shall be deemed to have become, immediately due and payable without any such declaration or notice or any other action, and references in the Security and Intercreditor Deed to "declaration of acceleration" shall include such automatic acceleration.

(ii) Pursuant to an Ordinary Resolution of the Senior Outstanding Class and written notice to the Trustee, such Class may rescind an acceleration of any Class of Notes if: (i) all existing Events of Default for all Classes of Notes, other than the non payment of the principal of and interest on any Notes (including Blocked Junior Note Interest) which have become due solely by such declaration of acceleration, have been cured or waived, (ii) to the extent the payment of such interest is lawful, interest on overdue instalments of interest and overdue premium (if any) and principal, which has become due otherwise than by such declaration of acceleration, has been paid or deposited with the Trustee (other than Blocked Junior Note Interest), (iii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (iv) the Issuer has caused to be paid or deposited with the Trustee a sum sufficient to pay all amounts paid or advanced by the Trustee under the Trust Deed and the properly incurred compensation, expenses, and disbursements and advances of the Trustee, its agents and counsel. In the case of a Class of Notes being accelerated pursuant to an Under Collateralisation Event, such acceleration may be rescinded pursuant to an Ordinary Resolution of such Class and written notice to the Trustee.

(iii) If at any time: (i) any Debt under an External Permitted Debt Document has been declared to be due and payable prior to its stated maturity as a result of the occurrence of an event of default under such External Permitted Debt Document, (ii) the Trustee, subject to it being indemnified and/or secured to its satisfaction, or the relevant Noteholders (as applicable) have declared the relevant Notes to be due and payable solely as the result of the occurrence of an event of default under such External Permitted Debt Document, (iii) the Holders of External Permitted Debt under such

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External Permitted Debt Document rescind and annul the acceleration of maturity of such External Permitted Debt under such External Permitted Debt Document and its consequences and (iv) any past amounts payable on the relevant Notes are paid in full (other than any Blocked Junior Note Interest) then, notwithstanding the provision of Condition 11(b) (Enforcement), the acceleration of maturity of the relevant Class of Notes and its consequences shall be rescinded and annulled without any action on the part of the Issuer, the Trustee or the relevant Class of Noteholders.

(iv) If an Event of Default occurs and is continuing, the Trustee shall, subject to it being indemnified and/or secured to its satisfaction, upon the written direction of the Controlling Class pursuant to an Intercreditor Approval, and may, in its discretion, pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or premium (if applicable), interest, commitment fees (if any) or breakage costs (if any) on the Notes or to enforce the performance of any provision (including any obligation of payment or performance) of the Notes or the Trust Deed; provided, however, that such remedy is not inconsistent with any of the subordination restrictions set forth therein or with the provisions of the Intercreditor Arrangements.

(v) The Senior Outstanding Class acting by Extraordinary Resolution may by written notice to the Trustee, waive an existing Default or Event of Default and its consequences (including rescinding acceleration), except a Default or Event of Default in the payment of principal of or premium (if applicable), interest, commitment fees (if any) or breakage costs (if any) on any Note (other than principal or interest which has become due as a result of acceleration), which must be waived by each affected Noteholder. A cross default to another Class of Notes may be waived by the Senior Outstanding Class acting by Extraordinary Resolution. Any waiver of any Default or Event of Default in respect of any covenant or obligation of the Issuer (including any obligation of payment) to or for the benefit of the Trustee shall also require the express prior written consent of the Trustee. When a Default or Event of Default is waived, it is deemed cured and ceases to exist (but only with respect to the facts or circumstances that gave rise to such Default or Event of Default).

(vi) Upon any notice being given to the Issuer in accordance with Condition 10(b)(i) (Acceleration and Curing Default), all of the Notes shall immediately become due and repayable at their applicable Redemption Prices.

(c) Notification and Confirmation of No Default

The Issuer shall promptly notify the Trustee, the Investment Manager and the Rating Agencies upon becoming aware of the occurrence of an Event of Default. The Trust Deed contains provision for the Issuer to provide written confirmation to the Trustee and the Rating Agencies on an annual basis or on request that no Event of Default has occurred and that no condition, event or act has occurred which, with the lapse of time and/or the issue, making or giving of any notice, certification, declaration and/or request and/or the taking of any similar action and/or the fulfilment of any similar condition could constitute an Event of Default and that no other matter which is required (pursuant thereto) to be brought to the Trustee's attention has occurred.

11. Enforcement

(a) Security becoming Enforceable

The security constituted under the Security Documents over the Collateral shall become enforceable upon an acceleration of the maturity of any of the Notes pursuant to Condition 10(b) (Acceleration and Curing Default), and upon the service of a Liquidation Direction pursuant to the Intercreditor Arrangements in the event that the same has not precipitated an acceleration under Condition 10(b) (Acceleration and Curing Default).

(b) Enforcement

At any time after the security under the Security Documents becomes enforceable, the Security Trustee shall, at the direction of the Controlling Class, in accordance with the

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Intercreditor Arrangements, subject to it being indemnified and/or secured to its satisfaction, and without further notice, institute such proceedings against the Issuer as instructed by the Controlling Class to enforce the terms of the Security Documents and the Notes and pursuant and subject to the terms of the Security Documents realise and/or otherwise liquidate the Collateral and/or take such action as may be permitted under applicable laws against any obligor in respect of the Collateral and/or take any other action to enforce the security over the Collateral, in each case without any liability as to the consequence of any action and without having regard (save to the extent provided in Condition 14(e) (Entitlement of the Trustee and Conflicts of Interest)) to the effect of such action on individual Noteholders or any other Secured Creditors.

(c) Only Security Trustee to Act

Only the Security Trustee may pursue the remedies available under the Security Documents to enforce the rights of the Noteholders or of any of the other Secured Creditors under the Security Documents in accordance with the Intercreditor Arrangements and the Notes and no Noteholder or other Secured Creditor may proceed directly against the Issuer or any of its assets unless the Security Trustee, having become bound to proceed in accordance with the terms of the Security and Intercreditor Deed, fails or neglects to do so within a reasonable period of time following the instance of the obligation to proceed having arisen and such failure or neglect is continuing. After realisation of the security which has become enforceable and distribution of the net proceeds in accordance with the Intercreditor Priority of Payments, no Noteholder or other Secured Creditor may take any further steps against the Issuer to recover any sum still unpaid in respect of the Notes or the Issuer's obligations to such Secured Creditor and all claims against the Issuer to recover any sum still unpaid in respect of the Notes or the Issuer's obligations to such Secured Creditor and all claims against the Issuer in respect of such sums unpaid shall be extinguished. In particular, none of the Trustee, any Noteholder or any other Secured Creditor shall be entitled in respect thereof to petition or take any other step for the winding up of the Issuer except to the extent permitted under the Security and Intercreditor Deed.

(d) Purchase of Collateral by Noteholders

Upon any sale of any part of the Collateral following the occurrence of an Event of Default, whether made under the power of sale under the Security Documents or by virtue of judicial proceedings, any Noteholder (or other Secured Creditor) may (but shall not be obliged to) bid for and purchase the Collateral or any part thereof and, upon compliance with the terms of sale, may hold, retain, possess or dispose of such property in its or their own absolute right without accountability. In addition, any purchaser in any such sale which is a Noteholder (or other Secured Creditor) may deliver Notes held by it in place of payment of the purchase price for such Collateral where the amount payable to such Noteholder (or other Secured Creditor) in respect of such Notes pursuant to the Intercreditor Priority of Payments out of the net proceeds of such sale is equal to or exceeds the purchase monies so payable.

12. Prescription

Claims in respect of principal and interest payable on redemption in full of the relevant Notes will become void unless presentation for payment is made as required by Condition 7 (Redemption) within a period of five years, in the case of interest, and ten years, in the case of principal, from the Relevant Date.

For this purpose, "Relevant Date" means the date on which the payment in respect of the Note first becomes due and payable. However, if the full amount of the monies payable on such date has not been received by the Principal Paying Agent or the Trustee on or prior to such date, the "Relevant Date" means the date on which such monies shall have been so received and notice to that effect shall have been given to the Noteholders in accordance with Condition 16 (Notices).

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13. Replacement of Notes

If any Note is lost, stolen, mutilated, defaced or destroyed it may be replaced at the Specified Office of the Irish Paying Agent, subject in each case to all applicable laws and Irish Stock Exchange requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer may require (provided that the requirement is reasonable in the light of prevailing market practice). Mutilated or defaced Notes must be surrendered before replacements will be issued.

14. Meetings of Noteholders, Modification, Waiver and Substitution

(a) Provisions in Trust Deed

The Trust Deed contains provisions for convening meetings of the Noteholders (and of passing Written Resolutions (as defined in the Trust Deed)) to consider matters affecting the interests of the Noteholders including, without limitation, modifying or waiving certain of the provisions of these Conditions and the substitution of the Issuer in certain circumstances. The provisions in this Condition 14 are descriptive of the detailed provisions of the Trust Deed.

(b) Decisions and Meetings of Noteholders

(i) General

Decisions may be taken by Noteholders by way of Ordinary Resolution or Extraordinary Resolution, in each case, either acting together or, to the extent specified in any applicable Transaction Document, as a Class of Noteholders acting independently. Such Resolutions can be effected either at a duly convened meeting of the applicable Noteholders or by the applicable Noteholders resolving in writing, in each case, in at least the minimum percentages specified in the table "Minimum Percentage Voting Requirements" in Condition 14(b)(iii) (Minimum Voting Rights) below. Meetings of the Noteholders may be convened by the Issuer, the Trustee or by one or more Noteholders holding not less than ten per cent. in Principal Amount Outstanding of the Notes of a particular Class in aggregate, subject to certain conditions including minimum notice periods.

The Trustee may, in its discretion, determine that any proposed Ordinary Resolution or Extraordinary Resolution affects only the Holders of one or more Classes of Notes, in which event the required quorum and minimum percentage voting requirements of such Ordinary Resolution or Extraordinary Resolution may be determined by reference only to the Holders of that Class or Classes of Notes and not the Holders of any other Notes as set forth in the tables below.

(ii) Quorum

The quorum required for any meeting convened to consider an Ordinary Resolution or Extraordinary Resolution, in each case, of all the Noteholders or of a specified Class of Noteholders, or at any adjourned meeting to consider such a Resolution, shall be as set out in the relevant column and row corresponding to the type of Resolution in the table "Quorum Requirements" below.

Quorum Requirements

Type of Resolution Any meeting other than a meeting adjourned for want of quorum

Meeting previously adjourned for want of quorum

Extraordinary Resolution of all Noteholders (or a certain Class or certain Classes only)

Two or more persons holding or representing not less than 50 per cent. of the aggregate Principal Amount Outstanding of each Class of Notes (or the relevant Class or Classes only, if applicable)

Two or more persons holding or representing Notes of each Class of Notes regardless of the aggregate Principal Amount Outstanding of each Class of Notes (or the relevant Class or Classes only, if applicable) so held or represented

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Type of Resolution Any meeting other than a meeting adjourned for want of quorum

Meeting previously adjourned for want of quorum

Ordinary Resolution of all Noteholders (or a certain Class or certain Classes only)

Two or more persons holding or representing not less than ten per cent. of the aggregate Principal Amount Outstanding of each Class of Notes (or the relevant Class or Classes only, if applicable)

Two or more persons holding or representing Notes of each Class of Notes regardless of the aggregate Principal Amount Outstanding of each Class of Notes (or the relevant Class or Classes only, if applicable) so held or represented

The Trust Deed does not contain any provision for higher quorums in any circumstances.

(iii) Minimum Voting Rights

Set out in the table "Minimum Percentage Voting Requirements" below are the minimum percentages required to pass the Resolutions specified in such table which, (A) in the event that such Resolution is being considered at a duly convened meeting of Noteholders, shall be determined by reference to the percentage which the aggregate Principal Amount Outstanding of Notes held or represented by any person or persons entitled to vote any applicable Notes who votes or vote in favour of such Resolution represents of the aggregate Principal Amount Outstanding of all applicable Notes which are represented at such meeting and are entitled to be voted or, (B) in the case of any Written Resolution, shall be determined by reference to the percentage which the aggregate Principal Amount Outstanding of the Notes entitled to be voted in respect of such Resolution which are voted in favour thereof represent of the aggregate Principal Amount Outstanding of all the Notes entitled to vote in respect of such Written Resolution.

Minimum Percentage Voting Requirements

Type of Resolution Minimum percentage

Extraordinary Resolution of all Noteholders (or a certain Class or certain Classes only)

66⅔ per cent. of the aggregate Principal Amount Outstanding of each Class of Notes (or of a certain Class or Classes only) that is (a) actually represented at such meeting and are entitled to be voted or (b) in the case of a Written Resolution, entitled to be voted in respect of such Extraordinary Resolution.

Ordinary Resolution of all Noteholders (or a certain Class or certain Classes only)

Over 50 per cent. of the aggregate Principal Amount Outstanding of each Class of Notes (or of a certain Class or Classes only) that is (a) actually represented at such meeting and are entitled to be voted or (b) in the case of a Written Resolution, entitled to be voted in respect of such Ordinary Resolution.

(iv) Written Resolutions

Any Written Resolution may be contained in one document or in several documents in like form each signed by or on behalf of one or more of the relevant Noteholders and the date of such Written Resolution shall be the date on which the latest such document is signed.

(v) All Resolutions Binding

Any Resolution of the Noteholders duly passed shall be binding on all Noteholders (regardless of Class and regardless of whether or not a Noteholder was present at the meeting at which such Resolution was passed). Matters requiring Controlling Class consent, approval and instruction under these Conditions shall not (unless specified

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otherwise) require approval by means of a Resolution to bind Noteholders of any Class but shall be determined in accordance with the provisions of the Security and Intercreditor Deed.

(vi) Extraordinary Resolution

Any Resolution to sanction any of the following items will be required to be passed by an Extraordinary Resolution (in each case, subject to anything else contemplated in the Trust Deed or the relevant Transaction Document, as applicable):

(A) the exchange or substitution of the Notes of a Class for, or the conversion of the Notes of a Class into, shares, bonds or other obligations or securities of the Issuer or any other entity;

(B) the modification of any provision relating to the timing and/or circumstances of redemption of the Notes of a Class at maturity or otherwise (including the circumstances in which the maturity of such Notes may be accelerated);

(C) the modification of any of the provisions of the Trust Deed which would directly and adversely affect the calculation of the amount of any payment of interest or principal on any Note;

(D) a change in the currency of payments of the Notes of (or within) a Class;

(E) any change in the Intercreditor Priority of Payments, provided that, in the event such change, in the opinion of the Initial Purchaser, in any way adversely affects any amounts payable by the Issuer to the Initial Purchaser under the Arrangement Fee Letter, such change shall require the consent of the Initial Purchaser, or the Prepayment Priorities;

(F) the modification of the provisions concerning the quorum required at any meeting of Noteholders or the minimum percentage required to pass an Extraordinary Resolution or any other provision of these Conditions which requires the written consent of the Holders of a requisite Principal Amount Outstanding of the Notes of any Class;

(G) any modification of any Transaction Document having a material adverse effect on the security over the Collateral constituted by the Security and Intercreditor Deed;

(H) any item requiring approval by Extraordinary Resolution pursuant to these Conditions or any Transaction Document;

(I) any modification of this Condition 14(b)(vi); and

(J) any material modification to the Market Valuation Manual not being of the nature contemplated by Condition 14(c)(xii) (Modification and Waiver).

(vii) Ordinary Resolution

A meeting shall, subject to these Conditions and without prejudice to any powers conferred on other persons by the Trust Deed, have power by Ordinary Resolution to approve any other matter relating to the Notes not referred to in paragraph (vi) (Extraordinary Resolution) above.

(c) Modification and Waiver

The Trust Deed provides that, without the written consent of the Noteholders, the Issuer may amend, modify, supplement and/or waive the relevant provisions of the Trust Deed and/or the Investment Management Agreement and/or any other Transaction Documents (subject to the consent of the other parties thereto and the relevant provisions thereof) (as applicable), subject to the prior written consent of the Trustee, for any of the following purposes:

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(i) to add to the covenants of the Issuer or the Trustee for the benefit of the Noteholders or to surrender any right or power in the Trust Deed or the Investment Management Agreement (as applicable) conferred upon the Issuer;

(ii) to charge, convey, transfer, assign, mortgage or pledge any property to or with the Trustee;

(iii) to correct or amplify the description of any property at any time subject to the security of the Trust Deed, or to better assure, convey and confer unto the Trustee any property subject or required to be subject to the security of the Trust Deed (including, without limitation, any and all actions necessary or desirable as a result of changes in law or regulations) or to subject to the security of the Trust Deed any additional property;

(iv) to evidence and provide for the acceptance of appointment under the Trust Deed by a successor trustee subject to and in accordance with the terms of the Trust Deed and to add to or change any of the provisions of the Trust Deed as shall be necessary to facilitate the administration of the trusts under the Trust Deed by more than one Trustee, pursuant to the requirements of the relevant provisions of the Trust Deed;

(v) to modify the restrictions on and procedures for resales and other transfers of Notes to reflect any changes in applicable law or regulation (or the interpretation thereof) or to enable the Issuer to rely upon any exemption from registration under the Securities Act or the Investment Company Act or applicable Irish banking or securities laws or to remove restrictions on resale and transfer to the extent not required thereunder or to modify the restrictions on the Notes related to ERISA or otherwise to make any such modifications to the restrictions on and procedures for resales and other transfers of Notes as shall be necessary or advisable;

(vi) to make such changes as shall be necessary or advisable in order for any Note to be (or to remain) listed on the Irish Stock Exchange or any other exchange;

(vii) save as contemplated pursuant to Condition 14(d) (Substitution) below, to take any action advisable to prevent the Issuer from becoming subject to withholding or other taxes, fees or assessments;

(viii) to take any action advisable to prevent the Issuer from being treated as engaged in a United States trade or business or otherwise be subject to United States federal, state or local income tax on a net income basis;

(ix) to enter into any additional agreements not expressly prohibited by the Security Documents or the Investment Management Agreement (as applicable);

(x) to evidence any waiver by any Rating Agency as to any requirement (or condition in the Trust Deed, the Investment Management Agreement or the Collateral Administration Agreement (as applicable)) of such Rating Agency;

(xi) to modify any calculation described within the Market Valuation Manual to correspond with changes in the guidelines, methodology or standards established by any applicable Rating Agencies, subject to receipt of Rating Agency Confirmation;

(xii) to make any other modification of any of the provisions of the Trust Deed, the Investment Management Agreement or any other Transaction Document which, in the opinion of the Trustee, is of a formal, minor or technical nature or is made to correct a manifest error; and

(xiii) without prejudice to Condition 14(b)(i) (General) above, to make any other modification to (save as otherwise provided in the Trust Deed, the Investment Management Agreement or the relevant Transaction Document), and/or give any waiver or authorisation of any breach or proposed breach of, any of the provisions of the Trust Deed or any other Transaction Document which is, in the opinion of the Trustee, not materially prejudicial to the interests of the Noteholders of any Class without regard, in such circumstances, to the interests of the Holders of other Permitted

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Indebtedness (on whose behalf such waiver or authorisation may be given by the relevant Intercreditor Agent pursuant to the Security and Intercreditor Deed).

