Asset-Backed European Securitisation Transaction Three Plc (incorporated in England and Wales with limited liability under company number )

Transcription

1 Asset-Backed European Securitisation Transaction Three Plc (incorporated in England and Wales with limited liability under company number ) 256,870,000 Class A Asset Backed Floating Rate Notes due ,160,000 Class B Asset Backed Floating Rate Notes due ,920,000 Class C Asset Backed Floating Rate Notes due 2013 (Issue Price: 100 per cent.) Application to the Irish Stock Exchange This document constitutes a prospectus for the purposes of Directive 2003/71/EC. Application has been made to the Irish Financial Services Regulatory Authority, as competent authority under Directive 2003/71/EC, for this prospectus to be approved. Application has been made to the Irish Stock Exchange Limited (the Stock Exchange ) for the 256,870,000 Class A Asset Backed Floating Rate Notes due 2013 (the Class A Notes ), the 16,160,000 Class B Asset Backed Floating Rate Notes due 2013 (the Class B Notes ), the 6,920,000 Class C Asset Backed Floating Rate Notes due 2013 (the Class C Notes and, together with the Class A Notes and the Class B Notes, the Notes ) to be admitted to the official list and trading on its regulated market. Such approval relates only to the Notes which are to be admitted to trading on the regulated market of the Stock Exchange or other regulated markets for the purposes of Directive 93/22/EEC or which are to be offered to the public in any member state of the European Economic Area. The Notes are expected to be issued on or about 7 February 2006 (or such later date as may be agreed by the Issuer, the Joint Lead Managers (as defined below), the Note Trustee (as defined below) and the Principal Paying Agent (as defined below)) (the Closing Date ). Source of Payment The principal source of payment of interest and repayment of principal on the Notes will be the right to receive payments attributable to certain loan agreements, hire purchase agreements and personal contract purchase agreements purchased by A-Best Three Receivables Trustee Limited (the Receivables Trustee ) (to be held on trust under the terms of the Receivables Trust for the benefit of, among others, Asset-Backed European Securitisation Transaction Three Plc (the Issuer )) from Fiat Auto Financial Services Limited (the Seller ) pursuant to the terms of a receivables purchase agreement (the Receivables Purchase Agreement ) expected to be entered into on or around 9 February Interest on Notes Interest on the Notes is payable by reference to successive interest periods (each an Interest Period ). Each Interest Period will commence on (and include) an Interest Payment Date (or in the case of the first Interest Period, the Closing Date) and end on (but exclude) the next succeeding Interest Payment Date (or in the case of the first Interest Period, the Interest Payment Date falling in April 2006). Interest will be payable quarterly in arrear in respect of each Interest Period in Sterling on 10 April 2006 and thereafter on January, April, July and October in each year, subject to adjustment in accordance with the Modified Following Business Day Convention (each such day being a Interest Payment Date ) provided that payment will only be made if certification of non-us beneficial ownership by the relevant Noteholder has been made. Interest will accrue on the Principal Amount Outstanding of the Notes of each Class at an annual rate equal to the sum of LIBOR for three month sterling deposits from time to time (or, in the case of the first Interest Period a linear interpolation of LIBOR for 2 month sterling deposits and LIBOR for 3 month sterling deposits) plus, a margin, in the case of the Class A Notes, of 0.08 per cent. per annum, in the case of the Class B Notes, of 0.25 per cent. per annum and, in the case of the Class C Notes, of 0.46 per cent. per annum. Obligations of Issuer Only The Notes will be obligations of the Issuer only and will not be obligations or responsibilities of, or guaranteed by, any of the other parties to the transactions described in this document. It should be noted, in particular, that the Notes will not be obligations or responsibilities of, or guaranteed by the Receivables Trustee, the Note Trustee, the Security Trustee, the Principal Paying Agent, the Irish Paying Agent, the Agent Bank, the Irish Listing Agent, the Back-Up Servicer Facilitator, the Account Bank, the Cash Manager, the Corporate Services Provider, the Servicer, the Seller, the Subordinated Loan Provider, HoldCo, LoanCo, the Collection Guarantors, the Swap Counterparties, FRI, the Arranger, or the Joint Lead Managers. Ratings The Class A Notes are expected, on issue, to be rated AAA by Fitch Ratings Ltd ( Fitch Ratings ), Aaa by Moody s Investors Service Inc. ( Moody s ) and AAA by Standard & Poor s Rating Services, a division of the McGraw Hill Companies, Inc. ( S&P and, together with Fitch Ratings and Moody s, the Rating Agencies ). The Class B Notes are expected, on issue, to be rated A by Fitch Ratings, Aa3 by Moody s and A by S&P. The Class C Notes are expected, on issue, to be rated BBB by Fitch Ratings, Baa1 by Moody s and BBB by S&P. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal by the assigning rating organisation. Risk Factors A discussion of certain factors, which should be considered in connection with an investment in the Notes, is set out in the section entitled Risk Factors below. Arranger, Sole Bookrunner Bayerische Hypo- und Vereinsbank AG Joint Lead Managers Bayerische Hypo- und Vereinsbank AG Landesbank Baden-Württemberg This prospectus is dated 7 February 2006 LD805741/

2 Responsibility for Information The Issuer accepts responsibility for the information contained in this document (other than the information for which FAFS, FRI, the Receivables Trustee, the Collection Guarantors and the Swap Counterparties accept responsibility in the following paragraphs). To the best of the knowledge and belief of the Issuer (which has taken all reasonable care to ensure that such is the case) the information (for which it accepts responsibility) contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information. FAFS accepts responsibility for the information included in this document in the Sections headed The Portfolio, Fiat Auto Financial Services Limited and its Automotive Financing Business, Servicing of Collections, and any other information contained in this document relating to itself, its business and assets, the Credit and Collection Policies, the Receivables, and the insurance policies. To the best of the knowledge and belief of FAFS (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. FRI accepts responsibility for the information relating to it in this document in the Sections headed Fidis Retail Italia S.p.a.. To the best of the knowledge and belief of FRI (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 impact of such information. The Receivables Trustee accepts responsibility for the information relating to it in this document in the Section headed The Receivables Trustee. To the best of the knowledge and belief of the Receivables Trustee (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 impact of such information. Bayerische Hypo- und Vereinsbank AG as Collection Guarantor and Swap Counterparty accepts responsibility for the information relating to it included in this document in the Sections headed The Swap Counterparties and Collection Guarantors - Bayerische Hypo- und Vereinsbank AG. To the best of the knowledge and belief of Bayerische Hypo- und Vereinsbank AG (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. Landesbank Baden-Württemberg as Collection Guarantor and Swap Counterparty accepts responsibility for the information relating to it included in this document in the Sections headed The Swap Counterparties and Collection Guarantors - Landesbank Baden-Württemberg. To the best of the knowledge and belief of Landesbank Baden-Württemberg (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. No person has been authorised to give any information or to make any representation not contained in this document 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, HoldCo, the Receivables Trustee, the Note Trustee, the Security Trustee, the Principal Paying Agent, the Irish Paying Agent, the Agent Bank, the Irish Listing Agent, the Back-Up Servicer Facilitator, the Account Bank, the Cash Manager, the Corporate Services Provider, the Servicer, the Collection Guarantors, the Swap Counterparties, FRI, FAFS (in any capacity), the Arranger, or the Joint Lead Managers. Neither the delivery of this document nor any sale or allotment made in connection with the offering of any of the Notes shall, under any circumstances, constitute a representation or create any implication that there has been no change in the affairs of the Issuer, FAFS, the Receivables Trustee or the Swap Counterparties or in any of the other information contained herein since the date hereof or that the information contained herein is correct as at any time subsequent to the date hereof. None of the shareholders of the Issuer, the Receivables Trustee, the Note Trustee, the Security Trustee, the Principal Paying Agent, the Irish Paying Agent, the Agent Bank, the Irish Listing Agent, the Back-Up Servicer Facilitator, the Account Bank, the Cash Manager, the Corporate Services Provider, the Servicer, the Arranger or the Joint Lead Managers (other than FAFS, FRI, and the Collection Guarantors and Swap Counterparties and solely to the extent described above) makes any representation, express or implied, or accepts any responsibility, with respect to the accuracy or completeness of any of the information in this document. Form of Notes Each Class of Notes will initially be represented by a Temporary Global Note of the relevant Class without coupons or talons attached, which are expected to be deposited with the Common Depositary for Euroclear Bank S.A./N.V., as operator of the Euroclear System and for Clearstream Banking, société anonyme, Luxembourg on or about the Closing Date (or such later date as may be agreed by the Issuer and the Joint Lead Managers). Interests in the Temporary Global Notes will be exchangeable not earlier than 40 days after the Closing Date on the Exchange Date (upon certification of non-u. S. beneficial ownership) for interests in the Permanent Global Notes of the relevant Class in bearer form without coupons or talons which will also be deposited with the Common Depositary. Save in certain limited circumstances, Notes in definitive form will not be issued in exchange for Temporary Global Notes or Permanent Global Notes in each case, of the relevant Class. Page 2

