Margin over EURIBOR (1) Estimated Average Life (2)

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1 Odysseus (European Loan Conduit No. 21) FCC (a French mutual debt fund (fonds commun de créances) regulated by Articles L , L to L and of the French Code monétaire et financier) 270,000,000 Class A Commercial Mortgage Backed Floating Rate Notes due ,750,000 Class B Commercial Mortgage Backed Floating Rate Notes due ,050,000 Class C Commercial Mortgage Backed Floating Rate Notes due 2015 Application has been made to the Irish Financial Services Regulatory Authority ("IFSRA") in its capacity as the competent authority under Irish law pursuant to Directive 2003/71/EC (the "Prospectus Directive") for the prospectus to be approved. Application has been made to the Irish Stock Exchange for the 270,000,000 Class A Commercial Mortgage Backed Floating Rate Notes due 2015 (the "Class A Notes"), the 40,750,000 Class B Commercial Mortgage Backed Floating Rate Notes due 2015 (the "Class B Notes") and the 16,050,000 Class C Commercial Mortgage Backed Floating Rate Notes due 2015 (the "Class C Notes" and, together with the Class A Notes and the Class B Notes, the "Listed Notes") of Odysseus (European Loan Conduit No. 21) FCC the "Issuer") to be admitted to the Official List of the Irish Stock Exchange. References in this prospectus (the "Prospectus") to Listed Notes being "listed" (and all related references) shall mean that such Listed Notes have been listed on the Irish Stock Exchange's Regulated Market. The Irish Stock Exchange's Regulated Market is a regulated market for the purposes of the Investment Services Directive (Directive 93/22/EEC). There can be no assurance that any such listing will be obtained or, if obtained, will be maintained. Simultaneously with the issuance of the Listed Notes, the Issuer will issue 300 Class X Commercial Mortgage Backed Variable Income Notes due 2015 (the "Class X Notes"). The Class X Notes will not be admitted to the Official List of the Irish Stock Exchange. The Listed Notes and the Class X Notes are collectively referred to as the "Notes". The Financial Regulator (IFSRA) has only approved of this document in relation to the Listed Notes or Alternative Investments which are to be listed on the Irish Stock Exchange or any other EU Regulated Market and the Financial Regulator has neither reviewed nor approved this document in relation to the unlisted Notes or Alternative Investments. Interest on the Listed Notes will be payable quarterly in arrear in euros on 15 th February, 15 th May, 15 th August and 15 th November in each year, subject to adjustment for non-business days as described herein (each a "Note Interest Payment Date"). The first Note Interest Payment Date will be 15 th February The interest rate applicable to the Listed Notes from time to time will be determined by reference to the European Interbank Offered Rate ("EURIBOR") for three-month euro deposits (or, in the case of the first Interest Period (as defined herein), a rate determined by the linear interpolation of EURIBOR for two and three month euro deposits) plus a margin which will be different for each class of Listed Notes, as set out under "Margin over EURIBOR" in the table below. The Class A Notes, the Class B Notes and the Class C Notes are expected, on their issue, to be assigned the ratings set out opposite the relevant class in the table below by Moody's Investors Service Limited ("Moody's") and Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P" and, together with Moody's, the "Rating Agencies"). 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 one or more of the assigning rating organisations. The ratings from the Rating Agencies only address the likelihood of timely receipt by any Noteholder of interest on the Notes and the likelihood of receipt by any Noteholder of principal of the Listed Notes by the relevant Final Maturity Date and do not address the likelihood of receipt by any Noteholder of principal prior to the relevant Final Maturity Date. Expected Ratings Initial Principal Amount Margin over EURIBOR (1) Estimated Average Life (2) Expected Final Note Interest Payment Date Final Maturity Date Issue Price (3) Class S&P Moody's A Notes AAA Aaa 270,000, per cent. 6.1 years August 2012 August % B Notes AA Not rated 40,750, per cent. 6.3 years August 2012 August % C Notes A Not rated 16,050, per cent. 6.3 years August 2012 August % (1) Interest due and payable on the Class B Notes and the Class C Notes on any Note Interest Payment Date is limited, in accordance with Condition 3(g), to an amount equal to the lesser of (a) the Interest Amount in respect of such class of Notes for that Note Interest Payment Date, and (b) the Adjusted Interest Amount in respect of such classes of Notes for that Note Interest Payment Date. (2) See "Estimated Average Lives of the Listed Notes and Assumptions" at page 187. (3) Plus accrued interest, if any. The Notes and interest thereon will not be obligations or responsibilities of any person other than the Issuer. In particular, the Notes will not be obligations or responsibilities of, or be guaranteed by, Morgan Stanley Bank International Limited ("MS Bank") or any affiliate thereof, or of or by the Manager, the French Loan Servicer, the French Loan Sub-Servicer, the Principal Paying Agent, the Irish Paying Agent, the Issuer Liquidity Facility Provider, the Luxembourg Liquidity Facility Provider, the Management Company, the Custodian, the Operating Bank, the Luxembourg Issuer, the Luxembourg Issuer Related Parties, the Belgian Issuer, the Belgian Issuer Related Parties, the Issuer Swap Provider or the Issuer Swap Guarantor (each as defined herein) or any of their respective affiliates, and none of such persons accepts any liability whatsoever in respect of any failure by the Issuer to make payment of any amount due on the Notes. The Notes will be issued simultaneously on or about 8 December 2005 (the "Closing Date"). The Notes of each class will rank pari passu with each other and without priority over other Notes of the same class. Prior to redemption on the Note Interest Payment Date falling in August 2015 (the "Final Maturity Date"), the Notes will be subject to mandatory redemption in certain circumstances. For further information, see "Terms and Conditions of the Notes Redemption and Cancellation" at page 196. THIS PROSPECTUS HAS NOT BEEN SUBMITTED FOR APPROVAL BY THE FRENCH AUTORITE DES MARCHES FINANCIERS AND, CONSEQUENTLY, THE NOTES MAY ONLY BE OFFERED AND SOLD IN FRANCE TO PROVIDERS OF INVESTMENT SERVICES RELATING TO PORTFOLIO MANAGEMENT FOR THE ACCOUNT OF THIRD PARTIES (PERSONNES FOURNISSANT LE SERVICE D'INVESTISSEMENT DE GESTION DE PORTEFEUILLE POUR COMPTE DE TIERS) AND/OR QUALIFIED INVESTORS (INVESTISSEURS QUALIFIES AS DEFINED IN ARTICLE L AND ARTICLE D OF THE FRENCH CODE MONETAIRE ET FINANCIER) AND/OR ANY PERSON AS DESCRIBED IN PARAGRAPHS 3 AND 4 OF ARTICLE R OF THE FRENCH CODE MONÉTAIRE ET FINANCIER. ACCORDINGLY, THE NOTES MAY NOT BE OFFERED OR SOLD TO THE PUBLIC IN FRANCE, DIRECTLY OR INDIRECTLY, AND NEITHER THIS PROSPECTUS NOR ANY PART HEREOF NOR ANY OTHER PROSPECTUS, FORM OF APPLICATION, ADVERTISEMENT, OTHER OFFERING MATERIAL OR OTHER INFORMATION MAY BE ISSUED, DISTRIBUTED OR PUBLISHED TO THE PUBLIC IN FRANCE, EXCEPT IN CIRCUMSTANCES THAT WILL RESULT IN COMPLIANCE WITH ALL APPLICABLE LAWS, ORDERS, RULES AND REGULATIONS, AS MORE PARTICULARLY DESCRIBED IN "SUBSCRIPTION AND SALE - SELLING AND TRANSFER RESTRICTIONS - FRANCE" AT PAGE 230 BELOW. THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW OF ANY STATE OF THE UNITED STATES OF AMERICA AND UNLESS SO REGISTERED MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OF AMERICA OR TO, OR FOR THE BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE LAWS (SEE "SUBSCRIPTION AND SALE - SELLING AND TRANSFER RESTRICTIONS - UNITED STATES OF AMERICA" AT PAGE 229 BELOW). THE NOTES MAY ONLY BE OFFERED AND SOLD TO NON FRENCH RESIDENT INVESTORS IN CERTAIN CIRCUMSTANCES, AS MORE PARTICULARLY DESCRIBED IN "SUBSCRIPTION AND SALE - SELLING AND TRANSFER RESTRICTIONS" BELOW. The Notes are expected to settle in book-entry form through the facilities of Euroclear France, société anonyme ("Euroclear France"), Clearstream Banking, société anonyme ("Clearstream, Luxembourg") and Euroclear Bank S.A./N.V. in its capacity as operator of the Euroclear System ("Euroclear", and together with Clearstream, Luxembourg and Euroclear France, the "Relevant Clearing Systems") on the Closing Date against payments therefore in immediately available funds. If any withholding or deduction for or on account of tax is applicable to payments of interest or repayments of principal on the Notes, such payments or repayments will be made subject to such withholding or deduction without the Issuer being obliged to pay any additional amounts as a consequence. See "Risk Factors" at page 43 for a discussion of certain factors to be considered in connection with an investment in the Notes. FONDS COMMUN DE CRÉANCES Established jointly by EuroTitrisation MANAGEMENT COMPANY The date of this Prospectus is 8 December MORGAN STANLEY Sole Lead Manager and Sole Bookrunner BNP Paribas Securities Services CUSTODIAN

2 IMPORTANT NOTICE This document comprises a prospectus (the "Prospectus") for the purposes of Article 5 of Directive 2003/71/EC (the "Prospectus Directive") and for the purpose of giving information with regard to the Issuer which is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses and prospects of the Issuer and the rights attaching to the Notes. This Prospectus is to be read in conjunction with all documents which are deemed to be incorporated herein by reference. The Management Company and the Custodian accept, except as set forth in the following paragraph, responsibility for all information contained in this Prospectus. To the best of the knowledge and belief of the Management Company and the Custodian (having taken all reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. MS Bank accepts responsibility for the section headed "The Originated Assets" at page 103. To the best of the knowledge and belief of MS Bank (having taken all reasonable care to ensure that such is the case), the information contained in this section of the Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. The accounting principles used in this Prospectus comply with those recommended by the Conseil National de la Comptabilité in respect of French debt mutual funds (fonds communs de créances). BDO Marque et Gendrot will take responsibility for the accounting principles and for the audit of the accounts of the Issuer. No person is or has been authorised in connection with the issue and sale of the Notes 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 French Loan Servicer, the French Loan Sub-Servicer, the Principal Paying Agent, the Irish Paying Agent, the Issuer Liquidity Facility Provider, the Luxembourg Liquidity Facility Provider, the Management Company, the Custodian, the Operating Bank, the Luxembourg Issuer, the Luxembourg Issuer Related Parties, the Belgian Issuer, the Belgian Issuer Related Parties, the Issuer Swap Provider or the Issuer Swap Guarantor (each as defined herein). Neither the delivery of this Prospectus nor any sale or allotment made in connection with the offering of any of the Notes shall, under any circumstances, constitute a representation or create any implication that there has been no change in the information contained herein since the date hereof or that the information contained herein is correct as of any time subsequent to its date. Other than the approval by IFRSA as competent authority under the Prospectus Directive no action has been taken under any regulatory or other requirements of any jurisdiction or will be so taken to permit a public offering of the Notes or the distribution of this Prospectus in any jurisdiction where action for that purpose is required. The distribution of this Prospectus and the offering of the Notes in certain jurisdictions, including, without limitation, the United States of America, the European Economic Area, the United Kingdom, France and Italy, may be restricted by law. Persons coming into possession of this Prospectus (or any part hereof) are required to inform themselves about, and observe, any such restrictions (see "Subscription and Sale - Selling and Transfer Restrictions" at page 229 below). In accordance with the provisions of Article L of the French Code monétaire et financier, Notes issued by the Issuer may not be sold by way of solicitation and canvassing calls (démarchage). Neither this Prospectus nor any part of it constitutes an offer to sell or the solicitation of an offer to buy any of the Notes and neither this Prospectus nor any part of it may be used for or in connection with an offer to, or a 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. Each investor contemplating the purchase of any Notes should conduct an independent investigation of the financial condition, and appraisal of the capacity of payments of the Issuer, the risks associated with the Notes and of the legal, tax, accounting and capital adequacy consequences of an investment in the Notes. 2

3 Accordingly, the Notes may not be offered or sold, directly or indirectly, and neither this Prospectus nor any part of it nor any other prospectus, form of application, advertisement, other offering material or other information may be issued, distributed or published in any country or jurisdiction except under circumstances that will result in compliance with all applicable laws, orders, rules and regulations. This Prospectus has not been submitted for approval by the French Autorité des Marchés Financiers. Accordingly, MS Bank and the Manager have represented and agreed that they have not offered or sold and will not offer or sell, directly or indirectly, the Notes to the public in the Republic of France and have not distributed or caused to be distributed and will not cause to be distributed directly or indirectly to the public in the Republic of France this Prospectus or any material relating to the Notes. Such offers, sales and distributions of the Class A Notes and the Class X Notes may only be made in France to (a) providers of investment services relating to portfolio management for the account of third parties (personnes fournissant le service d'investissement de gestion de portefeuille pour compte de tiers) and (b) qualified investors (investisseurs qualifiés) within the meaning of Article L and Article D of the French Code monétaire et financier. Such offers, sales and distributions of the Class B Notes and the Class C Notes may only be made in France to (a) qualified investors (investisseurs qualifiés) within the meaning of Article L and Article D of the French Code monétaire et financier, (b) to non-french resident investors and (c) any person as described in paragraphs 3 and 4 of Article R of the French Code monétaire et financier. Persons into whose possession this Prospectus (or any part hereof) comes are required to inform themselves about and to observe any such restrictions. All references in this document to " " or "euro" or "Euro" or "EUR" are to the lawful currency from time to time of the Republic of France and the other member states of the European Union that have adopted the single currency in accordance with the EC Treaty. According to the provisions of Article L of the French Code monétaire et financier, the Euro is the lawful currency of the Republic of France. In connection with this issue, Morgan Stanley & Co. International Limited or any person acting for it may over-allot Listed Notes (provided that, in the case of Listed Notes to be admitted to trading on a Regulated Market, the aggregate principal amount of Listed Notes allotted does not exceed 105 per cent. of the aggregate principal amount of the Listed Notes) or effect transactions with a view to supporting the market price of the Listed Notes at a level higher than that which might otherwise prevail. However, there is no assurance that Morgan Stanley & Co. International Limited or any of its agents will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the final terms of the offer of the Listed Notes is made and, if begun, may be ended at any time, but must be ended no later than the earlier of 30 days after the issue date of the Listed Notes and 60 days after the date of the allotment of the Listed Notes. 3

4 TABLE OF CONTENTS Page SUMMARY STRUCTURE DIAGRAM... 5 SUMMARY... 6 CASHFLOWS RISK FACTORS THE ISSUER THE PARTIES THE BORROWERS THE ORIGINATED ASSETS THE ORIGINATED ASSETS DOCUMENTATION THE ORIGINATED ASSETS SALE AGREEMENTS SUBSCRIPTION FOR THE LUXEMBOURG NOTES THE STRUCTURE OF THE ACCOUNTS THE LOAN POOL OVERVIEW THE LOANS AND THE RELATED PROPERTY SUMMARIES FRENCH LOAN SERVICING CASH MANAGEMENT CREDIT STRUCTURE ESTIMATED AVERAGE LIVES OF THE NOTES AND ASSUMPTIONS DESCRIPTION OF THE NOTES AND THE RESIDUAL UNITS TERMS AND CONDITIONS OF THE NOTES USE OF NET PROCEEDS FRENCH TAXATION APPLICABLE TO THE NOTES FRENCH TAXATION APPLICABLE TO THE RESIDUAL UNITS LIQUIDATION OF THE ISSUER GENERAL ACCOUNTING PRINCIPLES GOVERNING THE ISSUER GOVERNING LAW AND JURISDICTION MODIFICATIONS TO THE TRANSACTION ADDITIONAL INFORMATION RELATING TO THE ISSUER SUBSCRIPTION AND SALE CD-ROM DISCLAIMER GENERAL INFORMATION APPENDIX 1 INDEX OF PRINCIPAL DEFINED TERMS

5 SUMMARY STRUCTURE DIAGRAM Investors Notes Transfer of the claims resulting from the French Loans and the French Related Security MS Bank Issuer Swap Provider Odysseus (ELoC 21) FCC Issuer Luxembourg Liquidity Facility Provider Luxembourg Notes Issuer Liquidity Facility Provider Transfer of Belgian Registered Bonds Odysseus (Intermediate Luxco) s.à.r.l. MS Bank Belgian Bonds Belgian Issuer French Loans Belgian Inter-Company Loans Pascal Loan France Telecom Loan Carillon Loan Lexin Portfolio Loan Ford Loan Centrum Invest SPRL Melodicum SPRL Seminole SPRL Polytrophys SPRL Trealen SPRL 2 Pascal Properties France Telecom Property Carillon Property 3 Lexin Properties Ford Property Centrum Belgian Property Melodicum Belgian Property Seminole Belgian Property Polytrophys Belgian Property Trealen Belgian Property 5

6 SUMMARY The following information is a summary of the principal features of the issue of the Notes and the Residual Units. This summary should be read in conjunction with, and is qualified in its entirety by reference to, the more detailed information appearing elsewhere in this document and any decision to invest in the Notes and the Residual Units should be based on a consideration of the Prospectus as a whole, including the documents incorporated by reference. Following the implementation of the relevant provisions of the Prospectus Directive (Directive 2003/71/EC) in each Member State of the European Economic Area no civil liability will attach to the Issuer in any such Member State solely on the basis of this summary, including any translation thereof, unless it is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus. Where a claim relating to the information contained in this Prospectus is brought before a court in a Member State of the European Economic Area, the plaintiff may, under the national legislation of the Member State where the claim is brought, be required to bear the costs of translating the Prospectus before the legal proceedings are initiated. Certain terms used in this summary are defined elsewhere in this document. A list of the pages on which these terms are defined is found in the "Index of Principal Defined Terms" at Appendix 1 on page 236. TRANSACTION OVERVIEW The transaction described in this Prospectus involves the issuance of the Notes and the Residual Units (as defined herein). As is described in further detail in this Prospectus, the payment of interest on and the repayment of principal of the Notes and the Residual Units is primarily funded from payments of interest on and the repayment of principal of certain mortgage loans originated by MS Bank or notes subscribed for or acquired by MS Bank. The mortgage loans or notes in question are directly or indirectly secured upon, among other things, commercial real properties situated in France and Belgium. The transaction described in this Prospectus has been structured to take into account the relevant laws of these jurisdictions. On the Closing Date, the Issuer will issue the Notes and the Residual Units and with the proceeds of such issuance the Issuer will: (i) (ii) acquire from MS Bank certain receivables (the "French Loan Receivables") arising in connection with five French mortgage loans (each a "French Loan" and together the "French Loans") together with MS Bank's interest in certain security interests granted in respect of the French Loans (the "French Related Security"), as more particularly described in "The Loans and the Related Property Summaries" at page 153 below, in an aggregate principal amount of 312,805,000 as at the Closing Date; and subscribe for certain notes (the "Luxembourg Notes") issued by Odysseus (Intermediate Luxco) S.à.r.l. (the "Luxembourg Issuer"). The Luxembourg Notes are governed by Luxembourg law and are more particularly described in "The Originated Assets" at page 103 below. In relation to two of the French Loans, the French Loan Receivables that are to be sold to the Issuer is the senior portion (each a "Senior Tranche") of each of the relevant French Loans (each a "Tranched French Loan" and together the "Tranched French Loans") to the relevant French Borrowers. Except where stated otherwise, in respect of the Tranched French Loans, the information in this Prospectus relates to the relevant Senior Tranches only and, references to the "French Loans" includes the Senior Tranches of the Tranched French Loans only. Information relating to the intercreditor arrangements between the senior and junior lenders of the Tranched French Loans is set out at "The Originated Assets Documentation The French Loans and the French Related Security - Intercreditor Arrangements: Tranched French Loans" at page

7 The French Loan Receivables, the French Related Security and the Luxembourg Notes are together referred to as the "Issuer Assets" and each is referred to as an "Issuer Asset". For further information about the subscription or purchase, as the case may be, of each of the Issuer Assets, see "The Originated Assets Sale Agreements" at page 125 below. The Luxembourg Issuer will use the proceeds of the subscription for the Luxembourg Notes by the Issuer to pay the deferred purchase price owing to MS Bank and resulting from the sale by MS Bank to the Luxembourg Issuer of certain Belgian registered bonds (the "Belgian Bonds") in an aggregate principal amount of 14,000,000. The purchase of the Belgian Bonds by the Luxembourg Issuer has occurred on the Belgian Bond Interest Payment Date (as defined herein) falling on 7 November 2005 (the "Belgian Bond Transfer Date") subject to the conditions subsequent (conditions résolutoires/ontbindende voorwaarden) inter alia that the Luxembourg Notes are issued by the Luxembourg Issuer and that such Luxembourg Notes are subscribed for by the Issuer in an amount equal to 14,000,000. The Belgian Bonds were issued by AB CPFM Europroperty Belgium NV (the "Belgian Issuer") on 8 June 2004 (the "Belgian Bond Issue Date"). The Belgian Bonds are governed by Belgian law. The French Loans, the Luxembourg Notes and the Belgian Bonds are together referred to as the "Originated Assets" and each is referred to as an "Originated Asset". The French Loans and the Belgian Bonds are also collectively referred to as "Loans" and each individually a "Loan" unless expressly stated to the contrary. References to "origination" shall, unless expressly stated to the contrary, include the subscription for the Belgian Bonds by MS Bank, Morgan Stanley & Co. International Limited and Morgan Stanley & Co. Incorporated on 8 June References to a "Borrower" or the "Borrowers" shall include the French Borrowers and shall, unless expressly stated to the contrary, include the Belgian Issuer. The French Loans, the terms of each of which are set out in separate loan agreements governed by French law (each a "French Loan Agreement" and together, the "French Loan Agreements") are secured by, among other things, a lender's privilege (privilège de prêteur de deniers) and first ranking mortgages (hypothèques) governed by French law over eight commercial properties (each a "French Property" and together, the "French Properties"), civil law assignments (cessions civiles à titre de garantie) or Dailly law assignments (cessions de créances professionnelles à titre de garantie) relating to rental claims, insurance indemnity claims or seller's indemnity claims, as applicable, first ranking pledges over borrower accounts, first ranking pledges over the shares of the French Borrowers (except in the case of the Carillon Loan (as defined herein) where the granting of a first ranking pledge over the shares of the relevant French Borrower remains subject to the prior release of the existing pledge granted in favour of a third party guarantor as security for the first demand guarantee issued by it in connection with the payment of the complementary purchase price relating to the acquisition of the shares of such French Borrower) and cash collateral (gage-espèces) over the sums standing to the credit of the Originator accounts. The proceeds of the issue of the Belgian Bonds have been on-lent by the Belgian Issuer on the Belgian Bond Issue Date to five Belgian companies (each a "Belgian Property Owning Company" and together the "Belgian Property Owning Companies") by way of five intra-group loans governed by Belgian law (the "Belgian Intra-Group Loans"). The Belgian Bonds are secured by, among other things, guarantees, pledges and mortgages (hypothèques/hypotheken) governed by Belgian law over five commercial properties located in the Brussels and Flanders regions of Belgium (each a "Belgian Property" and together the "Belgian Properties"). The French Properties and the Belgian Properties are together referred to as the "Properties", and each as a "Property". For further information about each of the Originated Assets, see "The Originated Assets" and "The Originated Assets Documentation" below. Save as described in this Prospectus under "Risk Factors" and as set out in the tables entitled "The Loans and the Related Property Summaries" below, the Properties are let to one or more tenants and, as such, generate an entitlement to a regular periodic rental income (the "Rental Income"). At the time each Originated Asset was originated, security interests were granted over the Rental Income from time to time generated by the Property or Properties the subject of such financing, for the benefit of the Originator. 7

8 The Rental Income generated by the French Properties will be applied by the borrowers of the French Loans (each a "French Borrower" and together the "French Borrowers"), among other things, in or towards making payments of interest and repayments of principal in respect of the French Loans to the French Loan Originator and after the Closing Date, the Issuer. The Rental Income generated by the Belgian Properties will be applied by the Belgian Property Owning Companies to, among other things, pay interest on and repay the principal of the Belgian Intra-Group Loans made to them by the Belgian Issuer and such payments of interest and repayments of principal will be used by the Belgian Issuer, among other things, in or towards making payments of interest and repayments of principal in respect of the Belgian Bonds to the Luxembourg Issuer. Such amount will, in turn, be applied by the Luxembourg Issuer, among other things, in or towards making payments of interest and repayments of principal in respect of the Luxembourg Notes to the Issuer. To the extent that Rental Income is insufficient to repay principal on any of the Loans in full on or before the scheduled maturity date of such Originated Assets and the applicable Properties have not previously been sold, it is anticipated that such repayment will be made through the proceeds of the refinancing of the relevant Loans (the "Refinancing Proceeds") or the proceeds of sale of the relevant Properties (the "Disposal Proceeds"). Payments of interest and repayments of principal in respect of the Issuer Assets will thus be funded, directly or indirectly, through the Originated Assets or the proceeds resulting from the enforcement of the Originated Assets, from Rental Income, Refinancing Proceeds or Disposal Proceeds, such amounts, in turn, constituting the principal sources from which payments of interest and repayments of principal in respect of the Notes and the Residual Units will be made. Each of the French Loans (except for the Pascal Loan (as defined herein) which bears interest at a capped rate of interest) and the Belgian Bonds bears interest at a fixed rate. The Issuer thus receives interest payments based on a fixed rate of interest in respect of the French Loans and the Luxembourg Notes. The Notes, however, bear interest at a floating rate. The Issuer is therefore exposed to the risk of an interest rate mismatch arising between the fixed rate interest payments received on the French Loans and Luxembourg Notes and the floating rate interest liability on the Notes. In order to protect the Issuer against the interest rate risk, the Issuer will enter into a series of interest rate swap transactions (each an "Issuer Swap Transaction" and together the "Issuer Swap Transactions"), in respect of the interest payable to the Issuer on the Issuer Assets. The counterparty to the Issuer Swap Transactions will be the Issuer Swap Provider, whose obligations under such transactions will be guaranteed by the Issuer Swap Guarantor. Payments of interest and repayments of principal in respect of the French Loans and Luxembourg Notes may, under certain circumstances, be delayed. Such delays could impact upon the ability of the Issuer to make timely payments of interest in respect of the Notes. In order to protect the Issuer against this risk, the Issuer will enter into a liquidity facility agreement (the "Issuer Liquidity Facility Agreement") with Lloyds TSB Bank plc (the "Issuer Liquidity Facility Provider"). There is no intention to accumulate any surplus funds in any of the Luxembourg Issuer and the Belgian Issuer as security for any future payments of interest and principal on the Luxembourg Notes or the Belgian Bonds, respectively, though each will have a transaction account to which funds will be credited from time to time. There is no intention to accumulate any surplus funds in the Issuer on any Note Interest Payment Date as security for any future payments of interest and principal on the Notes falling due on subsequent Note Interest Payment Dates, though the Issuer will have a transaction account to which funds will be credited from time to time. The Issuer and the Issuer Related Parties Issuer Odysseus (European Loan Conduit No. 21) FCC (the "Issuer"), a French fonds commun de créances (mutual debt fund) governed by the provisions of Articles L , L to L and L and Articles R to R of the French Code monétaire et financier and the Issuer Regulations (see "The Issuer" below). The Issuer shall be jointly established by the Custodian and the Management Company (each as defined below). The Issuer shall be created on the Closing Date. 8

9 The Issuer is a co-ownership (copropriété). Pursuant to the management strategy (stratégie de gestion within the meaning of Articles R to R of the French Code monétaire et financier) of the Issuer, the Issuer's activities pursuant to the Issuer Regulations consist of (i) the purchase of the French Loan Receivables, together with the French Related Security and any other ancillary rights, (ii) the management of the Tranched French Loans in accordance with the terms of the Intercreditor Agreements, (iii) the subscription for the Luxembourg Notes, and (iv) the issue of the Notes and the Residual Units. Custodian Management Company Originator BNP Paribas Securities Services, a limited liability company (société anonyme) incorporated under and governed by the laws of France, licensed as a credit institution (établissement de crédit) under the French Code monétaire et financier whose principal office is at 3, rue d'antin, Paris, France and which is registered with the Trades and Companies Register (Registre de Commerce et des Sociétés de Paris) under number ("BNP Paribas Securities Services" and, in such capacity, the "Custodian") (see "The Parties - Custodian" below). EuroTitrisation (the "Management Company"), a limited liability company (société anonyme) incorporated under and governed by the laws of France, licensed by, and subject to the supervision and regulation of, the French Autorité des Marchés Financiers (see "The Parties - Management Company" below). With respect to the French Loans, Morgan Stanley Bank International Limited ("MS Bank"), whose principal office is at 25 Cabot Square, Canary Wharf, London E14 4QA (see "The Parties - Morgan Stanley Bank International Limited" below), acting in its capacity as lender, the "French Loan Originator". With respect to the Belgian Bonds, MS Bank, acting in its capacity as subscriber or purchaser of the Belgian Bonds, the "Belgian Bond Originator". The French Loan Originator and the Belgian Bond Originator are referred to in this Prospectus as the "Originator". French Loan Servicer MS Bank (in such capacity, the "French Loan Servicer") will, pursuant to the French Loan Servicing Agreement (as defined below), act as servicer in respect of the French Loan Receivables and the French Related Security. The services to be provided by the Servicer will consist of managing and servicing the French Loans as well as preserving and enforcing the French Related Security in accordance and subject to the terms of the French Loan Servicing Agreement. As from the Closing Date and in accordance with the terms of the French Loan Servicing Agreement, MS Bank will outsource to Morgan Stanley Mortgage Servicing Limited ("MSMS") certain tasks in relation to the servicing of the French Loan Receivables and the French Related Security in accordance with the terms of a sub-servicing agreement pursuant to which MSMS (in such capacity, the "French Loan Sub-Servicer") will act under the name of the French Loan Servicer (the "French Loan Sub-Servicing Agreement"). See "The Parties French Loan Servicer" and "French Loan Servicing" below. Operating Bank BNP Paribas Securities Services (in such capacity, the "Operating Bank") (see "The Parties - Operating Bank" below). 9

10 Principal Paying Agent BNP Paribas Securities Services (in such capacity, the "Principal Paying Agent") (see "The Parties - Paying Agents" below). Irish Paying Agent The Issuer Swap Provider and the Issuer Swap Agreement AIB/BNY Fund Management (Ireland) Limited (the "Irish Paying Agent" and, together with the Principal Paying Agent and any other paying agent appointed in respect of the Notes and the Residual Units, the "Paying Agents"), a limited liability company incorporated under and governed by the laws of Ireland, whose principal office is at Guild House Guild Street Dublin 1, Ireland (see "The Parties - Paying Agents" below). Morgan Stanley Bank AG whose principal office is located at Junghofstrasse 13-15, Frankfurt, Germany (the "Issuer Swap Provider"). The Issuer Swap Provider will enter into a swap agreement in the form of an International Swaps and Derivatives Association Inc. ("ISDA") 1992 Master Agreement (Multicurrency-Cross Border) (the "Issuer Swap Agreement") with the Issuer. The Issuer and the Issuer Swap Provider will enter into swap confirmations evidencing the terms of the Issuer Swap Transactions to be entered into pursuant to the Issuer Swap Agreement in order to protect the Issuer against interest rate risk arising as a result of the French Loans (except for the Pascal Loan (as defined herein) which bears interest at a capped rate of interest) and the Belgian Bonds bearing interest at fixed rates of interest whilst the Issuer is required to pay floating rates of interest on the Notes. For further information about the Issuer Swap Provider see "The Parties Issuer Swap Provider" at page 91. For further information about the Issuer Swap Agreement and the Issuer Swap Transactions see "Credit Structure The Issuer Swap Agreement" at page 184. Issuer Swap Guarantor Morgan Stanley (the "Issuer Swap Guarantor") will, pursuant to and subject to the terms of a guarantee in favour of the Issuer (the "Issuer Swap Guarantee"), guarantee all of the Issuer Swap Provider's obligations under the Issuer Swap Agreement and the Issuer Swap Transactions. The Issuer Swap Guarantee will be governed by New York law. For further information about the Issuer Swap Guarantor, see "The Parties Issuer Swap Guarantor" at page 91. For further information about the Issuer Swap Guarantee, see "Credit Structure The Issuer Swap Guarantee" at page 185. Issuer Liquidity Facility Provider Lloyds TSB Bank plc, acting through its corporate office located at Faryner's House, 25 Monument Street, London EC3R 8BQ, (the "Issuer Liquidity Facility Provider") under a liquidity facility agreement (the "Issuer Liquidity Facility Agreement") with an initial maximum principal amount of 20,760,000 (such amount being subject to adjustment and reduction in certain specified circumstances), to be dated on or prior to the Closing Date and made between the Issuer Liquidity Facility Provider and the Issuer. The Issuer will be entitled to make drawings under the Issuer Liquidity Facility Agreement from time to time to cover certain shortfalls in the Issuer's funds. Each drawing under the Issuer Liquidity Facility Agreement will be made in Euro. Subject to certain limitations, the Issuer will be entitled to make drawings under the Issuer Liquidity Facility Agreement from time to time to cover shortfalls in 10

11 the amount of interest received from Borrowers in respect of any Loans ("Interest Drawings") as well as shortfalls in the amounts required to pay outstanding drawings and interest that has accrued on outstanding drawings under the Issuer Liquidity Facility Agreement ("Accrued Interest Drawings"). The Issuer will also be entitled to make drawings to fund shortfalls in amounts available to pay certain Issuer Priority Payments ("Expenses Drawings"). For further information about the Issuer Liquidity Facility Provider, see "The Parties Issuer Liquidity Facility Provider" at page 90. For further information about the Issuer Liquidity Facility Agreement, see "Credit Structure Issuer Liquidity Facility Agreement " at page 181. The Issuer Related Parties The Custodian, the Management Company, the French Loan Servicer, the French Loan Sub-Servicer, the Operating Bank, the Principal Paying Agent, the Irish Paying Agent, the Issuer Swap Provider, the Issuer Swap Guarantor and the Issuer Liquidity Facility Provider are together referred to as the "Issuer Related Parties". The Issuer Assets and the Originated Assets The Issuer Assets The Issuer Assets comprise the French Loans, the French Related Security and the Luxembourg Notes. Payment of interest on and repayment of principal of the Luxembourg Notes will be made primarily from payments of interest on and repayment of principal of the Belgian Bonds. The Belgian Bonds are, in turn, the primary obligations of the Belgian Issuer only. For further information on the Luxembourg Notes, see "The Originated Assets Documentation The Belgian Originated Assets The Luxembourg Notes" at page 131 below. Lending Criteria Valuations The lending criteria applied by the Originator at the time of the origination of the Originated Assets are described in "The Originated Assets" at page 103. On the basis of the valuations of the Properties undertaken in connection with the origination of the French Loans and the issue of the Belgian Bonds (the "Origination Valuations"), the weighted average loan-to-value ratio ("LTV Ratio") of the Loans as at the Cut-Off Date was 56.6 per cent., the aggregate Origination Valuations of the Properties being 613,038,000. In the absence of an Appraisal Reduction (as defined below) in accordance with the terms of the Issuer Liquidity Facility Agreement, no further independent valuations of the Properties will be undertaken nor will the Origination Valuations be updated at any time. For further information about the valuations of the Properties, see "The Loan Pool Overview" at page 148. Further information about the valuations, or summaries of the valuations, of the Properties is also contained, in electronic form, on the CD-ROM circulated contemporaneously with this Prospectus. For further information about the CD-ROM, see "CD-ROM Disclaimer" at page

12 The French Loans and the French Related Security The French Loans The French Loans consist of the following five loans: (i) (ii) (iii) (iv) (v) the Pascal Loan; the France Telecom Loan; the Carillon Loan; the Lexin Portfolio Loan; and the Ford Loan, each as defined in "The Originated Assets Documentation" at page 107 below. For further information on the French Loans, see "The Loan Pool Overview" at page 148 below. The French Loans, which were originated by the French Loan Originator between October 2004 and July 2005, are secured by, among other things, a lender's privilege (privilege de prêteurs de deniers) and first-ranking mortgages (hypothèques) governed by French law over the French Properties. As at Cut-Off Date, the aggregate principal amount outstanding in respect of the French Loan was 312,805,000. There are eight French Properties, all of which are office buildings. French Properties for each French Loan are defined in "The Loans and the Related Property Summaries" at page 153 below. On the basis of the Origination Valuations of the French Properties, the weighted average loan to value ratio ("LTV Ratio") of the French Loans as at the Cut-Off Date was 56.5 per cent., the aggregate Origination Valuations of the French Properties being 589,441,000. The expected LTV Ratio of the French Loans at the time of their scheduled maturity is 54.6 per cent., again based on the Origination Valuations of the French Properties and assuming no prepayments and no default under the French Loans amongst other things. The French Borrowers are all incorporated under the laws of France. The French Borrowers (except for the French Borrower under the France Telecom Loan (as defined herein)) were existing companies at the time of the extension of the relevant French Loans. A detailed due diligence in respect of these French Borrowers was carried out on behalf of the French Loan Originator in order to determine whether they were subject to any actual or contingent liabilities other than those arising from their ownership of the relevant French Properties. This due diligence did not reveal the existence of any material liabilities. The French Borrowers are all sponsored by professional property investors and their activities are restricted to acquiring, financing or refinancing, as the case may be, and operating commercial real estate properties of a type similar to the French Properties, with the intention that the French Borrowers should be single purpose vehicles. The French Borrowers have not employed any employees. Payments of interest on and repayments of principal of the French Loans will be made primarily from Rental Income generated by the French Properties. To the extent that such principal repayments are not made from such Rental Income, it is anticipated that they will be made from Refinancing Proceeds in respect of the French Loans or Disposal Proceeds in respect of the French Properties. 12

13 Certain French Properties are not fully let. For further information about the French Loans, see "The Originated Assets Documentation The French Loans and the French Related Security" at page 11. For further information about the French Properties, see "The Loans and Related Property Summaries" at page 153. Further information about the valuation of the French Properties is also contained in electronic form, on the attached CD-ROM. For further information about the CD-ROM, see "CD-ROM Disclaimer" at page 233. Further Advances Payments under the French Loans The French Loans were fully drawn on the date of their origination. No further advances are required to be made under the French Loan Agreements. Rental Income generated by each of the French Properties is paid by the tenants into an account in the name of the applicable French Borrower (each a "French Borrower Account"). Such amount is retained in the applicable French Borrower Account, until the balance on that account is sufficient to pay all charges and taxes (including VAT due on the rents) forecast in the annual budget prepared by the applicable French Borrower to be incurred on or with respect to the applicable French Property during the then current interest period under the applicable French Loan Agreement. Once the balance of such French Borrower Account is sufficient to cover the budgeted charges and taxes, all further amounts received in respect of rent (or other proceeds) into such account during the then current interest period are required to be paid to an account in the name of the French Loan Originator (each a "French Rent Account") within 48 hours of receipt into the applicable French Borrower Account. Amounts standing to the credit of the French Rent Accounts constitute cash collateral (gage-espèces) in favour of the French Loan Originator and, after the Closing Date, the Issuer to the extent of the amounts due from the applicable French Borrower under its French Loan Agreement. The French Rent Accounts in the name of the French Loan Originator will be closed on the Closing Date and all amounts standing to the credit thereof will be transferred to equivalent French Rent Accounts opened in the name of the Issuer at the Operating Bank as part of the French Related Security. In respect of the Carillon Loan and the Lexin Portfolio Loan, the French Rent Accounts will remain opened in the name of the French Loan Originator acting as agent (mandataire) of the Junior Lenders and the Senior Lender, and after the Closing Date, the Issuer in accordance with the terms of the Intercreditor Agreements. The cash collateral (gage-espèces) of all sums standing to the credit of the relevant French Rent Accounts will be held by the French Loan Originator acting as agent (mandataire) on behalf and for the benefit of the Junior Lenders and the Senior Lender, and after the Closing Date, the Issuer. In respect of the Ford Loan, the applicable French Borrower has credited, upon origination, a reserve account in the name of the French Loan Originator in an amount of 533,000 in order to cover any financial costs arising from two pending litigations existing between the relevant French Borrower and its tenant. As at the date of this Prospectus, one of these two pending litigations has been amicably settled and the amount initially credited on this reserve account has been partially released in an amount of 106,008. The second litigation is still pending for an estimated amount of 292,000. Such amount constitute cash collateral (gage-espèces) in favour of the French Loan Originator and, after the Closing Date, the Issuer. This reserve account in the name of the French Loan Originator will be closed on the Closing Date and its credit balance will be transferred to an equivalent reserve account opened in the name of the Issuer at the Operating Bank as part of the French Related Security. 13

14 For further information on the payments of the French Loans, see "The Structure of the Accounts" below. For further information on the two pending litigations, see "Risk Factors Tenant Default" below. The French Related Security The obligations of the French Borrowers under the French Loans are secured, among other things, by: (a) a lender's privilege (privilège de prêteurs de deniers) and first-ranking mortgages (hypothèques), (b) civil law assignments (cessions civiles à titre de garantie) or Dailly law assignments (cessions de créances professionnelles à titre de garantie) relating to rental claims, insurance indemnity claims or seller's indemnity claims, as applicable, (c) first ranking pledges over borrower accounts, (d) first ranking pledges over the shares of the French Borrowers (except in the case of the Carillon Loan where the granting of a first ranking pledge over the shares of the relevant French Borrower remains subject to the prior release of the existing pledge granted in favour of a third party guarantor as security for the first demand guarantee issued by it in connection with the payment of the complementary purchase price relating to the acquisition of the shares of such French Borrower) and (e) cash collateral (gage-espèces) over the sums standing to the credit of the French Loan Originator accounts, as more particularly described in "The Originated Assets Documentation The French Loans and the French Related Security The French Related Security" below. Upon the transfer by MS Bank to the Issuer of the French Loan Receivables on the Closing Date pursuant to Article L of the French Code monétaire et financier, the French Related Security will be automatically transferred to the Issuer as accessories (accessoires) of the French Loan Receivables. Further Advances Insurance The Issuer is not required to make any advances to the French Borrowers. The terms of each French Loan require the French Properties securing it to be covered by a satisfactory buildings insurance policy. For further information relating to the insurance arrangements in respect of the French Properties and the risks in relation thereto, see "Risk Factors Factors Relating to the Originated Assets Insurance" at page 48 and "The Originated Assets Documentation The French Loans and the French Related Security Insurance" at page 111. The Luxembourg Notes The Luxembourg Issuer and its Related Parties The Luxembourg Issuer Odysseus (Intermediate Luxco) S.à.r.l. (the "Luxembourg Issuer"). The Luxembourg Issuer is a private limited company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 8-10, rue Mathias Hardt, 1717 Luxembourg, Grand Duchy of Luxembourg. The Luxembourg Issuer is a securitisation company within the meaning of, and governed by, the Luxembourg law of 22 March 2004 on securitisation (the "Luxembourg Securitisation Law"). The issued share capital of the Luxembourg Issuer is 12,500 and is entirely held by Monument Trustees Limited, a company established under the laws of Ireland (the "Luxembourg Issuer Trustee"). 14

15 The sole object of the Luxembourg Issuer is to enter into securitisation transactions within the meaning of the Luxembourg Securitisation Law and the Luxembourg Issuer may, in this context, assume risks, existing or future, relating to the holding of assets, whether movable or immovable, tangible or intangible, as well as risks resulting from the obligations assumed by third parties or relating to all or part of the activities of third parties, in one or more transactions or on a continuous basis. The Luxembourg Issuer may assume those risks by acquiring the assets, guaranteeing the obligations or by committing itself in any other way. It may also transfer, to the extent permitted by law and these articles of incorporation, dispose of the claims and other assets it holds, whether existing or future, in one or more transactions or on a continuous basis. The Luxembourg Issuer may, in this same purpose, acquire, dispose of and invest in loans, stocks, bonds, debentures, obligations, notes, advances, shares, warrants and other securities. The Luxembourg Issuer may grant pledges, other guarantees or security of any kind to Luxembourg or foreign entities involved in such securitisation transaction and enter into securities lending activity on an ancillary basis. The Luxembourg Issuer may perform all legal, commercial, technical and financial investments or operations and in general, all transactions which are necessary or useful to fulfil and develop its purpose, as well as, all operations connected directly or indirectly to facilitating the accomplishment of its purpose in all areas described above. The assets of the Luxembourg Issuer may only be assigned in accordance with the terms of the securities issued to finance the acquisition of such assets. The Luxembourg Issuer will purchase Belgian Bonds and issue negotiable financial instruments in the form of Luxembourg Notes as well as enter into certain ancillary transactions. The Luxembourg Issuer will not issue securities to the public on a continuous basis within the meaning of Article 19 of the Luxembourg Securitisation Law and thus is not and will not be authorised or supervised by the Commission de Surveillance du Secteur Financier. The Luxembourg Issuer may also within the context and for the purpose of the securitisation transaction: (i) raise funds, including through the issue of bonds, notes, obligations and other evidences of indebtedness; (ii) grant security for funds; (iii) enter into agreements, including, but not limited to underwriting agreements, marketing agreements and selling agreements in relation to the raising of funds, interest and/or currency exchange agreements and other financial derivative agreements in connection with the objects mentioned above, and bank and cash administration agreements, liquidity facility agreements, credit insurance agreements and agreements creating security in connection with the activities mentioned above. For further details about the Luxembourg Issuer, see "The Parties The Luxembourg Issuer and its Related Parties The Luxembourg Issuer" at page 92 and "Subscription for the Luxembourg Notes" at page 130. The Luxembourg Corporate Services Provider Mercuria Services S.A., a public company with limited liability incorporated as a société anonyme under the laws of the Grand Duchy of Luxembourg, having its registered office at 8-10, rue Mathias Hardt, L 1717 Luxembourg registered with the Luxembourg Trade and Company Register under number B (the "Luxembourg Corporate Services Provider"). 15

16 The Luxembourg Security Agent MSMS (in such capacity, the "Luxembourg Security Agent") (see "The Parties The Luxembourg Issuer and its Related Parties" at page 92). The Luxembourg Security Agent will hold a pledge over the Belgian Bonds granted by the Luxembourg Issuer in favour of the Issuer, as the subscriber of the Luxembourg Notes in its own name and as agent (mandataire) for the Issuer, as the holder of the Luxembourg Notes. The Belgian Bond Servicer The Luxembourg Liquidity Facility Provider The Luxembourg Issuer Statutory Auditors The Luxembourg Issuer Related Parties MSMS (in such capacity, the "Belgian Bond Servicer") (see "The Parties The Luxembourg Issuer and its Related Parties" at page 92). Lloyds TSB Bank plc (in such capacity, the "Luxembourg Liquidity Provider") (see "The Parties The Luxembourg Issuer and its Related Parties" at page 92). BDO Compagnie Fiduciaire, having its registered office at 5, boulevard de la Foire, L-2013 Luxembourg, will act as the statutory auditor of the Luxembourg Issuer (the "Luxembourg Issuer Statutory Auditor ") (see "The Parties The Luxembourg Issuer and its Related Parties" at page 92). The Luxembourg Corporate Services Provider, the Luxembourg Security Agent, the Belgian Bond Servicer, the Luxembourg Liquidity Facility Provider and the Luxembourg Issuer Statutory Auditor are together referred to as the "Luxembourg Issuer Related Parties". The Belgian Issuer and its Related Parties The Belgian Issuer AB CPFM Europroperty Belgium NV (the "Belgian Issuer"). The activities of the Belgian Issuer are restricted to issuing the Belgian Bonds, granting security for its obligations under and in respect of the Belgian Bonds and entering into transactions incidental to these other activities and making intragroup loans. The Belgian Issuer was established in connection with an advance of debt finance by MS Bank, Morgan Stanley & Co. Incorporated and Morgan Stanley & Co. International Limited, by way of their subscription for the Belgian Bonds, and as such its position in the structure relating to the issuance of the Notes is analogous to that of the French Borrowers. The Belgian Issuer was incorporated as a société anonyme/naamloze vennootschap under Belgian law on 8 April The Belgian Properties are mainly office properties. For further information relating to the Belgian Properties, see "The Loans and the Related Property Summaries The Belgian Bonds" at page 167. On the basis of the Origination Valuations of the Belgian Properties, the LTV Ratio of the Belgian Bonds as at the Cut-Off Date was 59.3 per cent., the aggregate Origination Valuations of the Belgian Properties being 23,597,000. The Belgian Issuer was incorporated under the laws of Belgium as a société anonyme/naamloze vennootschap around the time the Belgian Bonds were issued, and was incorporated for the purpose of issuing the Belgian Bonds and lending the proceeds thereof to the Belgian Property Owning Companies pursuant to the Belgian Intra-Group Loans. The Belgian Issuer is sponsored by a 16

17 professional real estate property investor and its activities are restricted to issuing the Belgian Bonds and undertaking certain activities incidental to such issuance and it is thus a single purpose, bankruptcy remote vehicle. The Belgian Issuer is not, however, the owner of any of the Belgian Properties. Each of the Belgian Properties is owned by a Belgian Property Owning Company, which are, in turn, direct or indirect wholly-owned subsidiaries of the Belgian Issuer. The Belgian Property Owning Companies were not established as special purpose vehicles. Prior to the issuance of the Belgian Bonds, detailed financial due diligence in respect of the Belgian Property Owning Companies was carried out on behalf of the Belgian Bond Originator in order to determine whether they were subject to any actual or contingent liabilities other than those arising in relation to their ownership of the Belgian Properties. This due diligence did not reveal the existence of any material liabilities. Further, in order to ensure that the activities of the Belgian Property Owning Companies remained restricted to the ownership and management of the Belgian Properties, thereby minimising the risk of the Belgian Property Owning Companies subsequently becoming subject to actual or contingent liabilities other than those arising in relation to their ownership of the Belgian Properties, various amendments were made to their constitutional documents. Thus, the Belgian Property Owning Companies have, as a result of the process of due diligence and amendment, been converted into single purpose vehicles. On 23 June 2003, each Belgian Property Owning Company was converted into a société privée à responsabilité limitée/besloten vennootschap met beperkte aansprakelijkheid pursuant to the relevant provisions of the Belgian Company Code, such conversion being undertaken in a manner which preserved the efficacy of the security interests previously granted to the Belgian Security Agent over the shares of the Belgian Property Owning Companies. The Belgian Issuer has lent the proceeds of the issuance of the Belgian Bonds to the Belgian Property Owning Companies by way of the Belgian Intra-Group Loans. Payments of interest and repayments of principal in respect of the Belgian Bonds will be funded primarily from payments of interest and repayments of principal in respect of the Belgian Intra-Group Loans which, in turn, will be funded primarily from Rental Income generated by the Belgian Properties. To the extent that such principal repayments on or before the schedule maturity date of the Belgian Bonds are not made from such Rental Income, they will be made from Refinancing Proceeds in respect of the Belgian Bonds, or Disposal Proceeds in respect of the Belgian Properties or out of the Belgian Property Owning Companies' own resources. For further details about the Belgian Issuer, see "The Parties The Belgian Issuer and its Related Parties The Belgian Issuer" at page 94 and the "The Originated Assets - The Belgian Originated Assets Belgian Bonds - Status of the Belgian Issuer and the Belgian Property Owning Companies" at page 117. The Belgian Security Agent MSDW Finance (Netherlands) B.V. (the "Belgian Security Agent"). The Belgian Security Agent is a besloten vennootschap incorporated in The Netherlands. The security interests granted in respect of the Belgian Bonds have been granted by the Belgian Issuer to the Belgian Security Agent, acting in its own name under a parallel covenant to pay (solidarité active/actieve hoofdelijkheid) and as agent (mandataire/mandataris) for the holders of the Belgian Bonds. For further details about the Belgian Security Agent, see "The Parties - The Belgian Issuer and its Related Parties - The Belgian Security Agent" at page

18 The Belgian Property Owning Companies Centrum Invest SPRL, Melodicum SPRL, Polytrophys SPRL, Seminole SPRL and Trealen SPRL (the "Belgian Property Owning Companies"). The Belgian Property Owning Companies were incorporated as sociétés anonymes under Belgian law. On 23 June 2003, each of the Belgian Property Owning Companies was converted from a société anonyme/naamloze vennootschap into a société privée à responsabilité limitée/besloten vennootschap met beperkte aansprakelijkheid pursuant to the relevant provisions of the Belgian Company Code. Such conversion was undertaken in a manner which preserved the efficacy of the security interests granted to the Belgian Security Agent by the Belgian Property Owning Companies over their shares in the Belgian Issuer. The Belgian Property Owning Companies together own the Belgian Properties and are all subsidiaries of the Belgian Issuer. The Belgian Issuer has made the Belgian Intra-Group Loans to the Belgian Property Owning Companies. For further information about the Belgian Property Owning Companies, see "The Parties The Belgian Issuer and its Related Parties The Belgian Property Owning Companies" at page 94. The Belgian Issuer Related Parties The Belgian Security Agent and the Belgian Property Owning Companies are together referred to as the "Belgian Issuer Related Parties". The Luxembourg Issuer Assets The Belgian Bonds and the Belgian Properties The Belgian Bonds were issued by the Belgian Issuer on 8 June 2004 and had an aggregate principal amount outstanding of 14,000,000 as at the Cut-Off Date. A certain amount of the indebtedness owing under the Belgian Bonds is secured by mortgages (hypothèques/hypotheken) governed by Belgian law over the Belgian Properties. The mortgages do not, however, secure the entire amount of principal and interest evidenced by the Belgian Bonds, and do not constitute the sole form of security granted in respect of the Belgian Bonds. Rather, the Issuer is relying both upon the effectively single purpose nature of the Belgian Property Owning Companies and upon certain other forms of security interest to secure the indebtedness owing in respect of the Belgian Bonds. The relevant security interests include pledges over the shares of the Belgian Property Owning Companies, pledges over the Rental Income payable in respect of the Belgian Properties, pledges over the Belgian Collection Accounts established by and in the name of each Belgian Property Owning Company, and any amounts from time to time standing to the credit thereof, and equity participations in and representations on the board of managers of each of the Belgian Property Owning Companies. In addition, mortgage mandates (mandat hypothécaire/hypothecaire mandaten) have been granted empowering attorneys in fact appointed by the Belgian Security Agent to execute at any time, prior to the insolvency of the relevant Belgian Property Owning Companies, further mortgages over the Belgian Properties, without the need to seek the consent of the Belgian Issuer, the Belgian Property Owning Companies, or any other third party, in an amount up to the entire indebtedness outstanding in respect of the Belgian Bonds. The Belgian Properties are mainly office properties. For further information relating to the Belgian Properties, see "The Loans and the Related Property Summaries The Belgian Bonds" at page 167. For further information about the Belgian Bonds, see "The Originated Assets Documentation The Belgian Originated Assets The Belgian Bonds" at page 117. For further information about the Belgian Properties see "The Loans and Related Property Summaries - The Belgian Bonds" at page 167. Further 18

19 information about the valuation of the Belgian Properties is also contained in electronic form, on the CD-ROM circulated contemporaneously with this Prospectus. For further information about the CD-ROM, see "CD-ROM Disclaimer" at page 233. Payments on the Belgian Bonds Rental Income generated by the Belgian Properties is paid by the tenants into a number of accounts (each a "Belgian Collection Account"), each in the name of a Belgian Property Owning Company. Each of these accounts is subject to a first ranking security interest in favour of the Belgian Security Agent. Following collection into such accounts, the relevant amounts are transferred at the end of each business day to a master bank account in the name of the Belgian Security Agent (the "Belgian Collateral Account"). On each date when interest on the Belgian Bonds is due and payable (each a "Belgian Bond Interest Payment Date"), the Belgian Security Agent will apply amounts standing to the credit of the Belgian Collateral Account to make payments of interest on, repayments of principal of, and payment of any other amounts due on, the Belgian Bonds. Following the Closing Date, on each Belgian Bond Interest Payment Date, such payments of interest, repayments of principal and payment of any other amounts due will be made to the Luxembourg Issuer Transaction Account. For further information about payments on the Belgian Bonds, see "The Originated Assets Documentation The Belgian Originated Assets The Belgian Bonds Bank Accounts" at page 120. The Belgian Related Security With respect to the Belgian Bonds, the principal elements of the Belgian Related Security are as follows: (a) (b) (c) (d) a first ranking pledge over the shares of the Belgian Issuer and each of the Belgian Property Owning Companies; a first ranking pledge of the Rental Income payable in respect of the Belgian Properties; full cross-collateralisation pursuant to certain joint and several guarantees provided by the Belgian Property Owning Companies, in favour of the Belgian Security Agent and the Belgian Bondholders and vis-à-vis each other, in respect of the Belgian Bonds; and a first ranking mortgage (hypothèques/hypotheken) over each of the Belgian Properties, which mortgages secure, in aggregate, 10 per cent. of the initial principal amount of the Belgian Bonds and, as far as the remainder of the principal amount outstanding of the Belgian Bonds is concerned, mortgage mandates (mandat hypothécaire/hypothecaire mandaten) which empower attorneys in fact appointed by the Belgian Security Agent to create, at all times prior to insolvency of the relevant Belgian Property Owning Companies and without seeking any further permission, further mortgages over each Belgian Property up to such remaining principal amount (subject, among other things, to payment of the relevant registration and inscription fees, which equate to approximately 1.3 per cent. of the amount secured, plus other fees and other incidental costs). The Belgian Related Security has been granted to the Belgian Security Agent acting on behalf of the holders from time to time of the Belgian Bonds, except for the mortgages which have been granted to the Belgian Security Agent in its own name and certain joint and several guarantees which have been granted to the Belgian Security Agent in its own name and as agent for the holders from time to time of the Belgian Bonds. 19

20 All elements of the Belgian Related Security are governed by Belgian law. Because the mortgages over the Belgian Properties secure only 10 per cent. of the initial principal amount of the Belgian Bonds, in addition to the security interests described above, the Belgian Security Agent has obtained an equity participation in and representation on the board of managers of each of the Belgian Property Owning Companies, such representation occurring through an independent manager (the "Independent Manager") appointed by the Belgian Security Agent. The equity participation of the Belgian Security Agent in each of the Belgian Property Owning Company corresponds to one share. This equity participation and board representation through the Independent Manager allows independent control to be exercised over the activities of the Belgian Property Owning Companies, including in relation to their dealings with the Belgian Properties and, hence, among other things, permits the Belgian Security Agent to intervene in the operations of the Belgian Property Owning Companies so as to avoid, as far as possible, a situation where security interests must be enforced, or otherwise to be informed on a timely basis of such a situation, allowing timely conversions of the mortgage mandates, at any time prior to insolvency of the Belgian Property Owning Companies, into full mortgages over the Belgian Properties. Under the terms of the Belgian Bonds, appropriate insurance cover in respect of the Belgian Properties is required to be maintained by the Belgian Property Owning Companies. For further information about the Belgian Related Security, see "The Originated Assets Documentation The Belgian Originated Assets - The Belgian Bonds" at page 117. Transfer of the Belgian Bonds On the Belgian Bond Transfer Date, the Belgian Bond Originator has entered into (a) the First Belgian Bond Sale Agreement pursuant to which it has agreed to purchase from Morgan Stanley & Co. Incorporated and from Morgan Stanley & Co. International Limited, the Belgian Bonds not currently owned by the Belgian Bond Originator, and (b) the Second Belgian Bond Sale Agreement pursuant to which it has agreed to sell all of the Belgian Bonds (including the Belgian Bonds formerly owned by Morgan Stanley & Co. Incorporated and by Morgan Stanley & Co. International Limited) to the Luxembourg Issuer in consideration for a deferred purchase price of 14,000,000, which is equal to the aggregate principal amount outstanding under the Belgian Bonds on such date. The Second Belgian Bond Sale Agreement provides that the deferred purchase price will be paid by the Luxembourg Issuer to the Belgian Bond Originator on or about the Closing Date out of the proceeds resulting from the issuance of the Luxembourg Notes. Pursuant to the Second Belgian Bond Sale Agreement, the sale of the Belgian Bonds by the Belgian Bond Originator to the Luxembourg Issuer occurring the Belgian Bond Transfer Date is subject to the conditions subsequent (conditions résolutoires/ontbindende voorwaarden) inter alia that the Luxembourg Notes are issued by the Luxembourg Issuer and that such Luxembourg Notes are subscribed for by the Issuer in an amount equal to 14,000,000. Certain Belgian withholding tax rules provide for an exemption from withholding tax on interest payments in respect of registered bonds held by nonresident investors who are not using such bonds for a business activity in Belgium, subject to certain conditions, including a condition that the ownership of the registered bonds does not change at any time other than on a note interest payment date in respect of such bonds. 20

21 For further information about the transfer of the Belgian Bonds, see "The Originated Assets Sale Agreements Sale of the Belgian Bonds" at page 128 and "Subscription for the Luxembourg Notes" at page 130. The Luxembourg Notes Status, Form, Denomination and Title of the Luxembourg Notes The Luxembourg Notes are issued in registered form, in the denomination of 100,000 each, representing together a total issue of 14,000,000. The Luxembourg Notes constitute direct, secured and limited recourse obligations of the Luxembourg Issuer and will at all times rank pari passu and without any preference among themselves. Title to the Luxembourg Notes will pass by registration in the register of noteholders held by the Luxembourg Issuer pursuant to Article 84 of the Luxembourg law of 10 August 1915, as amended, on commercial companies (the "Register"). The Luxembourg Issuer may, except as otherwise required by law, deem and treat the registered holder as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes. Liability and Limited Recourse Interest The Luxembourg Notes are obligations solely of the Luxembourg Issuer. The Luxembourg Issuer's ability to satisfy its payment obligations under the Luxembourg Notes and its operating and administrative expenses will be wholly dependent upon receipt by it in full of payments of principal and interest under the Belgian Bonds and payments (if any) under the other Luxembourg Issuer Transaction Documents (as defined herein). A variable income will accrue on the Luxembourg Notes, in respect of the first Luxembourg Note Interest Payment Date, from (and including) the Closing Date (the "Luxembourg Note Issue Date") to (but excluding) the first Luxembourg Note Interest Payment Date and, in respect of any subsequent Luxembourg Note Interest Payment Date, from (and including) the immediately preceding Luxembourg Note Interest Payment Date to (but excluding) such Interest Payment Date (each, a "Luxembourg Note Interest Period") provided that the last Luxembourg Note Interest Period shall end on (but exclude) the Luxembourg Note Final Maturity Date. The variable income on the Luxembourg Notes will be payable (i) one Business Day following the Belgian Bond Interest Payment occurring on 7 February 2006, with respect to the first Luxembourg Note Interest Period, and (ii) thereafter, quarterly in arrear on the next Business Day following each Belgian Bond Interest Payment Date in each year until the Luxembourg Final Maturity Date at the latest (each a "Luxembourg Note Interest Payment Date"). The variable income on the Luxembourg Notes will be equal to the remaining sums standing to the credit of the Luxembourg Issuer Transaction Account after the payment of the amounts due to the Luxembourg Issuer Related Parties and the amounts due to third parties (see "Luxembourg Note Available Interest Receipts" below). Principal Amount Outstanding of the Luxembourg Notes The "Luxembourg Notes Principal Amount Outstanding" of a Luxembourg Note on any date shall be the face amount thereof on the Luxembourg Note Issue Date less the aggregate amount of all payments in principal respect of such Luxembourg Note that have been paid since the Luxembourg Note Issue Date 21

22 and on or prior to the Luxembourg Note Calculation Date. Final Redemption Mandatory Redemption in Whole or in Part Rating and Listing Sales Restrictions Unless redeemed earlier in full or in part, the Luxembourg Notes will be redeemed at their then Luxembourg Note Principal Amount Outstanding in February 2009 (the "Luxembourg Note Final Maturity Date"). Upon early repayment in full or in part of the Belgian Bonds, the Luxembourg Note Principal Amount Outstanding will be redeemed in full or in part on a pro rata basis amongst all Luxembourg Notes then outstanding. The Luxembourg Notes will not be rated by any of the Rating Agencies nor by any other rating agency, nor will they be listed on any stock exchange. The Luxembourg Notes will be issued pursuant to a subscription agreement (the "Luxembourg Notes Subscription Agreement". For further information about the Luxembourg Notes, see "Subscription for the Luxembourg Notes" at page 130. Acquisition of the Issuer Assets Deferred Consideration Class X Amount On each Note Interest Payment Date the Issuer will pay the following amounts to the Originator (as the initial Class X Noteholder and then to any subsequent Class X Noteholders): (i) French Loan Prepayment Fees received by the Issuer in respect of the French Loans originated by the French Loan Originator; (ii) payments of interest on the Luxembourg Notes represented by Belgian Prepayment Fees; (iii) the Class X Amount payable on each Note Interest Payment Date, and (iv) the surplus Available Issuer Interest Receipts on such Note Interest Payment Date. On each Note Interest Payment Date the Issuer will pay to the Residual Unitholders the Swap Breakage Receipts received by the Issuer in respect of the French Loans and the Luxembourg Notes (to the extent they do not constitute Available Issuer Interest Receipts and that they have not been applied to amounts due by the French Borrowers and the Belgian Issuer in accordance with the terms of the relevant French Loan Agreements or the terms of the Belgian Bond Issue Documents). The "Class X Amount" shall be payable on each Note Interest Payment Date and shall be an amount equal to the sum of (A) the product of: (i) the aggregate outstanding principal balance of the French Loans and the Luxembourg Notes as of the beginning of the applicable Interest Period (after taking into account any write-offs of principal following completion of Enforcement Procedures in respect of any Specially Serviced French Loans or the occurrence of any event of default under the Luxembourg Notes during the Collection Period immediately preceding such Interest Period); (ii) the Class X Weighted Average Strip Rate and (iii) the fraction obtained by dividing (x) by the number of days in the relevant Interest Period by (y) 360; and (B) in the case of the first Note Interest Payment Date, an amount equal to the aggregate amount of interest that accrued on each of the French Loans and the Luxembourg Notes during the period from and including the French Loan Payment Date for the relevant French Loan and the Luxembourg Note Interest Payment Date that fell immediately prior to the Closing Date, to but excluding the Closing Date. The "Class X Weighted Average Strip Rate" with respect to any Note Interest Payment Date will be a per annum rate equal to the excess, if any, of (x) the Weighted Average Net Mortgage Rate for such Interest Period over (y) the sum 22

23 of (i) the weighted average of the interest rates of all of the Notes (weighted on the basis of the respective Principal Amount Outstanding of such Notes immediately prior to the related Note Interest Payment Date) and (ii) the Administrative Cost Rate. The "Weighted Average Net Mortgage Rate" with respect to any Note Interest Payment Date will be equal to the weighted average of the Net Mortgage Rates for the Loans weighted on the basis of their respective principal balances as of the beginning of the applicable Interest Period (after taking into account any write-offs of principal following completion of Enforcement Procedures in respect of any Specially Serviced French Loans or the occurrence of any event of default under the Luxembourg Notes during the Collection Period immediately preceding such Interest Period) and, in the case of the first Note Interest Payment Date, the Closing Date (except in the case of the Luxembourg Notes, as of the Belgian Bond Transfer Date). The "Net Mortgage Rate" for any French Loan (except for the Pascal Loan) and the Belgian Bonds, with respect to any Note Interest Payment Date, will be equal to the sum of (i) Euribor and (ii) the difference between the fixed rate of the Loans (and for the avoidance of doubt, in the case of the Tranched French Loans, only with reference to the Senior Debt as determined in the relevant Intercreditor Agreements) and the fixed rate of the Issuer Swap Transactions attributable to such French Loans or Belgian Bonds. For the Pascal Loan, the Net Mortgage Rate will be the sum of (i) Euribor and (ii) the margin as determined in the relevant French Loan Agreement. The "Administrative Cost Rate" is equal to a variable rate, which, as of any Note Interest Payment Date, is the percentage equal to the product of (a) the fraction obtained by dividing: (i) 360 by (ii) the actual number of days in the relevant Interest Period and (b) the Administrative Cost Factor. The Administrative Cost Rate represents as of any date of calculation, the per annum rate at which Administrative Fees for any Interest Period accrue against the outstanding principal balance of the French Loans and the Luxembourg Notes. The "Administrative Cost Factor" is, as of any Note Interest Payment Date, equal to the percentage obtained by dividing: (i) the Administrative Fees for such Note Interest Payment Date by (ii) the outstanding principal balance of (a) the French Loans immediately after the second preceding French Loan Payment Date, and (b) the Luxembourg Notes immediately after the second preceding Luxembourg Note Interest Payment Date, for such Note Interest Payment Date. The "Administrative Fees" for each Note Interest Payment Date will be the sum of all ordinary, recurring fees payable by the Issuer or by the Luxembourg Issuer to the Issuer Related Parties and to the Luxembourg Issuer Related Parties respectively plus VAT, if applicable, related to such Note Interest Payment Date. The amount of Administrative Fees payable on any Note Interest Payment Date will vary to the extent that some are payable on an annual basis while others are payable on a quarterly basis. If any current Issuer Related Party or Luxembourg Issuer Related Party is replaced by a successor service provider and such successor's fees are in excess of the prior Issuer Related Party's or Luxembourg Issuer Related Party's fees, the Administrative Fees will be increased to reflect such change. Administrative Fees for the purposes of calculating the Class X Amount do not include any fees or expenses payable by the Issuer and the Luxembourg Issuer to any entity that are unusual or extraordinary in nature including the repayment of Liquidity Drawings and Luxembourg Liquidity Drawings and interest thereon. 23

24 The Notes and the Residual Units Status and Form of the Notes The Issuer will issue the Class A Notes, the Class B Notes and the Class C Notes pursuant to the Issuer Regulations on the Closing Date in an aggregate principal amount of 326,800,000 and in denominations of 50,000 (the "Listed Notes"). The Issuer will issue the Class X Notes pursuant to the Issuer Regulations on the Closing Date in an aggregate principal amount of 300 and in denominations of 150. The Listed Notes and the Class X Notes are together referred to as the "Notes" unless expressly stated to the contrary or unless the context otherwise requires. The Notes will be issued in bearer dematerialised form. Title to the Notes will be evidenced in accordance with Article L of the French Code monétaire et financier by book-entries (inscription en compte). No certificates (including certificats représentatifs issued pursuant to Article R of the French Code monétaire et financier), global notes or physical documents of title will be issued in respect of the Notes. Status and Form of the Residual Units The Issuer will issue two subordinated residual units (parts de fonds commun de créances) (each a "Class R Unit" and together, the "Class R Units" or the "Residual Units") on the Closing Date in an aggregate principal amount of 5,000. The holders of the Class R Units will be referred to herein as "Class R Unitholders" or "Residual Unitholders". The Residual Units may only be subscribed for or held by qualified investors (investisseurs qualifiés) within the meaning of Article L and Article D of the French Code monétaire et financier, by non-french resident investors and by any person as described in paragraphs 3 and 4 of Article R of the French Code monétaire et financier. Liability and Limited Recourse Neither the Notes nor the Residual Units and interest thereon will be obligations or responsibilities of any person other than the Issuer. In particular, neither the Notes nor the Residual Units will be obligations or responsibilities of, or be guaranteed by, MS Bank or any associated body of MS Bank, or of or by the Originator, the Manager, the Luxembourg Issuer, the Belgian Issuer, the French Loan Servicer, the Paying Agents, the Issuer Swap Provider, the Issuer Swap Guarantor, the Issuer Liquidity Facility Provider, the Luxembourg Liquidity Facility Provider, the Management Company, the Custodian, the Listing Agent or the Operating Bank or the shareholders of any company in the same group of companies as MS Bank, the Originator, the Manager, the French Loan Servicer, the Paying Agents, the Issuer Swap Provider, the Issuer Swap Guarantor, the Issuer Liquidity Facility Provider, the Luxembourg Liquidity Facility Provider, the Management Company, the Custodian, the Listing Agent or the Operating Bank and none of such persons accepts any liability whatsoever in respect of any failure by the Issuer to make payment of any amount due on the Notes and the Residual Units. 24

25 Closing Date 8 December Interest Each Listed Note will bear interest on its Principal Amount Outstanding (as defined below) from, and including, the Closing Date. Interest will be payable in respect of the Listed Notes in Euro quarterly in arrear on the fifteenth day of February, May, August and November, in each year or, if such day is not a Business Day (as defined in "Terms and Conditions of the Notes - Condition 3" below), the next following Business Day (unless such Business Day falls in the next succeeding calendar month, in which event such day shall be the immediately preceding Business Day) (each such day being an "Note Interest Payment Date"). The first payment of interest in respect of the Listed Notes will be due on the Note Interest Payment Date falling in February Interest payments will be made subject to applicable withholding or deduction for or on account of tax (if any), without the Issuer or any Paying Agent being obliged to pay any additional amounts in respect of any such withholding or deduction. The interest rate applicable to the Listed Notes from time to time will be EURIBOR for three-month Euro deposits (or, in the case of the first Interest Period, the linear interpolation of two and three month Euro deposits), determined on the second Target Settlement Day preceding the first day of an Interest Period, plus the Relevant Margin. The "Relevant Margin" in respect of the Listed Notes will be: Class A B C Relevant Margin 0.20 per cent. per annum 0.34 per cent. per annum 0.50 per cent. per annum Whenever it is necessary to compute an amount of interest in respect of any of the Listed Notes for any period, such interest will be calculated on the basis of actual days elapsed and a 360-day year. The holders of the Class A Notes (the "Class A Noteholders"), the holders of the Class X Notes, (the "Class X Noteholders"), the holders of the Class B Notes (the "Class B Noteholders") and the holders of the Class C Notes (the "Class C Noteholders" and, together with the Class A Noteholders, the Class X Noteholders and the Class B Noteholders, the "Noteholders") will only receive interest payments after payment by the Issuer of certain priority amounts (see "Cashflows - The Notes and the Residual Units" below). Further, the Issuer's obligation to pay interest on the Class B Notes and the Class C Notes will be subordinated to the Issuer's obligation to pay interest on the Class A Notes and the Class X Notes, the Issuer's obligation to pay interest on the Class C Notes will be subordinated to the Issuer's obligation to pay interest on the Class B Notes. In any event, the repayment of principal of the Class R Units will be fully subordinated to (i) the payment by the Issuer of certain priority amounts, (ii) the payment of interest on and the repayment of principal of the Class A Notes, the Class B Notes and the Class C Notes, and (iii) the payment of the Class X Amount and the repayment of principal of the Class X Notes (see "Cashflows - The Notes and the Residual Units" below). 25