Any such modification, authorisation or waiver shall be binding on all Noteholders and shall be notified to the Rating Agencies and to the Noteholders as soon as practicable in accordance with Condition 16 (Notices), provided that the Trustee shall be entitled to obtain such advice in connection therewith and give such consent as it sees fit. Any such fees and/or charges incurred by the Trustee in connection with such advice shall be for the account of the Issuer. The Trust Deed provides that no Trust Instruments shall, or shall purport to, amend the Base Conditions other than (i) so as to specify the Specific Conditions applicable to any Class of Notes (ii) to make Applicable Currency Amendments with respect to any Notes issued in a currency other than Euro or (iii) to the extent that such amendments would not have a material impact on the rights of, or be prejudicial to, the Holders of any Outstanding Notes of any Class unless (x) such amendment is approved by an Extraordinary Resolution of the Holders of each Class of Notes then Outstanding and (y) the same is in accordance with the Intercreditor Arrangements.

(d) Substitution

The Trust Deed contains provisions permitting the Trustee to agree, subject to such amendment of the Trust Deed and such other conditions as the Trustee may require (without the consent of the Noteholders of any Class), to the substitution of any other company in place of the Issuer, or of any previously substituted company, as principal debtor under the Trust Deed and the Notes of each Class, if required for taxation purposes. In the case of such a substitution the Trustee may agree, without the consent of the Noteholders, but subject to receipt by the Trustee of Rating Agency Confirmation (subject to receipt of such information and/or opinions as the applicable Rating Agency may require), to a change of the law governing the Notes and/or the Trust Deed. Any substitution agreed by the Trustee pursuant to this Condition 14(d) shall be binding on the Noteholders, and shall be notified to the Noteholders as soon as practicable in accordance with Condition 16 (Notices).

The Trustee may, subject to the satisfaction of certain conditions, including receipt by the Trustee of Rating Agency Confirmation, agree to a change in the place of residence of the Issuer for taxation purposes without the consent of the Noteholders of any Class, provided the Issuer does all such things as the Trustee may require in order that such change in the place of residence of the Issuer for taxation purposes is fully effective and complies with such other requirements which are in the interests of the Noteholders, as the Trustee may reasonably direct.

The Issuer will procure that, so long as the Notes are listed on the Irish Stock Exchange, any material amendments or modifications to the Conditions, Trust Deed or such other conditions made pursuant to this Condition 14 shall be notified to the Irish Stock Exchange.

(e) Entitlement of the Trustee and Conflicts of Interest

In connection with the exercise of its trusts, powers, duties and discretions (including but not limited to those referred to in this Condition 14) the Trustee shall have regard to the interests of each Class of Noteholders as a Class and shall not have regard to the consequences of such exercise for individual Noteholders of such Class and the Trustee shall not be entitled to require, nor shall any Noteholder be entitled to claim, from the Issuer, the Trustee or any other person, any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders except to the extent already provided for in Condition 9 (Taxation).

If the Holders of one or more Classes of Notes have an interest in the outcome of a conflict, the Trustee shall give priority to the interests of the Class of Notes which ranks most senior in priority over the interests of the more junior ranking Class or Classes of Notes. The Trust Deed provides further that the Trustee will act upon the directions of the Holders of the Senior Outstanding Class in such circumstances, and shall be exempted from liability to the Senior Outstanding Class for actions taken upon their direction, and the Trustee shall not be obliged

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to consider the interests of, and is exempted from any liability to, the Holders of any other Class of Notes in such circumstances.

15. Indemnification of the Trustee and Security Trustee

The Trust Deed and the Security and Intercreditor Deed contains provisions for the indemnification of the Trustee and the Security Trustee and for their relief from responsibility in certain circumstances, including provisions relieving them from instituting proceedings to enforce repayment or to enforce the security constituted by or pursuant to the Trust Deed and the Security and Intercreditor Deed, unless indemnified and/or secured to its satisfaction. The Trustee is entitled to enter into business transactions with the Issuer and any entity related to the Issuer without accounting for any profit. The Trustee is exempted from any liability in respect of any loss or theft of the Collateral, from any obligation to insure, or to monitor the provisions of any insurance arrangements in respect of, the Collateral (for the avoidance of doubt, under the Security Documents the Trustee is under no such obligation) and from any claim arising from the fact that the Collateral is held by the Custodian or is otherwise held in safe custody by a bank or other custodian. The Trustee shall not be responsible for the performance by the Custodian of any of its duties under the Agency Agreement, for the performance by the Investment Manager of any of its duties under the Investment Management Agreement, for the performance by the Collateral Administrator of its duties under the Collateral Administration Agreement or for the performance by any other person appointed by the Issuer in relation to the Notes. The Trustee shall not have any responsibility for the administration, management or operation of the Collateral including the request by the Investment Manager to release any of the Collateral from time to time.

The Trust Deed contains provisions for the retirement of the Trustee and the removal of the Trustee at the direction of the Controlling Class Agent, but no such retirement or removal shall become effective until a successor trustee is appointed.

16. Notices

All notices regarding the Notes will be valid if published (i) in one leading London daily newspaper or, if this is not possible, in one other English language daily newspaper approved by the Trustee with general circulation in Europe and (ii) if and for so long as the Notes are listed on the Irish Stock Exchange and the Irish Stock Exchange so requires, in one daily newspaper published in Ireland approved by the Trustee. It is expected that such publication will be made in (i) the Financial Times in London or another daily newspaper in London approved by the Trustee and (ii) the Irish Times.

The Issuer shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any other stock exchange on which the Notes are for the time being listed.

Any notice published in a newspaper as aforesaid shall be deemed to have been given on the date of such publication.

The Trustee shall be at liberty to sanction some other method of giving notice to the Noteholders or a category of them if, in its opinion, such other method is reasonable having regard to market practice then prevailing and to the rules of the stock exchange on which the Notes are then listed and provided that notice of such other method is given to the Noteholders in such manner as the Trustee shall require.

17. Further Issues

(a) The Issuer may from time to time without the consent of the Noteholders, create and issue further securities (x) having the same terms and conditions as the Initial Issuance Class A Notes and/or the Initial Issuance Class B Notes and/or the Initial Issuance Class C Notes and/or the Initial Issuance Class D Notes and/or the First Issued Intervening Notes and/or the Initial Issuance Class E Subordinated Notes in all respects (or in all respects except for the first payment of interest thereon) or (y) after the redemption of any of the same having the same terms and conditions as any other Class of Notes which is Outstanding (each, a

136

"Relevant Outstanding Class"); which shall in each case be consolidated and form a single series with the applicable Outstanding Notes, provided the following conditions are met:

(i) the terms of the Notes issued are identical to the terms of the relevant Initial Issuance Notes or First Issued Intervening Notes then Outstanding (if any) (or, as the case may be, the Relevant Outstanding Class) of the Class of which such Notes are to form a part (save for the first payment of interest on them and (subject to Condition 17(d)), in the case of any Class E Subordinated Notes, the Non-Call Period applicable thereto);

(ii) the Issuer and the Trustee have received Rating Agency Confirmation that the additional issue will not cause the reduction or withdrawal of the then current ratings of any Permitted Indebtedness;

(iii) any such further issue of Notes does not result in a breach by the Issuer of the laws and regulations (including, without limitation, the securities laws and regulations) of Ireland;

(iv) no Event of Default or Default in respect of any Notes is continuing (unless after giving effect to the incurrence of such additional tranches of Notes and the application of the proceeds thereof, no such Event of Default or Default is continuing) or will occur as a result of the issuance of such new tranche of Notes;

(v) immediately after giving effect to the issuance of further securities, further Permitted Indebtedness and any other issuances, redemptions, purchases or payments to be made on the applicable Closing Date, the Over-Collateralisation Tests with respect to all outstanding Permitted Indebtedness (including such further Permitted Indebtedness) shall be satisfied (without giving effect to any grace period set forth therein);

(vi) any such issuance is in accordance with the Intercreditor Arrangements, including, without limitation, that the rights of Secured Creditors are not prejudiced thereby;

(vii) without prejudice to (vi) above, the issuance proceeds of any notes issued hereunder and any property acquired therewith shall (subject to any deductions associated with the issuance of such notes) be added to, and comprise a non segregated element of, the Collateral;

(viii) [RESERVED];

(ix) the Issuer has agreed with the potential Holders of additional Class E Subordinated Notes to be issued pursuant to this Condition 17 (the "New Holders"), that such New Holders shall (taking into account the costs suffered by such New Holders on the issuance of such additional Class E Subordinated Notes) bear, pro rata, that proportion of the issuance costs suffered by the Holders of Class E Subordinated Notes existing at the time of issue of such additional Class E Subordinated Notes, to the extent that the seven year amortisation period applicable to such issuance costs has not expired as at the Closing Date of the additional Class E Subordinated Notes to be acquired by the New Holders; and

(x) establishment by the Investment Manager (on behalf of the Issuer) of the Net Asset Value allocable between the Holders of Class E Subordinated Notes existing at the time of issuance of additional Class E Subordinated Notes and New Holders on the Determination Date prior to the Payment Date on which such additional issuance is to occur.

(b) In addition to the foregoing, the Issuer may also from time to time without the consent of the Noteholders of any Class but subject to the Intercreditor Arrangements, create and issue further notes provided (x) the requirements of (ii) to (x) above and certain additional conditions contained in the Trust Deed are satisfied and (y) the Conditions of such notes incorporate the Base Conditions as amended in accordance with the provisions of the same and the Trust Deed.

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(c) Any further notes forming a single series with Notes constituted by the Trust Deed or any deed supplemental to it shall be constituted by a deed supplemental to the Trust Deed and any notes issued pursuant to Condition 17(b) shall be constituted by a Trust Instrument pursuant to the Trust Deed.

(d) Any Class E Subordinated Notes issued pursuant to Condition 17(a) which have a Non-Call Period which differs from that of any Class E Subordinated Notes already in issue, shall only be consolidated and form a single series with such Outstanding Class E Subordinated Notes once the Non-Call Period applicable to such new issue and the Non-Call Period applicable to such Outstanding Class E Subordinated Notes have both expired.

Noteholders should be aware that additional notes that are treated for non tax purposes as a single series with the original Notes may be treated as a separate series for U.S. federal income tax purposes. In such case, the new notes may be considered to have been issued with "original issue discount" (as defined in the Offering Circular headed "Tax Considerations – United States Federal Income Taxation"), which may affect the market value of the original Notes since such additional notes may not be distinguishable from the original Notes.

18. Third Party Rights

No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act 1999.

19. Governing Law

(a) Governing Law

The Trust Deed and the Notes of each Class are governed by and shall be construed in accordance with English law.

(b) Jurisdiction

The courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with the Notes, and accordingly any legal action or proceedings arising out of or in connection with the Notes ("Proceedings") may be brought in such courts. The Issuer has in the Trust Deed irrevocably submitted to the jurisdiction of such courts and waives any objection to Proceedings in any such courts whether on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum. This submission is made for the benefit of each of the Noteholders and the Trustee and shall not limit the right of any of them to take Proceedings in any other court of competent jurisdiction nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not).

(c) Agent for Service of Process

The Issuer appoints Law Debenture Corporate Services Limited, of Fifth Floor, 100 Wood Street, London EC2V 7EX as its agent in England to receive service of process in any Proceedings in England based on any of the Notes. If for any reason the Issuer does not have such an agent in England, it will promptly appoint a substitute process agent and notify the Trustee and the Noteholders of such appointment. Nothing herein shall affect the right to service of process in any other manner permitted by law.

20. Specific Conditions

Specific Conditions set out below as "Other terms" may include, but shall not be limited to, the issue of Notes in currencies other than Euro and differing redemption procedures, bases for the calculation of interest and Business Days and other market conventions applicable to such Notes.

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€70,000,000 Class A-1 Senior Secured Floating Rate Notes due 2014

Specified Notes: Class A-1 Senior Secured Floating Rate Notes

Maturity Date: 10 September 2014

Closing Date: 2 August 2007

Rating: AAA from S&P, Aaa from Moody's

Fixed Rate Notes: No

Floating Rate Notes: Yes

Relevant Margin: 0.30 per cent.

Other terms: (i) Non-Call Period from and including the Initial Closing Date to, but excluding, the Payment Date falling in September 2010.

(ii) Notwithstanding the terms of Condition 6(c)(i) (Determination of Floating Rate of Interest), in the case of the first Interest Period, the Floating Rate of Interest (determined by the Calculation Agent two Business Days immediately preceding the Initial Closing Date) will be the aggregate of the Relevant Margin and the linear interpolation of (i) the available offered rate for four month Euro deposits in the Euro-zone Interbank market and (ii) the available offered rate for five month Euro deposits in the Euro-zone Interbank market.

€8,750,000 Class B-1 Second Senior Secured Floating Rate Notes due 2014

Specified Notes: Class B-1 Second Senior Secured Floating Rate Notes



Rating: AA from S&P, Aa2 from Moody's




Other terms: Non-Call Period from and including the Initial Closing Date to, but excluding, the Payment Date falling in September 2010.

Notwithstanding the terms of Condition 6(c)(i) (Determination of Floating Rate of Interest), in the case of the first Interest Period, the Floating Rate of Interest (determined by the Calculation Agent two Business Days immediately preceding the Initial Closing Date) will be the aggregate of

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the Relevant Margin and the linear interpolation of (i) the available offered rate for four month Euro deposits in the Euro-zone Interbank market and (ii) the available offered rate for five month Euro deposits in the Euro-zone Interbank market.

€8,750,000 Class C-1 Third Senior Secured Floating Rate Notes due 2014

Specified Notes: Class C-1 Third Senior Secured Floating Rate Notes



Rating: A from S&P, A2 from Moody's





Notwithstanding the terms of Condition 6(c)(i) (Determination of Floating Rate of Interest), in the case of the first Interest Period, the Floating Rate of Interest (determined by the Calculation Agent two Business Days immediately preceding the Initial Closing Date) will be the aggregate of the Relevant Margin and the linear interpolation of (i) the available offered rate for four month Euro deposits in the Euro-zone Interbank market and (ii) the available offered rate for five month Euro deposits in the Euro-zone Interbank market.

€4,500,000 Class D-1 Fourth Senior Secured Floating Rate Notes due 2014

Specified Notes: Class D-1 Fourth Senior Secured Floating Rate Notes



Rating: BBB from S&P, Baa2 from Moody's




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Notwithstanding the terms of Condition 6(c)(i) (Determination of Floating Rate of Interest), in the case of the first Interest Period, the Floating Rate of Interest (determined by the Calculation Agent two Business Days immediately preceding the Initial Closing Date) will be the aggregate of the Relevant Margin and the linear interpolation of (i) the available offered rate for four month Euro deposits in the Euro-zone Interbank market and (ii) the available offered rate for five month Euro deposits in the Euro-zone Interbank market.

€30,000,000 Class I-1 Intervening Notes due 2014

Specified Notes: Class I-1 Intervening Notes


Closing Date: 10 November 2008

Rating: Not rated

Fixed Rate Notes: Yes

Fixed Rate of Interest: 20.50 per cent. per annum. The holders of the Class I-1 Intervening Notes hereby authorise and direct the Issuer and the Principal Paying Agent on its behalf to pay an amount equal to 0.50 per cent. per annum of the Interest Payment Amount payable in respect of the Class I-1 Intervening Notes to the Investment Manager on each Payment Date as an additional management fee (the "Class I-1 Intervening Management Fee") in consideration of the Investment Manager on behalf of the Issuer managing the proceeds of issuance of the Class I-1 Intervening Notes and the assets acquired therewith in accordance with the Investment Management Agreement.

Floating Rate Notes: No

Other terms: (i) Non-Call Period from, and including, the Closing Date to, but excluding, the Payment Date falling in December 2009.

(ii) For the avoidance of doubt, the Redemption Price for each Intervening Note is 100 per cent. of the Principal Amount Outstanding of such Note, together with accrued and unpaid interest thereon to the date of redemption (including any accrued and unpaid deferred interest and the applicable Blocked Junior Note Interest).

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(iii) "Minimum Denomination" shall mean in the case of Regulation S Class I-1 Intervening Notes, €250,000.

(iv) For the avoidance of doubt, the Class I-1 Intervening Notes shall be designated as Intervening Indebtedness.