3 Summary of Selling Restrictions The Notes have not been and will not be registered under the Securities Act, and include Notes in bearer form that are subject to US tax law requirements. The Notes may not be offered, sold or delivered within the United States or to US persons (as defined in Regulation S under the Securities Act ( Regulation S )) except in certain transactions permitted by US tax regulations and the Securities Act. For a more complete description of restrictions on offers and sales and applicable US tax law requirements, see Subscription and Sale below. Other than the approval of this Offering Circular as a prospectus in accordance with the Listing and Admission to Trading Guidelines for Asset-backed Securities of the Stock Exchange, no action has been, or will be, taken to permit a public offering of the Notes or the distribution of this Offering Circular in any jurisdiction where action for that purpose is required. The distribution of this Offering Circular and the offering of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular (or any part hereof) comes are required by the Issuer and the Joint Lead Managers to inform themselves about, and to observe, any such restrictions. For a further description of certain restrictions on offers and sales of the Notes and the distribution of this Offering Circular, see the section entitled, Subscription and Sale below. Neither this Offering Circular nor any part hereof constitutes an offer of, or an invitation by, or on behalf of, the Issuer or the Joint Lead Managers to subscribe for or purchase any of the Notes. Neither this Offering Circular, nor any part hereof, may be used in connection with an offer to, or solicitation by, any person in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. Accordingly, the Notes may not be offered or sold, directly or indirectly, and neither this Offering Circular nor any part hereof nor any other offering circular, prospectus, form of application, advertisement, other offering material or other information may be issued, distributed or published in any country or jurisdiction (including the United Kingdom), except in circumstances that will result in compliance with all applicable laws, orders, rules and regulations. Stabilisation In connection with the issue and distribution of the Notes, Bayerische Hypo- und Vereinsbank AG as the stabilising manager (the Stabilising Manager ) (or any person acting for the Stabilising Manager) may over allot (provided that the aggregate principal amount of Notes allotted does not exceed 105 per cent. of the aggregate principal amount of the Notes) or effect transactions with a view to supporting the market price of the Notes at a higher level than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager (or persons acting on behalf of the Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public discharge of the final terms of the offer of the Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Currency References in this document to, pounds or Sterling are to the lawful currency for the time being of the United Kingdom of Great Britain and Northern Ireland (the United Kingdom). References in this document to, euro and EUR are to the single currency introduced at the third stage of European Economic and Monetary Union pursuant to the Treaty establishing the European Community, as amended from time to time. References in this document to $ and dollars are to the lawful currency for the time being of the United States of America (the United States). Offering Circular This document (the Offering Circular ) constitutes a prospectus for the purposes of the Listing Guidelines of the Irish Stock Exchange and Directive 2003/71/EC (the Prospectus Directive). Definitions Words and expressions in this document shall, unless the context requires otherwise have the same meanings as those set out in the Glossary of Terms. These and other terms used in this document are subject to, and in some cases are summaries of, the definitions of such terms set out in the Transaction Documents, as they may be amended from time to time. Copies of the Transaction Documents in their form as at the Closing Date and the constitutional documents of the Issuer and the Receivables Trustee will be available for inspection during normal business hours at the Specified Office of the Issuer and the Irish Paying Agent during the period of fourteen days from the date of this document. LD805741/ Page 3

4 TABLE OF CONTENTS 1. SUMMARY SIMPLIFIED DIAGRAMMATIC OVERVIEW OF THE TRANSACTION CASH FLOW OVERVIEW PRINCIPAL FEATURES OF THE NOTES PRINCIPAL FEATURES OF THE TRANSACTION RISK FACTORS SUMMARY OF THE TRANSACTION DOCUMENTS USE OF PROCEEDS FIAT AUTO FINANCIAL SERVICES LIMITED AND ITS AUTOMOTIVE FINANCING BUSINESS FIDIS RETAIL ITALIA S.P.A THE PORTFOLIO SERVICING OF COLLECTIONS CASH MANAGEMENT ESTIMATED WEIGHTED AVERAGE LIFE OF THE NOTES THE ISSUER THE RECEIVABLES TRUSTEE HOLDCO LOANCO THE SWAP COUNTERPARTIES AND COLLECTION GUARANTORS CREDIT STRUCTURE, LIQUIDITY AND HEDGING TERMS AND CONDITIONS OF THE NOTES FORM OF NOTES TAXATION SUBSCRIPTION AND SALE GENERAL INFORMATION GLOSSARY OF TERMS LD805741/ Page 4