26 To the extent that funds available to the Issuer on any Note Interest Payment Date, after paying any interest then due and payable on the most senior class or classes of Notes then outstanding, are insufficient to pay in full interest otherwise due on any one or more classes of more junior-ranking Notes then outstanding, the shortfall in the amount then due will not be paid but will only be paid, in accordance with the order of seniority of the affected classes of Notes, on subsequent Note Interest Payment Dates if and when permitted by subsequent cash flow which is available after the Issuer's other higher priority liabilities have been discharged. The Issuer's obligation to pay interest on the Class B Notes and the Class C Notes is limited, on each Note Interest Payment Date, to an amount equal to the lesser of (a) the Interest Amount (as defined in Condition 3(d) at page 193) in respect of such classes of Notes for that Note Interest Payment Date, and (b) the Adjusted Interest Amount (as defined in Condition 3(g) at page 193) in respect of such classes of Notes for that Note Interest Payment Date. Failure by the Issuer to pay interest on the most senior class of Notes which is still outstanding when due and payable will result in the occurrence of an "Accelerated Redemption Event" will result in the application of the Issuer's funds held in the Issuer Transaction Account (after payment of any Issuer Priority Payments (as defined below)) in accordance with the Accelerated Redemption Order of Priority described in "Available Funds and Priority of Application - Payments following an Accelerated Redemption Event" below. No interest shall accrue in respect of unpaid interest during the time it remains unpaid. Principal Amount Outstanding of the Notes Final Maturity Date The "Principal Amount Outstanding" of a Note of any class on any date shall be the face amount thereof on the Closing Date less the aggregate amount of all Note Principal Payments in respect of such Note that have been paid since the Closing Date and on or prior to the Note Calculation Date (as defined herein). For further information on the Principal Amount Outstanding of the Notes, see "Terms and Conditions of the Notes Condition 4". Unless previously redeemed, the Notes shall be redeemed in whole or in part on the Note Interest Payment Date falling in August 2015 (the "Final Maturity Date"). After the Final Maturity Date, any part of the nominal value of any Note of any class or of the interest due thereon which may remain unpaid will be automatically cancelled, so that the Noteholders, after such date, shall have no right to assert a claim in this respect against the Issuer, regardless of the amounts which may remain unpaid after the Final Maturity Date (abandon de créances). Redemption of the Class X Notes Mandatory Redemption in Part - The Class X Notes will be repaid out of the initial deposit of 300 made by the Issuer on the Issuer Transaction Account (the "Class X Collateral Amount"). The Management Company, acting in the name and on behalf of the Issuer, shall ensure that the Class X Collateral Amount stands at all times (including for the avoidance of doubt on a Note Interest Payment Date) to the credit balance of the Issuer Transaction Account. The Class X Notes, therefore, do not rank against any other class of Notes with respect to any principal amounts distributable from the Issuer Transaction Account (other than the Class X Collateral Amount) to such classes. Unless an Accelerated Redemption Event has occurred, the Notes shall amortise quarterly on each Note Interest Payment Date pursuant to the Normal 26

27 Redemption prior to the occurrence of an Accelerated Redemption Event Mandatory Redemption in Part - Redemption following the occurrence of an Accelerated Redemption Event Redemption Orders of Priority (see "Cashflows - The Notes and the Residual Units - Payments out of the Issuer Transaction Account prior to an Accelerated Redemption Event Available Issuer Principal Receipts - Application of Available Sequential Principal Receipts" and "Cashflows - The Notes and the Residual Units - Available Issuer Principal Receipts" below). Following the occurrence of an Accelerated Redemption Event, the Notes shall amortise quarterly on each Note Interest Payment Date, pursuant to the Accelerated Redemption Order of Priority (see "Cashflows - The Notes and the Residual Units - Payments out of the Issuer Transaction Account following the occurrence of an Accelerated Redemption Event" below). Mandatory Redemption in Full due to a Change of Law Ratings The Notes will be subject to redemption in full, but not in part, if (a) by virtue of a change in any law from that which is in effect at the Closing Date (i) the Issuer is obliged to make any withholding or deduction for tax from payments in respect of the Notes and such requirement cannot be avoided by the Management Company, acting in the name and on behalf of the Issuer, taking reasonable measures available to it, or (ii) any amount receivable by the Issuer in relation to any of the Issuer Assets is reduced or ceases to be receivable by the Issuer, whether or not actually received, or (b) by virtue of a Swap Tax Event occurring under the Issuer Swap Agreement and (i) such Swap Tax Event cannot be avoided by the Management Company, acting in the name and on behalf of the Issuer, taking reasonable measures available to it, (ii) the Issuer Swap Provider is unable to transfer its obligations thereunder to another branch, office or affiliate to cure the Swap Tax Event, and (iii) the Management Company, acting in the name and on behalf of the Issuer, is unable to find a replacement swap provider (the Management Company being obliged to use its reasonable efforts to find a replacement swap provider), provided further that, in either case, (a) the Issuer has sufficient funds available to it on the relevant Note Interest Payment Date to discharge all of its liabilities in respect of the Notes and any Issuer Priority Payments required to be paid in priority to the Notes in accordance with "Cash-flows - Available Funds and Priority of Application: The Notes Payments out of the Issuer Transaction Account prior to an Accelerated Redemption Event", or (b) the Issuer has sufficient funds in respect of the most junior class of Notes then outstanding. The Class A Notes, the Class B Notes and the Class C Notes are upon issue expected to be rated as follows: Expected Ratings Class S&P Moody's A AAA Aaa B AA Not rated C A Not rated The Class X Notes are upon issue expected to be rated as follows: Class S&P Moody's X AAA Aaa 27

28 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 one or more of the assigning rating agencies. The ratings from the Rating Agencies only address the likelihood of timely receipt by any Noteholder of interest on the Notes and the likelihood of receipt by any Noteholder of principal of the Notes by the Final Maturity Date and do not address the likelihood of receipt by any Noteholder of principal prior to the Final Maturity Date. Furthermore, the ratings of the Notes only address the credit risks associated with the underlying transaction and do not address the noncredit risks which may have a significant effect on the receipt by Noteholders of interest and principal. The ratings of the Notes are dependent upon, among other things, the short-term (and in the case of the Issuer Swap Guarantor, the short-term and the long-term), unsecured, unsubordinated debt ratings of the Issuer Liquidity Facility Provider, the Luxembourg Liquidity Facility Provider, the Operating Bank and the Issuer Swap Guarantor. Consequently, a qualification, downgrade or withdrawal of any such rating by a Rating Agency may have an adverse effect on the ratings of the Notes. The Class R Units will not be rated by the Rating Agencies. Listing Application has been made to the Irish Financial Services Regulatory Authority, as competent authority under Directive 2003/71/EC, for the prospectus to be approved. Application has been made to the Irish Stock Exchange for the Listed Notes to be admitted to the Official List and trading on its regulated market. There can be no assurance that any such listing will be obtained or, if obtained, will be maintained. In particular, should Directive 2004/109/EC (the "Transparency Directive") impose requirements on the Issuer that it in good faith determines are unduly burdensome, the Issuer may de-list the Listed Notes. No application has been made to the Irish Financial Services Regulatory Authority for the Class X Notes and the Class R Units to be admitted to the Official List of the Irish Stock Exchange. Transfer and Selling Restrictions Settlement of Notes Governing Law Tax Status The Notes will be subject to certain transfer and selling restrictions as set forth and described in "Subscription and Sale". The Notes have been accepted for clearance through Euroclear France, Euroclear and Clearstream. The Issuer Regulations are governed, and the Notes and the Class R Units will be governed by French law. For information on the tax status of the Notes, see "French Taxation" at page

29 CASHFLOWS The Luxembourg Notes Source of Funds Funds paid into the Luxembourg Issuer Transaction Account Payments of interest on and repayment of principal of the Belgian Bonds will provide the source of funds for the Luxembourg Issuer to make payments of interest on and repayments of principal of the Luxembourg Notes. On each Belgian Bond Interest Payment Date occurring on and after 7 February 2006, the Belgian Security Agent will transfer from the Belgian Collateral Account to the Luxembourg Issuer Transaction Account an amount in respect of interest on or repayments of principal of, and payment of any other amounts due on, the Belgian Bonds. Accordingly, all amounts standing to the credit of the Luxembourg Issuer Transaction Account will be referable by the Belgian Bond Servicer to the following sources: (a) (b) (c) (d) (e) "Belgian Bond Interest Receipts", which comprise all payments of interest, fees (other than Belgian Prepayment Fees), swap breakage costs paid by the Belgian Issuer as a result of the prepayment in part or in full of the Belgian Bonds (both prior to and following the enforcement of the Belgian Bonds), costs, expenses, commissions and other sums, paid by the Belgian Issuer in respect of the Belgian Bonds (other than payments in respect of principal), including recoveries in respect of such amounts on enforcement of the security granted in respect of the Belgian Bonds, amounts received upon a transfer back of the Belgian Bonds pursuant to the Second Belgian Bond Sale Agreement or disposal of the Belgian Bonds pursuant to the enforcement of the security granted by the Luxembourg Issuer in respect of the Belgian Bonds; "Belgian Bond Amortisation Funds", which comprise all repayments of principal of the Belgian Bonds made by the Belgian Issuer other than payments which comprise Belgian Bond Prepayment Redemption Funds, Belgian Bond Final Redemption Funds or Belgian Bond Principal Recovery Funds; "Belgian Bond Prepayment Redemption Funds", which comprise all payments of principal of the Belgian Bonds made by the Belgian Issuer in connection with any prepayment in part or in full in respect of the Belgian Bonds (including insurance proceeds not applied to reinstate any Belgian Property but excluding, for the avoidance of doubt, any prepayments constituting Belgian Bond Principal Recovery Funds) and all principal amounts paid to the Luxembourg Issuer on transfer back of the Belgian Bonds pursuant to the Second Belgian Bond Sale Agreement; "Belgian Bond Final Redemption Funds", which comprise the repayment of principal of the Belgian Bonds made on their scheduled final maturity date; "Belgian Bond Principal Recovery Funds", which comprise all amounts recovered and applied in repayment of principal of the Belgian Bonds as a result of enforcement of the Belgian Bonds or the disposal of the Belgian Bonds pursuant to enforcement of the security granted by the Luxembourg Issuer in respect of the Belgian Bonds; and 29

30 (f) "Belgian Prepayment Fees", which comprise all fees and costs (except for swap breakage costs, if any) paid by the Belgian Issuer in connection with any prepayment in part or in full of the Belgian Bonds, including any such fees arising from a prepayment following the enforcement of the Belgian Bonds. Belgian Bond Principal Receipts Belgian Prepayment Fees Payments out of the Luxembourg Issuer Transaction Account; Luxembourg Issuer Priority Payments Belgian Bond Amortisation Funds, Belgian Bond Prepayment Redemption Funds, Belgian Bond Final Redemption Funds, and Belgian Bond Principal Recovery Funds are collectively referred to as "Belgian Bond Principal Receipts". For the avoidance of doubt, Belgian Prepayment Fees will not be included in the calculation of Belgian Bond Interest Receipts at any time. Belgian Prepayment Fees will, following receipt in the Luxembourg Issuer Transaction Account, be paid directly to the Issuer (as the holder of the Luxembourg Notes) as part of the interest payable on the Luxembourg Notes on the next Luxembourg Note Interest Payment Date. The Luxembourg Security Agent, acting in the name and on behalf of the Luxembourg Issuer (and upon the information provided to it by the Belgian Bond Servicer), shall in the case of amounts referred to in paragraph (a) below, and otherwise may, make the following payments out of the Luxembourg Issuer Transaction Account in priority to all other payments required to be made by the Luxembourg Issuer and on any day such payments are due: (a) (b) out of Belgian Bond Interest Receipts and, where Belgian Bond Interest Receipts are insufficient, out of the Belgian Bond Principal Receipts available at that time, amounts due to third parties (other than the Luxembourg Issuer Related Parties), including the Luxembourg Issuer's liability, if any, to corporation tax and/or value added tax, on a date other than a Luxembourg Note Interest Payment Date under obligations incurred in the course of the Luxembourg Issuer's business; and after a Belgian Bond Event of Default has occurred, any urgent capital expenditure and property expenses (such as insurance) required to prevent a material decline in the value of any Belgian Property out of Belgian Bond Interest receipts and, where Belgian Bond Interest Receipts are insufficient, Belgian Bond Principal Receipts available at that time provided that no such payment shall be made between a Luxembourg Note Calculation Date and the next following Luxembourg Note Interest Payment Date. Such payments are together referred to as the "Luxembourg Issuer Priority Payments". Luxembourg Note Available Interest Receipts The period from and including the third Business Day prior to a Luxembourg Note Interest Payment Date (the "Luxembourg Note Calculation Date") or, in the case of the first such period, the Belgian Bond Transfer Date, to but excluding the next following Luxembourg Note Calculation Date, is referred to as a "Luxembourg Note Collection Period". On each Luxembourg Note Interest Payment Date the aggregate of (a) Belgian Bond Interest Receipts transferred by or at the direction of the Belgian Security Agent into the Luxembourg Issuer Transaction Account during the Luxembourg Note Collection Period ending prior to such Luxembourg Note Interest Payment Date (net of any Belgian Bond Interest Receipts applied during such Luxembourg Note Collection Period in payment of Luxembourg Issuer Priority Payments); 30

31 and (b) any interest accrued upon and paid to the Luxembourg Issuer on the Luxembourg Issuer Transaction Account and not paid out on any previous Luxembourg Note Interest Payment Date and any other accounts maintained by the Luxembourg Issuer and the interest on any eligible investments received by the Luxembourg Issuer during the Luxembourg Note Collection Period then ended (such amounts being, collectively, the "Luxembourg Note Available Interest Receipts", in respect of such Luxembourg Note Interest Payment Date, and as determined by the Belgian Bond Servicer) will be applied in the following order of priority (the "Luxembourg Note Available Interest Receipts Priority of Payments"), in each case, only if and to the extent that the payments and provisions of a higher priority have been made in full: (a) (b) (c) (d) (e) (f) first, in or towards payment of (i) fees, costs and expenses in connection with the establishment of the Luxembourg Issuer and any annual return, filing, registration and publication cost fee due by the Luxembourg Issuer and (ii) payment of the Luxembourg Issuer's liability (if any) to taxes; second, in or towards payment of all amounts due and payable to the Luxembourg Liquidity Facility Provider under and in accordance with the Luxembourg Issuer Liquidity Facility Agreement (other than the Luxembourg Liquidity Facility Subordinated Amounts); third, in or towards payment of any fees and other amounts due but unpaid to the subscriber of the Luxembourg Notes, the Luxembourg Security Agent, the Belgian Bonds Servicer or the Luxembourg Issuer Corporate Services Provider; fourth, in or towards payment of any variable income on the Luxembourg Notes; fifth, in or towards payment of principal under the Luxembourg Notes (if due); and sixth, in or towards payment of any amounts due and payable to the Luxembourg Liquidity Facility Provider, if any, in respect of (A) any increased costs, mandatory costs or tax gross up amounts (other than those referred to in (B) below) owing under the Luxembourg Liquidity Facility Agreement to the extent that such increased costs, mandatory costs or tax gross up amounts exceed per cent., and (B) any increase in the commitment fee payable to the Luxembourg Liquidity Facility Provider as a result of the implementation of the new Basel capital accord, to the extent that the aggregate of the increased costs referred to in (A) and (B) above exceed 0.20 per cent. per annum of the commitment provided under the Luxembourg Liquidity Facility Agreement (the amounts owing under this paragraph (f) being the "Luxembourg Liquidity Subordinated Amounts" in respect of such Luxembourg Note Interest Payment Date). If, on any Business Day, the Luxembourg Note Interest Receipts are in aggregate insufficient to pay in full any amount due and payable on such Business Day under paragraph (a) above, the Luxembourg Issuer, shall make Luxembourg Expenses Drawings pursuant to the Luxembourg Liquidity Facility Agreement and shall use the proceeds of such Luxembourg Expenses Drawings to pay such amounts. Luxembourg Note Available Principal The Belgian Bond Servicer, acting in the name and on behalf of the Luxembourg Issuer is required to calculate one Business Day before each 31

32 Receipts Luxembourg Note Calculation Date, the amount of Belgian Bond Principal Receipts received during each Luxembourg Note Collection Period and not applied during such Luxembourg Note Collection Period or required to be applied on the next Luxembourg Note Interest Payment Date in payment of the Luxembourg Issuer Priority Payments (such amounts being the "Luxembourg Note Available Principal Receipts"). On each Luxembourg Note Interest Payment Date, Luxembourg Note Available Principal Receipts will be applied from the Luxembourg Issuer Transaction Account in or toward repayment of the principal amount outstanding in respect of the Luxembourg Notes. Accordingly, the aggregate principal amount outstanding in respect of the Luxembourg Notes should (unless the Belgian Bond Principal Receipts have been used for the purposes of making Luxembourg Issuer Priority Payments) at all times be equal to the principal amount outstanding of the Belgian Bonds. Thus the Issuer, as the holder of the Luxembourg Notes, will periodically receive payments of the Luxembourg Note Available Interest Receipts in accordance with Luxembourg Note Available Interest Receipts Priority of Payments, Luxembourg Note Available Principal Receipts, Belgian Prepayment Fees. The Notes and the Residual Units Source of Funds The primary sources of funds available to the Issuer to make payments of interest on and repayments of principal on the Notes will be as follows: (a) (b) repayment of principal and payments of interest by the French Borrowers in respect of the French Loans. Such payments will be made on each French Loan Payment Date by debiting the sums standing to the credit of the French Rent Accounts or, in respect of the Tranched French Loans, by debiting the relevant portion of the sums standing to the credit of the Tranching Accounts, on such date and by transferring such sums to the credit of the Issuer Transaction Account; repayment of principal and payments of interest on the Luxembourg Notes. Such payment will be made on each Luxembourg Note Interest Payment Date to the Issuer Transaction Account. Funds paid into the Issuer Transaction Account Amounts standing to the credit of the Issuer Transaction Account from time to time are referable to, among other things, the following sources: (a) "Issuer Asset Interest Receipts", which comprise: (i) "French Borrowers Interest Receipts", comprising all amounts allocated towards interest, fees (other than French Loan Prepayment Fees), swap breakage costs paid by a French Borrower as a result of the prepayment in part or in full of a French Loan (both prior to and following the enforcement of the relevant French Loan), costs, expenses, commissions and other sums paid by the French Borrowers in respect of the French Loans or the French Related Security (other than any payments in respect of principal), including recoveries in respect of such amounts on enforcement of a French Loan, and/or its French Related Security and upon the transfer back of any French Loan pursuant to the terms of the French Loan Servicing Agreement or disposal of the 32

33 French Loans pursuant to the liquidation of the Issuer; (ii) "Luxembourg Note Interest Receipts" which comprise all payments of interest on the Luxembourg Notes made by the Luxembourg Issuer other than payments of interest related to the Belgian Prepayment Fees. (b) "Issuer Asset Principal Receipts", which comprise: (i) (ii) "French Loan Amortisation Funds", which comprise all payments of principal made by the French Borrowers in respect of the French Loans, other than payments which comprise French Loan Prepayment Redemption Funds, French Loan Final Redemption Funds and French Loan Principal Recovery Funds; "French Loan Prepayment Redemption Funds", which comprise all payments of principal made by the French Borrowers in connection with any prepayment in part or in full in respect of a French Loan (including insurance proceeds not applied to reinstate any of the French Properties but excluding, for the avoidance of doubt, any prepayments constituting French Loan Principal Recovery Funds) and all principal amounts paid to the Issuer on transfer back from the Issuer of any French Loan pursuant to the terms of the French Loan Transfer Agreement or disposal of the French Loans pursuant to the liquidation of the Issuer; (iii) "French Loan Final Redemption Funds", which comprise the repayment of principal of each French Loan made on its scheduled final maturity date; (iv) (v) (vi) "French Loan Principal Recovery Funds", which comprise all amounts recovered in respect of principal of the French Loans as a result of the enforcement of a French Loan or the applicable French Related Security; "Luxembourg Note Principal Receipts", which comprise all payments of principal on the Luxembourg Notes made by the Luxembourg Issuer; "Luxembourg Note Redemption Funds", which comprise the proceeds of the redemption in full of the Luxembourg Notes due to a change in any law obliging the Luxembourg Issuer to withhold or deduct tax from payments in respect of the Luxembourg Notes. (c) (d) (e) "French Loan Prepayment Fees", which comprise all amounts allocated towards fees, costs and expenses (excluding all swap breakage costs) paid by a French Borrower as a result of the prepayment in part or in full of a French Loan, both prior to and following the enforcement of such French Loan or the French Related Security; "Swap Breakage Receipts", which comprise all termination payments paid to the Issuer by the Issuer Swap Provider or Issuer Swap Guarantor under the Issuer Swap Agreement or the Issuer Swap Guarantee as a result of the termination of any Issuer Swap Transaction prior to its scheduled termination date; and the Class X Collateral Amount. 33

34 Prepayment Fees and Swap Breakage Receipts Payments out of the Issuer Swap Collateral Cash Account and the Issuer Swap Collateral Custody Account prior to an Accelerated Redemption Event French Loan Prepayment Fees, payments of interest on the Luxembourg Notes represented by Belgian Prepayment Fees (together the "Prepayment Fees"), and Swap Breakage Receipts (other than those of the types contemplated in paragraph (c) of "Available Issuer Interest Receipts" at page 35) will not be included in the calculation of Issuer Interest Receipts at any time. Such Swap Breakage Receipts (to the extent they do not constitute Available Issuer Interest Receipts and that they have not been applied to amounts due by the French Borrowers and the Belgian Issuer in accordance with the terms of the relevant French Loan Agreements or the terms of the Belgian Bond Issue Documents) will, upon receipt in the Issuer Transaction Account, be payable directly by the Issuer to the Residual Unitholders. The Prepayment Fees will, upon receipt in the Issuer Transaction Account, be payable directly by the Issuer to the Class X Noteholders. The Management Company will arrange for payments to be made to the Issuer Swap Provider from time to time, of amounts equal to any relevant amounts of interest on the credit balance of the Issuer Swap Collateral Cash Account and/or amounts equivalent to distributions received on securities held in the Issuer Swap Collateral Custody Account as well as any other payments required to be made by the Issuer in accordance with the terms of the Issuer Swap Agreement Credit Support Document in priority to any other payment obligations of the Issuer. Payments out of the Issuer Transaction Account prior to an Accelerated Redemption Event Issuer Priority Payments On any date on which payments due to third parties (other than the Issuer Related Parties) are payable, the Management Company (acting on information received by it from the French Loan Servicer and the Belgian Bond Servicer) shall, in the case of amounts referred to in paragraph (a) below, and otherwise may, give instructions to the Operating Bank (with a copy to the Custodian) to pay the following amounts (the "Issuer Priority Payments") out of the Issuer Transaction Account, in priority to all other amounts required to be paid by the Issuer: (a) (b) out of the Issuer Asset Interest Receipts and where Issuer Asset Interest Receipts are insufficient, out of the Issuer Asset Principal Receipts then available, or if such amounts are insufficient, from the proceeds of Expenses Drawings, amounts due and payable to third parties (other than the Issuer Related Parties), on a date other than a Note Interest Payment Date, including the Issuer's liability, if any, under obligations incurred in the course of the Issuer's business, including taxes, costs, expenses, fees and indemnity claims due and payable by the Issuer and including any unforeseen and unexpected fees and expenses incurred in the interests of the Noteholders due and payable by the Issuer; and after a French Loan Event of Default has occurred under any French Loan Agreement, any urgent capital expenditure and property expenses (such as insurance) required to prevent a material decline in the value of any French Property, to be funded out of Issuer Asset Interest Receipts and, where Issuer Asset Interest Receipts are insufficient, out of Issuer Asset Principal Receipts. 34

35 If, on any Business Day, the Issuer Assets Interest Receipts and the Issuer Assets Principal Receipts are in aggregate insufficient to pay in full any amount due and payable on such Business Day under paragraph (a) above, the Management Company, on behalf of the Issuer, shall make Expenses Drawings pursuant to the Issuer Liquidity Facility Agreement and shall use the proceeds of such Expenses Drawings to pay such amounts. Swap Payments Available Issuer Interest Receipts On each Note Interest Payment Date, the Issuer Swap Provider (or, as the case may be, the Issuer Swap Guarantor) will pay to the Issuer the amounts (if any) required to be paid by it under the Issuer Swap Agreement or the Issuer Swap Guarantee. If the Issuer Swap Agreement requires the Issuer to make a payment to the Issuer Swap Provider (other than a payment following an early termination of the Issuer Swap Agreement in respect of which the Issuer Swap Provider is the defaulting party) then, prior to making any other payments on behalf of the Issuer, the Management Company will arrange for such a payment to be made to the Issuer Swap Provider using amounts (other than Issuer Asset Principal Receipts) standing to the credit of the Issuer Transaction Account. On each Note Interest Payment Date prior to the occurrence of an Accelerated Redemption Event, the aggregate of: (a) all Issuer Asset Interest Receipts transferred by or at the direction of the Management Company from each French Rent Account (as applicable) to the Issuer Transaction Account during the relevant Collection Period ending immediately prior to the relevant Note Interest Payment Date, net of any Issuer Asset Interest Receipts applied during such Collection Period in payment of the Issuer Priority Payments or to make any relevant payment under the Issuer Swap Agreement; plus (b) (c) (d) (e) any payments (other than Swap Breakage Receipts) which the Management Company has determined will be received by the Issuer from the Issuer Swap Provider or the Issuer Swap Guarantor in respect of any Issuer Swap Transaction on the relevant Note Interest Payment Date; plus any Swap Breakage Receipts received by the Issuer during the related Collection Period which (i) are paid to the Issuer following an early termination of the Issuer Swap Agreement as a result of an event of default where the Issuer Swap Provider was the defaulting party, or (ii) are required for the purposes of covering any shortfall in interest arising on the enforcement of a French Loan or an early or accelerated repayment under the Luxembourg Notes resulting from an early or accelerated repayment under the Belgian Bonds, the liquidation of which caused the Issuer to terminate an Issuer Swap Transaction, or (iii) are required for the purposes of making a payment in order for the Issuer to enter into a replacement swap agreement; plus an amount equal to one per cent. of the aggregate of any French Loan Principal Recovery Funds recovered by or on behalf of the Issuer in respect of the related Collection Period to be applied towards the payment of the French Loan Liquidation Fee, if any, payable on such Note Interest Payment Date (such amounts having been excluded from the calculation of Available Issuer Principal Receipts); plus an amount equal to one per cent. of the aggregate of French Loan Amortisation Funds, French Prepayment Redemption Funds and French Final Redemption Funds received by the Issuer in respect of any 35

36 Corrected French Loans during the related Collection Period to be applied towards payment of the French Loan Work-out Fee, if any, payable on such Note Interest Payment Date (such amounts having been excluded from the calculation of the Available Issuer Principal Receipts); plus (f) (g) (h) (i) (j) the proceeds of any Interest Drawing to be made by the Issuer under and in accordance with the Issuer Liquidity Facility Agreement in respect of such Note Interest Payment Date; plus the proceeds of any Accrued Interest Drawing to be made by the Issuer under and in accordance with the Issuer Liquidity Facility Agreement in respect of such Note Interest Payment Date; plus any interest accrued upon and paid to the Issuer in respect of funds standing to the credit of the Issuer Transaction Account, the Stand-by Account or any other account maintained by the Issuer and not paid out on any previous Note Interest Payment Date or the proceeds of Eligible Investments purchased by the Issuer using such funds; less an amount equal to any payments which the Management Company has determined will be required to be paid by the Issuer to the Issuer Swap Provider on the relevant Note Interest Payment Date; and less all Issuer Priority Payments paid during the related Collection Period and up to (but not including) that Note Interest Payment Date, shall constitute the "Available Issuer Interest Receipts". Application of Available Issuer Interest Receipts prior to an Accelerated Redemption Event On each Note Interest Payment Date prior to the occurrence of an Accelerated Redemption Event, the Management Company shall give instructions to the Operating Bank (with a copy to the Custodian) to apply the Available Issuer Interest Receipts in the following order of priority, in each case only if and to the extent that payments and provisions of a higher priority have been made in full: (a) (b) (c) (d) first, in payment or discharge of any amounts of fees, costs and expenses due and payable by the Issuer to any Issuer Related Parties (other than the Issuer Swap Provider and the Issuer Liquidity Facility Provider) under and in accordance with the arrangements which are in place between the Issuer and the Issuer Related Parties (other than the Issuer Swap Provider and the Issuer Liquidity Facility Provider) on a pro rata and pari passu basis; then second, in payment or discharge to and towards all amounts due and payable to the Issuer Liquidity Facility Provider under and in accordance with the Issuer Liquidity Facility Agreement (other than the Issuer Liquidity Facility Subordinated Amounts); then third, in payment or discharge to and towards amounts due and payable to a replacement swap provider upon entry into of a replacement swap agreement; then fourth, in or towards payment or discharge of any amounts described in item (a) of "Issuer Priority Payments" above; then 36

37 (e) (f) (g) (h) (i) (j) fifth, in each case, pari passu and pro rata, in or towards payment or discharge of (A) interest due and payable on the Class A Notes and (B) the Class X Amount due and payable; then sixth, in or towards payment or discharge of interest due and overdue on the Class B Notes, provided that such overdue interest shall be paid in priority to any currently due interest; then seventh, in or towards payment or discharge of interest due and overdue on the Class C Notes, provided that such overdue interest shall be paid in priority to any currently due interest; then eighth, (A) in or towards payment or discharge of any amounts due and payable by the Issuer to the Issuer Swap Provider under the Issuer Swap Agreement in respect of any payments to be made by the Issuer following an early termination of the Issuer Swap Agreement as a result of an event of default under the Issuer Swap Agreement in respect of which the Issuer Swap Provider is the defaulting party, and (B) a termination event under the Issuer Swap Agreement resulting from a failure by the Issuer Swap Provider to take the measures required of it under the Issuer Swap Agreement following a downgrade of the Issuer Swap Provider in respect of which the Issuer Swap Provider is the sole affected party, provided that the amount of any premium or other upfront payment paid to the Issuer when entering into a swap to replace the Issuer Swap Agreement (less an amount equal to any fees or expenses reasonably incurred by the Issuer in respect of any administration costs relating to the payment of such premium or upfront payment) shall be applied first in payment of any amounts due and payable to the Issuer Swap Provider pursuant to this paragraph (h); then ninth, in or towards payment or discharge of any amounts due and payable to the Issuer Liquidity Facility Provider, if any, in respect of (A) any increased costs, mandatory costs or tax gross up amounts (other than those referred to in (B) below) owing under the Issuer Liquidity Facility Agreement to the extent that such increased costs, mandatory costs or tax gross up amounts exceed per cent., and (B) any increase in the commitment fee payable to the Issuer Liquidity Facility Provider as a result of the implementation of the new Basel capital accord, to the extent that the aggregate of the increased costs referred to in (A) and (B) above exceed 0.20 per cent. per annum of the commitment provided under the Issuer Liquidity Facility Agreement (the amounts owing under this paragraph (i) being the "Issuer Liquidity Subordinated Amounts" in respect of such Note Interest Payment Date); then tenth, any surplus to the Class X Noteholders. Available Issuer Principal Receipts On each Note Interest Payment Date prior to the occurrence of an Accelerated Redemption Event, the sum of: (a) the Issuer Assets Principal Receipts; less (b) the aggregate amount of the Issuer Asset Principal Receipts applied during the related Collection Period in payment of any Issuer Priority Payments but only to the extent that such moneys have not been taken into account in the calculation of Available Issuer Principal Receipts on any preceding Note Interest Payment Date; less 37

38 (c) an amount equal to the aggregate of: (i) (ii) one per cent. of the aggregate of any French Loan Principal Recovery Funds recovered by or on behalf of the Issuer in respect of the related Collection Period to be applied towards the payment of the French Loan Liquidation Fee, if any, payable on such Note Interest Payment Date; and one per cent. of the aggregate of the French Loan Amortisation Funds, French Prepayment Redemption Funds and French Final Redemption Funds received by the Issuer in respect of any Corrected French Loans during the related Collection Period to be applied towards payment of the French Loan Work-out Fee, if any, payable on such Note Interest Payment Date, shall constitute the "Available Issuer Principal Receipts". Application of Available Issuer Principal Receipts prior to an Accelerated Redemption Event On each Note Interest Payment Date prior to the occurrence of an Accelerated Redemption Event, the Management Company shall give instructions to the Operating Bank (with a copy to the Custodian) to apply the Available Issuer Principal Receipts as set out below. Subject as provided below, on each Note Interest Payment Date where a Sequential Redemption Event has not occurred, the Available Issuer Principal Receipts will be applied to redeem the Class A Notes, the Class B Notes and the Class C Notes. The amount by which a Class A Note, a Class B Note and a Class C Note will be redeemed on a particular Note Interest Payment Date will equal the sum of: (A) an amount equal to the percentage applicable to the relevant class of Listed Notes of Available Issuer Principal Receipts (other than French Loan Principal Recovery Funds and Belgian Bond Principal Recovery Funds) received in respect of each Loan according to its group. The relevant percentages for each relevant class of Listed Notes and the groups of Loans for these purposes are set out below: Group 1 Group 2 Class A Notes 100% 86% Class B Notes 0% 10% Class C Notes 0% 4% Where the Group 1 comprises the Pascal Loan (as defined herein). Where the Group 2 comprises: - the French Loans (other than the Pascal Loan); and - The Luxembourg Notes. (B) an amount of French Loan Principal Recovery Funds received in respect of each French Loan and Belgian Bond Principal Recovery Funds received in respect of the Luxembourg Notes allocated to the relevant class of Listed Notes in accordance with the following procedure. The French Loan Principal Recovery Funds received in respect of a French Loan and the Belgian Bond Principal Recovery Funds received in respect of the Luxembourg Notes will be applied sequentially to the Target Redemption Amounts for such French Loan and the Luxembourg Notes. The "Target Redemption Amount" for each class of Listed Notes in relation to each French Loan or to the Luxembourg Notes on any day will 38

39 be equal to the product of (i) the aggregate principal amount outstanding of the relevant French Loan and the Luxembourg Notes on that day and (ii) the percentage applicable to the relevant class of Listed Notes and the relevant French Loan and the Luxembourg Notes according to its group. For the purpose of determining the amount of Available Issuer Principal Receipts to be allocated to redeem any relevant class of Listed Notes, if in accordance with the above allocation rules the amount of Available Issuer Principal Receipts available to redeem a class of Listed Notes would exceed the Principal Amount Outstanding of such class of Listed Notes, an amount equal to the excess will be allocated to the other relevant classes of Listed Notes on a pro-rata basis. The percentage of such excess amount to be applied to a class of Listed Notes will be equal to the fraction (expressed as a percentage) of (i) the weighted average loan allocation percentage applicable to the relevant outstanding class of Listed Notes divided by (ii) the aggregate of the weighted average loan allocation percentages applicable to all the relevant classes of Listed Notes with a Principal Amount Outstanding of greater than zero. The weighted average loan allocation percentage of a class of Listed Notes on any Note Calculation Date will be equal to (i) the sum of the products of the amount of Available Issuer Principal Receipts applicable to each Loan and the relevant percentage applicable to the relevant class of Listed Notes divided by (ii) the amount of Available Issuer Principal Receipts to be allocated on such Note Calculation Date. Notwithstanding the above, if on any Note Interest Payment Date where a Sequential Redemption Event has not occurred, but a French Loan Work-out Fee or French Loan Liquidation Fee is payable by the Issuer in respect of principal with the effect that Available Issuer Principal Receipts available to redeem the Listed Notes is reduced (which may not be the case in respect of a Tranched French Loan), then the above application of Available Issuer Principal Receipts shall be altered. In such circumstances, the amount of such French Loan Work-out Fee or Liquidation Fee shall, for the purposes of calculating the amount of each class of Listed Notes to be redeemed, be added to the amount of the then Available Issuer Principal Receipts and the waterfall above applied as if such amounts were available to the Issuer. Then the relevant amount of French Loan Work-out Fee or French Loan Liquidation Fee shall be deducted from the amount by which the most junior class of Listed Notes would have been redeemed if such increased sum of Available Issuer Principal Receipts had been available and the Listed Notes of each class shall then be redeemed by reference to such revised amounts. The Class X Notes will be repaid from the Class X Collateral Amount standing to the credit of the Issuer Transaction Account. Application of Available Sequential Principal Receipts A "Sequential Redemption Event" shall occur if any of the following circumstances exists on a Note Calculation Date: (A) more than 23 per cent. of the aggregate principal amount outstanding of the Issuer Assets are Specially Serviced French Loans as far as the French Loans are concerned or are subject to an event of default as far as the Luxembourg Notes are concerned; or (B) (i) the cumulative percentage of the Issuer Assets (calculated by reference to the principal amount outstanding of the Issuer Assets as at the Closing Date) which have defaulted since the Closing Date is greater than 23 per cent. of the aggregate principal amount outstanding of the Loans as at the Closing Date, or (ii) more than two Loans have defaulted since the 39

40 Closing Date; provided that, in determining whether an Issuer Asset has defaulted for the purposes of this paragraph (B): (1) such determination shall be made solely on the basis of the terms of the relevant French Loan Agreement or Luxembourg Note Issue Document as at the Closing Date and without regard to any subsequent amendments to the relevant French Loan Agreement or Belgian Bond Issue Document, or waivers granted in respect thereof; and (2) a default shall not be deemed to have occurred if (a) the default is with respect to payment and such default has been remedied or cured within 10 Business Days of such default, and/or (b) the default is other than with respect to payment, the default is capable of being remedied or cured and such default has been remedied or cured by the relevant Borrower within 30 days of such default being notified in accordance with the terms of the relevant French Loan Agreement or the Luxembourg Note Issue Document, and/or (c) enforcement procedures have been completed and the principal amount outstanding of all amounts of interest, fees, expenses and any other amounts payable by the relevant Borrower in respect of such defaulted Loan have been received in full or the relevant Borrower has prepaid the defaulted Loan in full (including, for the avoidance of doubt, all amounts of interest, fees, expenses and other amounts payable by the relevant Borrower in respect of such defaulted Loan); or (C) there has been any loss incurred by the Noteholders since the Closing Date resulting from a failure of the Issuer to repay principal of any Listed Note, or to pay interest on any Note, other than in respect of the interest on the most senior class of Notes then outstanding, on the due date for such payment. If a Sequential Redemption Event has occurred then all Available Issuer Principal Receipts will be applied on each subsequent Note Interest Payment Date in the following order of priority: (a) (b) (c) first, in or towards repaying the Principal Amount Outstanding of the Class A Notes and until all the Class A Notes have been redeemed in full; second, the balance in or towards repaying the Principal Amount Outstanding of the Class B Notes until all the Class B Notes have been redeemed in full; third, the balance in or towards repaying the Principal Amount Outstanding of the Class C Notes until all the Class C Notes have been redeemed in full. The Class X Notes will be repaid from the Class X Collateral Amount standing to the credit of the Issuer Transaction Account. The Issuer will not be required to accumulate surplus assets as security for any future payments of interest or repayment of principal on the Notes. Any amounts standing to the credit of the Issuer Transaction Account after a Note Interest Payment Date or, in the case of the first Interest Period, the Closing Date and prior to the next following Note Calculation Date will be invested in 40

41 Eligible Investments that mature on or before the next following Note Calculation Date. For further information regarding the redemption of the Notes, see Condition 5 in "Terms and Conditions of the Notes". Payments out of the Issuer Transaction Account following the occurrence of an Accelerated Redemption Event The failure by the Issuer to pay interest on the most senior class of Notes which is still outstanding when due and payable will result in the occurrence of an "Accelerated Redemption Event". On any Note Interest Payment Date on or after the date on which an Accelerated Redemption Event has occurred, the Management Company shall apply all funds received or recovered by it first in payment of the Issuer Priority Payments and then in accordance with the following order of priority (the "Accelerated Redemption Order of Priority") (in each case, only if and to the extent that the payments and provisions of a higher priority have been made in full), all as more particularly described in the Issuer Regulations: (a) (b) (c) (d) (e) first, in or towards payment or discharge of any amounts due and payable by the Issuer (including indemnity expenses (if any)) to (i) any Issuer Related Parties (other than the French Loan Servicer, the Issuer Swap Provider and the Issuer Liquidity Facility Provider) under and in accordance with the arrangements which are in place between the Issuer and the Issuer Related Parties (other than the French Loan Servicer, the Issuer Swap Provider and the Issuer Liquidity Facility Provider) pro rata and pari passu; then (ii) the Issuer Swap Provider in respect of amounts due or overdue to it under the Issuer Swap Agreement and the Issuer Swap Agreement Credit Support Document (other than payments to be made by the Issuer referred to in item (f) below); then (iii) the French Loan Servicer in respect of the French Loan Servicing Fee and French Loan Special Servicing Fees and any other amounts (including any amounts due to the French Loan Servicer in respect of any French Loan Work-out Fee or French Loan Liquidation Fee) due to the French Loan Servicer pursuant to the French Loan Servicing Agreement pari passu and pro rata; and then (iv) the Issuer Liquidity Facility Provider under and in accordance with the Issuer Liquidity Facility Agreement, other than any Stand-by Drawing and any Issuer Liquidity Subordinated Amounts; second, (i) in or towards payment of interest due or overdue on the Class A Notes; and after payment of all such sums (ii) in repayment of all amounts of principal due or overdue on the Class A Notes and all other amounts due in respect of the Class A Notes until the outstanding principal balance of the Class A Notes is reduced to zero; third, (i) in or towards payment of interest due or overdue on the Class B Notes; and after payment of all such sums (ii) in repayment of all amounts of principal due or overdue on the Class B Notes and all other amounts due in respect of the Class B Notes until the outstanding principal balance of the Class B Notes is reduced to zero; fourth (i) in or towards payment of interest due or overdue on the Class C Notes; and after payment of all such sums (ii) in repayment of all amounts of principal due or overdue on the Class C Notes and all other amounts due in respect of the Class C Notes until the outstanding principal balance of the Class C Notes is reduced to zero; fifth, in or towards payment of any Issuer Liquidity Subordinated 41

42 Amounts; (f) (g) sixth, the balance in or towards payment or discharge of any amounts that are due and payable by the Issuer to the Issuer Swap Provider under the Issuer Swap Agreement in respect of any payments to be made by the Issuer following an early termination of the Issuer Swap Agreement as a result of an event of default under the Issuer Swap Agreement in respect of which the Issuer Swap Provider is the defaulting party; and seventh, any surplus to the Class X Noteholders. Following the occurrence of an Accelerated Redemption Event, the Class X Notes will be repaid from the Class X Collateral Amount standing to the credit of the Issuer Transaction Account. Liquidation Surplus On the Liquidation Date, the aggregate of all Issuer Asset Interest Receipts and Issuer Asset Principal Receipts and all other funds of the Issuer remaining after payment of the Issuer Priority Payments and all other amounts referred to in the Normal Redemption Orders of Priority or the Accelerated Redemption Order of Priority, as applicable (the "Liquidation Surplus") shall be applied in repaying the Principal Amount Outstanding of the Class R Units until the Class R Units have been redeemed in full and any Liquidation Surplus (if any) remaining thereafter will be applied to the Class X Notes. 42

43 RISK FACTORS The following is a summary of certain issues of which prospective Noteholders and Residual Unitholders should be aware. This summary is not intended to be exhaustive and prospective Noteholders and Residual Unitholders should also read the detailed information set out elsewhere in this Prospectus and reach their own views prior to making an investment decision. Some of the issues set out in this section are mitigated by certain representations and warranties which MS Bank will provide in the Asset Transfer Agreements in relation to the French Loans, the French Related Security, the Belgian Bonds and other associated matters (see "The Originated Assets Sale Agreements"). This Prospectus is issued with the intention that it will be read only by corporations, partnerships and other entities (but not individuals) having such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Notes or the Residual Units, who are experienced in investing in real estate and who are familiar with secondary market trading in instruments such as the Notes and the Residual Units. Noteholders and Residual Unitholders should conduct such independent investigation and analysis regarding the Notes and the Residual Units, the French Loan Agreements, the French Related Security and the Belgian Bonds as they deem appropriate. FACTORS RELATING TO THE ORIGINATED ASSETS Borrowers' Ability to Pay If the Issuer does not receive the full amount due from the French Borrowers in respect of the French Loans or from the Luxembourg Issuer and in turn if the Luxembourg Issuer does not receive the full amount due from the Belgian Issuer in respect of the Belgian Bonds and if the Belgian Issuer does not receive the full amount due from the Belgian Property Owning Companies under the Belgian Intra-Group Loans, then Noteholders (or the holders of certain classes of Notes) or Residual Unitholders may receive by way of principal repayment an amount less than the face value of their Notes or Residual Units and the Issuer may be unable to pay, in whole or in part, interest due on the Notes or on the Residual Units. The Issuer does not guarantee or warrant full and timely payment by the French Borrowers, the Luxembourg Issuer, the Belgian Issuer or the Belgian Property Operating Companies of any sums payable under the Originated Assets. The ability of a Borrower to make timely payment of amounts due in respect of an Originated Asset will, in most cases, be dependent on the ability of the Property or Properties securing that Borrower's Originated Asset to generate income which is sufficient to make such payments. Investors should assume that no funds other than those derived from the Properties will be available to the Borrowers to enable them to make payments due on their Originated Asset. Furthermore, if a Borrower defaults in its obligations in respect of an Originated Asset and the relevant French Related Security or Belgian Security is enforced or if a Borrower's ability to repay an Originated Asset on its maturity is dependent on the sale or refinancing of the related Property or Properties, the Issuer's ability to recover all amounts due in respect of the relevant Originated Asset will depend on the market value of the Property or Properties securing its repayment. In respect of the Pascal Loan and a portion of the Lexin Portfolio Loan accounting for 46.2 per cent. of the aggregate principal amount of the Originated Assets as at Cut-Off Date (the "Aggregate Cut-Off Date Balance"), each of the relevant French Borrowers are jointly and severally liable (solidairement) for the obligations of each of the other French Borrowers within the limit of the higher of an amount equal to its share in the relevant French loan principal amount, the market value of its French Property or the sale proceeds of its French Property. Further to French case law, the validity of joint and several liability contractual provisions are subject in particular to the existence of a corporate benefit to each of the joint and several borrowers and to the condition that such liability does not exceed the financial assistance threshold that each of the joint and several borrowers is entitled to provide. These case law criteria are construed on a case by case basis in accordance with the factual information in the relevant matter. The ability of a Property to generate income and its market value may be adversely affected by a large number of factors. Some of these factors relate specifically to a Property itself, such as: (a) the age, design 43

44 and construction quality of the Property; (b) perceptions regarding the safety, convenience and attractiveness of the Property; (c) the proximity and attractiveness of competing properties; (d) the adequacy of the Property's management and maintenance; (e) an increase in the capital expenditure needed to maintain the Property or make improvements to it; and (f) a decline in the financial condition of a major tenant, a decline in rental rates as leases are renewed or entered into with new tenants, the length of occupational leases, the creditworthiness of tenants and the size of the real estate market in the locality of the Property. Other factors are more general in nature, such as: (a) national, regional or local economic conditions (including plant closures, industry slowdowns and unemployment rates); (b) local property conditions from time to time; (c) demographic factors; (d) consumer confidence; (e) consumer tastes and preferences; (f) retrospective changes in building codes or other regulatory changes; (g) changes in governmental regulations, fiscal policy, planning/zoning or tax laws; (h) potential environmental legislation or liabilities or other legal liabilities; (i) the availability of refinancing; and (j) changes in interest rate levels or yields required by investors in income-producing commercial properties. In respect of certain of the French Loans (the Pascal Loan, the France Telecom Loan and the Ford Loan) accounting for 64.8 per cent. of the Aggregate Cut-Off Date Balance, the next break date and/or the termination date of the relevant French Occupational Leases will occur prior to the final repayment date of such French Loans. Consequently, the relevant French Loan Agreements provide that the credit balance remaining on the relevant French Rent Accounts after all amounts due under these French Loans on a French Loan Payment Date will not be released to the relevant French Borrowers for a period of a year preceding the relevant break date and/or termination date. For further information on this cash trap mechanism, see "The Structure of the Accounts The French Loans The French Rent Accounts" below. In respect of the Lexin Portfolio Loan accounting for 12.2 per cent. of the Aggregate Cut-Off Date Balance, Crédit Lyonnais, one of the major tenant representing 16.0 per cent. of the Gross Rental Income derived from the Lexin Properties, has purported to give notice to terminate its French Occupational Lease on the lease break date occurring on 31 March The relevant Lexin Portfolio Borrowers are currently contesting the effectiveness of such notice to terminate on the ground that Crédit Lyonnais has sent the required six-month prior termination notice to an inappropriate recipient. If the relevant Lexin Portfolio Borrowers succeed, Crédit Lyonnais will have to pay the rents due on the relevant Lexin Property until 31 March 2009, which corresponds to the termination date of its French Occupational Lease. If the termination of Crédit Lyonnais' French Occupational Lease is recognised as effective, Crédit Lyonnais will have to pay the rents due on the relevant Lexin Property until 31 March 2006, which corresponds to the lease break date. Any one or more of these factors could have an adverse effect on the income which a particular Property is able to generate and/or on its market value, which could in turn cause the relevant Borrower to default on its Loan, reduce the chances of refinancing a Loan or reduce the ability to sell the Property for a price which would be sufficient to pay or repay all amounts due on the related Loan. Refinancing Risk The Pascal Loan, the France Telecom Loan, the Carillon Loan and the Belgian Bonds accounting for 79.8 per cent. of the Aggregate Cut-Off Date Balance do not require the Belgian Issuer or the relevant French Borrower to repay any principal until the maturity of the relevant French Loans or the Belgian Bonds. The remaining French Loans accounting for 20.2 per cent. of the Aggregate Cut-Off Date Balance amortise partly throughout their term but require the relevant French Borrower under the French Loans to make a substantial repayment of principal on the maturity date. The ability of a French Borrower to make the payment of principal due on the final maturity date of any French Loan and of a Belgian Property Owning Company to make the payment of principal due on the final maturity date of any Belgian Intra- Group Loan (and in turn the ability of the Belgian Issuer to make payment of principal due on the final maturity date of the Belgian Bonds and the ability of the Luxembourg Issuer to make payment of principal due on the final maturity date of the Luxembourg Notes) may be dependent upon the ability of that French Borrower or of that Belgian Property Owning Company to refinance the relevant French Loan or the relevant Belgian Intra-Group Loan or to sell the Property or Properties securing that French Loan or that Belgian Intra-Group Loan. Neither the Issuer, the French Loan Originator, the Belgian Issuer nor the Luxembourg Issuer is under any obligation to provide any such refinancing and there can be no assurance that a French Borrower or a Belgian Property Owning Company, as applicable, would be able to refinance 44

45 its French Loan or its Belgian Intra-Group Loan or that a French Borrower or a Belgian Property Owning Company would be able to sell the relevant Property or Properties in a timely fashion. Failure by a French Borrower or a Belgian Property Owning Company to refinance the relevant French Loan or the relevant Belgian Intra-Group Loan by the French Borrower or the Belgian Property Owning Company to sell or to procure the sale of the relevant Property or Properties may result in that French Borrower or that Belgian Property Owning Company defaulting on its French Loan or its Belgian Intra-Group Loan. In the event of such a default, the Noteholders, or the holders of certain classes of Notes and the Residual Unitholders may receive by way of principal repayment an amount less than the face value of their Notes and their Residual Units and the Issuer may be unable to pay in full interest due on the Notes or the Residual Units. Loan Concentration In relation to any pool of loans, loan losses will be more severe if the losses relate to loans that account for a large percentage of the pool's aggregate principal balance. The Pascal Loan, the France Telecom Loan and the Carillon Loan made to four French Borrowers represent approximately 34.0, 22.9 and 18.7 per cent. respectively, of the Aggregate Cut-Off Date Balance. For further details of these French Loans and their French Related Security see "The Loans and Related Property Summaries" at page 153. As there are only five French Loans accounting for 95.7 per cent. of the Aggregate Cut-Off Date Balance and the Belgian Bonds accounting for 4.3 per cent. of the Aggregate Cut-Off Date Balance, losses on any French Loan may have a substantial adverse effect on the ability of the Issuer to make payments due under the Notes or the Residual Units. In addition, concentrations of Properties in geographic areas may increase the risk that adverse economic or other developments affecting a particular region could increase the frequency and severity of losses on the Originated Assets which are secured by such Properties. Tenant Concentration and Tenant Default The French Borrowers' and the Belgian Issuer's ability to pay interest on and to repay principal under the French Loans and the Belgian Bonds depends on the tenants' ability to make rental payments under the Occupational Leases. Any tenant of a Property may, from time to time, experience changes in its business which may weaken its financial condition and result in a failure to make rental payments when due. If a tenant of a Property were to default in its obligations to pay rent, the related French Borrower or the Belgian Issuer is unlikely to have other funds available to enable it to make payments due on its French Loan or the Belgian Bonds. The Borrower may also incur costs and experience delays associated with protecting its investment, including costs incurred in renovating and reletting the relevant Property, thereby further reducing the amount available to make payments due in respect of the French Loan or the Belgian Bonds. The risks presented by these tenant concentrations and tenant defaults are mitigated by the strength of the respective tenants and by the structural features of the relevant French Loans. In respect of the Pascal Loan, 85.6 per cent. of the Gross Rental Income deriving from the relevant French Properties is paid by the Ministère de l'equipement. In respect of the France Telecom Loan and the Ford Loan, 100 per cent. of the Gross Rental Income deriving from the relevant French Properties is paid respectively by France Telecom and the Groupe Ford France. Therefore, the relevant French Borrowers' ability to make interest or principal payments under the Pascal Loan, the France Telecom Loan and the Ford Loan may be adversely affected if France Telecom, the Groupe Ford France or the Ministère de l'equipement default on their respective payment obligations under the relevant French Occupational Leases. Although the relevant French Occupational Leases may be terminated if the relevant tenants fail to make the required rental payments as they fall due, the relevant French Borrowers may nevertheless be unable to enter into new leases in respect of the relevant French Properties or to enter into new leases whose terms are similar to the relevant French Occupational Leases. The Pascal Loan provides for a full cash sweep mechanism for the year preceding the next expiry date of the relevant French Occupational Lease (i.e., October 2007) and the year preceding the break date of the relevant French Occupational Lease (i.e., November 2010) unless and until the relevant French Occupational Leases are renewed, the relevant break option has been definitely waived by the Ministère de 45

46 l'equipement or the relevant French Borrower has found a satisfactory new tenant(s), as applicable. This cash reserve is capped at a maximum amount equal to 11,200,000. As at the date of this Prospectus, the long term unsecured and unsubordinated debt obligations of France Telecom are rated A- by S&P, A3 by Moody's and A- by Fitch. In addition, the France Telecom Loan provides for a full cash swap mechanism for the year preceding the next expiry date of the relevant French Occupational Lease (i.e., March 2008) and the year preceding the break date of the relevant French Occupational Lease (i.e., March 2011) trapping all excess cash unless and until the relevant French Occupational Leases are continued or renewed, as applicable, or unless and until the relevant French Borrower has found satisfactory new tenant(s). As at the date of this Prospectus, the long term unsecured and unsubordinated debt obligations of the Groupe Ford France are rated BB+ by S&P, Ba1 by Moody's and BBB- by Fitch. These ratings refer to those of the Ford group rating and no explicit guarantee is provided to the benefit of Groupe Ford France as the tenant of the relevant French Property. In addition, the Ford Loan provides for a full cash sweep mechanism for the year preceding the expiry date of the French Occupational Lease (i.e., March 2011) trapping all excess cash unless and until the relevant French Occupational Lease is renewed or unless and until the relevant French Borrower has found a satisfactory new tenant(s) under a lease agreement concluded in substantially the same terms as and with rental payments at least equal to the rental payments due under the current French Occupational Lease. In respect of the Ford Loan, the due diligence conducted in connection with the acquisition of the relevant French Property revealed the following two pending litigations. The first litigation consists of the French Borrower asking for damages in respect of certain defective repairs having been conducted on the relevant French Property. Under the second litigation, the sole tenant of the relevant French Property seeks to compel the relevant French Borrower to carry out certain repairs on three showrooms located in one part of the building and has requested the authorisation to suspend rental payments until the actual completion of such repairs. As at the date of this Prospectus, the second litigation has been amicably settled while the first litigation is still pending for an estimated amount of 292,000. Under the seller guarantee granted by the seller in connection with the purchase of the relevant French Property, the relevant seller has undertaken to pay (i) the financial costs which may be incurred by the relevant French Borrower due to the defective nature of the relevant repairs and (ii) any shortfall which may result from the suspension of rental payments by the tenant of the relevant French Property. In addition, an amount of 533,000 was initially credited by the relevant French Borrower on or about the origination date of the Ford Loan to a dedicated reserve account (the "Ford Litigation Reserve Account") opened in the name of the French Loan Originator. This amount has been partially released in an amount of 106,008 following the amicable settlement relating to the second litigation and the completion of required part of the requested repairs. The relevant French Borrower has granted a cash collateral (gage-espèces) over the sums standing to the credit of the Ford Litigation Reserve Account in favour of the French Loan Originator and after the Closing Date, the Issuer as part of the French Related Security. For further information on the Ford Litigation Reserve Account, see "The Structure of the Accounts French Reserve Accounts" at page 146 below. In respect of the Carillon Loan, Compagnie Générale des Eaux (CGE) is the main tenant in respect of the related French Property. CGE accounts for 78.0 per cent. of the Gross Rental Income generated by the relevant French Property. CGE is a subsidiary of Veolia Environnement whose long-term debt obligations are rated BBB+ by Standard & Poor's and A3 by Moody's as at the date of this Prospectus. Considering the rental payments made by CGE under the relevant French Occupational Leases, any default by CGE in its payment obligations under such French Occupational Lease could have an adverse effect on the relevant French Borrower's ability to make payments under the Carillon Loan. Consequently, the Carillon Loan Agreement provides that the credit balance remaining on the relevant French Rent Accounts after all amounts due under this French Loan on a French Loan Payment Date will not be released to the relevant French Borrowers for so long as the ratings of long term debt obligations of Veolia Environnement is downgraded below BB by Standard & Poor's and Ba2 by Moody's up to a maximum annual amount of 800,000 and a maximum aggregate amount of 2,000,000. For further information on this cash trap mechanism, see "The Structure of the Accounts The French Loans The French Rent Accounts" below. 46

47 Office Properties The French Loans and the Belgian Bonds are secured mainly by office properties. The income from and market value of an office property, and a borrower's ability to meet its obligations under a loan secured by an office property, are subject to a number of risks. In particular, a given property's age, condition, design, access to transportation and ability to offer certain amenities to tenants, including sophisticated building systems (such as fibre-optic cables, satellite communications or other base building features) all affect the ability of such a property to compete against other office properties in the area in attracting and retaining tenants. Other important factors that affect the ability of an office property to attract or retain tenants include the quality of a building's existing tenants, the quality of the building's property manager, the attractiveness of the building and the surrounding area to prospective tenants and their customers or clients and access to public transportation and major roads. Attracting and retaining tenants often involves refitting, repairing or making improvements to office space to accommodate the type of business conducted by prospective tenants or a change in the type of business conducted by existing major tenants. Such refitting, repairing or improvements are often more costly for office properties than for other property types. Local and regional economic conditions, changes in local and regional population patterns, sharing of office space and employment growth together with other related factors also affect the demand for and operation of office properties. In addition, an economic decline in the businesses operated by tenants can affect a building and cause one or more significant tenants to cease operations and/or become insolvent. The risk of such an adverse effect is increased if revenue is dependent on a single tenant or a few large tenants or if there is a significant concentration of tenants in a particular business or industry. Any one or more of the above described factors or others not specifically mentioned above could operate to have an adverse effect on the income derived from, or able to be generated by, a particular office Property, which could in turn cause the relevant French Borrower or the Belgian Issuer to default on its French Loan or the Belgian Bonds, reduce the chances of a French Borrower or the Belgian Issuer refinancing a French Loan or the Belgian Bonds or reduce the ability of a French Borrower or of the Belgian Issuer to sell a Property at a required price or at all. No assurance can be given that tenants in the Properties will continue making payments under their leases or that any such tenants will not become insolvent or subject to administration in the future or, if any such tenants become subject to administration, that they will continue to make rental payments in a timely manner. In addition, a tenant may, from time to time, experience a downturn in its business, which may weaken its financial condition and result in a failure to make rental payments when due. If a tenant, particularly a major tenant, defaults in its obligations under its occupational lease, the applicable French Borrower or the Belgian Issuer may experience delays in enforcing its rights as lessor and may incur substantial costs and experience significant delays associated with protecting its investment, including costs incurred in renovating and re-letting the relevant Property. Prepayment The French Loans, the Belgian Bonds and in turn the Luxembourg Notes may be prepaid in whole or in part prior to their respective stated final maturity dates. The Senior Tranches in respect of the Tranched French Loans may be prepaid in whole prior to its stated final maturity date if the Junior Lenders purchase such Senior Tranches in accordance with the terms of the Intercreditor Agreements. If such prepayments occur at a faster rate than was anticipated, the investment performance of a Note may be adversely affected. Prepayment Fees will not be available to compensate Noteholders or Residual Unitholders for any reductions in yield but will be paid to the Class X Noteholders. Due Diligence; Representations and warranties MS Bank as French Loan Originator and Belgian Bond Originator, undertook due diligence in relation to the French Loans and the Belgian Bonds, as applicable, and the Properties securing such French Loans or Belgian Bonds at the time of their origination or their issuance, as applicable. Other than limited legal due diligence undertaken by or on behalf of each of the French Loan Originator or the Belgian Bond Originator in the context of the representations and warranties being given under the Asset Transfer Agreement to which it is a party, the due diligence previously undertaken by the French Loan Originator or the Belgian 47

48 Bond Originator will not be verified or updated prior to the sale of the French Loans to the Issuer or the sale of the Belgian Bonds to the Luxembourg Issuer. None of the Issuer, the Luxembourg Issuer or the Belgian Issuer has undertaken or will undertake any investigations, searches or other due diligence regarding the French Loans, the Belgian Bonds or the Properties or as to the status of the French Borrowers or the Belgian Property Owning Companies and each of them will instead rely solely on the warranties given by MS Bank as French Loan Originator or Belgian Bond Originator, as applicable, in respect of such matters in the relevant Asset Transfer Agreement. For further information regarding the representations and warranties given by MS Bank as French Loan Originator or Belgian Bond Originator, see "The Originated Asset Sale Agreements" at page 125. If any breach of warranty relating to any French Loan and the French Related Security or to any Belgian Bond is material and (if capable of remedy) is not remedied, the Issuer or the Luxembourg Issuer, as applicable, may require MS Bank as French Loan Originator or Belgian Bond Originator, as applicable, to transfer back such French Loan or the Belgian Bonds. Neither the Issuer nor the Luxembourg Issuer will have any recourse to the French Loan Originator or the Belgian Bond Originator in respect of losses arising in relation to the French Loans or their French Related Security or in relation to the Belgian Bonds, other than to require the French Loan Originator to transfer back any French Loan in relation to which a warranty has been breached or to require the Belgian Bond Originator to transfer back the Belgian Bonds. Therefore to the extent that any loss arises as a result of a matter which is not covered by a particular warranty or warranties, the loss will remain with the Issuer or the Luxembourg Issuer, as applicable. Valuations The Origination Valuations in respect of the Properties have been provided by a number of independent qualified firms. The Origination Valuations express the professional opinion of the relevant valuers on the relevant Property and are not guarantees of present or future value in respect of such Property. One valuer may, in respect of any Property, reach a different conclusion than the conclusion in relation to a particular Property that would be reached if a different valuer were appraising such Property. Moreover, valuations seek to establish the amount that a typically motivated buyer would pay a typically motivated seller and, in certain cases, may have taken into consideration the purchase price paid by the existing property owner. There can be no assurance that the market value of the Property will continue to equal or exceed the valuation contained in the relevant valuation report. If the market value of a Property fluctuates, there can be no assurance that the market value will be equal to or greater than the unpaid principal and accrued interest on the Loan made in respect of such Property and any other amounts due under the relevant Credit Agreement. If the Property is sold following an event of default in respect of a French Loan or a Belgian Bond Event of Default, there can be no assurance that the net proceeds of such sale will be sufficient to pay in full all amounts due in respect of the relevant French Loan or the Belgian Bonds. For further information regarding the Origination Valuations of each of the Properties please see the CD- ROM distributed contemporaneously with this Prospectus and the section entitled "CD-ROM Disclaimer" at page 233. Insurance All the French Loan Agreements and the terms and conditions of the Belgian Bonds require each Property to be insured at appropriate levels and against the usual risks. However, there can be no assurance that any loss incurred will be of a type covered by such insurance and will not exceed the limits of such insurance. Should an uninsured loss or a loss in excess of insured limits occur at a Property, the French Borrower or the Belgian Issuer could suffer disruption of income from the Property, potentially for an extended period of time, while remaining responsible for any financial obligations relating to the Property. In addition, French Borrowers and the Belgian Issuer are relying on the creditworthiness of the insurers providing insurance with respect to the Property and the continuing availability of insurance to cover the required risks, in respect of neither of which can assurances be made. When each French Loan was originated or when the Belgian Bonds were issued, it was the policy of MS Bank as French Loan Originator or Belgian Bond Originator to verify that insurance was in place which met the requirements of the applicable documents. No further verification of such insurance arrangements has been undertaken in connection with the sale of the Originated Assets to the Issuer. 48

49 For further information regarding the French Borrowers' and the Belgian Issuer's obligations relating to insurance, see "The Originated Assets Documentation The French Loans and the French Related Security Terms of the French Loans" at page 108 and "The Originated Assets Documentation The Belgian Originated Assets". Environmental Risks France As regards the French Properties, the environmental and occupational health and safety obligations and liabilities of real property landlords under the applicable French laws and regulations essentially include the following: (i) (ii) Landlords have no direct obligations as regards land investigation and monitoring but must inform a potential purchaser of (a) the current or prior operation of authorised regulated activities on the site and (b) of any environmental damage, risk or inconvenience such activities may have generated or generate. Responsibilities with respect to land remediation and monitoring lie with the title operator of the regulated activities and installations located thereon. Since a July 30, 2003 amendment of applicable laws, municipal authorities may also under certain circumstances require not only the operator but also the landlord to carry our clean up works a polluted site. For contractual responsibility reasons, it is now customary but not mandatory for landlords to assess the environmental condition of the land in order to determine whether past activities are likely to have been a source of environmental conditions which may eventually require soil and/or groundwater investigation, monitoring or cleanup. In terms of potential liabilities arising out of the operation of the site, the following must be noted. Pursuant to a prefectoral order dated 22 April 1999 issued under the registered installations legal regime (installations classées pour la protection de l'environnement), installations operated within the property include: - a car park subject to authorization under Articles L et seq. of the French Code de l'environnement (item No. 2935/1-A of the categorical classification of industrial and commercial operations); - cooling towers subject to authorization (item No. 2920/2/a); - combustion installations subject to declaration (boilers) (item No. 2910/A/2). The capacity of fuel tanks supplying combustion installations and their contents are such that they do not require authorization or declaration under currently applicable thresholds. Failure of the title operator of the above installations to comply with applicable prescriptions may result in administrative sanctions including for example a permit suspension (preceded by an injunction to comply within a given timeframe) (see Article L of the French Code de l'environnement) and/or criminal prosecution (see id., Article L et seq. of the French Code de l'environnement). (iii) Domestic laws and regulations further require that the French Borrower, as the owner of the Property, check the premises for the presence of asbestos-containing materials ("ACMs"). Article L of the French Code de la santé publique requires that an asbestos investigation report detailing the presence or absence of ACMs be appended by the seller to any promise or deed of sale of a building. In the absence of such documentation, no liability waiver may validly be stipulated to the benefit of the seller. Decree No of 7 February 1996 as amended provides that information duties shall apply only to those buildings which building permits were issued prior to 1 July In respect of the Carillon Loan, ACMs have been found in certain equipments (pipes and fire protection materials). It has been established that these ACMs need not be removed in an urgent manner and that the level of ACMs found on the Carillon Property complies with the applicable 49

50 French environmental laws as at the date of this Preliminary Prospectus. However, general security works or inspections should be conducted in this respect on the relevant French Property on a regular basis. These works or inspections shall include an assessment of the good state of repair of certain property equipments and a regular update of security instructions given to janitors and employees working on the relevant French Property. (iv) Standard occupational health and safety regulations also require that water cooling and heating systems be checked for the presence of legionella (the aerobic bacteria causing legionnaire's disease - a form of pulmonary infection). Likewise, technical prescriptions attached to the operation of cooling towers under item No of the categorical classification of industrial activities (see supra (ii)) also require that legionella testing be conducted on a regular basis. On the basis of the due diligence undertaken at the time of the origination of the French Loans and subject to the presence of ACMs on the Carillon Property at a level acceptable under applicable French public health protection laws as at the date of this Preliminary Prospectus, the French Properties complied with the French public health protection laws applicable to them on such date. This was confirmed by the French Borrowers in the French Loan Agreements. Belgium No classified environmental facility is being operated in the Belgian Properties so in principle no environmental permits are required. The Belgian legislation on asbestos is set forth in the General Regulation on Work Protection (Règlement Général sur la Protection du Travail/Algemeen Reglement op de Arbeidsbescherming (ARAB/RGPT)). The main obligations provided for in this regulation, such as the obligation to draft an inventory of all asbestos and materials containing asbestos in the building and to draft a programme to handle the presence of asbestos, rest upon the employer and not the owner of the building, and, therefore, should not apply to the Belgian Property Owning Companies. With respect to all offices situated in the Flemish Region, the "transfer of land" (which is defined very broadly by the legislation, covering among other things the transfer of ownership, the entering into or termination of a lease) is subject to obtaining a soil certificate and, if relevant, an orientating or descriptive soil investigation by the environmental authorities (OVAM) in accordance with the Flemish Statute on Soil Clean-up dated 22 February In the Brussels Region, legislation regarding the management of polluted soils has entered into force recently (Ordinance of 13 May 2004 and implementing decrees dated 9 December 2004). In the Walloon Region, specific legislation regarding soil pollution and decontamination has been adopted on 1 April 2004 but this legislation has not yet entered into force because the implementing decrees have not been taken yet. However, the Walloon Region will probably implement its soil legislation in the near future which could, once implemented, affect the liabilities with respect to the Belgian Properties. The due diligence undertaken at the time the Belgian Bonds were issued revealed that (i) no environmental permit was available for one of the Belgian Properties, which seemed to be unusual although no information was available to find out whether such Belgian Property contained installations that required an environmental permit and that (ii) no report was available with respect to the possible presence of PCB or polychlorobiphényls (i.e. chemical derivatives including chlorine) in the Belgian Properties. However, on the basis of this due diligence undertaken at the time the Belgian Bonds were issued, it appears that any asbestos containing materials which had been found in the Belgian Properties had been completely removed and any pollution present in the soil and groundwater of the Belgian Properties' parcels had been duly cleaned-up. The Belgian Issuer represented in the terms and conditions of the Belgian Bonds that no contaminating activities or installations had been used since the clean-up works nor will be used on the Properties. 50

51 Planning France Right of first refusal (droit de préemption urbain) There can be no assurance that the sale of the French Properties can be effected at a given price or in a specific timeframe or will result in additional funds sufficient to permit the Issuer to make payments on the Notes or the Residual Units, since the authorised French local planning authority may, in certain circumstances, hold a right of first refusal (droit de préemption urbain) on the sale of the French Properties. This right of first refusal only applies to direct asset sales. Such right may be exercised by the authorised French local planning authorities within a two-month period following the mandatory filing of the offer for sale of the French Properties and for a different price than the offer price (in which case the authorised French local planning authority must inform the seller of its intention to request judicial determination of the acquisition price). Any one or more of the factors described above could operate to have an adverse effect on the amount of proceeds derived from the direct sale of the French Properties or may delay the effective payment date of such proceeds. In such event, if the French Borrowers fail to make payments due under the French Loans, receipt by the relevant Noteholders or Residual Unitholders of expected payment under the Notes or the Residual Units will be dependent on the Issuer Liquidity Facility Provider performing its obligations under the Issuer Liquidity Facility Agreement and the proceeds resulting from the enforcement of the French Related Security. Planning permissions and work declarations As a general rule, construction works and/or any change of use of a real estate asset require that appropriate planning permissions be obtained or that the requisite works declarations be filed. Should these permissions or this filing not be completed, the following sanctions shall apply. During a time period of three years from the completion of the works, criminal sanctions may be taken against the user of the property (utilisateur du sol), the beneficiary of the works, the architect, the building contractors and any other people in charge of the carrying out of the works (fine and/or imprisonment) together with other sanctions such as demolition of the erected building, restoration of the initial use, if (i) works have been carried out or a change in the use initially authorised has been made without obtaining the relevant authorisation, and (ii) the works carried out do not comply with the relevant authorisation. Imprisonment is very rare and only in case of repeated offending. Likewise, the demolition of the building is also very rare. In the event that the planning authorisation is in breach of a planning rule or a public easement, third parties may have the possibility to obtain damages and the possibility to require the demolition of the works or the restoration of the initial use if the following five conditions are met: (i) the works were carried out in compliance with the building permit, (ii) the planning permission breached a planning rule or a public easement, (iii) the claimants suffer a damage, (iv) a direct link exists between the prejudice and the breach invoked, and (v) the planning permission is annulled or declared illegal. Any action on these grounds is statute-barred after a five-year period as from the date of completion of the works. The forced demolition of the works is very rare. Where works are carried out without planning permission or a work declaration and in the case of a change of use without the above mentioned authorisation, third parties may obtain damages and may ask for the demolition or the restoration of the initial use if the claiming third party has suffered a prejudice and there is a direct link between the prejudice and the breach invoked (i.e. absence of the relevant authorisation or the failure of the works or the use to comply with the relevant authorisation). This risk is statute-barred after a ten-year period as from the date the works have been completed. Again, the forced demolition of the works is very rare. Generally, any third party who objects to the granting of planning permissions has to bring an action before the administrative courts within two months from the latest of the two following dates: the first day of the publication of the planning permission at the town hall and the first day of the publication of such a permit on the site. If, at the expiry of this time period, no objection has been raised by any interested third party 51

52 the permit becomes definitive and cannot (in most cases) be attacked (subject to the administrative control which expires two months after the decision to grant the planning permission was transmitted to the appropriate authority and subject to the right of withdrawal of such decision by the administrative authority having delivered the permit, which right expires four months after the permit was delivered). In the case of breach of the above regulations, the successive owners of the properties could be held liable. The consequence of such breach could entail the payment of a substantial fine as well as demolition of the relevant property. The due diligence undertaken at the time the French Loans were originated did not reveal, in the case of all but one of the French Properties, any material non-compliance with local planning requirements. This was confirmed by the French Borrowers in the French Loan Agreements. In respect of the Lexin Portfolio Loan, one of the financed Lexin Portfolio Properties was identified as initially forming part of the public estate (domaine public) of the city of Paris. This means that the relevant building initially belonged to the city of Paris and was used for the performance of public service obligations (service public). Under French law, the buildings which are part of the public estate (domaine public) of a French public entity (in our case the city of Paris) may not be transferred to a third party purchaser (inaliénabilité) unless they are declassified (déclassification) so that they become part of the private estate (domaine privé) of such French public entity. Should a public estate building be transferred without being the subject of any recharacterisation as a private estate building, this transfer may be declared null and void and the relevant building shall be returned to the relevant French public entity subject to the payment of a compensation for the damages suffered by the third party purchaser as a result thereof. Further to the due diligence conducted on the relevant Lexin Property, it appeared that whole or part of such property was not recharacterised as a private estate building prior to its transfer to SEMAVIP, as initial transferee approximately 35 years ago. As a result, this initial transfer and the subsequent transfers (including the transfer to the relevant Lexin Borrower) of such Lexin Property may be declared null and void and such Lexin Property may have to be transferred back to the city of Paris. However, on the basis of legal memoranda obtained on this issue respectively in July and October 2004, this risk has been assessed as relatively low for the following reasons. The likelihood of the city of Paris claiming for the nullity of the transfer of the relevant Lexin Property is fairly remote because the city of Paris has taken the decision to transfer this property in the first place. Moreover, should the city of Paris claim for such nullity, it would then have to indemnify the relevant Lexin Borrower for all damages suffered by it as a result of such transfer back. Although any third party may also avail itself of the non-transferability (inaliénabilité) of a public estate building for the defense of its rights, a majority of French court decisions have considered that the relevant transfer may only be deemed unenforceable towards this third party only (inopposabilité aux tiers) and may not be declared null and void on this sole ground. In addition to the above, in case of total or partial destruction of the relevant Lexin Property, it may not be possible to obtain a building permit for reinstatement. However, this risk is mitigated by the existence of an appropriate loss of value insurance policy on the relevant Lexin Property. Indeed, if the Lexin Borrower does not or cannot rebuild after a total destruction, the standard insurance indemnity would be on the basis of the "reinstatement value" (estimated by Cushman & Wakefield at 16,400,000) less obsolescence (generally between per cent. of reinstatement cost), i.e. 13,900,000 which exceeds the apportioned Lexin Portfolio Loan amount of 11,000,000). In case of the partial destruction of the relevant Lexin Property, the loss of value insurance policy contracted with First Title (and assigned to the French Loan Originator and after the Closing Date, to the Issuer, as part of the French Related Security) will cover any loss of market value as determined by an independent valuer after the damage has occurred. Besides, Cushman & Wakefield's valuation of the relevant Lexin Property was established after consideration of this transferability issue. 52