€30,500,000 Class E-1 Subordinated Notes due 2086

Specified Notes: Class E-1 Subordinated Notes









In the event that the Class E-2 Subordinated Notes are redeemed on a Payment Date falling in September 2008, December 2008, March 2009 or June 2009, such Notes shall be redeemed at a price equivalent to 97 per cent. of the applicable Redemption Price.

In the event that the Class E-2 Subordinated Notes are redeemed on a Payment Date falling in September 2009, December 2009, March 2010 or June 2010, such Notes shall be redeemed at a price equivalent to 98.50 per cent. of the applicable Redemption Price.





Other terms: Non-Call Period from and including the Initial Closing Date to, but excluding, the Payment Date falling in September 2010, subject to the provisions in the following paragraph.

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In the event that Class E Subordinated Notes are to be redeemed on an Optional Redemption Date and, as a result, the Principal Amount Outstanding of Class E-3 Subordinated Notes would be equal to or exceed 20 per cent. of the Principal Amount Outstanding of Class E Subordinated Notes following such date, then, unless the Issuer receives written notification to the contrary from the Holders of the Class E-3 Subordinated Notes, such Holders shall automatically be considered to be the Electing Class E Subordinated Noteholders for the purposes of the Liquidity Limitation Procedure, and the Elected Amount for each such Holder of Class E-3 Subordinated Notes shall be the amount necessary to ensure that the Principal Amount Outstanding of Class E-3 Subordinated Notes remains below 20 per cent. of the Principal Amount Outstanding of Class E Subordinated Notes following such Optional Redemption Date.




Closing Date: 10 March 2008

Rating: Not rated

Payment Dates: 10 December, 10 March, 10 June and 10 September in each year, commencing on 10 June 2008 (subject to adjustment for non Business Days in accordance with the Conditions)

Other terms: Non-Call Period from, and including, the Closing Date to, but excluding, the Payment Date falling in September 2010.

For the avoidance of doubt, the Class E-4 Subordinated Notes shall be designated as Subordinated Indebtedness.




Closing Date: 10 March 2008

Rating: Not rated

Payment Dates: 10 December, 10 March, 10 June and 10 September in each year, commencing on 10 June 2008 (subject to adjustment for non Business Days in accordance with the Conditions)

143

Other terms: Non-Call Period from, and including, the Closing Date to, but excluding, the Payment Date falling in September 2010.

For the avoidance of doubt, the Class E-5 Subordinated Notes shall be designated as Subordinated Indebtedness.

In the event that Class E Subordinated Notes are to be redeemed on an Optional Redemption Date and, as a result, the Principal Amount Outstanding of Class E-3 Subordinated Notes and Class E-5 Subordinated Notes would, in aggregate, be equal to or exceed 20 per cent. of the Principal Amount Outstanding of Class E Subordinated Notes following such date, then, unless the Issuer receives written notification to the contrary from the Holders of the Class E-5 Subordinated Notes, such Holders shall automatically be considered to be the Electing Class E Subordinated Noteholders for the purposes of the Liquidity Limitation Procedure, and the Elected Amount for each such Holder of Class E-5 Subordinated Notes shall be (i) the amount necessary to ensure that the Principal Amount Outstanding of Class E-3 Subordinated Notes and Class E-5 Subordinated Notes, in aggregate, remains below 20 per cent. of the Principal Amount Outstanding of Class E Subordinated Notes following such Optional Redemption Date, multiplied by (ii) the fraction equal to (A) the Principal Amount Outstanding of Class E-5 Subordinated Notes, divided by (B) the Principal Amount Outstanding, in aggregate, of Class E-3 Subordinated Notes and Class E-5

Subordinated Notes, in each case as immediately prior to such Optional Redemption Date.




Closing Date: 10 September 2009

Rating: Not rated

Payment Dates: 10 December, 10 March, 10 June and 10 September in each year, commencing on 10 December 2009 (subject to adjustment for non Business Days in accordance with the Conditions).

Other terms: (i) Non-Call Period from, and including, the Closing Date to, but excluding, the Payment Date falling in September 2011.

144

(ii) For the avoidance of doubt, the Class E-7 Subordinated Notes shall be designated as Subordinated Indebtedness.

(iii) Notwithstanding any provision of the Conditions to the contrary: the Issuer will retain the net proceeds of issuance of the September 2009 Issuance Class E Subordinated Notes in the Custody Cash Account until the earlier of (i) the close of business on the Business Day next following the Closing Date (the period from and including the Closing Date to such time the "Onward Sale Period" and (ii) the time at which the Initial Purchaser certifies to the Issuer in writing (including by email) that is has completed the onward sales of the September 2009 Issuance Class E Subordinated Notes. At any time during the Onward Sale Period, the Initial Purchaser may provide written certification (which for the avoidance of doubt may be delivered by email) to the Issuer that it has failed to achieve an onward sale of the September 2009 Issuance Class E Subordinated Notes or any portion of them (an "Onward Sale Failure Notice"). Upon receipt of an Onward Sale Failure Notice, the Issuer shall promptly (subject to clearing system and other operational requirements and restrictions) repurchase from the Initial Purchaser the principal amount of September 2009 Issuance Class E Subordinated Notes specified in the Onward Sale Failure Notice, out of amounts standing to the credit of the Custody Cash Account, at a price of 100 per cent. of the principal amount thereof (without any accrued interest), and shall deliver such Notes to the Registrar for immediate cancellation. If an Onward Sale Failure Notice is received by the Issuer, the September 2009 Issuance Class E Subordinated Notes subject to such re-purchase and cancellation shall be treated for all purposes (including without limitation, the determination of the Net Asset Value, the Management Fee and the Incentive Fee) as if they had not been issued and the proceeds thereof had not been received by the Issuer. For the avoidance of doubt, in the event that an Onward Sale Failure Notice is issued, (i) any costs incurred by the Issuer in repurchasing and cancelling all or any portion of the September 2009 Issuance Class E Subordinated Notes shall be borne by the Initial Purchaser, (ii) no

145

interest for any period from the Closing Date shall be payable to holders of the September 2009 Issuance Class E Subordinated Notes that are subject to such repurchase and cancellation, and (iii) neither the Issuer nor the Account Bank shall be liable to the Initial Purchaser for use of funds prior to such repurchase and cancellation.




Closing Date: 10 December 2009

Rating: Not rated

Payment Dates: 10 December, 10 March, 10 June and 10 September in each year, commencing on 10 March 2010 (subject to adjustment for non Business Days in accordance with the Conditions).

Other terms: (i) Non-Call Period from, and including, the Closing Date to, but excluding, the Payment Date falling in September 2011.





Closing Date: 10 December 2010

Rating: Not rated

Payment Dates: 10 December, 10 March, 10 June and 10 September in each year, commencing on 10 March 2011 (subject to adjustment for non Business Days in accordance with the Conditions).

Other terms: (i) Non-Call Period from, and including, the Closing Date to, but excluding, the Payment Date falling in December 2011.


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DESCRIPTION OF THE PORTFOLIO AND MARKET VALUATION METHODOLOGY

Types of Investments in the Portfolio

For the purpose of the Market Valuation Manual, Issuer Investments may include Cash, Cash Equivalents, Government Securities, Loans, Securities and Hedging and Transactions (each as defined in the Market Valuation Manual). However it is anticipated that the portfolio of Collateral that the Issuer may acquire from time to time will consist primarily of (i) high yield securities, (ii) secured loans and (iii) certain special opportunity investments including traditional distressed debt, each of which is described below.

(i) High Yield Securities

High yield securities typically consist of below investment grade debt securities purchased in the public or private markets, which may include deferred, zero coupon or pay in kind payment terms.

(ii) Loans

Loans include assignments of and participations in performing senior corporate debt. Loans are typically acquired through primary bank syndications and in the secondary market.

(iii) Special Opportunity Investments

Special opportunity investments include (i) public and private securities of financially distressed or bankrupt issuers, including bank debt and bonds, (ii) privately negotiated subordinated debt securities issued in connection with leveraged transactions and (iii) warrants or options that may be purchased in connection with high yield debt.

Target Asset Mix

Pursuant to the Investment Management Agreement the Issuer has authorised the Investment Manager to invest as many of its assets as possible in the types of investment described above. However, the Investment Manager may determine from time to time that investment opportunities are limited, and that it may not be able to fully allocate all of such assets to such investments on advantageous terms. In such cases, the Investment Manager may choose to invest a portion of the Issuer's assets, directly or indirectly, in Cash or Cash Equivalents or similar assets. The composition of the Issuer Investments will vary over time and be affected by, among other things, certain financial covenants imposed on the Issuer under the Intercreditor Arrangements and changing market conditions, which in the opinion of the Investment Manager, warrant a different allocation of the Issuer Investments. At times, this portion may constitute a significant portion of the Issuer's total assets. Any assets held by the Issuer as Cash or Cash Equivalents or similar assets are likely to reduce the investment returns of the Issuer and could affect the ability of the Issuer to make all payments on the Notes and External Permitted Debt when due.

Investment Strategy Governed by the Over-Collateralisation Tests

The Issuer's investment strategy is governed by the Over-Collateralisation Tests set out in the Market Valuation Manual. The Over-Collateralisation Tests comprise formulae according to which the Rating Agencies determine the permitted amount of Senior Indebtedness, Second Senior Indebtedness, Third Senior Indebtedness and Fourth Senior Indebtedness based upon the composition of its assets in the form of Issuer Investments at any time. If Intervening Indebtedness is issued, any over-collateralisation test applicable thereto will also comprise formulae according to which the Rating Agencies shall determine the permitted amounts of Intervening Indebtedness. For each level of seniority of such indebtedness, each of the Asset Categories between A-1 and K-2 is allocated a specific Advance Rate (see the matrices referred to in the definition of "Advance Rate" in the Market Valuation Manual). The Advance Rates obtained by application of these matrices in turn determine the applicable S&P Advance Amount and Moody's Advance Amount by reference to which (together with reference to the Market Value of Issuer Investments in the relevant Asset Categories) the Over-Collateralisation Tests are then computed. By reason of the application of this procedure the levels of coverage maintained by the Issuer (together with the liquidity available to it) means that the assets and commitments backing the Notes and External Permitted Debt from time to time have the characteristics that demonstrate

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capacity to produce funds to service payments due and payable from time to time on the Notes and External Permitted Debt.

Determination of Market Value and Market Value Price

The Market Valuation Manual provides a mechanism for obtaining the Market Value of Cash, Cash Equivalents, Unquoted Investments and other Issuer Investments. The Market Value of certain Issuer Investments is calculated by reference to the Market Value Price of the same. The Market Value Price is the bid price for each Issuer Investment at such date obtained from an Approved Source, namely any of (a) the lower of two, or the average of three, prices quoted by Approved Dealers or Approved Investment Banking Firms, (b) in the case of an Approved Exchange, the closing price on such Approved Exchange (or if such Approved Exchange is closed for business at such date, then the most recent available closing price) or (c) the price obtained from an Approved Pricing Service. The principal purpose of ascertaining the relevant Market Value of Issuer Investments is to employ the same in determining compliance with the Over-Collateralisation Tests.

Investment Diversification and Concentration Limitations

The basis on which funds are to be made available under the VF Notes and the Notes by reference to the Market Valuation Manual has been structured to permit investment flexibility while maintaining portfolio diversification. Although the Investment Management Agreement does not prescribe specific eligibility criteria with which Issuer Investments must comply (other than on their acquisition (see the section headed "Acquisition Criteria for Issuer Investments" below)), the Market Valuation Manual does establish certain Issuer Investment concentration parameters, with respect to issuer and industry diversification, liquidity of investments, foreign currency investments, counterparty exposure and various other criteria, for the purpose of computing compliance with the Over-Collateralisation Tests. These parameters are not strict limitations in themselves but determine which Issuer Investments at any time may be taken into consideration when computing compliance with the Over-Collateralisation Tests. However, the Issuer is not prohibited from holding Issuer Investments in excess of such parameters. In addition, the amount of indebtedness that the Issuer is permitted to incur at any time will be reduced to account for potential funding obligations under Hedging Transactions and for extensions of credit under Loans that are not fully funded. The investment diversification and concentration parameters are set out in the Market Valuation Manual (see definition of "Excess Issuer Investments" in the Market Valuation Manual).

Acquisition Criteria for Issuer Investments

The Investment Management Agreement specifies certain criteria ("Acquisition Criteria") with which Issuer Investments must comply at the time of the Issuer (or Investment Manager on its behalf) entering into a binding commitment to acquire the same. As further particularised in the Investment Management Agreement the Acquisition Criteria require that Issuer Investments: (a) are eligible to be sold, novated, assigned to or by, or participated in and by, the Issuer in each case without any breach of applicable law, selling restrictions or of any contractual provision, (b) are not leases, (c) will not, following acquisition by the Issuer, be subject to withholding tax in any jurisdiction unless the applicable obligors under such Issuer Investments are required to make "gross up" payments to the Issuer that cover the full amount of any such withholding on an after tax basis, (d) are not obligations whose acquisition by the Issuer will cause the Issuer to be deemed to have participated in a primary loan origination in the United States, (e) are not Margin Stock as defined under Regulation U issued by The Board of Governors of the Federal Reserve System, (f) are not interests in or participations in a letter of credit given in favour of an Obligor located in the United States, including interests that could arise because the Issuer would be obligated to acquire a right to receive a reimbursement by such United States Obligor of any drawings made in accordance with such letter of credit, (g) are capable of being subject to a first fixed charge or first priority security interest in favour of the Security Trustee for the benefit of the Secured Creditors pursuant to the Security and Intercreditor Deed and (h) do not, by reason of their acquisition, cause the Issuer to breach the Over-Collateralisation Tests or any of the covenants contained in Condition 5 (Covenants of and Restrictions on the Issuer). The Investment Management Agreement provides that the subsequent failure of any Issuer Investment to satisfy any of the Acquisition Criteria shall not prevent any obligation from being an Issuer Investment so long as such obligation satisfied the Acquisition Criteria when the Issuer or the Investment Manager (on behalf of the Issuer) entered into a binding agreement to purchase such obligation and shall not necessitate any action by the Issuer or the Investment Manager.

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Over-Collateralisation Testing and Reporting

Pursuant to the Trust Deed and the Security and Intercreditor Deed, the Issuer will procure that the Investment Manager, on behalf of the Issuer, shall: (A)(i) calculate the Market Value of each Issuer Investment that is not an Unquoted Investment on (x) the Valuation Date for each calendar week and (y) to the extent that a Market Value Price therefor is determined using an Approved Pricing Service, on each Business Day and (ii) calculate the Market Value of each Issuer Investment that is an Unquoted Investment on at least a quarterly basis or, with respect to Unquoted Investments having an aggregate Market Value in excess of four per cent. of Total Capitalisation, at least monthly and (B) on each Business Day on which any Rated Notes or other Over-Collateralisation Test Dependent Indebtedness remain Outstanding, determine whether the Over-Collateralisation Tests have been satisfied by reference to the then most recent Quoted Issuer Investment Valuation and/or the then most recent Unquoted Issuer Investment Valuation.

The Over-Collateralisation Tests

Compliance with the Over-Collateralisation Tests is an obligation of the Issuer under the Trust Deed. Subject to certain provisos the Over-Collateralisation Tests are satisfied when either: (1)(a) the Senior Advance Amount is greater than or equal to the Principal Amount Outstanding of Senior Indebtedness (as defined in Condition 1 (Definitions)), (b) the Second Senior Advance Amount is greater than or equal to the sum of the Principal Amount Outstanding of Senior Indebtedness and the Principal Amount Outstanding of Second Senior Indebtedness (as defined in Condition 1 (Definitions)), (c) the Third Senior Advance Amount is greater than or equal to the sum of the Principal Amount Outstanding of Senior Indebtedness, the Principal Amount Outstanding of Second Senior Indebtedness and the Principal Amount Outstanding of Third Senior Indebtedness (as defined in Condition 1 (Definitions)) and (d) the Fourth Senior Advance Amount is greater than or equal to the sum of the Principal Amount Outstanding of Senior Indebtedness, the Principal Amount Outstanding of Second Senior Indebtedness, the Principal Amount Outstanding of Third Senior Indebtedness and the Principal Amount Outstanding of Fourth Senior Indebtedness (as defined in Condition 1 (Definitions)) or (2) the Issuer has complied with Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates). In the event that the Over-Collateralisation Tests are not satisfied, the Issuer is obliged to employ certain strategies to attempt to ensure compliance within specific timeframes (see Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates)).

Over-Collateralisation Failure and Collateralisation Shortfall Dates

On the occurrence of a failure to comply with the Over-Collateralisation Tests, the Issuer will procure that the Investment Manager, on behalf of the Issuer, shall, not later than the Business Day following the date on which the breach occurred (such day being referred to in the Conditions as a Collateralisation Shortfall Date), furnish the Rating Agencies, the VFN Agent (for furnishing to the VF Noteholders) and the Trustee with a Collateralisation Shortfall Valuation Statement. Upon the occurrence of a Collateralisation Shortfall Date, the Issuer (or the Investment Manager on its behalf) shall, inter alia, also employ either the Prepayment Cure Methodology or the Projection Cure Methodology in order to remedy the breach of the Over-Collateralisation Tests. Pursuant to the Prepayment Cure Methodology, the Issuer, or the Investment Manager on its behalf, is obliged to make prepayments of its External Permitted Debt and Outstanding Notes (see Condition 7(f)(i) (Mandatory Redemption upon Over-Collateralisation Failure)) by reference to the seniority of the same up to the level necessary to cure the relevant under collateralisation (see paragraph (i) of Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates)). Pursuant to the Projection Cure Methodology which the Issuer, or the Investment Manager on its behalf, may elect to adopt instead of the Prepayment Cure Methodology, the Issuer is obliged to furnish the Rating Agencies, the VFN Agent (for furnishing to the VF Noteholders) and the Trustee with a Projection Cure Statement showing projected compliance with the Over-Collateralisation Tests by the Long Stop Date by means of disposing of certain Issuer Investments and acquiring others in accordance with a specific set of timelines and redeeming External Permitted Debt and Notes with the net proceeds of such disposals and acquisitions and other liquidity available to the Issuer (see paragraph (ii) of Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates)).