5 1. SUMMARY The information set out on pages 5 to 11 is a summary of the principal features of the transaction. This summary should be read in conjunction with, and is qualified in its entirety by reference to, the detailed information appearing elsewhere in this Offering Circular. Capitalised terms used in this section have the meanings given to them in the Glossary on pages 177 to 202. Fiat Auto Financial Services Limited Fiat Auto Financial Services Limited ( FAFS ) is a lending and finance company incorporated in England and Wales. Established in 1996, and acquired by the Fidis Retail Group (the FRI Group ) in 2004, FAFS provides automotive finance to individuals and corporations in the United Kingdom acquiring new vehicles produced by Fiat and Alfa Romeo, and used vehicles manufactured by a wide range of car manufacturers. FAFS offers customers four principal types of financing: auto-loans pursuant to auto-loan agreements ( Auto-Loan Agreements ), financing pursuant to hire purchase agreements ( HP Agreements ), financing pursuant to personal contract purchase agreements ( PCP Agreements ) and leasing products. As at 30 June 2005, financing offered under Auto-Loan Agreements, HP Agreements and PCP Agreements accounted for 99 per cent. of FAFS active portfolio, FAFS had approximately 79,000 customers in total, and a net managed portfolio valued at 357 million. Under a receivables purchase agreement expected to be dated on or around 9 February 2006 (the Receivables Purchase Agreement ), FAFS (in such capacity the Seller ) will sell certain of its interest and benefit in the Auto-Loan Agreements, HP Agreements and PCP Agreements to the Receivables Trustee (in its capacity as trustee of the Receivables Trust) to be held on the terms of the Receivables Trust (as described under The Receivables Trust and the Purchase of Receivables below). In addition to being the Seller, FAFS will act as the servicer of the Purchased Receivables (the Servicer ) (as set out under Servicing below) and the provider of a subordinated loan to the Issuer (the Subordinated Loan Provider ) (as set out under Subordinated Loan below). The Receivables The receivables (the Receivables ) which are intended to be purchased by the Receivables Trust consist of amounts due to the Seller from its customers ( Customers ) in respect of Auto-Loan Agreements, HP Agreements and PCP Agreements (together the Receivables Agreements ). The Receivables to be sold to the Receivables Trustee (in its capacity as trustee of the Receivables Trust) on the Closing Date (the Purchased Receivables ) will be selected from a portfolio of receivables each of which will be legally and beneficially owned by the Seller immediately prior to its sale to the Receivables Trustee, as required by the Eligibility Criteria (as set out in Section 11 The Portfolio - Eligibility Criteria ), and will represent each scheduled payment (other than Optional Balloon Payments) owed by the Customer in respect of a particular Receivables Agreement (the Related Receivables Agreements ) as set out in the Receivables Purchase Agreement. The Issuer, by virtue of its beneficial interest in the Receivables Trust (as described below under The Receivables and Purchase of Receivables ) has an interest in the Receivables. The Receivables Trustee, and therefore indirectly the Issuer, has the benefit of certain warranties given by the Seller relating to, among other things, the underwriting procedures carried out by the Seller before the Receivables Agreements were entered into. If there is a material and unremedied breach of a warranty in respect of a Receivables Agreement, the Seller will, upon being so notified, be obliged to make a payment to the Receivables Trustee in respect of such breach. In addition, the Receivables Trustee has the right to require the Seller to repurchase any Purchased Receivable, which has become a Defaulted Receivable or a Voluntarily Terminated Receivable (as described below under Defaulted Receivables Put Option ). Page 5

6 The Receivables Trust and the Purchase of Receivables On or before the Closing Date, the Seller and the Receivables Trustee will enter into the Receivables Purchase Agreement pursuant to which the Receivables Trustee will offer to purchase the Offered Receivables from the Seller for an initial purchase price equal to the aggregate of the Principal Elements of the Offered Receivables (which is anticipated to be approximately 279,100,000). On the Closing Date the Issuer will apply the net proceeds of the issuance of the Notes and an amount equal to Tranche C of the Subordinated Loan in paying an amount to the Receivables Trustee to enable the Receivables Trustee to pay such purchase price. Upon receiving payment, the Seller will transfer the benefit of the Purchased Receivables to the Receivables Trustee which benefit will then be held by the Receivables Trustee on the terms of the Receivables Trust. On or before the Closing Date, the Receivables Trustee will execute a declaration of trust (the Declaration of Trust ) constituting the Receivables Trust and setting out the Receivables Trustee s obligations to hold, apply and invest the Trust Property and to deal with other ancillary matters. The Issuer, the Seller and HoldCo, as beneficiaries of the Receivables Trust (together the Beneficiaries ) will also be party to the Declaration of Trust. The Receivables Trustee will hold the Trust Property for the benefit of the Beneficiaries in the proportions and amounts provided in the Declaration of Trust and will distribute monies received by it during a Determination Period on the next Interest Payment Date in accordance with the Declaration of Trust to the Beneficiaries, being the Issuer in respect of the Issuer Principal Entitlement and the Issuer Income Entitlement, the Seller in respect of the Seller Income Entitlement and, on Final Redemption (or, if earlier, the termination of the Receivables Trust), the Seller in respect of the Seller Principal Entitlement and HoldCo in respect of the HoldCo Entitlement. The monies received will consist of payments from Customers under Receivables Agreements together with interest received on those monies as a result of the Receivables Trustee investing such monies pursuant to the RT/LoanCo Loan Agreement (as described in Loan Agreements below) and interest accrued on amounts in the Receivables Trustee Account, prior to distribution. The Issuer will charge its interest in the Receivables Trust to the Security Trustee in accordance with the Deed of Charge. The Issuer The Issuer has been incorporated as a special purpose company established for the purpose of issuing the Notes. The proceeds from the issue of the Notes and a drawing equal to Tranche C of the Subordinated Loan will be paid to the Receivables Trustee in return for a beneficial interest in the Receivables Trust. The Issuer will not carry on any activities other than those described in this Offering Circular. The entire share capital in the Issuer is beneficially held by HoldCo. The Receivables Trustee A-Best Three Receivables Trustee Limited (the Receivables Trustee ) has been incorporated as a special purpose company for the purpose of purchasing the Purchased Receivables, holding the Purchased Receivables and the other Trust Property on trust for, and distributing monies received by it to, the Issuer, the Seller and HoldCo. The entire share capital in the Receivables Trustee is held by HoldCo. HoldCo A-BEST Three HoldCo Limited ( HoldCo ) has been incorporated as a special purpose company for the purpose of holding the entire issued share capital in the Issuer, LoanCo and the Receivables Trustee. The share capital in HoldCo is held on trust for charitable purposes. LoanCo A-BEST Three HoldCo Subsidiary Limited ( LoanCo ) has been incorporated as a special purpose company for the purpose of entering into the RT/LoanCo Loan Agreement, and the LoanCo/Servicer Guaranteed Loan Agreement. The entire share capital in LoanCo is held by HoldCo. LD805741/ Page 6