53 Belgium Right of first refusal in the Flemish Region (droit de pre-emption/voorkooprecht) There can be no assurance that the sale of the Belgian Properties located in the Flemish region can be effected at a given price or in a specific timeframe or will result in additional funds sufficient to permit the Issuer to make payments on the Notes or the Units, since the Flemish authority may, in certain circumstances, hold a right of first refusal (droit de pre-emption/voorkooprecht) on the sale of the Properties located in the Flemish Region. This right of first refusal only applies to direct asset sales. Building permits As a general rule, construction works and/or any change of use of a real estate asset require that an appropriate building permit be granted in accordance with the applicable zoning regulations and planning rules. Building or maintaining constructions without holding a building permit can give rise to criminal liability as well as administrative and tort liability. All buildings in Belgium have to comply with regulations on fire protection. An analysis of compliance with relevant fire regulations is included in the procedure undertaken prior to issuance of a building permit. A building permit can in fact only be delivered by a local authority if the building or proposed building complies with safety rules on fire protection. The due diligence undertaken at the time the Belgian Bonds were issued revealed that (i) the building permit relating to one of the Belgian Properties had disappeared but that the official overview from the city of Brussels provides for certain building permits which were granted in respect of the reconstruction and the renovation of the relevant Belgian Property and that (ii) no fire inspection reports were available in respect of the Belgian Properties. On the basis of this due diligence, the Belgian Issuer confirmed in the terms and conditions of the Belgian Bonds that none of the properties owned by the Belgian Property Owning Companies is in breach of any national, regional or local zoning laws in any material respects. Borrowers/Mortgagors Each French Borrower and each Belgian Property Owning Companies has been structured, to the extent possible, to be a special purpose entity (an "SPE"). The same is true for the Belgian Issuer and the Luxembourg Issuer. SPEs give covenants in their relevant loan documentation that are generally designed to limit the purpose of the borrowing entity to owning one or more properties, making payments on their loan(s) and taking such other actions as may be necessary to carry out the foregoing in order to reduce the risk that circumstances unrelated to the loan(s) and related properties result in a borrower bankruptcy. SPEs are generally used in commercial loan transactions to satisfy requirements of institutional lenders and rating agencies. In order to minimise the possibility that SPEs will be the subject of insolvency proceedings, provisions are generally contained in the documentation relating to their mortgage loans that, among other things, limit the indebtedness that can be incurred by such entities and restrict such entities from conducting business as an operating company (thus limiting exposure to outside creditors). All of the French Loans and the terms and conditions of the Belgian Bonds contain provisions that require the related French Borrower, Belgian Issuer and Belgian Property Owning Company to conduct itself in accordance with certain SPE covenants, which may include some or all of the foregoing. However, there can be no assurance that all or most of the restrictions customarily imposed on SPEs by institutional lenders and ratings agencies will be complied with by the French Borrowers, the Belgian Issuer or the Belgian Property Owning Companies, and even if all or most of such restrictions have been complied with by the French Borrowers, the Belgian Issuer and the Belgian Property Owning Companies, there can be no assurance that such French Borrowers, the Belgian Issuer or the Belgian Property Owning Companies will not nonetheless become insolvent. 53

54 All the borrowers (including the French Borrowers and the Belgian Property Owning Companies) except one French Borrower under the France Telecom Loan were existing companies at the time of the origination of the French Loans and the issuance of the Belgian Bonds. Save as set out under "Loan and Property Summaries" below, the Issuer has been informed by such parties that the relevant company or entity has no material or contingent liabilities (other than indebtedness permitted under the related Credit Agreement in relation to the Property or Properties which are security for the French Loans and the Belgian Bonds and which is fully subordinated pursuant to a formal subordination agreement). In respect of the Belgian Bonds, the Belgian Property Owning Companies have been incorporated in Belgium under the laws of Belgium as commercial companies and various amendments were made to the corporate and constitutional documents of the Belgian Property Owning Companies with a view to limiting the corporate purpose of these companies, and the Belgian Property Owning Companies have given covenants typical of an SPE. Nonetheless, Centrum Invest SPRL as a Belgian Property Owning Company employs a janitor. This Belgian Property Owning Company represents that it complies with any social security obligations which are required by virtue of law. An insolvency of any French Borrower would result in a default under the French Loan Agreement (a "French Loan Event of Default") with respect to the related French Loan giving rise to a potential acceleration of such French Loan and an enforcement of the French Related Security. Any insolvency of the Belgian Issuer or any of the Belgian Property Owning Companies would result in a Belgian Bond Event of Default. In the event of such default, the Issuer may be unable to pay to the Noteholders, or the holders of certain classes of Notes, or the Residual Unitholders (a) by way of principal repayment, the entire face value of their Notes or their Residual Units and (b) by way of interest payment, the full amount due on the Notes or on the Residual Units. Limited Payment History; Recent Acquisition of the Property All French Loans except the Carillon Loan and the Ford Loan were originated within four months of the Closing Date. As such, such French Loans do not have a long standing payment history and there can be no assurance that required payments will be made or, if made, will be made on a timely basis. In addition, the French Borrower under the France Telecom Loan accounting for 22.9 per cent. of the Aggregate Cut- Off Date Balance acquired its related French Property contemporaneously with the origination of its French Loan. Accordingly, this French Borrower may have limited operating history with respect to the relevant French Property and, therefore, there is a risk that the net operating income and cash flow of such French Property may vary significantly from the operations, Gross Rental Income and cash flow generated by the French Property under prior ownership and management. Security over French Properties Lender's Privilege (privilège de prêteur de deniers) and mortgage (hypothèque) A lender's privilege (privilège de prêteur de deniers) is conferred on a creditor who lends a sum of money for the financing of the purchase of real property in accordance with Articles 2095 and of the French Code civil. A mortgage (hypothèque) is a right to real property granted to a creditor, known as a mortgagee (créancier hypothécaire), by a debtor, known as the mortgagor (débiteur), relating to real property which the latter owns or in which it has a right in rem, in order to secure payment of a debt owed by the mortgagor to the mortgagee. A lender's privilege and a mortgage have similar legal effects. However, unlike a mortgage, the lender's privilege is also subject to the specific rules of Article of the French Code civil. In the context of a refinancing of a loan, a lender's privilege or mortgage granted in favour of the lender whose loan is being refinanced can be transferred to the new lender by way of subrogation up to the principal amount of the loan. The beneficiary of a lender's privilege or a mortgage will rank ahead of all unsecured creditors (créanciers chirographaires) of the grantor of the security but will rank after the prior ranking creditors in the context of a bankruptcy (for further information about insolvency, see "Enforcement of the secured Properties France" below) and after any claim of the manager of the condominium (copropriété) if the French Property is comprised within a condominium. Secured amounts comprise the principal amount of the loan in question as well as its related rights. It should be noted, however, that only three years of interest at the contractual rate can be secured by a lender's privilege or a mortgage. 54

55 Peculiarities of Lender's Privilege In order for a lender's privilege to be validly created, the following two conditions must be satisfied: (a) the loan must be granted for the purchase of real property and the deed evidencing the loan (acte d'emprunt) must expressly stipulate the purpose for which the loan was intended; and (b) the discharge receipt (quittance) given by the vendor of the relevant real property must certify that, up to the principal amount of the relevant loan, the payment was made out of the moneys borrowed. Both the deed evidencing the loan and the discharge receipt must be in a notarised form (acte authentique). Registration of Lender's Privilege and Mortgage In order to be enforceable against third parties, pursuant to the provisions of Article 2106 of the French Code civil, lender's privileges and mortgages must be registered at the relevant French local Land and Charges Registry (Conservation des Hypothèques). A lender's privilege is retrospectively perfected from the date of the deed of conveyance of the relevant real property if the registration of the privilege occurs within a period of two months after the signing of the deed of conveyance (under Article 2108 of the French Code civil). If this deed fails to be registered within this two month period, rules applicable to mortgages will apply to the lender's privilege. Mortgages are perfected from their date of registration with the French Land and Charges Registry. The registration of a lender's privilege or of a mortgage in France is only valid for a limited period of time. As a general rule, a lender's privilege or a mortgage is valid until the date of validity specified in the registration (under Article 2154 of the French Code civil). Where the registration of the lender's privilege or the mortgage occurs on one or several fixed dates, the last date for registration occurring prior to the due date of the debt secured by the lender's privilege or the mortgage may run for more than two years beyond such due date, but may not exceed thirty-five years. Where the due date of the debt secured by the lender's privilege or the mortgage is not expressly fixed, or is antecedent to or concomitant with the registration, the validity of the registering of the lender's privilege or of the mortgage is limited to ten years. The registration of a lender's privilege or of a mortgage ceases to be effective if it is not renewed on or before the last day of its current period of effectiveness. The formalities for the registration of a lender's privilege or of a mortgage are set out in Articles 2146 and 2148 of the French Code civil. The lender's privilege and the mortgage should be registered at the French Land and Charges Registry situated in the same geographical district where the relevant real property is situated. Foreclosing on Secured Real Property without Insolvency Proceedings The French legal procedures to be followed in relation to the enforcement of security interests over real property situated in France and the related expenses may affect the Issuer's ability to liquidate the Properties efficiently and in a timely fashion. An outline of these procedures is set out below. Foreclosure on property situated in France by secured creditors may first require the sale of the property at a public auction (vente aux enchères). The foreclosure procedure may take up to one year in normal circumstances. The first step in the foreclosure procedure consists of delivering a foreclosure notice to the debtor by huissier (a process server). This notice should be filed at the French Land and Charges Registry having jurisdiction over the district in which the relevant real property is situated. The next step is to instruct a local lawyer (avocat) to prepare the terms of the sale of the property at auction, including the reserve price of the relevant real property. Finally, a number of legal notices are required to be given prior to the sale. The debtor may file objections against such foreclosure (including the reserve price), the validity of which will be decided by a competent court. If no bid is made at the public auction, and provided there is only one foreclosing creditor, such foreclosing creditor is declared the highest bidder and is thus obliged to purchase the property at the reserve price specified in the terms of the sale. The second possible action of the secured creditor may be exercised in the event of the sale of the property by the debtor. In such event, the secured creditor may have the debts owing 55

56 to him satisfied from the proceeds of the sale of the property in the order of priority of the privileges and mortgages encumbering such property (droits de préférence), in accordance with Article 2166 of the French Code civil. The final secured creditor's enforcement action consists of the possibility to continue to benefit from the lender's privilege or mortgage, even if the property is transferred by the debtor to a third party. This right is known as droit de suite. The secured creditor can have the property attached and can exercise its droit de préférence on the proceeds of the sale by the debtor to the third party. If the secured creditor wishes to exercise this right, it must cause an order to pay to be served on the debtor by a bailiff and, in addition, cause a notice to be served on the third party to whom the property subject to the lender's privilege or mortgage was transferred with a view either to pay the debt secured by the lender's privilege or mortgage granted over the property or to surrender such property in an auction sale, where a minimum bid exceeding 10 per cent. of the price paid by such third party shall be made by the creditor. Enforcement of the pledge over the French Borrower Accounts in French law A pledge over a bank account (nantissement de solde de compte bancaire) is a pledge over intangible assets (consisting of the claim which the pledgor has against the bank which holds the account in the name of the pledgor) which, under French law, does not confer a right of retention in favour of the pledgee. In practice, under a pledge over a bank account, the pledged account is opened in the name of the pledgor and the pledgor retains title to the amounts standing to the credit of the pledged bank account at the time the pledge is enforced. A pledge over a bank account may be granted in accordance with Articles L of the French Code de commerce and Articles 2071 et seq. of the French Code civil. So as to ensure the validity and the perfection of the security interest granted, the pledge agreement needs to be registered with the tax authorities (Recette des Impôts) and notified by huissier to the bank in the books of which the pledged account is opened (even if such bank is also the beneficiary of the pledge). In practice, according to the enforcement regime applicable to pledges over bank accounts, the enforcement of a pledge over a bank account should be made by requesting the competent court to allow appropriation of the assets subject to the pledge (attribution judiciaire) and the application of the proceeds in satisfaction of the secured debt (Article 2078 et seq. of the French Code civil). There is no French case law regarding the pledge over a bank account (nantissement de solde de compte bancaire). Enforcement of the secured Properties France If a French Borrower defaults in its obligations in relation to a French Loan and/or a French Related Security, the Issuer may decide to foreclose on the French Borrower's secured French Property provided that the relevant French Borrower is not subject to any insolvency proceedings. The French legal procedures to be followed in relation to the enforcement of the French Related Security in relation to a Property located in France and the related expenses may affect the French Loan Originator's and after the Closing Date, the Issuer's ability to liquidate the French Properties efficiently and in a timely fashion. An outline of these procedures is set out below. Foreclosure on a Property located in France requires the sale of the property at a public auction (vente aux enchères). The foreclosure procedure may take up to one year in normal circumstances. The foreclosure procedure of a secured Property is described in "Security over French Properties - Foreclosing on Secured Property without Insolvency Proceedings" above. Belgium Pursuant to the terms and conditions of the Belgian Bonds, the Belgian Operating Companies have granted to the Belgian Security Agent Belgian Mortgages over their respective Belgian Properties and, with respect to the remaining outstanding principal amount of the Belgian Bonds issue which is not secured by the Belgian Mortgages, they have granted Belgian Mortgage Mandates. 56

57 Under Belgian law, a mortgage over real estate is enforced by a sale of the secured property. In order to enforce the mortgage, the mortgagee will need its claim to be confirmed by a court or to be set out in sufficient detail in a notarised deed signed by the mortgagor (the latter will generally only be acceptable in the case of fairly simple mortgage bans). The mortgagee will also need to arrange for a public auction of the property to take place, which requires prior notice to each registered creditor, a separate court order, the appointment of a notary (who will organise and effect the sale) and the registration of an attachment order at the mortgage registry. The costs of enforcement will be borne by the borrower or owner of the property. Any transfer of an immovable property is subject either (a) to VAT (for new buildings), or (b) to registration duty. The chances that the relevant building would be considered "new" for VAT purposes so that VAT (current rate of 21 per cent.) would be payable on the transfer are minimal. Assuming the Belgian Properties are not new buildings for VAT purposes, enforcing a mortgage via a public auction will trigger the proportional registration duty on transfers of real property, being 12.5 per cent. in the Brussels and Walloon Region and 10 per cent. in the Flemish Region, to be calculated on the sales price, which may not be lower than the market value (valeur vénale/markt waarde). The registration duties would normally be payable by the purchaser of the property, but technically speaking both the vendor and the purchaser are jointly liable for the payment of the duties. In addition, there will be proportional fees (administrative expenses) for the notary public and notional fees for the mortgage registrar in respect of the sale. In respect of the mortgage mandates granted by the Belgian Property Owning Companies in respect of the Belgian Properties, the use thereof to create further effective mortgages will be subject to certain restrictions in the event of insolvency of the Belgian Property Owning Companies, as well as in certain other situations. In particular: (i) (ii) (iii) such use would not be possible with effect from the date of the declaration of insolvency of the relevant company; the effectiveness of the mortgage created pursuant to the mandate may be challenged if the creation occurred during the suspect period (période suspecte/verdachte periode) prior to insolvency; and it is not certain what the effects would be of a judicial composition of the company on the mortgage mandate; the view has been expressed by authoritative legal writers that (except in the case where the court restricts the powers of the company's management) the mortgage could still be created and registered, but that such mortgage would not be effective (opposable/tegenwerpelijk) against other creditors during the judicial composition (concordat judiciaire/gerechtelijk akkoord) nor if the judicial composition would be immediately followed by an insolvency of the company. The use of a mortgage mandate to create an effective mortgage may also be prejudiced by the dissolution (dissolution/ontbinding) of the company. Based on the due diligence information provided to MS Bank, two of the Belgian Property Owning Companies were in a situation of negative net assets as envisaged in Article 333 of the Belgian Company Code at the time of the issue of the Belgian Bonds. Having negative net assets does not trigger a situation of insolvency under Belgian law, but Article 333 provides that any third party with a valid interest can start legal action to have the company which has negative assets dissolved by a court order. The Belgian Finance Documents include undertakings so as to require the Belgian Property Owning Companies either to be recapitalised or otherwise to have the net assets brought up to the required level, should any circumstance arise where a proceeding pursuant to Article 333 would or could be triggered. However, the likelihood of these risks materialising in respect of the Belgian Property Owning Companies is considered to be remote because the Belgian Issuer and each of the Belgian Property Owning Companies have been structured to be single purpose vehicles. In order to make the Belgian Property Owning Companies single purpose vehicles, limitations were provided with regard to the corporate purpose of these entities, so that each can only hold, rent out and finance its Properties, as well as grant loans to affiliated companies within the meaning of Article 11 of the Belgian Company Code. Outside the framework of these activities, the Belgian Property Owning Companies may not hold any assets, enter into any agreements and carry out any other activities. In general they may carry out all commercial, financial, movable or 57

58 immovable transactions and may grant real or personal securities to secure their own obligations or to secure obligations of affiliated companies, by amongst other things, a mortgage or pledge of their goods, to the extent they are necessary to realise their corporate purpose as described above. They may not have employees. The due diligence report produced at the time of issuance of the Belgian Bonds indicated that one of the Belgian Property Owning Companies has one employee, a janitor, and that in respect of that employee, no liabilities were overdue. MS Bank has satisfied itself that any liability in case of termination of this one employee would not be material. In addition, the Belgian Security Agent has obtained an equity participation corresponding to one share in and representation on the board of managers of each of the Belgian Property Owning Companies, such representation occurring through an Independent Manager. Belgian pledge of rental receivables In respect of the pledge granted by the Belgian Property Owning Companies over their Rental Income, in case of an insolvency event (i.e. a bankruptcy, judicial imposition, insolvent winding-up or an attachment) in respect of the pledgor, the issue may be raised whether or not the payments which fall due under the leases after the date of such insolvency event would constitute future receivables or existing receivables. If such payments were characterised as future receivables there would be a risk that in line with the comments published on the decision of the Court of Appeals of Ghent of 5 November 1993, courts could decide that the pledge would not be effective (opposable/tegenwerpelijk) against the creditors of the grantor. Furthermore, such analysis could be influenced by case law in France and The Netherlands, which limits the effectiveness of assignments of future receivables in a similar way and where case law to date seems to characterise rental receivables falling due after insolvency as future receivables. French civil law assignment (cession civile à titre de garantie) Under the Pascal Loan and the Lexin Portfolio Loan, the French Borrowers and/or the relevant French Parent Companies (as defined herein), as applicable, have assigned by way of civil assignment (cession civile) their rental claims, their insurance indemnity claims and some of their indemnity claims under the applicable French Seller Guarantee as security for the French Borrowers' obligations under these French Loans. Under the Ford Loan, the French Borrower Shareholder has assigned by way of civil assignment (cession civile) its indemnity claim under the relevant French Seller Guarantee as security for the French Borrower's obligations under the Ford Loan. Under French law, the assignment of receivables comes into effect between the parties as soon as they agree on the amount and the type of receivables to be transferred, but is binding on the assigned debtor and third parties as of the date it has been notified by the bailiff (huissier) to such debtor (in our case, the tenants). The assignment of future receivables by way of security (cession civile), which is made without a price being paid, is not expressly dealt with by the French Code civil and the validity of such security is subject to debate. Certain French authors consider that such civil assignment can validly be made pursuant to the provisions of Article 1689 of the French Code civil and that the decision of the first civil division of the French Cour de Cassation dated 20 March 2001 recognises such a possibility. Other authors have raised reservations to the extent that in this case, the French Cour de Cassation was only asked to decide whether the court of appeals adequately construed the actual intention of the parties. Reversing the decision of the court of appeal, the French Cour de Cassation confirmed that the parties actually intended to assign receivables by way of security. Therefore, the French Cour de Cassation did not come to a decision on the nature of the transaction and, according to certain authors, this decision cannot be regarded as a general recognition of the validity of an assignment of receivables by way of security under French law. Under the relevant French Loans, only the civil law assignments (cessions civiles) relating to the insurance indemnity claims were duly notified. The relevant French Loan Agreements provide that the French Loan Originator and after the Closing Date, the Issuer, is entitled to carry out this notification at any time and at its own discretion. 58

59 Insolvency France The relevant French legislation applicable to bankruptcy and insolvency (procédures collectives) is contained in Articles L and seq. of the French Code de commerce (the "Insolvency Law"). Under French law, no distinction is made between insolvency and bankruptcy proceedings (together "Insolvency Proceedings"). As at the date of this Prospectus a law reforming the Insolvency Law has been adopted by the French parliament (law No dated 26 July 2005), which will come into force on 1 January 2006 (the "Reformed Insolvency Law"). The description of the Insolvency Law that follows is made subject to the effect of the Reformed Insolvency Law. The Reformed Insolvency Law provides in particular for the following: (i) (ii) (iii) the director or manager of a French debtor facing financial difficulties may, at his own discretion, request that the competent French court appoints an ad hoc agent (mandataire ad hoc) the duties of which are determined by the relevant French court. In practice, this already exists prior to the coming into force of the Reformed Insolvency Law, although it is not expressly specified in the law. Such ad hoc agents are appointed in order to facilitate the negociations with the debtor's creditors; if a French debtor faces actual or expected legal, economic or financial difficulties and has not been under cessation of payments (cessation des paiements) for more than 45 days, it may apply for a conciliation procedure (procédure de conciliation) with the competent French court. This conciliation procedure may not last for a period exceeding four months subject to a one month extension. The duty of the conciliation agent (conciliateur) is to facilitate the negociation of an amicable arrangement (accord amiable) between the debtor and its main creditors. If such an arrangement is reached, it may be either approved (homologation) by the competent French court or simply acknowledged by the President of such court. If a bankruptcy proceeding is subsequently opened against the insolvent debtor (i.e., the insolvent debtor is subject to cessation of payments (cessation des paiements)), this amicable arrangement will be automatically terminated and the creditors which have entered into this arrangement will be paid in priority to any other creditors of the debtors if this arrangement has been approved by the competent French court. It has to be noted that this conciliation procedure provided for under the Reformed Insolvency Law will replace the règlement amiable procedure (see below), to which it is very similar; if a French debtor is subject to financial difficulties which it is not in a position to surmount and which are likely to lead to the debtor's cessation of payments, it may file for a protection procedure (procédure de sauvegarde) with the competent French court. The competent French court will appoint a judicial administrator (administrateur judiciaire) and/or a judicial agent (mandataire judiciaire). This procedure will start with an observation period, which may last for up to six months and may be extended to an additional six month period subject to a justified request of the judicial administrator, the debtor or the French public ministry (it also may, exceptionally, be extended again, for a further time period - to be fixed by decree - on request by the French public ministry). The opening judgement will have similar effects as a judgment opening Insolvency Proceedings (see below), in particular (a) a prohibition on paying any debts incurred before the opening judgment, (b) the obligation for creditors to file their claims, (c) a stay of proceedings against the French debtor, (d) the right for the judicial administrator to decide whether to continue or not the execution of ongoing contracts. However, it must be noted that any debts incurred by the debtor after the opening judgement in relation to the protection procedure or in exchange for services rendered to the debtor must be paid when they come due. During the observation period, the judicial administrator will help the debtor set up a protection plan for the financial recovery of the French debtor. At the end of the observation period, the competent court may adopt this plan; Negotiations regarding the protection plan may, under certain circumstances, be carried out within two committees consisting of the French debtor's main creditors (one for credit institutions, one for its main commercial partners). These committees shall vote (by qualified majority of half of the creditors representing at least two thirds of the amount of the claims) on the proposed protection 59

60 plan (including, for example, a rescheduling of the debts), which will be enforceable against all the creditors belonging to the committees if the court validates the plan approved by both committees. The creation of such committees is mandatory for large companies (thresholds in terms of number of employees and turnover to be set forth later by decree) but also possible for smaller ones; (iv) the existing Insolvency Proceedings (see below) will continue to exist, although their regime will be partially amended (in particular, the creation of committees of creditors will be possible not only during a protection procedure, as described above, but also during the observation period of Insolvency Proceedings). Insolvency Proceedings set out in the Insolvency Law apply to corporate entities (whether of a commercial or civil nature) such as the French Borrowers, individuals carrying on trade activities (commerçants) and craftsmen (artisans) and farmers. The only persons excluded from these proceedings are individuals carrying on civil activities (which are subject to a separate set of rules) and public entities, which are not subject to any specific Insolvency Proceedings because of their particular status. Courts Which courts have jurisdiction to hear Insolvency Proceedings will depend on whether the debtor conducts a civil or commercial activity. In principle, for commercial debtors (e.g. sociétés anonymes, sociétés en nom collectif, sociétés par actions simplifiées, sociétés à responsabilité limitée, individuals conducting trade activities), the court of first instance is the commercial court (tribunal de commerce) located where the debtor has its registered office (or, in the case of a debtor which is a foreign entity with no registered office in France, its principal place of business in France). For civil debtors (i.e. companies of a civil nature and farmers), the relevant court of first instance will be the civil court (tribunal de grande instance). The same principles apply to the location of this court as for the commercial court described above. During Insolvency Proceedings, a juge-commissaire is appointed by the court, given certain jurisdictional powers, and is in charge of many procedural matters relating to the proceedings (such as the admission or rejection of claims). Appeals against rulings made by the commercial or civil courts are made before the court of appeal. Appeals against decisions made by a juge-commissaire are usually made to the commercial (or civil) court, except in certain specific instances, where they are made directly to the court of appeal. Voluntary Arrangements When a debtor finds itself in financial difficulties but is not yet insolvent, it can seek to benefit from the pre-insolvency proceedings (règlement amiable) provided for under Articles L and seq. of the French Code de commerce. A request is made by the debtor to the commercial court or the civil court, depending on the nature of the debtor's activities. Unlike Insolvency Proceedings, pre-insolvency proceedings may only be instigated by the debtor. There have been several examples of the application of this procedure in the real property market. If the court is satisfied that the company is in financial difficulties, which are not insurmountable, it will appoint a mediator (conciliateur). The mediator is nominated for a maximum period of four months, and his principal function is to procure an amicable agreement between the debtor and its main creditors. There are no mandatory provisions in a voluntary reorganisation. Such an arrangement will, however, usually include stays in respect of payments or waivers of debts, and sometimes provisions relating to the company's organisation (modification of capital or the articles of association, undertaking to sell certain assets, etc). All creditors may be asked to participate in the plan but are not obliged to do so. If the debtor and the mediator reach an agreement with the creditors, the agreement may be approved by the court. This approval does not have any real legal consequences and is more intended as moral support for the parties. The voluntary arrangement does not involve interference by any third party in the normal management of the undertaking, which remains in the hands of the existing directors and shareholders. 60

61 A failure by the debtor to meet any of its financial commitments under the voluntary arrangement leads to Insolvency Proceedings, which can be commenced at the request of the debtor itself, by any of the creditors party to the arrangement or by the state prosecutor (Procureur de la République), or on the order of the commercial court. Extension of Insolvency of the French Borrowers Directors and officers (dirigeants de fait ou de droit) of an insolvent company may also be held personally liable for the debts of the company (i) if they are found guilty of misconduct in the management of the company's business (faute de gestion) or (ii) if they have used the company's credit in their own interests. In the latter case, the directors may be obliged to pay all or part of the company's debt, either as a result of separate proceedings against them (action en comblement de passif), or by way of an extension of the Insolvency Proceedings to their personal assets in the proceedings against the debtor. A court may extend the insolvency of the borrower to another company if the court finds that the assets and liabilities of the borrower and such other company have been managed as a single unit. The French supreme court (Cour de cassation) has established case-law for two types of situations which would entitle a Court to extend bankruptcy proceedings of one company to another, even when the second company is not insolvent: the merging of assets and liabilities between the companies (confusion des patrimoines) and the fictitious nature of the companies (fictivité). The merging of assets and liabilities between companies is a question of fact which will be assessed by the competent court. It may result from a mingling (imbrication) of assets and liabilities resulting from a general confusion in their respective accounts, which renders the determination of the companies' respective assets and liabilities impossible or unusual financial or business relationships between the relevant companies, such as transfers of assets by one company to another without proper or any consideration (e.g. a company pays its own debts using the funds of the other company). In practice, there are no precise criteria by which a court may characterise the merging of assets and liabilities of two companies. The French Cour de cassation has decided that transfers of assets or liabilities between companies constitute a merging of assets and liabilities only if they involve a permanent and substantial breakdown in the correlation between assets and liabilities in the respective companies' balance sheets. In addition, the court has emphasised that bankruptcy proceedings of a company may only be extended to another company when the degree of inter-relationship of the aggregate assets and liabilities' of the relevant companies is so inextricable that only a professional adviser could ascertain the actual respective asset/liability situation of the companies. This could result from the total disorder of the current accounts between the companies and from confusion in the contractual relations between the companies. In this respect, it should be noted that French courts usually take into account both the accounting and the legal aspects. The bankruptcy proceedings of a company may also be extended where there are unusual transfers of assets from one company in favour of another if it could be argued that the two companies in reality form a single entity. This would be the case, for example, where a company is set up using the assets of another company in order for that company to shield, for example, its real estate assets from its creditors or a company pays, without receiving an apparent benefit, the debts of another company. In the present instance, none of these situations should occur in so far as the Borrower will hold its own assets and liabilities and account for its own assets and liabilities. There is no precise legal definition of the concept of what amounts to the "fictitious" nature of a company. It has been held to apply where a separate legal entity exists in form only. Basically, the fictitious company has no autonomy and does not in practice exist as an independent entity despite the existence of an independent legal structure and its creation results from a fraudulent intent. Thus, a French court would be entitled to extend the bankruptcy of a company to another company on the basis of the fictitious nature of the company if the business executives were the same, the companies' names were identical, the companies' registered offices were located in the same place, the companies had the same activities or interests or the letter-head of the companies was identical. As far as real estate transactions are concerned, the merging of 61

62 assets and liabilities between companies (confusion des patrimoines) and the fictitious nature of a company (fictivité) may be mingled issues. However, the existence of one or more of these elements is not sufficient to systematically establish the fictitious nature of a company, the establishment of which depends mainly on the facts, considered on a case by case basis. Commencement of the Insolvency Proceedings An insolvent debtor is required under the Insolvency Law to file a request for the commencement of Insolvency Proceedings with the relevant court within 15 days of the date on which the debtor is insolvent (en état de cessation des paiements), that is when the debtor is unable to meet its current liabilities out of its current assets (cash available or assets which may be quickly turned into cash). The conduct of Insolvency Proceedings is the same whether commenced voluntarily or by creditors. Any unpaid creditor may file a request to commence Insolvency Proceedings or liquidation proceedings against a debtor. In practice, it is helpful if a creditor can show that it has already tried to obtain payment (for example, by attempting to seize the debtor's assets), as these actions will help to prove that the debtor is actually unable to meet current liabilities out of its current assets, which is the necessary condition for the commencement of Insolvency Proceedings. If the creditor requests liquidation proceedings (meaning that the debtor is going to be put in liquidation without any observation period) rather than Insolvency Proceedings, it will have to prove that the debtor has actually ceased business or that recovery is obviously impossible. The relevant court or the state prosecutor (Procureur de la République) may also commence Insolvency Proceedings. When the court declares the commencement of Insolvency Proceedings, it will also have to decide whether or not the business can be continued as a going concern. If it decides that it cannot, the court will make an immediate order for the business to be liquidated. If the court considers that the business may be continued as a going concern, it will order the commencement of an observation period (période d'observation) during which an administrator (administrateur) appointed by the court will investigate the affairs of the debtor and make proposals for the continuation of its business (the appointment of an administrator is not mandatory for small companies). At the end of the observation period, the court will make an order for the continuation of the debtor, for the sale of its business or for its liquidation, as appropriate. The observation period can last up to 20 months (with a minimum of six months which can be extended for six months more if the state prosecutor apply for such extension before the bankruptcy court) and includes the following consequences: (i) (ii) (iii) (iv) the debtor will be prevented from making payments in respect of any debts incurred before the commencement of the observation period; creditors to whom the debtor became indebted prior to this date are required to send in a statement of their claims (creditors must file their claims in the Insolvency Proceedings within two months (four months for non French resident creditors) of the official commencement of the proceedings (i.e. the publication of the judgement opening the proceedings in the Bulletin Officiel des Annonces Civiles et Commerciales (BODACC)); failure to file the claim within these time limits results in the debt being extinguished and any security rights being lost; secured creditors will not be entitled to enforce their security and, in particular, the French Related Security; in principle no further security may be granted over the assets of the debtor; and all actions and proceedings against the debtor will be stayed insofar as they relate to the payment by the debtor of any sum, or the termination of a contract for default (events of default linked to insolvency or similar events will, therefore, not be enforceable); 62

63 (v) (vi) all actions and proceedings against the debtor will be stayed insofar as they relate to the payment by the debtor of any sum, or the termination of a contract for default (events of default linked to insolvency or similar events will, therefore, not be enforceable); the administrator may decide whether or not to continue the execution of ongoing contracts. At the commencement of the Insolvency Proceedings, the court will also appoint a creditor's representative (représentant des créanciers). At the end of the observation period, the court will adopt one of three alternatives: (i) (ii) (iii) continuation of the business: In this case, the court will draw up a plan to ensure the successful continuation of the debtor's business. Such a plan may provide for delayed payments and impose obligations on the debtor. Although the court cannot force creditors to accept payment delays, the power of the court to enforce in principle lengthy time limits on payment achieves a substantially similar result (usually such time limits do not exceed ten years). If the debtor does not comply with the obligations provided by the continuation plan, any creditor may request the termination of the plan. Such termination will result in the automatic liquidation of the debtor; sale of the business: In this case, the court will draw up a plan to ensure the sale of the debtor's business, either in whole or in part, if it appears that the business is commercially viable but that the debtor is not the appropriate person to manage it. After the sale, the remaining assets of the debtor will be sold, the debtor being de facto liquidated; liquidation of the debtor: A liquidation of the debtor occurs if it appears that the business is definitely not viable. It is only in the event of sale or liquidation that there will be a distribution of monies to the creditors since, in the event of continuation, creditors will be paid according to the continuation plan. In such cases, either the person responsible for the execution of the sale plan (commissaire à l'exécution du plan), or a liquidator appointed by the court, will carry out the liquidation proceedings. Fraudulent Conveyance Period (Période Suspecte) When the court declares the opening of Insolvency Proceedings, it will also fix the date on which the debtor effectively became insolvent (date de cessation des paiements). This date can be fixed at any time up to 18 months prior to the order declaring the opening of the insolvency. The period between the date of effective insolvency and the date when the court declared the commencement of Insolvency Proceedings is known as the suspect period (période suspecte). Certain acts are automatically null and void if they fall within the suspect period. These include in particular, voluntary disposals of assets, contracts which impose unduly onerous obligations on the debtor, payments of unexpired debts before they are due, payments which are not made in cash, or by certain specific means described in the Insolvency Law, or by normal commercial means, and mortgages and charges granted by the debtor over its movable or immovable property in order to secure a previously incurred debt. The court may also, at its discretion, declare void any transaction entered into by the debtor after the deemed insolvency date, if it is proved that the other party had actual knowledge that the debtor was insolvent when it entered into such transaction. In the event that an act or a transaction is declared void by the court, the creditor will be deprived of rights and will have no claim under the void act or transaction. Secured Parties During and After the Observation Period During the observation period, the administrator with the consent of the juge-commissaire may sell assets that are the subject of a mortgage. If those assets are subject to security interests, which do not confer an actual right of retention, an amount equal to the lesser of the sale price and the secured debt will be deposited in an account. At the end of the observation period, the secured creditors will be paid from this 63

64 account in accordance with their respective rank. The secured creditors may also be required to accept alternative security. If the court orders the implementation of a continuation plan, essentially the same rules apply. In such case, the creditor still benefits from the security granted by the company. If the court orders the sale of the secured asset, the ultimate purchaser of the asset is bound by the terms of the outstanding loan agreements extended for the purpose of such acquisition. In any other cases (including, in particular, with respect to the mortgages granted as security for the refinancing of the initial loan), the court will apportion, at its own discretion, part of the sale proceeds towards the satisfaction of the secured debt/liquidation. The potential difficulty in all of these situations is that the claim of the secured creditors to the proceeds of sale will be subordinated to the claims of certain prior ranking creditors, namely the French State (in respect of taxes), employees and "Article 40" creditors (being those persons who have granted credit to the insolvent company after the opening of the Insolvency Proceedings, although the French Borrowers' articles of association provides for a limitation of their corporate purpose). Belgium Judicial Composition Pursuant to the law on judicial composition (Loi relative au concordat judiciaire/wet betreffende het gerechtelijk akkoord), a judicial composition can be filed for if the following conditions are met: (i) (ii) (iii) the debtor is temporarily unable to pay its debts as they fall due or the continuity of the company is threatened so that it might give rise to a suspension of payments in the short term; the financial situation of the company can be cured and there is a real expectation of recovery; and there is no apparent bad faith on the part of the debtor; a judicial composition starts with a request of the debtor or of the Public Prosecutor's office. The court decides on whether or not to grant a judicial composition request within 15 days after the introduction of the request. A preliminary suspension of payment is granted for a maximum period of six months (the "Preliminary Suspension Period"). The court will grant such suspension if the debtor has not acted in bad faith and if the court is of the opinion that such suspension would contribute to the recovery of the business. The court may extend the suspension for another three months upon the request of the "commissioner", the Public Prosecutor's office, or at the discretion of the court itself. After the creditors have submitted their claims for unpaid debts to the court, the court may grant a definitive suspension of payment for a term up to 24 months, which may be prolonged for another 12 months (the "Definitive Suspension Period"). Such definitive suspension is based on a recovery plan which will set out when and to what extent the suspended debts will be paid as well as other measures agreed to allow the company to recover (the "Recovery Plan"). In addition to a suspension the plan may include mandatory rescheduling and even a mandatory reduction of debts. The Recovery Plan must be approved by a majority of creditors and by the court. The court will appoint a commissioner (commissaire au sursis/commissaris inzake opschorting) whose task it is to assist and supervise the debtor's actions in the course of the judicial composition. Any provisions of an agreement which provide that the contract is terminated or dissolved as the mere consequence of the company applying for a judicial composition or becoming the subject of a judicial composition procedure will be ineffective. Following a request for a judicial composition (concordat judiciaire/gerechtelijk akoord), no enforcement against movable or immovable property of the debtor can be effected prior to the court's ruling on the request in accordance with the law on judicial composition. Following the entry into force of the Act of 15 64

65 December 2004 regarding financial collateral, such prohibition should however not apply to the pledge on financial instruments or on cash held on account. During the Preliminary Suspension Period no enforcement against movable or immovable property of the debtor can be effected, provided that during such period the relevant creditors receive payment of interest and charges that fall due as from the date of ruling on the preliminary suspension. If, following the preliminary suspension, a Recovery Plan is approved by the creditors and the court, such plan and a final suspension of payments and enforcement rights will apply for a maximum period of 24 months, which period could be extended for a further 12 months. Approval by the court of the final suspension requires: (i) (ii) that the Recovery Plan is approved by more than 50 per cent. of creditors who have filed a claim and have participated in the vote, provided these creditors also represent more than 50 per cent. of the claims made against the debtor; and the debtor provides sufficient comfort as to proper management going forward. In respect of creditors who benefit from a pledge or a mortgage (and who have not voluntarily agreed to the Recovery Plan), the Recovery Plan and final suspension will not be binding unless the court decides otherwise, which is only allowed if the following conditions are met: (i) (ii) (iii) the Recovery Plan provides for payments of interest to the secured creditors; and the suspension of payments is limited to no more than 18 months; and the Recovery Plan does not otherwise change their current or future position. None of these moratorium rules prevents the pledgee of rent from notifying the tenants of the pledge created after the date that the pledgor would enter into bankruptcy or judicial corporation proceedings. If the secured party is not kept current for interest and costs during these periods, it can seek to enforce its security. This must be with the consent of the court if a definitive suspension has been ordered. During a judicial composition of a company, the debtor may decide to sell part or all of its business and assets. Unless the court order granting the judicial composition has restricted such right, the company can freely sell properties as part of its normal business activity. The sale could be part of an approved Recovery Plan. Furthermore, article 41 of the law on judicial composition provides that the court appointed commissioner can sell all or part of the debtor's business with the approval of the court without an approved Recovery Plan. The commissioner will need to (i) publicise the proposed sale so that any interested parties can make a bid, (ii) investigate the bids made in view of their impact on the survival of the debtor and the debtor's ability to (re)pay its creditors. He must take into account the lawful interests of the creditors. If only part of the business is sold, the creditors do not need to consent. If all of the business is sold the approval of the creditors will be required (i.e. an approval by more than 50 per cent. of creditors who have filed a claim and have participated in the vote, provided these creditors also represent more than 50 per cent. of the claims made against the debtor). The law on judicial composition does not deal with the consequences of any such sales for creditors with security over the sold assets. There are not many reported cases which are of relevance. One may expect that sales effected by the management of the debtor without the prior consent of a mortgagee would not legally prejudice the normal rights of the mortgagee and that the debtor would remain bound by the previously agreed covenants and undertakings. In case of a sale pursuant to article 41 there is the risk, however, that a court would take the view that such procedure would release the mortgage, leaving the mortgagee to exercise its security interest only on the proceeds of such sale. 65

66 Bankruptcy A bankruptcy procedure may be initiated by the debtor, unpaid creditors or upon the initiative of the Public Prosecutor's office. Once the court decides that the requirements for bankruptcy are present (i.e. sustained cessation of payments and a loss of further credit), the court will establish a date before which all claims of unpaid debts by the creditors must be entered (within 30 days after the bankruptcy judgement) and will be verified (within 30 days after the due date for introduction of claims by the creditors). The debtor loses all authority and decision rights concerning the management of the assets of the bankrupt business. The bankruptcy receiver (curateur/curator) will take over the running of the business and will see to the sale of the assets, the distribution of the proceeds thereof to the creditors and the liquidation of the debtor. The input of creditors is limited, to the extent that they are informed of the course of the bankruptcy proceedings on a regular basis by the liquidator, they may oppose the sale of assets by bringing an action before court, or they may request the temporary continuation of the business. Conditions for a bankruptcy order (déclaration de faillite/aangifte van faillissement) are that the company must be in a situation of cessation of payments (cessation de paiements/staking van betaling) and be unable to obtain further credit (ébranlement de crédit/wiens krediet geschokt is). Cessation of payments is generally accepted to mean that the debtor is not able to pay its main debts. Such situation must be persistent and not merely temporary. In principle, the cessation of payments is deemed to have occurred as from the date of the bankruptcy order. The court issuing the bankruptcy order may determine that the cessation of payments occurred on an earlier date if there are serious and objective indications that such was the case. Such earlier date may not be earlier than six months before the date of the bankruptcy order, save in the case where the bankruptcy order relates to a company that was dissolved more than six months before the date of the bankruptcy order in circumstances suggesting an intent to defraud its creditors, in which case the date of cessation of payments may be determined as being the date of such decision to dissolve the company. The period from the date of cessation of payments up to the declaration of bankruptcy is referred to as the suspect period (période suspecte/verdachte periode). The fees payable to the bankruptcy receiver (appointed by the court) are paid from the proceeds of the assets in the bankrupt company. It should be assumed that each secured creditor will be required to contribute to these costs to the extent that the bankruptcy receiver can establish that his involvement has been beneficial for the relevant secured creditor. The bankruptcy receiver may decide not to perform the obligations of the bankrupt party which are still to be performed after the bankruptcy under any agreement validly entered into by the bankrupt party prior to the bankruptcy. The counterparty to that agreement (a) may enter a claim for damages in the bankruptcy and such claim will rank pari passu with claims of all other unsecured creditors and/or (b) seek a court order to have the relevant contract dissolved. It will, however, no longer be possible to seek injunctive relief or to require specific performance. In the case of bankruptcy, any power of attorney or mandate expressed to be irrevocable will lapse upon the bankruptcy of the principal. Further such power of attorney may not be effective in circumstances where the agent would want to act as the counterparty of the principal. The bankruptcy judgement means that enforcement rights of individual creditors will be suspended since only the bankruptcy trustee will from then on be able to proceed against the debtor and to liquidate its assets. Following the entry into force of the Act of 15 December 2004, such suspension does however not apply to the pledge on financial instruments or cash held on account. However, for creditors secured over movable assets such suspension would normally be limited to the period required for the verification of the claims, but may at the request of the bankruptcy receiver be extended up to one year from the bankruptcy judgement. Such extension will require a specific order of the court which can only be made if the further suspension will allow for a realisation of the assets without prejudicing the secured creditors and provided those secured creditors have been given the opportunity to be heard by the court. For immovable assets, in principle only the bankruptcy receiver can pursue the sale of the assets. The receiver will do so upon an order of the court, given either at its request or at the request of a mortgagee. However, the first ranking mortgagee will nevertheless be entitled to pursue the enforcement of its 66

67 mortgage as soon as the report of claims has been finalised, unless the court suspends such enforcement for a period of not more than one year from the date of the bankruptcy if the further suspension will allow for a realisation of the assets without prejudicing the mortgagee and provided the mortgagee has been given the opportunity to be heard by the court. As from the date of the bankruptcy judgement no further interest accrues against the bankrupt debtor on its unsecured debt. As a general rule, any security interest will rank behind prior existing security interests provided that appropriate perfection requirements (e.g. registration or filing) have been completed. If a company that has obtained or has become subject to a judicial composition is declared bankrupt during the judicial composition, then new debts duly incurred by the company during the judicial composition may be treated as debts incurred by the liquidator, and will therefore rank in priority to the debts incurred prior to the judicial composition. Although it has been argued that these new debts should also take priority over previous debts which are secured by a mortgage or a pledge, reported case law to date and the most authoritative legal writers seem to take the view that such is only the case where the new creditors can provide proof that the incurrence of the new debt specifically benefited the secured creditor. Under the bankruptcy law, debts duly incurred by the liquidator after the date of the bankruptcy order could rank ahead of a mortgagee or a pledgee to the extent that such creditors could establish that the incurrence of such debt had specifically benefited the mortgagee or pledgee. Certain statutorily preferred creditors may, depending on the circumstances, rank ahead of a first ranking mortgage or first ranking pledge. Such creditors include: (i) creditors for legal costs incurred in the interest of all creditors; (ii) claims for costs made by a third party or the liquidator for the maintenance, enforcement or recovery of the relevant asset; (iii) claims for overdue insurance premiums payable in respect of insurance covering the relevant asset, up to a maximum amount of two annual premiums; (iv) in respect of the business equipment owned by the company, any unpaid creditor of business equipment which has filed a copy of the sales invoice with the secretariat of the competent commercial court within 15 days of the delivery. As to the statutory liens of the tax and social security authorities, these will normally rank behind the mortgage and pledge, unless such mortgage would be registered only after the tax authorities have perfected their mortgage (for example, on the basis of a mortgage mandate deed). Belgian courts have established that in certain events other than bankruptcy or judicial composition, certain insolvency rules should also be applied. In relation to commercial companies, the relevant events are (i) the attachment of assets by various creditors (saisie/beslag) and (ii) the winding-up (dissolution/ontbinding and liquidation/vereffening) of the company. In these events certain insolvency rules will apply. Insolvency of the French Borrowers; Enforcement of French Security The French Borrowers and the other parties to the French Loan Agreements and ancillary documentation which are incorporated under the laws of France are subject to the provisions of French insolvency legislation. Although the French Borrowers have been incorporated as single purpose vehicles, each for the purpose of acquiring a specific French Property, they may, nonetheless, become insolvent or subject to moratorium proceedings under French law. The Issuer, as holder of the security interests granted in connection with the transfer of the French Loans, will have certain rights under a French Loan Agreement if the French Borrower in respect thereof becomes insolvent or subject to a moratorium, and certain rights to enforce its security. However, the rights of creditors of insolvent French companies are limited by law; self-help remedies, for example appointing a receiver in respect of a property and controlling the manner and timing of the sale of secured collateral, are also generally prohibited by mandatory provisions of French law. Insolvency of the Belgian Property Owning Companies; Enforcement of Belgian Security The Belgian Property Owning Companies have been incorporated in Belgium under the laws of Belgium as commercial companies and are subject to the Belgian insolvency legislation. Although various amendments were made to the corporate and constitutional documents of the Belgian Property Owning Companies with 67

68 a view to limiting the corporate purpose of these companies, and the Belgian Property Owning Companies have given covenants typical of a special purpose vehicle, such as covenants not to incur additional indebtedness, or engage employees, or acquire property other than the Belgian Properties, it is possible that the Belgian Property Owning Companies could become insolvent or subject to moratorium or insolvency proceedings in Belgium. Such a situation could arise, for example, if the Belgian Properties fail to generate the revenue necessary to make timely payments of principal and interest on the Belgian Bonds. Furthermore, the mortgages granted by the Belgian Property Owning Companies by way of security for the Belgian Bonds secure only 10 per cent. of the initial aggregate principal amount outstanding under the Belgian Bonds. The Belgian Security Agent holds mortgage mandates that would enable it to execute, on behalf of the Belgian Property Owning Companies, supplemental mortgages over the Belgian Properties securing the remaining 90 per cent. of the initial principal amount outstanding under the Belgian Bonds, plus interest and costs. However, these mandates (being contractual in nature rather than rights in rem) cease to be effective upon the insolvency of the donor thereof. The effectiveness of a mortgage created pursuant to a mortgage mandate may also be challenged if the mortgage is registered at a time less than six months prior to the insolvency of the Belgian Property Owning Company against which the mortgage has been registered. However, under certain limited circumstances, the clawback rule is not limited in time, for example, where a mortgage has been created pursuant to a mortgage mandate in order to "fraudulently prejudice" creditors. The only due diligence (including valuations of Properties) that has been undertaken in relation to the Originated Assets and the Properties is described below under "The Originated Asset Documentation" and was undertaken in the context of and at the time of the origination of each particular Originated Asset by MS Bank. None of the due diligence undertaken at the time of origination of the Originated Assets will be verified or updated prior to the sale of the Originated Assets to the Issuer or, with respect to the Belgian Bonds, the Luxembourg Issuer, as applicable. Each of the Issuer and, with respect to the Belgian Bonds, the Luxembourg Issuer, will rely on the warranties given to it in respect of the applicable Originated Assets by MS Bank in the related Asset Transfer Agreement. Application of Rental Income In evaluating whether a French Borrower or the Belgian Issuer would be able to meet its payment obligations in respect of a French Loan or the Belgian Bonds, MS Bank as French Loan Originator and Belgian Bond Originator took into account any rental income ("Rental Income") that would be generated by the Properties offered as security for that French Loan or the Belgian Bonds and assumed that such income would be applied towards making payments on the relevant French Loan or the Belgian Bonds. Investors should assume that no funds other than those derived from the Properties will be available to French Borrowers or the Belgian Issuer to enable them to make payments due on their respective loans, that the security is limited to the relevant land and buildings and does not extend to any moveable assets or chattels at such Properties, nor to the book debts or goodwill of the businesses carried on there. Under the French Loans, (i) all rental payments and other income in respect of the French Properties are required to be paid into the relevant French Borrower Accounts and transferred to the relevant French Rent Accounts after deduction of charges and taxes (including VAT due on the rents) forecast in the annual budget due and payable by the French Borrowers in respect of the French Properties, (ii) the French Borrower Accounts are pledged (nanti) in favour of the French Loan Originator and after the Closing Date, the Issuer, and (iii) in respect of the Pascal Loan and the Lexin Portfolio Loan, civil law assignments (cessions civiles) and, in respect of the other French Loans, Dailly law assignments (cessions de créances professionnelles à titre de garantie), of the rental payments due under the French Occupational Leases have been granted by the French Borrowers to the French Loan Originator and after the Closing Date, the Issuer (see "The Originated Assets Documentation The French Loans and the French Related Security Terms of the French Loans" at page 108 below). In respect of the Carillon Loan and the Lexin Portfolio Loan, the above mentioned pledges, civil law assignments (cessions civiles) and Dailly law assignments (cessions de créances professionnelles à titre de garantie) will be transferred to the Issuer, to the extent of the Issuer's benefit, as part of the French Related Security. There can be no assurance that in the event insolvency proceedings are commenced in respect of the French Borrowers, all or part of such rental payments or other income will be effectively paid to the French Rent 68

69 Accounts or otherwise recovered by the French Loan Originator and after the Closing Date, the Issuer (see "Insolvency France" at page 59). Statutory Rights of Tenants France A number of statutory rights of tenants under the French Occupational Leases may affect the net cash flow realised from the French Properties or cause delay in the payment of the rental income. Such rights may include in particular the following: (i) (ii) (iii) (iv) where a French Borrower as landlord is in default of its obligations under a French Occupational Lease, the tenant may have the right under general principles of French law (principe d'exception d'inexécution) to retain its rental payments until the default is cured or refrain from performing its other obligations thereunder, if the breach results in an impossibility for the tenant to use the premises; a legal right of set-off (droit de compensation légale) could be exercised by a tenant of a French Property in respect of its rental obligations under the relevant French Occupational Lease if a reciprocal debt is owed to this tenant by the relevant French Borrower as landlord or otherwise; French Courts may in some circumstances grant time to the tenants in respect of their payment obligations under the French Occupational Leases, taking into account their financial standing and the needs of the relevant French Borrower as landlord or may reschedule the debt of the tenants (in both cases not in excess of two years), treating the extension of time as a matter of procedural law governed by Articles , and of the French Code civil, thus disregarding any provision of the French Occupational Leases to the contrary; a tenant who owns a going-concern (fonds de commerce) which has been legitimately carried out in a French Property for the three years preceding the expiry of the relevant French Occupational Lease acquires a protected leasehold right, subject to certain other conditions, and is entitled to the renewal of the lease (droit au renouvellement) upon its expiry or to compensation for eviction (indemnité d'éviction) should the landlord elect not to renew the French Occupational Lease. The compensation for eviction must compensate the tenant for any losses and costs incurred by it. It must be noted that in case of offices, the current French case law considers that usually there is no going-concern, so that the eviction compensation amounts to the costs incurred in connection with the removal of the tenants and his installation into new premises. Compensation is not payable, however, if the tenant is in serious breach of its obligations under the lease. The exercise of any such rights may affect the ability of the French Borrowers to meet their obligations under the French Loans which in turn may result in the receipt by the Noteholders, or the holders of certain classes of Notes, or the Residual Unitholders, of a principal repayment less than the face value of their Notes or their Residual Units and the Issuer may be unable to pay in full interest due on the Notes or the Residual Units. Belgium A number of statutory or contractual rights of tenants may affect the net cash-flow realisable from the Belgian Properties or cause delay in payment of the rental income. Such rights may include in particular the following: (i) where a Belgian Property Owning Company, as landlord, is in default of its obligations under a lease of its Belgian Property, the tenant may have the right under general principles of Belgian law (exception d'inexécution/exceptie van niet uitvoering) to withhold its rental payments until the default is cured or refrain from performing its other obligations under its lease; 69

70 (ii) (iii) (iv) (v) a legal right of set-off (droit de compensation légale/wettelijke recht op compensatie) could be exercised by a tenant of Belgian Property in respect of its rental obligations under the relevant lease if a reciprocal debt is owed to this tenant by the landlord in its capacity as landlord or otherwise; Belgian courts may in some circumstances grant a tenant acting in good faith a limited grace period in respect of its obligations to pay rent (under Article 1244 of the Belgian Code civil), thus overriding any express provision of the affected lease to the contrary; a tenant under a commercial lease may upon non-renewal of the lease, in certain circumstances, claim compensation from the landlord for eviction; and the terms of a commercial lease may grant the tenant a pre-emption right exercisable in the event of a proposed sale of the property. The exercise of any such rights may affect the ability of the Belgian Issuer to meet its obligations under the Belgian Bonds and may result in the receipt by the Noteholders, or the holders of certain classes of Notes, or the Residual Unitholders, of a principal repayment less than the face value of their Notes or their Residual Units and the Issuer may be unable to pay in full interest due on the Notes or the Residual Units. Compulsory Purchase and Expropriation of Properties Any property in France or Belgium may at any time be compulsorily acquired by, among others, a local or public authority or a governmental department on public interest grounds, for example, a proposed redevelopment or infrastructure project. No such compulsory purchase proposals were, however, revealed in the course of the due diligence undertaken by MS Bank at the time of the origination of the Loans. Each of France and Belgium has its own legal rules relating to compulsory purchase of property, providing a process pursuant to which a compulsory purchase of property may occur. Under the legal rules of each jurisdiction, the owners and occupiers of a property subject to a compulsory purchase proposal will be entitled to receive a market value based price for the property. In the context of the Properties, there can be no assurance, however, that the compulsory purchase price would be equal to the amount or portion of the Loans secured upon such Property or that the compulsory purchase price would be paid prior to the scheduled maturity date of the relevant Loans. This could undermine the ability of the affected Borrower to repay the principal (or its portion of the principal) of the relevant Loans. Moreover, under the legal rules of each jurisdiction, a compulsory purchase order in respect of a property would have the effect of releasing the tenants thereof from their obligations to pay rent. In the context of the Properties, this could undermine the ability of a Borrower to pay interest on the relevant Loans or its portion of the relevant Loans. In the case of each of Belgium and France, there is often a delay between the compulsory purchase of a property and the payment of compensation, the length of which will largely depend upon the ability of the property owner and the entity acquiring the property to agree on the market value of the affected property, or other means of determining the amount of compensation payable upon a compulsory purchase. Should such a delay occur in the case of a Property, then, unless the affected Borrower has other funds available to it, an event of default may occur under the affected French Loan Agreement or the Belgian Bonds, as applicable. Following the payment of compensation, the affected Borrower will be required to prepay all or such part of the amounts owing by it under the affected French Loan Agreement or the Belgian Bonds, as applicable, as is equivalent to the compensation payment received. The proceeds of any such prepayment will be paid, ultimately, to the Issuer and will be applied by the Issuer to redeem the Notes or the Residual Units (or part thereof). Replacement of French Loan Servicer The Management Company must appoint a substitute servicer prior to a termination of the appointment of the French Loan Servicer under the French Loan Servicing Agreement (see "The Originated Asset Sale Agreements" below). There is no assurance that a substitute servicer could be found who would be willing to service the Issuer's French Loans and the French Related Security at a commercially reasonable fee, or at all, on the terms of the French Loan Servicing Agreement. In any event, the ability of such substitute 70

71 servicer to perform such services fully would depend on the information and records then available to it. The fees and expenses of a substitute servicer performing services in this way would be payable in priority to payment of interest under the Notes or the Residual Units. Impact of French Loan Work-out Fee and French Loan Liquidation Fee The payment of a French Loan Work-out Fee or a French Loan Liquidation Fee to the French Loan Servicer will reduce the amount available to the Issuer to make repayments of principal on the Notes and the Residual Units. No assurances can be given regarding the amount of any such reduction or its impact on any class or classes of Notes and/or the Residual Units. For further details of the circumstances in which a Liquidation Fee or a Work-out Fee may become payable and the amount thereof, see "French Loan Servicing French Loan Servicing Fee" at page 175. Conflict of Interest During the course of their business activities, the French Loan Servicer or any sub-servicer appointed by it and any respective affiliates or any such person may operate, service, acquire or sell properties, or finance loans secured by properties, which are in the same markets as the Properties. In such cases, the interests of any of those parties or their affiliates or the interests of other parties for whom they perform servicing functions may differ from, and compete with, the interests of the Issuer or of the Junior Lenders in the case of the Carillon Loan and the Lexin Porfolio Loan, and decisions made with respect to other real-estate assets serviced by them or in which they may have an interest may adversely affect the value of the Properties. However, if, in the course of providing the services under the French Loan Servicing Agreement or under the Intercreditor Agreements, a conflict arises between the interests of the French Loan Servicer or any of its respective affiliates or the Junior Lenders on the one hand and the interests of the Noteholders or the Residual Unitholders on the other, the interests of the Noteholders shall prevail. The same rules will apply to any sub-servicer appointed by the French Loan Servicer, as the case may be. The French Loan Servicer is responsible for servicing the French Loans in the circumstances described in "French Loan Servicing" at page 171. Changes to the Loans Unless specified otherwise, information with respect to the Loans relates to the Loans as at the Cut-Off Date, being 15 November All amounts or percentage referred to in this Prospectus and calculated at Cut-Off Date have been calculated on the expected assumptions as of such date. Force Majeure, Fait du Prince and Similar Matters The laws of each of France and Belgium recognise the doctrine of force majeure, permitting a party to a contractual obligation to be freed from it upon the occurrence of an event which renders impossible the performance of such contractual obligation. There can be no assurance that the tenants of Properties will not be subject to a force majeure event leading to their being freed from their obligations under their leases. This could undermine the generation of Rental Income and hence the ability of the relevant Borrower to pay interest on or repay the principal of the relevant Loans or its portion of the relevant Loans. The French Ministère de l'equipement is the main tenant of the Pascal Properties. One of the two French Occupational Leases entered into by the Ministère de l'equipement includes a provision which is not customary for commercial leases (clause exorbitante du droit commun) and should therefore be construed as an administrative lease. The other French Occupational Lease entered into by the Ministère de l'equipement does not include such provision and there are strong arguments to consider that, although the Ministère de l'equipement is a French public entity undertaking public service obligations (mission de service public), the relevant French Occupational Lease is not to be characterised as an administrative lease under French law. Under French law, French governmental entities, such as Ministères, are allowed to unilaterally modify, (either directly or indirectly) or terminate contracts (including an administrative lease) to which they are a party pursuant to the fait du prince theory. However, should the Ministère de l'equipement carry out such contractual changes, it shall provide for a full compensation of the damages suffered by the relevant French Borrower as its counterparty under the relevant French Occupational Leases provided that the modification is substantial and it becomes more difficult or more expensive for the relevant French Borrower to perform 71

72 its underlying obligations under said leases. If the Ministère de l'equipement terminates the relevant contract, it shall then provide for a full compensation of the losses incurred by the relevant French Borrower as a result of such termination, including any loss of gains (manque à gagner) which would consist of the rental payments due by it until the expiry date of said leases. The Pascal Loan provides that, in case of a notice of termination of any of the French Occupational Leases in respect of the Pascal Properties, the amount of rents due thereunder over the next four interest periods under the Pascal Loan will not be taken into account for the calculation of the applicable ICR (as defined herein). For further information on the Pascal Properties, see "The Loans and the Related Property Summaries The French Loans The Pascal Loan" at page 153. FACTORS RELATED TO THE NOTES AND THE RESIDUAL UNITS Liability under the Notes and the Residual Units The Notes and the Residual Units and interest thereon will not be obligations or responsibilities of any person other than the Issuer. In particular, the Residual Units will not be obligations or responsibilities of, or be guaranteed by MS Bank or any associated body of MS Bank, or of or by the Luxembourg Issuer, the Belgian Issuer, the Originator, the Manager, the French Loan Servicer, the Paying Agents, the Issuer Swap Provider, the Issuer Swap Guarantor, the Issuer Liquidity Facility Provider, the Management Company, the Custodian, the Listing Agent or the Operating Bank or any company in the same group of companies as MS Bank, the Luxembourg Issuer, the Belgian Issuer, the Manager, the French Loan Servicer, the Paying Agents, the Issuer Swap Provider, the Issuer Swap Guarantor, the Issuer Liquidity Facility Provider, the Management Company, the Custodian, the Listing Agent or the Operating Bank and none of such persons accepts any liability whatsoever in respect of any failure by the Issuer to make payment of any amount due on the Notes and the Residual Units. Limited Recourse The Noteholders and the Residual Unitholders will have no recourse against the Issuer in respect of the Notes and the Residual Units. The Issuer is a special purpose entity without any capitalisation. The Issuer's ability to make payments in respect of the Notes and the Residual Units is principally dependent upon its receipt of payments from the Borrower in respect of the Originated Assets. The Issuer's recourse against any French Borrower for payment of the relevant French Loan is limited to the French Related Security. Only the Management Company through the French Loan Servicer is entitled to enforce the French Related Security and only in certain circumstances (which include a French Borrower's failure to pay the relevant French Loan when due). Neither the Noteholders nor the Residual Unitholders may not enforce the French Related Security and may not require the Management Company to enforce the French Related Security, but the Management Company is required at all times to act in their best interests. The Issuer's recourse against the Luxembourg Issuer for payment of the Luxembourg Issuer is limited to the available funds of the Luxembourg Issuer. In the event that the proceeds of enforcement of the French Related Security or the existing available funds of the Luxembourg Issuer and the Issuer's other assets are insufficient to pay amounts due under the Notes and the Residual Units (after the Issuer Liquidity Facility has been fully drawn, receipt of all monies owed to it by the Issuer Swap Provider or the Issuer Swap Guarantor under the Issuer Swap Agreement and payment of all claims ranking in priority to or pari passu with amounts due under the Notes and the Residual Units), then the Issuer's obligation to pay any amount remaining unpaid under the Units will cease and the Noteholders and the Residual Unitholders will have no further claim against the Issuer nor against any other person in respect of such unpaid amounts. After the Final Maturity Date, any part of the nominal value of the Notes and the Residual Units or of the interest due thereon which may remain unpaid will be automatically cancelled, so that the Noteholders and 72

73 the Residual Unitholders, after such date, shall have no right to assert a claim in this respect against the Issuer, regardless of the amounts which may remain unpaid after the Final Maturity Date. The Issuer will have no recourse to MS Bank, save in respect of certain representations and warranties given by MS Bank in the French Loan Transfer Agreement. For further information about the representation and warrants, see "The Originated Assets Sale Agreements Sale of the French Loans and the French Related Security Representations and warranties" at page 125. Ratings of the Notes and Confirmations of Ratings The ratings assigned to the Notes by the Rating Agencies are based on the Originated Assets, the French Related Security and the Belgian Security, the Properties and other relevant structural features of the transaction, including, among other things, the short-term (and also, in the case of the Issuer Swap Guarantor, the long-term), unsecured, unguaranteed and unsubordinated debt ratings of the Issuer Liquidity Facility Provider, the Operating Bank and the Issuer Swap Guarantor, and reflect only the views of the Rating Agencies. The ratings address the likelihood of full and timely receipt by any of the relevant Noteholders of interest on the Notes and the likelihood of receipt by any relevant Noteholder of principal of the Notes by the Final Maturity Date. There is no assurance that any such ratings will continue for any period of time or that they will not be reviewed, revised, suspended or withdrawn entirely by any of the Rating Agencies as a result of changes in or unavailability of information or if, in the judgement of the Rating Agencies, circumstances so warrant. A qualification, downgrade or withdrawal of any of the ratings mentioned above may impact upon both the value of the Notes or their marketability in secondary market transactions. The Rating Agencies will be notified of the exercise of certain discretions by or at the direction of the Management Company, acting in the name and on behalf of the Issuer and/or the French Loan Servicer, such as amendments to and waivers of the documents described in "Originated Assets Documentation". However, the Rating Agencies are under no obligation to revert to the Management Company or the French Loan Servicer regarding the impact of the exercise of such discretion on the ratings of the Notes and any decision as to whether or not to confirm, downgrade, withdraw or qualify the ratings of all classes or any class of Notes based on such notification may be made at the sole discretion of the Rating Agencies at any time, including after the relevant action has been taken. Where, after the Closing Date, a particular matter such as that referred to in the preceding paragraph or any other matter involves the Rating Agencies being requested to confirm the then-current ratings of the Notes, the Rating Agencies, at their sole discretion, may or may not give such confirmation. It should be noted that, depending on the timing of delivery of the request and any information needed to be provided as part of any such request, it may be the case that the Rating Agencies cannot provide their confirmation in the time available or at all and they will not be held responsible for the consequences thereof. Any confirmation received from the Rating Agencies, if given, will be given on the basis of the facts and circumstances prevailing at the relevant time and in the context of cumulative changes to the transaction of which the Notes form part since the Closing Date. Furthermore, in the event that the Rating Agencies confirm the ratings, this will be on the basis of full and timely receipt by the relevant Noteholders of interest on the Notes and the likelihood of receipt of principal of the Notes by the Final Maturity Date. There is no assurance that after any such confirmation any such ratings will continue for any period of time or that they will not be reviewed, revised, suspended or withdrawn entirely by one or more of the Rating Agencies for any of the reasons specified above in relation to the original ratings of the Notes. As such a confirmation of the ratings of the Notes by the Rating Agencies is not a representation or warranty that, as a result of a particular matter, the interest and principal due under the Notes will be paid or repaid in full and when due. Agencies other than the Rating Agencies could seek to rate the Notes and if such unsolicited ratings are lower than the comparable ratings assigned to the Notes by the Rating Agencies, those unsolicited ratings could have an adverse effect on the value and the marketability of the Notes. For the avoidance of doubt and unless the context otherwise requires, any references to "ratings" or "rating" in this Prospectus are to ratings assigned by the specified Rating Agencies only. 73

74 Absence of Secondary Market; Limited Liquidity Application has been made to the Irish Stock Exchange for the Listed Notes to be admitted to the Official List and trading on its regulated market. There can be no assurance that a secondary market in the Listed Notes will develop or, if it does develop, that it will provide the relevant Noteholders with liquidity of investment, or that it will continue for the life of the Listed Notes. In addition, the market value of certain of the Listed Notes may fluctuate with changes in prevailing rates of interest. Consequently, any sale of Listed Notes by the relevant Noteholders in any secondary market which may develop may be at a discount to the original purchase price of those Listed Notes. Availability of Issuer Liquidity Facility Pursuant to the terms of the Issuer Liquidity Facility Agreement, the Issuer Liquidity Facility Provider will provide a committed facility for drawings to be made in the circumstances described in "Credit Structure Issuer Liquidity Facility Agreement" at page 181. The facility will, however, be subject to an initial maximum aggregate principal amount of 20,760,000 which will, in certain specified circumstances, be adjusted or reduced. The amount available to be drawn under the Issuer Liquidity Facility on any Note Interest Payment Date may be less than the Issuer would have received, had full and timely payments been made in respect of all amounts owing to the Issuer during the related Collection Period. In such circumstances, insufficient funds may be available to the Issuer to pay in full interest due on the Notes. The Issuer Liquidity Facility Agreement is not available to meet shortfalls in principal. Issuer Liquidity Facility and withholding tax The Issuer intends to take the position that there is no withholding tax in France on the payment of interest to the Issuer Liquidity Facility Provider pursuant to the double tax treaty entered into between France and the United Kingdom dated 22 May 1968 (the "Treaty"). Payment of interest made by the Issuer to the Issuer Liquidity Facility Provider under the Issuer Liquidity Facility may be construed as "business profits" not taxable in France so long as the Issuer Liquidity Facility Provider is resident in the United Kingdom and the Issuer Liquidity Facility is not connected to a permanent establishment in France of the Issuer Liquidity Facility Provider (Article 6 of the Treaty). This position draws all consequences from the fact that Article 11 "Interest" of the Treaty does not apply to the Issuer Liquidity Facility (as the Issuer is not a tax resident under the meaning of such Treaty) so that interest paid under the Issuer Liquidity Facility are not excluded from the business income definition under the provisions of Article 6-5 of the Treaty. Though there are strong arguments to sustain this position, there is no assurance that the French tax authorities or the courts will agree with the position of the Issuer. In order to reduce (in all or in part) or to avoid the relevant withholding tax event to occur, the Issuer Liquidity Facility Provider will use its reasonable efforts to transfer its rights and obligations to another of its offices, branches or affiliates. Alternatively, the Management Company, acting in the name and on behalf of the Issuer, will be entitled to terminate the Issuer Liquidity Facility Agreement and to appoint a substitute Issuer liquidity facility provider in relation to which no such withholding tax risk would be likely to occur in which case the Luxembourg Liquidity Facility Agreement will also be terminated by the Luxembourg Issuer (see "Subscription for the Luxembourg Notes The Luxembourg Liquidity Facility Agreement" at page 140 and "Credit Structure Issuer Liquidity Facility Agreement" at page 181). European Union Directive on the Taxation of Savings Income On 3 June 2003, the European Union adopted the Directive 2003/48/EC regarding the taxation of savings income in the form of interest payments (the "Directive"). The Directive requires Member States as from 1 July 2005 to provide to the tax authorities of other Member States details of payments of interest and other similar income within the meaning of the Directive made by a paying agent within its jurisdiction to (or under circumstances to the benefit of) an individual resident in another Member State, except that Belgium, Luxembourg and Austria will instead impose a withholding system for a transitional period unless the beneficiary of interest payment elects for the exchange of information. The same regime applies to payments to individuals resident in any of the following territories: Netherlands Antilles, Aruba, Guernsey, Jersey, the Isle of Man, Montserrat and the British Virgin Islands. If a payment were to be made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of tax were to be withheld from that payment, neither the Issuer nor 74

75 any paying agent nor any other person would be obliged to pay additional amounts with respect to any Note as a result of the imposition of such withholding tax. If a withholding tax is imposed on payment made by a paying agent, the Issuer will be required to maintain a paying agent in a Member State that will not be obliged to withhold or deduct tax pursuant to the Directive. In relation to French taxation, the Directive has been implemented in French law under Article 242 ter of the French Code général des impôts and Articles 49 I ter to 49 I sexies of the Schedule III to French Code général des impôts. These provisions impose on paying agents based in France an obligation to report to the French tax authorities, certain information with respect to interest payments made to beneficial owners domiciled in another member state, including, among other things, the identity and address of the beneficial owner and a detailed list of the different categories of interest paid to that beneficial owner. The Management Company, on behalf of the Issuer, will take up, on the closing date, the option referred to by Article 49 I ter of the Schedule III to French Code général des impôts. As regards Luxembourg taxation, the Directive has been implemented in Luxembourg by a law dated 21 June 2005 (see "The Subscription for the Luxembourg Notes Terms and Conditions of the Luxembourg Notes - Tax") at page 134. Withholding Tax under the Notes and under the Residual Units In the event any withholding or deduction for or on account of taxes is imposed on or is otherwise applicable to payments of interest on or repayments of principal of the Notes to Noteholders or of the Residual Units to the Residual Unitholders, the Issuer is not obliged to gross-up or otherwise compensate Noteholders or Residual Unitholders for the lesser amounts the Noteholders or the Residual Unitholders will receive as a result of such withholding or deduction. Change of Law The structure of the issue of the Notes and the Residual Units and the ratings which are to be assigned to the Notes are based on French law, Irish Law, Luxembourg law, Belgian law, English law and New York law and administrative practice in effect as at the date of this Prospectus. No assurance can be given as to the impact of any possible change to French law, Luxembourg law, Belgian law, New York law or administrative practice after the date of this Prospectus, nor can any assurance be given as to whether any such change could adversely affect the ability of the Issuer to make payments under the Notes or the Residual Units. Insolvency of the Belgian Issuer The Belgian Issuer has been incorporated in Belgium under the laws of Belgium as a commercial company and is subject to the Belgian insolvency legislation. The insolvency proceedings as described above for the Belgian Property Owning Companies will apply equally to the Belgian Issuer. In order to make the Belgian Issuer insolvency remote, the limitations on the corporate purposes of the Belgian Issuer were included in its incorporation documents, so that its activities are limited to the issuing of negotiable financial instruments for the purpose of refinancing of credits entered into by affiliated companies within the meaning of Article 11 of the Belgian Company Code, grant loans to affiliated companies out of the proceeds of this issuance, and holding shares in the capital of the Belgian Property Owning Companies. Outside the framework of the activities mentioned above, the Belgian Issuer may not hold any assets, enter into any agreements or carry out any other activities. In general the Belgian Issuer may carry out all commercial, financial, movable or immovable transactions and may grant real or personal securities to secure its own obligations or to secure obligations of affiliated companies, by amongst other things a mortgage or pledge of its goods, to the extent they are necessary to realise the company's purpose as described above. The Belgian Issuer may not have employees. Transfer of the Belgian Bonds Belgian withholding tax rules provide for an exemption for withholding tax on interest payments in respect of registered bonds held by non-resident investors not using the bonds for a business activity in Belgium, provided certain conditions apply, including a condition that the ownership of registered bonds does not 75