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Under Collateralisation Events

In the event that the application of the Under Collateralisation Cure Methodologies fails to cure an Over-Collateralisation Failure, the Issuer (or the Investment Manager on its behalf) shall make payments in accordance with the Prepayment Cure Methodology in order to cure the resulting Supervening Shortfall by the Long Stop Date. Failure to do so will give rise to an Under Collateralisation Event, which constitutes an Event of Default for the purpose of the Conditions (see Condition 10 (Events of Default)).

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MARKET VALUATION MANUAL

Pursuant to the Investment Management Agreement, the Investment Manager is obliged, acting on the Issuer's behalf, to calculate the Market Value of each Issuer Investment on the following basis:

(i) if such Issuer Investment is not an Unquoted Investment:

(x) as of the Valuation Date for each calendar week; and

(y) on each Business Day, to the extent that a Market Value Price for such Issuer Investment is determined using an Approved Pricing Service; and

(ii) if such Issuer Investment is an Unquoted Investment, on at least a quarterly basis or, with respect to Unquoted Investments having an aggregate Market Value in excess of four per cent. of Total Capitalisation, at least monthly.

In making the above determinations, the Investment Manager is obliged to refer to the following Rating Agency definitions and procedures. In this Market Valuation Manual, capitalised terms not defined below have the meanings given to them in the Conditions.

"Market Value" means, with respect to:

(a) Cash, the current balance thereof;

(b) (i) any Cash Equivalents of the type described in paragraph (a) of the definition thereof, the original purchase price of such Cash Equivalents; and

(ii) any Cash Equivalents of the type described in paragraph (b) of the definition thereof, the aggregate current net value of such Cash Equivalents;

(c) any Defensive Hedge Transaction:

(i) where the related Issuer Investment is part of the Collateral, the amount, as determined by the Issuer (or the Investment Manager on its behalf), by which the Protected Market Value with respect to such Issuer Investment exceeds the product of the Market Value of the Issuer Investment (or, if less, the portion thereof that is a Non-Excluded Issuer Investment), as otherwise determined in accordance with these procedures, and the applicable Advance Rate for such Issuer Investment; or

(ii) where the Issuer Investment is not part of the Collateral, the Protected Market Value with respect to such Issuer Investment;

(d) each:

(i) Credit Default Protection Contract;

(ii) Synthetic Purchase Contract; and

(iii) Structured Product Transaction,

an amount, which may be positive or negative, equal to the amount, obtained from an Approved Source (using the lower of two, or the average of three, quotes from

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Approved Dealers and/or Approved Investment Banking Firms), that a Person would pay or charge to assume all obligations and benefits of the Issuer under such Credit Default Protection Contract, Synthetic Purchase Contract or Structured Product Transaction, as applicable; provided that the Market Value of each Credit Default Protection Contract, Synthetic Purchase Contract and Structured Product Transaction that has a positive Market Value and a counterparty that is not an Eligible Counterparty shall be zero;

(e) any Asset Backed Security or CDO Security, the lower of two, or the average of three, bid prices quoted by Approved Dealers and/or Approved Investment Banking Firms;

(f) any Issuer Investment which is an Unquoted Investment at any date, either (x) the lower of two, or the average of three, bid prices quoted by Approved Dealers or Approved Investment Banking Firms or (y) an appraisal by an Approved Third-Party Appraiser, in either case obtained at least quarterly; provided that, with respect to Unquoted Investments having an aggregate Market Value in excess of 4 per cent. of Total Capitalisation, such quotes and/or appraisals shall be obtained at least monthly; provided further that in no event will the Market Value of any Unquoted Investment exceed the lesser of (1) the most recent quotation or appraisal obtained as provided in this clause (f) and (2) the value most recently determined by the Issuer in any report or statement provided by the Issuer. Prior to the first available quotation or appraisal of any Unquoted Investment obtained as provided above in this clause (f), the Market Value of such Unquoted Investment will be the lower of the value thereof as most recently quoted by an Approved Source, if any, and cost; and

(g) any other Issuer Investment at any date, an amount determined by the Issuer (or the Investment Manager on its behalf) that is not in excess of the product of (x) the Market Value Price for each unit of such Issuer Investment on such date (and, with respect to any Securities which have an amortising principal amount, the then current factor related thereto, if applicable) and (y) the number of units of such Issuer Investment held by, or on behalf of, the Issuer; provided that for any Loan, Participation or delayed draw Security, the Market Value shall be (i) the product of the commitment amount and the Market Value Price minus (ii) the Maximum Unfunded Amount, in each case, of such Loan, Participation or delayed draw Security.

For the purposes of the definition of Market Value, (i) accrued interest on any interest bearing Non-Excluded Issuer Investments shall be excluded in the determination of Market Value by the party making such determination and (ii) the Market Value of all non-Euro Issuer Investments shall be converted into Euros at the then current spot rate (after taking into account the effect of any Currency Hedging Transactions which can be associated with such Issuer Investment).

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"Market Value Price" means, with respect to an Issuer Investment at any date, the bid price for each unit of such Issuer Investment at such date obtained from an Approved Source.

"Advance Rate" means, for each Asset Category, the percentage set out in the relevant Rating Agency Table opposite such Asset Category and maturity (if applicable) under the applicable Over-Collateralisation Test, and, in particular, for purposes of calculating the S&P Advance Amount in respect of US Assets the aggregate of such percentage and the relevant US Element.

For the purposes of determining the S&P Advance Amount or Moody's Advance Amount,

(i) the Advance Rate of any Unhedged Currency Investment shall be 95 per cent. of the Advance Rate thereof otherwise determined in accordance with the above procedures;

(ii) unless such Cash or Cash Equivalents are protected against currency fluctuations as a result of Currency Hedging Transactions or borrowings under a Permitted Debt Document that are repayable in the applicable foreign currency, the S&P Advance Rate applicable to Cash or Cash Equivalents denominated in Eligible Foreign Currencies other than Pounds Sterling or U.S. Dollars shall be (1) 95 per cent., if such Cash or Cash Equivalents are held for a period of five Business Days or fewer and (2) zero per cent., if such Cash or Cash Equivalents are held for more than five Business Days, of the Advance Rate thereof otherwise determined in accordance with the above procedures and the Moody's Advance Rate applicable to Cash or Cash Equivalents denominated in Eligible Foreign Currencies other than Pounds Sterling or U.S. Dollars shall be 95 per cent.;

(iii) the Advance Rate of any Non-Cash Pay Instrument that is not a Government Security shall be 95 per cent. of the Advance Rate thereof otherwise determined in accordance with the above procedures;

(iv) the Advance Rate applicable to any Non-Qualifying Security for which the most recent quote is more than one week old shall be zero; and

(v) the Advance Rate applicable to any Unquoted Investment for which the most recent quote is more than three months old shall be zero.

"Aggregate Counterparty Exposure"

means, for the purposes of calculating the S&P Advance Amount, on any date of determination, the excess of (A) the sum of (i) the aggregate Market Value of Issuer Investments consisting of Participations with Eligible Selling Institutions having either (x) a short-term S&P issuer credit rating of less than "A-1+" or (y) with respect to any Eligible Selling Institution that has no such short-term S&P issuer credit rating, then a long-term S&P issuer credit rating of less than "AAA", (ii) the aggregate Market Value of each Defensive Hedge Transaction, Credit Default Protection Contract and Synthetic Purchase Contract, in each case with a positive Market Value and an Eligible Counterparty with either (x) a short-term S&P issuer credit rating of less than "A-1+" or

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(y) with respect to such Eligible Counterparty that has no such short-term S&P issuer credit rating, then a long-term S&P issuer credit rating of less than "AAA" and (iii) the aggregate amount of cash posted to Eligible Counterparties with either (x) a short-term S&P issuer credit rating of less than "A-1+" or (y) with respect to any such Eligible Counterparty that has no such short-term S&P issuer credit rating, then a long-term S&P issuer credit rating of less than "AAA" in respect of Credit Default Protection Contracts and Synthetic Purchase Contracts over (B) the portion of (A) pursuant to which an Eligible Counterparty has agreed to maintain collateral posted with the Issuer and with respect to which Rating Agency Confirmation has been received and, for the purposes of calculating the Moody's Advance Amount, on any date of determination, the excess of (A) the sum of (i) the aggregate Market Value of Issuer Investments consisting of Participations with Eligible Selling Institutions having a long-term Moody's senior unsecured rating of less than "Aaa", (ii) the aggregate Market Value of each Defensive Hedge Transaction, Credit Default Protection Contract and Synthetic Purchase Contract, in each case with a positive Market Value and an Eligible Counterparty with a long-term Moody's senior unsecured rating of less than "Aaa" and (iii) the aggregate amount of cash posted to Eligible Counterparties with a long-term Moody's senior unsecured rating of less than "Aaa" in respect of Credit Default Protection Contracts and Synthetic Purchase Contracts over (B) the portion of (A) pursuant to which an Eligible Counterparty has agreed to maintain collateral posted with the Issuer and with respect to which Rating Agency Confirmation has been received

"Approved Dealer" means (a) in the case of any Issuer Investment that is not a Government Security of a Qualifying Country, any bank or broker dealer set forth in Schedule 6 to the Investment Management Agreement (or any successor to any such listed bank or broker dealer) or any other bank or broker dealer designated by the Issuer (or the Investment Manager on its behalf) in writing and approved by (i) the Designated Approval Representative in its reasonable discretion and (ii) S&P and/or Moody's (as the case may be) pursuant to a Rating Agency Confirmation and (b) in the case of a Government Security of a Qualifying Country, any primary dealer in Government Securities of such Qualifying Country, as reported by the Central Bank of such Qualifying Country or the European Central Bank for Member States.

"Approved Exchange" means any exchange or quotation system providing regularly published securities prices listed in Schedule 10 to the Investment Management Agreement or any other exchange designated by the Issuer (or the Investment Manager on its behalf) in writing and approved by (i) the Designated Approval Representative in its reasonable discretion and (ii) S&P and/or Moody's (as the case may be) pursuant to a Rating Agency Confirmation.

"Approved Industry" means a single industry category that is listed in Schedule 7 to the Investment Management Agreement, or any other industry category designated by the Issuer (or the Investment Manager on its behalf) in writing and approved by (i) the Designated Approval Representative in its reasonable discretion and (ii) S&P and/or Moody's (as the case may be) pursuant to a Rating Agency Confirmation.

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"Approved Investment Banking Firm"

means any investment banking firm set forth in Schedule 8 to the Investment Management Agreement (or any successor to any such investment banking firm) or any other investment banking firm designated by the Issuer in writing and approved by (i) the Designated Approval Representative in its reasonable discretion and (ii) S&P and/or Moody's (as the case may be) pursuant to a Rating Agency Confirmation.

"Approved Pricing Service" means a pricing or quotation service set forth in Schedule 9 to the Investment Management Agreement (or any successor to any such listed pricing service) or any other pricing or quotation service designated by the Issuer (or the Investment Manager on its behalf) in writing and approved by (i) the Designated Approval Representative in its reasonable discretion and (ii) S&P and/or Moody's (as the case may be) pursuant to a Rating Agency Confirmation.

"Approved Source" means any of (i) two Approved Dealers and/or Approved Investment Banking Firms (so long as the lower of two bid prices is being used) and three Approved Dealers and/or Approved Investment Banking Firms (if the average of three bid prices is being used), (ii) an Approved Exchange or (iii) an Approved Pricing Service; provided that, for the purposes of the Over-Collateralisation Tests, a Loan, Investment Grade Security or High Yield Security which is an Issuer Investment shall be considered "quoted" or "priced" by an Approved Source only if, in the reasonable judgment of the Issuer (or the Investment Manager on its behalf), such Approved Source will continue to provide quotations with respect to such Loan, Investment Grade Security or

High Yield Security on an on going basis in the ordinary course of its business as a pricing service or dealer, as the case may be.

"Approved Third-Party Appraiser"

means a third-party appraiser that is not an Affiliate of either the Issuer or the Investment Manager (or subject to an agreement to become such an Affiliate) which is set forth in Schedule 11 to the Investment Management Agreement (or any successor to or any Affiliate of any such appraiser that is engaged in the business of valuing securities and/or other investments that constitute Issuer Investments) or any other such appraiser designated by the Issuer (or the Investment Manager on its behalf) in writing and approved by (i) the Designated Approval Representative in its reasonable discretion and (ii) S&P and/or Moody's (as the case may be) pursuant to a Rating Agency Confirmation.

"Asset Backed Security" means any fixed income Security that is (i) backed by and paid primarily from the proceeds (or payments or proceeds of a disposition) of Eligible Assets and (ii) issued in a transaction structured to (A) isolate the Security and the Eligible Assets backing the Security from the credit risk of the sponsor of the transaction and (B) result in the creditworthiness of such Security being primarily dependent upon (x) the creditworthiness of the Eligible Assets backing such Security and (y) any credit support provided with respect to the creditworthiness of such Eligible Assets; provided, however, that in no event shall an "Asset Backed Security" include either a Defensive Hedge Transaction, a CDO Security or a Structured Product Transaction.

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"Busted Convertible Bond" means any convertible bond that trades like a fixed income investment because the value of the conversion option for the equity into which such bond may be converted has fallen below 2.5 per cent. of the aggregate value of the convertible bond.

"Cash" means any immediately available funds in Euros or any Eligible Foreign Currency (including amounts held in the Custody Cash Account or on deposit with the Custodian pursuant to "sweep" arrangements linked to the Custody Cash Account).

"Cash Equivalents" means investments (other than Cash and Government Securities):

(a) in respect of which the obligor has a short-term S&P issuer credit rating of "A-1+" or a long-term S&P issuer credit rating of at least "AA" for the purposes of calculating the S&P Advance Amount and has a short-term Moody's rating of "P-1" or a long-term Moody's senior unsecured rating of at least "Aa2" for the purposes of calculating the Moody's Advance Amount or

(b) in offshore funds investing in money market instruments, such funds rated "AAAm" or "AAAg" by S&P for the purposes of calculating the S&P Advance Amount and "P-1" by Moody's for the purposes of calculating the Moody's Advance Amount;

provided that: (i) in no event shall Cash Equivalents include any obligation that provides for the payment of interest alone, (ii) Cash Equivalents referred to in paragraph (a) above shall mature within 183 days of issuance, (iii) if either S&P or Moody's changes its rating system, then any ratings included in this definition shall be deemed to be an equivalent rating in a successor rating category of S&P or Moody's as the case may be, (iv) if either S&P or Moody's ceases to be in the business of rating securities, then any ratings included in this definition shall be deemed to be an equivalent rating from another rating agency, (v) Cash Equivalents (other than money market funds maintained by the Custodian) shall not include any such investment equivalent to more than €100 million in any single issuer and (vi) in no event shall Cash Equivalents include any synthetic securities or, for the purposes of calculating the S&P Advance Amount, any Securities with ratings containing an "r", "t", "p", "pi" or "q" subscript; unless otherwise confirmed in writing as acceptable by S&P and/or Moody's, as the case may be.

"CDO Security" means any security issued by a special purpose vehicle that entitles the holders thereof to receive payments that depend primarily on cash flows from, or proceeds upon the sale of, a pool of Loans, Investment Grade Securities and/or High Yield Securities.

"Cheapest to Deliver Security" means, with respect to any Credit Default Swap, the "cheapest to deliver security" on the date such Credit Default Swap is executed.

"Credit Default Exposure Contract"

means a Hedging Transaction (in the form of a Form Approved Swap or a form otherwise approved by S&P pursuant to a Rating Agency Confirmation for the purposes of calculating the S&P Advance Amount or by Moody's pursuant to a Rating Agency Confirmation for the purposes of calculating the Moody's Advance Amount) having a Reference Security of an obligor that

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has in excess of €100 million of indebtedness outstanding or is an index at the time the Credit Default Exposure Contract is entered into and pursuant to which (1) the Issuer receives periodic payments from an Eligible Counterparty and (2) the Issuer agrees to purchase a Reference Security that is a debt security (or pay settlement amounts calculated based upon a reduction in the market value of such Reference Security) upon the occurrence of certain credit related events with respect to such Reference Security or such Reference Security's obligor.

"Credit Default Protection Adjustments"

means, with respect to any Credit Default Protection Contract, an amount equal to the product of (a) the periodic payment on the notional amount of such Credit Default Protection Contract expressed as an annualised percentage of the notional amount, (b) 1 minus the Advance Rate for the Reference Security for such Credit Default Protection Contract, (c) the term of such Credit Default Protection Contract expressed in years (rounded to a tenth of a year) and (d) the notional amount of such Credit Default Protection Contract.

"Credit Default Protection Advance Amount"

means an amount equal to (1) the sum, for each Credit Default Protection Contract with a positive or zero Market Value, of the greater of (A) (i) the product of (x) the Market Value of such Credit Default Protection Contract and (y) the Advance Rate for such Credit Default Protection Contract's Reference Security minus (ii) the Credit Default Protection Adjustment for such Credit Default Protection Contract and (B) the product of (i) negative one and (ii) the aggregate of all periodic payments payable by the Issuer through the expiration of such Credit Default Protection Contract plus (2) the sum, for each Credit Default Protection Contract with a negative Market Value, of the greater of (A) (i) the Market Value of such Credit Default Protection Contract minus (ii) the Credit Default Protection Adjustment for such Credit Default Protection Contract and (B) the product of (i) negative one and (ii) the aggregate of all periodic payments payable by the Issuer through the expiration of such Credit Default Protection Contract.