7 Fidis Retail Italia S.p.A. The obligations of FAFS as Servicer to transfer to the Receivables Trustee amounts received in relation to Related Receivables Agreements ( Collections ) to the Receivables Trustee will be guaranteed by Fidis Retail Italia S.p.A, a company incorporated in the Republic of Italy ( FRI ). FRI is the holding company of the FRI Group, which resulted from the de-merger and the subsequent sale of a 51 per cent. interest in the end-customer financial services division of Fiat Auto to Synesis Finanzaria S.p.A. Through its subsidiaries, the FRI Group provides financing to customers purchasing new and used vehicles sold mainly by the Fiat, Lancia and Alfa Romeo dealer networks. The FRI Group currently operates in 12 different countries. Bayerische Hypo- und Vereinsbank AG On or before the Closing Date, Bayerische Hypo- und Vereinsbank AG, London Branch, (in this capacity a Collection Guarantor ) will enter into a guaranteed loan agreement (the LoanCo/Servicer Guaranteed Loan Agreement ) with LoanCo and the Servicer under which it will guarantee the obligations of the Servicer to make payments of principal and interest under the LoanCo/Servicer Guaranteed Loan Agreement (as discussed under Loan Agreements below). Bayerische Hypo- und Vereinsbank AG, London Branch will also guarantee the obligations of FRI as guarantor of FAFS obligations to transfer the Collections to the Receivables Trustee (to a maximum of the Collections Guaranteed Amount). In addition, Bayerische Hypo- und Vereinsbank AG will enter into Swap Agreements with the Issuer as a Swap Counterparty (as described in Hedging below). Bayerische Hypo- und Vereinsbank AG is the parent company of HVB Group, one of Europe s leading providers of banking and financial services. Based on consolidated assets of billion at December 31, 2004, Bayerische Hypo- und Vereinsbank AG was the second largest publicly traded bank in Germany. In accordance with the provisions for the transaction structure stipulated in the Business Combination Agreement, UniCredit on 26 August 2005 launched a voluntary public exchange offer to all shareholders of HypoVereinsbank ( HypoVereinsbank Offer ). This offer has been accepted by 93.93% of the shareholders of HypoVereinsbank. As of 23 November 2005 these shareholders received newly issued ordinary shares of UniCredit. As stipulated in the Business Combination Agreement UniCredit on 26 August 2005 launched a public exchange offer to all shareholders of HypoVereinsbank s subsidiary Bank Austria Creditanstalt AG, Vienna ( Bank Austria Offer ); HypoVereinsbank agreed not to tender its 77.5% stake in Bank Austria Creditanstalt in the bank Austria Offer. This offer has been accepted by 94.99% of the free float shareholders of Bank Austria Creditanstalt. As of 5 December 2005 these shareholders received newly issued ordinary shares of UniCredit. UniCredit announced a further voluntary public exchange offer as stipulated in the Business Combination Agreement to all shareholders in BPH Spolka Akcyjna, Cracow ( BPH ) following the approval of all relevant Polish authorities. The Polish Banking Supervision Commission has not yet issued its consent in connection with UniCredit s indirect acquisition of control over BPH and its bank subsidiaries. Until, this consent is obtained, Bank Austria Creditanstalt, the majority shareholder of BPH, will not be able to exercise its voting rights in BPH. Landesbank Baden-Württemberg On or before the Closing Date, Landesbank Baden-Württemberg, London Branch, (in this capacity a Collection Guarantor ) will enter into a guaranteed loan agreement (the LoanCo/Servicer Guaranteed Loan Agreement ) with LoanCo and the Servicer under which it will guarantee the obligations of the Servicer to make payments of principal and interest under the LoanCo/Servicer Guaranteed Loan Agreement (as discussed under Loan Agreements below). Landesbank Baden- Württemberg, London Branch will also guarantee the obligations of FRI as guarantor of FAFS obligations to transfer the Collections to the Receivables Trustee (to a maximum of the Collections Guaranteed Amount). In addition, Landesbank Baden-Württemberg will enter into a Swap Agreement with the Issuer as a Swap Counterparty (as described in Hedging below). LD805741/ Page 7

8 Landesbank Baden-Württemberg is a universal bank and an international commercial bank which may engage in all types of banking and financial service activities, as well as establish and operate any kind of office or branch without regional restrictions. Collection Guarantors The Collection Guarantors have agreed that all funds either guaranteed by the Collection Guarantors or standing to the credit of an account maintained with the Collection Guarantor must be equal to or below 20 per cent of the Principal Amount Outstanding of the Notes, and that any exposure relating thereto, financial or otherwise, must be less than 30 calendar days. Servicing Under a servicing agreement to be entered into on the Closing Date between, among others, FAFS and the Receivables Trustee (the Servicing Agreement ), FAFS will agree to act as Servicer and will agree, either itself or through its agents, to collect amounts due in respect of the Purchased Receivables on behalf of the Receivables Trustee and other services to the Receivables Trustee. In return for these services, the Servicer will be entitled to receive from the Receivables Trustee (to be paid by the Issuer) a fee (inclusive of amounts in respect of VAT, if any) payable quarterly in arrear on each Interest Payment Date calculated as 0.03% per cent. per annum of the aggregate Outstanding Balances of the Principal Element of all Related Receivables Agreements (the Receivables Servicing Fee ). The Servicing Agreement allows the Servicer with the written consent of the Receivables Trustee to appoint a sub servicer to carry out all or any part of the obligations of the Servicer to collect the amounts due in respect of the Purchased Receivables. Currently the Servicer has engaged GE Capital Bank Limited (trading as GE Capital Woodchester) to be its sub-servicer in respect of some of those obligations. If the long term unsecured debt obligations of FRI cease to be rated at least Ba3 by Moody s and BBby Fitch Ratings, Bayerische Hypo- und Vereinsbank AG (in this capacity the Back-Up Servicer Facilitator ) will, acting on the instructions of the Receivables Trustee, use best efforts to assist in the appointment of a Back-Up Servicer which will replace the Servicer only on the occurrence of a Servicer Termination Event, within 90 calendar days of such downgrade on substantially the same terms as the Servicing Agreement. Hedging In order to hedge the interest rate mis-match between the fixed rate of interest payable under the Receivable Agreements (and therefore received by the Issuer through its interest in the Receivables Trust) and the floating rate of interest payable by the Issuer under the Notes, the Issuer will enter into swap agreements on arm s length terms (respectively the Swap Agreements ) with each of Bayerische Hypo- und Vereinsbank AG and Landesbank Baden-Württemberg (the Swap Counterparties ). Subordinated Loan On the Closing Date, FAFS (in this capacity the Subordinated Loan Provider ) will advance to the Issuer under a subordinated loan (the Subordinated Loan ) comprising three tranches: Tranche A of the Subordinated Loan shall be used in its entirety solely in or towards payment of initial fees, costs and expenses of the Issuer and the Receivables Trustee incurred in connection with the Securitisation and incurred on or before the Closing Date; Tranche B of the Subordinated Loan shall be used to establish the Cash Reserve in an amount equal to the Required Cash Reserve Amount as at the Closing Date (as described under Additional Liquidity below); and Tranche C of the Subordinated Loan shall be paid by the Issuer, in addition to the proceeds from the issue of the Notes, to the Receivables Trustee as a contribution to trust assets, to be LD805741/ Page 8