76 change at any time other than on a note interest payment date in respect of such bonds. It is for this reason that the Second Belgian Bond Sale Agreement has been entered into on the Belgian Bond Interest Payment Date which occurred on 7 November The Luxembourg Issuer will fund the purchase price of the Belgian Bonds out of the proceeds resulting from the issuance of the Luxembourg Notes and its subscription by the Issuer on or about the Closing Date. The Issuer will in turn fund the subscription price of the Luxembourg Notes through a portion of the proceeds resulting from the issuance of the Notes. Therefore, the Belgian Bond Sale Agreement provides that the payment of the purchase price of the Belgian Bonds by the Luxembourg Issuer to the Belgian Bond Originator will occur on or about the Closing Date and that the sale of the Belgian Bonds is subject to the conditions subsequent (conditions résolutoires/ontbindende voorwaarden) that, inter alia, the Luxembourg Notes are issued by the Luxembourg Issuer and that such Luxembourg Notes are subscribed for by the Issuer in an amount equal to 14,000,000. If the conditions subsequent (conditions résolutoires/ontbindende voorwaarden) provided for in the Second Belgian Bond Sale Agreement are not complied with, the Second Bond Sale Agreement will be terminated (résolution/ontbinding) and the Belgian Bond Originator will be deemed the legal owner of the Belgian Bonds as of the Belgian Bond Transfer Date. Insolvency of the Luxembourg Issuer The Luxembourg Issuer can be declared bankrupt upon petition by a creditor of the Luxembourg Issuer or the Public Prosecutor (Procureur d'etat) or at the request of the Luxembourg Issuer or ex officio by the Luxembourg courts in accordance with the relevant provisions of Luxembourg insolvency law. The parties to the Luxembourg Issuer Transaction Documents (other than the Luxembourg Issuer) have undertaken in the Luxembourg Issuer Transaction Documents not to petition for the bankruptcy of the Luxembourg Issuer within two years and one month after the last Luxembourg Note has been redeemed. The Luxembourg Securitisation Law provides that such undertakings are valid and proceedings initiated in Luxembourg in breach of such undertakings will be declared inadmissible (irrecevables) by a Luxembourg court. The Luxembourg Issuer will provide the Issuer with the benefit of covenants prohibiting the entering into contractual agreements with third parties not containing an undertaking not to petition for the bankruptcy of the Luxembourg Issuer within two years and one month. However, there can be no assurance that the Luxembourg Issuer will at all times be able to fully comply with such undertaking. If a petition for bankruptcy of the Luxembourg Issuer is granted, the Luxembourg courts will appoint a bankruptcy receiver (curateur) who shall be obliged to take such action as he deems to be principally in the best interest of all creditors of the Luxembourg Issuer and also the Luxembourg Issuer. Certain preferred creditors of the Luxembourg Issuer (including the Luxembourg tax authorities) may have a privilege that ranks senior to the rights of the Issuer. Furthermore, the Luxembourg Issuer may be subject to the procedures of moratorium, suspension of payments, controlled management, liquidation or similar insolvency proceedings. The Luxembourg Issuer will provide the Issuer with the benefit of covenants prohibiting the creation of further indebtedness and restricting its activities generally to those specified in the Luxembourg Issuer Transaction Documents and described generally in this Prospectus. Insolvency of the Issuer The Issuer should be neither subject to the provisions of the French Code de commerce relating to bankruptcy and insolvency proceedings, nor is it subject to the provisions of the French Code monétaire et financier relating to credit institutions (établissements de crédit), investment companies (entreprises d'investissement) or investment funds (organismes de placement collectif en valeurs mobilières) and its winding up or liquidation may only be effected in accordance with the Issuer Regulations (see "The Issuer"). 76

77 Limited Resources of the Issuer The ability of the Issuer to meet its obligations under the Notes and the Residual Units will be dependent on the receipt by it of principal and interest from the Borrowers under the Loans and the receipt of funds (if due) from the Issuer Swap Provider under the Issuer Swap Transactions. In addition, the Issuer will have available to it (subject to satisfaction of the conditions for drawing) drawings under the Issuer Liquidity Facility Agreement. Other than the foregoing, prior to the enforcement of the French Related Security or the Belgian Security, the Issuer is not expected to have any other funds available to it to meet its obligations under the Notes and the Residual Units and in respect of making any payment ranking in priority to, or pari passu with, the Notes. The junior classes of Notes and the Residual Units in particular may be adversely affected by high levels of principal prepayments and/or defaults on the Originated Assets. Effect of the Class X Amount An effect of the Class X Amount will be that if the Issuer is required to pay any fees, costs and expenses, whether to a third party creditor, that are unusual and extraordinary in nature (including the repayment of Issuer Liquidity Drawings and interest thereon) then, to the extent that such fees, costs and expenses cannot be recouped from the relevant Borrower prior to the following Note Interest Payment Date or fall to be paid and are paid from amounts that would otherwise be paid to the Junior Lenders, a shortfall in funds necessary to pay interest on the then junior classes of Notes or the Residual Units will occur. Interest Payments on the Class B Notes and the Class C Notes On each Note Interest Payment Date, the maximum amount of interest then due and payable on the Class B Notes and the Class C Notes will be limited to the amount equal to the lesser of (a) the Interest Amount (as defined in Condition 3(d) at page 193) in respect of such classes of Notes on that Note Interest Payment Date, and (b) the Adjusted Interest Amount (as defined in Condition 3(g) at page 193) for such classes of Notes on such Note Interest Payment Date. If the difference between the Interest Amount and the Adjusted Interest Amount applicable to the Class B Notes and the Class C Notes, on a Note Interest Payment Date is attributable to a reduction in the interest-bearing balance of the Loans as a result of any prepayments by the French Borrowers or the Belgian Issuer, the debt that would otherwise be represented by such difference will be extinguished on such Note Interest Payment Date, and the affected Noteholders will have no claim against the Issuer in respect thereof. Yield and Prepayment Considerations The yield to maturity of each class of Notes and of the Residual Units will depend on, among other things, the amount and timing of payment of principal (including prepayments, sale proceeds arising on enforcement of a French Related Security and the Belgian Security and revestings due to breaches of the representations and warranties) on the Loan and the Principal Amount Outstanding under the Notes and the Residual Units. Such yield may be adversely affected by a higher or lower than anticipated rate of prepayments on the Originated Assets. The rate of prepayment of the Originated Assets cannot be predicted and is influenced by a wide variety of economic and other factors, including, without limitation, prevailing interest rates, the buoyancy of the property market, the availability of alternative financing and local and regional economic conditions. Therefore, no assurance can be given as to the level of prepayment that the Originated Assets will experience, it being provided that any partial or total prepayment of the Originated Assets shall result in the partial or total prepayment of the Notes or the Residual Units accordingly. The yield-to-maturity of each class of Notes and of the Residual Units as well as the rate of prepayment of the Originated Assets may be affected by notes interest and principal repayments. Basel Accord In June 1999, the Basel Committee on Banking Supervision (the "Basel Committee") issued proposals for the reform of the 1988 Capital Accord and proposed a new capital adequacy framework which would place enhanced emphasis on risk sensitivity and market discipline. Following an extensive consultation period on its proposals, the Basel Committee announced on 11 May 2004 that it had achieved consensus on the new framework (the "New Basel Capital Accord"). The text of the New Basel Capital Accord was 77

78 published on 26 June This text will serve as the basis for national and supra national rule-making and approval processes to continue and for banking organisations to complete their preparation for the implementation of the New Basel Capital Accord at year end The European Commission issued its consultative paper on the EU Capital Adequacy Directive ("CAD 3") on 14 July CAD 3 will implement the New Basel Capital Accord in the EU capital adequacy framework and is proceeding on a parallel track to the New Basel Capital Accord. If the New Basel Capital Accord is adopted in its current form (including via CAD 3) the proposals could affect the risk weighting of the Notes in respect of certain investors if those investors are regulated in a manner which will be affected by the proposals. Consequently, recipients of this Prospectus should consult their own advisers as to the consequences to and effect on them of the potential application of the New Basel Capital Accord proposals. Hedging Risks The French Loans (except the Pascal Loan which bears interest at a capped rate of interest) and the Belgian Bonds bear interest at a fixed rate while each class of the Listed Notes bear interest at a rate based on threemonth EURIBOR plus a margin. In order to hedge the mismatch of such interest rates, the Issuer will enter into the Interest Rate Swap Transactions pursuant to the Issuer Swap Agreement. However, there can be no assurance that the Swap Transactions will adequately address unforeseen hedging risks. Moreover, in certain circumstances, the Issuer Swap Agreement may be terminated and as a result the Issuer may be unhedged if replacement interest rate swap transactions cannot be entered into. Transparency Directive In December 2004, Directive 2004/109/EC (the "Transparency Directive") was formally adopted. The Transparency Directive relates to information about the issuers whose securities are admitted to trading on a regulated market in the European Union ("EU") such as the Irish Stock Exchange. The Transparency Directive is required to be implemented in EU member states by 20 January Should the Transparency Directive impose requirements on the Issuer that it in good faith determines are unduly burdensome, the Issuer may de-list the Listed Notes in accordance with the rules of the Irish Stock Exchange. The Issuer will use its best endeavours to obtain an alternative admission to listing, trading and/or quotation for the Listed Notes by another listing authority, exchange and/or system or market outside the EU (or on an alternative non-regulated market in the EU) and outside the United States, as it may decide, in any case such that the Transparency Directive would not apply to the Issuer. If such an alternative admission is not available to the Issuer or is, in the Issuer's good faith opinion, unduly burdensome, an alternative admission may not be obtained. Although no assurance is made as to the liquidity of the Listed Notes as a result of the listing on the Irish Stock Exchange, de-listing the Listed Notes from the Irish Stock Exchange may have a material effect on the ability to resell the Listed Notes in the secondary market. THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR INVESTOR. EACH PROSPECTIVE INVESTOR IS STRONGLY URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES OF AN INVESTMENT IN THE NOTES UNDER THE INVESTOR'S OWN CIRCUMSTANCES. The Issuer believes that the risks described above are the principal risks inherent in the transaction for the Noteholders or the Residual Unitholders, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with the Notes and the Residual Units may occur for other reasons and the Issuer does not represent that the above statements regarding the risks of holding the Notes or the Residual Units are exhaustive. Although the Issuer believes that the various structural elements described in this Prospectus lessen some of these risks for Noteholders or Residual Unitholders, there can be no assurance that these measures will be sufficient to ensure payment to Noteholders or to Residual Unitholders of interest, principal or any other amounts on or in connection with the Notes on a timely basis or at all. 78

79 THE ISSUER STATUS The Issuer, Odysseus (European Loan Conduit No. 21) FCC, was established for the sole purpose of this transaction jointly by the Management Company and the Custodian on the Closing Date. The Issuer is a French mutual debt fund (fonds commun de créances), governed by the provisions of Articles L , L to L , L and R to R of the French Code monétaire et financier, and by the Issuer Regulations. The Issuer is a co-ownership entity (copropriété), created jointly by the Custodian and the Management Company. Neither the provisions of the French Code civil concerning indivision (joint ownership) nor of Articles 1871 and 1873 of the French Code civil concerning sociétés en participation (joint companies) shall apply. The Issuer does not have separate legal personality. It is therefore unable to take action in its own name. However, it shall be validly substituted for its co-owners with respect to any action taken by the Management Company in the name and on behalf of the co-owners of the Issuer. The role and duties of the Management Company and the Custodian are described in "The Parties" below. The Issuer should not be subject to the provisions of the French Code de commerce relating to bankruptcy and insolvency proceedings, nor to the provisions of the French Code monétaire et financier relating to credit institutions (établissements de crédit), investment companies (entreprises d'investissement) or investment funds (organismes de placement collectif en valeurs mobilières). PRINCIPAL ACTIVITIES Pursuant to Article R of the French Code monétaire et financier, the Issuer Regulations set out the management strategy (stratégie de gestion) of the Issuer. Pursuant to the management strategy (stratégie de gestion) of the Issuer, the Issuer's activities pursuant to the Issuer Regulations consist of (i) the purchase of the French Loan Receivables, together with the French Related Security and any other ancillary rights, (ii) the management of the Tranched French Loans in accordance with the terms of the Intercreditor Agreements, (iii) the subscription for the Luxembourg Notes, and (iv) the issue of the Notes and the Residual Units. The Issuer has not engaged in any activity since its establishment other than those incidental to issuing the Notes and Residual Units, acquiring the Issuer Assets and the performance of its obligations under the documents referred to in this Prospectus. Since the date of establishment of the Issuer, the Issuer has not traded, no profits or losses have been made or incurred and no dividends have been paid. It has entered into a number of contracts in connection with the issue of the Notes and Residual Units and the purchase of the Issuer Assets and for no other purpose other than in relation to the provision of administrative, secretarial, legal and tax services to it. Pursuant to the Issuer Regulations and notwithstanding the provisions of Article L of the French Code monétaire et financier, the Issuer is not entitled to purchase further receivables or debt instruments or issue further units or debt instruments after the Closing Date. 79

80 The capitalisation and indebtedness of the Issuer as at the date of this Prospectus is as follows: CAPITALISATION AND INDEBTEDNESS The following Notes and Residual Units will be issued by the Issuer pursuant to the Issuer Regulations on the Closing Date: Issued Notes Initial Principal Amount in Euro Class A Notes due ,000,000 Class X Notes due Class B Notes due ,750,000 Class C Notes due ,050,000 Issued Residual Units Initial Principal Amount in Euro Class R Units due ,000 The Issuer has no further capitalisation. THE NOTES AND THE RESIDUAL UNITS By subscribing for or purchasing the Residual Units, each Residual Unitholder shall be bound by the provisions of the Issuer Regulations, including the terms and conditions of the French Loan Transfer Agreement and the French Loan Servicing Agreement appended to the Issuer Regulations. By subscribing for or purchasing the Notes, each Noteholder shall be bound by the Terms and Conditions of the Notes at page 191, the Normal Redemption Orders of Priority and the Accelerated Redemption Order of Priority and, more generally each such Noteholder shall be deemed to have agreed to and acknowledged the terms of the Issuer Regulations. Copies of the Issuer Regulations (i) are available to the Noteholders and Residual Unitholders (at no cost), upon request to the Management Company or the Custodian and (ii) so long as the Listed Notes of any class are listed on the Irish Stock Exchange and the rules of such stock exchange so require, will be deposited with the Listing Agent or the Irish Paying Agent, where they may be inspected during normal business hours. Pursuant to Article L I of the French Code monétaire et financier, only the Management Company may enforce the rights of the Noteholders and Residual Unitholders against third parties. The Management Company is not bound to act upon the instructions of the Noteholders or Residual Unitholders, or any of them, but is responsible for ensuring that the conditions for maintaining the level of security enjoyed by the Noteholders and Residual Unitholders are fulfilled. In accordance with Article L of the French Code monétaire et financier, the securities issued by French debt mutual funds (fonds commun de créances) may not be sold by way of solicitation or canvassing (démarchage). In accordance with Article L of the French Code monétaire et financier, the holders of Residual Units may not require the Issuer to repurchase the Residual Units. By subscribing for or purchasing Notes or Residual Units, the holders of such Notes or Residual Units irrevocably agree that they shall have no recourse whatsoever against the French Borrowers, the Luxembourg Issuer or the Belgian Issuer. The Management Company is required to ensure that each party with whom the Management Company, on behalf of the Issuer, enters into any contract shall expressly and irrevocably agree that such party shall have no contractual rights of recourse (responsabilité contractuelle) against the Issuer and shall waive the claims which it may have against the Issuer for sums in excess of the amount of the assets of the Issuer that are available to be applied for the benefit of such party in accordance with the cash allocation provisions set out in the Issuer Regulations. 80

81 AMENDMENTS TO THE ISSUER REGULATIONS The Management Company and the Custodian, acting in their capacity as founders of the Issuer, may agree to amend the provisions of the Issuer Regulations, provided that: (i) (ii) (iii) (iv) (v) (vi) no such amendment shall result in the reduction of the level of security available to the Noteholders and the Residual Unitholders or the downgrading of any of the then current ratings assigned to any of the Notes or shall be intended to limit such reduction or the downgrading or withdrawal of the then current ratings; the Issuer Regulations may not be amended in a way which would contradict the provisions of the Intercreditor Agreements; all provisions of the laws relating to providing information to Noteholders and Residual Unitholders are complied with; any amendment to the financial characteristics of any class of Notes shall require the prior approval of the holders of such Listed Notes in accordance with the "Terms and Conditions of the Notes"; any amendment to the financial characteristics of any class of Residual Units shall require the prior approval of the Residual Unitholders in accordance with the Issuer Regulations; and any such amendment shall be disclosed by way of publication on the Management Company's website to the holders of all outstanding Notes and Residual Units, provided that such amendment shall be automatically and without any further formality (de plein droit) enforceable against such Noteholders and Residual Unitholders five clear days after such disclosure. 81

82 THE PARTIES The Originator MORGAN STANLEY BANK INTERNATIONAL LIMITED Morgan Stanley Bank International Limited ("MS Bank") is a wholly owned subsidiary of Morgan Stanley ("Morgan Stanley"). MS Bank is active in retail lending through the Morgan Stanley Dean Witter credit card as well as wholesale loan origination and securitisation in the United Kingdom and Europe. MS Bank is incorporated in England and Wales (registered number ) and its London branch is located at 25 Cabot Square, Canary Wharf, London E14 4QA. The Issuer and its Related Parties MANAGEMENT COMPANY Eurotitrisation is a limited liability company (société anonyme) whose head office is located at 20, rue Chauchat, Paris, France. It is registered with the Paris Commercial Registry (Registre de Commerce et des Sociétés de Paris) under number B It is duly authorised as a management company (société de gestion) by the French Autorité des Marchés Financiers under number SG-FCC Its sole purpose is the management of French mutual debt funds (fonds commun de créances). The general telephone number of the Management Company is + 33 (0) As at the date of this Prospectus, the principal shareholders in the Management Company are BNP Paribas, Calyon and IXIS CIB. The financial statements of the Management Company, duly approved by resolution of the shareholders, show that as at 31 December 2004, the Management Company had a share capital of 684,000. The Noteholders and Residual Unitholders may obtain copies of the Management Company's annual accounts from the Clerk of the Paris Commercial Court (Greffe du Tribunal de Commerce de Paris) (free of charge). Pursuant to the Issuer Regulations, the Management Company has participated jointly with the Custodian in the establishment of the Issuer. The Management Company is responsible for the management of the Issuer and shall represent the Issuer vis-à-vis third parties and in any legal proceedings, whether as plaintiff or defendant. The Management Company shall take all steps which it deems necessary or desirable to protect the Issuer's rights arising under the Issuer Assets. It is responsible for ensuring that the conditions for maintaining the level of security enjoyed by the Noteholders and Residual Unitholders are fulfilled. Duties of the Management Company The Management Company shall ensure that the Issuer does not deviate from its management strategy (stratégie de gestion) within the meaning of Article R et seq. of the French Code monétaire et financier) as set out in the Issuer Regulations (see "The Issuer" above). Among other things and pursuant to the Issuer Regulations, the Management Company shall: (i) (ii) ensure, on the basis of information which is made available to it, compliance by MS Bank acting as the French Loan Originator and the French Loan Servicer of the French Loan Receivables and the French Related Security, with the provisions of the French Loan Servicing Agreement; not enter into any contract on behalf of the Issuer if such contract does not contain: (a) (b) an express waiver by the other contracting parties of all rights of contractual recourse (responsabilité contractuelle) against the Issuer; an express waiver of the claims which it may have against the Issuer for sums in excess of the amount of the assets of the Issuer that are available to be applied for the benefit of such party in accordance with the cash allocation provisions set out in the Issuer Regulations; 82

83 (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) not enter into, renew or terminate any contract of any kind to which the Issuer is a party if, in so doing, the ratings assigned to the Notes by the Rating Agencies would be downgraded or withdrawn, unless in so doing, a downgrade or withdrawal of the ratings assigned to the Notes would be limited or avoided; ensure, in particular, that the payments received by the Issuer accord with the amounts contractually due in respect of the Issuer Assets and, if necessary, enforce the Issuer's rights under the Issuer Regulations, the French Loan Transfer Agreement, the French Loan Servicing Agreement, the French Loan Transfer Deeds, the Luxembourg Notes Subscription Agreement, the Issuer Account Agreement, the Paying Agency Agreement, the Issuer Liquidity Facility Agreement, the Issuer Swap Agreement and the Issuer Subscription Agreement (together, the "Issuer Transaction Documents") and any other agreement entered into by the Issuer and under the Issuer Assets; allocate any amount received by the Issuer in accordance with the provisions of the Issuer Regulations; enter into and, if necessary, renew, either alone or with the Custodian, the relevant agreements necessary for the operation of the Issuer to which the Issuer is a party and ensure full compliance therewith and with the Issuer Regulations; determine the payments payable by the Issuer (including all Issuer Priority Payments and other expenses due to the Issuer Related Parties) prior to each Note Interest Payment Date; give the necessary instructions (with a copy to the Custodian, for the fulfillment of its supervision duties) for the operation of the Issuer Accounts held with the Operating Bank in accordance with the provisions of the Issuer Regulations and the Issuer Account Agreement; give the necessary instructions to the Paying Agents (with a copy to the Custodian) for them to be in a position to ensure the financial services and payments relating to the Notes and the Residual Units in accordance with the provisions of the Issuer Regulations and the Paying Agency Agreement to the extent of the Issuer Cash; invest the Issuer Cash in Eligible Investments in accordance with the Issuer Regulations; appoint the Issuer's statutory auditor upon the approval of the French Autorité des Marchés Financiers, and, if necessary, replace the statutory auditor, in accordance with the same procedure; prepare, subject to the supervision of the Custodian, where such supervision is required by applicable French laws and regulations, all documents relating to the Issuer, the Notes, the Residual Units and the Issuer Assets required by any applicable laws and regulations to keep informed, among others, the Bank of France (Banque de France), the relevant supervision authorities, any stock exchange or similar market place, in particular the Irish Stock Exchange on which application has been made for the Listed Notes to be listed and traded, the Relevant Clearing Systems, the Rating Agencies, the Noteholders and the Residual Unitholders; arrange, if appropriate, for the substitution of the French Loan Servicer in accordance with the conditions and restrictions contained in the applicable legislation in force at the time of such a substitution and the terms of the French Loan Servicing Agreement; arrange, if appropriate, for the substitution of the Custodian in accordance with the conditions and restrictions contained in the applicable legislation in force at the time of such a substitution and the terms of the Issuer Regulations; subject to three months' prior notice, change or terminate the appointment of any Paying Agent and/or appoint additional or other Paying Agents with the prior consent of the Custodian (which shall not be unreasonably withheld) and/or approve any change in the specified office of any 83

84 Paying Agent, provided that, for as long as Listed Notes of any class remain outstanding and remain listed on the Irish Stock Exchange, there will be an Irish Paying Agent. Notice of any such change or termination in the appointment of a Paying Agent shall be immediately given to the Noteholders in accordance with the terms and conditions of the relevant class of Notes; (xvi) (xvii) within one month from the Closing Date, to apply with the competent French tax administration (on form no. 2562) for the exercise of the tax option relating to the tax treatment of the Issuer as a UCITS recognised in accordance with the European Union Directive 85/611/EC dated 20 December 1985 pursuant to the procedure foreseen by Article 4.3 of the European Union Directive 2003/48/EC dated 3 June 2003, in accordance with the provisions of Article 49 I ter I of Annex III of the French Code général des impôts and to transmit forthwith the related certificate (form no SD) issued by the competent French tax administration to the Luxembourg Issuer as the required evidence of the exercise of this tax option; evidence to the Principal Paying Agent on form no the situation of the Issuer vis-à-vis the investment ratio defined by Article 6.1 d) of the European Union Directive 2003/48/EC dated 3 June 2003, in accordance with the provisions of Article 242 ter of the French Code général des impôts, Articles 49 I ter I and 49 I quinquies I. of Annex III of the French Code général des impôts within one month of the Closing Date, and within one month of the change of the situation of the Issuer vis-à-vis this investment ratio, computed every six month (unless such change is not confirmed upon computation of the investment ratio of the following semester); (xviii) mention the situation of the Issuer vis-à-vis the investment ratio defined by Article 6.1 d) of the European Union Directive 2003/48/EC dated 3 June 2003, in accordance with the provisions of Article 242 ter of the French Code général des impôts, Articles 49 I ter I and 49 I quater of Annex III of the French Code général des impôts in the Issuer Regulations; (xix) (xx) dissolve the Issuer and inform the Custodian of the same, in accordance with applicable laws and regulations and subject to the Issuer Regulations, and conduct the liquidation thereof when the conditions for such dissolution, as referred to in applicable laws and regulations and/or the terms of the Issuer Regulations, are met; in order to enable the Custodian to carry out its duty of supervision and control of the Management Company's decisions: (a) (b) provide the Custodian with all of the information and documents received and/or that the Management Company deems necessary, in its reasonable judgment, in relation to such supervision and control, consult with the Custodian as soon as any difficulties arise with a view to resolving such difficulties (including by substitution of the Management Company) within a reasonable time, in particular resolving technical difficulties in relation to communication of information, (xxi) (xxii) respond to information requests by the Rating Agencies; and more generally, take all steps which it deems necessary or useful to protect the rights of the Issuer in connection with in particular, the Issuer Transaction Documents, the Issuer Assets and each agreement entered into by the Issuer, and to maintain the level of security enjoyed by the Noteholders and Residual Unitholders. In addition to its duties under applicable French laws and regulations, the Management Company's obligations under the Issuer Regulations are contractual obligations which shall be binding upon the Management Company throughout the life of the Issuer. 84

85 Delegation of Duties and Substitution of the Management Company The Management Company may sub-contract or delegate, with the prior approval of the Custodian, all or part of its duties or may appoint a third party to exercise all or part thereof, but will not thereby be exempted from its liabilities in respect thereof under the Issuer Regulations and applicable law. The Issuer shall not be deemed to have approved any such subcontracting, delegation or appointment. The Management Company shall obtain from any subcontractor, agent, delegate or representative a waiver of all rights of contractual recourse (responsabilité contractuelle) against the Issuer. The management of the Issuer may be transferred (a) at the request of the Custodian in the event that the license accorded to the Management Company by the French Autorité des Marchés Financiers is withdrawn for any reason or (b) by the Management Company, at any time during the life of the Issuer and for any reason, upon not less than six months' prior written notice to the Custodian (with a copy to the Operating Bank, the Paying Agents, the French Loan Servicer, the Luxembourg Issuer and the Rating Agencies) from the Management Company, to another management company which manages mutual debt funds (fonds communs de créances) and is duly approved by the French Autorité des Marchés Financiers, provided that: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) a substitute management company has been appointed in accordance with the applicable French laws and regulations; the fees due to the new management company are not higher than the then remuneration of the Management Company; however, if this is not the case, the difference between the fees due to the new management company and the fees then due to the Management Company will be borne, in the case of (b) above, by the Management Company or, in the case of (a) above, as part of the expenses incurred by the Issuer; the Management Company, at its own expense (or at the expense of any entity having agreed with the Management Company to pay such expenses) shall make available to the new management company, for such period as may be necessary in order for the substitution to become effective, all resources as may be reasonably requested by the new management company in order for the new management company to be able to assume all of the rights and obligations of the Management Company in relation to its duties as soon as possible, in the interest of the Noteholders and the Residual Unitholders; in the case of (b) above, the Management Company shall bear the costs related to the up-front fees related to the appointment of the new management company; in the case of (b) above, all reasonable costs and expenses incurred by the new management company in connection with the substitution, will be borne by the Management Company; the fee payable to the Management Company in connection with its duties shall cease to be payable as of the effective date of substitution of the Management Company, and any excess amounts paid shall be repaid to the Issuer on the same date pro rata temporis, as a fee paid in advance; in general, none of the fees or expenses in relation to such a substitution shall be borne by the Issuer and/or the Noteholders and/or the Residual Unitholders; no indemnity shall be given in favour of the Management Company; the Noteholders and the Residual Unitholders have been given prior notice of such transfer; the transfer of the management of the Issuer does not result in a deterioration in the level of security enjoyed by the Noteholders or the Residual Unitholders; the Rating Agencies have confirmed that such transfer will not result in a downgrade or withdrawal of the ratings assigned to the Notes; and 85

86 (xii) such transfer complies with the then current laws and regulations. Custodian BNP Paribas Securities Services is a limited liability company (société anonyme) whose registered office is located at 3, rue d'antin, Paris, France. It is registered with the Paris Commercial Registry (Registre du Commerce et des Sociétés de Paris) under number It is governed by the French Code monétaire et financier (formerly law No of 24 January 1984 (as amended) relating to banking activities and the supervision of credit institutions). It is duly licensed by the French Credit Institutions and Investment Companies Committee (Comité des Etablissements de Crédit et des Entreprises d'investissement) and subject to the regulations of the French Banking and Financial Regulatory Committee (Comité de la Réglementation Bancaire et Financière). As at the date of this Prospectus, the Custodian is a wholly owned subsidiary of BNP Paribas. The financial statements of the Custodian, duly approved by resolution of the shareholders, show that as at 31 December 2004, the Custodian had a share capital of 165,279,835. The Noteholders and the Residual Unitholders may obtain copies of the Custodian's annual accounts from the Clerk of the Paris Commercial Court (Greffe du Tribunal de Commerce de Paris) (free of charge). In accordance with Article L II of the French Code monétaire et financier, the Custodian will be in charge of the assets (assure la conservation des actifs) of the Issuer and in particular be responsible for custody of the Issuer transfer deeds (actes de cession de créance) (the "French Loan Transfer Deeds") evidencing the assignment of the French Loan Receivables to the Issuer pursuant to the provisions of the Issuer Regulations. The Custodian has participated jointly with the Management Company in the establishment of the Issuer. The Custodian shall act as the custodian of the Issuer's assets in accordance with the French Code monétaire et financier. Duties of the Custodian The Custodian shall: (i) (ii) (iii) (iv) (v) (vi) be responsible for the custody of all assets deposited with it (other than in respect of the French Loans and the French Related Security, the custody of which is the responsibility of the French Loan Servicer); ensure that the French Loan Servicer has implemented procedures certifying the existence of the French Loan Receivables and the French Related Security and their safe custody and that such French Loan Receivables are collected for the exclusive benefit of the Issuer; be responsible for controlling all settlement instructions issued by the Management Company and for the performance of such settlement instructions by the Operating Bank; act in the interests of the Noteholders and Residual Unitholders; maintain the Issuer's register of the registered Notes and Residual Units; in accordance with Article L II of the French Code monétaire et financier, monitor the compliance of the Management Company's decisions with any applicable laws and regulations and with the Issuer Regulations; 86

87 (vii) arrange, if appropriate, for the substitution of the Operating Bank with the prior consent of the Management Company, in accordance with the conditions and restrictions contained in the applicable legislation in force at the time of such a substitution and with the Issuer Account Agreement, provided always that no substitution of the Operating Bank may occur other than where: (a) (b) (c) (d) (e) the substitute entity can assume in substance the rights and obligations of the original entity and replacement Issuer Accounts are opened in the books of the substitute entity; the substitute entity irrevocably waives all contractual rights of recourse (responsabilité contractuelle) which it may have against the Issuer; the substitution does not result in a deterioration of the level of security enjoyed by the Noteholders or the Residual Unitholders; the Rating Agencies have been given prior notice of such substitution; and the substitute entity has the Requisite Rating; provided that, in the event of the Operating Bank ceasing to have the Requisite Rating, the Custodian shall, in accordance with the conditions set out above and within 30 calendar days of the occurrence of such downgrade event, replace the Operating Bank with a new account bank which has the Requisite Rating. The "Requisite Rating" means (i) in respect of the Operating Bank or if the Operating Bank is BNP Paribas Securities Services, in respect of BNP Paribas, that its short term, unsecured, unsubordinated debt obligations are rated A-1+ by S&P and P-1 by Moody's, and (ii) in respect of the Issuer Liquidity Facility Provider and the Luxembourg Liquidity Facility Provider, that its short term, unsecured, unsubordinated debt obligations are rated A-1+ by S&P and P-1 by Moody's. (viii) (ix) (x) (xi) (xii) (xiii) given the fact that the Issuer Accounts will be opened in the name of the Issuer in the books of the Operating Bank, be responsible for verifying the instructions of the Management Company to the Operating Bank (with a copy of such instructions being sent to the Custodian) in relation to the Issuer Accounts. Notwithstanding the delegation of the operation of the Issuer Accounts to the Operating Bank, the Custodian shall remain responsible to the Issuer for the restitution of any amounts deposited into any Issuer Account; receive, before certification by the statutory auditor, the financial information concerning the Issuer prepared by the Management Company; in the event that the license accorded to the Management Company by the French Autorité des Marchés Financiers is withdrawn for any reason, appoint a new management company to replace the Management Company with the authorisation of the French Autorité des Marchés Financiers and in accordance with the Issuer Regulations; hold on behalf of the Issuer the French Loan Transfer Deed (bordereaux de cession) required by Article L of the French Code monétaire et financier; waive all contractual rights of recourse (responsabilité contractuelle) which it may have against the Issuer; and ensure that it has received appropriate evidence of the registration of the holding of the Luxembourg Notes in accordance with the Luxembourg Notes Subscription Agreement. In addition to its duties under the applicable French laws and regulations, the Custodian's obligations under the Issuer Regulations are contractual obligations which shall be binding upon the Custodian throughout the life of the Issuer. 87

88 Delegation of Duties and Substitution of the Custodian At any time during the life of the Issuer, the Custodian shall be entitled to sub-contract or delegate to any third party (or to be represented or partially substituted by any third party in the performance of) part (but not all) of its obligations under the Issuer Regulations in the exercise of such obligations, on the condition that: (i) (ii) (iii) (iv) the Custodian shall have obtained from any sub-contractor, delegate, representative or substitute the waivers and undertakings referred to in the Issuer Regulations; such sub-contract, delegation, representation or partial substitution is made in compliance with the then current and applicable provisions of the laws and regulations in force; the French Autorité des Marchés Financiers shall be informed, prior to such sub-contract, delegation, representation or partial substitution; and the Management Company shall have given its prior written consent to such sub-contract, delegation, representation or partial substitution (such consent being not refused other than on the basis of legitimate, serious and reasonable grounds). Notwithstanding the foregoing, the Custodian shall remain liable for the performance of its duties and obligations under the Issuer Regulations vis-à-vis the Issuer and the Management Company. The duties of the Custodian may be transferred (a) at the request of the Custodian, who may appoint any credit institution (établissement de crédit) as a substitute custodian, provided that such change has been previously notified, upon not less than six months' prior written notice, by the Custodian to the Management Company (with a copy to the Operating Bank, the Paying Agents, the French Loan Servicer and the Rating Agencies), or (b) at the request of the Management Company in the event (A) that such a transfer is necessary in order to maintain the ratings assigned to the Notes, (B) that the license of the Custodian as credit institution is revoked, or (C) of serious misconduct by the Custodian (including, without limitation, the wilful default, negligence or fraud of the Custodian), provided further that: (i) (ii) (iii) (iv) (v) (vi) such transfer shall have been notified by the Management Company or, as the case may be, by the Custodian to the French Autorité des Marchés Financiers, the Noteholders and the Residual Unitholders and the Rating Agencies, prior to such transfer; such transfer is made in compliance with the then current and applicable provisions of the laws and regulations in force; the choice of the substitute credit institution shall not reduce the level of security available to the Noteholders and the Residual Unitholders; if the fees due to the new custodian are higher than the then remuneration of the Custodian, the difference between the fees due to the new custodian and the fees then due to the Custodian will be borne, in the case of (a) above, by the Custodian or in the case of (b) above, in accordance with the Normal Redemption Orders of Priority or the Accelerated Redemption Order of Priority, as applicable; in the case of (a) above, the Custodian, at its own expense (or at the expense of any entity having agreed with the Custodian to pay such expenses) shall make available to the new custodian, for such period as may be necessary in order for the substitution to become effective, all resources as may be reasonably requested by the new custodian in order for the new custodian to be able to assume all of the rights and obligations of the Custodian in relation to its duties as soon as possible, in the interest of the Noteholders and the Residual Unitholders; in the case of (a) above, the Custodian shall bear the costs related to the up-front fees related to the appointment of the new custodian; 88

89 (vii) (viii) (ix) (x) (xi) (xii) in the case of (a) above, all reasonable costs and expenses incurred by the new custodian in connection with the substitution will be borne by the Custodian; the fee payable to the Custodian in connection with its duties shall cease to be payable as of the effective date of substitution of the Custodian, and any excess amounts paid shall be repaid to the Issuer on the same date pro rata temporis, as a fee paid in advance; in general, none of the fees or expenses in relation to such a substitution shall be borne by the Issuer and/or the Noteholders and/or the Residual Unitholders; no indemnity shall be given in favour of the Custodian; the Noteholders and the Residual Unitholders have been given prior notice of such transfer; and the substitution of the Custodian shall result automatically in the novation to the new custodian of all of the rights and obligations of the Custodian in relation to the safekeeping of the assets of the Issuer. FRENCH LOAN SERVICER Pursuant to Article L of the French Code monétaire et financier, MS Bank, in its capacity as Originator of the French Loan Receivables, is the French Loan Servicer of the French Loan Receivables and the French Related Security. Subject always to the provisions of the French Loan Servicing Agreement, the French Loan Servicer may, under its responsibility and control, outsource to another entity the performance of its obligations under the French Loan Servicing Agreement, provided that such entity's duties towards the French Loan Servicer (i) are performed under the name of the French Loan Servicer and (ii) are performed in compliance with applicable laws and regulations and in particular, the French Règlement du Comité de la Réglementation Bancaire et Financière n dated 21 February 1997 (as amended). Pursuant to the French Loan Sub- Servicing Agreement entered into by MS Bank and Morgan Stanley Mortgage Servicing Limited ("MSMS"), MSMS has agreed to act as sub-servicer of the French Loans and the French Related Security the "French Loan Sub-Servicer"). Pursuant to the French Loan Servicing Agreement, the French Loan Servicer shall, for the benefit of the Issuer, be responsible for the management of, and recovery of amounts due under, the French Loan Receivables and shall take or ensure that the necessary steps are taken to preserve and exercise the rights arising under the French Related Security, with the standard of care of a prudent and skilled manager, and in any event with at least the same degree of care as it would exercise in relation to its own receivables. Subject to obtaining the appropriate specific mandate (mandat spécial), where necessary and as the case may be, the French Loan Servicer is authorised to take such judicial or extrajudicial procedures, or to effect such settlements, as may be necessary for the management and recovery of amounts under the French Loan Receivables. The French Loan Servicer shall also initiate all such proceedings as are necessary to ensure compliance by the French Borrowers with their contractual obligations and to preserve and enforce the French Related Security (see "French Loan Servicing" at page 171 below). OPERATING BANK BNP Paribas Securities Services, a limited liability company (société anonyme) incorporated under and governed by the laws of France, whose principal office is at 3 rue d'antin and which is registered with the Trades and Companies Register (Registre de Commerce et des Sociétés de Paris) under number , will act as Operating Bank pursuant to an account agreement (the "Issuer Account Agreement") and the Issuer Regulations. 89

90 It will open and maintain the Issuer Accounts in its books (see "The Structure of the Accounts The Issuer Accounts" below). The obligations of BNP Paribas Securities Services as the Operating Bank are guaranteed by BNP Paribas (caution solidaire). As at the date of this Prospectus, the short-term, unsecured, unsubordinated and unguaranteed debt obligations of BNP Paribas are rated "P-1" by Moody's and "A-1+" by S&P. The Issuer Accounts will only be operated upon the instructions of the Management Company (with a copy of such instructions being sent to the Custodian) and in accordance with the relevant provisions of the Issuer Account Agreement. The Custodian is responsible for monitoring compliance by the Operating Bank with its duties. An attached securities account is opened for each Issuer Account in the books of the Operating Bank. No amount may be debited from an Issuer Account if, as a result, the account would become overdrawn. Any cash standing from time to time to the credit of the Issuer Accounts pending application in accordance with the cash allocation provisions of the Issuer Regulations ("Issuer Cash") may be invested in Eligible Investments by the Management Company in accordance with the terms of the Issuer Regulations (see "Cash Management" at page 179 below). The Operating Bank may be replaced with a new operating bank in the circumstances and in accordance with the conditions described under "The Parties - The Issuer and its Related Parties - The Custodian - Duties of the Custodian" above. PAYING AGENTS BNP Paribas Securities Services, a limited liability company (société anonyme) incorporated under and governed by the laws of France, whose principal office is at 3 rue d'antin and which is registered with the Trades and Companies Register (Registre de Commerce et des Sociétés de Paris) under number , will act as in such capacity as Principal Paying Agent and AIB/BNY Fund Management (Ireland) Limited, whose principal office is at Guild House Guild Street Dublin 1, Ireland will act as Irish Paying Agent, in each case pursuant to a paying agency agreement (the "Paying Agency Agreement"). The Paying Agents are required, inter alia, on each Note Interest Payment Date, to pay on behalf of the Issuer each of the payments required to be paid to the Noteholders and the Residual Unitholders and received by the Paying Agents from the Issuer. ISSUER LIQUIDITY FACILITY PROVIDER Lloyds TSB Bank plc, acting through its corporate office at Faryner's House, 25 Monument Street, London EC3R 8BQ, will act as the Issuer Liquidity Facility Provider under the Issuer Liquidity Facility Agreement. Lloyds TSB Bank plc together with its subsidiaries and affiliates provides a range of banking and financial services in the UK and overseas. These include providing personal, business and corporate customers with banking and other related financial services. Lloyds TSB Bank plc is regulated by the Financial Services Authority. The short-term, unsecured, unsubordinated debt obligations of Lloyds TSB Bank plc as at the date of this Prospectus are rated P-1 by Moody's, F1+ by Fitch and A-1+ by S&P. The Issuer will be entitled to make drawings under the Issuer Liquidity Facility Agreement from time to time to cover certain shortfalls in the Issuer's funds. Each drawing under the Issuer Liquidity Facility Agreement will be made in Euro. Subject to certain limitations, the Issuer will be entitled to make Interest Drawings under the Issuer Liquidity Facility Agreement from time to time to cover shortfalls in the amount of interest received from Borrowers in respect of any Loans as well as Accrued Interest Drawings to cover Accrued Interest Shortfalls under the Issuer Liquidity Facility Agreement. The Issuer will also be entitled to make Expenses Drawings to fund shortfalls in amounts available to pay certain Issuer Priority Payments. 90

91 ISSUER SWAP PROVIDER Morgan Stanley Bank AG, whose principal office is located at Junghofstrasse 13-15, Frankfurt, Germany is the Swap Provider. The Issuer Swap Provider is engaged in the business of, among other things, conducting forward payment business, including interest rate swaps, currency swaps and interest rate guarantees. ISSUER SWAP GUARANTOR Morgan Stanley, a corporation incorporated in the State of Delaware, is the Issuer Swap Guarantor. In providing services in this capacity, the Issuer Swap Guarantor is acting through its office at 1585 Broadway, New York, New York The Issuer Swap Guarantor is a global financial services firm which combines global investment banking services (including the origination of underwritten public offerings and mergers and acquisitions advice) with institutional sales and trading activities and provides investment and global asset management products and services and, through its Discover Card brand, consumer credit products. The Swap Guarantor will guarantee the payment obligations of the Issuer Swap Provider in respect of the Issuer Swap Transactions. As at the date of this Prospectus, the long-term, unsecured, unsubordinated debt obligations of the Issuer Swap Guarantor are rated "Aa3" by Moody's and "A+" by S&P, and the short-term, unsecured, unsubordinated debt obligations of the Issuer Swap Guarantor are rated "P-1" by Moody's and "A-1" by S&P. STATUTORY AUDITORS Pursuant to Article L VI of the French Code monétaire et financier, BDO Marque et Gendrot has been appointed as the statutory auditors (commissaire aux comptes) of the Issuer by the board of directors of the Management Company, with the prior consent of the French Autorité des Marchés Financiers for a term of six financial periods. Its appointment may be renewed upon the same conditions. In accordance with applicable laws and regulations, the statutory auditors are required in particular: (i) (ii) (iii) to certify, when necessary, that the Issuer's accounts are true and fair and to verify the accuracy of the information contained in the management reports prepared by the Management Company; to bring to the attention of the Management Company, the Custodian and the French Autorité des Marchés Financiers any irregularities or misstatements that may be revealed during the performance of their duties; and to examine the information transmitted periodically to the Notetholders, the Residual Unitholders and the Rating Agencies by the Management Company and to prepare an annual report on the Issuer Accounts for the benefit of the Noteholders, the Residual Unitholders and the Rating Agencies. The statutory auditors' fees shall be paid by the Management Company in accordance with the Issuer Priority Payments. 91

92 RATING AGENCIES Standard and Poor's ("Standard and Poor's" or "S&P") 20 Canada Square Canary Wharf London, E14 5LH Moody's Investors Services ("Moody's") Standard and Poor's and Moody's are rating agencies authorised to evaluate French mutual debt funds (fonds commun de créances) pursuant to Article L of the French Code monétaire et financier. Their role is to assign ratings to the Notes issued by the Issuer. The Luxembourg Issuer and its Related Parties THE LUXEMBOURG ISSUER The Luxembourg Issuer is a private limited company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg having its registered office at 8-10, rue Mathias Hardt, 1717 Luxembourg, Grand Duchy of Luxembourg. The Luxembourg Issuer is a securitisation company within the meaning of, and governed by, the Luxembourg Securitisation Law. The sole object of the Luxembourg Issuer is to enter into securitisation transactions within the meaning of the Luxembourg Securitisation Law and the Luxembourg Issuer may, in this context, assume risks, existing or future, relating to the holding of assets, whether movable or immovable, tangible or intangible, as well as risks resulting from the obligations assumed by third parties or relating to all or part of the activities of third parties, in one or more transactions or on a continuous basis. The Luxembourg Issuer may assume those risks by acquiring the assets, guaranteeing the obligations or by committing itself in any other way. It may also transfer, to the extent permitted by law and these articles of incorporation, dispose of the claims and other assets it holds, whether existing or future, in one or more transactions or on a continuous basis. The Luxembourg Issuer may, in this same purpose, acquire, dispose of and invest in loans, stocks, bonds, debentures, obligations, notes, advances, shares, warrants and other securities. The Luxembourg Issuer may grant pledges, other guarantees or security of any kind to Luxembourg or foreign entities involved in such securitisation transaction and enter into securities lending activity on an ancillary basis. The Luxembourg Issuer may perform all legal, commercial, technical and financial investments or operations and in general, all transactions which are necessary or useful to fulfil and develop its purpose, as well as, all operations connected directly or indirectly to facilitating the accomplishment of its purpose in all areas described above. The assets of the Luxembourg Issuer may only be assigned in accordance with the terms of the securities issued to finance the acquisition of such assets. The Luxembourg Issuer will purchase Belgian Bonds and issue negotiable financial instruments in the form of the Luxembourg Notes as well as enter into certain ancillary transactions. The Luxembourg Issuer will not issue securities to the public on a continuous basis within the meaning of Article 19 of the Luxembourg Securitisation Law and thus is not and will not be authorised or supervised by the Commission de Surveillance du Secteur Financier. The Luxembourg Issuer may also within the context and for the purpose of the securitisation transaction: (i) (ii) raise funds, including through the issue of bonds, notes, obligations and other evidences of indebtedness; grant security for funds; 92

93 (iii) enter into agreements, including, but not limited to: (a) (b) (c) underwriting agreements, marketing agreements and selling agreements in relation to the raising of funds; interest and/or currency exchange agreements and other financial derivative agreements in connection with the objects mentioned above; and bank and cash administration agreements, liquidity facility agreements, credit insurance agreements and agreements creating security in connection with the activities mentioned above. For further information about the Luxembourg Issuer, see "Subscription for the Luxembourg Notes" at page 130 below. THE LUXEMBOURG CORPORATE SERVICES PROVIDER Mercuria Services S.A. is a public company with limited liability incorporated as a société anonyme under the laws of the Grand Duchy of Luxembourg, having its registered office at 8-10, rue Mathias Hardt, L 1717 Luxembourg registered with the Luxembourg Trade and Company Register under number B It will act as corporate services provider pursuant to a corporate services agreement (the "Luxembourg Corporate Services Agreement"). The Luxembourg Corporate Services Provider's core businesses are twofold: (i) (ii) domiciliation services, including various administrative and corporate services related thereto. It also generally assists international clients in incorporating, administering and managing Luxembourg companies; investment company services, assisting investment companies to fulfil the UCITS III governance criteria. The Luxembourg Corporate Services Provider is licensed by the Luxembourg Ministry of Finance to act as a domiciliation agent within the meaning of Article 29-1 of the law of 5 April 1993 on the financial sector, as amended (the "Luxembourg Banking Law") As a licensed financial professional under the Luxembourg Banking Law, it is subject to the supervision of the Commission de Surveillance du Secteur Financier, the supervisory authority of the Luxembourg financial sector. THE LUXEMBOURG SECURITY AGENT As Luxembourg Security Agent, MSMS will hold the pledge over the Belgian Bonds (the "Belgian Bonds Pledge Agreement") granted by the Luxembourg Issuer in favour of the Issuer, as the subscriber of the Luxembourg Notes in its own name and as agent (mandataire) for the Issuer, as the holder of the Luxembourg Notes. THE BELGIAN BOND SERVICER MSMS has been appointed as Belgian Bond Servicer by the Luxembourg Issuer pursuant to the Belgian Bonds servicing agreement dated on or about the Closing Date (the "Belgian Bonds Servicing Agreement"). Under the Belgian Bonds Servicing Agreement, the Belgian Bond Servicer will be required in particular to (i) make certain calculations in respect of the sums received by the Luxembourg Issuer under the Belgian Bonds or paid by the Luxembourg Issuer to the Issuer under the Luxembourg Notes, (ii) provide services in relation to the transfer to the Luxembourg Issuer of all amounts in relation to the collection of the Belgian 93

94 Bonds and under the Belgian Related Security, (iii) provide services in relation to the calculation of amounts due under the Luxembourg Notes, (iv) provide certain data administration services in relation to the Belgian Bonds and the Belgian Related Security, and (v) report to the Luxembourg Issuer and, at the request of the Luxembourg Issuer, the Management Company, on a quarterly basis, on the performance of the Belgian Bonds and, as the case may be, the enforcement of the Belgian Related Security. THE LUXEMBOURG LIQUIDITY PROVIDER Lloyds TSB Bank plc will act as the Luxembourg Liquidity Facility Provider under the Luxembourg Liquidity Facility Agreement. The Luxembourg Issuer will be entitled to make drawings under the Luxembourg Liquidity Facility Agreement from time to time to cover certain expenses. Each drawing under the Luxembourg Liquidity Facility Agreement will be made in Euro. Subject to certain limitations, the Luxembourg Issuer will be entitled to make Luxembourg Expenses Drawings under the Luxembourg Liquidity Facility Agreement from time to time to cover certain expenses as well as Luxembourg Accrued Interest Drawings to cover Accrued Interest Shortfalls in the amounts required to pay interest that has accrued on outstanding Luxembourg Expenses Drawings under the Luxembourg Liquidity Facility Agreement. THE LUXEMBOURG ISSUER STATUTORY AUDITORS BDO Compagnie Fiduciaire, having its registered office at 5, boulevard de la Foire, L-2013 Luxembourg, will act as the Luxembourg Issuer Statutory Auditor. The Belgian Issuer and its Related Parties BELGIAN ISSUER - BELGIAN SOCIÉTÉ ANONYME The Belgian Issuer is AB CPFM Europroperty Belgium NV, a limited liability company (société anonyme/naamloze vennootschap) incorporated under the laws of Belgium with its registered office at Chaussée de Waterloo / Waterloosesteenweg 876, 1000 Brussels, Belgium and registered with the Crossroads Bank for Enterprises (Banque-Carrefour des Entreprises/Kruispuntbank voor Ondernemingen) under number For further information on the Belgian Issuer, see "The Originated Assets Documentation The Belgian Originated Assets The Belgian Bonds" at page 117. THE BELGIAN SECURITY AGENT MSDW Finance (Netherlands) B.V., a besloten vennootschap incorporated under the laws of The Netherlands, with its registered office at Locatellikade 1, 1076 AZ Amsterdam, The Netherlands, is the Belgian Security Agent. The Belgian Security Agent is engaged in the business of, among other things, providing agency services in the context of the issuance of capital market debt instruments similar to the Belgian Bonds pursuant to agreements similar to the Belgian Security Agreements. Its sole activity is to act as Belgian Security Agent in connection with the Belgian Bonds. THE BELGIAN PROPERTY OWNING COMPANIES 94

95 Centrum Invest SPRL, Melodicum SPRL, Polytrophys SPRL, Seminole SPRL and Trealen SPRL (the "Belgian Property Owning Companies"). The Belgian Property Owning Companies were incorporated as sociétés anonymes/naamloze vennootschappen under Belgian law. On 23 June 2003, each of the Belgian Property Owning Companies was converted from a société anonyme/naamloze vennootschap into a société privée à responsabilité limitée/besloten vennootschap met beperkte aansprakelijkheid pursuant to the relevant provisions of the Belgian Company Code. Such conversion was undertaken in a manner which preserved the efficacy of the security interests granted to the Belgian Security Agent by the Belgian Issuer over their shares in the Belgian Property Owning Companies. For further information on the Belgian Companies see "The Originated Assets Documentation The Belgian Originated Assets The Belgian Bonds" at page 117. BELGIAN ISSUER'S SHAREHOLDERS AB CPFM Europroperty Fund BV, a company incorporated under the laws of The Netherlands having its registered office at Kabelweg 37, 1014 BA Amsterdam, The Netherlands. 95

96 THE BORROWERS The Loan Pool consists of five French Loans and the Belgian Bonds. Two French Loans (accounting for 35.1 per cent. of the Aggregate Cut-Off Date Balance) were made to real estate companies (sociétés civiles immobilières) incorporated under French law. One French Loan (accounting for 34.0 per cent. of the Aggregate Cut-Off Date Balance) was made to two French unlimited partnership companies (sociétés en nom collectif) incorporated under French law. One French Loan (accounting for 7.9 per cent. of the Aggregate Cut-Off Date Balance) was made to a limited liability company (société par actions simplifiée) incorporated under French law. One French Loan (accounting for 18.7 per cent. of the Aggregate Cut-Off Date Balance) was made to a limited liability company (société à responsabilité limitée) incorporated under French law. The Belgian Bonds (accounting for 4.3 per cent. of the Aggregate Cut-Off Date Balance) were issued by a limited liability company (société anonyme) incorporated under Belgian Law. FRENCH SOCIÉTÉ EN NOM COLLECTIF The Pascal Loan was made to Pascal Immobilière Première SNC and Pascal Immobilière Seconde SNC which are both French unlimited partnerships (sociétés en nom collectif), registered with the Trade and Companies Registry of Paris (Registre du Commerce et des Sociétés de Paris). A société en nom collectif ("SNC") is a closed company with at least two members (bodies corporate or individuals which are registered as traders (commerçants) and subject to unlimited liability). It has no minimum capital requirement and very few restrictions on its organisation. An SNC may not issue securities nor publicly place its debt or equity. Interests in an SNC are referred to as parts sociales (shares). The members of an SNC are indefinitely and jointly and severally liable for all debts of the SNC, including, debts arising before they became members. By operation of law, the insolvency of the SNC automatically triggers the insolvency of its members. An SNC is managed by a general manager (gérant). The general manager may be an individual or an entity (in the latter case, the legal representatives of that entity will incur the same liability as if they were themselves general managers) and need not be a member. The general manager is appointed by the members in general meeting and may be removed at any time by a simple majority resolution (or a greater majority as provided by the by-laws of the SNC) of the members (save that if all members are general managers, or if the general manager is a member designated as general manager by the memorandum and articles of association, a unanimous resolution of the other members is required. A general manager removed without proper cause (justes motifs) may have a claim for damages. As regards third parties, the general manager enjoys the widest powers to bind the company, but only insofar as he acts within the scope of the company's corporate purposes. Ultimate authority within an SNC lies with the members in general meeting. Resolutions must be passed unanimously, unless the by-laws provide otherwise for certain types of resolutions. The partners (associés) may appoint statutory auditors (commissaires aux comptes) and must do so where certain thresholds are triggered (for example, number of employees, minimum annual turnover, total amount of balance sheet). Registration duties (droits d'enregistrement) at a rate of 4.80 per cent. are due on the transfer of shares (parts sociales) of a SNC. A 23,000 rebate is applicable on the transfer price or fair market value of the shares (parts sociales), pro rata to the number of shares (parts sociales) transferred (such 23,000 rebate is not applicable to the sale of shares (parts sociales) in real estate companies (société à prépondérance immobilière), defined as an unlisted company more than 50 per cent. of the gross assets of which is composed or has been composed over the year preceding the transfer of real estate assets or of shares in a real estate company (société à prépondérance immobilière). The 4.80 per cent. rate will be increased to 5 per cent. as of 1 January

97 Pascal Immobilière Première SNC is per cent. owned by Pascal Défense SARL, a limited liability company registered with the Trade and Companies Registry of Paris (Registre du Commerce et des Sociétés de Paris); one share is held by Pascal Immobilière Seconde SNC. Pascal Immobilière Seconde SNC is per cent. owned by Pascal Défense SARL, a limited liability company registered with the Trade and Companies Registry of Paris (Registre du Commerce et des Sociétés de Paris), except for one share held by Pascal Immobilière Première SNC. Pascal Défense SARL is 100 per cent. directly owned by MSEOF Pascal France SARL, a limited liability company registered with the Trade and Companies Registry of Paris (Registre du Commerce et des Sociétés de Paris). FRENCH SOCIÉTÉ PAR ACTIONS SIMPLIFIÉE The Ford Loan was made to SAS Foncière du Chateau St Léger which is a French limited liability company (société par actions simplifiée), registered with the Trade and Companies Registry of Paris (Registre du Commerce et des Sociétés de Paris). A French société par actions simplifiée ("SAS") may have a single shareholder if its memorandum and articles of association so provide. The liability of the shareholder(s) of an SAS, each being referred to as partner (associé), is limited to the amount of its (their) equity participation. Save for certain type of SAS, undertaking certain types of regulated activities, the minimum share capital of a SAS is 37,000 and the equity interests of a SAS, which may not solicit funds from the public (appel public à l'épargne), are referred to as actions (shares). Each SAS is managed by one director (président), who may be an individual or a legal entity, as specified in the articles of associations of such SAS. The articles of association also determine the corporate decisions which have to be taken by the director as well as the conditions under which a director is appointed and removed. In accordance with Article L of the French Code de commerce, as regards third parties, the director has the power to bind an SAS, even if the director's acts exceed the company's purpose, unless such SAS proves that the third parties knew that such acts exceeded the company's corporate purpose or, due to circumstances, could not be unaware that such acts exceeded the company's corporate purpose, it being understood that the mere publication of the memorandum and articles of association of an SAS is not sufficient proof. Pursuant to paragraph 2 of Article L of the French Code de commerce, the provisions of the company's memorandum and articles of association which limit the director's powers may not be raised as a defence against third parties. The statutory auditors of an SAS are appointed at the general meeting of shareholders. The partners must appoint at least one statutory auditor (commissaire aux comptes) and where an SAS publishes consolidated accounts (comptes consolidés), two statutory auditors must be appointed. Registration duties (droits d'enregistrement) at a rate of 1.00 per cent. capped at 3,049 (1.10 per cent. capped at 4,000 as of 1 January 2006) are due on the transfer of actions of a SAS. However, if the SAS is a real estate company (société à prépondérance immobilière) registration duties (droits d'enregistrement) at a rate of 4.80 per cent (5 per cent. on 1 January 2006) are due on the transfer of shares (actions). A real estate company (société à prépondérance immobilière) is defined as an unlisted company more than 50 per cent. of the gross assets of which is composed or has been composed over the year preceding the transfer of real estate assets or of shares in a real estate company (société à prépondérance immobilière). SAS Foncière du Chateau St Léger is 100 per cent. owned by Blue Star, a Luxembourg société anonyme registered with the Trade and Companies Registry of Luxembourg, 99 per cent. of Blue Star shares are held by Abdullatif & Mohammed Al-Fozan Development Co., a Saudi limited liability company registered in Saudi Arabia and one per cent. by an individual, Mr. Abdullah A. Al-Fozan, domiciled in Saudi Arabia. 97

98 FRENCH SOCIÉTÉ À RESPONSABILITÉ LIMITÉE The Carillon Loan was made to White Carillon which is a French limited liability company (société à responsabilité limitée), registered with the Trade and Companies Registry of Paris (Registre du Commerce et des Sociétés de Paris). A French société à responsabilité limitée ("SARL") may have a single shareholder if its memorandum and articles of association so provide. The liability of the shareholders is limited to the amount of their equity participation. There is no minimum share capital for an SARL; it may not issue securities and interests in an SARL are referred to as shares (parts socials). An SARL is managed by one or more partners (gérants) who are individuals. The partner is appointed by the shareholders in general meeting and may be removed by the latter for proper cause (justes motifs). In accordance with Article L of the French Code de commerce, as regards third parties, the partner is fully empowered to bind the company, even if such acts exceed the corporate purpose of the company. In accordance with Article L al. 6 of the French Code de commerce, the limitations of powers in respect of the partners are not binding (inopposable) vis-à-vis third parties. Ultimate authority within an SARL lies with the shareholders in general meeting. The shareholders may appoint statutory auditors (commissaires aux comptes) and must do so where certain thresholds are triggered (for example, number of employees, minimum annual turnover, total amount of balance sheet). Registration duties (droits d'enregistrement) at a rate of 4.80 per cent. are due on the transfer of shares (parts sociales) of an SARL. A 23,000 rebate is applicable on the transfer price or fair market value of the shares (parts sociales), pro rata to the number of shares (parts sociales) transferred (such 23,000 rebate is not applicable to the sale of shares (parts sociales) in real estate companies (société à prépondérance immobilière), defined as an unlisted company more than 50 per cent. of the gross assets of which is composed or has been composed over the year preceding the transfer of real estate assets or of shares in a real estate company (société à prépondérance immobilière). The 4.80 per cent. rate shall be increased to 5 per cent. as of 1 January White Carillon is 100 per cent. owned by Green Palace SARL, a limited liability company registered with the Trade and Companies Registry of Paris (Registre du Commerce et des Sociétés de Paris). FRENCH SOCIÉTÉ CIVILE IMMOBILIÈRE The Lexin Portfolio Loan and the France Telecom Loan were made respectively to Le Directoire SCI, Les Bureaux Diapason SCI and Le Verdun SCI (the "Lexin Portfolio Borrowers"), and SCI Alleray which are French real estate companies (sociétés civiles immobilières), registered with the Trade and Companies Registry of Paris (Registre du Commerce et des Sociétés de Paris). Le Directoire SCI, Les Bureaux Diapason SCI and Le Verdun SCI were French limited liability companies (sociétés par actions simplifiées) as at the date of the origination of the Lexin Portfolio Loan. Their corporate form has been changed to the corporate form of real estate companies (sociétés civiles immobilières) on 26 September 2005 subject to and in accordance with the terms of the Lexin Portfolio Loan Agreement. Perfected pledges over these French Borrowers' shares have been granted in favour of the French Loan Originator and after the Closing Date, the Issuer as part of the French Related Security, on such date. A French société civile immobilière ("SCI") is a corporate entity governed by the provisions of its articles of association and the French Code civil. The activities carried out by SCIs must be of a civil nature. The letting of buildings owned by a SCI is considered to be of a civil nature. Most other real estate activities are of a commercial nature. An SCI must be created by at least two members, each being referred to as a partner (associé) (Article 1832 of the French Code civil). An SCI has no minimum capital requirement. The equity interests held by partners in an SCI are referred to as shares (parts sociales). The partners (associés) of an SCI are subject to 98

99 unlimited liability in respect of the entire debt of the SCI in proportion to their individual share in the capital of the SCI (Article 1857 of the French Code civil). A partner who ceases to be a partner remains liable for the SCI's debts which become due and payable until the date on which his departure becomes binding on third parties. The creditors of an SCI may file an action for payment against a partner only if they have made a prior unsuccessful claim against the SCI (Article 1858 of the French Code civil). An SCI is managed by one or several general managers (gérants) who may, but need not be a partners of the SCI (Article 1846 of the French Code civil). The partners may be a individuals or corporate entities (in the latter case, the legal representatives of such corporate entity incur the same civil and criminal liability as if they were themselves a partner) (Article 1847 of the French Code civil). A partner may be removed by a simple majority resolution of the partners (Article 1851 of the French Code civil). If a general manager is removed without proper cause (justes motifs), such general manager may have a claim for damages against the SCI. The general manager has wide powers to bind the company as regards third parties, and provisions to the contrary contained in the articles of association are not enforceable against such third parties (Article 1849 the French Code civil). However, the general manager must act within the scope of the company's corporate purpose. In the event that the general manager exceeds such limit, the SCI is not bound by such general manager's act. The partners may appoint statutory auditors (commissaires aux comptes) and must do so where certain thresholds are triggered (for example, number of employees, minimum annual turnover, total amount of balance sheet). Pursuant to Article 1861 of the French Code civil, shares (parts sociales) in a SCI may generally be assigned only after such assignment has been unanimously agreed upon by the other partners of the SCI. Registration duties (droits d'enregistrement) at a rate of 4.80 per cent. are due on the transfer of shares (parts sociales) of a SCI. A 23,000 rebate is applicable on the transfer price or fair market value of the shares (parts sociales), pro rata to the number of shares (parts sociales) transferred (such 23,000 rebate is not applicable to the sale of shares (parts sociales) in real estate companies (société à prépondérance immobilière), defined as an unlisted company more than 50 per cent. of the gross assets of which is composed or has been composed over the year preceding the transfer of real estate assets or of shares in a real estate company (société à prépondérance immobilière). The 4.80 per cent. rate shall be increased to 5 per cent. as of 1 January Following the change in the corporate form of the French Borrowers under the Lexin Portfolio Loan on 26 September 2005, Les Bureaux Diapason SCI is 100 per cent. owned by Le Directoire SCI, except for one share held by Le Verdun SCI. Le Verdun SCI is 100 per cent. owned by Le Directoire SCI, except for one share held by Les Bureaux Diapason SCI. Le Directoire SCI is 100 per cent. owned by Lexin France Holding SAS, a société par actions simplifiée, registered with the Trade and Companies Registry of Paris (Registre du Commerce et des Sociétés de Paris) except for one share held by Le Verdun SCI and for one share held by Les Bureaux Diapason SCI. SCI Alleray is fully owned by SAS Alleray, a limited liability company (société par actions simplifiée) incorporated under the laws of France, registered with the Trade and Companies Registry of Paris (Registre du Commerce et des Sociétés de Paris), except for one share held by JP Morgan European Property Holding Luxembourg 5, a Luxembourg limited liability company (société à responsabilité limitée) incorporated under the laws of Luxembourg, registered with the Trade and Companies Registry of Luxembourg. BELGIAN SOCIÉTÉ ANONYME The Belgian Issuer is ABCPFM Europroperty Belgium NV, a limited liability company (société anonyme/naamloze vennootschap) incorporated under the laws of Belgium. A Belgian société anonyme/naamloze vennootschap ("SA/NV") must have at least two shareholders (individuals or legal entities). If, during the life of an SA/NV, the number of shareholders is reduced to one for a period of more than a year, this single shareholder will become jointly liable with the company for all 99

100 of the company s liabilities that have arisen as from the date on which all shares were concentrated in the hands of the one single shareholder. The liability of the shareholders of an SA/NV is limited to the amount of their equity participation. The minimum subscribed share capital of a SA/NV is 61,500 and the equity interests of a SA/NV, which may solicit funds from the public (appel public à l'épargne/openbaar beroep op het spaarwezen), are referred to as actions/aandelen (shares). At least one-fourth of the total subscribed capital must be paid in upon incorporation, with a minimum of 61,500. Prior to the incorporation of an SA/NV, the incorporators must submit to the notary a so-called financial plan in which they justify (for the first two financial years) the future capital requirements of the SA/NV to be set up. Should the company be declared bankrupt within three years following the company s formation, the incorporators may however be held personally liable for the obligations of the company, if the bankruptcy has been caused by a manifest insufficiency of capital during the company s first two financial years. However, the articles of association may provide that only certain major incorporators will be liable under the above rules, whereas the other incorporators will be deemed to be mere subscribers. Each SA/NV must be managed by a board of directors which, depending on the company's articles of association, will consist of at least two directors (if there are only two shareholders) or a minimum of three directors (if there are three or more shareholders). Directors of an SA/NV may be individuals or legal entities. Whenever a legal entity is appointed as director, it must designate an individual to perform the mandate in its name and for its account. This permanent representative shall be in the same position as if he were acting in his own name and for his own account. His appointment (and resignation) must be published in the Appendixes to the Belgian State Gazette. The board of directors of an SA/NV is authorized to do and perform any acts necessary or useful to realise or further the company's corporate purpose, save for those acts reserved by law to the general meeting of shareholders. The board is entitled to represent the company and bind it in transactions with third parties. However, the articles of association of an SA/NV may restrict the directors' right of representation. The board of directors is appointed by the general meeting for a maximum (renewable) term of six years. Board members may be removed at any time by the general meeting. The articles of association of an SA/NV may also provide that certain decisions of the board of directors require the prior approval of the general meeting. In principle, such a restriction on the power of the board has internal effect only and may only be invoked against or by third parties under limited circumstances. Daily managerial authority may be delegated by the board to one or more directors, who are usually referred to as the managing director(s) (administrateur délégué/gedelegeerd bestuurder) or to any other person(s) (generally an employee of the company, usually referred to as the general manager (directeur général/algemeen directeur). These individuals may act jointly or severally. Any person(s) to whom daily managerial authority has been delegated may represent the company in matters of daily management. The appointment, removal and powers of such individuals are regulated by the articles of association, provided no restrictions on their power to represent the company in matters of day-to-day management may be relied on by third parties. Shares in an SA/NV will be in bearer form or in registered form. For registered shares, title to shares will result from appropriate mentions in the company s stock ledger. If the shares are in bearer form title will result from possession of share certificates. Transfers of shares in an SA/NV are basically free, but it is allowed that the parties provide for restrictions on the transfer of shares, e.g. by way of rights of first refusal in favour of the existing shareholders. Such restrictions may be included in the articles of association or contained in separate shareholders' agreements. It is also possible to include in the articles of association a share transfer approval clause by virtue of which transfers of shares are only allowed if approved either by the general shareholders' meeting or the board of directors. If the proposed transferee is refused, the company will generally have to make sure that the shares can be taken over by one or more existing shareholders or by a third party. For bearer shares restrictions on transfers may be rendered effective through a deposit of the shares with a third party. Shares may also be represented in a dematerialised form. Such dematerialised shares are represented by a registration of the share in the holder s name in an account opened with an approved financial institution. 100

101 Booking from one account to the other operates the transfer of such shares. However, the necessary implementing decrees relating to dematerialised shares have not yet been adopted. An SA/NV must have an auditor if certain thresholds are reached: if the SA/NV employs more than 100 employees or if it meets at least two of the following three criteria: (i) more than 50 employees (annual average); (ii) an annual consolidated turnover of more than 6,250,000 (ex VAT); (iii) a total of consolidated balance sheet of more than 3,125,000. An auditor may be appointed by the general meeting of shareholders for a renewable term of three years. The general meeting of shareholders may only withdraw such an appointment on serious grounds. BELGIAN PROPERTY OWNING PROPERTIES Centrum Invest SPRL, Melodicum SPRL, Polytrophys SPRL, Seminole SPRL and Trealen SPRL (the "Belgian Property Owning Companies"). The Belgian Property Owning Companies were incorporated as sociétés anonyme under Belgian law. On 23 June 2003, each of the Belgian Property Owning Companies was converted from a société anonyme/naamloze vennootschap into a société privée à responsabilité limitée/besloten vennootschap met beperkte aansprakelijkheid pursuant to the relevant provisions of the Belgian Company Code. Such conversion was undertaken in a manner which preserved the efficacy of the security interests granted to the Belgian Security Agent by the Belgian Property Owning Companies over their shares in the Belgian Issuer. A Belgian société privée à responsabilité limitée/besloten vennootschap met beperkte aansprakelijkheid ("SPRL/BVBA") may have one or more founders/shareholders (individual or legal entity). An SPRL/BVBA established by one unique person is called a SPRLU/EBVBA. An SPRL/BVBA can become an SPRLU/EBVBA if one person acquires all the shares. If an SPRL/BVBA is established by one individual, the latter will be jointly liable with any other SPRL/BVBA that he would establish or hold as single shareholder, except if the shares have been transferred to him due to death. The joint liability will cease at the entrance of a new shareholder in, or the winding-up of, the company. If an SPRL/BVBA is established by one legal entity or if during the life of the company the number of shareholders is reduced to a single legal entity for a period of more than a year, this single shareholder will become jointly liable with the company for all of the company's liabilities that have arisen as from the date on which all shares were concentrated in the hands of the one single shareholder, and until the entrance of a new shareholder or the winding-up of the company. The liability of the shareholders of an SPRL/BVBA is limited to the amount of their equity participation. The minimum subscribed share capital of a SPRL/BVBA is 18,500 and the equity interests of a SPRL/BVBA, which may not solicit funds from the public (appel public à l'épargne/openbaar beroep op het spaarwezen), are referred to as parts sociales/aandelen (shares). The minimum paid in capital is EUR 6,200 (if there are at least two founders) and EUR 12,400 (if there is only one founder). Prior to the incorporation of an SPRL/BVBA, the incorporators must submit to the notary a so-called "financial plan" in which they justify (for the first two financial years) the future capital requirements of the SPRL/BVBA to be set up. Should the company be declared bankrupt within three years following the company s formation, the incorporators may be held personally liable for the obligations of the company, if the bankruptcy has been caused by a manifest insufficiency of capital during the company s first two financial years. The articles of association may not provide that only certain major incorporators will be liable under the above rules. An SPRL/BVBA may have one or more managers (gérant/zaakvoerder) who may be individuals or legal entities. Whenever a legal entity is appointed as manager, it must designate an individual to perform the mandate in its name and for its account. This permanent representative shall be in the same position as if he were acting in his own name and for his own account. His appointment (and resignation) must be published in the Appendixes to the Belgian State Gazette. Every manager has the power to perform any act necessary or useful for the fulfilment of the purposes of the company. This power covers all acts that are not expressly reserved by law to the general meeting of shareholders. The articles of association may restrict the powers of the manager, but such restrictions are no defence against third parties, even if they have been published. However, the requirement that the signature 101