"Credit Default Protection Contract"

means a Hedging Transaction (in the form of a Form Approved Swap or a form otherwise approved by S&P pursuant to a Rating Agency Confirmation for the purposes of calculating the S&P Advance Amount or by Moody's pursuant to a Rating Agency Confirmation for the purposes of calculating the Moody's Advance Amount) having a Reference Security of an obligor that has in excess of €100 million of indebtedness outstanding or is an index at the time a Credit Default Protection Contract is entered into and pursuant to which the Issuer makes payments to an Eligible Counterparty in exchange for the option to sell a Reference Security that is a debt security to (or to receive settlement amounts calculated based upon a reduction in the market value of such Reference Security from) the Eligible Counterparty upon the occurrence of certain credit related events with respect to such Reference Security or such Reference Security's obligor.

"Credit Default Swap" means each Credit Default Protection Contract and each Credit Default Exposure Contract.

"Currency Hedging Transaction"

means any Swap Transaction entered into by the Issuer with an Eligible Counterparty and intended to convert any payment on a Debt or other obligation of the Issuer or any Issuer Investment

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denominated in one currency to another currency or to protect against the fluctuation of the exchange rate of a currency in which a payment to be made or received by the Issuer is denominated.

"Custodian" means Deutsche Bank AG, London Branch.

"Defensive Hedge Advance Amount"

means, as of any date of determination, 98 per cent. of the aggregate Market Value of all Defensive Hedge Transactions.

"Defensive Hedge Transaction" means a Hedging Transaction between the Issuer and an Eligible Counterparty intended to protect the Issuer against fluctuations in the market value of an Issuer Investment and pursuant to which (i) the Eligible Counterparty has agreed for a period of time, at the direction of the Issuer, to (a) purchase the Issuer Investment at an agreed strike price (which may be based upon a formula) or (b) pay to the Issuer, at the Issuer's election, an amount by which an agreed strike price (which may be based upon a formula) exceeds the current price of the Issuer Investment, (ii) the Issuer may (a) pay a fee to the Eligible Counterparty in connection with the transaction, (b) remove the Issuer Investment from the Custody Account (whereby it is no longer part of the Collateral) and assign the Issuer Investment to the Eligible Counterparty as security for its obligations to the Eligible Counterparty and/or (c) agree to deliver the Issuer Investment to the Eligible Counterparty in satisfaction of all of its obligations to the Eligible Counterparty in connection with the transaction; provided, however, that in no event shall a "Defensive Hedge Transaction" include any Credit Default Protection Contract and (iii) the Eligible Counterparty does not otherwise have recourse to the Collateral or the Issuer for any amounts owing to such counterparty thereunder.

"Designated Approval Representative"

means (i) while any VF Instrument is in effect, the VFN Agent and (ii) thereafter (a) any one agent under a Senior Facility designated by the Issuer and notified to each Representative, S&P and Moody's and not objected to by S&P or Moody's within 15 days of such notification or (b) if no Senior Facility is in effect, any one person identified to S&P, Moody's, the Trustee and the Noteholders in writing and not objected to by the Noteholders, S&P or Moody's within 15 days of such notification.

"Eligible Assets" means financial assets, either fixed or revolving, that by their terms convert into cash within a finite time period plus any rights or other assets designed to assure the servicing or timely distribution of proceeds to security holders.

"Eligible Counterparty" means with respect to any Hedging Transaction (a) for the purposes of calculating the S&P Advance Amount, any counterparty thereto: (i) satisfying the Rating Requirement or (ii) which has (x) posted collateral with the Issuer within 30 calendar days of ceasing to satisfy the Rating Requirement, (y) has a short-term S&P issuer credit rating of at least "A-3" and a long-term S&P issuer credit rating of at least "BBB-" and (z) with respect to whom Rating Agency Confirmation has been received from S&P; provided that if any such counterparty ceases to satisfy the Rating Requirement after the date such Hedging Transaction was executed then the same shall be deemed to be an "Eligible Counterparty" for a period of 30 calendar days from the date of such cessation and (b) for the purposes of calculating the Moody's Advance Amount, (i) any Person satisfying the Rating Requirement, (ii) any counterparty to a Hedging Transaction who has posted collateral with the Issuer and with respect to whom

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Rating Agency Confirmation has been received from Moody's or (iii) with respect to a Credit Default Exposure Contract, a counterparty with a short-term Moody's rating of "P-2" or whose obligations in respect of such Credit Default Exposure Contract are absolutely and unconditionally guaranteed by a Person having such a rating or, if such Person (or its guarantor) does not have such a short-term rating, then such Person (or its guarantor) has a long-term Moody's senior unsecured rating of "A1", in either case who has posted to, and maintained with, the Issuer collateral in an amount at least equal to one periodic payment due on such Credit Default Exposure Contract to the Issuer; provided that if any such Person ceases to satisfy the Rating Requirement after the date such Hedging Transaction was executed, then such Person shall be deemed to be an "Eligible Counterparty" for a period of 30 calendar days from the date of such cessation.

"Eligible Foreign Currencies" means (i) Canadian Dollars, Pounds Sterling, U.S. Dollars and the currency of any G-7 nation, Australia, Denmark, New Zealand, Norway, Sweden, Switzerland or any country that has been invited to join the European Union and which has a foreign currency issuer credit rating of at least "AA-" from S&P for the purposes of calculating the S&P Advance Amount or a long term sovereign debt rating of at least "Aa2" from Moody's for the purposes of calculating the Moody's Advance Amount and (ii) each other currency identified by the Issuer (or the Investment Manager on its behalf) from time to time and confirmed by S&P and/or Moody's (as the case may be) pursuant to a Rating Agency Confirmation and in writing as acceptable by the Designated Approval Representative.

"Eligible Selling Institution" means, with respect to any Participation, any selling institution satisfying the Rating Requirement; provided that if any such selling institution ceases to satisfy the Rating Requirement after the date such Participation was executed, then such selling institution shall be deemed to be an "Eligible Selling Institution" for a period of 30 calendar days from the date of such cessation.

"European Union" means the European Economic and Monetary Union.

"Excess Issuer Investments" means that portion of the Market Value of any Issuer Investments which comprises any excess set forth below (in each case determined using the most recent Market Value for the applicable Issuer Investments).

(i) (a) for the purposes of calculating the S&P Advance Amount, the aggregate Market Value of Relevant Issuer Investments of any single issuer in excess of 5 per cent. of Total Capitalisation, (b) for the purposes of calculating the Moody's Advance Amount, the aggregate Market Value of Relevant Issuer Investments of any single issuer in excess of 4 per cent. of Total Capitalisation except, in the case of any five issuers, the aggregate Market Value of Relevant Issuer Investments (excluding Semi-Liquid Securities) of each such issuer in excess of 5 per cent. of Total Capitalisation and (c) the aggregate Market Value of Mezzanine Loans of any single issuer which are Relevant Issuer Investments (excluding any accretion since the purchase of such Mezzanine Loans) in excess of 2.5 per cent. of Total Capitalisation;

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(ii) the aggregate Market Value of Relevant Issuer Investments of issuers in any single Industry in excess of 15 per cent. of Total Capitalisation (except for investments in any one Approved Industry as described in paragraph (iii) below);

(iii) the aggregate Market Value of Relevant Issuer Investments of issuers in any one Approved Industry in excess of 20 per cent. of Total Capitalisation;

(iv) the aggregate Market Value of Relevant Issuer Investments in any three Industry categories in excess of 40 per cent. of Total Capitalisation; provided, however, that the foregoing limit may be increased to 45 per cent. to the extent that the aggregate Market Value of Relevant Issuer Investments in any single Approved Industry is in excess of 15 per cent. (but not 20 per cent.) of Total Capitalisation as permitted by paragraph (iii) above;

(v) the aggregate Market Value of Relevant Issuer Investments consisting of Semi-Liquid Securities in excess of 50 per cent. of the Net Asset Value;

(vi) the Aggregate Counterparty Exposure in excess of 25 per cent. of Total Capitalisation;

(vii) the aggregate Market Value of Relevant Issuer Investments consisting of Non-Cash Pay Instruments in excess of 25 per cent. of Total Capitalisation;

(viii) the aggregate Market Value of Relevant Issuer Investments consisting of Busted Convertible Bonds in excess of 5 per cent. of Total Capitalisation;

(ix) the aggregate Market Value of Relevant Issuer Investments that are Unhedged Currency Investments in excess of 5 per cent. of Total Capitalisation;

(x) (a) the aggregate Market Value of Relevant Issuer Investments that are Senior Unsecured Loans and non-US Assets in excess of 5 per cent. of Total Capitalisation; and

(b) the aggregate Market Value of Relevant Issuer Investments that are Senior Unsecured Loans and US Assets in excess of 5 per cent. of Total Capitalisation;

(xi) the aggregate Market Value of Relevant Issuer Investments consisting of Loans with an aggregate facility amount of less than €100 million in excess of 15 per cent. of Total Capitalisation;

(xii) the aggregate Market Value of Relevant Issuer Investments that are Structured Finance Obligations in excess of 10 per cent. of Total Capitalisation;

(xiii) the aggregate Market Value of Relevant Issuer Investments that are Non-Qualifying Securities in excess of 5 per cent. of Total Capitalisation;

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(xiv) the aggregate Market Value of Relevant Issuer Investments that are Non-Qualifying Securities in any single Non-Qualifying Country in excess of 1 per cent. of Total Capitalisation;

(xv) the aggregate Market Value of Relevant Issuer Investments that are Quarterly Mark Securities in excess of 5 per cent. of Total Capitalisation for the purposes of calculating the S&P Advance Amount and 4 per cent. of Total Capitalisation for the purposes of calculating the Moody's Advance Amount; and

(xvi) the aggregate of (1) the Market Value of Relevant Issuer Investments that are non Performing, (2) the Market Value of Relevant Issuer Investments consisting of Semi-Liquid Securities, (3) and the Market Value of Relevant Issuer Investments consisting of Structured Product Transactions and (4) the Market Value of Relevant Issuer Investments consisting of PIK Securities, in excess of the Net Asset Value.

Notwithstanding the foregoing:

(A) in the event that an Issuer Investment is reclassified after its acquisition by the Issuer, for the purposes of calculating the S&P Advance Amount and the Moody's Advance Amount, the exclusions described above in paragraphs (v) and (xvi) that would otherwise become applicable following such reclassification will not apply to assets owned by the Issuer (or which the Issuer had committed to purchase) on or prior to the date of such reclassification;

(B) in the event the Issuer owns an Issuer Investment and a Credit Default Protection Contract with the same or substantially the same Reference Security as such Issuer Investment, the portion of the Market Value of the Issuer Investment corresponding to the notional amount of such Credit Default Protection Contract shall not be included in the determination of whether the same comprises an Excess Issuer Investment other than for the purpose of paragraph (vi);

(C) the Protected Market Value of any Issuer Investment subject to a Defensive Hedge Transaction shall not be included in the determination of whether the same comprises an Excess Issuer Investment other than for the purpose of paragraph (vi);

(D) under no circumstances shall any Cash, Cash Equivalent or Government Security be an Excluded Issuer Investment based upon the limitations set forth above; and

(E) the proportion of the Market Value of Structured Finance Obligations which comprise Asset-Backed Securities or CDO Securities in excess of 5 per cent. of Total Capitalisation will have an S&P OC Test Rating of "BBB-" or above or a Moody's Test Rating of "Baa3" or above.

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"Excluded Issuer Investments" means (without duplication):

(i) sovereign debt of a Non-Qualifying Country;

(ii) Issuer Investments to the extent that they are (A) not subject to a first priority security interest (subject in priority only to any security interests permitted under the Security and Intercreditor Deed) in favour of the Security Trustee for its benefit and the benefit of the Eligible Counterparties party to Secured Hedging Transactions, the Trustee and the Holders of Permitted Indebtedness or (B) subject to any security interests (other than Permitted Security Interests);

(iii) Excess Issuer Investments;

(iv) Issuer Investments (a) denominated in a currency other than Euro that is not an Eligible Foreign Currency or (b) less than 95 per cent. of the Market Value of which is protected against currency fluctuations through an offsetting borrowing or requested borrowing under a Permitted Debt Document denominated in the currency of denomination of such Issuer Investment at the time of purchase and/or pursuant to Currency Hedging Transactions;

(v) Issuer Investments in any Participation held by the Issuer while any bank or other institution that sold such Participation is not an Eligible Selling Institution;

(vi) Issuer Investments issued by a Person which is an Affiliate of a Holder of VF Notes;

(vii) Issuer Investments in CDO Securities issued by a special purpose vehicle for which the Investment Manager serves as manager or advisor;

(viii) Issuer Investments in Non-Credit Risk Securities and equity Securities (which shall include the most deeply subordinated tranche of any issuance of Asset Backed Securities or CDO Securities, whether or not designated as equity);

(ix) Issuer Investments in securities issued by the Issuer or any subsidiary of the Issuer or Hedging SPE; and

(x) any investment not included in the definition of "Issuer Investment" or not described in one of the Asset Categories, including but not limited to any investment held by a Hedging SPE unless in each case such investment has been approved in a Rating Agency Confirmation for inclusion in any Asset Category by S&P for the purposes of calculating the S&P Advance Amount or by Moody's for the purposes of calculating the Moody's Advance Amount.

"Fourth Senior Advance Amount"

means the lesser of (A) the S&P Advance Amount calculated using the S&P Fourth Senior Advance Rates and (B) the Moody’s Advance Amount calculated using the Moody’s Fourth Senior Advance Rates.

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"Fourth Senior Over-Collateralisation Test"

is a test that is satisfied as of any Business Day if (a) the sum, as of such Business Day, of (i) the Principal Amount Outstanding of Senior Indebtedness, (ii) the Principal Amount Outstanding of Second Senior Indebtedness, (iii) the Principal Amount Outstanding of Third Senior Indebtedness and (iv) the Principal Amount Outstanding of Fourth Senior Indebtedness is less than or equal to (b) the Fourth Senior Advance Amount.

"Government Securities" means Securities that are direct obligations of, and obligations the timely payment of principal and/or interest on which is fully guaranteed by, a Qualifying Country or any agency or instrumentality the obligations of which are backed by the full faith and credit of a Qualifying Country and in the form of conventional bills, bonds or notes. In no event shall Government Securities include any: (i) security providing for the payment of interest only, (ii) Swap Transaction or (iii) obligation on which all or any portion of the payments thereunder is based, directly or indirectly, on any Swap Transaction.

"Hedging Advance Amount" means an amount, which may be positive or negative, equal to the sum of the following positive or negative amounts: (a) the Interest Rate/Currency Hedging Advance Amount, (b) the Defensive Hedge Advance Amount, (c) the Credit Default Protection Advance Amount, (d) the Synthetic Purchase Contract Advance Amount, (e) the Structured Product Transaction Advance Amount and (f) to the extent not included in the foregoing, the aggregate amount of cash posted as collateral by the Issuer (or the Investment Manager on its behalf), for the benefit of Eligible Counterparties, in respect of Credit Default Protection Contracts and Synthetic Purchase Contracts.

"Hedging SPE" means any entity which is a subsidiary of the Issuer and organised for the purpose of (i) holding and acquiring investments similar to Issuer Investments, (ii) incurring indebtedness on a secured or unsecured basis, (iii) entering into Hedging Transactions and (iv) any other activity incidental, necessary, ancillary or appropriate to the foregoing and which has provisions for bankruptcy remote special purpose entities in its organisational documents.

"Hedging Transaction" means any transaction entered into by the Issuer or a Hedging SPE with a counterparty that is (i) a Swap Transaction, (ii) a Securities Lending Transaction, (iii) a credit derivative transaction or repurchase agreement, (iv) an obligation to enter into any of the foregoing or (v) any combination of any of the foregoing.

"High Yield Security" means a debt security which, on acquisition by the Issuer, is a high yielding debt security that is not a CDO Security, as determined by the Investment Manager and which has an S&P OC Test Rating below "BBB-" and a Moody’s OC Test Rating below "Baa3".

"Industry" means any industry category listed in (and interpreted in accordance with) Schedule 7 to the Investment Management Agreement or any other such industry category designated by the Investment Manager on behalf of the Issuer in writing and approved by (i) the Designated Approval Representative in their reasonable discretion and (ii) S&P and/or Moody's (as the case may be) pursuant to a Rating Agency Confirmation.

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"Interest Rate Hedging Transaction"

means any Swap Transaction entered into by the Issuer with an Eligible Counterparty intended to protect the Issuer against adverse changes in the floating rate of interest payable on all or a portion of any Debt or other obligation of the Issuer or its subsidiaries or on any Issuer Investment or intended to protect against the fluctuation of the market value of certain Collateral from the fluctuation of interest rates.

"Interest Rate/Currency Hedging Advance Amount"

means as of any date of determination, (i) if the Interest Rate/Currency Hedging Net Exposure is greater than zero, 95 per cent. of the Interest Rate/Currency Hedging Net Exposure and (ii) if the Interest Rate/Currency Hedging Net Exposure is less than zero, 105 per cent. of the Interest Rate/Currency Hedging Net Exposure for the purposes of calculating the S&P Advance Amount and 100 per cent. of the Interest Rate/Currency Hedging Net Exposure for the purposes of calculating the Moody's Advance Amount.

"Interest Rate/Currency Hedging Net Exposure"

means, as of any date, the sum of the Net Exposure Components for all Interest Rate Hedging Transactions and Currency Hedging Transactions entered into by the Issuer, determined as of such date (in each case) by the applicable Eligible Counterparty and may, for the purposes of this calculation, be less than zero.

"Issuer Investments" means all Cash, Cash Equivalents, Government Securities, Loans, Securities and Hedging Transactions owned or entered into by the Issuer. Issuer Investments which the Issuer has contracted to purchase shall not be deemed to be owned by the Issuer until settlement of such purchase and Issuer Investments which the Issuer has contracted to sell shall not cease to be Issuer Investments for the purposes of the Security and Intercreditor Deed until settlement of such sale.