9 applied by the Receivables Trustee in purchasing the Offered Receivables (the Issuer Contribution ) (as described in Credit Enhancement below). All advances under the Subordinated Loan will be non-interest bearing. Tranche A of the Subordinated Loan will be repaid in accordance with the Pre-Acceleration Income Priority of Payments. Repayment of Tranche B and Tranche C of the Subordinated Loan will be deferred until Final Redemption to reduce, among other things, the risk of delayed or non-payment to Noteholders in respect of the Purchased Receivables. Credit Enhancement In order to provide credit enhancement for the Notes, Tranche C of the Subordinated Loan will be drawn down on the Closing Date by the Issuer and, together with the Note proceeds, paid to the Receivables Trustee as a contribution to the trust assets. The Receivables Trustee will apply this amount in purchasing the Offered Receivables from the Seller. Tranche C of the Subordinated Loan will not bear interest and the obligations to repay amounts advanced as Tranche C under the Subordinated Loan will be deferred until Final Redemption, and will be subordinated to amounts payable to Noteholders, ensuring that assets owned by the Receivables Trustee are greater than amounts outstanding to Noteholders. The obligations to repay amounts advanced as Tranche B of the Subordinated Loan will also be deferred until Final Redemption (in whole or in part). In addition to the credit enhancement provided by Tranche C, further credit enhancement will be provided by Tranche B of the Subordinated Loan which shall be used to establish the Cash Reserve in an amount equal to the Required Cash Reserve Amount as at the Closing Date (as described under Additional Liquidity below) and to amortise the Notes, in accordance with the Cash Reserve Priority of Payments. Additional Liquidity If on any Interest Payment Date the Issuer will have insufficient income available to meet its Senior Liabilities (which includes Senior Expenses, interest due on that date in respect of the Class A Notes, the Class B Notes and Class C Notes and any payment to be made by the Issuer under the Swap Agreements) it will use principal receipts available to it on that date to meet the deficiency. In order to further mitigate liquidity risks, a cash reserve fund will be established (the Cash Reserve ). The Cash Reserve will be established on the Closing Date with the proceeds of Tranche B of the Subordinated Loan, which the Issuer will deposit in the Issuer s deposit account with the Account Bank (the Cash Reserve Account ). To the extent that principal receipts are not sufficient to meet the deficiency, the Cash Reserve will be used to meet such deficiency. The initial amount of the Cash Reserve will be equal to 4,140,000 on the Closing Date. Repurchase of Non-Conforming Receivables and the Defaulted Receivables Put Option The Seller will make certain representations and warranties in relation to the Receivables and the Related Receivables Agreements, including, among other things, that each Receivable and each Related Receivables Agreement complies with the eligibility criteria set out in the Receivables Purchase Agreement (the Eligibility Criteria ), that as at the Cut-off Date in respect of the provisional Portfolio and Closing Date in respect of the final Portfolio each Related Receivables Agreement is valid and binding, that no Receivable is past due and unpaid for more than 30 days, and so far as the Seller is aware there has been no unremedied default under any Related Receivables Agreement. To the extent that such a representation or warranty proves to have been incorrect on the Closing Date, or if the relevant Purchased Receivable never existed (each affected Receivable being a Non- Conforming Receivable ), the Seller will repurchase such Purchased Receivable for an amount equal to its outstanding Principal Element as at the Closing Date, less any amounts recovered in respect of such Receivable plus any accrued income in respect thereof (the Repurchase Price ) or, in the case of a Purchased Receivable which did not exist as at the Closing Date, an amount equal to any loss suffered by reason of the representation or warranty being untrue or incorrect by reference to the facts subsisting on the Closing Date and the amount of such loss shall be equal to the Repurchase Price. Under the Receivables Purchase Agreement, the Seller will also grant to the Receivables Trustee the right to a defaulted receivables put option (the Defaulted Receivables Put Option ) which will entitle the Receivables Trustee to require the Seller, prior to an Insolvency Event of the Seller, to LD805741/ Page 9

10 purchase from the Receivables Trustee any Purchased Receivable (i) which is to be written off in accordance with the Seller s servicing and collections policy, has been unpaid past its due date for more than 180 days, or in relation to which the Customer been declared bankrupt, has filed for bankruptcy, or is subject to any other insolvency proceeding, or has been declared dead (each a Defaulted Receivable ) or (ii) which has been notified for voluntary termination by the Customer pursuant to section 99 of the Consumer Credit Act 1974 (a Voluntarily Terminated Receivable ). The DRPO Payment will be the aggregate of the outstanding Principal Elements of each Defaulted Receivable or Voluntarily Terminated Receivable (as calculated, in respect of each Defaulted Receivable or Voluntarily Terminated Receivable, at the date on which the Defaulted Receivables Put Option was exercised in respect of such Defaulted Receivable or Voluntarily Terminated Receivable). Such payment, however, will be limited to an amount equal to the aggregate of the Seller Income Entitlement and the Recoveries for such Determination Period (with the exception that, on Final Redemption, such payment must also be made to the extent of the outstanding balance of Tranche B and C of the Subordinated Loan). Payments which are required to be made by the Seller under the Defaulted Receivables Put Option will, to the extent possible, be satisfied out of and will be deducted from the Seller Income Entitlement on each quarterly Interest Payment Date before the distribution of the Seller Income Entitlement. On Final Redemption, the Receivables Trustee will then transfer its right to receive DRPO Payments to the Issuer. Cash Management Under an Account Bank and Cash Management Agreement to be entered into on the closing date between the Issuer, HoldCo, LoanCo, the Receivables Trustee, the Servicer, the Cash Manager, the Account Bank, the Back-Up Servicer Facilitator and the Security Trustee, the Issuer will establish and maintain the following accounts at the Account Bank: (a) (b) Issuer Transaction Account: on the Closing Date, the proceeds of the issuance of the Notes and Tranche C of the Subordinated Loan will be credited to the Issuer Transaction Account and paid to the Receivables Trustee as the Issuer Contribution to be used by the Receivables Trustee to purchase the Offered Receivables. Thereafter, quarterly payments received from the Receivables Trustee (comprising principal and income amounts received in relation to Purchased Receivables) will be paid into the Issuer Transaction Account, and amounts standing to the credit of the Issuer Transaction Account will be applied in accordance with the applicable Priority of Payments; Cash Reserve Account: on the Closing Date, an amount equal to of Tranche B of the Subordinated Loan (see Additional Liquidity above) will be credited to the Cash Reserve Account (and an entry made on the Cash Reserve Ledger) and, to the extent that on any Interest Payment Date there are insufficient principal receipts to meet an Income Shortfall, the required amount will be paid by the Issuer from the Cash Reserve Account. On or prior to the Closing Date, the Receivables Trustee will establish and maintain the following account with the Account Bank: (c) Receivables Trustee Account: The Receivables Trustee Account will be an account in the name of the Receivables Trustee into which all amounts payable to the Receivables Trustee are paid, and from which all amounts payable by the Receivables Trustee are paid. In addition, from the Closing Date, the Account Bank will be responsible for the HoldCo Account, the LoanCo Account and the Tax Reserve Ledger. Lloyds TSB Plc is currently responsible for the Collection Accounts. National Westminster Bank Plc is currently responsible for the Servicer Account. Loan Agreements To enable FAFS to have the benefit of the use of the Collections during each Monthly Loan Period, back to back loans will be entered into under which FAFS will ultimately be lent by the Receivables Trustee the daily Collections for a maximum period of one month. LD805741/ Page 10