102 of more than one manager is necessary to bind the company will be valid as against third parties if it is published in the Appendix to the Belgian State Gazette. Managers may act jointly or severally (as a managerial council) and are appointed by the general meeting for a definite or indefinite term. Managers appointed in the company's memorandum or articles of association are deemed to hold office for the life of the company, unless otherwise provided. These managers can only be removed for serious cause by a general meeting of shareholders deciding by a special majority of three fourth of the votes. They can always be dismissed by unanimity. The capital is divided into shares, with or without par value, with or without right to vote. Each share confers equal rights in the allocation of profits and to the balance upon winding-up. It is impossible to create preferred stock. No non-capital shares (i.e. bonus shares) are permitted. The shares are indivisible. Bearer shares are not allowed. All shares must be recorded in the register of shareholders, which will attest the property of such shares. This register is kept at the registered office of the company and any shareholder or interested third party may inspect it. The law stipulates certain minimum restrictions on the transfer of shares. The articles of association may provide further restrictions. The transfer of shares is subject to the agreement of at least half the number of shareholders representing at least three-quarters of the capital not being transferred. However, this agreement is not required (unless the articles of association provide otherwise) in case of transfers to shareholders, spouses, ancestors or descendants or to persons accepted in the articles of association. As against the company and third parties, a transfer is effective from the date of entry of the transfer in the registry of shares. The subscription by the SPRL/BVBA, by a subsidiary or by a third party acting on its behalf to its own shares is prohibited. All rights vested in shares subscribed by the SPRL/BVBA are suspended until they have been disposed of. An SPRL/BVBA is not entitled to grant loans or securities in order to have its own shares acquired by third parties. However, it may grant loans or securities to its own employees or to affiliated companies, at least half of the voting rights of which are held by the company s employees, in order to have its shares acquired by them. An SPRL/BVBA must have an auditor if certain thresholds are reached: if the SPRL/BVBA employs more than 100 employees or if it meets at least two of the following three criteria: (i) more than 50 employees (annual average); (ii) an annual consolidated turnover of more than 6,250,000 (ex VAT); (iii) a total of consolidated balance sheet of more than 3,125,000. An auditor may be appointed by the general meeting of shareholders for a renewable term of three years. The general meeting of shareholders may only withdraw such an appointment on serious grounds. 102

103 THE ORIGINATED ASSETS THE ORIGINATION PROCESS The Originated Assets have been originated by MS Bank (and in the case of the Belgian Bonds, by MS Bank, Morgan Stanley & Co. Incorporated and Morgan Stanley & Co. International Limited) between June 2004 and July The Originated Assets comprise, among other things, five French Loans (the "French Originated Assets") and the Belgian Bonds (the "Belgian Originated Assets"). As described further below, there are structural differences between each of the Originated Assets, reflecting both the legal requirements of the various jurisdictions in which the relevant real properties are situated (the "Relevant Jurisdictions") and the commercial requirements of the parties involved in the origination of the Originated Assets. These differences notwithstanding, in originating the Originated Assets, MS BANK has adhered to a consistent origination philosophy and approach, qualified, to the extent required, by the laws and commercial practices of each of the Relevant Jurisdictions. The following description relates to MS Bank's origination philosophy and approach in general (the "Lending Criteria"). Although it refers throughout to "loans", the same origination process and approach were applied to the origination of the Belgian Bonds. LENDING CRITERIA Lending Philosophy MS Bank's credit policy is to underwrite commercial property loans based on an analysis of the contractual cashflows, occupational tenant covenants and lease terms and the overall quality of the properties offered as security. Risk is assessed by stressing the cashflows derived from underlying tenants and the risks associated with refinancing the amount due upon maturity of the loan. The plans and strategy for the relevant property, as well as the property investment experience and expertise of the relevant borrower's sponsors, are also factors to be taken into consideration. Types of Borrower Borrowers are, typically, SPEs sponsored by experienced property investors. A borrower may be incorporated and/or resident in the United Kingdom or in an overseas jurisdiction. In respect of the Originated Assets, the borrowers are incorporated in France or in Belgium. Security The principal security for a loan originated by MS Bank will be a first ranking charge by way of legal mortgage over freehold which are the subject matter of the relevant loan, and charges over the borrower's other assets as applicable in the Relevant Jurisdictions. Advance Level MS Bank normally advances new loans having a principal amount of between 0.5 million and 1,000 million (or their equivalent in euros). The LTV Ratios of loans originated by MS Bank typically range from approximately 40 per cent. to 85 per cent. For further information regarding the loan to value ratios of the loans in the Originated Assets, see "The Loan Pool Overview" at page 148. Purpose of the Loan The purpose of the loans will normally be to assist in the acquisition or re-financing of commercial real estate and/or for general purposes. Repayment Terms The term of the loans originated by MS Bank may be between one and 30 years, although all the loans relating to the Originated Assets have a term of between five and seven years. Loans may be interest only 103

104 or have defined principal repayment schedules. The principal repayment schedule is structured to take account of the cashflow pattern of the leases in effect at the date of commencement of the loan and the anticipated realisable value of the security at its maturity. For further information regarding the term of the loans in the Originated Assets, see "The Loan Pool Overview" at page 148; for information regarding amortisation of the loans relating to the Originated Assets, see "The Originated Assets Documentation - The French Loans and the French Related Security" at page 107 and "The Originated Assets Documentation - The Belgian Originated Assets" at pages 117. LEGAL DUE DILIGENCE Following the approval in principle by MS Bank of the relevant loan facility, certain legal due diligence procedures are followed before the loan is advanced. Details of these procedures are set out below. The legal due diligence is in each case addressed to MS Bank; it is not updated prior to the sale of the relevant loan and its related security to an issuer in connection with any securitisation thereof and the assignment by such issuer thereafter by way of security to a trustee, nor (except in certain limited circumstances) is it readdressed either to such issuer or trustee. Such issuer instead must rely solely on the representations and warranties given by MS Bank, which are contained in the loan transfer agreement entered into by it. General Information MS Bank appoints external legal advisers ("External Legal Advisers") to act for it in relation to the origination of its loans. An External Legal Adviser initially obtains (and, where reasonably practicable, checks) general information relating to a proposed facility including details of a borrower's shareholders; any borrowings that it has entered into; the accounts to be operated in connection with the proposed facility; any managing agents appointed (or to be appointed) in connection with the collection of rents and/or management of the property; and insurance of the property. With respect to properties situated in jurisdictions other than England and Wales and security governed by laws other than the laws of England and Wales, MS Bank appoints additional external legal advisers in such jurisdictions who will undertake tasks relating to such properties and security analogous to those undertaken by the External Legal Advisers in England or Wales (including those detailed in paragraphs below). Such legal advisers will be appropriately qualified and experienced in the relevant jurisdictions. In relation to the French Loans, the External Legal Advisers that acted in relation to the origination of such French Loans were De Pardieu Brocas Mafféi acting as solicitor and Etude Cheuvreux & Associés or Eutde Allez & Associés, as applicable, acting as French notaries (notaires) (save for the Lexin Portfolio Loan in relation to which the Paris office of Mayer Brown Rowe & Maw was instructed) and the External Legal Advisers that acted in relation to the Belgian Bonds were Freshfields Bruckhaus Deringer. Property Title Investigation An important part of the legal due diligence process is to verify that the prospective borrower and/or mortgagor has or, if the property is being purchased, will have, good title to the property to be charged, free from any encumbrances or other matters which would be considered to be of a material adverse nature. The process of title verification is slightly different depending upon whether a report on title is prepared and issued in favour of MS Bank by the borrower's solicitors or whether the title investigation is undertaken by an External Legal Adviser (or French notary) and/or and a report is issued by it. Report on Title prepared by Borrower's Solicitors and/or French notaries If a report is prepared by the borrower's solicitors, MS Bank will check the identity of the solicitors and satisfy itself on behalf of MS Bank that they are of sufficient standing and competence to deliver a report on title in respect of the relevant property. An External Legal Adviser reviews the draft form of report to ensure that it covers all relevant matters (i.e. the matters that such External Legal Adviser would expect to cover in a report (for further information, see "Report on Title from the External Legal Advisers" below)). Once the draft report has been issued, it will 104

105 raise requisitions in case of omissions, ambiguities or material disclosures in the report and satisfy itself in relation to any issues arising from the report. The relevant External Legal Adviser then prepares a summary report for MS Bank, confirming (if appropriate) approval of the form and content of the report on title and highlighting any matters contained in the report which the relevant External Legal Adviser considers should be drawn to the attention of MS Bank and its valuers. Report on Title from the External Legal Advisers If a report is prepared by an External Legal Adviser, it will undertake the usual investigation of title in relation to the relevant property which will include reviewing copies of title documents and H.M. Land Registry entries or its equivalent in jurisdictions other than England and Wales (including any lease under which the property is held). All the usual H.M. Land Registry (or its equivalent in jurisdictions other than England and Wales), local authority and any other appropriate searches will be undertaken and preliminary enquiries will be raised with the borrower's solicitors. Where the property is being acquired by the borrower, a review of the replies to enquiries raised by the borrower's solicitors will be undertaken. The terms of all leases and tenancies affecting the property will be reviewed and the basic terms (including, among other things, details of rent reviews and tenants' determination rights) will be included in the report. Where a borrower is in the course of acquiring a property that is to be charged then the purchase contract and the form of transfer of the relevant property will be reviewed and approved. The relevant External Legal Adviser will also, where the property concerned is owned by another company whose shares are acquired by the relevant borrower or mortgagor, check the terms and conditions of any share sale and purchase agreement and oversee any legal formalities required to be undertaken, for example, ensuring that the requirements of Section 155 of the Companies Act 1985 (where a mortgagor may grant financial assistance by charging its assets as security for the purpose of the purchase of its own shares) or equivalent requirements in jurisdictions other than England and Wales are complied with. The report that an External Legal Adviser prepares will highlight any material or unusual matters but otherwise confirm (if correct) that, in its opinion, the prospective borrower or mortgagor has (or would have on completion of any purchase and necessary registration) good title to the property. The report will not normally cover matters relating to the structure or construction of the relevant property, specific environmental surveys or enquiries, or any credit checks on the borrower or occupational tenants. The relevant External Legal Adviser ensures that the valuer providing the valuation of a property has a copy of the report, and it cross checks and verifies basic details relating to the property (namely tenure and term and rents for any occupational tenancies) set out in any valuation received by it. Capacity of Borrowers/Mortgagors In relation to any borrower or mortgagor incorporated in England and Wales, the relevant External Legal Adviser satisfies itself that the relevant company is validly incorporated, has sufficient power and capacity to enter into the proposed transaction, whether it is subject to any existing mortgages or charges, whether it is the subject of any insolvency proceedings, and generally that any formalities required to enter into the proposed transaction with the Originator have been (or would be by drawdown) completed. In relation to any borrower or mortgagor incorporated outside England and Wales, lawyers competent in the jurisdiction where the company is incorporated (and also, if different, the jurisdiction where the relevant property is situated) are appointed to undertake a similar due diligence process to that undertaken by the External Legal Advisers taking account of jurisdictional differences (for example, there is no register of company security interests in Jersey). The lawyers advising in connection with jurisdictions outside England and Wales are required to deliver an appropriate legal opinion confirming, among other things, that the choice of English law to govern the loan documentation if the loan documentation is governed by English law (save in relation to the security over an asset whose "situs" is outside England and Wales, where local law will apply) will be recognised and upheld. The Originator generally requires that the external legal counsel to the borrowers and any guarantors issues a legal opinion with respect to the 105

106 existence and the capacity of such borrowers and guarantors as well as to the validity and enforceability of the finance documents against such borrowers and guarantors have entered into. Structural/Environmental Reports MS Bank does not usually obtain reports relating to the structure or construction of a property (except for certain types of real estate properties), however, MS Bank does obtain environmental "desk-top" reports. These reports do not constitute full environmental surveys but test, based upon historical use records and other information publicly available, the likelihood of the property being subject to any materially increased environmental risk. Details of any material matters are then included in the report on title or summary report provided by MS Bank's legal advisers. DRAWDOWN AND POST-COMPLETION FORMALITIES The relevant External Legal Adviser ensures that all necessary registration formalities and the service of notices are dealt with at drawdown or, as appropriate, within any applicable priority or other time periods following drawdown. In relation to registrations at any relevant land registry, the relevant External Legal Adviser or its agent either undertakes these registrations or obtains an unconditional undertaking from the borrower's solicitors to effect the registrations (and, in the meantime, to hold the deeds to the order of the relevant External Legal Adviser on behalf of the security trustee). Where any borrower's solicitors ask to retain any occupational leases in order to deal with day to day management matters, they are permitted to do so subject to providing an unconditional undertaking to hold them to the relevant External Legal Adviser's order and to deliver them on demand. In addition the borrower's External Legal Advisers shall ensure that the security interests granted in the favour of MS Bank shall be validly perfected. STANDARD FORM DOCUMENTATION Each loan is documented in a credit agreement which is governed by the laws of the Relevant Jurisdictions and comply with MS Bank's standard form subject to such variations as an individual borrower may negotiate (the "Credit Agreement"). The security interests granted in favour of MS Bank in accordance with the terms of the Credit Agreements secures all obligations of a borrower. Material amendments to the standard form credit agreement and debenture are generally resisted by MS Bank unless they are necessary to reflect the terms and conditions or the structure of the particular loan, or the laws and regulations of the jurisdiction in which the relevant property is situated. 106

107 THE ORIGINATED ASSETS DOCUMENTATION The description which follows relates to the French Loans and the French Related Security and the Belgian Originated Assets constituting the Originated Assets. THE FRENCH LOANS AND THE FRENCH RELATED SECURITY Status of the French Borrowers Except in respect of the France Telecom Loan where the relevant French Borrower was incorporated and constituted for the purposes of acquiring the relevant French Property, the French Borrowers under the other French Loans were existing companies. In all such cases and unless as otherwise disclosed in "Risk Factors" at page 43 above, the French Loan Originator is satisfied that such French Borrowers have no material assets or liabilities (other than such as are fully subordinated pursuant to the French Subordinated Loan Agreements, as applicable) save in relation to the relevant French Properties. For further information, see "The French Related Security" at page 14. The French Borrowers are French incorporated limited liability companies (société par actions simplifiée or société à responsabilité limitée) or unlimited partnerships (société civile immobilière or société en nom collectif). In respect of the Pascal Loan and the Lexin Portfolio Loan, the French Borrowers are jointly and severally liable (solidaires) within the limit of the maximum of their respective share in the Pascal Loan, the Lexin Portfolio Loan or the sale proceeds of its French Properties, as applicable, or the market value of their respective French Property. For further information on the joint and several liability of the French Borrowers, see "Risk Factors Factors relating to the Originated Assets Borrowers' Ability to Pay" at page 43 above. Information on the French Loans and the French Related Security The French Loans were made pursuant to the following five French Loan Agreements: (i) (ii) (iii) (iv) (v) a Loan Agreement dated 28 June 2005, which was entered into between the French Loan Originator and Pascal Immobilière Première SNC and Pascal Immobilière Second SNC as French Borrowers (the "Pascal Loan" and the "Pascal Loan Agreement"); a Loan Agreement dated 28 April 2005, which was entered into between the French Loan Originator and White Carillon as French Borrower (the "Carillon Loan" and the "Carillon Loan Agreement"); a Loan Agreement dated 27 July 2005, which was entered into between the French Loan Originator and SCI Alleray as French Borrower (the "France Telecom Loan" and the "France Telecom Loan Agreement"); a Loan Agreement dated 28 July 2005, which was entered into between the French Loan Originator and Le Directoire SCI, Les Bureaux Diapason SCI and Le Verdun SCI as French Borrowers (the "Lexin Portfolio Loan" and the "Lexin Portfolio Loan Agreement"); a Loan Agreement dated 12 October 2004, which was entered into between the French Loan Originator and Foncière du Chateau Saint Léger as French Borrower (the "Ford Loan" and the "Ford Loan Agreement"). The Pascal Loan, the Carillon Loan, the France Telecom Loan, the Lexin Portfolio Loan and the Ford Loan are referred to herein as the "French Loans" and the Pascal Loan Agreement, the Carillon Loan Agreement, the France Telecom Loan Agreement, the Lexin Portfolio Loan Agreement and the Ford Loan Agreement are referred to herein as the "French Portfolio Loan Agreements". 107

108 Where managing agents are employed, a duty of care agreement to which the French Loan Originator is a party (the "French Duty of Care Agreement") has been obtained from them, in particular if such management agents are in charge of transferring the Borrower's monies. The French Duty of Care Agreements generally refer to rent collection, where rent is not paid directly into the French Rent Accounts, and property management. Contemporaneously with entering into the French Loan Agreements, the Borrowers, certain affiliates of the French Borrowers and the French Loan Originator entered into certain French law governed security agreements (the "French Security Agreements" and together with the French Loan Agreements, the "French Finance Documents") creating the French Related Security. For further information about the French Security Agreements, see "French Related Security" at page 14 above. In addition to the French Finance Documents, the French Borrowers under the Pascal Loan, the Carillon Loan and the France Telecom Loan entered into subordinated loan agreements with certain of their affiliates (the "French Subordinated Lender") which provided additional debt finance to the French Borrowers (the "French Subordinated Loan Agreements"). Payment of amounts owing in respect of the French Subordinated Loan Agreements are expressly subordinated to payments of amounts owing in respect of the French Finance Documents. The French Loans all have original maturities of between five and seven years. No Loan is scheduled to be repaid later than August Interest payable in relation to the French Loans is payable at a fixed rate (except for the Pascal Loan which bears interest at a capped rate of interest), accrues daily and is payable quarterly in arrear. The interest rate was notified to the relevant Borrower by the French Loan Originator prior to making the French Loans. All the French Properties are let to third party tenants. Certain matters concerning the tenancies could affect the value of a French Property; these are part of the normal risks of lending on the security of let property and are referred to in "Risk Factors Factors Relating to the Originated Assets" at page 43. Terms of the French Loans Each Credit Agreement contains the types of representations, warranties and undertakings on the part of the French Borrower that a reasonably prudent lender would usually require. In relation to the French Loans, the French Loan Originator is entitled to assign to the Issuer any of its claims resulting from the Credit Agreements without restriction. A summary of the principal terms of the Credit Agreements is set out below. Loan Amount and Drawdown and Further Advances The maximum amount of a loan is calculated by reference to a pre-agreed percentage which is between 39.1 per cent. (in respect of the Pascal Loan) and 69.8 per cent. (in respect of the Lexin Portfolio Loan). None of the French Loans places an obligation on the relevant French Loan Originator or, after the Closing Date, the Issuer to make any further advance to a French Borrower and, following the transfer of the French Loan Receivables to the Issuer, the French Loan Servicer will not be permitted under the relevant French Loan Servicing Agreement to agree to an amendment of the terms of a French Loan that would require the Issuer to make any further advances to the French Borrower. Conditions Precedent The Conditions Precedent to a drawdown of a particular French Loan varied depending upon the terms of the facility and nature of the security to be created. However, certain documents (duly executed) were required in all cases and included each French Borrower's constitutional documents and appropriate board minutes (where appropriate); a valuation in respect of the French Property or Properties being financed or refinanced (and, where it was considered appropriate, structural surveys and/or environmental reports); evidence of insurance cover in respect of the French Property or Properties; a certificate of title in respect 108

109 of the French Property or Properties; security documents (consisting of the French Security Agreement); all appropriate tax clearances and relevant legal opinions; and notices in connection with the assignment or assignation of rental income and more generally the perfection of the relevant French Related Security. Interest and Amortisation Payments/Repayments Interest on each French Loan is due to be paid quarterly in arrear on designated payment dates for such French Loan (each, a "French Loan Payment Date") and amortisation payments (where required to be made) are also made on French Loan Payment Dates in accordance with a pre-determined amortisation schedule. The Ford Loan and one tranche of the Lexin Portfolio Loan provide for the principal of such French Loans to be repaid in instalments over the term of the loans and the remaining three French Loans provide for repayment of such loans by way of a single payment at the end of the term of such loans. In relation to all the French Loans, the French Borrowers may make prepayments in whole or in part (in an amount not less than 5,000,000 in the case of the Pascal Loan, 1,000,000 in the case of the Lexin Portfolio Loan, the France Telecom Loan and the Ford Loan and 300,000 in the case of the Carillon Loan) on 15 days' prior notice in the case of the Pascal Loan and the Carillon Loan or on 30 days' prior notice for all the other French Loans. Mandatory repayment of the French Loans in whole or in part will be made by the relevant French Borrowers upon the total or partial destruction of the relevant Property or Properties or in the case of the sale in whole or in part (as applicable) of the relevant French Property or Properties or of the shares of the relevant French Borrower. Voluntary prepayments and mandatory repayments can be made on any Loan Payment Date or any other time provided the French Borrower pays all the interest payable in respect of the whole interest period. Prepayment Fees on a sliding scale (dependent on the prepayment date) will also be payable by the relevant French Borrowers. Information relating to the projected amortisation of the French Loans is set out in "The Loans and Related Property Summaries" at page 153. On each Loan Payment Date, moneys are debited from the French Rent Accounts to discharge any interest and/or principal payments due under the French Loans. Any surplus moneys standing to the credit of the French Rent Accounts on the relevant Loan Payment Date (after payment of certain other prescribed costs, fees and expenses) will be released to the relevant French Borrower by transferring the remaining amount to the French Available Cash Accounts. For further information relating to the structure of the accounts, see "The Structure of the Accounts" at page 143 below. Rent Accounts Rental income deriving from each French Property is paid into the relevant French Borrower Account with an immediate transfer (subject to certain deduction relating to VAT and charges and taxes forecast in the annual budget) to the relevant French Rent Accounts. The credit balance of the French Borrower Accounts are pledged to the benefit of the French Loan Originator. Amounts standing to the credit of the French Rent Accounts constitute cash collateral (gage-espèces) in favour of the French Loan Originator and such cash collateral and pledges will be transferred to the Issuer as from the Closing Date as part of the French Related Security. Representations and Warranties The representations and warranties given by the French Borrowers in relation to each French Loan include a representation to the effect that the French Borrower is validly incorporated or constituted and has the power, capacity and authority to own its assets, to carry on its business and enter into the Credit Agreement and French Security Agreements. The French Borrower also warrants that no event of default or potential event of default under its Credit Agreement and security documents will occur as a result of the French Loan being made and that it is not in default under any other document to an extent which would be material; that there is no current material 109

110 litigation or other legal proceedings against the French Borrower (except in respect of the French Borrower under the Ford Loan as disclosed in "Risk Factors Factors relating to the Originated Assets Tenant Default" at page 45 above); and that the information supplied to the French Loan Originator (and any valuers) is true, complete and accurate. Such representations and warranties are in most instances deemed repeated by the French Borrowers with reference to the facts and circumstances then prevailing on each French Loan Payment Date until the maturity date of the French Loans. Undertakings Each French Borrower gives various undertakings which take effect so long as any amount is outstanding under the relevant French Loan. The undertakings relate, among other things, to the provision of financial information on an ongoing basis; an obligation to supply the French Loan Originator with details of shareholder documentation (where relevant) and details of any material litigation and any potential event of default under the Credit Agreement; an obligation not to permit or allow any charge or security to arise over any of its assets (subject to certain subordinated security being permitted and other security (see paragraph below)) and an obligation not to sell, transfer, lease or otherwise dispose of all or a substantial part of its assets (including the relevant French Property or Properties). In respect of the Carillon Loan, the shares of the relevant French Borrower are pledged in favour of a third party guarantor as security for the first demand guarantee issued by it in connection with the payment of the deferred purchase price relating to the acquisition of such French Borrower, which is expected to occur in November The relevant French Borrower's shareholder has undertaken to grant a first ranking pledge in favour of the French Loan Originator and after the Closing Date, the Issuer, as soon as the deferred purchase price payment is effected in November 2005, provided that the loan granted for the payment of this deferred purchase price is not extended by a third party credit institution. The consent of the French Loan Originator is not required for the grant of an occupational tenancy where a unit has been or is to become vacant provided certain conditions are met, including that the occupational tenancy is on normal commercial terms and that the new tenant is of sufficient good standing and reputation. Each French Borrower undertakes in its respective Credit Agreement to ensure that the interest cover percentages always exceed a certain prescribed figure of the interest payable pursuant to the relevant Credit Agreement in respect of the relevant period(s) as specified in the table below: French Loan Minimum Interest Cover Percentage Covenants ("MICP") 1. Pascal Loan 110% 2. France Telecom Loan 110% 3. Carillon Loan 110% 4. Lexin Portfolio Loan 110% 5. Ford Loan 110% In respect of the France Telecom Loan, if further to the termination or the non-renewal of the relevant French Occupational Lease the minimum interest cover percentage is expected to be below 110 per cent. on a French Loan Payment Date, the relevant French Borrower may remedy such non-compliance by transferring all necessary sums (out of its own resources) on the relevant French Rent Account no later than ten calendar days prior to the relevant French Loan Payment Date. Such remedy will only be available for the four consecutive France Telecom Loan interest periods immediately following the first anniversary date of the termination or the non-renewal of the relevant French Occupational Lease. 110

111 Insurance Each French Borrower is required to effect or procure prior to drawdown (in each case in a form acceptable to the French Loan Originator): (i) insurance of the relevant French Property, including fixtures and improvements, on a full reinstatement basis, with not less than three (3) years' loss of rent on occupational tenancies at the relevant French Property; (ii) insurance against third party liabilities; (iii) insurance against acts of terrorism; and (iv) such other insurance as a prudent company in the business of the relevant French Borrower would effect. In respect of the Pascal Loan, the relevant French Borrower has undertaken to procure that the business interruption insurance (assurance perte de loyers) will be for a duration of not less than three years' loss of rents as from the end of Until such date, the applicable business interruption insurance will be for a duration of two years' loss of rents. Insurance policies are typically renewed on an annual basis and to the extent coverage ceases to be in place, it constitutes an event of default under the relevant Credit Agreement. In general, insurance costs are recoverable by the relevant French Borrower from tenants as part of the service charge. All insurance indemnities above a certain threshold are paid directly to the relevant French Rent Accounts. For further information relating to the payment of the insurance indemnities, see "The Structure of the Accounts The French Loans Insurance Proceeds" at page 145 below. Events of Default Each Credit Agreement contains usual events of default entitling the French Loan Originator to terminate the French Loans and/or enforce the French Related Security for such French Loan, including non-payment of amounts due, breach of the French Borrower's other obligations under the relevant Credit Agreement (including maintaining the minimum interest cover percentage) and security documents, misrepresentation and acts of insolvency. In relation to non-payment and breaches of other obligations grace periods are sometimes agreed but for periods typically no longer than two business days to 30 business days respectively. French Related Security Each French Loan has the benefit of certain security granted by the relevant French Borrower, the shareholder or shareholders of the relevant French Borrower (the "French Borrower Shareholders") and the parent company of the relevant French Borrower Shareholder (the "French Parent Company"). Given that the French Related Security differs from French Loan to French Loan, the French Related Security granted in respect of each French Loan will be described in turn. With respect to the Pascal Loan, the French Related Security includes, inter alia: (i) first ranking mortgage (hypothèque de premier rang) and a complementary second ranking mortgage (hypothèque de second rang) granted by each French Borrower over the relevant French Properties; (ii) a transfer of comprehensive insurance proceeds referred to under and pursuant to Article L of the French Code des assurances; (iii) (iv) (v) cash collateral (gage-espèces) on the French Rent Accounts; pledges over the relevant French Borrower Accounts (nantissements de solde de comptes bancaires); civil law assignments (cessions civiles) of the rights of each French Borrower against the occupational tenants for the rents payable by them under the relevant Occupational Leases obtained in respect of the relevant French Properties; 111

112 (vi) (vii) (viii) civil law assignments (cessions civiles) of the rights of each French Borrower against the insurance companies for the comprehensive insurance indemnities which are or may become due under the insurance policies taken out by the relevant Borrower in respect of the relevant French Properties and not already transferred pursuant to Article L of the French Code des assurances; a pledge of the shares of the relevant French Borrowers granted by the French Borrower Shareholders; and a civil law assignment (cession civile) of the rights of the French Parent Company against the seller of the French Borrower Shareholder for any indemnities which are or may become due to such entity under the relevant French Seller Guarantee. With respect to the France Telecom Loan, the French Related Security includes, inter alia: (i) a lender's privilege (privilège de prêteur de deniers) granted by the French Borrower over the relevant French Property; (ii) a transfer of comprehensive insurance proceeds referred to under and pursuant to Article L of the French Code des assurances; (iii) (iv) (v) (vi) (vii) (viii) (ix) a cash collateral (gage-espèces) on the French Rent Account; a pledge over the relevant French Borrower Accounts (nantissement de solde de compte bancaire); a Dailly Law assignment (cession de créances professionnelles à titre de garantie) of the rights of the French Borrower against the occupational tenants for the rents payable by them under the relevant French Occupational Leases obtained in respect of the relevant French Property; a Dailly Law assignment (cession de créances professionnelles à titre de garantie) of the rights of the French Borrower against the insurance companies for all amounts which are or may become due under the comprehensive insurance policies taken out by the French Borrower in respect of the relevant French Property and not already transferred pursuant to Article L of the French Code des assurances; a Dailly Law assignment (cession de créances professionnelles à titre de garantie) of the rights of the French Borrower against the seller of the relevant French Property for any indemnities which are or may become due under the relevant French Seller Guarantees; a pledge of the shares of the French Borrower granted by the French Borrower Shareholder; and a pledge of the claims arising from the French Subordinated Loan Agreement. With respect to the Carillon Loan, the French Related Security includes, inter alia: (i) first ranking mortgage (hypothèque de premier rang) and a complementary second and so on successively ranking mortgage granted by the French Borrower over the relevant French Property; (ii) a transfer of comprehensive insurance proceeds referred to under and pursuant to Article L of the French Code des assurances; (iii) (iv) (v) a cash collateral (gage-espèces) on the French Rent Account; a pledge over the relevant French Borrower Account (nantissement de solde de compte bancaire); a Dailly Law assignment (cession de créances professionnelles à titre de garantie) of the rights of the French Borrower against the occupational tenants for the rents payable by them under the relevant French Occupational Leases obtained in respect of the relevant French Property; 112

113 (vi) (vii) (viii) a Dailly Law assignment (cession de créances professionnelles à titre de garantie) of the rights of the French Borrower against the insurance companies for all amounts which are or may become due under the comprehensive insurance policies taken out by the French Borrower in respect of the relevant French Property and not already transferred pursuant to Article L of the French Code des assurances; a Dailly Law assignment (cession de créances professionnelles à titre de garantie) of the rights of the French Borrower against the seller of the shares of the relevant French Borrower for any indemnities which are or may become due to such entity under the relevant French Seller Guarantees; and a pledge of the shares of the French Borrower will be granted by the French Borrower Shareholder in favour of the French Loan Originator and after the Closing Date, the Issuer, only when the existing pledge granted in favour of Compagnie Européenne de Garantie Immobilière ("CEGI") or to any credit institution described hereafter is no longer in force. The existing pledge of the shares of the relevant French Borrower has been granted to secure amounts which may be due by the French Borrower Shareholder to CEGI if the French Borrower Shareholder calls the first bank demand guarantee issued by CEGI to secure amounts which may be due by it to Cerep S.à r.l. as complementary purchase price of the shares of the relevant French Borrower. Such existing pledge over the shares of the French Borrower will remain in existence if CEGI grants a loan to the French Borrower Shareholder in order to enable it to pay such complementary purchase price or such existing pledge will be released and a new pledge over the shares of the French Borrower will be granted in favour of the credit institution which would grant such a loan. With respect to the Lexin Portfolio Loan, the French Related Security includes: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) first ranking mortgage (hypothèque de premier rang) and, as applicable, a complementary second ranking mortgage (hypothèque de second rang) granted by the French Borrowers over the relevant French Properties; a joint and several guarantee (cautionment personnel et solidaire) granted by the French Parent Company as security for the payment obligations of one of the French Borrowers under the Lexin Portfolio Loan; a civil law assignment (cession civile) of the rights of each French Borrower against the occupational tenants for the rents payable by them under the relevant Occupational Leases obtained in respect of the relevant French Properties; a civil law assignment (cession civile) of the rights of each French Borrower against the insurance companies for the insurance indemnities which are or may become due under the comprehensive insurance policies taken out by the relevant Borrower in respect of the relevant French Properties; a civil law assignment (cession civile) of the rights of the French Parent Company against the seller of the relevant French Property for any indemnities which are or may become due under the relevant French Seller Guarantees; cash collateral (gage-espèces) on the French Rent Accounts; cash collateral (gage-espèces) on the Lexin Seller Guarantee Reserve Account; pledges over the relevant French Borrower Accounts (nantissements de solde de compte bancaire); and pledges of the shares of the French Borrowers granted by the French Borrower Shareholder and the French Parent Company, as applicable. 113

114 With respect to the Ford Loan, the French Related Security includes, inter alia: (i) first ranking mortgage (hypothèque de premier rang), third ranking mortgage (hypothèque de troisième rang), fourth ranking mortgage (hypothèque de quatrième rang) and fifth ranking mortgage (hypothèque de cinquième rang); (ii) a transfer of comprehensive insurance proceeds referred to under and pursuant to Article L of the French Code des assurances; (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) a Dailly Law assignment (cession de créances professionnelles à titre de garantie) of the rights of the French Borrower against the occupational tenants for the rents payable by them under the relevant French Occupational Leases obtained in respect of the relevant French Property; a Dailly Law assignment (cession de créances professionnelles à titre de garantie) of the rights of the French Borrower against the insurance companies for all amounts which are or may become due under the comprehensive insurance policies taken out by the French Borrower in respect of the relevant French Property and not already transferred pursuant to Article L of the French Code des assurances; a Dailly Law assignment (cession de créances professionnelles à titre de garantie) of the rights of the French Borrower against the seller of the relevant French Property for any indemnities which are or may become due under the relevant French Seller Guarantees; a joint and several guarantee (cautionnement personnel et solidaire à titre réel) granted by the French Borrower Shareholder as security for the payment obligations of the French Borrower under the Ford Loan; a pledge (nantissement de compte d'instruments financiers) of the shares of the French Borrower granted by the French Borrower Shareholder; a civil law assignment (cession civile) of the rights of the French Borrower Shareholder against the seller of the shares of the relevant French Borrower for any indemnities which are or may become due to such entity under the relevant French Seller Guarantees; a pledge (nantissement de compte d'instruments financiers) of the shares of the French Borrower Shareholder granted by the French Parent Company; cash collateral (gage-espèces) on the French Rent Account; cash collateral (gage-espèces) on the Ford Litigation Reserve Account; a pledge over the French Borrower Account (nantissements de solde de comptes bancaires); and a pledge of the claims arising from the French Subordinated Loan Agreement. Intercreditor Arrangements: Tranched French Loans Tranched French Loans The following loans are tranched French loans (each a "Tranched French Loan" and together the "Tranched French Loans"): (i) (ii) the Carillon Loan (the "Tranched Carillon Loan"); and the Lexin Portfolio Loan (the "Tranched Lexin Portfolio Loan"). Pursuant to each Intercreditor Agreement, the Senior Lender and the relevant Junior Lender will appoint MSMS as agent (the "Agent") to act as their agent under the relevant French Finance Documents. 114

115 Ranking Each Tranched French Loan will be divided into two tranches: a senior tranche (the "Senior Tranche") which is held by the French Loan Originator and after the Closing Date, the Issuer (in their capacity as the holder of the Senior Tranche, the "Senior Lender") and a junior tranche (the "Junior Tranche") which is held by junior investors (the "Junior Lenders"). Each of the Senior Lender and the Junior Lender have entered into an intercreditor agreement (each an "Intercreditor Agreement") which regulates the claims of the Senior Lender and Junior Lenders as to payments, subordination and priority in relation to the relevant Tranched French Loans. Prior to the occurrence of a Material Senior Default (as defined below) and in respect of the Tranched Carillon Loan, any amounts prepaid by the relevant French Borrower in accordance with the terms of the French Finance Documents will be applied for the account of the Junior Lenders. Prior to the occurrence of a Material Senior Default (as defined below) and in respect of the Tranched Lexin Portoflio Loan, payments made by the relevant French Borrower and any amounts prepaid by such French Borrower in accordance with the terms of the French Finance Documents are to be applied pro rata against the amounts owed to the Senior Lender and the sums owed to the Junior Lender. Pursuant to the Intercreditor Agreements, the amounts due to the Senior Lender are referred to as the "Senior Debt" and the amounts owed to and received by the Junior Lenders are referred to as the "Junior Debt". In respect of the Tranched Carillon Loan, following the occurrence of a Material Senior Default, all amounts that would have been paid to the Junior Lender and any default interest paid to the Senior Lender and the Junior Lender by the relevant French Borrower will be transferred to an escrow account opened in the name of the Agent in the books of an account bank having the Requisite Rating (the "Escrow Account"). If any Enforcement Action is taken within the period of 90 days following the occurrence of a Material Senior Default, the amounts standing to the credit of the Escrow Account will be applied in priority towards payment of the Senior Debt in advance of the Junior Debt (subject to payment of fees, costs and expenses of the Senior Lender and Junior Lender's enforcement expenses). However, if the Material Senior Default is cured, remedied or waived and no insolvency Material Senior Default is outstanding or if, within 90 days of the occurrence of a Material Senior Default no Enforcement Action has been taken, the amount standing to the credit of the Escrow Account will be applied towards payment of the Junior Debt and to the extent that these sums are attributable to default interest payments, they will be applied towards payment of any shortfall in the amount of non-default interest due in respect of the Junior Debt in advance of any default interest due in respect of the Senior Debt. In respect of the Tranched Lexin Portfolio Loan, prior to the occurrence of a Material Event of Default, all amounts received under the relevant French Finance Documents will be credited to a tranching account opened in the name of the Agent with a bank previously notified to the Senior Lender and the Junior Lenders (the "Tranching Account"). The sums standing to the credit of the Tranching Account will be applied pro rata to the payment of sums due under the Senior Debt and the Junior Debt. After the occurrence of a Material Event of Default, all amounts received under the relevant French Finance Documents on the relevant French Rent Account will be applied in priority to the sums due under the Senior Debt. A "Material Senior Default" will occur upon the occurrence of a payment default or an actual insolvency event of default (other than, with respect to the Tranched Carillon Loan, the appointment of a mandataire ad hoc a réglement amiable or the opening of a procédure de conciliation) under the relevant Tranched French Loan or (in respect of the Tranched Lexin Portfolio Loan) an event of default under the Lexin Portfolio Loan which causes the Senior Tranche to be specially serviced by the French Loan Servicer in accordance with the French Loan Servicing Agreement. An "Enforcement Action" will be deemed to be taken if a demand payment of any sum due under the relevant Tranched French Loan has been made which is not satisfied, if the relevant Tranched French Loan has been accelerated or otherwise if the whole of the Tranched French Loan is declared prematurely due 115

116 and payable, if the French Related Security granted in respect of the Tranched French Loan is enforced or if any legal proceedings are brought against any obligor in relation to any matter which would have a material adverse effect. Cure Rights The Junior Lenders have cure rights entitling them to remedy defaults capable of such remedy within the grace period being, from receipt by the Junior Lenders of notification of a remediable default: (i) in respect of the Tranched Carillon Loan, in the case of a payment default, three Business Days (after the expiry of any applicable grace period for the relevant French Borrower to remedy that payment default), and in the case of a remediable default other than a payment default, the later of 15 Business Days and three Business Days (after the expiry of any applicable grace period for the relevant French Borrower to remedy that default), and (ii) in respect of the Tranched Lexin Portfolio Loan: in the case of a payment default, five Business Days, in the case of an event of default involving a breach of an obligation (not being a payment obligation), 15 Business Days, and in the case of any other remediable default, 20 Business Days (in the last two cases, as may be extended if agreed). Enforcement action is delayed during such grace period. The Junior Lenders' right to cure a payment default or a breach of a financial covenant is limited to twice in any 12 month period and not more than four times during the term of the relevant Tranched French Loan. There is no limit on the number of times non-payment defaults or financial covenants defaults can be remedied. Any cure payments made by a Junior Lender in exercising cure rights will rank behind the Senior Debt but ahead of the Junior Debt. Purchase of Senior Debt The Junior Lenders may (on appropriate notice being sent to the Senior Lender) purchase the Senior Debt if an insolvency default has occurred or an Enforcement Action has been taken in respect of the Tranched Carillon Loan, or if a payment default or an actual insolvency event of default has occurred or a Material Senior Default which consists of an event of default causing the Senior Tranche to be specially serviced and having been outstanding for more than three months has occurred in respect of the Tranched Lexin Portfolio Loan. After the Closing Date, the Junior Lenders may elect to purchase the Senior Tranche provided that, following the occurrence of certain purchase events, the Management Company, acting in the name and on behalf of the Issuer, offers to the Junior Lenders either to purchase or to arrange for another person to purchase all of the Senior Debt. The Management Company, acting in the name and on behalf of the Issuer will then sell the Senior Tranche to the Junior Lenders in accordance with the applicable French law and regulation. Enforcement A Junior Lender is prohibited from taking any enforcement action in relation to the Junior Debt. The enforcement of the relevant French Related Security may only be carried out by the Senior Lender. If the Senior Lender determines that the enforcement proceeds of the relevant French Related Security following the occurrence of a French Loan Event of Default will be sufficient to discharge the Senior Debt in full, then the Junior Lender can require the Senior Lender to enforce the French Related Security. In respect of the Tranched Lexin Portfolio Loan, the Junior Lender can require that the Agent be instructed to enforce the relevant French Related Security if the relevant French Loan Event of Default is still outstanding at the end of the relevant standstill period or of the relevant French Loan has been accelerated and the market value of the relevant French Property is greater than 130 per cent. of the Senior Tranche. If the market value of the relevant French Property is greater than 120 per cent. but less than or equal to 130 per cent. of the Senior Tranche, the Junior Lenders may make representations to the French Loan Servicer who will enforce the relevant French Related Security if it considers in its sole discretion that such action is in accordance with the Servicing Standard. 116

117 Amendments and Waivers re: French Finance Documents A term of the relevant French Finance Documents may be amended or waived if the Senior Lender agrees or if permitted under the French Finance Documents as a procedural or administrative matter which is not material. In respect of the Tranched Lexin Portfolio Loan, the Senior Lender will agree to such amendment or waiver after consultation with the Junior Lenders' representative unless the relevant amendment or waiver requires immediate action. However, no amendments can be made which result in, among other things, a change to payment dates, a change of the amount of any payment under the relevant French Finance Documents, and more generally a change in the financial characteristics of the Tranched French Loan (including a change to the financial covenants), a reduction in payments to the Junior Lenders, a change to the obligors under the relevant French Finance Documents, a release of any French Related Security and more generally a material amendment or waiver of any provision of a document evidencing a French Related Security, a change to the negative pledge clauses and the disposal restrictions, or a waiver of or an extension of a grace period in respect of an event that constitutes a Material Senior Default. In respect of the Tranched Lexin Portfolio Loan, the consent of the Junior Lenders will also be required for certain approvals or consents under the Lexin Portfolio Loan Agreement relating to the sale of all or part of the Lexin Properties and certain provisions relating to the management of the Lexin Properties as well as to any change to the right of a Senior Lender to assign or transfer its rights or obligations under the relevant French Finance Documents, the incurrence of additional debt by the relevant French Borrowers and any modification or waiver of the insurance provisions. However, certain of these items will no longer require the consent of the Junior Lenders after the occurrence of a control valuation event. Transferability The Junior Lenders may freely transfer or assign its interest in the Junior Debt to any person provided that (i) the transferee accedes to the Intercreditor Agreement, and (ii) the assignment or transfer will not result in any deduction or withholding for or on account of tax being required by law to be made from a payment under a French Finance Document or any increased cost becoming payable under a French Finance Document. THE LUXEMBOURG ISSUER ASSETS THE BELGIAN ORIGINATED ASSETS The Belgian Bonds Status of the Belgian Issuer and the Belgian Property Owning Companies AB CPFM Europroperty Belgium NV is the Belgian Issuer. The Belgian Issuer was incorporated on 8 April 2004 as a limited liability company (société anonyme/naamloze vennootschap) under the laws of Belgium. The directors (administrateurs/bestuurders) of the Belgian Issuer are Enrico Van Erkelens of Kemphaanstraat 121A, 1531 VD Wormer, the Netherlands, Léon Louis Vié of Bleijenbeek 34, 1083 AH Amsterdam, the Netherlands and Morgan Stanley Mortgage Servicing Limited having as permanent representative Robert Wojciechowicz of 25 Cabot Square, Canary Wharf, London E14 4QA. Pursuant to its articles of association (statuts/statuten), the Belgian Issuer's activities are restricted to the issuance of negotiable financial instruments for the purpose of refinancing debt obligations entered into by its affiliated companies (within the meaning of Article 11 of the Belgian Company Code (Code des sociétés/wetboek van vennootschappen)), the granting of loans to such companies out of the proceeds of such issuance and the holding or selling, as the case may be, of shares in the capital the Belgian Property Owning Operating Companies, and certain other ancillary activities necessary for the fulfilment of the foregoing purposes (including, for the avoidance of doubt, the granting of real or personal security to secure its own obligations or to secure obligations of its affiliated companies). Since the date of its establishment the Belgian Issuer has not engaged in any activity other than those permitted under its articles of association (statuts/statuten). 117

118 The Belgian Issuer is not, and has not been, involved in any legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Belgian Issuer is aware) which may have, or have had since the date of its incorporation, a significant effect on the Belgian Issuer's financial position. The Belgian Issuer owns all but one of the shares in the issued share capital of Centrum Invest SPRL, Melodicum SPRL, Polytrophys SPRL, Seminole SPRL and Trealen SPRL. Each of the Belgian Property Owning Companies is, therefore, an affiliate of the Belgian Issuer within the meaning of Article 11 of the Belgian Company Code. The Belgian Property Owning Companies were not established as special purpose vehicles. In respect of each of the Belgian Property Owning Companies, comprehensive due diligence was carried out by the Belgian Issuer's external counsel prior to the Belgian Bond Issue Date in order to establish that there were no material, actual or contingent liabilities arising out of the past operations of the Belgian Property Owning Companies or in relation to the ownership of the Belgian Properties. The Belgian Due Diligence Report was reviewed by the external counsel acting for MS Bank in order to ensure that it covered all relevant matters. On the basis of the Belgian Due Diligence Report (as defined below), it is apparent that the Belgian Property Owning Companies had, as at the Belgian Bond Issue Date, no material assets or liabilities save in relation to the Belgian Bond Issue Documents, the Belgian Intra-Group Loans and the ownership of shares in the Belgian Property Owning Companies and/or the ownership of the Belgian Properties. Information on the Belgian Bonds and the Belgian Related Security The Belgian Issuer issued the Belgian Bonds on 8 June 2004 (the "Belgian Bond Issue Date"). Morgan Stanley & Co. International Limited subscribed for 126 Belgian Bonds and MS Bank and Morgan Stanley & Co. respectively subscribed for seven Belgian Bonds. The Belgian Bonds are governed by Belgian law. The Belgian Issuer on-lent the proceeds of the issue of the Belgian Bonds on the Belgian Bond Issue Date by way of the Belgian Intra-Group Loans to the five Belgian Property Owning Companies pursuant to certain loan agreements (the "Belgian Intra-Group Loan Agreements"). The Belgian Issuer, the Belgian Property Owning Companies and the shareholders of the Belgian Property Owning Companies (the "Belgian Shareholders" entered into certain security agreements in favour of the Belgian Security Agent acting in its own name under a parallel covenant provision (solidarité active/actieve haafdelijkheid) and as agent (mandataire/mandataris) of the Belgian Bondholders (the "Belgian Security Agreements" and together with the Belgian Bonds, the "Belgian Finance Documents") creating the Belgian Related Security. The Belgian Security Agreements are also governed by Belgian law. In consideration of the benefit conferred on them by way of the Belgian Intra-Group Loans, the Belgian Property Owning Companies have entered into joint and several guarantees in favour of the Belgian Security Agent and vis-à-vis each other relating to the due and punctual performance of the Belgian Issuer's obligations under the Belgian Bonds. In addition, should any of the Belgian Issuer's obligations not be recoverable from the Belgian Property Owning Companies for any reason, each Belgian Property Owning Company has undertaken to indemnify the Belgian Security Agent in full in respect of the relevant amounts. The Belgian Bonds are scheduled to be repaid on 7 February Interest payable in relation to the Belgian Bonds is payable at a fixed rate, accrues daily and is payable quarterly in arrear. Terms of the Belgian Bonds The Belgian Finance Documents contain the types of representations, warranties and undertakings on the part of the Belgian Issuer and the Belgian Property Owning Companies that a reasonably prudent lender would usually require. The Belgian Bond Originator is entitled to transfer the Belgian Bonds to the Luxembourg Issuer without restriction. 118

119 Principal Amount of the Belgian Bonds The principal amount of the Belgian Bonds as at the Belgian Bond Issue Date was 14,000,000 divided into 140 bonds in denominations of 100,000 each. The Belgian Bonds are freely transferable registered bonds, which may not be offered publicly for sale in Belgium or in any other jurisdiction and no steps may be taken that would constitute or could result in a public offering of the Belgian Bonds in any jurisdiction. Purpose of the issue of the Belgian Bonds The Belgian Bonds were issued for the primary purpose of enabling each of the Belgian Property Owning Companies to re-finance its existing debt incurred in order to purchase the Belgian Properties. Each Belgian Property is at least partially let to occupational tenants (the "Belgian Occupational Tenants"). The Belgian Property Owning Companies will utilise the rental income from the Belgian Properties to pay interest, principal and other sums due to the Belgian Issuer under the Belgian Intra-Group Loan Agreements, and the Belgian Issuer will, in turn, use these amounts to make payments due under the Belgian Bonds. Interest and Amortisation Payments/Repayments Interest on the Belgian Bonds is payable quarterly in arrear on each Belgian Bond Interest Payment Date. Absent any voluntary or mandatory redemption by the Belgian Issuer, the principal amount outstanding of the Belgian Bonds on their scheduled maturity date is expected to be 14,000,000. In addition to the obligation to redeem the Belgian Bonds in full or in part, as the case may be, on their scheduled maturity date and on each relevant Belgian Bond Interest Payment Date, the Belgian Issuer may, under certain circumstances, make a voluntary redemption payment, in full or in part, of the principal amount outstanding of the Belgian Bonds and must, under certain circumstances, make mandatory redemption payments, in full or in part, of the principal amount outstanding of the Belgian Bonds. The Belgian Issuer may, on giving not less than 30 days' prior notice, make a voluntary redemption payment in full or in part of the principal amount outstanding on the Belgian Bonds subject (in the case of a voluntary redemption payment made between Belgian Bond Interest Payment Dates) to the payment of interest that would have been paid on the amount of the Belgian Bonds which are redeemed from the previous Belgian Bond Interest Payment Date to the next Belgian Bond Interest Payment Date. The minimum amount of each voluntary redemption payment is 400,000. The Belgian Issuer may also make a voluntary redemption payment of the full amount of the principal amount outstanding of the Belgian Bonds if it is required to deduct from any payment made in respect of the Belgian Bonds any amount for or on account of any tax, and consequently is required to "gross-up" such amount so that the Belgian Bondholders receive a net amount equal to the amount they would have received but for the deduction, or if the Belgian Issuer is required to pay to the Belgian Bondholders any additional costs incurred by it as a result of the Belgian Bonds having been issued. The Belgian Issuer must also make mandatory redemption in full of the principal amount outstanding of the Belgian Bonds if it becomes unlawful for the Belgian Bondholders or their successors in title to hold the Belgian Bonds. The Belgian Issuer shall pay to the Belgian Bondholders that are credit institutions the amount of increased costs incurred as a result of changes in legislation (or its interpretation or application). If the Belgian Issuer makes a voluntary redemption payment or a mandatory redemption payment of the principal amount outstanding of the Belgian Bonds it may be required to pay certain prepayment fees to the Belgian Bondholders. No such prepayment fees are payable, however, if all (but not some only) of the Belgian Bonds are subject to mandatory redemption by the Belgian Issuer as a result of the Belgian Issuer having to make payments in respect of tax gross up or increased costs, or if it becomes unlawful for the Belgian Bondholders to fund or maintain the funding of the Belgian Bonds. 119

120 Bank Accounts Each Belgian Property Owning Company has opened in its own name a separate bank account (each a "Belgian Collection Account" and together the "Belgian Collection Accounts"). Each Belgian Property Owning Company is required to serve notice on the Belgian Occupational Tenants to pay rent (excluding service charge, which is to be paid to a managing agent appointed by the Belgian Property Owning Companies (the "Belgian Managing Agent")) directly into the relevant Belgian Collection Account on the due dates for payment of the rent in accordance with the terms of the relevant occupational leases. The Belgian Collection Accounts are each pledged in favour of the Belgian Security Agent and notice has been served on the relevant account banks that the Belgian Collection Account has been pledged to the Belgian Security Agent. The Belgian Security Agent has opened an account in its name (the "Belgian Collateral Account") into which all sums standing to the credit of the Belgian Collection Accounts are transferred at the end of each business day. The Belgian Security Agent has agreed to release to the Belgian Issuer on each Belgian Bond Interest Payment Date any amounts standing to the credit of the Belgian Collateral Account in excess of the amounts required to pay all amounts then due and payable on the Belgian Bonds, or in connection therewith, provided that no Belgian Bonds Event of Default has occurred and that the interest cover in respect of the Belgian Bonds (calculated on the basis of the net rental income of each Belgian Property Owning Company) is not or does not become, as a result of the payment, less than 220 per cent. Following a Belgian Bond Event of Default, or on the occurrence of certain other specified events, each Belgian Property Owning Company shall immediately notify the relevant account banks of the fact that all accounts which it holds (other than the Belgian Collection Account, in relation to which notice of the pledge has been made) have been pledged to the Belgian Security Agent and that no amount may be withdrawn from the said accounts without the consent of the Belgian Security Agent (other than by way of transfer to the Belgian Collateral Account). The Belgian Managing Agent is an experienced property manager, which has entered into a duty of care agreement with the Belgian Security Agent pursuant to which it agrees to collect rental income and service charges and pay rental income, net of service charge, by means of daily sweeps from the relevant Belgian Collection Accounts into the Belgian Rent Account. Disposal proceeds arising on the sale of the whole of a Belgian Property or of the shares in a Belgian Property Owning Company are also required to be paid into the Belgian Collateral Account. The proceeds of sale are to be utilised to redeem the whole or part of the Belgian Bonds. Such redemption is to be in a minimum amount calculated in accordance with the terms and conditions of the Belgian Bonds. All of the Belgian Collection Accounts and the Belgian Rent Account are maintained with the Arts/Kunst branch of KBC Bank NV (the "Belgian Account Bank"). As at the date of this Prospectus, the long-term, unsecured, unsubordinated debt obligations of KBC Bank NV are rated "Aa3" by Moody's and "A+" by S&P. Representations and Warranties The terms and conditions of the Belgian Bonds contain various representations and warranties given by the Belgian Issuer. Each of the Belgian Property Owning Companies have also entered into similar warranties (in relation to itself only) under the joint and several guarantees. These representations and warranties were given on the Belgian Bond Issue Date and were and are deemed to be repeated by the Belgian Issuer and by the Belgian Property Owning Companies on each Belgian Bond Interest Payment Date (with certain limited exceptions), in each case, with reference to the facts and circumstances then prevailing. The representations and warranties contained in the terms and conditions of the Belgian Bonds include statements to the effect that each of the Belgian Bond Issuer and the Belgian Property Owning Companies are validly incorporated or constituted and has the power, capacity and authority to own its assets, to carry on its business and enter into the Belgian Finance Documents. 120

121 In addition the Belgian Property Owning Companies have provided further representations and warranties in connection with their respective joint and several guarantees. A legal due diligence report was issued by the Belgian lawyers acting for the Belgian Issuer and the Belgian Property Owning Companies (the "Belgian Issuer's Lawyers") on the day before the Belgian Issuer Date (the "Belgian Due Diligence Report"). Based on the findings in the Belgian Due Diligence Report, certain disclosures were made in a disclosure letter prepared by the Belgian Issuer's Lawyers (the "Belgian Disclosure Letter"). The representations and warranties contained in the terms and conditions of the Belgian Bonds are given subject to all facts and circumstances referred to in the Belgian Disclosure Letter. Undertakings The terms and conditions of the Belgian Bonds contain various undertakings given by the Belgian Issuer. Each of the Belgian Property Owning Companies has also entered into similar undertakings (in relation to itself only) under the joint and several guarantees. The undertakings of the Belgian Issuer and of the Belgian Property Owning Companies include, among other things, the provision of financial information and any other type of general and property related information on an ongoing basis, customary negative pledge covenants, customary property related covenants as to the ownership of the Belgian Properties and the good state of repair of the Belgian Properties. The undertakings of the Belgian Issuer and the Belgian Property Owning Companies are binding for as long as any amount is outstanding under the Belgian Bonds. Belgian Bond Events of Default The terms and conditions of the Belgian Bonds contain various events of default (each a "Belgian Bond Event of Default" and together the "Belgian Bond Events of Default") entitling the Belgian Bondholders or the Belgian Security Agent to demand that all or part of the Belgian Bonds shall become immediately due and payable. The Belgian Bond Events of Default include failure to pay (subject to a two (2) business days grace period), breach of the obligations under the documents which it enters into in connection with the issue of the Belgian Bonds (the "Belgian Bond Issue Documents"), misrepresentations and insolvency of the Belgian Issuer or any of the Belgian Property Owning Companies. Belgian Security The Belgian Bonds are secured by: (i) (ii) (iii) (iv) (v) (vi) pledges over the shares in the Belgian Issuer and each Belgian Property Owning Company (the "Belgian Share Pledge"); a pledge over all receivables arising under the Belgian Intra-Group Loan Agreements, over all rights under all relevant insurance policies in respect of the Belgian Properties and over all rental receivables accruing under all leases to occupational tenants in respect of the Belgian Properties (the "Belgian Receivables Pledge"); pledges over the Belgian Collection Accounts and all sums standing to the credit of the Belgian Collection Accounts (the "Belgian Bank Account Pledges"); registered mortgages over each Belgian Property, for an aggregate amount of 10 per cent. of the original principal amount of the Belgian Bonds (the "Belgian Mortgages"); up to the remaining original principal amount of the Belgian Bonds, interest and costs, irrevocable mortgage mandates (the right to unilaterally register an effective mortgage over each of the Belgian Properties) (the "Belgian Mortgage Mandates"); and an unconditional and irrevocable joint and several guarantee by each of the Belgian Property Owning Companies in favour of the Belgian Security Agent and the Belgian Bondholders and vis-àvis each other with respect to the liabilities of the Belgian Issuer (the "Belgian Guarantee"). 121

122 The Belgian Security has, in the case of each security document referred to at paragraphs (i) to (vi) above, been granted in favour of the Belgian Security Agent. In order to protect the insolvency remote status of the Belgian Security Agent after the Closing Date, the Belgian Security Agent will covenant to each of the Luxembourg Issuer pursuant to the terms of the Second Belgian Bond Sale Agreement that, among other things, it will restrict its activities to those permitted in the terms and conditions of the Belgian Bonds, and activities incidental thereto. In addition, the Belgian Security Agent will covenant not to incur any indebtedness of whatever nature, have any subsidiaries or any employees, or own any premises. The Belgian Security Agent is appointed by the Belgian Bondholders to hold the Belgian Security and to exercise its rights thereunder in its own name and for the benefit of the Belgian Bondholders. The appointment of the Belgian Security Agent for these purposes will continue even in the event of the holders of the Belgian Bonds transferring the Belgian Bonds and their rights thereunder and the security rights of the Belgian Security Agent will not be novated as a result of the transfer of the Belgian Bonds at any time. The Belgian Related Security is enforceable, in each case, by the Belgian Security Agent upon the occurrence of a Belgian Bond Event of Default which has not been remedied or waived in accordance with the terms and conditions of the Belgian Bonds. The Belgian Related Security secures all sums due under the Belgian Bonds, subject to the limitations relating to the Belgian Mortgages. The Belgian Share Pledge Each holder of shares in the Belgian Issuer and in each of the Belgian Property Owning Companies (other than the Belgian Security Agent) entered into a share pledge in favour of the Belgian Security Agent on the Belgian Bond Issue Date. The pledges of the shares have been inscribed in the shareholders' register of the company whose shares are being pledged, and create a commercial pledge (gage commercial/handelspand) pursuant to the Belgian Law of 5 May 1872 (a "Commercial Pledge") over those shares. The Belgian Law of 15 December 2004 on financial collateral which entered into force on 1 February 2005 now governs the Belgian Share Pledge and, to the extent not covered by this law, the Belgian law of 5 May 1872 governs such pledge. Such pledge constitutes a sûreté réelle/zakelijke zekerheid, or, in other words, a priority right to payment out of the pledged shares (subject to mandatory statutory priorities) enforceable against all third parties. The Belgian Receivables Pledge and the Belgian Bank Account Pledges The Belgian Issuer entered into a pledge in favour of the Belgian Security Agent on the Belgian Bond Issue Date in respect of all receivables arising under the Belgian Intra-Group Loan Agreements and the Belgian Property Owning Companies entered into a pledge in favour of the Belgian Security Agent on the Belgian Bond Issue Date in respect of all receivables arising under all rights under all relevant insurance policies in respect of the Belgian Properties and over all rental receivables arising under all leases with Belgian Occupational Tenants in respect of the Belgian Properties (other than service charges). The relevant insurance companies have recognised the Belgian Security Agent as beneficiary under the relevant insurance policies. Each Belgian Property Owning Company also entered into a pledge over its Belgian Collection Account and all amounts credited from time to time thereto in favour of the Belgian Security Agent. The pledges created pursuant to the Belgian Receivables Pledge and the Belgian Bank Account Pledges create Commercial Pledges. Nevertheless, the Belgian Bank Account Pledges are now governed by the Belgian Law of 15 December 2004 on financial collateral, which entered into force on 1 February 2005 and, to the extent not covered by this law, by the Belgian Law of 5 May Each such pledge constitutes a priority right to payment out of the assets (subject to statutory priorities) enforceable against all third parties. Notice of the pledges has been given to each relevant person in order to perfect the security created by the pledges. The Belgian Mortgages The Belgian Mortgages were created pursuant to a public deed executed before a Belgian notary public (the "Belgian Mortgage Deed"). The Belgian Mortgage Deed creates valid and enforceable first ranking 122

123 mortgages (hypothèques/hypotheken) under the Belgian Law of 16 December 1851 over the Belgian Properties, in favour of the Belgian Security Agent. The amount secured by each Belgian Mortgage is restricted to 10 per cent. of the original principal amount of the Belgian Bonds, together with: (i) (ii) a notional amount in relation to unpaid interest, to a maximum of three years' interest, at the rate of six per cent. per annum (or any other rate agreed upon between the parties in accordance with Article 87 of the Belgian law relating to mortgages); and an amount equivalent to 10 per cent. of the amount secured in relation to the costs of enforcing the mortgage (together, the "Belgian Secured Amount Limit"). The balance of the original principal amount of the Belgian Bonds is not secured by a first ranking mortgage over the Belgian Properties, unlike the other Originated Assets. The Belgian Mortgages have been granted in favour of the Belgian Security Agent and secure, subject to the Belgian Secured Amount Limit, all amounts owing to the Belgian Security Agent and the Belgian Bondholders under or in connection with the Belgian Bonds. The Belgian Mortgages will remain in full force and effect until all amounts owing under or in respect of the Belgian Bonds have been discharged in full. The Belgian Mortgages have been perfected through registration and the Belgian Property Owning Companies are required, under the terms of the Belgian Mortgage Deed, to do all things and execute all such future documents as may be necessary or advisable for the purposes of maintaining the perfection of the Belgian Mortgages. The Belgian Mortgage Mandate Each Belgian Property Owning Company has granted an irrevocable mortgage mandate in favour of the Belgian Security Agent up to the sum of the remaining original principal amount of the Belgian Bonds which are not secured by the Belgian Mortgages, plus (a) a notional amount in relation to unpaid interest, to a maximum of three years' interest, at the rate of six per cent. per annum (or any other rate agreed upon between the parties in accordance with Article 87 of the Belgian law relating to mortgages); and (b) an amount equivalent to 10 per cent. of the amount secured in relation to the costs of enforcing the mortgage (the "Belgian Bond Balance"). The Belgian Mortgage Mandate gives the Belgian Security Agent the right unilaterally to register an effective mortgage over each of the Belgian Properties in an amount up to the Belgian Bond Balance. The costs and taxes which are currently incurred in creating a valid mortgage include: (i) (ii) (iii) registration duty of one per cent. on the secured amount; mortgage duty of 0.3 per cent. on the secured amount; and incidental costs and fees generally around 0.5 per cent.. The use of a mortgage mandate to create an effective mortgage over the Belgian Properties may be subject, among other things, to the following restrictions: (i) (ii) it would not be possible to register the mortgage in accordance with the Belgian Mortgage Mandate at any time on or after the date of the declaration of insolvency of the Belgian Property Owning Company against which the mortgage is to be registered; in case of judicial composition of that company, it may still be possible to create and register a mortgage but it is unclear whether such mortgage would be effective (opposable/tegenwerpelijk) against other creditors of the relevant Belgian Property Owning Company during the judicial composition; the effectiveness of the mortgage created pursuant to the Belgian Mortgage Mandate may, except in certain limited circumstances, be challenged if the mortgage is registered at a time less than six 123

124 months prior to the insolvency of the Belgian Property Owning Company against which the mortgage has been registered. One of the limited circumstances in which this rule does not apply is in case of acts performed in order to cause "fraudulent prejudice" to creditors. In this case, the clawback rule is not limited to six months; (iii) (iv) (v) (vi) the Belgian Mortgage Mandate would not permit the Belgian Security Agent to perfect the relevant mortgage if the relevant Belgian Property had previously been transferred or sold by the relevant Belgian Property Owning Company in breach of the terms and conditions of the Belgian Bonds; a mortgage created pursuant to the Belgian Mortgage Mandate after the date on which a third party creditor of the relevant Property Owning Company has effected an attachment (saisie/beslag) of the property, will not be enforceable (opposable/tegenwerpelijk) against the creditor which has effected the attachment; the mortgage created pursuant to the Belgian Mortgage Mandate will be subject to any prior, perfected disposals or encumbrances in respect of the relevant Belgian Property; and the use of a Belgian Mortgage Mandate may also be prejudiced by the dissolution or any solvent corporate restructuring of the relevant Belgian Property Owning Company. The Guarantee Each of the Belgian Property Owning Companies has irrevocably, unconditionally, jointly and severally guaranteed to the Belgian Security Agent and the Belgian Bondholders and vis-à-vis each other the due and punctual payment of all amounts owing in respect of the Belgian Bonds. As an additional obligation, each Belgian Property Owning Company has undertaken with the Belgian Security Agent that, should any of the guaranteed amounts not be recoverable from any guarantor for any reason, then such Belgian Property Owning Company shall fully indemnify the Belgian Security Agent against all relevant losses. Each Belgian Property Owning Company is liable under its guarantee jointly and severally (solidaire et indivisible/hoofdelijk en ondeelbaar) with each of the Belgian Issuer and the other Belgian Property Owning Companies. The Belgian Share Pledges over the shares in the Belgian Issuer and each Belgian Property Owning Company also provide the Belgian Security Agent (and therefore the holders of the Belgian Bond and their successors in title and assigns) with security over the shares in the owner of each Belgian Property. Summary of the Belgian Security The Belgian Receivables Pledge, together with the Belgian Bank Account Pledges, will provide the Belgian Security Agent with security over the cashflows generated by the Belgian Properties. The Belgian Security Agent will monitor the financial status of the Belgian Property Owning Companies through the Independent Manager of each Belgian Property Owning Company and through the information which is to be provided pursuant to the terms and conditions of the Belgian Bonds. In the event it is deemed necessary to convert the Belgian Mortgage Mandates into full mortgages in the light of any information provided, the Belgian Security Agent will proceed with the registration of additional mortgages in its complete discretion and as permitted pursuant to the Belgian Mortgage Mandate, subject to being indemnified for the costs of so doing and subject to the limitations imposed with respect to such mortgages. The Belgian Mortgages will also put third parties on notice of the existence of the financing and the encumbrance on the Belgian Properties. 124

125 THE ORIGINATED ASSETS SALE AGREEMENTS ASSET TRANSFER AGREEMENTS On the Closing Date, the Originator will enter into agreements with, among others, the Issuer, as represented by the Management Company (in respect of the French Loans and the French Related Security) and the Luxembourg Issuer (in respect of the Belgian Bonds), pursuant to which it will agree to sell to Originated Assets specified therein (the "Asset Transfer Agreements"). The agreement between the French Loan Originator and the Issuer relating to the sale of the French Loans and the Related Security is referred to as the "French Loan Transfer Agreement". On the Belgian Bond Transfer Date, the Belgian Bond Originator has entered into an agreement with the Luxembourg Issuer (the "Second Belgian Bond Sale Agreement") pursuant to which it has agreed to purchase the Belgian Bonds held by the Belgian Bond Originator on such date. The deferred payment of the purchase price of the Belgian Bonds will be paid by the Luxembourg Issuer to the Belgian Bond Originator on or about the Closing Date because the Luxembourg Issuer will fund the acquisition of the Belgian Bonds by the issue of the Luxembourg Notes on such date. Pursuant to the Second Belgian Bond Sale Agreement, the sale of the Belgian Bonds by the Belgian Bond Originator to the Luxembourg Issuer occurring on the Belgian Bond Transfer Date is subject to the conditions subsequent (conditions résolutoires/ontbindende voorwaarden) inter alia that the Luxembourg Notes are issued by the Luxembourg Issuer and that such Luxembourg Notes are subscribed for by the Issuer in an amount equal to 14,000,000. SALE OF THE FRENCH LOANS AND THE FRENCH RELATED SECURITY Consideration The purchase price payable by the Issuer to the French Loan Originator in respect of the French Loans and the French Related Security will be 312,805,000, a sum equal to the outstanding aggregate principal amount of the French Loans on the Cut-Off Date. 312,805,000 will be paid by the Issuer to the French Loan Originator using the proceeds of the issuance of the Notes and the Residual Units. Transfer and Perfection The transfer of title to the French Loans and French Related Security pursuant to the French Loan Transfer Agreement will be completed by the French Loan Originator delivering to the Management Company, acting in the name and on behalf of the Issuer, a transfer document entitled actes de cession de créances (the French Loan Transfer Deeds) in the form prescribed by Article L and Article R of the French Code monétaire et financier which sets out various provisions of the French Code monétaire et financier. The delivery of the actes de cession de créances (the French Loan Transfer Deeds) makes the transfer of the French Loans and the Related Security binding upon third parties as at the date of these actes de cession de créances (the French Loan Transfer Deeds) without the requirement of any further act. The actes de cession de créances (the French Loan Transfer Deeds) will be delivered to and held in custody by the Custodian. Representations and Warranties None of the Issuer or the Issuer Related Parties (other than the French Loan Originator) has made or will make any of the enquiries, searches or investigations, nor has any such entity made any enquiry at any time in relation to compliance by the French Loan Originator with its lending criteria or the legality, validity, perfection, adequacy or enforceability of the relevant French Originated Assets or the transfer thereof pursuant to the French Loan Transfer Agreement. In relation to all of the foregoing matters, the Issuer will rely solely on the representations and warranties given by the French Loan Originator in the French Loan Transfer Agreement. 125

126 If there is a material breach of any representation and/or warranty set out in the French Loan Transfer Agreement in relation to any of the French Originated Assets (a description of the more significant of which is set out below) and such breach is not capable of remedy or, if capable of remedy, has not been remedied, the French Loan Originator will be obliged, if required by the Issuer as the case may be, to repurchase such French Originated Assets for an aggregate amount equal to the outstanding principal amount under the relevant French Loan together with interest accrued (but not yet payable) and costs, up to, but excluding, the date of the transfer back, such costs to include any swap breakage costs payable by the Issuer as a result of any early termination of an Issuer Swap Transaction which results from such transfer back. The Issuer will have no other remedy in respect of such a breach unless the French Loan Originator fails to purchase the relevant French Originated Assets in accordance with the French Loan Transfer Agreement. The representations and warranties to be given by the French Loan Originator on the Closing Date in the French Loan Transfer Agreement will include statements to the following effect: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) the French Loan Originator is the absolute owner of the relevant French Originated Assets free from encumbrances; each of the relevant French Properties is situated in France; each of the relevant French Properties constitute investment properties and are let predominantly for commercial use; each French Borrower has good and valid title to the relevant French Properties, free of any material title defects, except in respect of one of the Lexin Properties (see "Risk Factors Planning France" at page 51 above); each French Loan constitutes the valid and binding obligation of, and is enforceable against the relevant French Borrower; the related mortgage over the relevant French Property constitutes a legal, valid and binding first ranking security interest over the French Property to which such mortgage relates (subject only to any relevant registrations); no French Borrower has any financial indebtedness other than (a) the French Loans, (b) such as are fully subordinated pursuant to a subordination agreement, or (c) indebtedness incurred in the ordinary course of business; the French Loan Originator has not received any written notification of any encumbrance affecting its title to any of the relevant French Originated Assets other than those to which it has given its consent or to which its consent is not required; to the best of the French Loan Originator's knowledge after using reasonable endeavours to ensure the same, each relevant French Property is insured by an insurance policy maintained by the relevant French Borrower or another person with an interest in the French Property in an amount which is equal to or greater than its reinstatement value; the French Loan Originator has not received any notice that any insurance policy relating to any relevant French Property is about to lapse on account of a failure to pay the insurance premium thereunder; none of the provisions of any French Loan have been waived, altered or modified in any material respect since it was entered into except as set out in the relevant French Loan documentation; 126

127 (xii) (xiii) (xiv) (xv) (xvi) (xvii) the French Loan Originator has kept or has caused to be kept full and proper accounts, books and records showing all transactions, payments, receipts and other relevant information relating to the French Originated Assets which are complete and accurate in all material respects, all such accounts, books and records being fully up to date and kept by, or to the order of, the French Loan Originator; each of the French Loans arose from the ordinary course of the French Loan Originator's commercial secured lending activities; the French Loan Originator is not aware of the bankruptcy, insolvency, liquidation, receivership or administration (or equivalent procedure) in respect of any French Borrower; prior to originating the French Loans, the French Loan Originator carried out all material investigations, searches and other actions and made such enquiries about title to the French Properties as a reasonably prudent lender of money secured on commercial real property in France would make. No information was revealed by any such investigations, searches or action which would have led a reasonably prudent lender in France to decline to originate any of the French Loans; prior to making any advance under any French Loan (a) no express legal requirement was received by the French Loan Originator from a qualified surveyor or valuer to carry out any environmental audit, survey or report in respect of any of the French Properties which was not implemented, and (b) the results of any such environmental audit, survey or report which was procured by the French Loan Originator would, as at that date, have been acceptable to a reasonably prudent lender of money secured on commercial property and have been taken into account in the relevant valuation; each French Loan is governed by French law; (xviii) the French Loan Originator is not aware of any material default, material breach or material violation in respect of any of the French Originated Assets which has not been remedied, cured or waived (but only in case where a reasonably prudent lender of money secured on commercial property would grant such a waiver); (xix) (xx) (xxi) (xxii) the French Loan Originator has performed, in all material respects, its obligations under or in connection with the French Originated Assets and, so far as it is aware, no French Borrowers have taken or have threatened to take any action against the French Loan Originator for material failure on the part of the French Loan Originator to perform any such obligation; no French Loan has been discharged, terminated, redeemed, cancelled, or repudiated and neither the French Loan Originator nor any Borrower has expressed any intention to do so; each French Loan may be validly transferred by the French Loan Originator to the Issuer; the French Loan Originator has not received any notice of any default, for failure or the like, of any occupational lease granted in respect of any relevant French Property or the insolvency of any tenant of any such French Property which would, in any case, render the relevant French Property unacceptable as security; and (xxiii) the French Loan Originator has undertaken all due diligence that a prudent commercial lender would undertake to determine that each French Borrower has not engaged in any activity whatsoever other than those activities incidental to the ownership of the relevant French Properties. DEFERRED CONSIDERATION On each Note Interest Payment Date prior to the occurrence of an Accelerated Redemption Event, the Issuer will pay to the Residual Unitholders, to the extent that the Issuer has sufficient funds, an amount which is calculated in respect of the Collection Period ended on the Note Calculation Date immediately 127