"Investment Grade Securities" means a bond that is not a CDO Security which has an S&P OC Test Rating of "BBB-" or above and a Moody’s OC Test Rating of "Baa3" or above.

"Investment Manager" means Avoca Capital Holdings.

"Loans" means Senior Secured Loans, Mezzanine Loans, Second Lien Loans, Senior Unsecured Loans and/or any other direct purchases of, assignments of, participations in and other interests in (a) any bank loan to which a bank is party or (b) any loan made by an investment bank, investment fund or other financial institution; provided that such loan under this clause (b) is similar to those typically made, syndicated, purchased or participated in by a commercial bank or institutional loan investor in the ordinary course of business.

"Maximum Unfunded Amount" means as of any date of determination with respect to any Loan, Participation or delayed draw Security, the maximum amount of Cash that the Issuer is committed to advance in respect thereof undrawn as of such date of determination.

"Mezzanine Loan" means a second secured loan obligation (including any such loan obligation with attached warrants and including any such obligation which is evidenced by an issue of notes), as determined by the Investment Manager.

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"Moody's Advance Amount" means, as of any date of determination under any Over-Collateralisation Test, the sum of (i) the sum for all Non-Excluded Issuer Investments of the product of (1) the Market Value of such Non-Excluded Issuer Investments multiplied by (2) the Moody's Advance Rate for the Asset Category applicable to such Non-Excluded Issuer Investments under the applicable Over-Collateralisation Test, (ii) the positive or negative value of the Hedging Advance Amount as of such date and (iii) the positive or negative value of the Net Accrual Amount as of such date.

"Moody's OC Test Rating" means:

(i) in the case of an Issuer Investment that is rated by Moody's, such ratings;

(ii) in the case of an Issuer investment that is not rated by Moody's but another obligation of the same issuer is rated by Moody's, then (a) if the obligation is of the same priority, such rating, (b) if the obligation is a senior unsecured obligation, then (1) one subcategory above such rating, if such Issuer Investment is a senior secured obligation, with a rating of "Aaa" remaining the same, (2) two subcategories below such rating if such rating is "B1" or higher and such Issuer Investment is a subordinated obligation, (3) one subcategory below such rating if such rating is between "B2" and "Ca", inclusive, and such Issuer Investment is a subordinated obligation and (4) otherwise "C", (c) if the obligation is a subordinated obligation and such Issuer Investment is a senior secured obligation, then (1) one subcategory above such rating if such rating is "Baa3" or higher, (2) two subcategories above such rating if such rating is between "Ba1" and "B2", inclusive, (3) one subcategory above such rating if such rating is "B3" and (4) otherwise such rating, (d) if the obligation is a subordinated obligation and such Issuer Investment is a senior unsecured obligation, then (1) one subcategory above such rating if such rating is "B3" or higher and (2) otherwise such rating and (e) if the obligation is a senior secured obligation, then (1) one subcategory below such rating if such rating is "Ca" or higher and such Issuer Investment is a senior unsecured obligation, (2) two subcategories below such rating if such rating is "Ca2" or higher and such Issuer Investment is a subordinated obligation and (3) otherwise "C";

(iii) if the Issuer (or the Investment Manager on its behalf) presents such Issuer Investment to Moody's for an estimate of such Issuer Investment's rating factor, the rating determined from such estimate; provided that pending receipt from Moody's of such estimate, such rating shall be "B3" if the Issuer (or the Investment Manager on its behalf) certifies to the Representative for each Senior Facility and the Trustee that the Issuer (or the Investment Manager on its behalf) believes that such estimate will equate to a rating of at least "B3";

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(iv) in the case of an Issuer Investment that is not rated by Moody's and no other obligation of the same issuer is rated by Moody's then:

(A) (1) if such Issuer Investment is rated by S&P, (a) one subcategory below the Moody's equivalent of the rating assigned by S&P if such rating is "BBB-" or higher and (b) two subcategories below the Moody's equivalent of the rating assigned by S&P if such rating is "BB+" or lower or (2) if such Issuer Investment is not rated by S&P but another obligation of the issuer is rated by S&P (a "parallel security"), and the Moody's equivalent of the rating of such parallel security is determined in accordance with the methodology set forth in clause (1) above, the rating determined in accordance with the methodology set forth in clause (iv) above (for such purpose treating the parallel security as if it were rated by Moody's at the rating determined pursuant to this subclause (2));

(B) if (1) neither the issuer of such Issuer Investment nor any of its Affiliates is subject to reorganisation or bankruptcy proceedings, (2) no obligations of the issuer are in default, (3) neither the issuer nor any of its Affiliates have defaulted on any debt during the past two years, (4) the issuer has been in existence for the past four years, (5) the issuer is current on any cumulative dividends, (6) the fixed charge ratios for the issuer exceeds 120 per cent. for each of the past two fiscal years (and for the most recent four quarters), (7) the issuer had a net profit before tax in the past fiscal year and the most recent quarter and (8) the annual financial statements of the issuer are unqualified and certified by a firm of independent accounts of international reputation, and quarterly statements are unaudited but signed by a corporate officer, "B3" if such Issuer Investment is a senior secured obligation and "Caa1" if such Issuer Investment is not a senior secured obligation;

(C) if (1) neither the issuer of such Issuer Investment nor any of its Affiliates is subject to reorganisation or bankruptcy proceedings and (2) no obligation of the issuer has been in default during the past two years, "Caa2";

(D) if an obligation of the issuer of such Issuer Investment has been in default during the past two years, "Ca" and

(v) in the case of an Issuer Investment that is only rated by Moody's (including any shadow rating), such Moody's rating.

"Net Accrual Amount" means, as of any date, an amount, which may be positive or negative, equal to (i) the sum of (a) the aggregate amount of accrued interest payable to the Issuer (excluding any interest

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payable on Counterparty Downgrade Collateral) on all interest bearing Non-Excluded Issuer Investments as of such date and (b) the aggregate amount of accrued and unpaid payments due to the Issuer under any Synthetic Purchase Contract as of such date minus (ii) the sum of (a) the aggregate amount of accrued interest payable by the Issuer as of such date in respect of Permitted Indebtedness (provided that, for the purposes of the calculation of the Moody's Advance Amount and S&P Advance Amount, such Permitted Indebtedness shall only include Permitted Indebtedness which has been assigned a Rating by the Rating Agencies), (b) the aggregate amount of accrued and unpaid payments due to the counterparty under any Credit Default Protection Contract as of such date and (c) the Investment Manager's good faith estimate of the aggregate amount of accrued and unpaid fees and expenses of the Issuer (including, for the avoidance of doubt, any Management Fees (together with VAT thereon) and Administrative Expenses), including any fees and expenses payable to any Representative under any Permitted Debt Document. Any such amounts not payable in Euro shall be converted into Euro at the then current spot rate (after taking into account the effect of any Currency Hedging Transaction with respect thereto).

"Net Asset Value" means, as of any date of determination, an amount equal to the Market Value of all Issuer Investments as of such date minus the principal amount outstanding of all of the Issuer's Debt other than Subordinated Indebtedness as of such date plus the positive or negative value of the Net Accrual Amount as of such date.

"Net Exposure Component" means, with respect to each Interest Rate Hedging Transaction and Currency Hedging Transaction, an amount equal to the current unwind value to the Issuer on such date of determination of such Interest Rate Hedging Transaction or Currency Hedging Transaction; provided that the "Net Exposure Component" of each Interest Rate Hedging Transaction and each Currency Hedging Transaction that has a positive Net Exposure Component and a counterparty that is not an Eligible Counterparty shall be zero.

"Non-Cash Pay Instrument" means, unless otherwise determined pursuant to Rating Agency Confirmation, an Investment Grade Security which falls in Asset Category C-1, C-2, C-3, C-4, C-5, C-6, C-7, C-8, C-9 or C-10 or a High Yield Security which falls in Asset Category D-1, D-2, D-3, E-1, E-2, E-3, F-1, F-2 or F-3 that (a) does not provide for the payment of cash interest or provides for the total deferral of interest until the final maturity thereof, (b) is a debt security that has an initial rate of interest on the date of purchase or acquisition thereof of less than five per cent. per annum and provides for an increase in the rate of interest payable in respect thereof at any time after the date it was purchased or acquired (other than any increase resulting from (i) a change in a generally recognised floating rate interest rate index, (ii) a change in the weighted average interest rate on underlying collateral in the case of Securities the interest rate on which is based on such weighted average interest rate or (iii) a change in an interest rate spread or margin or the financial performance of the issuer resulting from an announced change in the rating of the issuer's debt obligations) or (c) is a debt security that provides for the partial deferral of interest until the final maturity thereof and which has cash interest payable without deferral at a rate per annum less than (x) with respect to Issuer Investments bearing interest at a fixed rate, five

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per cent. per annum and (y) with respect to Issuer Investments bearing interest at a floating rate, EURIBOR plus one per cent. per annum. For the purposes of clause (b) of this definition, if the interest rate is increased to five per cent. or more per annum, then at the time of the increase of such interest rate, the Security will cease to be a "Non-Cash Pay Instrument"; provided, however, that in no event shall a "Non-Cash Pay Instrument" include a CDO Security.

"Non-Credit Risk Security" means a security with respect to which an institutional money manager would determine its value primarily by reference to factors other than (a) the coupon (or the coupon as adjusted for any purchase discount or premium) in relation to prevailing market yields and/or (b) the credit worthiness of the issuing entity and/or (c) the adequacy of the underlying financial assets supporting such security to ensure the repayment of the security according to its terms (which adequacy may be measured by a credit analysis of the likelihood of the obligors under such underlying assets to pay according to the terms of such underlying assets and/or an analysis of the sufficiency of the income streams thereon to meet the payment terms of the security).

"Non-Excluded Issuer Investments"

means, at any date, all Issuer Investments in the Collateral on such date other than Excluded Issuer Investments.

"Non-Qualifying Country" means any country which is not a Qualifying Country.

"Non-Qualifying Security" means an Investment Grade Security or a High Yield Security whose issuer's or obligor's principal place of business or significant operation is in a Non-Qualifying Country.

"Over-Collateralisation Tests" means the Senior Over-Collateralisation Test, the Second Senior Over-Collateralisation Test, the Third Senior Over-Collateralisation Test and the Fourth Senior Over-Collateralisation Test.

For the purposes of the Over-Collateralisation Tests, the Issuer shall assign each Issuer Investment (other than Synthetic Purchase Contracts, Credit Default Protection Contracts and Defensive Hedge Transactions) and each Reference Security to one of the following categories (each, an "Asset Category") commencing upon the initial acquisition thereof (and, for the purposes of this categorisation, the Market Value Price of an Issuer Investment trading at par is equal to €1.00):

"Asset Category A-1 Investments" means Cash and Cash Equivalents or Government Securities that mature on the Business Day next following the date of acquisition thereof.

"Asset Category A-2 Investments" means Cash Equivalents and Government Securities with final maturities of less than or equal to 183 days (other than those described in the definition of Asset Category A-1 Investments).

"Asset Category A-3 Investments" means Government Securities with final maturities of more than 183 days but less than or equal to two years.

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"Asset Category A-4 Investments" means Government Securities with final maturities of more than two years but less than or equal to five years.

"Asset Category A-5 Investments" means Government Securities with final maturities of more than five years but less than or equal to ten years.

"Asset Category A-6 Investments" means Government Securities with final maturities of more than ten years but less than or equal to 30 years.

"Asset Category B-1 Investments" means Senior Secured Loans and Senior Unsecured Loans which (i) are Performing, (ii) are priced by an Approved Source and (iii) have a Market Value Price greater than or equal to €0.95.

"Asset Category B-2 Investments" means Senior Secured Loans and Senior Unsecured Loans which (i) are Performing, (ii) are priced by an Approved Source and (iii) have a Market Value Price greater than or equal to €0.80 and less than €0.95.

"Asset Category B-3 Investments" means Senior Secured Loans and Senior Unsecured Loans which (i) are Performing, (ii) are priced by an Approved Source and (iii) have a Market Value Price less than €0.80.

"Asset Category B-4 Investments" means Mezzanine Loans and Second Lien Loans which (i) are Performing, (ii) are priced by an Approved Source and (iii) have a Market Value Price greater than or equal to €0.95.

"Asset Category B-5 Investments" means Mezzanine Loans and Second Lien Loans which (i) are Performing, (ii) are priced by an Approved Source and (iii) have a Market Value Price greater than or equal to €0.80 and less than €0.95.

"Asset Category B-6 Investments" means Mezzanine Loans and Second Lien Loans which (i) are Performing, (ii) are priced by an Approved Source and (iii) have a Market Value Price less than €0.80.

"Asset Category C-1 Investments" means Investment Grade Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "AAA" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Aaa" for the purposes of calculating the Moody's Advance Amount.

"Asset Category C-2 Investments" means Investment Grade Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "AA+" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Aa1" for the purposes of calculating the Moody's Advance Amount.

"Asset Category C-3 Investments" means Investment Grade Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "AA" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Aa2" for the purposes of calculating

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the Moody's Advance Amount.

"Asset Category C-4 Investments" means Investment Grade Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "AA-" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Aa3" for the purposes of calculating the Moody's Advance Amount.

"Asset Category C-5 Investments" means Investment Grade Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "A+" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "A1" for the purposes of calculating the Moody's Advance Amount.

"Asset Category C-6 Investments" means Investment Grade Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "A" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "A2" for the purposes of calculating the Moody's Advance Amount.

"Asset Category C-7 Investments" means Investment Grade Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "A-" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "A3" for the purposes of calculating the Moody's Advance Amount.

"Asset Category C-8 Investments" means Investment Grade Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "BBB+" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Baa1" for the purposes of calculating the Moody's Advance Amount.

"Asset Category C-9 Investments" means Investment Grade Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "BBB" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Baa2" for the purposes of calculating the Moody's Advance Amount.

"Asset Category C-10 Investments" means Investment Grade Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "BBB-" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Baa3" for the purposes of calculating the Moody's Advance Amount.

"Asset Category D-1 Investments" means High Yield Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "BB+" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Ba1" for the purposes of calculating the Moody's Advance Amount.

"Asset Category D-2 Investments" means High Yield Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "BB" for the purposes of

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calculating the S&P Advance Amount or a Moody's OC Test Rating of "Ba2" for the purposes of calculating the Moody's Advance Amount.

"Asset Category D-3 Investments" means High Yield Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "BB-" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Ba3" for the purposes of calculating the Moody's Advance Amount.

"Asset Category E-1 Investments" means High Yield Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "B+" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "B1" for the purposes of calculating the Moody's Advance Amount.

"Asset Category E-2 Investments" means High Yield Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "B" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "B2" for the purposes of calculating the Moody's Advance Amount.

"Asset Category E-3 Investments" means High Yield Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "B-" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "B3" for the purposes of calculating the Moody's Advance Amount.

"Asset Category F-1 Investments" means High Yield Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "CCC+" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Caa1" for the purposes of calculating the Moody's Advance Amount.

"Asset Category F-2 Investments" means High Yield Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "CCC" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Caa2" for the purposes of calculating the Moody's Advance Amount.

"Asset Category F-3 Investments" means High Yield Securities which (i) are Performing, (ii) are priced by an Approved Source and (iii) have an S&P OC Test Rating of "CCC-" or below or "NR" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Caa3" or below or "NR" for the purposes of calculating the Moody's Advance Amount.

"Asset Category F-4 Investments" means Non-Qualifying Securities which (i) are Performing and (ii) are priced by an Approved Source.

"Asset Category I-1 Investments" means Senior Secured Loans and Senior Unsecured Loans which (i) are non-Performing, (ii) are priced by an Approved Source and (iii) have a Market Value Price greater than or equal to €0.95.

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"Asset Category I-2 Investments" means Senior Secured Loans and Senior Unsecured Loans which (i) are non-Performing, (ii) are priced by an Approved Source and (iii) have a Market Value Price greater than or equal to €0.80 and less than €0.95.

"Asset Category I-3 Investments" means (i) Senior Secured Loans and Senior Unsecured Loans which (a) are non-Performing, (b) are priced by an Approved Source and (c) have a Market Value Price less than €0.80, (ii) the portion of the aggregate Market Value of all Senior Secured Loans described in Asset Categories B-1, B-2 and B-3 or I-1 and I-2 above that have an S&P OC Test Rating below "B-" or of "NR" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of below "B3" or of "NR" for the purposes of calculating the Moody's Advance Amount that is in excess of 15 per cent. of Total Capitalisation and (iii) the portion of the aggregate Market Value of all Senior Unsecured Loans described in Asset Categories B-1, B-2 and B-3 or I-1 and I-2 above that have an S&P OC Test Rating below "B-" or of "NR" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating below "B3" or of "NR" for the purposes of calculating the Moody's Advance Amount that is in excess of 2.5 per cent. of Total Capitalisation.

"Asset Category I-4 Investments" means (i) Mezzanine Loans and Second Lien Loans which (a) are non-Performing, (b) are priced by an Approved Source and (c) have a Market Value Price greater than or equal to €0.95 and (ii) the portion of the aggregate Market Value of all Mezzanine Loans and Second Lien Loans described in Asset Categories B-4, B-5 and B-6 in excess of 20 per cent. of Total Capitalisation.

"Asset Category I-5 Investments" means Mezzanine Loans and Second Lien Loans which (i) are non-Performing, (ii) are priced by an Approved Source and (iii) have a Market Value Price greater than or equal to €0.80 and less than €0.95.

"Asset Category I-6 Investments" means (i) Mezzanine Loans and Second Lien Loans which (a) are non-Performing, (b) are priced by an Approved Source and (c) have a Market Value Price less than €0.80 and (ii) the portion of the aggregate Market Value of all Mezzanine Loans and Second Lien Loans described in Asset Categories B-4, B-5 and B-6 or I-4 and I-5 above that have an S&P OC Test Rating below "B-" or of "NR" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating below "B3" or of "NR" for the purposes of calculating the Moody's Advance Amount that is in excess of 5 per cent. of Total Capitalisation.