11 On the Closing Date, the Receivables Trustee and LoanCo will enter into the RT/LoanCo Loan Agreement, whereby monies otherwise payable to the Receivables Trustee by FAFS will on a daily basis be lent to LoanCo, to be repaid on the immediately succeeding Monthly Settlement Date. These amounts will then be on-lent by LoanCo to the Servicer under the LoanCo/Servicer Guaranteed Loan Agreement, to be repaid on the next Monthly Settlement Date. The parties will direct that these arrangements will be given effect to without daily physical movement of funds, with FAFS able to use such amounts until the last day of each Monthly Loan Period, when the total amount borrowed during the month, plus accrued interest, will be paid by the Servicer, at the direction of LoanCo, to the Receivables Trustee into the Receivables Trustee Account. The obligations of the Servicer to make interest payments and repay principal amounts when due under the LoanCo/Servicer Guaranteed Loan Agreement will be guaranteed (on a several but not joint basis to a maximum of the Loan Guaranteed Maximum Amount each), by Bayerische Hypo- und Vereinsbank AG, London Branch and Landesbank Baden-Württemberg, London Branch (in this capacity the Collection Guarantors). LD805741/ Page 11

12 2. SIMPLIFIED DIAGRAMMATIC OVERVIEW OF THE TRANSACTION The following diagram provides a summary description of the principal parties in the transaction structure upon transfer of the Receivables to the Issuer. Prospective investors should note that the diagram does not purport to be exhaustive and should therefore refer to the other sections of this document to obtain more information. Collection Guarantors FRI Loan Guarantee Guarantee Loan Guarantee LoanCo RT/ LoanCo Loan Collection Guarantee Customers FAFS (Seller/Servicer) Seller Trust Interest Sale of Receivables Receivables Trustee HoldCo Trust Interest HoldCo Servicing Subordinated Loan Issuer Trust Interest Swap Counterparties Issuer Noteholders Interest Rate Swap Grant of security under the Deed of Charge Security Trustee holds security granted by the Issuer on trust for the secured Creditors including Noteholders Security Trustee LD805741/ Page 12

13 3. CASH FLOW OVERVIEW The following diagram provides a pictorial representation of the main cash flows and the accounts of the transaction. Prospective investors should note that the diagram does not purport to be exhaustive and should therefore refer to the other sections of this document to obtain more information. Customers Collection Account (Servicer) Guarantee (if necessary) FRI Servicer Account (Servicer) Loan amounts (equal to Collections) LoanCo Monthly Loan Repayments Seller Trust Interest Purchase Price Loan Guarantee Seller Trust Contribution Loan amounts (equal to Collections) Collection Guarantors RT Account Collection Guarantee (if necessary) HoldCo Entitlement HoldCo Trust Contribution HoldCo servicer fees Subordinated Loan Issuer Entitlements + Seller DRPO Amount Trust Interest Closing Date Contribution Repayment of Subordinated Loan Swap Counterparties Cash Reserve Account Floating Shortfall Amount Income to bring CRA to required level Fixed Interest Rate Swap Amuonts Issuer Transaction Account Note Proceeds Quarterly Interest/ Redemption of Notes Outstanding Principal Costs/fees/expenses Noteholders Other Parties Closing Date Cash Flows Daily/Monthly Payments Quarterly Cash Flows Final Date Payments LD805741/ Page 13

14 4. PRINCIPAL FEATURES OF THE NOTES Class A Notes Class B Notes Class C Notes Nominal Amount 256,870,000 16,160,000 6,920,000 Rate of Interest LIBOR for a Designated Maturity of three months per cent. per annum LIBOR for a Designated Maturity of three months per cent. per annum LIBOR for a Designated Maturity of three months per cent. per annum Issue Price 100 per cent. 100 per cent. 100 per cent. Payment Dates for Interest and Principal payments January, April, July and October of each year, subject to adjustment in accordance with the Modified following Business Day Convention), the First Interest Payment Date being 10 April and the First Interest Period from (and including) the Closing Date to (but excluding) the Interest Payment Date falling in April. January, April, July and October of each year, subject to adjustment in accordance with the Modified following Business Day Convention), the First Interest Payment Date being 10 April and the First Interest Period from (and including) the Closing Date to (but excluding) the Interest Payment Date falling in April. January, April, July and October of each year, subject to adjustment in accordance with the Modified following Business Day Convention), the First Interest Payment Date being 10 April and the First Interest Period from (and including) the Closing Date to (but excluding) the Interest Payment Date falling in April. Final Maturity Date Interest Payment Date in April 2013 Interest Payment Date in April 2013 Interest Payment Date in April 2013 Expected Ratings on Issue AAA by Fitch Ratings, Aaa by Moody s, AAA by S&P A by Fitch Ratings, Aa1 by Moody s, A by S&P BBB by Fitch Ratings, Baa1 by Moody s, BBB by S&P Credit Enhancement (provided by other classes of Notes subordinated to the relevant class and the Subordinated Loan) Subordination of the Class B Notes and the Class C Notes and Tranche B and C of the Subordinated Loan Subordination of the Class C Notes and Tranche B and C of the Subordinated Loan Tranche B and C of the Subordinated Loan Form Global Bearer Global Bearer Global Bearer Listing Application for listing on the Stock Exchange Application for listing on the Stock Exchange Application for listing on the Stock Exchange Clearing Euroclear and Clearstream, Luxembourg Euroclear and Clearstream, Luxembourg Euroclear and Clearstream, Luxembourg Common Code ISIN XS XS XS LD805741/ Page 14

15 5. PRINCIPAL FEATURES OF THE TRANSACTION The following is an overview of the principal features of the transaction. It does not purport to be complete and is qualified in its entirety by, and is subject to, the detailed information contained elsewhere in this document and in all related documents referred to in this document. Capitalised terms not defined in this summary shall, except so far as the context otherwise requires, have the same meanings as those set out in the Glossary of Terms set forth at the back of this document. References to a Condition or to Conditions are to the Terms and Conditions of the Notes. 1. Key Parties to the Transaction Issuer Asset-Backed European Securitisation Transaction Three Plc, a public limited liability company incorporated in England and Wales (registered number ) whose registered office is at c/o Wilmington Trust SP Services (London) Limited, Tower 42 (Level 11), 25 Old Broad Street, London EC2N 1HQ, United Kingdom. The Issuer is a bankruptcy remote special purpose vehicle with no employees or premises established solely for the purpose of issuing asset backed securities as set out in this Offering Circular. Receivables Trustee A-Best Three Receivables Trustee Limited, a limited liability company incorporated in England and Wales (registered number ) whose registered office is at c/o Wilmington Trust SP Services (London) Limited, Tower 42 (Level 11), 25 Old Broad Street, London EC2N 1HQ, United Kingdom. The Receivables Trustee is a bankruptcy remote special purpose vehicle with no employees or premises established solely for the purpose of the transactions set out in this Offering Circular. It is wholly owned by HoldCo. HoldCo A-Best Three HoldCo Limited, a limited liability company incorporated in England and Wales (registered number ), whose registered office is at c/o Wilmington Trust SP Services (London) Limited, Tower 42 (Level 11), 25 Old Broad Street, London EC2N 1HQ, United Kingdom. HoldCo beneficially holds the entire share capital of the Issuer, LoanCo and the Receivables Trustee. The shares of HoldCo are held by SPV Advisors Limited on trust for charitable purposes. LoanCo A-Best Three HoldCo Subsidiary Limited, a limited liability company incorporated in England and Wales (registered number ) whose registered office is at c/o Wilmington Trust SP Services (London) Limited, Tower 42 (Level 11), 25 Old Broad Street, London EC2N 1HQ, United Kingdom. LoanCo is a bankruptcy remote special purpose vehicle with no employees or premises established solely for the purpose of the transactions set out in this Offering Circular. It is wholly owned by HoldCo. Sole Bookrunner Bayerische Hypo- und Vereinsbank AG, a bank organised under the laws of the Federal Republic of Germany, whose registered office is Arabellastraße 12, München, Germany. LD805741/ Page 15