128 preceding such Note Interest Payment Date and which is equal to the Swap Breakage Receipts (to the extent they do not constitute Available Issuer Interest Receipts and that they have not been applied to amounts due by the French Borrowers and the Belgian Issuer in accordance with the terms of the relevant French Loan Agreements or the terms of the Belgian Bond Issue Documents) received (a) as a result of the termination of an Issuer Swap Transaction relating to a French Loan originated by the Originator or received from a French Borrower as a result of the prepayment of a French Loan originated by the French Loan Originator, or (b) under the Luxembourg Notes. On each Note Interest Payment Date prior to the occurrence of an Accelerated Redemption Event, the Issuer will pay to the Originator (as the initial Class X Noteholder and then to any subsequent Class X Noteholders or to the person then entitled to the whole or any part of the same), to the extent that the Issuer has sufficient funds, an amount which is calculated in respect of the Collection Period ended on the Note Calculation Date immediately preceding such Note Interest Payment Date and which is equal to the aggregate of: (i) (ii) (iii) (iv) the Class X Amount; the French Loan Prepayment Fees received as a result of the prepayment of a French Loan originated by the French Loan Originator (other than principal of or interest on, that French Loan) received during that Collection Period. French Loan Prepayment Fees payable upon the sale of a French Property following enforcement of the relevant French Loan and the French Related Security will be applied as such only upon satisfaction in full of the principal amount outstanding under such French Loan and all interest accrued due and payable thereon as well as costs; the payments of interest on the Luxembourg Notes represented by Belgian Prepayment Fees; and the surplus Available Issuer Interest Receipts on such Note Interest Payment Date. SALE OF THE BELGIAN BONDS Sale of the Belgian Bonds to the Luxembourg Issuer Belgian withholding tax rules provide for an exemption for withholding tax on interest payments in respect of registered bonds held by non-resident investors who are not using the bonds for a business activity in Belgium, provided certain conditions apply, including a condition that the ownership of registered bonds does not change at any time other than on an interest payment date in respect of the relevant registered bonds. Therefore, the sale of the Belgian Bonds to the Luxembourg Issuer has occurred on the Belgian Bond Transfer Date under the following conditions. Pursuant to the First Belgian Bond Sale Agreement, MS Bank as Belgian Bond Originator has agreed to purchase the Belgian Bonds held by Morgan Stanley & Co. International Limited and by Morgan Stanley & Co. Incorporated for 13,300,000. Pursuant to the Second Belgian Bond Sale Agreement, the Luxembourg Issuer has agreed to purchase all the Belgian Bonds owned by the Belgian Bond Originator for 14,000,000 on the Belgian Bond Transfer Date. The deferred payment of the purchase price of the Belgian Bonds will be paid by the Luxembourg Issuer to the Belgian Bond Originator on or about the Closing Date because the Luxembourg Issuer will fund the acquisition of the Belgian Bonds by the issue of the Luxembourg Notes on such date. Pursuant to the Second Belgian Bond Sale Agreement, the sale of the Belgian Bonds by the Belgian Bond Originator to the Luxembourg Issuer occurring on the Belgian Bond Transfer Date is subject to the conditions subsequent (conditions résolutoires/ontbindende voorwaarden) inter alia that the Luxembourg Notes are issued by the Luxembourg Issuer and that such Luxembourg Notes are subscribed for by the Issuer in an amount equal to 14,000,000. Registration Immediately following the transfer of the Belgian Bonds to the Luxembourg Issuer on the Belgian Bond Transfer Date, the register maintained in respect of the Belgian Bonds has been amended to reflect the transfer of the Belgian Bonds from the Belgian Bond Originator to the Luxembourg Issuer and the pledge of the Belgian Bonds in favour of the Luxembourg Security Agent. The Belgian Related Security is held by 128

129 the Belgian Security Agent for the benefit of the registered holders of the Belgian Bonds from time to time. Therefore, no separate notification of the transfer of the Belgian Bonds need to be given to the Belgian Security Agent nor is any re-registration required in respect of any element of the Belgian Related Security as a result of the sale of the Belgian Bonds. Non compliance with the conditions subsequent (conditions résolutoires/ontbindende voorwaarden) If the conditions subsequent (conditions résolutoires/ontbindende voorwaarden) provided for in the Second Belgian Bond Sale Agreement are not complied with, the Second Bond Sale Agreement will be terminated (résolution/ontbinding) and the Belgian Bond Originator will be deemed the legal owner of the Belgian Bonds as of the Belgian Bond Transfer Date. 129

130 SUBSCRIPTION FOR THE LUXEMBOURG NOTES THE LUXEMBOURG ISSUER The Luxembourg Issuer is a private limited company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg having its registered office at 8-10, rue Mathias Hardt, 1717 Luxembourg, Grand Duchy of Luxembourg. The Luxembourg Issuer is a securitisation company within the meaning of, and governed by, the Luxembourg Securitisation Law. The issued share capital of the Luxembourg Issuer is 12,500 and is entirely held by Monument Trustees Limited, a company established under the laws of Ireland, as the Luxembourg Issuer Trustee. The sole object of the Luxembourg Issuer is to enter into one or more securitisation transactions within the meaning of the Luxembourg Securitisation Law and the Luxembourg Issuer may, in this context, assume risks, existing or future, relating to the holding of assets, whether movable or immovable, tangible or intangible, as well as risks resulting from the obligations assumed by third parties or relating to all or part of the activities of third parties, in one or more transactions or on a continuous basis. The Luxembourg Issuer may assume those risks by acquiring the assets, guaranteeing the obligations or by committing itself in any other way. It may also transfer, to the extent permitted by law and these articles of incorporation, or dispose of the claims and other assets it holds, whether existing or future, in one or more transactions or on a continuous basis. The Luxembourg Issuer may, for this same purpose, acquire, dispose of and invest in loans, stocks, bonds, debentures, obligations, notes, advances, shares, warrants and other securities. The Luxembourg Issuer may grant pledges, other guarantees or securities of any kind to Luxembourg or foreign entities involved in such securitisation transaction and enter into securities lending activity on an ancillary basis. The Luxembourg Issuer may perform all legal, commercial, technical and financial investments or operations and in general, all transactions which are necessary or useful to fulfil and develop its purpose, as well as all operations connected directly or indirectly to facilitating the accomplishment of its purpose in all areas described above. The assets of the Luxembourg Issuer may only be assigned in accordance with the terms of the securities issued to finance the acquisition of such assets. The Luxembourg Issuer will purchase Belgian Bonds and issue negotiable financial instruments in the form of the Luxembourg Notes as well as enter into certain ancillary transactions. The Terms and Conditions of the Luxembourg Notes provide a covenant restricting the activities of the Luxembourg Issuer to that effect. The Luxembourg Issuer will not issue securities to the public on a continuous basis within the meaning of Article 19 of the Luxembourg Securitisation Law and thus is not and will not be authorised or supervised by the Commission de Surveillance du Secteur Financier. The Luxembourg Issuer may also within the context and for the purpose of the securitisation transaction: (i) (ii) (iii) raise funds, including through the issue of bonds, notes, obligations and other evidences of indebtedness; grant security for funds; enter into agreements, including, but not limited to: (a) underwriting agreements, marketing agreements and selling agreements in relation to the raising of funds; 130

131 (b) (c) interest and/or currency exchange agreements and other financial derivative agreements in connection with the objects mentioned above; and bank and cash administration agreements, liquidity facility agreements; credit insurance agreements and agreements creating security in connection with the activities mentioned above. In connection with the issue of the Luxembourg Notes on or about the Closing Date, the Luxembourg Issuer will enter into the Luxembourg Issuer Corporate Services Agreement, the Belgian Bonds Servicing Agreement, the Belgian Bonds Pledge Agreement, the Luxembourg Liquidity Facility Agreement and the Luxembourg Notes Subscription Agreement (together the "Luxembourg Issuer Transaction Documents"). TERMS AND CONDITIONS OF THE LUXEMBOURG NOTES The section below is a summary of the terms and conditions of the Luxembourg Notes (the "Terms and Conditions of the Luxembourg Notes"). Form, Denomination and Title The Luxembourg Notes are issued in registered form, in the denomination of 100,000 each, representing together a total issue of 14,000,000. The Luxembourg Notes constitute direct, secured and limited recourse obligations of the Luxembourg Issuer and will at all times rank pari passu and without any preference among themselves. Title to the Luxembourg Notes will pass by registration in the Register. The Luxembourg Issuer may, except as otherwise required by law, deem and treat the registered holder as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes. Transfers The Luxembourg Notes will be freely transferable. Interest A variable income will accrue on the Luxembourg Notes, in respect of the Luxembourg Note Interest Period. The variable income on the Luxembourg Notes will be payable (i) one Business Day following the Belgian Bond Interest Payment occurring on 7 February 2006, with respect to the first Luxembourg Note Interest Period, and (ii) thereafter, quarterly in arrear on each Luxembourg Note Interest Payment Date. The variable income on the Luxembourg Notes will be equal to the remaining sums standing to the credit of the Luxembourg Issuer Transaction account after the payment of the amounts due to the Luxembourg Issuer Related Parties and the amounts due to third parties (see "Calculation and Application of Amounts" below). Redemption and Cancellation Final Redemption Unless redeemed earlier in full or in part, the Luxembourg Notes will be redeemed at their then Luxembourg Notes Principal Amount Outstanding on the Luxembourg Note Final Maturity Date. Mandatory Redemption in Whole or in Part 131

132 Upon early repayment in full or in part of the Belgian Bonds, the Luxembourg Notes Principal Amount Outstanding will be redeemed in full or in part on a pro rata basis amongst all Luxembourg Notes then outstanding. Application of Amounts The Luxembourg Issuer will open and maintain an account (the "Luxembourg Transaction Account") in the books of BNP Paribas Securities Services acting as account bank. The obligations of BNP Paribas Securities Services as the account bank of the Luxembourg Issuer are guaranteed by BNP Paribas (caution solidaire). As at the date of this Prospectus, the short-term, unsecured, unsubordinated and unguaranteed debt obligations of BNP Paribas are rated "P-1" by Moody's and "A-1+" by S&P. On each Luxembourg Note Interest Payment Date, the Luxembourg Security Agent shall apply the amounts received by the Luxembourg Issuer and resulting from the payment of interest on and the repayment of principal of the Belgian Bonds, as may be necessary on such date in or towards the following items (and, if the credit balance in the Luxembourg Issuer Transaction Account is insufficient to pay all those items, from the proceeds of the Luxembourg Expenses Drawings): (i) (ii) (iii) (iv) (v) (vi) first, in or towards payment of (a) fees, costs and expenses in connection with the establishment of the Luxembourg Issuer and any annual return, filing, registration and publication cost fee due by the Luxembourg Issuer and (b) payment of the Luxembourg Issuer's liability (if any) to taxes; second, in or towards payment of all amounts due and payable to the Luxembourg Liquidity Facility Provider under and in accordance with the Luxembourg Issuer Liquidity Facility Agreement (other than the Luxembourg Liquidity Facility Subordinated Amounts); third, in or towards payment of any fees and other amounts due but unpaid to the subscriber of the Luxembourg Notes, the Luxembourg Security Agent, the Belgian Bonds Servicer or the Luxembourg Issuer Corporate Services Provider; fourth, in or towards payment of any variable income on the Luxembourg Notes; fifth, in or towards payment of principal under the Luxembourg Notes (if due); and sixth, in or towards payment of any amounts due and payable to the Luxembourg Liquidity Facility Provider, if any, in respect of (A) any increased costs, mandatory costs or tax gross up amounts (other than those referred to in (B) below) owing under the Luxembourg Liquidity Facility Agreement to the extent that such increased costs, mandatory costs or tax gross up amounts exceed per cent., and (B) any increase in the commitment fee payable to the Luxembourg Liquidity Facility Provider as a result of the implementation of the new Basel capital accord, to the extent that the aggregate of the increased costs referred to in (A) and (B) above exceed 0.20 per cent. per annum of the commitment provided under the Luxembourg Liquidity Facility Agreement (the amounts owing under this paragraph (vi) being the "Luxembourg Liquidity Subordinated Amounts" in respect of such Luxembourg Note Interest Payment Date). If, on any Luxembourg Note Interest Payment Date, the Luxembourg Issuer is required by law to make any deduction (whether by way of withholding tax or otherwise) from the gross amount of interest due to the subscriber of the Luxembourg Notes, the Luxembourg Security Agent, the Belgian Bonds Servicer or the Luxembourg Issuer Corporate Services Provider as of such date then the amount of such deduction shall be retained in the Luxembourg Issuer Transaction Account until the earlier of (a) the date on which the Luxembourg Issuer may lawfully pay such amount to the subscriber of the Luxembourg Notes, the Luxembourg Security Agent, the Belgian Bonds Servicer or the Luxembourg Issuer Corporate Services Provider (whereupon the Security Agent may withdraw the same) and (b) the date on which the Luxembourg Issuer is obliged to account or pay the same to the competent tax authorities (whereupon the Issuer shall so account or pay). 132

133 All amounts payable or expressed to be payable by the Luxembourg Issuer under the Terms and Conditions of the Luxembourg Notes shall be recoverable solely out of and to the extent of the Belgian Bonds or the proceeds of such Belgian Bonds, as applied in accordance with the order of priority set out above. To the extent that the Belgian Bonds and the proceeds therefrom are ultimately insufficient to satisfy the claims of the subscriber of the Luxembourg Notes, the Luxembourg Security Agent, the Belgian Bonds Servicer or the Luxembourg Issuer Corporate Services Provider in full, then the Luxembourg Issuer shall not be liable for any shortfall arising and the subscriber of the Luxembourg Notes, the Luxembourg Security Agent, the Belgian Bonds Servicer or the Luxembourg Issuer Corporate Services Provider shall not have any further claims against the Luxembourg Issuer. Such assets and proceeds shall be deemed to be "ultimately insufficient" as at such time when no further assets of the Luxembourg Issuer are available and no further proceeds can be realised therefrom to satisfy any outstanding claims of the Luxembourg Issuer's creditors, and neither assets nor proceeds will be so available thereafter. The Luxembourg Security Agent may withdraw at any time amounts from the Luxembourg Issuer Transaction Account to pay any amounts due but unpaid under the Luxembourg Issuer Transaction Documents at the request of the Luxembourg Issuer for an early repayment of the Luxembourg Notes. Representations and warranties of the Luxembourg Issuer The Luxembourg Issuer has made certain customary representations and warranties to the holders of the Luxembourg Notes and to the Luxembourg Security Agent including, inter alia, that: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) it is a société à responsabilité limitée, duly incorporated and validly existing under the laws of the Grand Duchy of Luxembourg and that it has its registered office and the centre of main interests (including the conduct of the administration of its business) in the Grand Duchy of Luxembourg at the address of its registered office; it does not have any establishment or place of business otherwise than in the Grand Duchy of Luxembourg; it complies at all times with its duties and obligations set out in its articles of association; it has the power and legal capacity to own its assets and carry on its business, as it is being conducted; no default is outstanding or might result from the execution and the performance of any Luxembourg Issuer Transaction Document; no other event is outstanding which constitutes (or with the giving of notice, lapse of time, determination of materiality or the fulfilment of any other applicable condition or any combination of the foregoing, might constitute) a contravention of, or a default under any document, agreement or undertaking which is binding on it or on any of its assets to an extent or in a manner which might have a material adverse effect; all information supplied by the Luxembourg Issuer or on its behalf or for its account on or after the Luxembourg Note Issue Date to any person in connection with the Luxembourg Issuer Transaction Documents is true, complete and accurate in all material respects as at the date it was provided or as at the date which the information refers to, that the information did not omit as at the date it was provided or as at the date which the information refers to any information which, if disclosed, would adversely affect the decision of a person considering whether to subscribe for or acquire any of the Luxembourg Notes and/or to enter into any of the Luxembourg Issuer Transaction Documents and that nothing has occurred since the date the information was provided which renders the information contained in it untrue, incomplete, inaccurate or misleading in any respect that may be material for the Luxembourg Security Agent or the holders of the Luxembourg Notes; it is the exclusive legal owner of the Belgian Bonds and its other assets (if any), free and clear of any security interest (other than the pledge granted under the Belgian Bonds Pledge Agreement); 133

134 (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) it does not have and has never had any employees; its share capital is owned by Monument Trustees, who holds full legal title to such shares and all the voting rights; since the date of its incorporation it has not carried on any business other than the acquisition and holding of the Luxembourg Notes; it has not agreed to guarantee the obligations of any third party, not contracted or incurred any loan, financial indebtedness or other off balance sheet commitment other than pursuant to the Luxembourg Issuer Transaction Documents, and not granted any real security or personal security otherwise than as provided under the Belgian Bonds Pledge Agreement; each Luxembourg Note constitutes a valid and binding obligation of, is enforceable against and represents the full recourse obligation of, the Luxembourg Issuer and has been validly issued and subject to any general principles of law limiting its obligations and referred to in any legal opinion required under these Conditions, each of the Luxembourg Issuer Transaction Documents constitutes its legally valid, binding and enforceable obligations, ranking, subject to provisions of the Terms and Conditions of the Luxembourg Notes, at least pari passu with all its other present and future unsecured, unsubordinated obligations, except for those which are mandatorily preferred by law applying to companies generally; there has been no material adverse change in its business, assets or financial condition and it is not in breach of and has not breached any applicable law or regulation; the execution by it of each Luxembourg Issuer Transaction Document constitutes, and the exercise by it of its rights and performance of its obligations under each Luxembourg Issuer Transaction Document, private and commercial acts performed for private and commercial purposes and it will not be entitled to claim immunity from suit, execution, attachment or other legal process in any proceedings taken in the Grand Duchy of Luxembourg in relation to any Luxembourg Issuer Transaction Document; (a) it is not subject to insolvency proceedings (faillite) within the meaning of Articles 437 ff. of the Luxembourg Commercial Code or any other insolvency proceedings pursuant to the Insolvency Regulation (b) is not subject to controlled management (gestion contrôlée) within the meaning of the grand ducal regulation of 24 May 1935 on controlled management, (c) has not entered into a voluntary arrangement with its creditors (concordat préventif de faillite) within the meaning of the law of 14 April 1886 on arrangements to prevent insolvency, as amended and (d) has not been granted a suspension of payments (sursis de paiement) within the meaning of Articles 593 ff. of the Luxembourg Commercial Code; and it is tax resident only in the Grand Duchy of Luxembourg. Tax Payments in relation to the Luxembourg Notes will be made by the Luxembourg Issuer in euros and without deduction for withholding taxes, unless otherwise required by law. The Luxembourg Notes will not provide for gross-up payments in the event that interest payable under the Luxembourg Notes is or becomes subject to income taxes (including withholding taxes). General principles Under Luxembourg tax law, there is in principle no withholding tax on payments of principal, premium or interest, nor on accrued but unpaid interest, in respect of the Luxembourg Notes, nor is any Luxembourg withholding tax payable upon redemption or repurchase of the Luxembourg Notes. 134

135 Under EC Council Directive 2003/48/EC on the taxation of savings income (hereafter, the "Directive"), Member States are required, as from 1 July 2005, to provide to the tax authorities of another Member State details of payments of interest (or similar income) made by a paying agent established in its jurisdiction to an individual or a residual entity, in the meaning of Article 4.2 of the Directive, resident in that other Member State. However, for a transitional period, Belgium, Luxembourg and Austria are instead required (unless during that period they elect otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A number of non-eu countries and territories have agreed to adopt similar measures with effect as from the same date. Therefore, as from 1 July 2005 and pursuant to the Luxembourg law dated 21 June 2005 implementing the Directive, Luxembourg levies withholding tax on interest payments made by a Luxembourg paying agent to individual beneficial owners or a residual entity in the meaning of Article 4.2 of the Directive who are tax resident of (i) another EU Member State, pursuant to EC Council Directive 2003/48/EC on taxation of savings income in the form of interest payments, or (ii) certain non-eu countries and territories which have agreed to adopt similar measures to those provided for under EC Council Directive 2003/48/EC. The withholding tax rate is initially 15 per cent., increasing steadily to 20 per cent. and to 35 per cent. The withholding tax system will only apply during a transitional period, the ending of which depends on the conclusion of certain agreements relating to information exchange with certain other countries. Responsibility for the withholding of such tax will be assumed by the account holding bank of the Luxembourg Issuer acting as Luxembourg paying agent. Such withholding tax might however not be levied if, in accordance with Article 9.1 of the law dated 21 June 2005, the beneficial owner elects for an exchange of information. Besides, subject to the approval of the bill Nr. 5504, a Luxembourg withholding tax of 10 per cent. may be introduced as from 1 January 2006 on certain interest payments made to Luxembourg resident individuals. Withholding tax on specific payments to the Issuer Should the Issuer qualify as a residual entity in the meaning of Article 4.2 of the Directive, the Luxembourg Issuer will in principle be required to withhold tax on interest and other similar income paid to the Issuer. However, if the Issuer opts to be treated as a UCITS recognised in accordance with the European Union Directive 85/611/ECC dated 20 December 1985 pursuant to the procedure foreseen by Article 4.3 of the Directive, no tax will be withheld. In the latter case, the Issuer will be required to provide the Luxembourg Issuer with appropriate evidence of the exercise of this option. Pursuant to Article 49 I ter I of Annex III of the French Code général des impôts, a French fonds commun de créances is entitled to opt to be treated as a UCITS recognised in accordance with the European Union Directive 85/611/ECC dated 20 December 1985 pursuant to the procedure foreseen by Article 4.3 of the Directive. Therefore, the Management Company, acting in the name and on behalf of the Issuer, will apply for such treatment with the competent French tax authorities (on form No. 2562) within one month of the Closing Date which corresponds to the date of the creation of the Issuer. Further to this application, the competent French tax administration will have to deliver an admission certificate (form No SD) which will be transmitted by the Management Company, acting in the name and on behalf of the Issuer, to the Luxembourg Issuer as the required evidence of the exercise of this tax option. Governing Law The Luxembourg Notes will be governed by and construed in accordance with the laws of the Grand Duchy of Luxembourg. Limited Recourse The Luxembourg Notes are obligations solely of the Luxembourg Issuer. The Luxembourg Issuer's ability to satisfy its payment obligations under the Luxembourg Notes and its operating and administrative 135

136 expenses will be wholly dependent upon receipt by it in full of payments of principal and interest under the Belgian Bonds and payments (if any) under the other Luxembourg Issuer Transaction Documents. THE LUXEMBOURG NOTES SUBSCRIPTION AGREEMENT Pursuant to the Luxembourg Notes Subscription Agreement, the Issuer will subscribe for the Luxembourg Notes in an amount equal to 14,000, ,000,000 will be paid by the Issuer to the Luxembourg Issuer using the proceeds of the issuance of the Notes and the Residual Units. Representations and Warranties None of the Issuer or the Issuer Related Parties and none of the Luxembourg Issuer or the Luxembourg Issuer Related Parties (other than the Belgian Bond Originator) has made or will make any of the enquiries, searches or investigations, nor has any such entity made any enquiry at any time in relation to compliance by the Belgian Bond Originator with its lending criteria or the legality, validity, perfection, adequacy or enforceability of the Belgian Bonds. In relation to all of the foregoing matters, the Issuer will rely solely on the representations and warranties given by the Luxembourg Issuer in the Luxembourg Notes Subscription Agreement, and the Luxembourg Issuer will in turm rely solely on the representations and warranties given by the Belgian Bond Originator in the Second Belgian Bond Transfer Agreement. If there is a material breach of any representation and/or warranty set out in the Luxembourg Notes Subscription Agreement in relation to the Luxembourg Notes and the Belgian Bonds (a description of the more significant of which is set out below) and such breach is not capable of remedy or, if capable of remedy, has not been remedied, the Luxembourg Issuer will be obliged, if required by the Issuer as the case may be, to repay in full the Luxembourg Notes for an aggregate amount equal to the Luxembourg Note Principal Amount Outstanding together with interest accrued (but not yet payable) and costs, up to, but excluding, the date of the full redemption, such costs to include any swap breakage costs payable by the Issuer as a result of any early termination of an Issuer Swap Transaction which results from such full redemption. The Issuer will have no other remedy in respect of such a breach. The representations and warranties given by the Belgian Bond Originator on the Belgian Bond Transfer Date in the Second Belgian Bond Transfer Agreement include customary representations and warranties and in particular the following statements: (i) (ii) (iii) (iv) each Belgian Bond constitutes a bond (obligation/obligatie) in accordance with section 485 of the Belgian Company Code and constitutes a valid and binding obligation of, is enforceable against and represents the full recourse obligations of the Belgian Issuer and has been validly issued; the Belgian Bonds do not contain any obligation to make any further advances or subscribe for additional bonds which remains to be performed by the Belgian Bond Originator on or after the Belgian Bond Transfer Date and no part of any advance pursuant to the Belgian Bonds has been retained by the Belgian Bond Originator pending compliance by the Belgian Issuer or any relevant Belgian Mortgagor with any other conditions; no amount of principal or interest due and payable from the Belgian Issuer under the Belgian Bonds at the date hereof is more than two Business Days overdue at the Belgian Bond Transfer Date; none of the Belgian Bonds has been discharged, terminated, redeemed, cancelled, rescinded, repudiated or no claim has been made to that effect, and neither the Belgian Bond Originator nor, to the best of the Belgian Bond Originator's knowledge, that the Belgian Issuer has any intention to do so; 136

137 (v) (vi) (vii) (viii) (ix) (x) (xi) each of the Belgian Bonds and rights of the Belgian Security Agent may be validly assigned to the Luxembourg Issuer and no consent from the Belgian Issuer or any relevant Belgian Mortgagor is required to such assignment and pledge; in respect of the Belgian Bonds, the Belgian Issuer is required to make all payments without any deduction for or on account of taxes, except if required to do so by law. If any tax must be deducted from amounts paid or payable under a Belgian Bond then the Belgian Issuer shall be obliged to pay additional amounts to the holders of the Belgian Bonds or the Belgian Security Agent so that they receive a net amount equal to the full amount it would have received had the payment not been subject to tax, provided that such additional amount will only be payable in case the deduction is due as a result of any introduction of or amendment to, or change in, the tax laws or regulations of the Kingdom of Belgium (or any sub-division thereof or therein) or of any authority therein or thereof having power to tax; no borrower has any debt in place that would rank higher than the obligations under the terms and conditions of the Belgian Bonds and Belgian Related Security, except for claims that are mandatorily preferred by law applying to companies generally; the Belgian Issuer has no material liabilities other than pursuant to the Belgian Bonds (other than such as are fully subordinated pursuant to a formal subordination agreement or other subordination arrangement); (a) in relation to each Belgian Property, the relevant Belgian Mortgagor was, as at the date of that Belgian Mortgage, the full and exclusive legal owner (propriétaire/eigenaa/); (b) each Belgian Property was, as at the date of the relevant Belgian Mortgage, held by the relevant Belgian Mortgagor free (save for the relevant Belgian Mortgage or other Belgian Related Security) from any encumbrance which would materially adversely affect such title or the value for mortgage purposes set out in the valuation referred to in paragraph (xii) below (including any encumbrance contained in the leases relevant to such Belgian Properties); (c) in relation to the Belgian Bonds and Belgian Related Security, all registration duties (droits d'enregistrement/registratierechten) and all other taxes or fees required to be paid in connection with the registration or recording and perfection of the Belgian Related Security in the name of the Belgian Security Agent have been paid; as of the Belgian Bond Transfer Date, none of the Belgian Bond Originator or, to the best of Belgian Bond Originator's knowledge, the Belgian Security Agent has received written notice of any default or dispute under or in relation to any occupational lease granted in respect of a Belgian Property or of the insolvency of any tenant of a Belgian Property which would, in any case, render the relevant Belgian Property unacceptable as security for the Belgian Bonds, as secured by the relevant Belgian Mortgage over that Belgian Property; as at the Belgian Bond Transfer Date, the Belgian Bond Originator: (a) has no actual knowledge of any claim against the Belgian Issuer or a Belgian Mortgagor under any law or regulation concerning the protection of health and safety; the environment, or any emission or substance which is capable of causing harm to any living organism or the environment; any law or regulation concerning zoning (aménagement du territoire/ruimtelijke ordening) or construction and exploitation permits of any kind in relation to any Belgian Property which would, if adversely determined, materially and adversely affect the valuation of the relevant Belgian Property in the context of the loan to value calculation for the Belgian Bonds at or prior to its completion; and (b) has not received written notice of any matter likely in the opinion of the Belgian Bond Originator to give rise to environmental liability for the Belgian Issuer and/or Belgian Mortgagors in the foreseeable future of such materiality that it would materially and adversely affect the valuation of the relevant Belgian Property in the context of the loan to value calculation applied for the Belgian Bonds at or prior to its completion provided always that this paragraph (b) shall only apply to written notice of matters which under environmental laws or regulations in force in the country or jurisdiction where the relevant property is situated at the Belgian Bond Transfer Date 137

138 could give rise to a requirement to clean or to reinstate the relevant Property or to a claim against the Belgian Issuer and/or Mortgagors; (xii) (xiii) (xiv) (xv) (xvi) (xvii) immediately prior to the issuance of the Belgian Bonds each Belgian Property mortgaged as security therefore was valued for the Belgian Bond Originator by a qualified surveyor or valuer acting on behalf of the Belgian Bond Originator and, at the Belgian Issue Date, the principal amount so advanced to the Belgian Issuer did not exceed 60 per cent. of the aggregate of the valuations of all Belgian Properties; prior to the issuance of the Belgian Bonds, the Belgian Issuer (a) appointed a Belgian notary public to investigate title to the properties and to confirm title in the deed establishing the relevant Belgian Mortgage and (b) appointed Belgian counsel to review a due diligence report in relation to each Belgian Property Owning Company and each Belgian Property. In relation to the relevant Belgian Property there was nothing (initially or after further investigation) disclosed which would cause a reasonably prudent lender of money secured on commercial property in Belgium to decline to proceed with the advance on its agreed terms; to the best of the Belgian Bond Originator's knowledge (a) none of the information disclosed by the notary public or the due diligence report produced by the counsel of the Belgian Issuer were negligently or fraudulently prepared by the notary or the relevant counsel and (b) no such information or report failed to disclose any fact or circumstance in relation to a Belgian Property or a Belgian Property Owning Company that ought reasonably to have been disclosed and if disclosed would have caused the Belgian Bond Originator, acting as a reasonably prudent lender secured on commercial property in Belgium, to decline to proceed with the subscription for the Belgian Bonds; prior to the Belgian Bond Issue Date, the nature of, and amount secured by, the Belgian Bonds and each Belgian Related Security and the circumstances of the Belgian Issuer and the relevant Belgian Property Owning Companies would, as at that date, have been acceptable to a reasonably prudent lender of money secured on commercial property in Belgium; prior to subscribing for the Belgian Bonds on 8 June 2004 the Belgian Bond Originator carried out all material investigations, searches and other actions and made such enquiries as to the Belgian Property Owning Companies' title to the Properties as would a reasonably prudent lender of money secured on commercial property in Belgium. Nothing was disclosed by such investigations, searches, actions and enquiries that would have led such a reasonably prudent lender either initially or after further investigation to decline to proceed with a loan; to the best of the Belgian Bond Originator's knowledge, prior to subscribing for the Belgian Bonds on 8 June 2004, (a) no express recommendation was received by the Belgian Bond Originator from a qualified surveyor or valuer to carry out any environmental audit, survey or report of any of the Belgian Properties which was not implemented and (b) the results of any such environmental audit, survey or report which was procured by the Belgian Bond Originator would, as at that date, have been acceptable to a reasonably prudent lender of money secured on commercial property and have been taken into account in the relevant valuation; (xviii) to the best of the Belgian Bond Originator's knowledge, no valuation given by a valuer in connection with the Belgian Bonds or any of the Belgian Properties was negligently or fraudulently undertaken by the valuer and no such valuation failed to disclose any fact or circumstance that ought reasonably to have been disclosed by the report and that if disclosed would have caused the Belgian Bond Originator, acting as a reasonably prudent lender of money secured on commercial property in Belgium, to decline to proceed with a loan or financing; (xix) prior to subscribing for the Belgian Bonds on 8 June 2004, the Belgian Bond Originator has undertaken all due diligence that a prudent commercial lender would undertake to establish and confirm that none of the Belgian Property Owning Companies has any material liability or assets 138

139 other than the relevant Belgian Inter-Company Loans and relevant Belgian Properties providing security for the Belgian Bonds; (xx) (xxi) (xxii) since the Belgian Bond Issue Date, neither the Belgian Bond Originator nor the Belgian Security Agent has received any written notice of any encumbrance materially and adversely affecting the Belgian Bond Originator's title to the Belgian Bonds and the Belgian Related Security; at the Belgian Bond Transfer Date, to the best of the Belgian Bond Originator's knowledge after using reasonable endeavours to ensure the same: (a) each Belgian Property is covered by a buildings insurance policy maintained by the relevant Belgian Mortgagor or another person with an interest in the relevant Belgian Property in an amount which is equal to or greater than the amount which a qualified surveyor or valuer engaged by the Belgian Bond Originator estimated to be equal to such Belgian Property's reinstatement value at the time of the issuance of the Belgian Bonds and the Belgian Security Agent's interest has been approved or otherwise included by the insurers; (b) each Belgian Property is covered against those risks usually covered by a reasonably prudent mortgagee of a property of the same nature and in a comparable location; and (c) in the case of each Belgian Property the relevant buildings insurance policy provides cover in respect of at least three years loss of revenue; the Belgian Bond Originator and the Belgian Security Agent have not received written notice that any buildings insurance policy is about to lapse on account of failure by the relevant entity maintaining such insurance to pay the relevant premiums; (xxiii) (a) none of the provisions of the Belgian Bonds or any Belgian Related Security has been waived, altered or modified in any material respect since it was entered into except as set out in the relevant Belgian Bond Issue Documents; (b) no representations or warranties have been made to the Belgian Issuer or Belgian Property Owning Companies by the Belgian Bond Originator, and there are no other terms and conditions applicable to the Belgian Bonds or Belgian Related Security, other than in each case, those set out or referred to in the Belgian Bond Issue Documents (so far as applicable) in effect at the relevant time and those documents (if any) sent by or on behalf of the Belgian Bond Originator to the Belgian Issuer under the Belgian Bonds setting out how the relevant fixed rate of interest is calculated; (xxiv) the Belgian Bond Originator is not aware of the bankruptcy (faillissement/faillite), liquidation (vereffening/liquidation), judicial composition (concordat judiciaire/gerechtelijk akkoord) any foreign insolvency proceedings or any appointment of administrators (bewindvoerder/administrateur provisoire) or any similar officer affecting the Belgian Issuer or any Belgian Property Owning Company; (xxv) neither the Belgian Bond Originator nor the Belgian Security Agent is aware of any material default, material breach or material violation under the Belgian Bonds or any Belgian Related Security which has not been remedied, cured or waived (but only in a case where a reasonably prudent lender of money secured on residential and commercial property would grant such a waiver) or of any outstanding material default, material breach or material violation by the Belgian Issuer or a relevant Belgian Mortgagor under the Belgian Bonds or any Belgian Related Security or of any outstanding event which with the giving of notice and/or the expiration of any applicable grace period and/or making of any determination, would constitute such a default, breach or violation; (xxvi) the Belgian Bond Originator has performed in all material respects all its obligations under or in connection with the Belgian Bonds and the Belgian Related Security and so far as the Belgian Bond Originator is aware neither the Belgian Issuer nor any relevant Belgian Mortgagor has taken or has threatened to take any action against the Belgian Bond Originator for any material failure on the part of the Belgian Bond Originator to perform any such obligations; 139

140 (xxvii) the Belgian Bond Originator is not aware of any litigation or claim calling into question in any way the Belgian Bond Originator's title to the Belgian Bonds, its rights against the Belgian Security Agent or the latter's rights to the Belgian Related Security; (xxviii) the Belgian Bond Originator is not aware of any circumstances giving rise to a material reduction in the value of any Belgian Property since the Belgian Bond Issue Date other than as a result of market forces affecting the value of comparable properties in the area; (xxix) the Belgian Bond Originator is not aware of the Belgian Issuer having been in default of any payment due under the Belgian Bonds for a period in excess of two Business Days prior to the Belgian Bond Transfer Date; (xxx) (a) subject only to the due registration at the competent land register, each Belgian Mortgage is a first ranking legal, valid and binding security interest (surêté réelle/zakelijke zekerheid) by way of a hypothèque/hypotheken over the Belgian Property to which such Belgian Mortgage relates; and the Belgian Bond Originator warrants that all such registrations relating to the Belgian Mortgages have been duly made; (b) subject as set out in (a) above, the Belgian Security Agent is the legal beneficiary of each Belgian Related Security and all things necessary to perfect the Belgian Security Agent's entitlement to each Belgian Related Security have been or will be duly completed within the appropriate time or are in the process of being completed without undue delay; (c) the Belgian Bond Originator is the legal owner (propriétaire/eigenaar) of 140 Belgian Bonds, free and clear of all encumbrances, claims and equities (including, without limitation, rights of set off or counterclaim) and is duly registered as such in the Belgian Bond Register; (xxxi) none of the Belgian Related Security secures any liability of the Belgian Issuer or a relevant Belgian Mortgagor other than their liabilities under the Belgian Bond Issue Documents. THE LUXEMBOURG LIQUIDITY FACILITY AGREEMENT The Luxembourg Issuer is subject to the risk that payments which it expects to receive in respect of the Belgian Bonds are not paid when expected or that such payments are insufficient to cover certain expenses incurred by it. This risk is covered through the ability of the Luxembourg Issuer to make drawings under the Luxembourg Liquidity Facility Agreement to cover certain Luxembourg Issuer third party expenses. However, the amount available to be drawn under the Luxembourg Liquidity Facility on any Luxembourg Note Interest Payment Date may be less than the amount of the expenses incurred by the Luxembourg Issuer. In such circumstances, the amount of the variable income due and payable on the Luxembourg Notes may be materially affected. The Luxembourg Liquidity Facility Agreement is not available to meet shortfalls in variable income or principal under the Luxembourg Notes. If the Belgian Bonds are fully redeemed or written-off, the Luxembourg Liquidity Facility will be terminated. On the Closing Date, the Luxembourg Issuer will enter into the Luxembourg Liquidity Facility Agreement with the Luxembourg Liquidity Facility Provider, whereby the Luxembourg Liquidity Facility Provider will provide the Luxembourg Liquidity Facility to the Luxembourg Issuer. The "Luxembourg Liquidity Facility" will consist of a 364 day committed euro revolving loan facility. The Issuer Liquidity Facility will permit drawings to be made by the Luxembourg Issuer of up to an initial aggregate amount of 40,000. Drawings under the Luxembourg Liquidity Facility Agreement (other than Luxembourg Stand-by Drawings, as defined below) shall bear interest at a per annum rate equal to the sum of EURIBOR plus 0.30 per cent. per annum plus any applicable mandatory costs. A commitment fee will be paid by the Issuer to the Luxembourg Liquidity Facility Provider on each Luxembourg Note Interest Payment Date. Such commitment fee will be paid on the undrawn and uncancelled committed amount of the Luxembourg Liquidity Facility until the last day of the Luxembourg Liquidity Facility commitment period. 140

141 If, on any Business Day, the Luxembourg Issuer determines that there will be a shortfall in the amount available to pay the Luxembourg Issuer Priority Payments (a "Luxembourg Expense Shortfall"), the Luxembourg Issuer, make a drawing pursuant to the Luxembourg Liquidity Facility Agreement on the next Business Day in an amount equal to the relevant Luxembourg Expense Shortfall (a "Luxembourg Expenses Drawing"). On each Luxembourg Note Calculation Date, the Luxembourg Issuer will determine whether a Luxembourg Accrued Interest Shortfall (as defined below) will arise on the next following Luxembourg Note Interest Payment Date and, if so, will make a drawing pursuant to the Luxembourg Liquidity Facility Agreement in respect of such Luxembourg Accrued Interest Shortfall (such a drawing being referred to as a "Luxembourg Accrued Interest Drawing") as required on the Business Day immediately preceding that Luxembourg Note Interest Payment Date. Each such drawing will be in an amount equal to the relevant shortfall and will be credited to the Luxembourg Transaction Account. A "Luxembourg Accrued Interest Shortfall" will arise with respect to any Belgian Bond on a Luxembourg Note Interest Payment Date if and to the extent that the Belgian Bond Interest Receipts received during the relevant Luxembourg Note Collection Period are insufficient to cover (i) the aggregate outstanding amount of any Luxembourg Expenses Drawings and the Luxembourg Accrued Interest Drawings previously made, plus (ii) the amount of any interest which will have accrued on outstanding Luxembourg Expenses Drawings and Luxembourg Accrued Interest Drawings previously made. If enforcement procedures in respect of the Belgian Bonds and their Belgian Related Security have been commenced and completion of such procedures takes place during a Luxembourg Note Collection Period, all outstanding Luxembourg Accrued Interest Drawings and Luxembourg Expenses Drawings in respect of such Belgian Bonds (together, the "Luxembourg Liquidity Drawings") will be repaid in full on the next following Luxembourg Note Interest Payment Date. If completion of such procedures does not take place, any outstanding Luxembourg Expenses Drawings are repayable in full on the Luxembourg Note Interest Payment Date immediately following the date on which they are drawn and the Luxembourg Accrued Interest Drawings will be repayable on the Luxembourg Note Interest Payment Date on which all Luxembourg Expenses Drawings related to Luxembourg Accrued Interest Drawings have been repaid in full. The Luxembourg Liquidity Facility Agreement may be renewed until the earlier of the Luxembourg Note Final Maturity Date and such date the principal balance of the Luxembourg Notes has been reduced to zero. The Luxembourg Liquidity Facility Agreement will provide that if at any time, the Luxembourg Liquidity Facility Provider ceases to have the Requisite Rating, or the Luxembourg Liquidity Facility Provider refuses to renew the Luxembourg Liquidity Facility Agreement, then the Luxembourg Issuer will require the Luxembourg Liquidity Facility Provider to pay into (i) a designated bank account of the Luxembourg Issuer in case of the downgrade on any day of the Luxembourg Liquidity Facility Provider's short-term, unsecured, unsubordinated and unguaranteed debt to below the Requisite Rating or into (ii) an account opened in the name of the Luxembourg Liquidity Facility Provider in case of the refusal by the Luxembourg Liquidity Facility Provider to grant an extension of the Luxembourg Liquidity Facility commitment period and for so long as there is no downgrade of the Luxembourg Liquidity Facility Provider's short-term, unsecured, unsubordinated and unguaranteed debt to below the Requisite Rating (the "Luxembourg Stand-by Account"), maintained with an appropriately rated bank, an amount (a "Luxembourg Stand-by Drawing") equal to its undrawn commitment under the Luxembourg Liquidity Facility Agreement. In the event that the Luxembourg Issuer, makes a Luxembourg Stand-by Drawing, it is required, prior to the expenditure of the proceeds of such drawing as described above, to invest such funds in Eligible Investments. Amounts standing to the credit of the Luxembourg Stand-by Account will be available to the Luxembourg Issuer, for making any Luxembourg Expenses Drawing or Luxembourg Accrued Interest Drawing, in the circumstances described above. The Luxembourg Issuer will be entitled to terminate the Luxembourg Liquidity Facility Agreement at any time following the receipt from a copy of the termination notice sent by the Management Company, acting 141

142 in the name and on behalf of the Issuer, to the Issuer Liquidity Facility Provider pursuant to the Issuer Liquidity Facility Agreement, provided always that (i) the substitute liquidity facility provider can assume in substance the rights and obligations of the original Luxembourg Liquidity Facility Provider, (ii) the substitute liquidity facility provider irrevocably waives all contractual rights of recourse (responsabilité contractuelle) which it may have against the Luxembourg Issuer, (iii) the substitution does not result in a deterioration of the level of security enjoyed by the Noteholders or the Residual Unitholders, (iv) the Rating Agencies have been given prior notice of such substitution, and (v) the substitute liquidity facility provider is not subject to any withholding tax and has the Requisite Rating. The Luxembourg Liquidity Facility Agreement will be governed by the laws of England and Wales. 142

143 THE STRUCTURE OF THE ACCOUNTS THE RELEVANT ACCOUNTS Cash flow derived from each of the French Properties will be paid through accounts held in the name of the French Loan Originator. Such accounts will be re-opened in the name of the Issuer on or about the Closing Date as described below. The Luxembourg Notes will be paid directly to the Issuer Transaction Account. In addition, the Issuer will have certain other accounts. Each of the relevant accounts is described below. THE FRENCH LOANS The French Loan Rent Accounts Each French Borrower has opened a bank account in its own name (a "French Borrower Account"). All amounts owing to a French Borrower in respect of a French Property including, without limitation, Rental Income in respect of the French Properties, are to be paid directly into the relevant French Borrower Account. Rental payments credited to a French Borrower Account are retained in those accounts, until the balance on that account is sufficient to pay all charges and taxes (including VAT due on the rents) forecast in the annual budget prepared by the applicable French Borrower to be incurred on or with respect to the applicable French Property during the then current interest period under the applicable French Loan Agreement. Once the balance of the French Borrower Account is sufficient to cover the budgeted charges and taxes, all further amounts received in respect of rent (or other proceeds) into such account during the then current interest period are required to be paid to the related "French Rent Accounts" within 48 hours of their receipt thereof. On the Closing Date, the French Rent Accounts opened in the name of the French Loan Originator will be closed and all amounts standing to the credit thereof will be transferred to equivalent French Rent Accounts opened in the name of the Issuer at the Operating Bank as part of the French Related Security. Amounts standing to the credit of the French Rent Accounts constitute cash collateral (gage-espèces) in favour of the French Loan Originator and, after the Closing Date, the Issuer to the extent of the amounts due from the relevant Borrower under its French Loan Agreement. In respect of the Carillon Loan and the Lexin Portfolio Loan, the French Rent Accounts will remain opened in the name of the French Loan Originator acting as agent (mandataire) of the Junior Lenders and the Senior Lender, and after the Closing Date, the Issuer in accordance with the terms of the Intercreditor Agreements. The cash collateral (gage-espèces) of all sums standing to the credit of the relevant French Rent Accounts will be held by the French Loan Originator acting as agent (mandataire) on behalf and for the benefit of the Junior Lenders and the Senior Lender, and after the Closing Date, the Issuer. The French Rent Accounts will be operated in accordance with the terms of the relevant French Loans subject to the terms of the Intercreditor Agreements in respect of the Tranched Carillon Loan and the Tranched Lexin Portfolio Loan. On each French Loan Payment Date, the amounts standing to the credit of each French Rent Account will be applied to make payments of interest and repayments of principal, if any, on the corresponding French Loan and all other amounts then due and owing to the French Loan Originator under that French Loan Agreement. Once the required payments of interest, principal and other amounts are made, any remaining amount then standing to the credit of the relevant French Rent Account will be released to the relevant French Borrower, subject to certain conditions precedent to the release of such funds being met (including the absence of a French Loan Event of Default and compliance with applicable ICR ratios) and subject to deduction of certain amounts that shall remain on the relevant French Rent Accounts such as rent deposits and provisions for budgeted taxes and, in the case of the Carillon Loan and the Ford Loan additional deductions relating to the calling of the relevant French Seller Guarantees and in the case of the France Telecom Loan, deductions relating to major repairs to be conducted on the relevant French Property. Such release will be made by transferring such remaining amount to an account opened for such purpose in the name of the relevant French Borrower (a "French Available Cash Account"). Each release will be made 10 Business Days following a request by the relevant French Borrower to that effect, except with respect to 143

144 the Carillon Loan and the Ford Loan where a release will be made respectively five and seven Business Days after the Borrower's request. In respect of the Pascal Loan, as from 1 October 2006, no release of such remaining amount will occur until the occurrence of the first of the following events: (i) the cash reserve constituted following the above remaining amount trapping mechanism exceeds 11,200,000 and the relevant French Occupational Lease (the "ME-B Lease") is renewed tacitly, or (ii) a new lease is concluded with the ME-B Lease tenant and concerns the same premises and the same rent as that of the ME-B Lease and the lease provides for no break option for the first three years of the lease, or (iii) satisfactory new tenant(s) are found so that the applicable ICR ratios until the maturity date of the Pascal Loan are complied with (i.e., 200 per cent.). As from 1 October 2009 and if the lease referred to in paragraph (ii) above is executed, no release of such remaining amount will occur until the occurrence of the first of the following events: (a) the cash reserve constituted following the above remaining amount trapping mechanism exceeds 11,200,000 and the ME-B Lease is renewed tacitly, or (b) the Ministère de l'equipement definitely waived its break option under the lease referred to under paragraph (ii) above and under the other French Occupational Lease (the "ME-A Lease") or (c) satisfactory new tenant(s) so that the applicable ICR ratios until the maturity date of the Pascal Loan are complied with (i.e., 200 per cent.). In respect of the France Telecom Loan, as from the year preceding the next break date (i.e., 1 March 2007) and the year preceding the expiry date of the relevant French Occupational Lease (i.e., 1 March 2010), no release of such remaining amount will occur unless and until the relevant French Occupational Leases are continued or renewed, as applicable, or unless and until the relevant French Borrower has found satisfactory new tenant(s) so that the applicable ICR ratios are complied with (i.e., 175 per cent.). In respect of the Carillon Loan, no such release will occur for so long as the ratings of long term debt obligations of the main tenant (representing 78.0 per cent. of the gross rental income of the relevant French Property) is downgraded below BB by Standard & Poor's and Ba2 by Moody's up to a maximum annual amount of 800,000 and a maximum aggregate amount of 2,000,000. In respect of the Ford Loan, as from the year preceding the expiry date of the relevant French Occupational Lease (i.e., 1 March 2010), no release of such remaining amount will occur unless and until the relevant French Occupational Lease is renewed or unless and until the relevant French Borrower has found a satisfactory new tenant(s) under a lease agreement concluded in substantially the same terms as and with rental payments at least equal to the rental payments due under the current French Occupational Lease. In addition, no release of such remaining amounts will occur if the relevant French Borrower under the Ford Loan is compelled, by a court decision, to conduct specific repairs or refurbishment works on the relevant French Property in connection with the pending litigations existing between the relevant French Borrower and its tenant (see "French Reserve Accounts" below). All of the French Borrower Accounts and the French Available Cash Accounts are maintained with Société Générale. As at the date of this Prospectus, the long-term, unsecured, unsubordinated debt obligations of Société Générale are rated "Aa2" by Moody's and "AA-" by S&P. Tranching Account In respect of the Tranched French Loans, pursuant to the provisions of the relevant Intercreditor Agreements, the Agent will maintain an account opened in its name in the books of a bank notified to the Senior Lender and the Junior Lenders (the "Tranching Account") and, together with the Senior Lender and Junior Lenders, ensures that on each Loan Payment Date for so long as no Material Senior Default is outstanding, all payments to the Senior Lender and Junior Lenders paid in respect of the relevant French Finance Documents and any amounts received under any hedging arrangements, are paid into the Tranching Account for application in the following order: (a) first, payment of any unpaid fees, costs and expenses of the Senior Lender and Junior Lenders and/or the Agent under the French Finance Documents as well as the fees due to the French Loan Servicer under the French Loan Servicing Agreement; (b) secondly, payment of any sum due under the hedging arrangements; (c) thirdly, payment to the Senior Lender and Junior Lenders of any accrued interest due under the relevant French Finance Documents; and (d) fourthly, payment (on a pro rata basis) of any other amounts due but unpaid under the relevant French Finance Documents. 144

145 Insurance Proceeds The proceeds of any insurance claim (including an insurance claim resulting from loss of rents) must be paid to the relevant French Rent Accounts as cash collateral (gage-espèces) granted by the relevant French Borrower, further to civil law assignments (cessions civiles) or Dailly law assignments by way of security (cessions de créances professionnelles à titre de garantie) duly notified to the relevant insurance companies. In case of a total or a partial destruction of a French Property, each relevant French Loan shall be repaid up to the release price allocated to such French Property in accordance with the relevant French Loan Agreement in whole or in part out of the insurance proceeds received as a result thereof. However, in case of a partial destruction, the relevant French Borrower may be exempt from its obligation to repay the relevant French Loan provided that all appropriate repairs are carried out on the relevant French Property. The conduct of such repairs will be allowed by the French Loan Originator and after the Closing Date, by the Issuer, provided that, among other things, their costs are fully covered by insurance proceeds and that the insurance indemnities resulting from loss of rents are paid throughout the entire period during which such repairs are carried out. The insurance proceeds received by the French Loan Originator and after the Closing Date, by the Issuer will be returned to the relevant French Borrower upon receipt from such French Borrower of evidence of the repair or reconstruction carried out on the relevant French Property. Additionally, insurance proceeds received by the French Loan Originator and after the Closing Date, by the Issuer and below a certain threshold amount will be automatically returned to the relevant French Borrower. Such threshold amounts are equal to 150,000, in respect of the Pascal Loan and the France Telecom Loan, 25,000 in respect of the Carillon Loan, 50,000 in respect of the Lexin Portfolio Loan and the Ford Loan. Indemnities received under French Seller Guarantees Any indemnity to be received by a French Borrower or the relevant French Borrower Shareholder (except in respect of the Carillon Loan), as applicable, under a seller guarantee granted by the initial seller of the relevant French Property in connection with the acquisition of the relevant French Properties (the "French Seller Guarantee") will directly benefit to the French Loan Originator and after the Closing Date, the Issuer as part of the French Related Security. In respect of the Pascal Loan, the indemnities received by the relevant French Borrower Shareholder under the relevant French Seller Guarantee will be paid directly on the relevant French Rent Account and will be applied in or towards repayment of the Pascal Loan. In respect of the France Telecom Loan, the indemnities received by the relevant French Borrower under the relevant French Seller Guarantee will be paid on the relevant French Borrower Account and will be treated in the same way as any rental or other French Property related income unless and until the guarantor under the relevant French Seller Guarantee is requested to pay such indemnities directly on the relevant French Rent Account. In respect of the Carillon Loan, certain of the indemnities received by the relevant French Borrower under the relevant French Seller Guarantee will be paid directly on the relevant French Rent Account and will be applied in or towards repayment of the Carillon Loan while others will be paid on the relevant French Borrower Account and will be treated in the same way as any rental or other French Property related income unless and until the guarantor under the relevant French Seller Guarantee is requested to pay such indemnities directly on the relevant French Rent Account. In respect of the Lexin Portfolio Loan, the indemnities received by the relevant French Borrower under the relevant French Seller Guarantee will be paid directly on the relevant French Rent Account and will be applied in or towards repayment of the Lexin Portfolio Loan while the indemnities received by the relevant French Borrower Shareholder under such French Seller Guarantee will be paid directly to a dedicated reserve account in the name of the French Loan Originator (see "French Reserve Accounts" below). In 145

146 respect of the Ford Loan, the indemnities received by the relevant French Borrower under the relevant French Seller Guarantee will be paid directly on the relevant French Rent Account and will be applied in or towards repayment of the Ford Loan. French Reserve Account The Lexin Portfolio Loan Agreement and the Ford Loan Agreement include provisions for reserve accounts opened in the name of the French Loan Originator (the "French Reserve Accounts"). Any amounts standing to the credit of the French Reserve Accounts constitute cash collateral (gage-espèces) in favour of the French Loan Originator and after the Closing Date, the Issuer as part of the French Related Security. Pursuant to the Lexin Portfolio Loan Agreement, on or about the origination date of the Lexin Portfolio Loan, a reserve account was opened (the "Lexin Seller Guarantee Reserve Account") aiming at being credited with all indemnities to be received by the relevant French Borrower Shareholder under the relevant French Seller Guarantee. If the relevant French Borrower is required to pay any amount to a third party in connection with the relevant French Properties which is ultimately indemnified in accordance with the terms of the relevant French Seller Guarantee, the French Loan Originator and after the Closing Date, the Issuer will release such amount by way of transfer to an account designated for such purpose by the relevant French Borrower Shareholder. Pursuant to the Ford Loan Agreement, on or about the origination date of the Ford Loan, an amount of 533,000 was credited to a reserve account (the "Ford Litigation Reserve Account") by the relevant French Borrower. This amount aimed at covering the following: (i) any partial and insufficient rental payments by the tenant under the relevant French Occupational Lease further to a final court decision (exécutoire) rendered in connection with the pending litigations existing between the relevant French Borrower and its tenant, and (ii) secured the possible obligation of the French Borrower to conduct certain repair and refurbishment works on the relevant French Property in connection with such litigations. For further information on the two pending litigations, see "Risk Factors Risk Factors relating to the originated assets Tenant Default" at page 45 above. As at the date of this Prospectus, the sums standing to the credit of the Ford Litigation Reserve Account have been released by the French Loan Originator in an amount equal to 106,008 further to an amicable settlement concluded between the French Borrower and its tenant with respect to one of the pending litigations and following the completion of the requested repair and refurbishment works on the Ford Property. The remaining sums standing to the credit of the Ford Litigation Reserve Account will be fully released by way of transfer to the relevant French Available Cash Account provided that the French Loan Originator and after the Closing Date, the Issuer, has obtained sufficient assurance that the litigation which is still pending as at the date of this Prospectus is solved and that the applicable ICR ratio is complied with (i.e., 200 per cent.). On the Closing Date, all of the French Rent Accounts and the French Reserve Accounts will be closed and all amounts standing to the credit thereof will be transferred to equivalent French Rent Accounts and French Reserve Accounts opened in the name of the Issuer at the Operating Bank. Amounts standing to the credit of the French Rent Accounts and the French Reserve Accounts will constitute cash collateral (gageespèces) in favour of the Issuer (as part of the French Related Security) to the extent of the amounts due from the relevant French Borrowers under the relevant French Loan Agreement. On each French Loan Payment Date falling after the Closing Date, the Issuer (or the Management Company on its behalf) will apply the amounts standing to the credit of each French Rent Account to make payments of interest on and repayments of principal, if any, on the corresponding French Loan and payment of any other amounts then due and owing to the Issuer under the French Loan Agreement by paying the same into the Issuer Transaction Account. Any amounts remaining standing to the credit of the relevant French Rent Account on a French Loan Payment Date after the application of funds described above will be, subject to meeting certain conditions precedent to the release of such amounts, be released to the relevant French Available Cash Account or French Borrower Account, as applicable. In respect of the Carillon Loan and the Lexin Portfolio Loan, the French Rent Accounts and the Lexin Seller Guarantee Reserve Account will remain opened in the name of the French Loan Originator acting as agent (mandataire) of the Junior Lenders and the Senior Lender, and after the Closing Date, the Issuer in accordance with the terms of the Intercreditor Agreements. The cash collateral (gage-espèces) of all sums standing to the credit of the relevant French Rent Accounts will be held by the French Loan Originator 146

147 acting as agent (mandataire) on behalf and for the benefit of the Junior Lenders and the Senior Lender, and after the Closing Date, the Issuer. These accounts will be operated in accordance with the terms of the relevant French Loan Agreements subject to the terms of the Intercreditor Agreements in respect of the Tranched Carillon Loan and the Tranched Lexin Portfolio Loan. The Issuer will thus obtain the benefit of pledges over the French Borrower Accounts as part of the French Related Security from the Closing Date. THE ISSUER ACCOUNTS The Issuer Transaction Account On or about the Closing Date, the Operating Bank will open and maintain the Issuer Transaction Account in the name of the Issuer. The Operating Bank will make all payments required to be made on behalf of the Issuer, in respect of the Notes and the Residual Units, from the Issuer Transaction Account. On or about the Closing Date, the Issuer will deposit the proceeds of the issuance of the Class X Notes into the Issuer Transaction Account (the "Class X Collateral Amount"). The Management Company, acting in the name and on behalf of the Issuer, shall ensure that the Class X Collateral Amount stands at all times (including for the avoidance of doubt on a Note Interest Payment Date) to the credit balance of the Issuer Transaction Account. The Class X Collateral Amount will be exclusively applied towards redemption of the Class X Notes in accordance with their terms. For further information about the Operating Bank. See "The Parties The Issuer and its Related Parties The Operating Bank" at page 89. The Issuer Swap Collateral Cash Account and the Issuer Swap Collateral Custody Account Any cash amounts received by the Issuer pursuant to the Issuer Swap Agreement Credit Support Document will be paid into an interest-bearing account in the name of the Issuer at the Operating Bank (the "Issuer Swap Collateral Cash Account") and securities received by the Issuer pursuant to the Issuer Swap Agreement Credit Support Document will be deposited into a custody account in the name of the Issuer at the Operating Bank (the "Issuer Swap Collateral Custody Account"). The Issuer Swap Collateral Custody Account shall also be in the name of the Issuer at the Operating Bank. From time to time, subject to the conditions to be specified in the Issuer Swap Agreement Credit Support Document, the Issuer Swap Provider may make transfers of collateral to the Issuer in support of its obligations under the Issuer Swap Agreement and the Issuer will be obliged to return such collateral in accordance with the terms of the Issuer Swap Agreement Credit Support Document. The Stand-by Account Any Stand-by Drawing which the Issuer may require from the Issuer Liquidity Facility Provider (see "Credit Structure Issuer Liquidity Facility") will be credited to an account in the name of the Issuer (the "Stand-by Account") with the Issuer Liquidity Provider or with the Operating Bank in case of the downgrade of the Issuer Liquidity Facility Provider's short-term, unsecured, unsubordinated and unguaranteed debt to below the Requisite Rating. 147

148 THE LOAN POOL OVERVIEW For the purposes of the tables in this section and more generally for purposes of information contained in this Prospectus, the following assumptions and definitions were used. (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) "Cut-Off Date" means 15 November All amounts or percentage referred to in this Prospectus and calculated at Cut-Off Date have been calculated on the expected assumptions as of such date. "Market Valuation" means valuations performed on or about the respective loan origination dates. "Gross Rental Income" means annualised current contractual Rental Income from tenants. Gross Rental Income is not a projection of future rental cash flows. "Initial Yield" is calculated as Gross Rental Income divided by Market Valuation. "Net Rental Income" means Gross Rental Income less latest available budgeted non recoverable expenses. "All-In Rate" means the fixed interest rate, including margin and credit charge where applicable, payable by the Borrower in respect of the securitised piece or the whole Loan, as applicable. "ICR" means the interest cover ratio which is calculated for each loan as the aggregate Net Rental Income generated by the Properties securing such loan, divided by the interest expense. Interest expense is calculated by multiplying the relevant all in rate with the applicable loan balance as at Cut-Off Date. "DSCR" means the debt service cover ratio which is calculated for each loan as the aggregate Net Rental Income generated by the Properties securing such loan, divided by the interest expense plus scheduled amortization. The scheduled amortisation is the anticipated repayment over the next four interest periods, assuming no prepayments. "Weighted Average Unexpired Lease/Loan Terms" are calculated from the Cut-Off Date until the earlier of the respective lease termination date and the first break option date (where applicable), weighted by their applicable loan balances as at Cut-Off Date. "Weighted Average Cut-Off Date LTV/Cut-Off Date ICR/Cut-Off Date DSCR/Exit LTV" are weighted by their applicable loan balances as at Cut-Off Date or maturity date. "Weighted Average LTV at Maturity" assumes that there are no prepayments and no default under the Loans, amongst other things. "Occupational Leases" refer to tenants with occupational lease agreements. "French Occupational Lease" refer to tenants with occupational lease agreements under the French Properties and "Belgian Occupation Lease" refer to tenants with occupational lease agreements under the Belgian Properties. "Distinct Tenants" refer to tenants such as group companies which may have more than one occupational lease, but may be aggregated for the purposes of these tables. The ratings assigned to the tenants and referred to in the tables of this section, in the tables of "The Loans and the related Property summaries" below and throughout this Prospectus refer to those of the relevant tenants or their relevant group rating. In the case of France Telecom, Crédit Lyonnais and Sodexho, the ratings referred to in this Prospectus refer to their respective direct ratings. However, in the case of all the other tenants such as, without limitation, Compagnie Générale des 148

149 Eaux and Groupe Ford France, the ratings referred to in this Prospectus refer to their respective group rating and no explicit guarantee is provided to such tenants. In the case of governmental entity such as the French Ministère de l'equipement, the sovereign ratings of the Republic of France are shown in this Prospectus. Table 1 Loan Pool Overview Loan Pool Overview Securitised Loan Balance at Cut-Off Date 326,805,000 Aggregate Market Valuation 613,038,000 Loan Count Properties 6 (5 French, 1 Belgian) 13 (8 French, 5 Belgian) No. of Distinct Occupational Tenants 57 Weighted Average Cut-Off Date LTV 56.6% Weighted Average LTV at Maturity 54.8% Weighted Average ICR at Cut-Off Date 2.9x Weighted Average DSCR at Cut-Off Date 2.8x Weighted Average Remaining Lease Term to Break / to Maturity 3.5 yrs / 5.0 yrs % of Investment Grade Tenants (by Rental Income) 79.0% Largest Loan as % of Total at Cut-Off Date (Pascal) 34.0% Largest Property as % of Total at Cut-Off Date (Pascal) 46.3% No. of B-Pieces 2 ( 26.0 MM) Table 2 Loan Pool Summary Table Loan Name Property Type Securitised Loan Balance at Cut-Off Date ( ) (%) # of Properties # of Tenants Occupancy by Area Remaining Loan Term (yrs) Securitised Piece All-In Rate Initial Yield Securitised Piece ICR at Cut-Off Date Securitised Piece DSCR at Cut-Off Date Market Valuation ( ) Securitise d Piece LTV at Cut-Off Date Securit ised Piece LTV at Maturi ty B-Loans Balance at Cut-Off Date ( ) Pascal Office 111,000, % % % 6.44% 3.56x x 1 283,600, % 39.1% - France Telecom Office 74,750, % % % 6.43% 2.63x 2.63x 115,000, % 65.0% - Carillon Office 61,200, % % % 6.47% 2.19x 2.19x 94,200, % 65.0% 18,416,000 Lexin Portfolio Office 39,900, % % % 8.77% 3.19x 3.19x 57,141, % 62.8% 7,600,000 Ford Office 25,955, % % % 8.28% 2.66x 1.44x 39,500, % 54.3% - Brussels Portfolio Mixed 14,000, % % % 8.41% 2.87x 2.87x 23,597, % 59.3% - Total/ W A - 326,805, % % % 6.96% 2.94x 2.84x 613,038, % 54.8% 26,016,000 (1) Pascal Securitised Piece ICR and DSCR at Cut-Off Date are calculated assuming interest at the cap rate of 4.25% (including the margin). Assuming three month Euribor at Cut-Off Date plus Loan margin, Pascal Securitised Piece ICR and DSCR at Cut-Off Date would be 5.30x, and Weighted Average Securitised Piece ICR and DSCR at Cut-Off Date would be 3.54x and 3.44x respectively. 149

150 Table 3 Property Summary Table Property Location Main Tenant Rating (S&P/ Moody's/ Fitch) Pascal Pascal A La Défense Ministère de l'equipement Pascal B La Défense Ministère de l'equipement Total Pascal Market Valuation ( MM) Market Valuation % Area (sqm) Gross Rental Income ( MM) Gross Rental Income% ERV ( MM) ERV/ Rental Income Initial Yield AAA / Aaa / AAA % 20, % % 6.88% AAA / Aaa / AAA % 36, % % 6.18% % 57, % % 6.44% France Telecom France Telecom Carillon Carillon Building Paris France Telecom A- / A3 / A % 17, % % 6.43% Greater La Défense CGE BBB+ / A3 / % 17, % % 6.47% Lexin Portfolio Directoire Greater Paris Dassault - / - / % 12, % % 8.79% Diapason Paris Crédit Lyonnais AA- / Aa2 / AA % 6, % % 8.58% Verdun Greater Paris ILOG - / - / % 2, % % 9.06% Total Lexin % 21, % % 8.77% Ford Ford Greater Paris Ford BB+ / Ba1 / BBB % 15, % % 8.28% Brussels Portfolio Melodicu Waterloo Region Mastercard A- / - / % 4, % % 9.06% m Centrum Brussels Regie des Batiments AA+ / Aa1 / AA % 2, % % 7.20% Trealen Brussels SNCF AAA / Aaa / AAA % 2, % % 8.60% Polytroph Brussels AGEA - / - / % 2, % % 7.29% ys Seminole Greater Brussels UPS AAA / Aaa / % 4, % % 10.33% Total Brussels % 17, % % 8.41% Total % 145, % % 6.86% Table 4 Lease Expiry Analysis Year # Lease Rolling Gross Rental Income ( ) Gross Rental Income % , % (post Cut-Off Date) , % ,477, % ,483, % ,254, % , % ,667, % ,134, % > ,156, % Vacant Space % Total 65 42,028, % 150

151 Table 5 Property Type Property Type Area (sqm) Area % Gross Rental Income ( ) Gross Rental Income % Office 140, % 41,660, % Retail/Warehouse 5, % 368, % Total 145, % 42,028, % Table 6 Property Region Location Area (sqm) Area % Gross Rental Income ( ) Gross Rental Income % Market Valuation ( ) Market Valuation % Paris 23, % 8,805, % 131,400, % La Défense 57, % 18,270, % 283,600, % Greater La Défense 17, % 6,093, % 94,200, % Greater Paris 30, % 6,874, % 80,241, % Belgium 17, % 1,984, % 23,597, % Total 145, % 42,028, % 613,038, % 151

152 Table 7 Top 10 Tenant Overview Tenant Activity Rating (S&P / Moody's / Fitch) Ministère de l'equipement Equipment and Transportation Ministry Property Name Gross Rental Income ( ) Gross Rental Income % Area (sqm) Area % Break Date Expiry Date AAA / Aaa / AAA Pascal A 4,686, % 14, % Nov-10 Nov-13 Ministère de l'equipement Equipment and Transportation Ministry AAA / Aaa / AAA Pascal B 10,953, % 36, % - Oct-07 France Telecom Telecom operator A- / A3 / A- France Telecom HQ Compagnie Water supplier, BBB+ / A3 / - Carillon Générale des subsidiary of Veolia Building Eaux (CGE) Groupe Ford France Automotive manufacturer 7,398, % 17, % Mar-08 Mar-11 4,753, % 11, % - Apr-15 BB+ / Ba1 / BBB- Ford HQ 3,268, % 15, % - Mar-11 British Telecom Telecom operator A- / Baa1 / A- Pascal A 1,775, % 4, % - Aug-08 ILOG Supplier of software components - / - / - Verdun 855, % 2, % Jul-10 Jun-13 Crédit Lyonnais Bank AA- / Aa2 / AA Diapason 804, % 3, % Mar-06 Mar-09 CFPB Banking association - / - / - Carillon 668, % 2, % Aug-09 Jul-14 Building Glaverbel Glass manufacturer, subsidiary of Asahi Glass A / Aa2 / - Pascal A 588, % 1, % - Jul-07 Mastercard Europe Payment system provider A- / - / - Melodicum 582, % 3, % - Dec-07 Top 10 Tenants 36,335, % 113, % Remaining 46 Tenants 5,693, % 32, % Total 42,028, % 145, % 152

153 THE LOANS AND THE RELATED PROPERTY SUMMARIES THE FRENCH LOANS The Pascal Loan Loan Information Property Information Borrower Name Pascal Immobilière Première SNC Single Asset / Portfolio Portfolio Pascal Immobilière Seconde SNC City Puteaux Sponsor MSEOF Location La Défense Purpose Acquisition Year Built / Renovated 1983 / 1998 Origination Date 28-Jun-05 Number of Properties 2 Maturity Date 20-Jul-12 Type of Property Office Next Payment Date 20-Jan-06 Market Valuation 283,600,000 Securitised Loan Balance at Cut-Off Date 111,000,000 Gross Rental Income 18,270,543 Securitised Piece Cut-Off Date LTV 39.1% Initial Yield 6.44% Amortisation of the Securitised Piece Bullet Tenure Freehold Securitised Loan Balance at Maturity 111,000,000 Valuer Catella Codemer Securitised Piece Exit LTV 39.1% Date of Valuation 27-Jun-05 Interest Rate Type (1) Floating Rate Square Meters 57,342 Securitised Piece Cap Rate (2) 4.25% Occupancy (by area) 100.0% Interest Rate Calculation Actual / 360 Number of Tenants 8 Securitised Piece Cut-Off Date ICR (3) (4) 3.56x Securitised Piece Cut-Off Date DSCR (3) (4) 3.56x Dividend Trap (ICR Test) 2.00x Interest Cover Covenant 1.10x Major Tenants Gross Rent ( ) Gross Rent (%) Pledged Rent Account Yes Ministère de l'equipement 15,640, % Escrow Account No British Telecom 1,775, % A/B Loan Structure No (1) Floating rate with a cap at 4.25% including margin. (2) Assuming cap rate and not three month Euribor as at Cut-Off Date. (3) Pascal Securitised Piece ICR and DSCR at Cut-Off Date are calculated assuming interest at the cap rate of 4.25% (including the margin). Assuming three month Euribor at Cut-Off Date plus Loan margin, Pascal Securitised Piece ICR and DSCR at Cut-Off Date would be 5.30x, and weighted Average Securitised Piece ICR and DSCR at Cut-Off Date would be 3.54x and 3.44x respectively. (4) Annual non recoverable expenses are budgeted in 2005 at 1,260,000 in the loan agreement. The Loan The 111,000,000 Pascal Loan was used to refinance the French Borrowers' existing credit facilities following the MSEOF acquisition. The aggregate debt amount secured by the Pascal Properties (the "Pascal Properties") represents 39.1 per cent. LTV Ratio at Cut-Off Date. The Loan position at maturity is 39.1 per cent. LTV Ratio, with balloon repayment expected to be in July The Pascal Loan does not amortise during its term. The Borrower The French Borrowers under the Pascal Loan are Pascal Immobilière Première SNC and Pascal Immobilière Seconde SNC (the "Pascal Borrowers"). The sponsor is Morgan Stanley Eurozone Office Fund ("MSEOF"), a real estate investment core fund set up by Morgan Stanley in MSEOF's management team consists of the same professionals that run the other Morgan Stanley Real Estate Funds. Location The Pascal Properties are located in La Défense, one of Europe's largest business districts. The Pascal Properties, situated inside the ring road in La Défense, are easily accessible on foot and benefit from excellent road access and public transportation network. The Properties The Pascal Properties consist of two towers (tower A and tower B) which were built in 1983 by architect Henri La Fonta. The Pascal Properties are what is known as "Third Generation" office towers, a movement seeking to provide major savings in terms of energy consumption and running costs. The Pascal Properties were partially refurbished in The total lettable space is 57,342 square meters of office space only. 153