"Asset Category I-7 Investments" means (i) non-Performing High Yield Securities priced by an Approved Source, (ii) Loans that are Performing and are Unquoted Investments and (iii) PIK Securities.

"Asset Category K-1 Investments" means (i) Semi-Liquid Securities that are Performing and have an S&P OC Test Rating of "CCC+" or below or "NR" for the purposes of calculating the S&P Advance Amount or a Moody's OC Test Rating of "Caa1" or below or "NR" for the purposes of calculating the Moody's Advance Amount and (ii) CDO Securities not otherwise assigned to an Asset Category pursuant to the Rating Procedures for the

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purpose of calculating the S&P Advance Amount or the Moody’s Advance Amount.

"Asset Category K-2 Investments" means Semi-Liquid Securities that are non-Performing.

"Participation" means a participation in a Loan, provided that Participations shall not include (i) any participations which may be converted into an assignment at any time at the irrevocable option of the Issuer, (ii) any Secured Participations or (iii) any Structured Product Transactions.

"Performing" means, with respect to any Issuer Investment that is a Loan or other form of debt, the issuer of such Issuer Investment is not in default of any payment obligations in respect thereof.

"Person" means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organisation, including a government or political subdivision or an agency or instrumentality thereof.

"PIK Securities" means any loan obligation (other than Mezzanine Loans) which, by its terms, may pay interest thereon other than on a current basis and which is designated as such by the Investment Manager on or prior to the date of its acquisition.

"Pound Sterling" means pound sterling in lawful currency of the United Kingdom.

"Protected Market Value" means, with respect to any Issuer Investment that is the subject of a Defensive Hedge Transaction, the Protected Price of such Issuer Investment times the number of units of such Issuer Investment that are the subject of such Defensive Hedge Transaction.

"Protected Price" means, with respect to any Defensive Hedge Transaction, (i) the agreed strike price at which the Eligible Counterparty to such Defensive Hedge Transaction has agreed to purchase the Issuer Investment that is the subject of such Defensive Hedge Transaction or (ii) the agreed strike price under a Defensive Hedge Transaction pursuant to which the Eligible Counterparty has agreed to pay the Issuer an amount equal to the excess of the agreed strike price over the current price of the Issuer Investment that is the subject of such Defensive Hedge Transaction.

"Qualifying Country" means the United Kingdom (including the Channel Islands), Ireland, France, Greece, Spain, Portugal, Italy, The Netherlands, Luxembourg, Belgium, Germany, Austria, Liechtenstein, Norway, Sweden, Denmark, Finland, Switzerland, Cayman Islands, Australia, New Zealand, Canada, the United States of America, any country which is or becomes a member of the European Union after the Initial Closing Date and which has a foreign currency S&P issuer credit rating of at least "AA-" for the purposes of calculating the S&P Advance Amount or a Moody's long term sovereign debt rating of at least "Aa2" for the purposes of calculating the Moody's Advance Amount and any other country confirmed in writing as acceptable by (i) the Designated Approval Representative and (ii) S&P and/or Moody's (as the case may be) pursuant to a Rating Agency Confirmation.

"Quarterly Mark Security" means, as of any date of determination, any Issuer Investment that is an Unquoted Investment for which the Market Value was obtained more than a month prior to such date of determination.

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"Rating Agency Tables" means the tables applicable to S&P and Moody's set out at the end of these definitions and specifying the Advance Rates. On the Initial Closing Date, the Investment Manager, on behalf of the Issuer, will be required to elect which table initially applies in calculating the S&P Advance Amount and which set of tables initially applies in calculating the Moody's Advance Amount, based on expected issuer and industry diversification during the Diversity Compliance Period, and shall notify the Trustee, the Security Trustee, the Collateral Administrator and the Rating Agencies of such election. Thereafter, on ten Business Days' notice to the Trustee, the Security Trustee, the Collateral Administrator and the Rating Agencies, the Issuer (or the Investment Manager on behalf of the Issuer) may, during the Diversity Compliance Period, elect to have a different table or set of tables (as the case may be) apply, provided that the diversification requirements set out in the table applicable to S&P or the set of tables applicable to Moody's (as the case may be) are met and continue to be met following such date.

"Rating Procedures" References herein to any rating by S&P or Moody's shall include shadow ratings and shall also be deemed to include an equivalent rating in a successor rating category of S&P or Moody's, as the case may be, or if S&P or Moody's ceases to be in the business of rating securities, an equivalent rating from another rating agency.

Notwithstanding any other provision contained herein:

(i) Issuer Investments that are Investment Grade Securities or High Yield Securities that are Performing but are Semi-Liquid Securities will be assigned a rating for the purposes hereof that is one rating category (i.e., three rating subcategories) below the S&P OC Test Rating and the Moody's OC Test Rating assigned to such Investment Grade Security or High Yield Security;

(ii) Issuer Investments that are Busted Convertible Bonds will be assigned to an Asset Category into which such Issuer Investments would otherwise fall if they were not convertible securities, provided that the Advance Rate of any Busted Convertible Bonds shall be 95 per cent. of the Advance Rate thereof otherwise determined in accordance with valuation procedures set forth herein;

(iii) for the purposes of determining the Advance Rate applicable to Issuer Investments in Participations and to a Reference Security for any Hedging Transactions at any time during the 30-day period referred to in the provisos included in the definitions of Eligible Selling Institution and Eligible Counterparty, the Advance Rate will be 100 per cent. of the Advance Rate for the first 15 days of such 30-day period, and 90 per cent. of the Advance Rate for the remainder of such period, calculated for such Issuer Investment or Reference Security, as applicable, pursuant to the definition of Advance Rate;

(iv) the Advance Rate applicable to any Reference Security in respect of a Credit Default Swap or a Single Asset Total Return Swap having an S&P OC Test Rating of at least "BBB-" for the purposes of calculating the S&P Advance Amount shall be 95 per cent. (or such greater

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percentage approved by S&P) of the Advance Rate otherwise determined in accordance with the above procedures; the Advance Rate applicable to any Reference Security in respect of a Credit Default Swap or a Single Asset Total Return Swap having an S&P OC Test Rating of less than "BBB-" for the purposes of calculating the S&P Advance Amount shall be an Advance Rate that is 90 per cent. (or such greater percentage approved by S&P) of the Advance Rate otherwise determined in accordance with the above procedures; the Advance Rate applicable to any Reference Security which is an Investment Grade Security or a High Yield Security in respect of a Credit Default Swap or a Single Asset Total Return Swap having a Moody’s OC Test Rating of at least "Ba3" for the purposes of calculating the Moody’s Advance Amount shall be 95 per cent. (or such greater percentage approved by Moody’s) of the Advance Rate otherwise determined in accordance with the above procedures; the Advance Rate applicable to any Reference Security which is a High Yield Security in respect of a Credit Default Swap or a Single Asset Total Return Swap having a Moody’s OC Test Rating of "B1", "B2" or "B3" for the purposes of calculating the Moody’s Advance Amount shall be an Advance Rate that is 90 per cent. (or such greater percentage approved by Moody’s) of the Advance Rate otherwise determined in accordance with the above procedures; the Advance Rate applicable to any Reference Security which is a High Yield Security in respect of a Credit Default Swap or a Single Asset Total Return Swap having a Moody’s OC Test Rating of "Caa1", "Caa2" or "Caa3" for the purposes of calculating the Moody’s Advance Amount shall be an Advance Rate that is 85 per cent. (or such greater percentage approved by Moody’s) of the Advance Rate otherwise determined in accordance with the above procedures; the Advance Rate applicable to any Reference Security which is a High Yield Security in respect of a Credit Default Swap or a Single Asset Total Return Swap having a Moody’s OC Test Rating of less than "Caa3" for the purposes of calculating the Moody’s Advance Amount shall be 80 per cent. (or such greater percentage approved by Moody’s) of the Advance Rate otherwise determined in accordance with the above procedures; the Advance Rate applicable to any Reference Security which is a Performing Loan in respect of a Credit Default Swap or a Single Asset Total Return Swap for the purposes of calculating the Moody’s Advance Amount shall be 91 per cent. (or such greater percentage approved by Moody’s) of the Advance Rate otherwise determined in accordance with the above procedures;

the Advance Rate applicable to any Reference Security which is a non-Performing Loan with a Market Value Price of at least €0.85 in respect of a Credit Default Swap or a Single Asset Total Return Swap for the purposes of calculating the Moody’s Advance Amount shall be 80 per cent. (or such greater percentage approved by Moody’s) of the Advance Rate otherwise determined in accordance with the above procedures;

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and the Advance Rate applicable to any Reference Security which is a non-Performing Loan with a Market Value Price of less than €0.85 in respect of a Credit Default Swap or a Single Asset Total Return Swap for the purposes of calculating the Moody’s Advance Amount shall be 70 per cent. (or such greater percentage approved by Moody’s) of the Advance Rate otherwise determined in accordance with the above procedures;

(v) for the purposes of calculating the S&P Advance Amount, Issuer Investments that are Investment Grade Securities or High Yield Securities that are Performing but are Asset Backed Securities (a) that are rated by S&P will (1) be assigned a rating for the purposes hereof that is one rating category (i.e., three rating subcategories) below the S&P OC Test Rating assigned to such Investment Grade Security or High Yield Security and (2) if rated below "CCC-" by S&P, have the Asset Category K-2 Advance Rate and (b) that are not rated by S&P but are rated by Moody's will (1) be assigned a rating for the purposes hereof that is two rating categories (i.e., six rating subcategories) below the S&P OC Test Rating assigned to such Investment Grade Security or High Yield Security and (2) if rated below "Ba3" by Moody's, have the Asset Category K-2 Advance Rate and for the purposes of calculating the Moody's Advance Amount, Issuer Investments that are Investment Grade Securities or High Yield Securities that are Performing but are Asset Backed Securities will be assigned a rating for the purposes hereof that is one rating category (i.e. three rating subcategories) below the Moody's OC Test Rating of such Investment Grade Security or High Yield Security; and

(vi) for the purpose of calculating the S&P Advance Amount, Issuer Investments that are Performing CDO Securities will be assigned to an Asset Category for Investment Grade Securities or High Yield Securities using a rating that is (i) one rating category (i.e. three rating sub categories) below the S&P OC Test Rating, if such CDO Security is rated by S&P and (ii) two rating categories (i.e. six rating sub categories) below the S&P Rating as set forth opposite the applicable public Moody’s rating in the S&P OC Test Rating Chart, if such CDO Security is not rated by S&P but is publicly rated by Moody’s and for the purposes of calculating the Moody’s Advance Amount, Issuer Investments that are Performing CDO Securities will be assigned to an Asset Category for Investment Grade Securities or High Yield Securities using a rating that is one rating category (i.e. three rating sub categories) below the Moody’s OC Test Rating of such Investment Grade Security or High Yield Security.

"Reference Security" means, with respect to any Credit Default Protection Contract or Synthetic Purchase Contract, the security, or index that is approved by S&P for the purposes of calculating the S&P Advance Amount or by Moody's for the purposes of calculating the Moody's Advance Amount referred to in the underlying transaction documents for such Credit Default Protection Contract or Synthetic Purchase Contract as the "reference

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securities", which, in the case of a Credit Default Swap, shall be the Cheapest to Deliver Security.

"Relevant Issuer Investment" means any Issuer Investment excluding any Excluded Issuer Investments other than those so characterised by operation of paragraph (iii) of the definition of Excluded Issuer Investments.

"Reporting Date" means the last Friday of each calendar month, or, if such Friday is not a Business Day, the immediately preceding Business Day, commencing 31 August 2007.

"S&P Advance Amount" means, as of any date of determination under any Over-Collateralisation Test, the amount by which (x) the sum of (i) the sum for all Non-Excluded Issuer Investments of the product of (1) the Market Value of such Non-Excluded Issuer Investments multiplied by (2) the S&P Advance Rate for the Asset Category applicable to such Non-Excluded Issuer Investments under the applicable Over-Collateralisation Test, (ii) the positive or negative value of the Hedging Advance Amount as of such date and (iii) the positive or negative value of the Net Accrual Amount as of such date exceeds (y) the Unfunded Revolver Adjustment Amount.

"S&P OC Test Rating" means as follows:

(i) with respect to any Issuer Investment with an S&P issuer credit rating in the case of Loans, or with an S&P issue credit rating in the case of Investment Grade Securities or High Yield Securities, such rating;

(ii) with respect to any Issuer Investment without an S&P issuer credit rating, but whose issuer, or the unconditional and irrevocable guarantor of such issue, is rated by S&P, the senior unsecured S&P rating of such issuer or such unconditional and irrevocable guarantor, as the case may be;

(iii) with respect to any Issuer Investment without an S&P issuer credit rating, and without an issuer or unconditional and irrevocable guarantor of such issue rated by S&P, but with a public Moody's senior unsecured rating of such issuer or unconditional and irrevocable guarantor of such issue, the S&P rating as set forth opposite the applicable public Moody's rating in the S&P OC Test Rating Chart;

(iv) with respect to any Issuer Investment not covered in (i) through (iii) above, the rating of the issue, issuer, or such unconditional and irrevocable guarantor, as the case may be, as privately assessed by S&P at the Issuer's request and

(v) with respect to any Issuer Investment not covered in (i) through (iv) above, "CCC-".

"S&P OC Test Rating Chart" means the chart set forth below:

Moody's Rating Mapped S&P Rating Aaa AA+ Aa1 AA Aa2 AA-

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Aa3 A+ A1 A A2 A- A3 BBB+ Baa1 BBB Baa2 BBB- Baa3 BB+ Ba1 BB- Ba2 B+ Ba3 B B1 B- B2 CCC+ B3 CCC Caa1 CCC- NR or below Caa1 NR "Second Lien Loan" means a second secured loan obligation that, at the time of its

purchase by the Issuer has collateral that is also pledged to secure an obligation senior to such loan.

"Second Senior Advance Amount"

means the lesser of (A) the S&P Advance Amount calculated using the S&P Second Senior Advance Rates and (B) the Moody's Advance Amount calculated using the Moody's Second Senior Advance Rates.

"Second Senior Over-Collateralisation Test"

is a test that is satisfied as of any Business Day if (a) the sum, as of such Business Day, of (i) the Principal Amount Outstanding of Senior Indebtedness and (ii) the Principal Amount Outstanding of Second Senior Indebtedness is less than or equal to (b) the Second Senior Advance Amount.

"Secured Hedging Transaction" means any Hedging Transaction entered into by the Issuer with a counterparty that is eligible under each Permitted Debt Document which is secured by Collateral pursuant to the Security Documents (as defined in the Conditions).

"Secured Participation" means any participation in a Loan in respect of which the Issuer has security over the assets to which such participation relates.

"Security" means common and preferred equity, partnership units and participations, member interests in limited liability companies, notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, including debt instruments of public and private issuers and tax exempt securities (including, without limitation, warrants, rights, put and call options and other options relating thereto, representing rights, or any combination thereof), guarantees of indebtedness, chooses in action, trade claims, other property or interests commonly regarded as securities or any form of interest or participation therein, but not including Loans and Hedging Transactions.

"Security Trustee" means the security trustee appointed pursuant to the Intercreditor Arrangements (as defined in the Conditions).

"Securities Lending Transactions"

means all obligations of the Issuer to purchase investments which arise out of or in connection with the sale by the Issuer of the same or substantially similar investments or other similar transactions having the same economic effect (excluding Swap Transactions) incurred in connection with any security lending transactions.

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"Semi-Liquid Security" means any Issuer Investment (other than Synthetic Purchase Contracts, Credit Default Protection Contracts and Defensive Hedge Transactions) that is an Unquoted Investment.

"Senior Advance Amount" means the lesser of (A) the S&P Advance Amount calculated using the S&P Senior Advance Rates and (B) the Moody's Advance Amount calculated using the Moody's Senior Advance Rates.

"Senior Facility" means, as of any date of determination, each revolving or term loan credit facility (or any portion thereof) that has been designated as Senior Indebtedness.

"Senior Over-Collateralisation Test"

is a test that is satisfied as of any Business Day if, as of such Business Day, the Principal Amount Outstanding of Senior Indebtedness is less than or equal to the Senior Advance Amount.

"Senior Secured Loan" means a secured senior loan obligation as determined by the Investment Manager in its reasonable business judgment or a Participation therein (A) which is secured by (1) fixed assets or a guarantor if and to the extent a pledge of fixed assets is permissible under applicable law (save in the case of assets so numerous or diverse that the failure to take such security is consistent with reasonable secured lending practices) or (2) all or substantially, all of the equity interests, or equivalent voting rights, in the equity of an entity owning such fixed assets and (B) over which no other obligation has any higher priority security interest in such fixed assets or equity.

"Senior Unsecured Loan" means a loan obligation senior to any unsecured, subordinated obligation as determined by the Investment Manager in its reasonable business judgment or a Participation therein and which is not secured by (A) fixed assets or a guarantor if and to the extent a pledge of fixed assets is permissible under applicable law (save in the case of assets so numerous or diverse that the failure to take such security is consistent with reasonable secured lending practices) or (B) all or substantially, all of the equity interests, or equivalent voting rights, in the equity of an entity owning such fixed assets.

"Single Asset Total Return Swap"

means a Hedging Transaction (substantially in the form of a Form Approved Swap or form that is otherwise approved by S&P in a Rating Agency Confirmation for the purposes of calculating the S&P Advance Amount or by Moody's in a Rating Agency Confirmation for the purposes of calculating the Moody's Advance Amount) between the Issuer and a counterparty pursuant to which (a) the Counterparty is entitled to receive from the Issuer an amount equal to (1) periodic payments based on the notional amount of such transaction for the term thereof at a specified rate (which may be fixed or floating) and/or (2) the decrease over the term of such transaction in the market value of a single designated Reference Security that is a debt security or an index and (b) the Counterparty is obliged to make payment to the Issuer in an amount equal to (1) the interest, fees and other cash flows paid on such Reference Security for the term of such transaction and/or (2) the increase over the term of such transaction in the market value of such Reference Security or (c) the Issuer and the counterparty agree to pay a net amount calculated by reference to (a) and (b) above.