16 Arranger Joint Lead Managers Corporate Services Provider Seller Servicer FRI Bayerische Hypo- und Vereinsbank AG, a bank organised under the laws of the Federal Republic of Germany, acting through its London Branch. Bayerische Hypo- und Vereinsbank AG, whose registered office is Arabellastraße 12, München, Germany and Landesbank Baden-Württemberg, an institution duly established in Germany whose registered office is Am Hauptbahnhof 2, D Stuttgart, Germany. Wilmington Trust SP Services (London) Limited, a limited liability company incorporated in England and Wales (registered number ), acting through its office at Tower 42 (Level 11), International Financial Centre, 25 Old Broad Street, London EC2N 1HQ, United Kingdom (in such capacity, the Corporate Services Provider ) will provide corporate administration services to the Issuer, the Receivables Trustee, HoldCo and LoanCo pursuant to a corporate services agreement (the Corporate Services Agreement ) between, inter alios, the Issuer, the Receivables Trustee, HoldCo, LoanCo, the Corporate Services Provider and the Security Trustee to be dated on or about the Closing Date. The principal outside activities of the Corporate Services Provider are the provision of corporate, secretarial and administrative services. Fiat Auto Financial Services Limited, a limited liability company in England and Wales whose registered office is at Fiat House, 240 Bath Road, Slough SL1 4DX (registered number ) has agreed to sell the Offered Receivables pursuant to the Receivables Purchase Agreement (in this capacity the Seller ). Fiat Auto Financial Services Limited, (or any other person for the time being acting as such pursuant to the Servicing Agreement) has agreed to act as servicer of the Receivables for the Receivables Trustee (in this capacity the Servicer ). Fidis Retail Italia S.p.A., registered at the company registry in Turin, Italy under number , was incorporated in the Republic of Italy on 15th January, 2002 with a limited duration to 31st December, 2100, and is currently incorporated in the form of a limited liability company (societá per azioni). The registered office of FRI is located at Corso G. Agnelli 200, Turin, Italy. FRI will guarantee the financial obligations of the Servicer under clause 16 of the Servicing Agreement. Note Trustee Security Trustee J.P. Morgan Corporate Trustee Services Limited, a company incorporated in England and Wales with limited liability (registered number ) acting through its principal office at Trinity Tower, 9 Thomas More Street, London E1W 1YT, United Kingdom (in such capacity the Note Trustee ), will be appointed as trustee for the holders from time to time of the Notes pursuant to a trust deed (the Note Trust Deed ) between the Issuer and the Note Trustee constituting the Notes to be dated on the Closing Date. J.P. Morgan Corporate Trustee Services Limited, a company incorporated in England and Wales with limited liability (registered number ) acting through its principal LD805741/ Page 16

17 office at Trinity Tower, 9 Thomas More Street, London E1W 1YT, United Kingdom (in such capacity the Security Trustee ) will be appointed to hold (and upon the service of a Note Acceleration Notice will be entitled to enforce) the security granted by the Issuer on trust for all the Secured Creditors pursuant to the Deed of Charge. Principal Paying Agent, Agent Bank Irish Paying Agent Cash Manager Account Bank Back-Up Servicer Facilitator Subordinated Loan Provider Swap Counterparties JPMorgan Chase Bank, N.A. acting through its office at Trinity Tower, 9 Thomas More Street, London E1W 1YT, United Kingdom, will be appointed to provide certain services to the Issuer as principal paying agent (in such capacity the Principal Paying Agent ) and agent bank (in such capacity the Agent Bank ) pursuant to an agency agreement (the Agency Agreement ) made between the Issuer, the Paying Agents, the Agent Bank, the Note Trustee and the Security Trustee to be dated on or around the Closing Date. J.P. Morgan (Ireland) Plc, a company incorporated in Ireland whose registered office is JP Morgan House, I.F.S.C., Dublin 1, Ireland, will be appointed as Irish paying agent for the Issuer in Dublin (the Irish Paying Agent and, together with the Principal Paying Agent and any other paying agents appointed pursuant to the Agency Agreement, the Paying Agents ) and will be appointed pursuant to the Agency Agreement. JPMorgan Chase Bank, N.A. acting through its office at Trinity Tower, 9 Thomas More Street, London E1W 1YT, United Kingdom, will be appointed as cash manager to the Issuer, the Receivables Trustee and the Servicer (in such capacity the Cash Manager ) and will provide cash management, investment and certain administration services to the Issuer, the Receivables Trustee and the Servicer pursuant to an account bank and cash management agreement (the Account Bank and Cash Management Agreement ) between the Issuer, the Receivables Trustee, the Servicer, the Cash Manager, the Account Bank, and the Security Trustee. JPMorgan Chase Bank, N.A., acting through its office at Trinity Tower, 9 Thomas More Street, London E1W 1YT, United Kingdom (the Account Bank ) will be appointed Account Bank to the Issuer and the Receivables Trustee and will maintain certain bank accounts on behalf of the Issuer and the Receivables Trustee pursuant to the Account Bank and Cash Management Agreement between the Issuer, the Receivables Trustee, the Servicer, the Cash Manager, the Account Bank, and the Security Trustee. Bayerische Hypo- und Vereinsbank AG as back-up servicer facilitator (the Back-Up Servicer Facilitator ). Fiat Auto Financial Service Limited (in this capacity the Subordinated Loan Provider ) will provide a subordinated loan to the Issuer pursuant to a Subordinated Loan Agreement (the Subordinated Loan Agreement ) between the Subordinated Loan Provider and the Issuer. Bayerische Hypo- und Vereinsbank AG, whose registered office is Arabellastraße 12, München, Germany and Landesbank Baden-Württemberg, an institution duly established in Germany whose registered office is Am Hauptbahnhof 2, D Stuttgart, Germany, (in such LD805741/ Page 17