154 Both buildings share a common ground floor offering a full complement of services and facilities, including several conference rooms, a restaurant serving over 1,500 meals daily, a cafeteria and a kitchen. The buildings benefit from 476 car parking spaces (one car park per 120 square meters); unlike most properties in La Défense, the car park is private and wholly-owned by the Pascal Borrowers. Market Valuation provided by Catella Codemer on 27 June 2005 is 283,600,000. The Pascal Properties are held freehold. Tenancies Rental Income of 18,270,543 of the Pascal Properties reflects an initial yield of 6.44 per cent. based on the Market Valuation. Approximately 98.8 per cent. of day one rental income is derived from tenants rated investment grade per cent. of day one income comes from the Ministère de l'equipement, which occupies all of one building (Pascal B) and 67.0 per cent. (by area) of the other building (Pascal A). The lease of Pascal B is an administrative lease, giving the Ministère de l Equipement et des Transports under French law the right to terminate its lease at any time until its expiry, the "Fait du Prince". The Ministère has indicated that it will not exercise this option. A full cash sweep mechanism starts one year before the Ministère de l Equipement's lease expiry (Pascal B) or next break date (Pascal A) (October 2007 and in November 2010, respectively) trapping all excess cash which is expected to create a minimum 9,900,000 1 cash reserve which would allow seven quarters to relet the space it occupies (two quarters notice period plus payment of covering debt service and void rates for five quarters). The cash reserve is capped at a maximum amount equal to 11,200,000. For further information on the full cash sweep mechanism, see "The Structure of the Accounts The French Loans The French Loan Rent Accounts" at page 143 above. The Pascal Properties are per cent. occupied at Cut-Off Date. Lease Expiration Summary The following table shows scheduled lease expirations for the Pascal Properties: Year # Leases Rolling 2005 (post Cut-Off Date) Sqm Rolling Sqm Rolling % Cumulative Sqm Rolling % Gross Rental Income Rolling ( ) Gross Rental Income Rolling Avg per sqm Gross Rental Income Rolling% Cumul. Gross Rental Income Rolling % % 0.0% % 0.0% % 0.8% 124, % 0.7% , % 67.6% 11,542, % 63.9% , % 75.5% 1,901, % 74.3% % 75.5% % 74.3% % 75.5% % 74.3% % 75.5% % 74.3% % 75.5% % 74.3% > , % 100.0% 4,703, % 100.0% Vacant Space % 100.0% % 100.0% Total / Average 9 57, % 100.0% 18,270, % 100.0% 1 Minimum cash amount calculated using current rental income, without allowance for rental increases or other changes to the rentroll, and schedule amortisation. 154

155 Tenant Summary The following table shows certain information regarding tenants of the Pascal Properties: Tenant Activity Rating (S&P/Moody's/Fitch) Pascal A Gross Rental Income ( ) % Area (sqm) % Break Date Expiry Date Ministère de l'equipement Equipment and Transportation Ministry AAA / Aaa / AAA 4,686, % 14, % Nov-10 Nov-13 British Telecom Telecom operator A- / Baa1 / A- 1,775, % 4, % - Aug-08 Glaverbel Glass manufacturer, subsidiary of A / Aa2 / - 588, % 1, % - Jul-07 Asahi Glass Planaxis Software provider - / - / - 125, % % - Sep-08 Groupe 4 Falck Building security - / - / - 57, % % - Dec-05 Dalkia Building technical management BBB+ / A3 / - 52, % % - Dec-05 Tepia Building real estate management - / - / - 16, % 0 0.0% Jun-08 Jun-14 Arcade Building elevator - / - / - 13, % % - Dec-05 Pascal B Ministère de l'equipement Equipment and Transportation Ministry AAA / Aaa / AAA 10,953, % 36, % - Oct-07 Total 18,270, % 57, % 155

156 The France Telecom Loan Loan Information Property Information Borrower Name SCI Alleray Single Asset / Portfolio Single Asset Sponsor JP Morgan Fleming European City 15th District of Paris Property Fund Purpose Acquisition Location Paris Origination Date 27-Jul-05 Year Built / Renovated 1987 Maturity Date 07-Aug-12 Number of Properties 1 Next Payment Date 07-Feb-06 Type of Property Office Securitised Loan Balance at Cut-Off Date 74,750,000 Market Valuation 115,000,000 Securitised Piece Cut-Off Date LTV 65.0% Gross Rental Income 7,398,455 Amortisation of the Securitised Piece Bullet Initial Yield 6.43% Securitised Loan Balance at Maturity 74,750,000 Tenure Freehold Securitised Piece Exit LTV 65.0% Valuer DTZ Eurexi Interest Rate Type Fixed Rate Date of Valuation 15-Jun-05 Securitised Piece All-In Rate 3.68% Square Meters 17,056 Interest Rate Calculation Actual / 360 Occupancy (by area) 100.0% Securitised Piece Cut-Off Date ICR (1) 2.63x Number of Tenants 1 Securitised Piece Cut-Off Date DSCR (1) 2.63x Dividend Trap (ICR Test) 1.75x Interest Cover Covenant 1.10x Pledged Rent Account Yes Major Tenant Gross Rent ( ) Gross Rent (%) Escrow Account No France Telecom 7,398, % A/B Loan Structure No (1) Annual non recoverable expenses are budgeted in 2005 at 70,000 in the loan agreement. The Loan The 74,750,000 France Telecom Loan was used to finance the acquisition of the France Telecom Property (the "France Telecom Property"). The aggregate debt amount secured by the France Telecom Property represents 65.0 per cent. LTV Ratio at Cut-Off Date. The France Telecom Loan position at maturity is 65.0 per cent. LTV Ratio, with balloon repayment expected to be in August The France Telecom Loan does not amortise during its term. The Borrower The French Borrower under the France Telecom Loan is SCI Alleray (the "France Telecom Borrower"). The sponsor under the France Telecom Loan is JP Morgan Fleming European Property Fund, an openended JP Morgan new core fund. The fund is managed by the same team as the former Peabody fund. Strategy is to taken long term view, focused on Western Europe, with investment with low risk profile and to use moderate leverage, hence low LTV Ratio. Location The France Telecom Property is located in the centre of Paris (15 th district). This district is a mixed residential/office/retail area with good accessibility by public transportation and road. The Property The France Telecom Property was built in 1987 for France Telecom to serve as its headquarters. Approximately 500 France Telecom's employees work in the Property. This Class A property comprises 17,056 square meters of office space and 292 parking spaces. France Telecom is committed to the area. In addition to the France Telecom Property, France Telecom owns and occupies two adjacent buildings dedicated to technical use and is the only tenant for the entire block. Market Valuation provided by DTZ Eurexi on 15 June 2005 is 115,000,000. The France Telecom Property is held freehold. Tenancies Rental Income of 7,398,455 of the France Telecom Property reflects an initial yield of 6.43 per cent. based on Market Valuation. 156

157 The France Telecom Property is fully let to France Telecom rated A-/A3/A- by S&P/Moody's/Fitch. France Telecom is the principal provider of telecommunication services in France and one of the world's leading telecom service providers with activities in over 75 countries. French State owns 19.9 per cent. of France Telecom. A full cash sweep mechanism starts one year before France Telecom break date or lease expiry (March 2008 and March 2011 respectively) trapping all excess cash which is expected to be a minimum of 4,200,000 2 which would allow six quarters to re-let the France Telecom Property (two quarters notice period plus payment of covering debt service and void rates for four quarters). For further information on the full cash sweep mechanism, see "The Structure of the Accounts The French Loans The French Loan Rent Accounts" at page 143 above. France Telecom Property was per cent. occupied at Cut-Off Date. Lease Expiration Summary The following table shows scheduled lease expirations for the France Telecom Property: Year # Leases Rolling 2005 (post Cut-Off Date) Sqm Rolling Sqm Rolling % Cumulative Sqm Rolling % Gross Rental Income Rolling ( ) Gross Rental Income Rolling Avg per Sqm Gross Rental Income Rolling% Cumul. Gross Rental Income Rolling % % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% , % 100.0% 7,398, % 100.0% % 100.0% % 100.0% > % 100.0% % 100.0% Vacant Space % 100.0% % 100.0% Total / Average 1 17, % 100.0% 7,398, % 100.0% Major Tenant Summary The following table shows certain information regarding the France Telecom lease: Tenant Activity Rating (S&P/Moody's/Fitch) FT HQ Gross Rental Income ( ) % Area (sqm) % Break Date Expiry Date France Telecom Telecom operator A- / A3 / A- 7,398, % 17, % Mar-08 Mar-11 The Carillon Loan Loan Information Borrower Name Property Information Single Asset / Portfolio White Carillon / Action Single Asset Holding Group Sponsor Inovalis City Nanterre Purpose Acquisition Location Greater La Défense Origination Date 28-Apr-05 Year Built / Renovated 1991 Maturity Date 30-Jan-12 Number of Properties 1 Next Payment Date 30-Jan-06 Type of Property Office Securitised Loan Balance at Cut-Off Date 61,200,000 Market Valuation 94,200,000 Securitised Piece Cut-Off Date LTV 65.0% Gross Rental Income 6,093,012 Whole Loan Cut-Off Date LTV 84.5% Initial Yield 6.47% Amortisation of the Securitised Piece Bullet Tenure Freehold Securitised Loan Balance at Maturity 61,200,000 Valuer CBRE Securitised Piece Exit LTV 65.0% Date of Valuation 01-Apr-05 2 Minimum cash amount calculated using current rental income, without allowance for rental increases or other changes to the rentroll, and schedule amortisation. 157

158 Whole Loan Maturity LTV 74.8% Square Meters 17,038 Interest Rate Type Fixed Rate Occupancy (by area) 95.1% Securitised Piece Loan All-In Rate 4.38% Number of Tenants 4 Interest Rate Calculation Actual / 360 Securitised Piece Cut-Off Date ICR (1) 2.19x Whole Loan Cut-Off Date ICR (1) 1.56x Securitised Piece Cut-Off Date DSCR (1) 2.19x Whole Loan Cut-Off Date DSCR (1) 1.28x Dividend Trap (ICR Test) 1.40x Interest Cover Covenant 1.10x Pledged Rent Account Yes Major Tenants Gross Rent ( ) Gross Rent (%) Escrow Account No Compagnie Générale des Eaux 4,753, % (CGE) A/B Loan Structure Yes Total Energie Gaz 341, % B-Piece Balance at Cut-Off Date 18,416,000 (1) Annual non recoverable expenses are budgeted in 2005 at 150,000 by the French Borrower. The Loan The 79,616,000 loan served by the Carillon Property (the "Carillon Property") was used to refinance certain existing credit facilities at the French Borrower's level following the Inovalis acquisition. This loan will be tranched with a securitised piece (the "Carillon Loan") in an amount of 61,200,000. The Carillon Loan represents 65.0 per cent. LTV Ratio at Cut-Off Date. The loan position at maturity is 65.0 per cent. LTV Ratio, with balloon repayment expected to be in January The Securitised Piece does not amortise during its term. Pursuant to the relevant Intercreditor Agreement, any principal payments made by the relevant French Borrower prior to the final maturity date of the Carillon Loan will be for the account of the Junior Lender. As a result the interest received by the Senior Lender under the Tranched Carillon Loan will increase overtime (see "The Originated Assets Documentation The French Loans and the French Related Security Intercreditor Arrangements: Tranched French Loans" at page 114). At Cut-Off Date, no pledge of the shares of the French Borrower has been granted in favour of the French Loan Originator. Such pledge will be granted by the French Borrower Shareholder in favour of the French Loan Originator and after the Closing Date, the Issuer, only when the existing pledge granted in favour of CEGI or to any credit institution described hereafter is no longer in force. The existing pledge of the shares of the relevant French Borrower has been granted to secure amounts which may be due by the French Borrower Shareholder to CEGI if the French Borrower Shareholder calls the first bank demand guarantee issued by CEGI to secure amounts which may be due by it to Cerep S.à r.l. as complementary purchase price of the shares of the relevant French Borrower in an amount of 9,000,000. Such existing pledge over the shares of the French Borrower will remain in existence if CEGI grants a loan to the French Borrower Shareholder in order to enable it to pay such complementary purchase price or such existing pledge will be released and a new pledge over the shares of the French Borrower will be granted in favour of the credit institution which would grant such a loan. For further information on this French Related Security, see "The Originated Assets Documentation The French Loans and the French Related Security French Related Security" at page 111. The Borrower The French Borrower under the Carillon Loan is White Carillon SARL (the "Carillon Borrower"). The sponsor under the Carillon Loan is Inovalis, a real estate investment and asset management company for mainly middle-eastern investors founded in 1998 and staffed with 35 people, 20 of whom are dedicated to asset management. The fund's strategy is to purchase real estate assets ranging from 5,000,000 to 70,000,000 offering stable income throughout a projected holding period of 3 to 9 years. Location The Carillon Property is located in Nanterre in the centre of Nanterre-Seine-Arche business districts. Nanterre, Puteaux, Courbevoie and La Défense form the greater La Défense business district. 158

159 The Property is ideally located above Nanterre RER station (Paris Subway), allowing easy access to the centre of Paris. The Property The Carillon Property, built in 1991, comprises 17,038 square meters of office space only. This class A property is a low rise building (none "IGH") resulting in lower operating costs. The building is divisible into units of 1,000 square meters. Amenities include a company restaurant. A 4,700,000 ( 312 per square meter) refurbishment program was completed in 2002 and 2003 including: painting, carpeting and partitioning, security access, fire protection system and refurbishment of the restaurant. Market Valuation provided by CBRE on 1 April 2005 is 94,200,000. The Carillon Property is held freehold. Tenancies Rental Income of 6,093,012 of the Carillon Property reflects an initial yield of 6.47 per cent. based on the Market Valuation per cent. of the space (78.0 per cent. of rental income) is let until March 2015 (i.e. 3 years after Loan maturity) to CGE, a fully owned subsidiary of Veolia Environment, which is rated BBB+/A3 by S&P/Moody's. CGE Group is a leading supplier of water services globally, supplying water in France under the brand name CGE and in 52 other countries as Vivendi Water. If Veolia Environment is downgraded to below "BB" by Standard & Poor's and/or "Ba2" by Moody's, a cash trap mechanism will be triggered to trap up to a 800,000 annually to a maximum of 2,000,000 over the term of the Carillon Loan. For further information on this cash sweep mechanism, see "The Structure of the Accounts The French Loans The French Loan Rent Accounts" at page 143 above. The Carillon Property was 95.1 per cent. occupied at Cut-Off Date. Lease Expiration Summary The following table shows scheduled lease expirations for the Carillon Property: Year # Leases Rolling 2005 (post Cut-Off Date) Sqm Rolling Sqm Rolling % Cumulative Sqm Rolling % Gross Rental Income Rolling ( ) Gross Rental Income Rolling Avg per Sqm Gross Rental Income Rolling% Cumul. Gross Rental Income Rolling % % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% > , % 95.1% 6,093, % 100.0% Vacant Space % 100.0% % 100.0% Total / Average 5 17, % 100.0% 6,093, % 100.0% Tenant Summary 159

160 The following table shows certain information regarding tenants of the Carillon Property: Tenant Activity Rating (S&P/Moody's/ Fitch) Gross Rental Income ( ) % Area (sqm) % Break Date Expiry Date Carillon Building Compagnie Générale des Eaux (CGE) Water supplier, subsidiary of Veolia Environment BBB+ / A3 / - 4,753, % 11, % - Apr-15 CFPB Banking association - / - / - 668, % 2, % Aug-09 Jul-14 Total Energie Gaz Subsidiary of Total SA AA / Aa1 / AA 341, % 1, % Aug-07 Aug-13 IMS Metal manufacturer - / - / - 330, % 1, % Aug-11 Aug-14 Vacant - - / - / % % - - Total 6,093, % 17, % 160

161 The Lexin Portfolio Loan Loan Information Borrower Name Property Information Single Asset / Portfolio Diapason SCI, Directoire Portfolio SCI, Verdun SCI Sponsor Lexin ER Partners LLC City Saint-Cloud / Paris / Gentilly Purpose Acquisition Location Greater Paris Origination Date 28-Jul-05 Year Built / Renovated 1976, 1993, 1993 Maturity Date 07-Aug-10 Number of Properties 3 Next Payment Date 07-Feb-06 Type of Property Office Securitised Loan Balance at Cut-Off Date 39,900,000 Market Valuation 57,141,000 Securitised Piece Cut-Off Date LTV 69.8% Gross Rental Income 5,013,437 Whole Loan Cut-Off Date LTV 83.1 Initial Yield 8.77% Amortisation of the securitised Piece Amortising Tenure Freehold Securitised Loan Balance at Maturity 35,910,000 Valuer Cushman & Wakefield Healey & Baker Securitised Piece Exit LTV 62.8% Date of Valuation 18-Jul-05 Whole Loan Maturity LTV 74.8% Square Meters 21,914 Interest Rate Type Fixed Rate Occupancy (by area) 97.7% Securitised Piece Loan All-In Rate 3.67% Number of Tenants 20 Interest Rate Calculation Actual / 360 Securitised Piece Cut-Off Date ICR (1) 3.19x Whole Loan Cut-Off Date ICR (1) 2.43x Securitised Piece Cut-Off Date DSCR (1) 3.19x Whole Loan Cut-Off Date DSCR (1) 2.43x Dividend Trap (ICR Test) 1.50x Interest Cover Covenant 1.10x Major Tenants Gross Rent ( ) Gross Rent (%) Pledged Rent Account Yes ILOG 855, % Escrow Account No Crédit Lyonnais 804, % A/B Loan Structure Yes Dassault Systems 492, % B-Piece Balance at Cut-Off Date 7,600,000 (1) Annual non recoverable expenses are budgeted in 2005 at 275,000 by the French Borrower. The Loan The 47,500,000 loan served by the Lexin Portfolio was used to refinance the French Borrower's existing facilities following the acquisition of the Lexin Properties (the "Lexin Properties"). This loan will be tranched, with a securitised piece (the "Lexin Portfolio Loan") in an amount of 39,900,000. The Lexin Portfolio Loan represents 69.8 per cent. LTV Ratio at Cut-Off Date. The Lexin Portfolio Loan position at maturity is 62.8 per cent. LTV Ratio, with balloon repayment expected to be in August The Lexin Portfolio Loan amortises quarterly from May Pursuant to the relevant Intercreditor Agreement, any principal payments made by the relevant French Borrower will be applied pro rata between the Junior Lender and the Senior Lender (see "The Originated Assets Documentation The French Loans and the French Related Security Intercreditor Arrangements: Tranched French Loans" at page 114). Instalment Schedule Payment Date Falling In Amount of Repayment Instalment ( ) 7-Feb May Aug Nov Feb May Aug Nov Feb May ,080 7-Aug ,480 7-Nov ,680 7-Feb ,720 7-May ,360 7-Aug ,960 7-Nov ,000 7-Feb ,040 7-May ,680 7-Aug-10 35,910,

162 The Borrower The French Borrowers under the Lexin Portfolio Loan are Le Directoire SCI, Les Bureaux Diapason SCI and Le Verdun SCI (together, the "Lexin Portfolio Borrowers"). The sponsor under the Lexin Portfolio Loan is Lexin ER Partners LLC, which is a joint venture vehicle of Lexin Capital and a private individual for joint property investments in Europe, primarily in France. The principals of Lexin ER Partners are two private individuals, both of whom have strong track records of successful investment in Europe. Lexin Capital is an entrepreneurial firm with private high net worth family investors. The management of Lexin Capital has had a very strong investment track record in principal real estate investments over more than 10 years. Location The Lexin Properties is a well diversified portfolio of properties: - Directoire is located in Saint-Cloud in the so-called "Golden Crescent", which is formed by the prosperous communes which border the Western edge of Paris, the Seine River and Bois de Boulogne; - Diapason is located in Paris 19 th district and directly fronts the Paris ring road which provides direct links to the surrounding road network; - Verdun is located in Gentilly, in Southern Paris. All of the Lexin Properties benefit from excellent visibility and accessibility through public transport and highway. The Properties The Lexin Properties consist of three buildings. - Directoire is part of a complex which consists of 60,000 square meters of office space, a shopping mall and 2,100 parking spaces, held in co-ownership. This Property, built in 1976, comprises 12,549 square meters of office space; - Diapason is a modern office construction, built in 1993, in good condition and technical specifications with 6,547 square meters of lettable space; - Verdun is a well maintained, modern office, building with good technical specifications built in 1993 with 2,818 square meters of lettable space. The Lexin Properties are cross-collateralised. Market Valuation, provided by Cushman & Wakefield Healey & Baker on 18 July 2005, is 57,141,000. The Lexin Properties are held freehold. Diapason is subject in theory to public domain. When land plot, initially owned by the city of Paris, was sold c. 35 years ago, it should have been taken out from public domain, which has not been the case. Tenancies Rental Income of 5,013,437 of the Lexin Properties reflects an initial yield of 8.77 per cent. based on the Market Valuations at Origination. Tenancy of the Lexin Properties is well diversified with 20 distinct occupational tenants. - Major tenants in Directoire include Dassault Systemes (9.8 per cent. of portfolio rental income) and Transiciel (9.2 per cent. of portfolio rental income). 162

163 - Credit Lyonnais (16.0 per cent. of portfolio rental income), rated AA-/Aa2/AA by S&P/Moody's/Fitch, is Diapason's largest tenant. - Verdun is 100 per cent. occupied by ILOG, a supplier of software components. ILOG is the largest tenant of Lexin Properties counting for 17.1 per cent. of rental income of the portfolio. The Lexin Properties were 97.7 per cent. occupied at Cut-Off Date. The vacant space consists of service and storage space in Directoire. Lease Expiration Summary The following table shows scheduled lease expirations for the Lexin Properties: Year # Leases Rolling Sqm Rolling Sqm Rolling % Cumulative Sqm Rolling % Gross Rental Income Rolling ( ) Gross Rental Income Rolling Avg per Sqm Gross Rental Income Rolling% Cumul. Gross Rental Income Rolling % 2005 (post Cut-Off Date) % 1.4% 51, % 1.0% % 4.8% 138, % 3.8% , % 24.8% 935, % 22.4% % 24.8% % 22.4% , % 41.2% 804, % 38.5% % 41.2% % 38.5% % 41.2% % 38.5% , % 60.2% 1,093, % 60.3% > , % 97.7% 1,989, % 100.0% Vacant Space % 100.0% % 100.0% Total / Average 22 21, % 100.0% 5,013, % 100.0% 163

164 Major Tenant Summary The following table shows certain information regarding certain major tenants of thelexin Properties: Tenant Activity Rating (S&P/Moody's/ Fitch) Directoire Gross Rental Income ( ) % Area (sqm) % Break Date Expiry Date Dassault Systemes Software provider - / - / - 492, % 2, % - May-07 Transiciel Computer software and services - / - / - 462, % 2, % Nov-08 Oct-14 Netvalor Decalog Genie Informatique Consumer Credit, Subsidiary of A+ / Aa2 / AA 332, % 1, % Aug-06 Aug-12 HSBC Consulting - / - / - 273, % 1, % Oct-06 Oct-12 Sogesma Logistics company - / - / - 271, % 1, % - Dec-06 SunGard Finance Software provider - / - / - 257, % % May-06 May-12 Fermat Software provider - / - / - 215, % % Jul-07 Jul-13 Fil Assistance Subsidiary of CNP Assurances - / - / - 200, % % Aug-07 Aug-13 Audirep Consulting - / - / - 190, % % Jan-09 Dec-14 Sodexho Food and management services BBB+ / - / BBB 51, % % - Nov-05 Ste Europeenne de Stationnement Parking company - / - / - 3, % % - Jun-07 Vacant - - / - / % % - - Diapason Crédit Lyonnais Bank AA- / Aa2 / AA 804, % 3, % Mar-06 Mar-09 Alliance Hospitality Alliance Hospitality Hotel management company - / - / - 167, % % - Jun-07 Hotel management company - / - / - 137, % % - Oct-06 Mory Group Transport and logistics services - / - / - 147, % % Jun-06 Jun-12 Paritel Telecom Telecom supplier - / - / - 43, % % Apr-06 Apr-12 Sofig Action Multimedia Holding company investing in - / - / - 41, % % Jul-07 Jul-13 Guinea Media / internet company - / - / - 39, % % Mar-06 Mar-12 Diavendors Vending machines - / - / - 24, % % Aug-07 Aug-13 Manin Pantin - - / - / - 1, % % - Dec-05 Verdun ILOG Supplier of software components - / - / - 855, % 2, % Jul-10 Jun-13 Total 5,013, % 21, % 164

165 The Ford Loan Loan Information Property Information Borrower Name SAS Fonciere du Chateau St leger Single Asset / Portfolio Single Asset Sponsor Al-Fozan Group City Saint-Germain-en-Laye Purpose Acquisition Location Greater Paris Origination Date 12-Oct-04 Year Built / Renovated 1950 / 2002 Maturity Date 07-Aug-11 Number of Properties 1 Next Payment Date 07-Feb-06 Type of Property Office Securitised Loan Balance at Cut-Off Date 25,955,000 Market Valuation 39,500,000 Securitised Piece Cut-Off Date LTV 65.7% Gross Rental Income 3,268,900 Amortisation of the securitized Piece Amortising Initial Yield 8.28% Securitised Loan Balance at Maturity 21,450,000 Tenure Freehold Securitised Piece Exit LTV 54.3% Valuer AD Valorem Interest Rate Type Fixed Rate Date of Valuation 27-Sep-04 Securitised Piece All-In Rate 4.63% Square Meters 15,100 Interest Rate Calculation Actual / 360 Occupancy (by area) 100.0% Securitised Piece Cut-Off Date ICR (1) 2.66x Number of Tenants 1 Securitised Piece Cut-Off Date DSCR (1) 1.41x Dividend Trap (ICR Test) 2.00x Interest Cover Covenant 1.10x Pledged Rent Account Yes Major Tenant Gross Rent ( ) Gross Rent (%) Escrow Account No Groupe Ford France 3,268, % A/B Loan Structure No (1) Annual non recoverable expenses are budgeted in 2005 at 30,000 by the French Borrower. The Loan The 25,955,000 Ford Loan was used to refinance the French Borrower's existing credit facilities following the acquisition of the Ford property (the "Ford Property"). The aggregate debt amount secured by the Ford Property represents 65.7 per cent. LTV Ratio at Cut-Off Date. The loan position at maturity is 54.3 per cent. LTV Ratio, with balloon repayment expected to be in August The Ford Loan amortises quarterly. Instalments Schedule Payment Date Falling In Amount of Repayment Instalment ( ) 7-Feb ,000 7-May ,000 7-Aug ,000 7-Nov ,000 7-Feb ,000 7-May ,000 7-Aug ,000 7-Nov ,000 7-Feb ,000 7-May ,000 7-Aug ,000 7-Nov ,000 7-Feb ,000 7-May ,000 7-Aug ,000 7-Nov ,000 7-Feb-10 50,000 7-May-10 50,000 7-Aug-10 50,000 7-Nov-10 50,000 7-Feb May Aug-11 21,450,000 The Borrower The French Borrower under the Ford Loan is Foncière du Château Saint Léger SAS (the "Ford Borrower"). 165

166 The Sponsor is the Al Fozan Group, a traded Saudi Arabian conglomerate with over 2,500 employees involved in diverse activities including real estate investment, construction and development. The Al Fozan Group real-estate experience goes back to the sixties and it has holdings throughout the Gulf countries. In Europe, the Al Fozan Group has holdings in the UK, Switzerland, Lithuania and France. Location The Ford Property is located in Saint-Germain-en-Laye in Greater Paris. With adjacent cities such as Versailles and Marly le Roi, Saint Germain-en-Laye is part of the predominantly high end residential western suburbs of Paris. Saint Germain-en-Laye offers an established office market which accommodates the headquarters of several large companies such as Ikea, Pall France and Cargill. The Property The Ford Property, originally built in 1950, was fully refurbished and redeveloped in 2002 up to modern technical specifications (air-conditioning, suspended ceilings, raised floors). The Ford Property comprises 15,100 square meters of office space composed of two independent but connected buildings. - The new office building is composed of four modules around a patio consisting of 3 upper floors and 2 underground floors. - The fully refurbished office building is composed of 2 parallel modules, each built around a central patio and another module. Amenities include a staff restaurant, 800 car spaces, 4 showrooms and a conference centre. Landscape garden provides enjoyable working environment. The Ford Property is fully divisible with 5 separate entrances for each of Ford France divisions' (Ford France, Jaguar, Land Rover, Volvo and Mazda). Market Valuation provided by AD Valorem on 27 September 2004 is 39,500,000. The Ford Property is held freehold. Tenancies Rental Income of 3,268,900 of the Ford Property reflects an initial yield of 8.28 per cent. based on the Market Valuation. The Ford Property is fully let to the Groupe Ford France. Day one rental guarantee of 268,925 per annum until March 2011 covers 1,348 square meters of space. - Fully paid by the Seller and guaranteed by CEGI until 30/12/07. - From January 2008, 120,500 from the Seller and guaranteed by CEGI, balance paid by Ford under its lease. - If Ford occupies the space currently vacant, it will pay the full 268,925. A full cash sweep mechanism starts one year before Ford France's lease expiry (March 2011) trapping all excess cash which is expected to create a minimum 1,700,000 3 cash reserve which would allow four quarter to relet the Ford Property (two quarters notice period plus payment of covering debt service and void rates for two quarters). For further information on this full cash sweep mechanism, see "The Structure of the Accounts The French Loans The French Loan Rent Accounts" at page 143 above. 3 Minimum cash amount calculated using current rental income, without allowance for rental increases or other changes to the rentroll, and schedule amortisation. 166

167 The Ford Property was per cent. occupied at Cut-Off Date. Lease Expiration Summary The following table shows scheduled lease expirations for the Ford Property: Year # Leases Rolling 2005 (post Cut-Off Date) Sqm Rolling Sqm Rolling % Cumulative Sqm Rolling % Gross Rental Income Rolling ( ) Gross Rental Income Rolling Avg per Sqm Gross Rental Income Rolling% Cumul. Gross Rental Income Rolling % % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% , % 100.0% 3,268, % 100.0% % 100.0% % 100.0% > % 100.0% % 100.0% Vacant Space % 100.0% % 100.0% Total / Average 1 15, % 100.0% 3,268, % 100.0% Major Tenant Summary The following table shows certain information regarding the Group Ford France lease: Tenant Activity Rating (S&P/Moody's/ Fitch) Ford HQ Gross Rental Income ( ) % Area (sqm) % Break Date Expiry Date Groupe Ford France Automotive manufacturer BB+ / Ba1 / BBB- 3,268, % 15, % - Mar-11 THE BELGIAN BONDS Loan Information Borrower Name Property Information Single Asset / Portfolio AB CPFM Europroperty Portfolio Belgium NV. Sponsor Equity Estate City Brussels / Waterloo / Zaventem Purpose Acquisition Location Belgium Origination Date 08-Jun-04 Year Built / Renovated Several Maturity Date 07-Feb-09 Number of Properties 5 Next Payment Date 07-Feb-06 Type of Property Office Securitised Loan Balance at Cut-Off Date 14,000,000 Market Valuation 23,597,000 Securitised Piece Cut-Off Date LTV 59.3% Gross Rental Income 1,984,630 Amortisation of the securitised Piece Bullet Initial Yield 8.41% Securitised Loan Balance at Maturity 14,000,000 Tenure Freehold Securitised Piece Exit LTV 59.3% Valuer Catella Codemer Interest Rate Type Fixed Rate Date of Valuation 31-Mar-04 Securitised Piece All-In Rate 4.87% Square Meters 17,231 Interest Rate Calculation Actual / 360 Occupancy (by area) 86.1% Securitised Piece Cut-Off Date ICR (1) 2.87x Number of Tenants 23 Securitised Piece Cut-Off Date DSCR (1) 2.87x Dividend Trap (ICR Test) 2.20x Major Tenants Gross Rent ( ) Gross Rent (%) Interest Cover Covenant 1.10x Mastercard Europe 582, % Pledged Rent Account Yes Noortman (UPS Logistics) 284, % Escrow Account 150,000 Régie des Batiments (Belgian State) 233, % A/B Loan Structure No (1) Operating expenses are paid after interest and principal payments and therefore none are assumed for the purposes of this number. 167

168 The Loan The 14,000,000 Brussels Belgian Portfolio loan (the "Belgian Bonds") was used to refinance the Belgian Property Owning Companies' existing facilities following the acquisition of the Brussels Properties (the "Brussels Properties"). As described in the Belgian Bond Issue Documents, the Belgian loan is structured as a bond offering. The aggregate debt secured by the Brussels Properties represents 59.3 per cent. LTV Ratio at Cut-Off Date. The bond position at maturity is 59.3 per cent. LTV Ratio, with balloon repayment expected to be in February The Belgian Bond does not amortise during its term. The Borrower The Belgian Borrower under the Belgian Bonds is AB CPFM Europroperty Belgium NV (the "Belgian Borrower"). The sponsor is AB CPFM Europroperty Fund a joint-venture fund between Catella Europroperty Investment BV and a fund fully owned by the Arab Bank, one of the premier banking institutions in the Middle East. AB CFPM Europroperty Fund's investment targets are office, industrial and logistics properties located in Northern France, the Benelux or Germany. Location The Brussels Properties are a well diversified portfolio of properties: - Melodicum is located in the Waterloo business park offering services such as restaurants and retails and where the supply of vacant space is low. It has direct access to the Brussels ring road; - Centrum, Trealen and Polytrophys are located in a prime location within the Leopold District, one of Brussels three main office areas, which attracts many tenants related to the European Government; - Seminole is located in Zaventem, a well established technological and light industrial corridor close to the airport and the Brussels ring road. The Properties The Brussels Properties consist of 5 buildings: - Melodicum, Centrum, Trealen and Polytrophys are well maintained office buildings with good technical specifications. Trealen has been recently refurbished; - Seminole is divisible warehouse, office and archive space; The Brussels Properties are cross-collateralised. Market Valuation provided by Catella Codemer on 31 March 2004 is 23,597,000. The Brussels Properties are held freehold. Tenancies Rental Income of 1,984,630 of the Brussels Properties reflects an initial yield of 8.41 per cent. based on the Market Valuations at Origination. The tenancy of the Brussels Properties is well diversified with 23 distinct occupational tenants. - All office space in Melodicum (89.1 per cent. of building area) is let to MasterCard Europe until December All retail space is let to CBC Banque, a subsidiary of KBC Groep NV; 168

169 - Centrum is fully let to 7 tenants, including the Belgian, Danish and Swedish States, with 90.8 per cent. of Centrum's rental income coming from governmental institutions rated AA+/Aa1/AA (by S&P/Moody's/Fitch) or above; - Trealen tenancy is well diversified. A rental guarantee of 206,293 will expire in December 2005; - Major tenants in Polytrophys include Foratom (European nuclear industry association) and the Finnish State, both rated AAA/Aaa/AAA by S&P/Moody's/Fitch; - Seminole is fully let to UPS Logistics (rated AAA/Aaa by S&P/Moody's) which has occupied the building since There is a rental guarantee in Trealen for 18 months to December 2005, representing per square meter per annum on the 1,831 sqm of vacant area of Trealen. The Brussels Properties were 86.1 per cent. occupied at Cut-Off Date. Lease Expiration Summary The following table shows scheduled lease expirations for the Brussels Properties: Year # Leases Rolling 2005 (post Cut- Off Date) Sqm Rolling Sqm Rolling % Cumulative Sqm Rolling % Gross Rental Income Rolling ( ) Gross Rental Income Rolling Avg per Sqm Gross Rental Income Rolling % Cumul. Gross Rental Income Rolling % % 0.0% 206, (1) 10.4% 10.4% % 2.9% 63, % 13.6% % 2.9% % 13.6% , % 25.6% 582, % 43.0% , % 60.7% 450, % 65.6% , % 70.3% 270, % 79.3% % 70.3% % 79.3% % 71.9% 40, % 81.3% > , % 86.1% 370, % 100.0% Vacant Space 3 2, % 100.0% % 100.0% Total / Average 27 17, % 100.0% 1,984, % 100.0% (1) Gross Rental Income Rolling post Cut-Off Date in 2005 corresponds to the rental guarantee covering 1,831 sqm. 169

170 Tenant Summary The following table shows certain information regarding tenants of the Brussels Properties: Tenant Activity Rating (S&P/Moody's/Fitch) Melodicum Gross Rental Income ( ) % Area (sqm) % Break Date Expiry Date Mastercard Europe Payment system provider A- / - / - 582, % 3, % - Dec-07 CBC Banque Bank, subsidiary of KBC Groep NV A / A1 / A+ 84, % % - Sep-14 Centrum Regie des Batiments Association of Local Authorities Swedish, Finnish Association Belgian State AA+ / Aa1 / AA 233, % 1, % Mar-07 Mar-10 Danish State AAA / Aaa / AAA 73, % % Dec-05 Dec-08 Swedish and Finnish States AAA / Aaa / AAA 61, % % Aug-07 Aug-13 Vedior Interim Recruitment - / - / - 24, % % May-08 May-14 EHMA European Health Association - / - / - 10, % % Jan-08 Jan-14 Colt Weapons manufacturer - / - / - 2, % 6 0.0% - Dec-13 Mac Telecom Telecom operator - / - / % 0 0.0% Dec-07 Apr-08 Trealen Association Belliard 4-6 Association - / - / - 40, % % Feb-08 Feb-14 SNCF French national railway company AAA / Aaa / AAA 40, % % Dec-06 Dec-12 OC&C Consulting - / - / - 40, % % Jan-07 Jan-13 IFCA Consulting - / - / - 34, % % Jan-07 Jan-13 AFEP - - / - / - 1, % 0 0.0% - Apr-10 Vacant - - / - / % 1, % - - Rental Guarantee Rental Guarantee - / - / - 206, % 0 0.0% - Dec-05 Polytrophys Foratom European nuclear industry AAA / Aaa / AAA 63, % % - May-06 association AGEA Association - / - / - 38, % % Sep-06 Sep-09 Helsinki Office Finnish State AAA / Aaa / AAA 37, % % May-10 May-13 ACE Association - / - / - 36, % % Jan-06 Jan-09 Bosnia Embassy State of Bosnia - / B3 / - 35, % % Jan-11 Jan-14 CVN Association - / - / - 35, % % Aug-07 Aug-10 Czech Trade Agency Czech State A- / A1 / A 17, % % Nov-06 Nov-09 Vacant - - / - / % % - - Seminole Noortman (UPS Logistics) Worldwide express carrier AAA / Aaa / - 284, % 4, % Jun-06 Jun-09 Total 1,984, % % 170

171 FRENCH LOAN SERVICING INTRODUCTION Pursuant to Article L of the French Code monétaire et financier, the servicing of the French Loans will be carried out by MS Bank, in its capacity as French Loan Originator. MS Bank will be appointed to act as the French Loan Servicer of the French Loan Receivables and the French Related Security by the Management Company, acting in the name and on behalf of the Issuer in accordance with the terms of the French Loan Servicing Agreement whereby the French Loan Servicer and the Management Company, acting in the name and on behalf of the Issuer, have agreed to exercise their rights and to perform their obligations subject to and in accordance with the terms of the Intercreditor Agreements, pursuant to the Issuer Regulations. Subject always to the provisions of the French Loan Servicing Agreement, the French Loan Servicer may, under its responsibility and control, outsource to another entity the performance of its obligations under the French Loan Servicing Agreement, provided that such entity's duties towards the French Loan Servicer (i) are performed under the name of the French Loan Servicer, (ii) are performed in compliance with applicable laws and regulations and in particular, the French Règlement du Comité de la Réglementation Bancaire et Financière n dated 21 February 1997 (as amended) and (iii) all necessary or useful judicial or extra-judicial steps, or any settlements, as may be necessary for the management and recovery of amounts under the French Loan Receivables and the French Related Security shall be executed jointly by the French Loan Servicer and the Management Company, acting in the name and on behalf of the Issuer. Pursuant to the French Loan Sub-Servicing Agreement entered into by MS Bank and Morgan Stanley Mortgage Servicing Limited ("MSMS"), MSMS has agreed to act as French Loan Sub-Servicer of the French Loans and the French Related Security. Pursuant to the French Loan Servicing Agreement, the Management Company, acting in the name and on behalf of the Issuer, shall appoint the French Loan Servicer as its agent, to perform, in the name of the Issuer, all actions and procedures necessary to manage, recover and collect any amounts due in connection with the Receivables as well as preserve and enforce the French Related Security. STANDARDS The Management Company has instructed the French Loan Servicer that, in performing its obligations under the French Loan Servicing Agreement, the French Loan Servicer should act at all times in accordance with the following requirements (applying such requirements in the following order of priority): (i) (ii) (iii) (iv) (v) (vi) any and all applicable laws; the requirements of the French Loan Agreements; the express instructions of the Management Company, if any; the express terms of the French Loan Servicing Agreement; the servicing procedures which require the French Loan Servicer to act in accordance with the procedures and guidance used by the French Loan Servicer for the purpose of the management, servicing, collection and enforcement of the French Loans and the French Related Security (subject to the French Loan Servicer considering it necessary to do otherwise to enhance recovery prospects and/or minimise losses relating to the French Loans); and the "Servicing Standard", which requires the French Loan Servicer to act in accordance with the standard it would be reasonable to expect a reasonably prudent lender of money secured on commercial property in France to apply in servicing mortgages over commercial property which are owned by it, with a view to the timely collection of all sums due in respect of the French Loans and, on the occurrence of a default in respect of the relevant French Loans, the maximisation of 171

172 recoveries available in respect thereof (taking into account the likelihood of recovery of amounts due from the relevant French Borrowers, the timing of any such recovery and the costs of recovery), without regard to any fees or other compensation to which the French Loan Servicer may be entitled, any relationship the French Loan Servicer may have with a French Borrower or any other party to the transaction, the different payment priorities among the Notes and Residual Units or the ownership of any Note or Residual Unit by the French Loan Servicer or any affiliate thereof. If, in the course of providing the services required of it, a conflict arises between the interests of the French Loan Servicer and any of its affiliates, on the one hand, and the interests of the Noteholders and Residual Unitholders (as such interests may be determined by the Management Company), on the other, the interests of the Noteholders and Residual Unitholders shall prevail. SPECIALLY SERVICED FRENCH LOANS If (a) a French Borrower fails to pay any amount of interest or principal for five Business Days after the same has become due; or (b) certain insolvency-related events occur in relation to a French Borrower; or (c) the payment required to be made by a French Borrower in respect of a Loan on its maturity date is not paid when due; or (d) the French Loan Servicer of the French Loans determines that the Actual Interest Cover Percentage in respect of a French Loan is less than the level at which the applicable French Loan Documentation requires it to be maintained and an event of default subsists under the applicable French Loan Documentation; or (e) the French Loan Servicer considers that there is an imminent risk of material default under a French Loan, which material default will not be cured within 60 days of its occurrence; or (f) any other event of default occurs under the relevant French Loan Documentation which, in the opinion of the French Loan Servicer, constitutes a material default, the French Loan Servicer shall notify the Management Company of such event, whereupon the relevant French Loan will become a "Specially Serviced French Loan" and will remain so until it becomes a Corrected French Loan (as described below) or until the French Loan Servicer Enforcement Procedures are completed in relation thereto or until it is sold or redeemed in full. The "Actual Interest Cover Percentage" of a French Loan is the proportion (expressed as a percentage) which the net Rental Income payable to or for the benefit of the French Borrower under that French Loan during the immediately preceding Collection Period bore to the amount of interest payable by such French Borrower during the same period. A Specially Serviced French Loan will become a "Corrected French Loan" if, for three consecutive Collection Periods, the French Borrower pays all interest and repays all principal and other amounts owing in respect of such Specially Serviced French Loan when they fall due and none of the events described in items (b) through (f) of the penultimate paragraph above is persisting. DIRECTION OF THE FRENCH LOAN SERVICER Although the French Loan Servicer is appointed to act on behalf of the Issuer to exercise its powers and discretions in relation to the relevant French Loans and French Related Security, the French Loan Servicer must notify the Management Company, acting in the name and on behalf of the Issuer and at all times in the interests of the Noteholders and Residual Unitholders, prior to actually exercising any such powers or discretions including, for example, consenting to the variation or waiver of the terms of any "French Loan Documentation" (comprising the French Loan Agreements, the Tranched French Loan Agreements and the contractual documentation creating the French Related Security). Following such notification, the French Loan Servicer may only exercise the relevant discretion in accordance with the instructions of the Management Company and will be deemed not to be in breach of its obligations if it does not exercise the relevant discretion prior to obtaining the consent of the Management Company or if it exercises the discretion in the manner instructed by the Management Company (mandat spécial). 172

173 CUSTODY OF THE CONTRACTUAL DOCUMENTATION Pursuant to the provisions of the French Loan Servicing Agreement, the Custodian is charged with the custody of the assets of the Issuer. Nevertheless, in accordance with the provisions of Article R of the French Code monétaire et financier and the French Loan Servicing Agreement, the French Loan Servicer shall act as depositary of the French Loan Receivables, in compliance with the following conditions: (i) (ii) the Custodian shall ensure, as its own personal responsibility, the custody of the French Loan Transfer Deeds (actes de cession de créances) evidencing the assignment of the French Loan Receivables to the Issuer; and the French Loan Servicer shall ensure, as its own personal responsibility, the custody of the agreements and other instruments relating to the French Loan Receivables and the security, guarantees and collateral related thereto, shall implement to that effect custody procedures and shall procure to the Custodian that a regular and independent internal supervision of such procedures is carried out annually. Consequently, the French Loan Servicer shall keep the contractual documents and files delivered to it by the French Borrowers with respect to the French Loan Receivables in such form which is adequate to enable the French Loan Receivables to be enforced without any delay and in such manner that they are identifiable and distinguishable from the records and other documents which relate to other deposit receivables, agreements or other documents maintained by or on behalf of the French Loan Servicer or any other person. The French Loan Servicer shall afford to the Management Company, the Custodian, the Sub-Servicer and the Arranger and any other banking, insurance or other regulatory body that may exercise authority over the French Loan Servicer, the French Loan Sub-Servicer and the Arranger, access to copies of any documentation regarding the French Loans within its control that may be required to be provided by the French Loan Servicing Agreement or by applicable law, subject to any confidentiality restrictions. Such access shall be afforded without charge but only upon reasonable prior request. TRANSFER AND ALLOCATION OF FUNDS The French Loan Servicing Agreement requires the French Loan Servicer to calculate from time to time the various amounts which are to be transferred from the French Rent Accounts to the Issuer Transaction Account and the relevant French Available Cash Account. The French Loan Servicer will calculate, in respect of each relevant Collection Period, the French Borrower Interest Receipts, the French Loan Amortisation Funds, the French Loan Prepayment Redemption Funds, the French Loan Final Redemption Funds, the French Loan Principal Recovery Funds, the French Loan Prepayment Fees and the Swap Breakage Receipts received during that Collection Period into the Issuer Transaction Account. The Management Company will determine, from time to time, all Issuer Priority Payments relating to the French Originated Assets required to be paid by the Issuer. Such amounts will be paid by the Management Company using funds standing to the credit of the Issuer Transaction Account. As part of its duties under the Issuer Regulations, the Management Company is required to give instructions to the Operating Bank to transfer the French Borrower Interest Receipts, the French Loan Amortisation Funds, the French Loan Prepayment Redemption Funds, the French Loan Final Redemption Funds, the French Loan Principal Recovery Funds and the French Loan Prepayment Fees from the French Rent Accounts into the Issuer Transaction Account. Upon being notified by the French Loan Servicer of the amounts of such funds, the Management Company will instruct such transfers to be made, as required by the Issuer Regulations, and the Management Company will allocate the amounts so transferred towards interest, principal and other amounts due in respect of the relevant French Loan as described above. The Management Company, acting in the name and on behalf of the Issuer, will then pay monies on each Note Interest Payment Date in respect of principal and interest on the Notes and Residual Units. 173

174 All amounts applied towards sums due in respect of a French Loan will be allocated first towards fees (other than French Loan Prepayment Fees), costs and expenses, secondly towards interest, thirdly towards principal, and fourthly towards Prepayment Fees, in each case to the extent that such amounts are due and payable under the applicable French Loan Agreement at the relevant time. QUARTERLY ARREARS REPORTS The French Loan Servicer has agreed to deliver to the Management Company, acting in the name and on behalf of the Issuer, and the Custodian, no later than one Business Day prior to each Note Calculation Date, a report in which it will notify the Management Company and the Custodian of any French Loans known by the French Loan Servicer to be in arrears or in respect of which the relevant French Borrower is known by the French Loan Servicer to be in breach of any other term of its French Loan Documentation. Such report will include, among other things, the following: (i) a calculation of all collections in respect of the French Loan Receivables including the French Borrower Interest Receipts, the French Loan Amortisation Funds, the French Loan Prepayment Redemption Funds, the French Loan Final Redemption Funds, the French Loan Principal Recovery Funds and, if applicable, resales to MS Bank pursuant to the French Loan Transfer Agreement; (ii) a listing of those French Loans that were 1-90 days in arrear, days in arrear and over 180 days in arrears; (iii) (iv) (v) (vi) (vii) a listing of those French Loans in respect of which enforcement had begun at the end of the most recently ended collection period, including the individual French Loan and total arrears balances, the number of such French Loans one-three months in arrears, four-six months in arrear and more than six months in arrear; details of French Loans in respect of which enforcement procedures were completed and the amounts written-off; details of French Loans in respect of which a French Borrower is known by the French Loan Servicer to be in breach of any term of its French Loan Agreement or contractual documents relating to the French Related Security; details of French Loans previously written-off on which recoveries were made during the most recently ended collection period; and details of any event of default under a French Loan Agreement. ARREARS AND DEFAULTED PROCEDURES The French Loan Servicer will be responsible for the supervision and monitoring of payments falling due in respect of all French Loans serviced by it. The French Loan Servicer has agreed, in relation to any default in respect of a French Loan, to comply with the procedures for enforcement of French Loans and French Related Security of the Issuer which have been agreed upon by the French Loan Servicer and the Management Company from time to time in accordance with the Servicing Standard (the "French Loan Servicer Enforcement Procedures"). The French Loan Servicer may not implement any changes to the French Loan Servicer Enforcement Procedures unless the Issuer has agreed to such changes in advance. The French Loan Servicer Enforcement Procedures will be established and implemented in consultation with the Issuer who, pursuant to the French Loan Servicing Agreement, may direct the French Loan Servicer as to the timing and manner of enforcement of a French Loan and its French Related Security. In the event of a conflict between the French Loan Servicer Enforcement Procedures and the directions of the Issuer the instructions of the Issuer will prevail. 174

175 The French Loan Servicer Enforcement Procedures must at all times comply with the laws of France applicable to the enforcement of the relevant French Loans and their French Related Security. Enforcement of the French Related Security, if sale of the applicable French Property is required, will be effected through appropriate court proceedings. The net proceeds realised upon the enforcement of any French Related Security (after payment of the costs and expenses of the enforcement) will, together with any amount payable on any related insurance contracts, be applied against the sums owing from the relevant French Borrower in the manner and order of priority described under the Issuer Regulations. For further information regarding the enforcement of the French Related Security and in particular the enforcement of the lender's lien (privilège de prêteur de deniers) and the mortgages (hypothèque) granted by the French Borrower over their French Properties, see "Risk Factors Factors relating to the Originated Assets Enforcement of the Secured Properties" at page 56. INSURANCE The French Loan Servicer has established and maintains procedures to monitor compliance with the terms of the French Loans for which it has servicing responsibility regarding the insurance of the relevant French Properties. Upon receipt of notice that any policy of buildings insurance has lapsed or that any French Property is otherwise not insured in accordance with the terms of the relevant French Loan Agreement, the French Loan Servicer must notify the Issuer. If instructed to do so by the Issuer, the French Loan Servicer must arrange such insurance. To the extent that such costs are not met by the relevant French Borrower in advance, the costs of arranging such insurance, including paying any premiums will be paid by the French Loan Servicer on behalf of the Issuer. The French Loan Servicer will be reimbursed by the Issuer on the Note Interest Payment Date, following the date on which they are incurred. The French Loan Agreements require each French Borrower to reimburse the Issuer for such costs of insurance and the relevant French Loan Servicer must use all reasonable endeavours to recover such sums from the relevant French Borrower. ANNUAL REVIEW PROCEDURE The French Loan Servicer is required to undertake an annual review in respect of each French Borrower and its French Loan in accordance with its servicing procedures. The French Loan Servicer is authorised to conduct this review process more frequently if the French Loan Servicer, in accordance with the French Loan Servicing Standard, has cause for concern as to the ability of the French Borrower to meet its financial obligations under its French Loan. Such a review will include an inspection of French Properties and consideration of the quality of the cash flow arising from the French Properties and a compliance check of all of the French Borrower's covenants under the relevant French Loan. OUTSOURCING BY THE SERVICER Subject always to the provisions of the French Loan Servicing Agreement, the French Loan Servicer may, under its responsibility and control, outsource to another entity the performance of its obligations under the French Loan Servicing Agreement, provided that such entity's duties towards the French Loan Servicer (i) are performed under the name of the French Loan Servicer and (ii) are performed in compliance with applicable laws and regulations and in particular, the French Règlement du Comité de la Réglementation Bancaire et Financière n dated 21 February 1997 (as amended). Pursuant to the French Loan Sub- Servicing Agreement entered into by MS Bank and Morgan Stanley Mortgage Servicing Limited ("MSMS"), MSMS has agreed to act as French Loan Sub-Servicer of the French Loans and the French Related Security. FRENCH LOAN SERVICING FEE Pursuant to the French Loan Servicing Agreement, the Issuer will pay to the French Loan Servicer (or the person then entitled to the French Loan Servicing Fee) a fee (the "French Loan Servicing Fee") at the rate 175

176 of 0.03 per cent. per annum (exclusive of VAT) of the aggregate balance of the French Loans (other than Specially Serviced French Loans, in respect of which the Special French Loan Servicing Fee is payable) at the beginning of the Collection Period to which that Note Interest Payment Date relates. The French Loan Servicing Fee will be payable by the Issuer on each Note Interest Payment Date. If a French Loan becomes a Specially Serviced French Loan, the Issuer shall pay to the French Loan Servicer a fee (the "Special French Loan Servicing Fee") equal to 0.15 per cent. per annum (exclusive of VAT) (or such lesser percentage rate per annum as may be agreed between the French Loan Servicer and the Management Company, acting in the name and on behalf of the Issuer, from time to time) of the outstanding principal amount of such French Loan, calculated on the first day of the Collection Period during which it became a Specially Serviced French Loan. The Special French Loan Servicing Fee will accrue from day to day, will be calculated on the basis of a 360-day year and the actual number of days elapsed from and including the date on which such French Loan became a Specially Serviced French Loan until, but excluding, the date on which such French Loan ceases to be a Specially Serviced French Loan and will be payable in arrear on each Note Interest Payment Date commencing with the Note Interest Payment Date following the date on which the relevant French Loan becomes a Specially Serviced French Loan and ending on the Note Interest Payment Date following the date on which such French Loan ceases to be a Specially Serviced French Loan. In addition to any Special French Loan Servicing Fee then payable to the French Loan Servicer (or other person entitled thereto), on each Note Interest Payment Date the Issuer shall pay to the French Loan Servicer a fee (the "French Loan Liquidation Fee") equal to one per cent. of the liquidation proceeds (exclusive of any applicable VAT) received by or on behalf of the Issuer in respect of any Specially Serviced French Loan during the Interest Period then ended and a further fee (the "French Loan Work-out Fee") equal to the aggregate (exclusive of value added tax) of one per cent. of the Available Issuer Interest Receipts and one per cent. of the Available Issuer Principal Receipts received by or on behalf of the Issuer during the Interest Period then ended in respect of any French Loans which are, and remain, Corrected French Loans. However: (i) (ii) (iii) no French Loan Liquidation Fee shall be payable in respect of liquidation proceeds derived from the purchase of a French Property relating to a Specially Serviced French Loan or of a Specially Serviced French Loan by the French Loan Servicer, any Noteholder or Residual Unitholder or any affiliate of any of the foregoing; no French Loan Work-out Fee shall be payable in respect of a Corrected French Loan in relation to which a French Loan Restructuring Fee was recovered from the French Borrower, as described below; and Both before the occurrence of an Accelerated Redemption Event and thereafter, all fees and other sums due to the French Loan Servicer will be payable in priority to payments on the Notes. On the Note Interest Payment Date immediately following the Interest Period during which they are incurred, the Issuer will be obliged to reimburse the French Loan Servicer in respect of any out-of-pocket costs, expenses and charges properly incurred by them in the performance of their respective duties, together with interest thereon at the rate of one per cent. per annum over three-month EURIBOR from the date on which such costs, expenses or charges were incurred by the French Loan Servicer until the Note Interest Payment Date on which they are reimbursed. To the extent that such costs, expenses and charges are incurred in relation to a particular French Loan and the recovery of such amounts is permitted by the applicable French Loan Documentation, the French Loan Servicing Agreement requires the French Loan Servicer to use all reasonable endeavours to ensure that the same are recovered from the relevant French Borrower in respect of whose French Loan the cost or expense was incurred. Prior to agreeing to the waiver, variation or amendment of the terms of any French Loan Documentation, the French Loan Servicer must determine the amount of the fee (the "French Loan Restructuring Fee") (which must be a reasonable and customary amount) to be charged for the work undertaken in relation to that waiver, variation or amendment. The French Loan Servicer will only agree to the relevant waiver, variation or amendment if the French Borrower pays the French Loan Restructuring Fee in advance, unless such an instruction would contravene the standards required to be applied by the French Loan Servicer in the 176

177 performance of its duties under the French Loan Servicing Agreement. If a French Loan Restructuring Fee is charged to and recovered from a French Borrower, the Issuer shall, on the Note Interest Payment Date following such recovery, pay to the French Loan Servicer an amount equal to the fees so recovered. On or about each Note Interest Payment Date, the French Loan Servicer will assign the fees to which it is entitled under the French Loan Servicing Agreement to the French Loan Sub-Servicer pursuant to the terms of the French Loan Sub-Servicing Agreement. TERMINATION OF APPOINTMENT OF SERVICER The appointment of the French Loan Servicer may be terminated following a termination event, by voluntary termination or by automatic termination. Termination events include, among other things, a default in the payment on the due date of any amount to be paid by the French Loan Servicer under the French Loan Servicing Agreement or, in certain circumstances, a default in performance of any of its other material covenants or obligations under the French Loan Servicing Agreement, or on the occurrence of certain insolvency-related events. The French Loan Servicer may voluntarily terminate its appointment upon not less than three months' prior written notice to the Issuer. No termination of the French Loan Servicer's appointment may take effect unless a qualified substitute servicer has been appointed and agreed to be bound by the French Loan Servicing Agreement and other relevant documentation relating to the Issuer, the Rating Agencies have confirmed that such termination will not adversely affect the then current ratings of the Notes. On termination of its appointment, the French Loan Servicer will forthwith deliver to the Custodian or as the Custodian may direct all documents, information, computer-stored data and moneys held by it in relation to its appointment as servicer and will be required to take such further action as the French Loan Servicer may reasonably direct to enable the services of the relevant Issuer to be performed by a substitute thereof. The French Loan Servicing Agreement will terminate automatically at such time as the Issuer has no further interest in any of the relevant French Loans or the French Related Security serviced by the French Loan Servicer or, if later, upon discharge of all of the liabilities of the Issuer. GENERAL In addition to the duties described above, the French Loan Servicer is required under the French Loan Servicing Agreement to perform duties customary for a servicer of mortgage loans such as retaining or arranging for the retention of loan and property deeds and other documents in safe custody and software licensing and sub-licensing. Subject to obtaining the appropriate specific mandate (mandat spécial), where necessary, the French Loans Servicer is authorised to take all necessary or useful judicial or extra-judicial steps, or to effect such settlements, as may be necessary for the management and recovery of amounts under the French Loan Receivables and the French Related Security. The French Loan Servicer shall also initiate all such proceedings as are necessary to enforce the French Related Security, provided that in both cases, any relevant document shall be jointly executed by the French Loan Servicer and the Management Company, acting in the name and on behalf of the Issuer. The French Loan Servicer is not authorised to amend the terms of the French Loan Receivables or of any of the French Related Security granted in connection with the French Loans unless permitted to do by the servicing procedures or unless otherwise instructed by the Management Company. Notwithstanding the foregoing, the French Loan Servicer will not have any liability for the obligations of the French Borrowers or any other person in respect of any French Loan Receivable, have any liability to 177

178 any third party for the obligations of the Management Company, acting on behalf of the Issuer, or the Custodian under the Notes or the Residual Units or any of the documents listed in paragraph 5 of "General Information" nor will it have any liability whatsoever to the Management Company, the Custodian, the Noteholders and the Residual Unitholders or any other person for any failure by the Issuer to make any payment due by it under any of the Issuer Transaction Documents unless such failure by the Issuer results from a failure by the French Loan Servicer to perform its obligations under the French Loan Servicing Agreement. 178

179 CASH MANAGEMENT Pursuant to the Issuer Regulations and subject to the provisions of Articles L and R to R of the French Code monétaire et financier, the Management Company may invest any Issuer Cash in the following cash instruments ("Eligible Investments") denominated exclusively in Euros: (i) (ii) (iii) (iv) (v) (vi) deposits made with an institution referred to in point 1 of Article R of the French Code monétaire et financier, with the exception of investment firms, and which may be repaid or withdrawn at any moment at the request of the Issuer in order to make sums available within twenty-four hours at the latest, subject to the time limits required for deposits in other currencies, having a maturity date at least one Business Day prior to the next Note Interest Payment Date and having a rating no lower than "A-1+" by Standard & Poor's and "P-1" by Moody's or, to the extent that the maturity of such deposits is more than 30 days, "A1" by Moody's or having a rating otherwise acceptable to the Rating Agencies; French treasury bonds (bons du Trésor) having a maturity date at least one Business Day prior to the next Note Interest Payment Date and having a rating not lower than A-1+ by Standard & Poor's and P-1 by Moody's or, to the extent that the maturity of such French treasury bonds is more than 30 days, "A1" by Moody's or having a rating otherwise acceptable to the Rating Agencies; debt instruments referred to in point 2 of Article R of the French Code monétaire et financier, provided that they are traded on a regulated market located in a country that is party to the agreement on the European Economic Area, with the exception of securities giving access directly or indirectly to the share capital of a company, having a maturity date at least one Business Day prior to the next Note Interest Payment Date and having a rating not lower than A- 1+ by Standard & Poor's and P-1 by Moody's or, to the extent that the maturity of such debt instruments is more than 30 days, "A1" by Moody's or having a rating otherwise acceptable to the Rating Agencies; negotiable debt instruments (titres de créances négociables) having a maturity date at least one Business Day prior to the next Note Interest Payment Date and having a rating not lower than A- 1+ by Standard & Poor's and P-1 by Moody's or, to the extent that the maturity of such negotiable debt instruments is more than 30 days, "A1" by Moody's or having a rating otherwise acceptable to the Rating Agencies; units or shares of units in undertakings for collective investment in transferable securities (organismes de placement collectifs en valeurs mobilières) invested mainly in debt instruments referred to in paragraphs (ii), (iii) and (iv) above, having a maturity date at least one Business Day prior to the next Note Interest Payment Date and having a rating not lower than A-1+ by Standard & Poor's and P-1 by Moody's or, to the extent that the maturity of such securities is more than 30 days, "A1" by Moody's or having a rating otherwise acceptable to the Rating Agencies; units of fonds commun de créances or similar entities governed by a foreign law, with the exception of units issued by the Issuer, having a maturity date at least one Business Day prior to the next Note Interest Payment Date and having a rating not lower than A-1+ by Standard & Poor's and P-1 by Moody's or having a rating otherwise acceptable to the Rating Agencies. The Issuer may also invest in other instruments as authorised by applicable regulations. Such cash instruments are held by the Issuer subject to the limits of the needs arising in relation to the completion of its management strategy. 179

180 CREDIT STRUCTURE The composition of the Issuer Assets, the Originated Assets the Properties and the structure of the transaction and the other arrangements for the protection of the Noteholders, in the light of the risks involved, have been reviewed by the Rating Agencies. The ratings assigned by the Rating Agencies to each class of Notes are set out in "Summary The Notes and the Residual Units Ratings" at page 27. 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 assigning rating organisation. The ratings of the Notes are dependent upon, among other things, on the short-term, unsecured, unsubordinated debt ratings of the Issuer Liquidity Facility Provider and the Luxembourg Liquidity Facility Provider and on the short-term and the long-term, unsecured, unsubordinated debt ratings of the Issuer Swap Guarantor. Consequently, a downgrade, withdrawal or qualification of either such rating may have an adverse effect on the ratings of the Notes. The principal risks associated with the Notes and the Residual Units and the manner in which they are addressed in the structure are set out below. Attention is also drawn to the section of this Prospectus entitled "Risk Factors" for a description of the principal risks in respect of the Originated Assets and the Issuer Assets. LIQUIDITY, CREDIT AND BASIS RISK The Issuer is subject to: (i) (ii) (iii) the risk that payments which it expects to receive in respect of the Issuer Assets are not paid when expected. This risk would arise as a result of any of the French Borrowers not making a payment of interest, principal or other amount in respect of the French Loans when due or as a result of the pass-through nature of the Luxembourg Notes which reflect the payment of interest on and the repayment of principal of the Belgian Bonds, if the Belgian Issuer does not make a payment of interest, principal or other amount in respect of the Belgian Bonds when due or of delay arising between the scheduled French Loan Payment Dates or the Luxembourg Note Payment Date and the receipt of payments due from the relevant French Borrower or the Luxembourg Issuer, as applicable. This risk is covered through the ability of the Issuer to make drawings under the Issuer Liquidity Facility Agreement to cover certain Issuer third party expenses and to make payments of interest due to the Noteholders. For further information about the Issuer Liquidity Facility, see "Credit Structure Issuer Liquidity Facility Agreement" at page 181; the risk that payments which it expects to receive in respect of the Issuer Assets are not paid at all. This risk would arise in the case of a failure by the Management Company or the French Loan Servicer on behalf of the Issuer, to realise or to recover sufficient funds under the French Loan Servicer Enforcement Procedures in respect of the French Loans and the French Related Security in order to discharge all amounts due and owing by the French Borrowers under the French Loans or if the Luxembourg Issuer or the Belgian Issuer did not make a payment of interest, principal or other amount in respect of the Luxembourg Notes or the Belgian Bonds, as applicable. This is addressed in respect of the Listed Notes by the credit support provided to more senior classes of such Listed Notes by those classes of such Listed Notes (if any) ranking lower in priority to that class and by the Class R Units; and the risk of the interest rates payable by the French Borrowers on the French Loans and by the Belgian Issuer under the Belgian Bonds, and correspondingly the interest payable by the Luxembourg Issuer under the Luxembourg Notes being less than that required by the Issuer in order to meet its commitments under the Notes and its other obligations. This risk is addressed by the Issuer Swap Transactions. For further information about the Issuer Swap Transactions, see "The Issuer Swap Agreement" at page

181 LIABILITIES UNDER THE NOTES PRIOR TO THE OCCURRENCE OF AN ACCELERATED REDEMPTION EVENT The Notes and interest thereon will not be obligations or responsibilities of any person other than the Issuer. In particular, the Notes will not be obligations or responsibilities of, or be guaranteed by, MS Bank or any associated body of MS Bank, or of or by the Originator, the Manager, the French Loan Servicer, the French Loan Sub-Servicer, the Paying Agents, the Issuer Swap Provider, the Issuer Swap Guarantor, the Issuer Liquidity Facility Provider, the Luxembourg Liquidity Facility Agreement, the Management Company, the Custodian, the Listing Agent or the Operating Bank, or any company in the same group of companies as MS Bank, the Originator, the Manager, the French Loan Servicer, the French Loan Sub- Servicer, the Paying Agents, the Issuer Swap Provider, the Issuer Swap Guarantor, the Issuer Liquidity Facility Provider, the Luxembourg Liquidity Facility Agreement, the Management Company, the Custodian, the Listing Agent or the Operating Bank, and none of such persons accepts any liability whatsoever in respect of any failure by the Issuer to make payment of any amount due on the Notes. On each Note Interest Payment Date, provided that an Accelerated Redemption Event has not occurred, payments of interest on the Class B Notes, the Class C Notes and the Class R Units, respectively, will be due and payable only if and to the extent that there are sufficient funds available to the Issuer to pay interest on the Class A Notes and the Class X Amount and other liabilities of the Issuer ranking higher in priority to interest payments on the Class B Notes, the Class C Notes and the Class R Units respectively, as provided in "Cashflows", and which have been paid or provided for in full. To the extent that there are insufficient funds available to the Issuer on any Note Interest Payment Date to pay in full interest otherwise due on any one or more classes of junior-ranking Notes then outstanding, after making the payments and provisions ranking in priority to the relevant interest payment, as the case may be, such interest will not then be due and payable but will become due and payable on subsequent Note Interest Payment Dates, but only if and to the extent that funds are available therefore. The Issuer's obligation to pay interest in respect of the Class B Notes and the Class C Notes is limited, on each Note Interest Payment Date, to an amount equal to the lesser of (a) the Interest Amount (as defined in Condition 3(d) at page 193) in respect of such classes of Notes for that Note Interest Payment Date, and (b) the Adjusted Interest Amount (as defined in Condition 3(g) at page 193) in respect of such classes of Notes for that Note Interest Payment Date. If the difference between the Interest Amount and the Adjusted Interest Amount applicable to the Class B Notes and the Class C Notes is attributable to a reduction in the interest-bearing balance of the Loans as a result of any prepayments by the French Borrowers or the Belgian Issuer, the debt that would otherwise be represented by such difference will be extinguished on such Note Interest Payment Date, and the affected Noteholders will have no claim against the Issuer in respect thereof. The Class B Notes and the Class C Notes will provide credit support for the Class A Notes. Funds which are available in respect of payments of principal on the Notes and the Residual Units will be applied as described in "Cashflows - The Notes and the Residual Units - Application of Available Issuer Interest Receipts prior to an Accelerated Redemption Event", "Cashflows - The Notes and the Residual Units - Application of Available Issuer Principal Receipts prior to an Accelerated Redemption Event" and Condition 5(b). PRIORITY OF PAYMENTS FOLLOWING THE OCCURRENCE OF AN ACCELERATED REDEMPTION EVENT Following the occurrence of an Accelerated Redemption Event, the Accelerated Redemption Order of Priority shall be irrevocably applicable, as more particularly described in "Cashflows - The Notes and the Residual Units - Payments out of the Issuer Transaction Account following the occurrence of an Accelerated Redemption Event" and Condition 5(c). ISSUER LIQUIDITY FACILITY AGREEMENT On the Closing Date, the Management Company, acting in the name and on behalf of the Issuer, will enter into the Issuer Liquidity Facility Agreement with the Issuer Liquidity Facility Provider, whereby the Issuer Liquidity Facility Provider will provide the Issuer Liquidity Facility to the Issuer. The "Issuer Liquidity Facility" will consist of a 364 day committed euro revolving loan facility. The Issuer Liquidity Facility will 181

182 permit drawings to be made by the Management Company, in the name and on behalf of the Issuer, of up to an initial aggregate amount of 20,760,000. However, to the extent there is a reduction in the aggregate outstanding principal amount of the Issuer Assets and the Originated Assets from time to time, the liquidity facility commitment will be adjusted on each Note Calculation Date to an amount equal to the lesser of (i) 20,760,000 and (ii) 10 per cent. of the aggregate Principal Amount Outstanding of the Notes on that Note Calculation Date. Drawings under the Issuer Liquidity Facility Agreement (other than Stand-by Drawings, as defined below) shall bear interest at a per annum rate equal to the sum of EURIBOR plus 0.30 per cent. per annum plus any applicable mandatory costs. A commitment fee will be paid by the Issuer to the Issuer Liquidity Facility Provider on each Note Interest Payment Date. Such commitment fee will be paid on the undrawn and uncancelled committed amount of the Issuer Liquidity Facility until the last day of the Issuer Liquidity Facility commitment period. If, on any Business Day, the Management Company determines that there will be a shortfall in the amount available to pay the Issuer Priority Payments (an "Expense Shortfall"), the Management Company may, in the name and on behalf of the Issuer, make a drawing pursuant to the Issuer Liquidity Facility Agreement on the next Business Day in an amount equal to the relevant Expense Shortfall (an "Expenses Drawing"). On each Note Calculation Date, the Management Company will determine whether an Interest Shortfall or Accrued Interest Shortfall (each defined as below) will arise on the next following Note Interest Payment Date and, if so, will make a drawing pursuant to the Issuer Liquidity Facility Agreement in respect of such Interest Shortfall (such a drawing being referred to as an "Interest Drawing") or Accrued Interest Shortfall (such a drawing being referred to as an "Accrued Interest Drawing") as required on the Business Day immediately preceding that Note Interest Payment Date. Each such drawing will be in an amount equal to the relevant shortfall (subject to any Appraisal Reduction, as described below) and will be credited to the Issuer Transaction Account. An "Interest Shortfall" will arise with respect to any Originated Asset on a Note Interest Payment Date if and to the extent that the French Borrower Interest Receipts/Belgian Bond Interest Receipts received during the relevant Collection Period (excluding voluntary prepayments of interest) were less than the Scheduled Interest Receipts (as defined below) for that Collection Period. An "Accrued Interest Shortfall" will arise with respect to any Originated Asset on a Note Interest Payment Date if and to the extent that the French Borrower Interest Receipts/Belgian Bond Interest Receipts received during the relevant Collection Period are insufficient to cover (i) the aggregate outstanding amount of any Interest Drawings, Accrued Interest Drawings and Expenses Drawings previously made in respect of that Originated Asset, plus (ii) the amount of any interest which will have accrued on outstanding Interest Drawings, Expenses Drawings and Accrued Interest Drawings previously made in respect of that Originated Asset. The "Scheduled Interest Receipts" for an Originated Asset in a Collection Period include all payments of interest, fees (other than the Prepayment Fees), breakage costs (other than Swap Breakage Receipts), expenses, commissions and other sums due and payable by the French Borrower(s) or the Belgian Issuer respect of that Originated Asset during that Collection Period (other than any payments in respect of principal). The amount of Scheduled Interest Receipts due in a Collection Period will be calculated on the assumption that the French Borrower(s) or the Belgian Issuer have made all prior payments under the Originated Assets when due. However, if on any Note Interest Payment Date there are insufficient funds available under the Issuer Liquidity Facility to enable the Issuer to draw the amount it would otherwise be entitled to draw in respect of an Interest Shortfall (i.e. there is an "Issuer Liquidity Facility Deficiency"), the Scheduled Interest Receipts due from the French Borrower or the Belgian Issuer under the Originated Asset during the Collection Period immediately following that Note Interest Payment Date will be calculated on the assumption that the French Borrower Interest Receipts/Belgian Bond Interest Receiptsfor the Collection Period were reduced by the amount of the Issuer Liquidity Facility Deficiency. 182