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"Structured Finance Obligation" means (i) an Asset Backed Security or a CDO Security, in each case, that is a non-recourse or limited recourse debt obligation issued by a special purpose vehicle and secured solely by the assets thereof or (ii) a Structured Product Transaction.

"Structured Product Transaction"

means (i) any Hedging Transaction between the Issuer and a counterparty pursuant to which (a) the counterparty is entitled to receive from the Issuer an amount equal to (1) periodic payments based on the notional amount of such transaction for the term thereof at a specified rate (which may be fixed or floating) and (2) the decrease over the term of such transaction in the market value of a designated pool of Loans, Securities or other assets or any combination of the foregoing and (b) the counterparty is obliged to make payment to the Issuer in an amount equal to (1) the interest, fees and other cash flows paid on such designated pool of Loans, Securities or other assets for the term of such transaction and (2) the increase over the term of such transaction in the market value of such designated pool of Loans, Securities or other assets or (c) the counterparty and the Issuer agree to pay a net amount calculated by reference to (a) and (b) above, (ii) any transaction commonly referred to as a "total return swap" involving more than one asset and (iii) any Hedging Transaction other than a Single Asset Total Return Swap that is substantially similar to the transactions described in clauses (i) and (ii) above.

"Structured Product Transaction Advance Amount"

means an amount, which may be positive or negative, equal to the sum, for each Structured Product Transaction, of (i) if the Market Value of such Structured Product Transaction is greater or equal to zero, the product of the applicable Advance Rate set forth opposite Asset Category K-1 Investments in the Rating Agency Tables and the Market Value of such Structured Product Transaction and (ii) if the Market Value of such Structured Product Transaction is less than zero, the product of the factor set forth opposite the applicable Over-Collateralisation Test in the below table and the Market Value of such Structured Product Transaction.

Senior Over-Collateralisation Test 115%

Second Senior Over-Collateralisation Test 110%

Third Senior Over-Collateralisation Test 105%

Fourth Senior Over-Collateralisation Test 100%

"Swap Transaction" means (i) any rate, basis, currency, debt or equity swap, futures or forward agreement, (ii) any put, call, cap, floor or collar agreement, (iii) any option representing an obligation to buy or sell a security, currency, debt or equity and (iv) any other similar agreement.

"Synthetic Purchase Contract" means each Credit Default Exposure Contract and each Single Asset Total Return Swap pursuant to which the Issuer is entitled to receive from the counterparty thereto, inter alia, payments in respect of the increase in the market value of the Reference Security designated therein.

"Synthetic Purchase Contract Advance Amount"

means an amount, which may be positive or negative, equal to the sum, for each Synthetic Purchase Contract, of (a) the product of (i) the notional amount of such Synthetic Purchase Contract plus the Market Value of such Synthetic Purchase Contract and (ii) the

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Advance Rate for such Synthetic Purchase Contract's Reference Security minus (b) the notional amount of such Synthetic Purchase Contract.

"Third Senior Advance Amount"

means the lesser of (A) the S&P Advance Amount calculated using the S&P Third Senior Advance Rates and (B) the Moody's Advance Amount calculated using the Moody's Third Senior Advance Rates.

"Third Senior Over-Collateralisation Test"

is a test that is satisfied as of any Business Day if (a) the sum, as of such Business Day, of (i) the Principal Amount Outstanding of Senior Indebtedness, (ii) the Principal Amount Outstanding of Second Senior Indebtedness and (iii) the Principal Amount Outstanding of Third Senior Indebtedness is less than or equal to (b) the Third Senior Advance Amount.

"Total Capitalisation" means, at any time, the sum of (a) any amounts of committed and available Permitted Indebtedness, (b) the aggregate undistributed net gains and income of the Issuer less (i) any outstanding placement or structuring fees and organisational expenses and (ii) any net loss of the Issuer (each as determined monthly and set forth in the Issuer's financial records and, in the case of year end financial records, in accordance with the applicable Irish accounting standards) and (c) the issued and paid up share capital of the Issuer.

"Unfunded Revolver Adjustment Amount"

means an amount equal to the sum, for each Loan, Participation or delayed draw note, of the product of (x) the Maximum Unfunded Amount thereof, if any, (y) one minus the Advance Rate for such Loan, Participation or delayed draw note and (z) 100 per cent. or such lesser percentage as S&P may notify the Issuer in writing from time to time.

"Unhedged Currency Investment"

means any portion of an Issuer Investment which is not protected against currency fluctuations as a result of borrowings or requested borrowings under any Permitted Debt Document that are repayable in the currency of denomination of such Issuer Investment or Currency Hedging Transactions. For the purposes of calculating the S&P Advance Amount, if 95 per cent. or more of the Market Value of an Issuer Investment is so protected, all of such Issuer Investment shall be deemed to be so protected for the purposes of this definition and the calculation of the Over-Collateralisation Tests.

"Unquoted Investments" means Issuer Investments other than Cash, Cash Equivalents, Government Securities or Non-Qualifying Securities for which the Market Value has not been obtained from an Approved Source on the preceding Valuation Date.

"US Assets" means any Issuer Investment in respect of which the relevant obligor is an entity domiciled in the United States of America.

"US Element" means, for each Asset Category in relation to a US Asset the percentage set out in the S&P applicable Rating Agency Tables opposite such Asset Category.

"Valuation Date" means (a) a Determination Date, (b) a Reporting Date, (c) the Friday of each calendar week which does not include a Determination Date or Reporting Date or, if such Friday is not a Business Day, the immediately preceding Business Day and (d) for the purpose of determining the Market Value Price of an

181

Issuer Investment at any date when the Issuer is not, or the Issuer (or the Investment Manager on its behalf) reasonably believes that it is not, in compliance with any covenant relating to the Over-Collateralisation Tests, the date on which the most current pricing information with respect to such Issuer Investment is reasonably available.

"VFN Agent" means Deutsche Bank AG, London Branch as agent for the VF Noteholders and any successor thereto.

182

Advance Rates applicable to S&P (Diversification requirement: 30 different issuers and 15 S&P industry categories)

Asset Category

S&P Senior Advance Rate

S&P Second Senior

Advance Rate

S&P Third Senior

Advance Rate

S&P Fourth Senior

Advance Rate

US Element

A-1 100.00% 100.00% 100.00% 100.00% - A-2 99.00% 99.00% 99.00% 99.00% - A-3 96.00% 97.00% 97.00% 98.00% - A-4 92.00% 93.00% 93.00% 94.00% - A-5 87.00% 88.00% 89.00% 90.00% - A-6 79.00% 81.00% 82.00% 83.00% - B-1 82.55% 84.71% 86.87% 89.03% 5.00% B-2 73.30% 76.18% 79.07% 81.95% 10.00% B-3 63.30% 66.18% 69.03% 71.43% 20.00% B-4 62.58% 68.99% 75.41% 81.82% 5.00% B-5 57.58% 63.99% 70.41% 76.82% 5.00% B-6 52.58% 58.99% 65.41% 71.82% 5.00% C-1 88.30% 89.49% 90.68% 91.87% 5.00% C-2 87.07% 88.47% 89.88% 91.29% 5.00% C-3 86.10% 87.68% 89.26% 90.83% 5.00% C-4 85.22% 86.95% 88.68% 90.41% 5.00% C-5 84.23% 86.13% 88.03% 89.93% 5.00% C-6 83.51% 85.53% 87.56% 89.59% 5.00% C-7 82.60% 84.78% 86.96% 89.15% 5.00% C-8 81.27% 83.68% 86.09% 88.50% 5.00% C-9 80.30% 82.88% 85.46% 88.04% 5.00%

C-10 79.19% 81.97% 84.74% 87.51% 5.00% D-1 76.32% 79.60% 82.87% 86.15% 5.00% D-2 73.49% 77.26% 81.02% 84.78% 5.00% D-3 70.80% 75.03% 79.26% 83.49% 5.00% E-1 65.22% 70.40% 75.58% 80.76% 5.00% E-2 61.40% 67.24% 73.08% 78.92% 5.00% E-3 57.61% 64.11% 70.61% 77.11% 5.00% F-1 50.80% 58.42% 66.04% 73.66% 5.00% F-2 43.36% 52.26% 61.16% 70.07% 5.00% F-3 33.93% 44.43% 54.93% 65.43% 5.00% F-4 40.22% 50.64% 61.07% 71.49% 5.00% I-1 62.58% 68.99% 75.41% 81.82% 5.00% I-2 57.58% 63.99% 70.41% 76.82% 5.00% I-3 52.58% 58.99% 65.41% 71.82% 5.00% I-4 32.54% 35.88% 39.21% 42.54% 5.00% I-5 29.94% 33.28% 36.61% 39.94% 5.00% I-6 27.34% 30.68% 34.01% 37.34% 5.00% I-7 27.73% 39.31% 50.90% 62.49% 5.00% K-1 0.95% 17.93% 34.92% 51.91% 5.00% K-2 0.00% 12.93% 29.92% 46.91% 5.00%

183


Asset Category


S&P Second Senior

Advance Rate

S&P Third Senior

Advance Rate

S&P Fourth Senior

Advance Rate

US Element



184


Asset Category


S&P Second Senior

Advance Rate

S&P Third Senior

Advance Rate

S&P Fourth Senior

Advance Rate

US Element



185


Asset Category


S&P Second Senior

Advance Rate

S&P Third Senior

Advance Rate

S&P Fourth Senior

Advance Rate

US Element



186


Asset Category


S&P Second Senior

Advance Rate

S&P Third Senior

Advance Rate

S&P Fourth Senior

Advance Rate

US Element



187

Moody’s Senior Advance Rates for non-US Assets (Diversification requirement: 30 different issuers and 12 Moody's industry categories)

Asset Category

Independent of maturity

Less than or equal to 1 year

Greater than 1

year and less than or equal

to 3 years

Greater than 3 years

and less than or equal to 5 years






A-1 100.0% - - - - - - A-2 97.0% - - - - - - A-3 92.7% - - - - - - A-4 86.3% - - - - - - A-5 82.6% - - - - - - A-6 73.3% - - - - - - B-1 88.7% - - - - - - B-2 76.7% - - - - - - B-3 65.5% - - - - - - B-4 69.7% - - - - - - B-5 62.4% - - - - - - B-6 56.5% - - - - - - C-1 - 96.7% 91.7% 88.5% 87.0% 83.8% 74.8% C-2 - 96.0% 91.5% 88.3% 86.8% 83.5% 74.4% C-3 - 95.3% 91.3% 88.1% 86.6% 83.2% 74.1% C-4 - 95.2% 91.3% 88.1% 86.6% 83.2% 74.0% C-5 - 95.1% 91.2% 88.0% 86.5% 83.1% 74.0% C-6 - 94.9% 91.2% 88.0% 86.5% 83.1% 73.9% C-7 - 94.7% 91.1% 87.9% 86.4% 83.0% 73.8% C-8 - 94.5% 91.1% 87.9% 86.4% 82.9% 73.7% C-9 - 93.8% 89.1% 85.0% 83.4% 79.1% 68.6% C-10 - 93.0% 87.2% 82.0% 80.4% 75.2% 63.5% D-1 - 90.0% 84.9% 79.7% 78.0% 72.9% 61.3% D-2 - 88.9% 84.6% 79.3% 77.6% 72.6% 61.2% D-3 - 87.2% 82.5% 79.0% 77.3% 72.2% 61.0% E-1 - 79.7% 73.0% 69.8% 68.2% 67.1% 60.6% E-2 - 75.5% 69.2% 66.4% 65.5% 64.6% 60.1% E-3 - 72.4% 65.3% 62.0% 61.4% 60.7% 53.6% F-1 - 70.2% 58.9% 56.3% 55.8% 55.8% 43.1% F-2 - 66.7% 53.5% 49.9% 49.1% 48.7% 32.7% F-3 - 50.5% 42.8% 40.1% 38.5% 38.4% 23.6% F-4 32.9% - - - - - - I-1 65.7% - - - - - - I-2 59.7% - - - - - - I-3 49.8% - - - - - - I-4 33.1% - - - - - - I-5 30.7% - - - - - - I-6 25.3% - - - - - - I-7 26.3% - - - - - - K-1 14.8% - - - - - - K-2 11.6% - - - - - -

188

Moody’s Second Senior Advance Rates for non-US Assets (Diversification requirement: 30 different issuers and 12 Moody's industry categories)

Asset Category



Greater than 1


to 3 years









189

Moody’s Third Senior Advance Rates for non-US Assets (Diversification requirement: 30 different issuers and 12 Moody's industry categories)

Asset Category



Greater than 1


to 3 years









190

Moody's Fourth Senior Advance Rates for non-US Assets (Diversification requirement: 30 different issuers and 12 Moody's industry categories)

Asset Category



Greater than 1


to 3 years









191

Moody's Senior Advance Rates for US Assets (Diversification requirement: 30 different issuers and 12 Moody's industry categories)

Asset Category



Greater than 1


to 3 years









192

Moody’s Second Senior Advance Rates for US Assets (Diversification requirement: 30 different issuers and 12 Moody’s industry categories)

Asset Category



Greater than 1


to 3 years









193

Moody's Third Senior Advance Rates for US Assets (Diversification requirement: 30 different issuers and 12 Moody’s industry categories)

Asset Category



Greater than 1


to 3 years









194

Moody's Fourth Senior Advance Rates for US Assets (Diversification requirement: 30 different issuers and 12 Moody’s industry categories)

Asset Category



Greater than 1


to 3 years









195

Moody’s Senior Advance Rates for non-US Assets (Diversification requirement: 40 different issuers and 15 Moody’s industry categories)

Asset Category



Greater than 1


to 3 years









196

Moody’s Second Senior Advance Rates for non-US Assets (Diversification requirement: 40 different issuers and 15 Moody’s industry categories)

Asset Category



Greater than 1


to 3 years









197

Moody's Third Senior Advance Rates for non-US Assets (Diversification requirement: 40 different issuers and 15 Moody’s industry categories)

Asset Category



Greater than 1


to 3 years









198

Moody's Fourth Senior Advance Rates for non-US Assets (Diversification requirement: 40 different issuers and 15 Moody’s industry categories)

Asset Category



Greater than 1


to 3 years









199

Moody’s Senior Advance Rates for US Assets (Diversification requirement: 40 different issuers and 15 Moody’s industry categories)

Asset Category



Greater than 1


to 3 years








A-1 100.0% - - - - - - A-2 98.5% - - - - - - A-3 94.3% - - - - - - A-4 87.8% - - - - - - A-5 84.2% - - - - - - A-6 75.2% - - - - - - B-1 93.0% - - - - - - B-2 85.1% - - - - - - B-3 74.8% - - - - - - B-4 71.5% - - - - - - B-5 69.2% - - - - - - B-6 64.5% - - - - - - C-1 - 98.5% 93.6% 90.4% 89.0% 85.8% 77.1% C-2 - 97.8% 93.4% 90.2% 88.8% 85.5% 76.7% C-3 - 97.1% 93.2% 90.0% 88.6% 85.2% 76.4% C-4 - 97.0% 93.1% 89.9% 88.5% 85.1% 76.3% C-5 - 96.8% 93.1% 89.9% 88.5% 85.1% 76.2% C-6 - 96.7% 93.1% 89.9% 88.5% 85.0% 76.2% C-7 - 96.5% 93.0% 89.8% 88.4% 84.9% 76.1% C-8 - 96.2% 92.9% 89.7% 88.3% 84.8% 75.9% C-9 - 95.5% 90.9% 86.8% 85.3% 81.0% 70.8% C-10 - 94.7% 89.0% 83.8% 82.3% 77.1% 65.7% D-1 - 93.7% 88.7% 83.5% 81.9% 76.8% 65.5% D-2 - 92.6% 88.4% 83.1% 81.5% 76.5% 65.4% D-3 - 90.9% 86.3% 82.8% 81.2% 76.1% 65.2% E-1 - 83.6% 77.0% 75.6% 74.1% 73.1% 65.0% E-2 - 79.4% 73.2% 72.3% 71.4% 70.5% 64.5% E-3 - 76.3% 69.3% 68.2% 67.2% 66.5% 59.5% F-1 - 74.4% 63.2% 62.5% 61.7% 61.7% 49.0% F-2 - 70.9% 57.8% 56.3% 54.9% 54.4% 38.4% F-3 - 54.7% 47.1% 44.4% 44.0% 43.9% 29.0% F-4 33.8% - - - - - - I-1 77.4% - - - - - - I-2 71.7% - - - - - - I-3 61.5% - - - - - - I-4 39.1% - - - - - - I-5 36.9% - - - - - - I-6 31.2% - - - - - - I-7 32.5% - - - - - - K-1 19.4% - - - - - - K-2 15.9%

200


Asset Category



Greater than 1


to 3 years









201


Asset Category



Greater than 1


to 3 years









202


Asset Category



Greater than 1


to 3 years









203


Asset Category



Greater than 1


to 3 years









204


Asset Category



Greater than 1


to 3 years









205


Asset Category



Greater than 1


to 3 years









206


Asset Category



Greater than 1


to 3 years









207


Asset Category



Greater than 1


to 3 years









208


Asset Category



Greater than 1


to 3 years









209


Asset Category



Greater than 1


to 3 years









210


Asset Category



Greater than 1


to 3 years









211


Asset Category



Greater than 1


to 3 years









212


Asset Category



Greater than 1


to 3 years









213


Asset Category



Greater than 1


to 3 years









214


Asset Category



Greater than 1


to 3 years









215


Asset Category



Greater than 1


to 3 years