18 capacity, each a Swap Counterparty ) will, on or about the Closing Date, each enter into a series of interest rate swap transactions with the Issuer pursuant to an agreement (together the Swap Agreements ) in order to hedge the Issuer s interest rate exposure in relation to the floating rate of interest due under the Notes. Collection Guarantors Clearing Systems Common Depositary Bayerische Hypo- und Vereinsbank AG, acting through its London Branch and whose London office is 41 Moorgate, London EC2R 6PP, United Kingdom, and Landesbank Baden- Württemberg, an institution duly established in Germany acting through its London Branch and whose London office is Citypoint, 1 Ropemaker Street, London EC2Y 9LW, United Kingdom (in such capacity, each a Collection Guarantor ) will guarantee the obligations of the Servicer to pay interest and repay principal under the LoanCo/Servicer Guaranteed Loan Agreement, and will guarantee the obligations of FRI as guarantor of FAFS obligations to transfer the Collections to the Receivables Trustee up to the Maximum Loan Guarantee Amount. Euroclear Bank S.A./N.V. as operator of the Euroclear System and Clearstream Banking, société anonyme, Luxembourg. JPMorgan Chase Bank, N.A. acting through its office at Trinity Tower, 9 Thomas More Street, London E1W 1YT, United Kingdom will be appointed as Common Depositary (in such capacity the Common Depositary ). 2. Characteristics of the Notes The Issue Issue Price of the Notes Credit Rating of the Class A Notes, the Class B Notes and the Class C Notes On or around 9 February 2006 (the Closing Date ), the Issuer will issue 256,870,000 Class A Asset Backed Floating Rate Notes due 2013 (the Class A Notes ), 16,160,000 Class B Asset Backed Floating Rate Notes due 2013 (the Class B Notes ) and 6,920,000 Class C Asset Backed Floating Rate Notes due 2013 (the Class C Notes, together with the Class A Notes and the Class B Notes, the Notes ). The Notes will be constituted under the Trust Deed. On the Closing Date the Notes will be issued at an issue price of 100 per cent. of their nominal amount. The Class A Notes are expected, on issue, to be rated AAA by Fitch Ratings, Aaa by Moody s and AAA by S&P. The Class B Notes are expected, on issue, to be rated A by Fitch Ratings, Aa3 by Moody s and A by S&P. The Class C Notes are expected, on issue, to be rated BBB by Fitch Ratings, Baa1 by Moody s and BBB by S&P. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal by the assigning rating organisation. Status, Form and Denomination As between the Notes, the Class A Notes will rank in priority to the Class B Notes and the Class C Notes, and the Class B Notes will rank in priority to the Class C Notes, in point of security and as to payment of both interest and principal in accordance with the applicable Priority of Payments. The LD805741/ Page 18

19 Notes of each Class will rank pari passu and rateably among themselves without any preference or priority. The Notes will not be obligations or responsibilities of, or guaranteed by, any person or entity other than the Issuer. In particular, the Notes will not be obligations or responsibilities of, or guaranteed by the Note Trustee, the Security Trustee, the Principal Paying Agent, the Irish Paying Agent, the Agent Bank, the Irish Listing Agent, the Back-Up Servicer Facilitator, the Account Bank, the Cash Manager, the Corporate Services Provider, the Receivables Trustee, HoldCo, LoanCo, the Seller, the Servicer, the Subordinated Loan Provider, the Collection Guarantors, the Swap Counterparties, FRI, the Arranger, the Joint Lead Managers or any other person except the Issuer. The Noteholders will be entitled to receive payments of principal and interest on their Notes on each Interest Payment Date, with a final repayment of principal to occur on or prior to the Final Maturity Date. Such entitlements will be subordinated to any liabilities ranking in priority to the relevant series of Notes including, inter alia, any and all amounts payable on the relevant Interest Payment Date to the Swap Counterparties (other than certain subordinated hedging amounts), and to the Security Trustee, the Note Trustee, the Principal Paying Agent, the Irish Paying Agent, the Agent Bank, the Irish Listing Agent, the Back-Up Servicer Facilitator, the Cash Manager and the Account Bank. The Note Trust Deed will contain provisions requiring the Note Trustee to have regard to the interests of the Noteholders and in the event of a conflict between the interests of the Noteholders, the Note Trustee will have regard to the Most Senior Class of Notes. For further details as to Noteholder meetings, modifications, waivers and consents by the Security Trustee and the Note Trustee, see further the sections entitled Terms and Conditions of the Notes, Summary of Principal Documents and Risk Factors below. The Noteholders may replace the Note Trustee by an Extraordinary Resolution of the Noteholders (as long as there is a Note Trustee in place in relation to the Notes after such removal). The Notes and each individual Note, should definitive Notes be issued, will be in the denomination of 10,000, will initially be represented by separate Temporary Global Notes in bearer form, one for each Class of Note. Interests in the Temporary Global Notes will, upon certification as to non-us beneficial ownership, be exchangeable subject as provided under Terms and Conditions of the Notes below, for interests in the Permanent Global Notes on the Exchange Date. The Permanent Global Notes will not be exchangeable for Definitive Notes save in certain limited circumstances. Interest on the Notes Interest on the Notes is payable by reference to successive Interest Periods. Interest will be payable quarterly in arrear on each Interest Payment Date. Each Interest Period will commence on (and include) an Interest Payment Date and end on (but exclude) the immediately succeeding Interest Payment Date. LD805741/ Page 19

20 The first Interest Period will commence on (and include) the Closing Date and end on (but exclude) the Interest Payment Date falling in April Interest on the Notes will accrue at an annual rate of LIBOR for three-month Sterling deposits, plus a margin of 0.08 per cent. per annum (in the case of the Class A Notes), 0.25 per cent. per annum (in the case of the Class B Notes), or 0.46 per cent. per annum (in the case of the Class C Notes) (or, in the case of the first Interest Period a linear interpolation of LIBOR for 2 month sterling deposits and LIBOR for 3 month sterling deposits) plus, a margin, in the case of the Class A Notes, of 0.08 per cent. per annum, in the case of the Class B Notes, of 0.25 per cent. per annum and, in the case of the Class C Notes, of 0.46 per cent. per annum. The Noteholders will be entitled to receive payment of interest on their respective Notes on each Interest Payment Date as provided in the Conditions and provided that such amounts are paid after payment of any liabilities ranking in priority thereto in accordance with the Pre-Acceleration Income Priority of Payments or Post-Acceleration Priority of Payments, as applicable. A failure by the Issuer to make quarterly payments of amounts of interest due under the Most Senior Class of Notes (subject to the expiry of a grace period) will, among other things, constitute an Issuer Event of Default under the Notes. Withholding Tax Security for the Notes All payments of principal and interest in respect of the Notes will be made without withholding or deduction for or on account of tax unless such withholding or deduction is required by law. If any such withholding or deduction is required to be made from payments due in respect of the Notes, neither the Issuer nor any Paying Agent nor any other person will be obliged to pay any additional amounts to Noteholders or, if definitive Notes are issued, Couponholders, or to otherwise compensate Noteholders or Couponholders for the reduction in the amounts they would receive as a result of such withholding or deduction. In such circumstances, and in certain other circumstances resulting from a withholding or deduction for or on account of tax in the context of the transaction, the Issuer will have the option (but not the obligation) to redeem all of the Notes at their Principal Amount Outstanding, as more particularly set out in Condition 6(c) (Redemption, Purchase and Cancellation Optional Redemption for Tax Reasons). The Notes will be secured by the Deed of Charge, which will create the following security interests: (a) an assignment by way of first fixed security over all of the Issuer s right, title, interest and benefit, present and future, in, to, under and pursuant to the Receivables Trust, in and to all monies, rights, powers and property distributed or derived from, or accrued in or related to the Issuer s interest in the Receivables Trust, and in and to all other Trust Property and all of its powers relative thereto; (b) an assignment by way of first fixed security over the Issuer s rights in the Assigned Contractual Rights; LD805741/ Page 20