183 If French Loan Servicer Enforcement Procedures in respect of a French Loan and its French Related Security or if enforcement procedures in respect of the Belgian Bonds and their Belgian Related Security have been commenced and completion of such procedures takes place during a Collection Period, all outstanding Interest Drawings, Accrued Interest Drawings and Expenses Drawings in respect of such French Loan or Belgian Bonds (together, the "Issuer Liquidity Drawings") will be repaid in full on the next following Note Interest Payment Date. If completion of such procedures does not take place, any outstanding Issuer Liquidity Drawings in respect of such Loan will be repaid on each Note Interest Payment Date as follows: (i) (ii) (iii) Interest Drawings will be repayable in an amount equal to the amount (if any) of all Interest Drawings then outstanding in respect of the relevant Shortfall Loan on each Note Interest Payment Date on which any Interest Drawings are outstanding in respect of a Shortfall Loan; Accrued Interest Drawings will be repayable on the Note Interest Payment Date on which all Interest Drawings related to Accrued Interest Drawings made in respect of a Shortfall Loan have been repaid in full; and Expenses Drawings are repayable in full on the Note Interest Payment Date immediately following the date on which they are drawn. Appraisals and Valuations No later than the earliest to occur of (i) the date 120 days after the occurrence of any non-payment with respect to a Loan if such non-payment remains uncured, (ii) the date 90 days after certain insolvency proceedings are commenced in respect of the relevant French Borrower or the Belgian Issuer, provided such proceedings are still in effect, and (iii) the effective date of any modification to the maturity date, interest rate, principal balance, amortisation term or payment frequency of the Loans, other than the extension of the date that the final principal payment is due for a period of less than six months, the French Loan Servicer or the Belgian Bond Servicer in liaison with the Belgian Security Agent is required to obtain an appraisal by a third party valuer (if the outstanding principal balance of the Loans is greater than 10,000,000) or an internal valuation (if the outstanding principal balance of the Loans is equal to or less than 10,000,000) of the relevant French or Belgian Properties, unless such an appraisal or valuation had previously been obtained within the preceding twelve months. As a result of such appraisal or internal valuation, an "Appraisal Reduction" may be created, being an amount, calculated as of the first Note Calculation Date that is at least 15 days after the date on which the appraisal or valuation is obtained or performed equal to the excess, if any, of (a) the sum of (i) the outstanding principal balance of the Loans, (ii) all unpaid interest on the Loans, (iii) all currently due and unpaid taxes and assessments (net of any amount escrowed for such items), insurance premiums, and, if applicable, ground rents in respect of the relevant French or Belgian Properties, over (b) 90 per cent. of the appraised value of the relevant French or Belgian Properties as determined by such appraisal or valuation. An Appraisal Reduction will be reduced to zero as of the date on which the relevant Loans are brought current under the then current terms of the French Loan Agreement or the Belgian Finance Documents for at least three consecutive months, paid in full, liquidated, transferred back or otherwise disposed of. Notwithstanding the foregoing, if an internal valuation of the relevant French or Belgian Properties is performed, the Appraisal Reduction will equal the greater of (a) the amount calculated in the second preceding sentence and (b) 25 per cent. of the outstanding principal balance of the Loans. The creation of an Appraisal Reduction will proportionately reduce the amount available to be drawn by way of Interest Drawings, Accrued Interest Drawings and Expenses Drawings under the Issuer Liquidity Facility Agreement. The Issuer Liquidity Facility Agreement may be renewed until the earlier of the Final Maturity Date and such date the principal balance of the Loans has been reduced to zero. The Issuer Liquidity Facility Agreement will provide that if at any time, the Issuer Liquidity Facility Provider ceases to have the Requisite Rating, or the Issuer Liquidity Facility Provider refuses to renew the Issuer Liquidity Facility Agreement, then the Management Company, in the name and on behalf of the Issuer, will require the Issuer Liquidity Facility Provider to pay into (i) a designated bank account of the Issuer in case of the downgrade on any day of the Issuer Liquidity Facility Provider's short-term, unsecured, unsubordinated and 183

184 unguaranteed debt to below the Requisite Rating or into (ii) an account opened in the name of the Issuer Liquidity Facility Provider in case of the refusal by the Issuer Liquidity Facility Provider to grant an extension of the Issuer Liquidity Facility commitment period and for so long as there is no downgrade of the Issuer Liquidity Facility Provider's short-term, unsecured, unsubordinated and unguaranteed debt to below the Requisite Rating (the "Stand-by Account"), maintained with an appropriately rated bank, an amount (a "Stand-by Drawing") equal to its undrawn commitment under the Issuer Liquidity Facility Agreement. In the event that the Management Company, in the name and on behalf of the Issuer, makes a Stand-by Drawing, it is required, prior to the expenditure of the proceeds of such drawing as described above, to invest such funds in Eligible Investments. Amounts standing to the credit of the Stand-by Account will be available to the Management Company, in the name and on behalf of the Issuer, for making any Interest Drawing, Expenses Drawing or Accrued Interest Drawing, in the circumstances described above. All payments due to the Issuer Liquidity Facility Provider under the Issuer Liquidity Facility Agreement (other than in respect of any amounts due thereunder which are described in "Cashflows - The Notes and the Residual Units - Application of Available Issuer Principal Receipts prior to an Accelerated Redemption Event" and "Cashflows - The Notes and the Residual Units - Payments out of the Issuer Transaction Account following the occurrence of an Accelerated Redemption Event", at pages 38 and 41) will rank higher in priority to payments of interest and principal on the Notes. The Management Company, acting in the name and on behalf of the Issuer, will be entitled to terminate the Issuer Liquidity Facility Agreement at any time and to appoint a substitute liquidity facility provider following a written prior notice to be given to the Issuer Liquidity Facility Provider at least 15 days prior to the date of such termination (with a copy to the Luxembourg Issuer) provided always that (i) the substitute liquidity facility provider can assume in substance the rights and obligations of the original Issuer Liquidity Facility Provider, (ii) the substitute liquidity facility provider irrevocably waives all contractual rights of recourse (responsabilité contractuelle) which it may have against the Issuer, (iii) the substitution does not result in a deterioration of the level of security enjoyed by the Noteholders or the Residual Unitholders, (iv) the Rating Agencies have been given prior notice of such substitution, and (v) the substitute liquidity facility provider is not subject to any withholding tax and has the Requisite Rating. The Issuer Liquidity Facility Agreement will be governed by the laws of France. THE ISSUER SWAP AGREEMENT On or before the Closing Date, the Issuer will enter into the Issuer Swap Agreement with the Issuer Swap Provider and the Issuer Swap Transactions pursuant thereto (each as described below). The obligations of the Issuer Swap Provider under the Issuer Swap Agreement will be guaranteed by the Issuer Swap Guarantor. Pursuant to the Issuer Swap Agreement, the Issuer will enter into the Interest Rate Swap Transactions with the Issuer Swap Provider in order to protect itself against interest rate risk arising in respect of the Loans. Under the terms of each Interest Rate Swap Transaction, the Issuer will pay to the Issuer Swap Provider on each Note Interest Payment Date an amount equal to the excess (if any) of an amount determined by reference to the fixed rate payments payable by the French Borrowers under the French Loans and by the Luxembourg Issuer under the Luxembourg Notes during the relevant Collection Period ("X") over an amount determined by reference to three-month EURIBOR ("Y") and the Issuer Swap Provider will pay to the Issuer an amount equal to the excess (if any) of Y over X. The Issuer Swap Agreement may be terminated in accordance with certain termination events and events of default, certain of which are more particularly described below. Subject to the following, the Issuer Swap Provider and the Issuer Swap Guarantor are only obliged to make payments under the Issuer Swap Transactions to the extent that the Issuer makes the corresponding payments thereunder. Furthermore, a failure by the Issuer to make timely payment of amounts due from it 184

185 under the Issuer Swap Transactions will constitute a default thereunder and entitle the Issuer Swap Provider to terminate the Issuer Swap Transactions. If the Issuer Swap Agreement is terminated by the Issuer Swap Provider, this may result in the Issuer being required to make a swap termination payment to the Issuer Swap Provider thus reducing the amount available to the Issuer to make the payments it is obliged to make in respect of the Notes. In addition, payments may become due from the Issuer to the Issuer Swap Provider in the event that the Loans are repaid or prepaid in whole or in part prior to their scheduled repayment date or the Luxembourg Notes are redeemed in whole or in part prior to their scheduled maturity date. The Issuer Swap Provider will be obliged to make payments under the Issuer Swap Agreement without any withholding or deduction of taxes unless required by law. If any such withholding or deduction is required by law, the Issuer Swap Provider will be required to pay such additional amount as is necessary to ensure that the net amount actually received by the Issuer will equal the full amount the Issuer would have received had no such withholding or deduction been required or, if such withholding or deduction is a withholding or deduction which will or would be or become the subject of any tax credit, allowance, setoff, repayment or refund to the Issuer Swap Provider, the Issuer shall use all reasonable endeavours to reach agreement to mitigate the incidence of tax on the Issuer Swap Provider. The Issuer is similarly obliged to make payments under the Issuer Swap Agreement without any withholding or deduction of taxes unless required by law and is similarly obliged to pay additional amounts and the relevant Issuer Swap Provider is similarly obliged to use reasonable endeavours to reach agreement to mitigate the incidence of tax on the Issuer. Such additional amounts will be payable in priority to amounts payable on the Notes. The Issuer Swap Agreement will provide, however, that if due to action taken by a relevant taxing authority, action brought in a court of competent jurisdiction or any change in tax law, either the Issuer or the Issuer Swap Provider will, or there is a substantial likelihood that it will, on the next Note Interest Payment Date, be required to pay additional amounts in respect of tax under the Issuer Swap Agreement or will, or there is a substantial likelihood that it will, receive payment from the other party from which an amount is required to be deducted or withheld for or on account of tax (a "Swap Tax Event"), the Issuer Swap Provider will use its reasonable efforts to transfer its rights and obligations to another of its offices, branches or affiliates or a suitably rated third party to avoid the relevant Swap Tax Event. If no such transfer can be effected, the Issuer Swap Agreement and the Issuer Swap Transactions may be terminated. If the Issuer Swap Agreement is terminated and the Issuer is unable to find a replacement Issuer Swap Provider (the Issuer being obliged to use its best endeavours to find a replacement Issuer Swap Provider) and the Issuer has certified that it has sufficient funds to discharge all of its liabilities in respect of the Notes, then the Issuer shall redeem all of the Notes in full. Such redemption will be made by the Issuer to the extent of an amount equal to the then aggregate Principal Amount Outstanding of each class of Notes then outstanding plus interest accrued and unpaid thereon. For further information, see Condition 4 at page 196. The Issuer Swap Provider may, at its own discretion and at its own expense, assign its rights or novate its rights and obligations under the Issuer Swap Agreement (including the Issuer Swap Transactions) to any third party provided that the short-term, unsecured, unsubordinated debt obligations of such third party are rated at least "P1" by Moody's or "A-1" by S&P and the long-term unsecured, unsubordinated debt obligations of such third party are rated at least "A1" by Moody's, provided that, as of the date of such transfer, neither party is required by applicable law to withhold any amounts for or on account of tax in respect of any payments made to the other party pursuant to the Issuer Swap Transactions and provided further that such third party agrees to be bound by, among other things, the terms of the Issuer Swap Agreement and the Issuer Swap Transactions, on substantially the same terms as the Issuer Swap Provider. The Issuer Swap Guarantee The Issuer Swap Provider's obligations under the Issuer Swap Transactions are guaranteed pursuant to, and subject to the terms of, the Issuer Swap Guarantee provided by the Issuer Swap Guarantor. In the event that Morgan Stanley Bank AG ceases (other than by virtue of its own default) to be the Issuer Swap Provider or it is replaced by a suitably rated third party, Morgan Stanley will cease to be the Issuer Swap Guarantor. Issuer Swap Guarantor Downgrade Event 185

186 If the rating of the short-term, unsecured, unsubordinated debt obligations of the Issuer Swap Guarantor falls below "P1" by Moody's or "A-1" by S&P or the long-term, unsecured, unsubordinated debt obligations of the Issuer Swap Guarantor fall below "A1" by Moody's at any time, then the Issuer Swap Provider will be required to comply with the requirements set out in the Issuer Swap Agreement which may require the delivery to the Issuer of collateral (which collateral may be in the form of cash or securities) in respect of its obligations under the Issuer Swap Agreement in an amount or value determined in accordance with the terms of the Issuer Swap Agreement Credit Support Document. Issuer Swap Agreement Credit Support Document If at any time the Issuer Swap Provider is required to provide collateral in respect of any of its obligations under the Issuer Swap Agreement it will also do so under the terms of the 1995 ISDA Credit Support Annex (Bilateral Form Transfer) entered into on or prior to the Closing Date between the Issuer and the Issuer Swap Provider (the "Issuer Swap Agreement Credit Support Document"). The Issuer Swap Agreement Credit Support Document will provide that, from time to time, subject to the conditions specified in the Issuer Swap Agreement Credit Support Document, the Issuer Swap Provider will make transfers of collateral to the Issuer in support of its obligations under the Issuer Swap Agreement and the Issuer will be obliged to return equivalent collateral in accordance with the terms of the Issuer Swap Agreement Credit Support Document. Collateral amounts that may be required to be posted by the Issuer Swap Provider pursuant to the Issuer Swap Agreement Credit Support Document may be delivered in the form of cash or securities (as agreed with the Rating Agencies). Cash amounts will be paid into the Issuer Swap Collateral Cash Account and securities will be transferred to the Issuer Swap Collateral Custody Account. Amounts equal to any amounts of interest on the credit balance of the Issuer Swap Collateral Cash Account, or equivalent to distributions received on securities held in the Issuer Swap Collateral Custody Account, are required to be paid to the Issuer Swap Provider in accordance with the terms of the Issuer Swap Agreement Credit Support Document in priority to any other payment obligations of the Issuer. The obligation of the Issuer in respect of any return of securities posted as collateral pursuant to the Issuer Swap Agreement Credit Support Document is to return collateral of the same type, nominal value, description and amount as the collateral posted to the Issuer by the Issuer Swap Provider. 186

187 ESTIMATED AVERAGE LIVES OF THE NOTES AND ASSUMPTIONS The average lives of the Notes cannot be predicted as the actual rate at which Issuer Assets will be repaid or prepaid and a number of other relevant factors are unknown. Calculations of possible average lives of the Notes can be made based on certain assumptions. For example, based on the assumptions that: (i) (ii) (iii) (iv) (v) (vi) (vii) no French Loans are transferred back to the Originator; no Luxembourg Notes are sold by the Issuer; no Originated Assets default or are enforced and no loss arises; the Issuer Swap Agreement will not be terminated; any scheduled amortisation occurring between the Cut-Off Date and the Closing Date has already taken place prior to the Closing Date; no Originated Assets prepays; no modification, waiver or amendments is made regarding any payment of interest on, any repayment of principal of, or the term of any of the Originated Assets; and (viii) the Closing Date is on or about 8 December 2005; then the approximate percentage of the initial principal amount outstanding of the Notes on each Note Interest Payment Date (after payment has been made on such date) and the approximate average lives of the Notes would be as follows: Payment Class A Notes Class X Notes Class B Notes Class C Notes Closing Date 100.0% 100.0% 100.0% 100.0% 15/Feb/ % 100.0% 99.9% 99.9% 15/May/ % 100.0% 99.9% 99.9% 15/Aug/ % 100.0% 99.8% 99.8% 15/Nov/ % 100.0% 99.7% 99.7% 15/Feb/ % 100.0% 99.7% 99.7% 15/May/ % 100.0% 99.6% 99.6% 15/Aug/ % 100.0% 99.5% 99.5% 15/Nov/ % 100.0% 99.5% 99.5% 15/Feb/ % 100.0% 99.4% 99.4% 15/May/ % 100.0% 99.3% 99.2% 15/Aug/ % 100.0% 99.1% 99.1% 15/Nov/ % 100.0% 98.9% 98.9% 15/Feb/ % 100.0% 95.3% 95.2% 15/May/ % 100.0% 95.1% 95.0% 15/Aug/ % 100.0% 94.9% 94.9% 15/Nov/ % 100.0% 94.8% 94.7% 15/Feb/ % 100.0% 94.6% 94.6% 15/May/ % 100.0% 94.5% 94.4% 15/Aug/ % 100.0% 85.7% 85.5% 15/Nov/ % 100.0% 85.7% 85.4% 15/Feb/ % 100.0% 85.7% 85.4% 15/May/ % 100.0% 85.7% 85.4% 15/Aug/ % 100.0% 80.4% 80.1% 15/Nov/ % 100.0% 80.4% 80.1% 15/Feb/ % 100.0% 65.4% 64.8% 15/May/ % 100.0% 65.4% 64.8% 15/Aug/12 0.0% 0.0% 0.0% 0.0% 15/Nov/12 0.0% 0.0% 0.0% 0.0% 15/Feb/13 0.0% 0.0% 0.0% 0.0% Average Life (years) First Principal Payment Date 15-Feb Feb Feb Feb-2006 Last Principal Payment Date 15-Aug Aug Aug Aug

188 DESCRIPTION OF THE NOTES AND THE RESIDUAL UNITS GENERAL PROVISIONS APPLICABLE TO THE NOTES AND THE RESIDUAL UNITS The Notes and the Residual Units are financial instruments (instruments financiers) within the meaning of Article L of the French Code monétaire et financier. The Notes are bonds (obligations) within the meaning of Article L of the French Code monétaire et financier. Title to the Notes will be evidenced in accordance with Article L of the French Code monétaire et financier by book-entries (inscription en compte). No certificates (including certificats représentatifs) issued pursuant to Article R of the French Code monétaire et financier, global notes or physical documents of title will be issued in respect of the Notes. By subscribing for or purchasing the Residual Units, each Residual Unitholder shall be bound by the provisions of the Issuer Regulations. By subscribing for the Notes, each Noteholder shall be bound by the "Terms and Conditions of the Notes", the Normal Redemption Orders of Priority and the Accelerated Redemption Order of Priority and, more generally each such Noteholder shall be deemed to have agreed to and acknowledged the terms of the Issuer Regulations. CHARACTERISTICS OF THE NOTES AND THE RESIDUAL UNITS Classes of Notes and Residual Units The Issuer will issue, on the Closing Date, the following Notes and Residual Units: (a) (b) (c) (d) (e) the Class A Notes; the Class X Notes; the Class B Notes; the Class C Notes; and the Class R Units. The Class A Notes, the Class B Notes and the Class C Notes are referred to in this Prospectus as the "Listed Notes" unless expressly stated to the contrary or unless the context otherwise requires. The Listed Notes and the Class X Notes are together referred to in this Prospectus as the "Notes" unless expressly stated to the contrary or unless the context otherwise requires. Application has been made to the Irish Financial Services Regulatory Authority, as competent authority under Directive 2003/71/EC, for the prospectus to be approved. Application has been made to the Irish Stock Exchange for the Listed Notes to be admitted to the Official List and trading on its regulated market. No application has been made to the Irish Financial Services Regulatory Authority for the Class X Notes and the Class R Units to be admitted to the Official List and trading on its regulated market. All of the Notes are rated by the Rating Agencies. Pursuant to Article L of the French Code monétaire et financier, Notes may entitle their holders to different rights in respect of the repayment of principal and the payment of interest. The Class A Notes and the Class X Notes are ordinary debt instruments. The Class B Notes and the Class C Notes are subordinated debt instruments (obligations spécifiques) within the meaning of Articles R to R of the French Code monétaire et financier. 188

189 The Class R Units, which are subordinated (spécifiques) within the meaning of Articles R to R of the French Code monétaire et financier shall neither be listed on the Irish Stock Exchange nor rated by the Rating Agencies. The Class R Units may not be redeemed until all of the Notes are redeemed in full, at which time, the Liquidation Surplus shall be applied in repaying the Principal Amount Outstanding of the Class R Units until the Class R Units have been redeemed in full. Any Liquidation Surplus remaining thereafter (if any) shall be applied to the Class X Noteholders. Each potential investor in the Notes or the Residual Units should consult its legal advisers to determine whether and to what extent (i) it is legally authorised to invest in the Notes or the Residual Units, (ii) Notes or Residual Units can be used as collateral for various types of borrowing and/or refinancings and (iii) other restrictions apply to its purchase of any Note or Residual Unit. Financial institutions should consult their legal advisors or the appropriate regulators to determine the appropriate treatment of Notes or Residual Units under any applicable risk-based capital or similar rules including, but not limited to, with regard to Article R of the French Code monétaire et financier. RESTRICTIONS ON OWNERSHIP RIGHTS IN THE NOTES AND THE RESIDUAL UNITS The ownership rights of certain investors in the Notes may be constrained or restricted by applicable laws and regulations. Investors should therefore refer to the laws and regulations applicable to them. Neither the Management Company nor the Custodian shall be in any way responsible for the failure of an investor to comply with any such constraints or restrictions. For information purposes, and in accordance with the applicable French laws and regulations in force on the date of establishment of the Issuer: (a) (b) mutual funds (fonds commun de placement), whose management company is controlled by an originator of the Issuer Assets or SICAVs (sociétés d'investissement à capital variable) whose directors and officers are employees of an originator of the Issuer Assets may not subscribe for more than five per cent. of the value of the Notes and the Residual Units issued by the Issuer, as determined on the Closing Date; and the Notes and the Residual Units may only be subscribed for or held by qualified investors within the meaning of Article L of the French Code monétaire et financier or non-french resident investors. The subscription and sale of the Notes is subject to specific rules detailed in "Subscription and Sale" below. RIGHTS AND OBLIGATIONS OF THE NOTEHOLDERS The Noteholders and the Residual Unitholders shall have the rights which result from applicable laws and the Issuer Regulations. The Noteholders shall be regularly informed by the Management Company of the operation of the Issuer in accordance with the conditions set out in "Additional Information Relating to the Issuer" below. All prospective investors of the Notes should consult their own professional advisers concerning any possible legal, tax, accounting, capital adequacy or financial consequences of buying, holding or selling any Note under law and the applicable laws of their country of residence or domicile. ISSUANCE AND PLACEMENT OF THE NOTES The Class A Notes and the Class X Notes are ordinary debt instruments to be privately placed in France with providers of investment services relating to portfolio management for the account of third parties (personnes fournissant le service d'investissement de gestion de portefeuille pour compte de tiers) and 189

190 qualified investors (investisseurs qualifiés) within the meaning of Article L and Article D of the French Code monétaire et financier and with non-french resident investors. The Class B Notes and the Class C Notes are obligations spécifiques within the meaning of Articles R to R of the French Code monétaire et financier. They may therefore only be acquired and held by qualified investors (investisseurs qualifiés) within the meaning of Article L of the French Code monétaire et financier, by non-french resident investors and by any person as described in paragraphs 3 and 4 of Article R of the French Code monétaire et financier. Application has been made to the Irish Financial Services Regulatory Authority, as competent authority under Directive 2003/71/EC, for the prospectus to be approved. Application has been made to the Irish Stock Exchange for the Listed Notes to be admitted to the Official List and trading on its regulated market. SECONDARY MARKET There is no assurance that a secondary market will develop with respect to the Notes (or if it does develop, that it will provide Noteholders with liquidity of investment or that it will continue for the life of the Notes). DESCRIPTIVE TABLE OF THE NOTES AND THE RESIDUAL UNITS The principal characteristics of the Notes and the Residual Units on the Closing Date are described in the following table: Class A Notes Class X Notes Class B Notes Class C Notes Class R Units Ranking ordinary ordinary subordinated subordinated subordinated Number of Notes or Residual Units Nominal value per Note or Residual Unit Aggregate nominal value 5, , ,000 50,000 2, ,000, ,750,000 16,050,000 5,000 Issue price 100% 100% 100% 100% 100% Interest rate (1) 3 month EURIBOR % Frequency of interest payments Expected final Note Interest Payment Date (4) Variable income (2) 3 month EURIBOR % 3 month EURIBOR % Variable income (3) quarterly quarterly quarterly quarterly quarterly August 2012 August 2012 August 2012 August 2012 August 2012 Final Maturity Date August 2015 August 2015 August 2015 August 2015 in fine S&P AAA AAA AA A Not rated Moody's Aaa Aaa Not rated Not rated Not rated Form of the Notes and the Residual Units (5) Bearer dematerialised form Bearer dematerialised form Bearer dematerialised form Bearer dematerialised form Bearer dematerialised form Placement private private private private private Clearing Euroclear France, Euroclear, Clearstream Luxembourg Euroclear France, Euroclear, Clearstream Luxembourg Euroclear France, Euroclear, Clearstream Luxembourg Euroclear France, Euroclear, Clearstream Luxembourg Euroclear France, Euroclear, Clearstream Luxembourg Common Code ISIN FR FR FR FR FR Application for Listing Irish Stock Exchange Not listed Irish Stock Exchange Irish Stock Exchange Not listed (1) The interest rate for the first interest period will be determined in the manner set out in "Terms and Conditions of the Notes" below. (2) The interest on the Class X Notes will be calculated as described in "Summary Acquisition of the Issuer Assets Class X Amount" and Condition 3 (f). (3) The Swap Breakage Receipts (to the extent they do not constitute Available Issuer Interest Receipts) shall be applied directly to the Class R Units. (4) Plus supplementary interest (if any). (5) The form of the Notes is more fully described in "Terms and Conditions of the Notes". 190

191 TERMS AND CONDITIONS OF THE NOTES The terms and conditions of the Notes (the "Terms and Conditions") will be as follows: Odysseus (European Loan Conduit No. 21) FCC (the "Issuer") will issue outside France the 270,000,000 Class A Commercial Mortgage Backed Floating Rate Notes due 2015 (the "Class A Notes"), the 300 Class X Commercial Mortgage Backed Variable Income Notes due 2015 (the "Class X Notes"), the 40,750,000 Class B Commercial Mortgage Backed Floating Rate Notes due 2015 (the "Class B Notes") and the 16,050,000 Class C Commercial Mortgage Backed Floating Rate Notes due 2015 (the "Class C Notes"). The Class A Notes, the Class B Notes and the Class C Notes are referred to as the "Listed Notes" in these Terms and Conditions, unless expressly stated to the contrary or as the context otherwise requires. The Listed Notes and the Class X Notes are together referred to as the "Notes" in these Terms and Conditions, unless expressly stated to the contrary or as the context otherwise requires. Application has been made to the Irish Financial Services Regulatory Authority, as competent authority under Directive 2003/71/EC, for the prospectus to be approved. Application has been made to the Irish Stock Exchange for the Listed Notes to be admitted to the Official List and trading on its regulated market. No application has been made to the Irish Financial Services Regulatory Authority for the Class X Notes to be admitted to the Official List and trading on its regulated market. The Issuer will issue the Notes on or about 8 December 2005 (the "Closing Date"). Any reference to a "class of Notes" or of Noteholders shall be a reference to any or all of, the respective Class A Notes, the Class X Notes, the Class B Notes and the Class C Notes; or any or all of their respective holders, as the case may be. References below to "Conditions" are, unless the context otherwise requires, to the numbered paragraphs below. Terms not defined in theses Conditions, shall, unless the context otherwise requires, have the meaning ascribed to them in this Prospectus. 1. Form, Denomination and Title The Listed Notes will be issued in denominations of 50,000 each. The Class X Notes will be issued in denominations of 150 each. The Notes will be issued in bearer dematerialised form. Title to the Notes will be evidenced in accordance with Article L of the French Code monétaire et financier by book-entries (inscription en compte). No certificates (including certificats représentatifs issued pursuant to Article R of the French Code monétaire et financier), global notes or physical documents of title will be issued in respect of the Notes. The Notes will only be transferable in accordance with the restrictions described in "Subscription and Sale" in this Prospectus. 2. Status and Relationship between the Class A Notes, the Class X Notes, the Class B Notes and the Class C Notes (a) The Notes constitute direct and unconditional obligations of the Issuer. The Notes of each class will rank pari passu within the same class and rateably without any preference or priority among themselves. (b) As to the payment of interest between the classes of Notes prior to or following the occurrence of an Accelerated Redemption Event (as defined below), the Class A Notes and the Class X 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. 191

192 (c) (d) Save as described in Condition 5, prior to the occurrence of an Accelerated Redemption Event, repayments of principal of the Class C Notes will be subordinated to repayments of principal on the Class A Notes and the Class B Notes, and repayments of principal of the Class B Notes will be subordinated to repayments of principal on the Class A Notes. As to the repayment of principal between the classes of Note following the occurrence of an Accelerated Redemption Event (as defined below), 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. 3. Interest (a) Period of Accrual Each Class A Note, Class B Note and the Class C Note will bear interest on its Principal Amount Outstanding (as defined in Condition 4(c) below) from (and including) the Closing Date to (but excluding) the redemption in full of such Listed Note. (b) Note Interest Payment Dates and Interest Periods Interest is payable on the Class A Notes, the Class B Notes and the Class C Notes and variable income is payable on the Class X Notes on the fifteenth day of February, May, August and November in each year (or, if such day is not a Business Day (as defined below), the next following Business Day unless such following Business Day falls in the next succeeding calendar month, in which event such day shall be the immediately preceding Business Day) (each a "Note Interest Payment Date"), in respect of the Interest Period (as defined below) ending immediately prior thereto. The first Note Interest Payment Date in respect of each relevant class of Notes shall be the Note Interest Payment Date falling in February In these Conditions: (i) "Business Day" means a day (other than a Saturday or Sunday) which is a Target Settlement Day (as defined below) and on which banks are open for business in New York, Dublin, London, Brussels, Luxembourg and Paris; (ii) "Target Settlement Day" means a day on which the Trans-European Automated Real-time Gross Settlement Express Transfer System is operating; and (iii) "Interest Period" means each period from (and including) a Note Interest Payment Date (or, in respect of the first payment of the Interest Amount (as defined in Condition 3(d) below), the Closing Date) to (but excluding) the next following Note Interest Payment Date (or, in respect of the first payment of the Interest Amount (as defined in Condition 3(d) below), the Note Interest Payment Date falling in February 2006). (c) Rate of interest The rate of interest applicable from time to time in respect of each relevant class of Listed Note (each a "Rate of Interest") will be the aggregate of (i) EURIBOR (as defined below) and (ii) the Relevant Margin (as defined below) for such class, as determined by the Management Company on each Note Calculation Date (as defined below) in respect of the Interest Period next following such date, where: (i) "EURIBOR" shall mean, in relation to an Interest Period, the rate determined by the Management Company, on the second Target Settlement Day preceding the first day of such Interest Period (such second Target Settlement Day being an "Interest Determination Date") to be equal to: (A) the interest rate for deposits in Euro for a period of three months (or, in relation to the Interest Period commencing on the Closing Date, the linear interpolation of two and three month Euro deposits) which appears on the 192

193 Telerate Page 248 (or such other page as may replace that page on Bridge's Telerate Service, or such other service as may replace that service for the purpose of displaying comparable rates) at a.m. (Brussels time) on such Interest Determination Date (the "Screen Rate"); or (B) if on such Interest Determination Date the Screen Rate is not available, the arithmetic mean of the quoted rates provided by the principal Eurozone office of each of the Reference Banks (as defined in Condition 3(e) below) to the Management Company for which three month deposits in Euro (or, in relation to the Interest Period commencing on the Closing Date, the linear interpolation of two and three month Euro deposits) in an amount that is representative of the Principal Amount Outstanding (as defined in Condition 4(d)) below) of the relevant Notes for such Interest Period are offered to prime banks in the Euro-zone interbank market for the same period as such Interest Period at or about a.m. (Brussels time) on such Note Interest Payment Date; provided that if on such Interest Determination Date, fewer than two of the Reference Banks provides the Management Company with such a quoted rate, the rate for the relevant Interest Period will be the arithmetic mean of the rates quoted by major banks in the Euro-zone, selected by the Management Company, for which three month deposits in Euro (or, in relation to the Interest Period commencing on the Closing Date, the linear interpolation of two and three month Euro deposits) in an amount that is representative of the Principal Amount Outstanding (as defined in Condition 5(c) above) of the relevant Notes for such Interest Period are offered to leading European banks at approximately a.m. (Brussels time), on the first day of the relevant Interest Period; and (ii) The "Relevant Margin" in respect of each relevant class of Listed Notes will be: (A) (B) (C) in respect of Class A Notes, 0.20 per cent. per annum; in respect of Class B Notes, 0.34 per cent. per annum; and in respect of Class C Notes, 0.50 per cent. per annum. There shall be no maximum or minimum Rate of Interest. (d) Determination of the Rate of Interest and Calculation of Interest Amounts The Management Company shall, on or as soon as practicable after each Interest Determination Date, determine (i) the Rate of Interest applicable to the Interest Period beginning on and including the next following Note Interest Payment Date (or, in respect of the first Interest Amount, the Closing Date) in respect of the Listed Notes of each relevant class, and (ii) the amount of interest (the "Interest Amount") payable in respect of such Interest Period in respect of the Listed Notes of each relevant class. Each Interest Amount shall be an amount equal to: (A) (B) (C) the aggregate Principal Amount Outstanding of the Listed Note of the relevant class on the relevant Interest Determination Date; multiplied by the Rate of Interest applicable to that Listed Note; multiplied by the actual number of days during the relevant Interest Period; (D) divided by 360; 193

194 (E) rounded down to the nearest Euro cent. Interest Amounts shall be paid to the relevant Noteholders in accordance with the Normal Redemption Orders of Priority or the Accelerated Redemption Order of Priority as applicable. (e) Reference Banks The Management Company will procure that, so long as any of the Class A Notes, the Class B Notes and the Class C Notes remains outstanding, there will at all times be three Reference Banks for the determination of EURIBOR. The initial Reference Banks shall be the principal Euro-zone office of four major banks in the Euro-zone interbank market (the "Reference Banks") chosen by the Management Company. The Management Company reserves the right at any time to terminate the appointment of the Reference Banks or any one of them. Notice of any such termination will be given to the Paying Agents. If a Reference Bank is unable or unwilling to continue to act as such capacity, or if the appointment of any Reference Bank is terminated, the Management Company will appoint a successor Reference Bank to act as such in its place. (f) Variable income under the Class X Notes The "Class X Amount" shall be payable on each Note Interest Payment Date and shall be an amount equal to the sum of (A) the product of: (i) the aggregate outstanding principal balance of the French Loans and the Luxembourg Notes as of the beginning of the applicable Interest Period (after taking into account any write-offs of principal following completion of Enforcement Procedures in respect of any Specially Serviced French Loans or the occurrence of any event of default under the Luxembourg Notes during the Collection Period immediately preceding such Interest Period); (ii) the Class X Weighted Average Strip Rate and (iii) the fraction obtained by dividing (x) by the number of days in the relevant Interest Period by (y) 360; and (B) in the case of the first Note Interest Payment Date, an amount equal to the aggregate amount of interest that accrued on each of the French Loans and the Luxembourg Notes during the period from and including the French Loan Payment Date for the relevant French Loan and the Luxembourg Note Interest Payment Date that fell immediately prior to the Closing Date, to but excluding the Closing Date. For purposes of these Conditions: (i) (ii) The "Class X Weighted Average Strip Rate" with respect to any Note Interest Payment Date will be a per annum rate equal to the excess, if any, of (x) the Weighted Average Net Mortgage Rate for such Interest Period over (y) the sum of (i) the weighted average of the interest rates of all of the Notes (weighted on the basis of the respective Principal Amount Outstanding of such Notes immediately prior to the related Note Interest Payment Date) and (ii) the Administrative Cost Rate. The "Weighted Average Net Mortgage Rate" with respect to any Note Interest Payment Date will be equal to the weighted average of the Net Mortgage Rates for the Loans weighted on the basis of their respective principal balances as of the beginning of the applicable Interest Period (after taking into account any writeoffs of principal following completion of Enforcement Procedures in respect of any Specially Serviced French Loans or the occurrence of any event of default under the Luxembourg Notes during the Collection Period immediately preceding such Interest Period) and, in the case of the first Note Interest Payment Date, the Closing Date (except in the case of the Luxembourg Notes, as of the Belgian Bond Transfer Date). 194

195 (iii) (iv) (v) (vi) The "Net Mortgage Rate" for any French Loan (except for the Pascal Loan) and the Belgian Bonds, with respect to any Note Interest Payment Date, will be equal to the sum of (i) Euribor and (ii) the difference between the fixed rate of the Loans (and for the avoidance of doubt, in the case of the Tranched French Loans, only with reference to the Senior Debt as determined in the relevant Intercreditor Agreements) and the fixed rate of the Issuer Swap Transactions attributable to such French Loans or Belgian Bonds. For the Pascal Loan, the Net Mortgage Rate will be the sum of (i) Euribor and (ii) the margin as determined in the relevant French Loan Agreement. The "Administrative Cost Rate" is equal to a variable rate, which, as of any Note Interest Payment Date, is the percentage equal to the product of (a) the fraction obtained by dividing: (i) 360 by (ii) the actual number of days in the relevant Interest Period and (b) the Administrative Cost Factor. The Administrative Cost Rate represents as of any date of calculation, the per annum rate at which Administrative Fees for any Interest Period accrue against the outstanding principal balance of the French Loans and the Luxembourg Notes. The "Administrative Cost Factor" is, as of any Note Interest Payment Date, equal to the percentage obtained by dividing: (i) the Administrative Fees for such Note Interest Payment Date by (ii) the outstanding principal balance of (a) the French Loans immediately after the second preceding French Loan Payment Date, and (b) the Luxembourg Notes immediately after the second preceding Luxembourg Note Interest Payment Date, for such Note Interest Payment Date. The "Administrative Fees" for each Note Interest Payment Date will be the sum of all ordinary, recurring fees payable by the Issuer or by the Luxembourg Issuer to the Issuer Related Parties and to the Luxembourg Issuer Related Parties respectively plus VAT, if applicable, related to such Note Interest Payment Date. The amount of Administrative Fees payable on any Note Interest Payment Date will vary to the extent that some are payable on an annual basis while others are payable on a quarterly basis. If any current Issuer Related Party or Luxembourg Issuer Related Party is replaced by a successor service provider and such successor's fees are in excess of the prior Issuer Related Party's or Luxembourg Issuer Related Party's fees, the Administrative Fees will be increased to reflect such change. Administrative Fees for the purposes of calculating the Class X Amount do not include any fees or expenses payable by the Issuer and the Luxembourg Issuer to any entity that are unusual or extraordinary in nature including the repayment of Liquidity Drawings and Luxembourg Liquidity Drawings and interest thereon. In addition to the Class X Amount, on each Note Interest Payment Date, the Issuer will pay to the Class X Noteholders any surplus Available Issuer Interest Receipts (if any). (g) Interest on the Class B Notes and the Class C Notes The interest due and payable on the Class B Notes and the Class C Notes is subject, on any Note Interest Payment Date, to a maximum amount equal to the lesser of (i) the Interest Amount in respect of such classes of Notes, as calculated pursuant to Condition 3(d), and (ii) the amount (the "Adjusted Interest Amount") equal to (x) the Available Issuer Interest Receipts in respect of such Note Interest Payment Date (including, for the avoidance of doubt, the amount available for drawing by way of Interest Drawings and Accrued Interest Drawings under the Issuer Liquidity Facility Agreement on such Note Interest Payment Date) minus (y) the sum of all amounts payable out of Available Issuer Interest Receipts on such Note Interest Payment Date in priority to the payment of interest on such classes of Notes in accordance with the applicable Order of Priority. If the 195

196 difference between the Interest Amount and the Adjusted Interest Amount applicable to the Class B Notes and the Class C Notes is attributable to a reduction in the interestbearing balance of the Loans as a result of any prepayments by the French Borrowers or the Belgian Issuer, the debt that would otherwise be represented by such difference shall be extinguished on such Note Interest Payment Date, and the affected Noteholders shall have no claim against the Issuer in respect thereof. (h) Notification to be Final All notifications, determinations, calculations and decisions given, expressed or made by the Management Company for the purpose of this Condition 3 (in the absence of wilful default, bad faith or manifest error) will be binding on the Reference Banks, the Paying Agents and the Noteholders and (in such absence as aforesaid) no liability to the Noteholders shall attach the Management Company, the Reference Banks or the Paying Agents in connection with the exercise or non-exercise by them or any of them of their powers, duties and discretions hereunder. (i) Late Payment Interest No interest shall accrue on any unpaid interest in respect of the Notes. 4. Redemption and cancellation (a) Final redemption Unless previously redeemed in full and cancelled as provided in this Condition 4, the Issuer shall redeem the Notes at their Principal Amount Outstanding together with accrued interest on the Note Interest Payment Date falling in August 2015, without prejudice to the provisions of Condition 8. The Issuer may not redeem Notes in whole or in part prior to that date except as provided in this Condition 4. After the Final Maturity Date, any part of the nominal value of any Note of any class or of the interest due thereon which may remain unpaid will be automatically cancelled, so that the Noteholders, after such date, shall have no right to assert a claim in this respect against the Issuer, regardless of the amounts which may remain unpaid after the Final Maturity Date. (b) Mandatory Redemption in Full or in Part from Available Issuer Principal Receipts (1) Redemption prior to the occurrence of an Accelerated Redemption Event Subject as provided in Condition 4(c) and Condition 5(b)(2)(b), prior to the occurrence of an Accelerated Redemption Event, the most senior class of Notes then outstanding shall be subject to mandatory redemption in full or in part on each Note Interest Payment Date if on the relevant Note Calculation Date, there are funds available for such redemption as specified in the Normal Redemption Orders of Priority set out in Condition 5(b). If on any Note Interest Payment Date, the most senior class of Notes then outstanding is redeemed in full pursuant to the foregoing, any remaining Available Issuer Principal Receipts shall be used for the mandatory redemption of whole or part of the next most senior class of Notes then outstanding as specified in the Normal Redemption Orders of Priority. (2) Redemption following the occurrence of an Accelerated Redemption Event Following the occurrence of an Accelerated Redemption Event, the most senior class of Notes then outstanding shall be subject to mandatory redemption in full or 196

197 in part on each Note Interest Payment Date if on the relevant Note Calculation Date, there are funds available for such redemption as specified in the Accelerated Redemption Orders of Priority set out in Condition 5(c). If on any Note Interest Payment Date, the most senior class of Notes then outstanding is redeemed in full pursuant to the foregoing, any remaining Available Issuer Principal Receipts shall be used for the mandatory redemption of whole or part of the next most senior class of Notes then outstanding as specified in the Accelerated Redemption Order of Priority. The failure by the Issuer to pay interest on the most senior class of Notes which is still outstanding when due and payable shall result in the occurrence of the "Accelerated Redemption Event". (c) Mandatory Redemption in Full due to Change in Law If (a) by virtue of a change in any law from that which is in effect on the Closing Date (i) the Issuer is obliged to make any withholding or deduction for tax from payments in respect of the Notes and such requirement cannot be avoided by the Management Company, acting in the name and on behalf of the Issuer, taking reasonable measures available to it, or (ii) any amount receivable by the Issuer in relation to any of the Issuer Assets is reduced or ceases to be receivable by the Issuer, whether or not actually received, or (b) by virtue of a Swap Tax Event occurring under the Issuer Swap Agreement and (i) such Swap Tax Event cannot be avoided by the Management Company, acting in the name and on behalf of the Issuer, taking reasonable measures available to it, (ii) the Issuer Swap Provider is unable to transfer its obligations thereunder to another branch, office or affiliate to cure the Swap Tax Event, and (iii) the Management Company, acting in the name and on behalf of the Issuer, is unable to find a replacement swap provider (the Management Company being obliged to use its reasonable efforts to find a replacement swap provider), provided further that, in either case, (a) the Issuer has sufficient funds available to it on the relevant Note Interest Payment Date to discharge all of its liabilities in respect of the Notes and any Issuer Priority Payments required to be paid in priority to the Notes in accordance with Condition 5(b), or (b) the Issuer has sufficient funds in respect of the most junior class of Notes then outstanding, the Notes will be subject to redemption in full, but not in part as follows: (a) (b) (c) all Class A Notes in an amount equal to the then aggregate Principal Amount Outstanding of the Class A Notes plus interest accrued and unpaid thereon; and all Class B Notes in an amount equal to the then aggregate Principal Amount Outstanding of the Class B Notes plus interest accrued and unpaid thereon; and all Class C Notes in an amount equal to the then aggregate Principal Amount Outstanding of the Class C Notes plus interest accrued and unpaid thereon. After giving notice of redemption or repayment pursuant to this sub-paragraph, the Issuer shall not make any further payment of principal on the Class A Notes, the Class B Notes and the Class C Notes other than by way of redemption or repayment pursuant to this Condition 5(c). Once redeemed or repaid to the full extent provided in this Condition 5(c), the Notes shall cease to bear interest. For these purposes, a "Swap Tax Event" means: (i) any action taken by a taxing authority, or brought in a court of competent jurisdiction (regardless of whether such action is taken or brought with respect to a party to the Issuer Swap Agreement); or (ii) the enactment, promulgation, execution or ratification of, or change in or amendment to, any law (or in the application or interpretation of any law), 197

198 as a result of which, on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by any government or taxing authority, either the Issuer or the Issuer Swap Provider will, or there is a substantial likelihood that it will be required to pay additional amounts or make an advance in respect of tax under the Issuer Swap Agreement or the Issuer Swap Provider will, or there is a substantial likelihood that it will, receive a payment from the Issuer from which an amount is required to be deducted or withheld for or on account of tax and no additional amount or advance is able to be paid by the Issuer. (d) Note Principal Payments and Principal Amount Outstanding The principal amount (if any) to be redeemed in respect of each Note (the "Note Principal Payment") on any Note Interest Payment Date under Condition 4(b) or Condition 4(c) (as applicable) shall, in relation to the Notes of a particular class, be a pro rata share of the aggregate amount required to be applied in redemption of the Notes of that relevant class on such Note Interest Payment Date under Condition 4(b) or Condition 4(c) (as applicable), (rounded down to the nearest Euro cent), provided always that no such Note Principal Payment may exceed the Principal Amount Outstanding of the relevant Note. On each date falling four Business Days prior to a Note Interest Payment Date (the "Note Calculation Date"), the Management Company shall determine (i) the amount of any Note Principal Payment (if any) due on the next following Note Interest Payment Date, (ii) the Principal Amount Outstanding of each Note on the next following Note Interest Payment Date (after deducting any Note Principal Payment to be paid on that Note Interest Payment Date) and (iii) the fraction expressed as a decimal to the sixth place (the "Pool Factor") of which the numerator is the Principal Amount Outstanding (after deducting any Note Principal Payment to be paid on that Note Interest Payment Date) of a Note of the relevant class (calculated on the assumption that the face amount of such Note on the date of issuance thereof was 50,000) and the denominator is 50,000. Each determination by the Management Company of any Note Principal Payment and the Principal Amount Outstanding of a Note shall in each case (in the absence of wilful default, bad faith or manifest error) be final and binding on all persons. The Pool Factor will be communicated by the Management Company two Business Days prior to each Note Interest Payment Date. The "Principal Amount Outstanding" of a Note of any class on any date shall be the face amount thereof on the Closing Date less the aggregate amount of all Note Principal Payments in respect of such Note that have been paid since the Closing Date and on or prior to the Note Calculation Date. The Management Company, acting in the name and on behalf of the Issuer, will cause each determination of a Note Principal Payment and Principal Amount Outstanding to be notified in writing forthwith to the Paying Agents, the Rating Agencies, the Operating Bank and (for so long as the Class A Notes, the Class B Notes and the Class C Notes are listed on the Irish Stock Exchange) the Irish Stock Exchange, and will cause notice of each determination of a Note Principal Payment and Principal Amount Outstanding to be given to the Noteholders in accordance with Condition 10 as soon as reasonably practicable. (e) Notice of Redemption Any such notice as is referred to in Condition 4(d), shall be irrevocable and, upon the expiration of such notice, the Issuer shall be bound to redeem the Notes of the relevant class in the amounts specified in these Conditions. 198

199 (f) Redemption of the Class X Notes The Class X Notes will be repaid from the initial deposit of 300 made by the Issuer on the Issuer Transaction Account (the "Class X Collateral Amount"). (g) Cancellation All Notes redeemed in full pursuant to the foregoing provisions will be cancelled forthwith and may not be resold or re-issued. 5. Calculations and Application of Amounts (a) Issuer Priority Payments On any date on which payments due to third parties (other than the Issuer Related Parties) are payable, the Management Company (acting on information received by it from the French Loan Servicer and the Belgian Bond Servicer) shall, in the case of amounts referred to in paragraph (i) below, and otherwise may, give instructions to the Operating Bank (with a copy to the Custodian) to pay the following amounts (the "Issuer Priority Payments") out of the Issuer Transaction Account, in priority to all other amounts required to be paid by the Issuer: (i) (ii) out of the Issuer Asset Interest Receipts and where Issuer Asset Interest Receipts are insufficient, out of the Issuer Asset Principal Receipts then available, or if such amounts are insufficient, from the proceeds of Expenses Drawings, amounts due and payable to third parties (other than the Issuer Related Parties), on a date other than a Note Interest Payment Date, including the Issuer's liability, if any, under obligations incurred in the course of the Issuer's business, including taxes, costs, expenses, fees and indemnity claims due and payable by the Issuer and including any unforeseen and unexpected fees and expenses incurred in the interests of the Noteholders due and payable by the Issuer; and after a French Loan Event of Default has occurred under any French Loan Agreement, any urgent capital expenditure and property expenses (such as insurance) required to prevent a material decline in the value of any French Property, to be funded out of Issuer Asset Interest Receipts and, where Issuer Asset Interest Receipts are insufficient, out of Issuer Asset Principal Receipts. If, on any Business Day, the Issuer Assets Interest Receipts and the Issuer Assets Principal Receipts are in aggregate insufficient to pay in full any amount due and payable on such Business Day under Condition 5(a)(i), the Management Company, on behalf of the Issuer, shall make Expenses Drawings pursuant to the Issuer Liquidity Facility Agreement and shall use the proceeds of such Expenses Drawings to pay such amounts. For the purposes of these Conditions: "Collection Period" means the period from (and including) the preceding Note Calculation Date to (but excluding) such Note Calculation Date or, if applicable, in the case of the first Note Calculation Date, the period from (and including) the Closing Date to (but excluding) such first Note Calculation Date. "Issuer Asset Interest Receipts" means, in respect of a Note Interest Payment Date, the aggregate of: (a) "French Borrowers Interest Receipts", comprising all amounts allocated towards interest, fees (other than French Loan Prepayment Fees), swap breakage costs paid by a French Borrower as a result of the prepayment in part or in full of a French Loan (both prior to and following the enforcement of the relevant French 199

200 Loan), costs, expenses, commissions and other sums paid by the French Borrowers in respect of the French Loans or the French Related Security (other than any payments in respect of principal), including recoveries in respect of such amounts on enforcement of a French Loan, and/or its French Related Security and upon the transfer back of any French Loan pursuant to the terms of the French Loan Servicing Agreement or disposal of the French Loans pursuant to the liquidation of the Issuer; and (b) "Luxembourg Note Interest Receipts" which comprise all payments of interest on the Luxembourg Notes made by the Luxembourg Issuer other than payments of interest related to the Belgian Prepayment Fees. "Issuer Asset Principal Receipts" means, in respect of a Note Interest Payment Date, the aggregate of: (a) (b) (c) (d) (e) (f) "French Loan Amortisation Funds", which comprise all payments of principal made by the French Borrowers in respect of the French Loans, other than payments which comprise French Loan Prepayment Redemption Funds, French Loan Final Redemption Funds and French Loan Principal Recovery Funds; "French Loan Prepayment Redemption Funds", which comprise all payments of principal made by the French Borrowers in connection with any prepayment in part or in full in respect of a French Loan (including insurance proceeds not applied to reinstate any of the French Properties but excluding, for the avoidance of doubt, any prepayments constituting French Loan Principal Recovery Funds) and all principal amounts paid to the Issuer on transfer back from the Issuer of any French Loan pursuant to the terms of the French Loan Transfer Agreement or disposal of the French Loans pursuant to the liquidation of the Issuer; "French Loan Final Redemption Funds", which comprise the repayment of principal of each French Loan made on its scheduled final maturity date; "French Loan Principal Recovery Funds", which comprise all amounts recovered in respect of principal of the French Loans as a result of the enforcement of a French Loan and the applicable French Related Security; "Luxembourg Note Principal Receipts", which comprise all payments of principal on the Luxembourg Notes made by the Luxembourg Issuer; and "Luxembourg Note Redemption Funds", which comprise the proceeds of the redemption in full of the Luxembourg Notes due to a change in any law obliging the Luxembourg Issuer to withhold or deduct tax from payments in respect of the Luxembourg Notes. "French Loan Prepayment Fees" means, in respect of a Note Interest Payment Date, all amounts allocated towards fees, costs and expenses (excluding all swap breakage costs) paid by a French Borrower as a result of the prepayment in part or in full of a French Loan, both prior to and following the enforcement of such French Loan or the French Related Security. "Swap Breakage Receipts" means, in respect of a Note Interest Payment Date, all termination payments paid to the Issuer by the Issuer Swap Provider or Issuer Swap Guarantor under the Issuer Swap Agreement or the Issuer Swap Guarantee as a result of the termination of any Issuer Swap Transaction prior to its scheduled termination date. "Available Issuer Interest Receipts" means, in respect of a Note Interest Payment Date, the sum of: 200

201 (a) (b) (c) (d) (e) (f) (g) (h) (i) all Issuer Asset Interest Receipts transferred by or at the direction of the Management Company from each French Rent Account (as applicable) to the Issuer Transaction Account during the relevant Collection Period ending immediately prior to the relevant Note Interest Payment Date, net of any Issuer Asset Interest Receipts applied during such Collection Period in payment of the Issuer Priority Payments or to make any relevant payment under the Issuer Swap Agreement; plus any payments (other than Swap Breakage Receipts) which the Management Company has determined will be received by the Issuer from the Issuer Swap Provider or the Issuer Swap Guarantor in respect of any Issuer Swap Transaction on the relevant Note Interest Payment Date; plus any Swap Breakage Receipts received by the Issuer during the related Collection Period which (i) are paid to the Issuer following an early termination of the Issuer Swap Agreement as a result of an event of default where the Issuer Swap Provider was the defaulting party, or (ii) are required for the purposes of covering any shortfall in interest arising on the enforcement of a French Loan or an early or accelerated repayment under the Luxembourg Notes resulting from an early or accelerated repayment under the Belgian Bonds, the liquidation of which caused the Issuer to terminate an Issuer Swap Transaction, or (iii) are required for the purposes of making a payment in order for the Issuer to enter into a replacement swap agreement; plus an amount equal to one per cent. of the aggregate of any French Loan Principal Recovery Funds recovered by or on behalf of the Issuer in respect of the related Collection Period to be applied towards the payment of the French Loan Liquidation Fee, if any, payable on such Note Interest Payment Date (such amounts having been excluded from the calculation of Available Issuer Principal Receipts); plus an amount equal to one per cent. of the aggregate of the French Loan Amortisation Funds, French Prepayment Redemption Funds and French Final Redemption Funds received by the Issuer in respect of any Corrected French Loans during the related Collection Period to be applied towards payment of the French Loan Work-out Fee, if any, payable on such Note Interest Payment Date (such amounts having been excluded from the calculation of the Available Issuer Principal Receipts); plus the proceeds of any Interest Drawing to be made by the Issuer under and in accordance with the Issuer Liquidity Facility Agreement in respect of such Note Interest Payment Date; plus the proceeds of any Accrued Interest Drawing to be made by the Issuer under and in accordance with the Issuer Liquidity Facility Agreement in respect of such Note Interest Payment Date; plus any interest accrued upon and paid to the Issuer in respect of funds standing to the credit of the Issuer Transaction Account, the Stand-by Account or any other account maintained by the Issuer and not paid out on any previous Note Interest Payment Date or the proceeds of Eligible Investments purchased by the Issuer using such funds; less an amount equal to any payments which the Management Company has determined will be required to be paid by the Issuer to the Issuer Swap Provider on the relevant Note Interest Payment Date; and less 201

202 (j) all Issuer Priority Payments paid during the related Collection Period and up to (but not including) that Note Interest Payment Date. "Available Issuer Principal Receipts" means, in respect of a Note Interest Payment Date, the sum of: (a) (b) (c) the Issuer Assets Principal Receipts; less the aggregate amount of the Issuer Asset Principal Receipts applied during the related Collection Period in payment of any Issuer Priority Payments but only to the extent that such moneys have not been taken into account in the calculation of Available Issuer Principal Receipts on any preceding Note Interest Payment Date; less an amount equal to the aggregate of: (i) (ii) one per cent. of the aggregate of any French Loan Principal Recovery Funds recovered by or on behalf of the Issuer in respect of the related Collection Period to be applied towards the payment of the French Loan Liquidation Fee, if any, payable on such Note Interest Payment Date; and one per cent. of the aggregate of the French Loan Amortisation Funds, French Prepayment Redemption Funds and French Final Redemption Funds received by the Issuer in respect of any Corrected French Loans during the related Collection Period to be applied towards payment of the French Loan Work-out Fee, if any, payable on such Note Interest Payment Date. (b) Normal Redemption Orders of Priority Prior to the occurrence of an Accelerated Redemption Event, the Management Company shall, on the basis of the information provided to it by the French Loan Servicer and the Belgian Bond Servicer, calculate on each Note Calculation Date in respect of the current Collection Period ending immediately prior to such Note Calculation Date, the Available Issuer Interest Receipts and the Available Issuer Principal Receipts and on each Note Calculation Date or by no later than a.m. one Business Day prior to each Note Interest Payment Date, shall give all appropriate payment instructions to the Operating Bank (with copy to the Custodian) to transfer to the Principal Paying Agent on the relevant Note Interest Payment Date, by way of debit of the relevant Issuer Account, all sums necessary for the payment of any amount due to the Noteholders on such Note Interest Payment Date. (1) Application of Available Interest Receipts On each Note Interest Payment Date prior to the occurrence of an Accelerated Redemption Event, the Management Company shall give instructions to the Operating Bank (with a copy to the Custodian) to apply the Available Issuer Interest Receipts in the following order of priority, in each case only if and to the extent that payments and provisions of a higher priority have been made in full: (a) first, in payment or discharge of any amounts of fees, costs and expenses due and payable by the Issuer to any Issuer Related Parties (other than the Issuer Swap Provider and the Issuer Liquidity Facility Provider) under and in accordance with the arrangements which are in place between the Issuer and the Issuer Related Parties (other than the Issuer Swap Provider and the Issuer Liquidity Facility Provider) on a pro rata and pari passu basis; then 202

203 (b) (c) (d) (e) (f) (g) (h) (i) (j) second, in payment or discharge to and towards all amounts due and payable to the Issuer Liquidity Facility Provider under and in accordance with the Issuer Liquidity Facility Agreement (other than the Issuer Liquidity Facility Subordinated Amounts); then third, in payment or discharge to and towards amounts due and payable to a replacement swap provider upon entry into of a replacement swap agreement; then fourth, in or towards payment or discharge of any amounts described in item (i) of "Issuer Priority Payments" above; then fifth, in each case, pari passu and pro rata, in or towards payment or discharge of (A) interest due and payable on the Class A Notes and (B) the Class X Amount due and payable; then sixth, in or towards payment or discharge of interest due and overdue on the Class B Notes, provided that such overdue interest shall be paid in priority to any currently due interest; then seventh, in or towards payment or discharge of interest due and overdue on the Class C Notes, provided that such overdue interest shall be paid in priority to any currently due interest; then eighth, (A) in or towards payment or discharge of any amounts due and payable by the Issuer to the Issuer Swap Provider under the Issuer Swap Agreement in respect of any payments to be made by the Issuer following an early termination of the Issuer Swap Agreement as a result of an event of default under the Issuer Swap Agreement in respect of which the Issuer Swap Provider is the defaulting party, and (B) a termination event under the Issuer Swap Agreement resulting from a failure by the Issuer Swap Provider to take the measures required of it under the Issuer Swap Agreement following a downgrade of the Issuer Swap Provider in respect of which the Issuer Swap Provider is the sole affected party, provided that the amount of any premium or other upfront payment paid to the Issuer when entering into a swap to replace the Issuer Swap Agreement (less an amount equal to any fees or expenses reasonably incurred by the Issuer in respect of any administration costs relating to the payment of such premium or upfront payment) shall be applied first in payment of any amounts due and payable to the Issuer Swap Provider pursuant to this paragraph (h); then ninth, in or towards payment or discharge of any amounts due and payable to the Issuer Liquidity Facility Provider, if any, in respect of (A) any increased costs, mandatory costs or tax gross up amounts (other than those referred to in (B) below) owing under the Issuer Liquidity Facility Agreement to the extent that such increased costs, mandatory costs or tax gross up amounts exceed per cent., and (B) any increase in the commitment fee payable to the Issuer Liquidity Facility Provider as a result of the implementation of the new Basel capital accord, to the extent that the aggregate of the increased costs referred to in (A) and (B) above exceed 0.20 per cent. per annum of the commitment provided under the Issuer Liquidity Facility Agreement (the amounts owing under this paragraph (i) being the "Issuer Liquidity Subordinated Amounts" in respect of such Note Interest Payment Date); then tenth, any surplus to the Class X Noteholders. 203

204 (2) Application of Available Issuer Principal Receipts On each Note Interest Payment Date prior to the occurrence of an Accelerated Redemption Event, the Management Company shall give instructions to the Operating Bank (with a copy to the Custodian) to apply the Available Issuer Principal Receipts as set out below. (a) Application of Available Pro Rata Principal Receipts Subject as provided below, on each Note Interest Payment Date where a Sequential Redemption Event has not occurred, the Available Issuer Principal Receipts will be applied to redeem the Class A Notes, the Class B Notes and the Class C Notes. The amount by which a Class A Note, a Class B Note and a Class C Note will be redeemed on a particular Note Interest Payment Date will equal the sum of: (A) an amount equal to the percentage applicable to the relevant class of Listed Notes of Available Issuer Principal Receipts (other than French Loan Principal Recovery Funds and Belgian Bond Principal Recovery Funds) received in respect of each Loan according to its group. The relevant percentages for each relevant class of Listed Notes and the groups of Loans for these purposes are set out below: Group 1 Group 2 Class A Notes 100% 86% Class B Notes 0% 10% Class C Notes 0% 4% Where the Group 1 comprises the Pascal Loan (as defined herein). Where the Group 2 comprises: - the French Loans (other than the Pascal Loan); and - The Luxembourg Notes. (B) an amount of French Loan Principal Recovery Funds received in respect of each French Loan and Belgian Bond Principal Recovery Funds received in respect of the Luxembourg Notes allocated to the relevant class of Listed Notes in accordance with the following procedure. The French Loan Principal Recovery Funds received in respect of a French Loan and the Belgian Bond Principal Recovery Funds received in respect of the Luxembourg Notes will be applied sequentially to the Target Redemption Amounts for such French Loan and the Luxembourg Notes. The "Target Redemption Amount" for each class of Listed Notes in relation to each French Loan or to the Luxembourg Notes on any day will be equal to the product of (i) the aggregate principal amount outstanding of the relevant French Loan and the Luxembourg Notes on that day and (ii) the percentage applicable to the relevant class of Listed Notes and the relevant French Loan and the Luxembourg Notes according to its group. For the purpose of determining the amount of Available Issuer Principal Receipts to be allocated to redeem any class of Listed Notes, if in accordance with the above allocation rules the amount of Available Issuer Principal Receipts available to redeem a class of Listed Notes would exceed the Principal Amount Outstanding of such class of Listed Notes, an amount equal to the excess will be allocated to the other classes of Listed Notes on a pro-rata basis. The percentage of such excess amount to be applied to a class of Listed Notes will be equal to the fraction (expressed as a percentage) of (i) the weighted average loan allocation percentage applicable to the relevant outstanding class of Listed Notes divided by (ii) the 204

205 aggregate of the weighted average loan allocation percentages applicable to all the classes of Listed Notes with a Principal Amount Outstanding of greater than zero. The weighted average loan allocation percentage of a class of Listed Notes on any Note Calculation Date will be equal to (i) the sum of the products of the amount of Available Issuer Principal Receipts applicable to each Loan and the relevant percentage applicable to the relevant class of Listed Notes divided by (ii) the amount of Available Issuer Principal Receipts to be allocated on such Note Calculation Date. Notwithstanding the above, if on any Note Interest Payment Date where a Sequential Redemption Event has not occurred, but a French Loan Work-out Fee or French Loan Liquidation Fee is payable by the Issuer in respect of principal with the effect that Available Issuer Principal Receipts available to redeem the Listed Notes is reduced (which may not be the case in respect of a Tranched French Loan), then the above application of Available Issuer Principal Receipts shall be altered. In such circumstances, the amount of such French Loan Workout Fee or Liquidation Fee shall, for the purposes of calculating the amount of each class of Listed Notes to be redeemed, be added to the amount of the then Available Issuer Principal Receipts and the waterfall above applied as if such amounts were available to the Issuer. Then the relevant amount of French Loan Work-out Fee or French Loan Liquidation Fee shall be deducted from the amount by which the most junior class of Listed Notes would have been redeemed if such increased sum of Available Issuer Principal Receipts had been available and the Listed Notes of each class shall then be redeemed by reference to such revised amounts. The Class X Notes will be repaid from the Class X Collateral Amount standing to the credit of the Issuer Transaction Account. (b) Application of Available Sequential Principal Receipts A "Sequential Redemption Event" shall occur if any of the following circumstances exists on a Note Calculation Date: (A) (B) more than 23 per cent. of the aggregate principal amount outstanding of the Issuer Assets are Specially Serviced French Loans as far as the French Loans are concerned or are subject to an event of default as far as the Luxembourg Notes are concerned; or (i) the cumulative percentage of the Issuer Assets (calculated by reference to the principal amount outstanding of the Issuer Assets as at the Closing Date) which have defaulted since the Closing Date is greater than 23 per cent. of the aggregate principal amount outstanding of the Loans as at the Closing Date, or (ii) more than two Loans have defaulted since the Closing Date; provided that, in determining whether an Issuer Asset has defaulted for the purposes of this paragraph (B): (1) such determination shall be made solely on the basis of the terms of the relevant French Loan Agreement or Luxembourg Note Issue Document as at the Closing Date and without regard to any subsequent amendments to the relevant French Loan Agreement or Belgian Bond Issue Document, or waivers granted in respect thereof; and (2) a default shall not be deemed to have occurred if (a) the default is with respect to payment and such default has been remedied or cured within 10 Business Days of such default, and/or (b) the 205

206 default is other than with respect to payment, the default is capable of being remedied or cured and such default has been remedied or cured by the relevant Borrower within 30 days of such default being notified in accordance with the terms of the relevant French Loan Agreement or the Luxembourg Note Issue Document, and/or (c) enforcement procedures have been completed and the principal amount outstanding of all amounts of interest, fees, expenses and any other amounts payable by the relevant Borrower in respect of such defaulted Loan have been received in full or the relevant Borrower has prepaid the defaulted Loan in full (including, for the avoidance of doubt, all amounts of interest, fees, expenses and other amounts payable by the relevant Borrower in respect of such defaulted Loan); or (C) there has been any loss incurred by the Noteholders since the Closing Date resulting from a failure of the Issuer to repay principal of any Note, or to pay interest on any Note, other than in respect of the interest on the most senior class of Notes then outstanding, on the due date for such payment. If a Sequential Redemption Event has occurred then all Available Issuer Principal Receipts will be applied on each subsequent Note Interest Payment Date in the following order of priority: (a) (b) (c) first, in or towards repaying the Principal Amount Outstanding of the Class A Notes and until all the Class A Notes have been redeemed in full; second, the balance in or towards repaying the Principal Amount Outstanding of the Class B Notes until all the Class B Notes have been redeemed in full; third, the balance in or towards repaying the Principal Amount Outstanding of the Class C Notes until all the Class C Notes have been redeemed in full. The Class X Notes will be repaid from the Class X Collateral Amount standing to the credit of the Issuer Transaction Account. The Issuer will not be required to accumulate surplus assets as security for any future payments of interest or repayment of principal on the Notes. Any amounts standing to the credit of the Issuer Transaction Account after a Note Interest Payment Date or, in the case of the first Interest Period, the Closing Date and prior to the next following Note Calculation Date will be invested in Eligible Investments that mature on or before the next following Note Calculation Date. The order of priority of payments in paragraphs (1) and (2) above shall be referred to herein as the "Normal Redemption Orders of Priority". (c) Accelerated Redemption Order of Priority The failure by the Issuer to pay interest on the most senior class of Notes which is still outstanding when due and payable will result in the occurrence of an "Accelerated Redemption Event". The Management Company shall, on each Note Calculation Date or no later than a.m. one Business Day prior to each Note Interest Payment Date, give all appropriate payment instructions to the Operating Bank (with copy to the Custodian) to 206

207 transfer to the Principal Paying Agent on the relevant Note Interest Payment Date, by way of debit of the Issuer Transaction Account, all sums necessary for the payment of any amount due to the Noteholders on such Note Interest Payment Date. On any Note Interest Payment Date on or after the date on which an Accelerated Redemption Event has occurred, the Management Company shall apply all funds received or recovered by it first in payment of the Issuer Priority Payments and then in accordance with the following order of priority (the "Accelerated Redemption Order of Priority") (in each case, only if and to the extent that the payments and provisions of a higher priority have been made in full), all as more particularly described in the Issuer Regulations: (a) (b) (c) (d) (e) (f) (g) first, in or towards payment or discharge of any amounts due and payable by the Issuer (including indemnity expenses (if any)) to (i) any Issuer Related Parties (other than the French Loan Servicer, the Issuer Swap Provider and the Issuer Liquidity Facility Provider) under and in accordance with the arrangements which are in place between the Issuer and the Issuer Related Parties (other than the French Loan Servicer, the Issuer Swap Provider and the Issuer Liquidity Facility Provider) pro rata and pari passu; then (ii) the Issuer Swap Provider in respect of amounts due or overdue to it under the Issuer Swap Agreement and the Issuer Swap Agreement Credit Support Document (other than payments to be made by the Issuer referred to in item (f) below); then (iii) the French Loan Servicer in respect of the French Loan Servicing Fee and French Loan Special Servicing Fees and any other amounts (including any amounts due to the French Loan Servicer in respect of any French Loan Work-out Fee or French Loan Liquidation Fee) due to the French Loan Servicer pursuant to the French Loan Servicing Agreement pari passu and pro rata; and then (iv) the Issuer Liquidity Facility Provider under and in accordance with the Issuer Liquidity Facility Agreement, other than any Standby Drawing and any Issuer Liquidity Subordinated Amounts; second, (i) in or towards payment of interest due or overdue on the Class A Notes; and after payment of all such sums (ii) in repayment of all amounts of principal due or overdue on the Class A Notes and all other amounts due in respect of the Class A Notes until the outstanding principal balance of the Class A Notes is reduced to zero; third, (i) in or towards payment of interest due or overdue on the Class B Notes; and after payment of all such sums (ii) in repayment of all amounts of principal due or overdue on the Class B Notes and all other amounts due in respect of the Class B Notes until the outstanding principal balance of the Class B Notes is reduced to zero; fourth (i) in or towards payment of interest due or overdue on the Class C Notes; and after payment of all such sums (ii) in repayment of all amounts of principal due or overdue on the Class C Notes and all other amounts due in respect of the Class C Notes until the outstanding principal balance of the Class C Notes is reduced to zero; fifth, in or towards payment of any Issuer Liquidity Subordinated Amounts; sixth, the balance in or towards payment or discharge of any amounts that are due and payable by the Issuer to the Issuer Swap Provider under the Issuer Swap Agreement in respect of any payments to be made by the Issuer following an early termination of the Issuer Swap Agreement as a result of an event of default under the Issuer Swap Agreement in respect of which the Issuer Swap Provider is the defaulting party; and seventh, any surplus to the Class X Noteholders. 207

208 Following the occurrence of an Accelerated Redemption Event, the Class X Notes will be repaid from the Class X Collateral Amount standing to the credit of the Issuer Transaction Account. (d) Application of Prepayment Fees and Swap Breakage Receipts French Loan Prepayment Fees, payments of interest on the Luxembourg Notes represented by Belgian Prepayment Fees (together the "Prepayment Fees"), and Swap Breakage Receipts (other than those of the types contemplated in paragraph (c) of "Available Issuer Interest Receipts" at page 35) will not be included in the calculation of Issuer Interest Receipts at any time. Such Swap Breakage Receipts (to the extent they do not constitute Available Issuer Interest Receipts and that they have not been applied to amounts due by the French Borrowers and the Belgian Issuer in accordance with the terms of the relevant French Loan Agreements or the terms of the Belgian Bond Issue Documents) will, upon receipt in the Issuer Transaction Account, be payable directly by the Issuer to the Residual Unitholders. The Prepayment Fees will, upon receipt in the Issuer Transaction Account, be payable directly by the Issuer to the Class X Noteholders. 6. Payments (a) Means of Payments Any payment of interest or principal in respect of a Note shall be made by credit or transfer to an account denominated in euro (or any other account to which euro may be credited or transferred) specified by the payee on the corresponding Note Interest Payment Date to the extent of the available funds in accordance with the Normal Redemption Orders of Priority or the Accelerated Redemption Order of Priority, as applicable. Any payment in respect of the Notes shall be made by the Principal Paying Agent or, as required under the rules and regulations of the Irish Stock Exchange, by the Irish Paying Agent, and only if the Principal Paying Agent or the Irish Paying Agent, as applicable, has received the appropriate funds no later than the relevant Note Interest Payment Date, for the benefit of the Noteholders to the Euroclear France Account Holders (including Euroclear and Clearstream) and all payments made to such Euroclear France Account Holders in favour of the Noteholders will be an effective discharge of the Issuer and the Paying Agents, as the case may be, in respect of such payment. (b) Payments subject to fiscal laws etc. Payments of principal and interest in respect of the Notes will be made subject to any fiscal or other laws and regulations applicable thereto. No commission or expenses shall be charged to the Noteholders in respect of such payments. (c) Paying Agents The initial Paying Agents (and their initial specified offices) are listed at the end of these Conditions: Principal Paying Agent BNP Paribas Securities Services Irish Paying Agent AIB/BNY Fund Management (Ireland) Limited 208

209 and/or such other Principal Paying Agent and/or other or following Paying Agent and/or specified offices as may from time to time be appointed by the Management Company and notice of which has been given to the Noteholders. The Management Company may at any time, subject to six month's prior notice, vary or terminate the appointment of any Paying Agent and/or appoint additional or other Paying Agents and/or approve any change in the specified office of any Paying Agent, provided that, so long as any of the Notes is outstanding, it will maintain a Paying Agent with a specified office in Paris and, so long as any of the Listed Notes are listed on the Irish Stock Exchange, in Ireland. Notice of any such variation, termination or appointment and of any change in the specified office of any Paying Agent will be given to the Noteholders promptly by the Management Company in accordance with Condition Representation of the Noteholders In the case of a plurality of Noteholders within a same class of Notes, such Noteholders will automatically be grouped for the defence of their respective common interests in a separate masse (hereinafter referred to as the "Masse"), which shall operate as described hereafter. The holders of each such Class will automatically be grouped as follows: (i) (ii) (iii) (iv) with respect to the Class A Notes, within the "Masse A"; with respect to the Class X Notes, within the "Masse X"; with respect to the Class B Notes, within the "Masse B"; and with respect to the Class C Notes, within the "Masse C". If there is only one Noteholder within a class of Notes, such single Noteholder shall exercise all of the powers entrusted with the Representative (as defined below) and the general assembly of the relevant class of Noteholders. Such single Noteholder shall hold a register of the decisions it will have taken in this capacity and shall make them available, upon request, to any subsequent holder of all or part of the Notes of such class. The provisions of this Condition shall apply to each of the respective Masse. Each respective Masse A, Masse X, Masse B and Masse C will be governed by the provisions of the French Code de Commerce (with the exception of the provisions of Articles L , L and L thereof), and by the French decree No of 23 March 1967, as amended (with the exception of the provisions of Articles 218, 222 and 224 thereof), subject to the following provisions: (a) Legal Personality Each Masse (masse) will be a separate legal entity by virtue of Article L of the French Code de Commerce, acting in part through a representative (the "Representative") and in part through a general assembly of the Noteholders. Each Masse alone, to the exclusion of all individual Noteholders, shall exercise the common rights, actions and benefits which now or in the future may accrue with respect to the Notes. (b) Representatives The office of Representative may be conferred on a person of any nationality. However, the following persons may not be chosen as Representatives: (i) the Management Company, the Custodian or the members of the conseil d'administration, the members of the directoire, the members of the conseil de 209

210 surveillance, the general directors, managers, accountants or employees of the Management Company and the Custodian; (ii) (iv) companies guaranteeing all or part of the obligations of the Issuer or the members of the conseil d'administration, the members of the directoire, the members of the conseil de surveillance, the general managers, managers, accountants or employees of such companies; persons to whom the practice of banker is forbidden or who have been deprived of the right of directing, administering or managing a business in whatever capacity. The initial Representative of the Masse A shall be Hélène Piotrowski, residing at Morgan Stanley Mortgage Servicing, 25 Cabot Square, Canary Wharf, London E14 4QA. The alternative representative of the Masse A (the "Masse A Alternative Representative") shall be Rob Wojciechowicz, residing at Morgan Stanley Mortgage Servicing, 25 Cabot Square, Canary Wharf, London E14 4QA. The initial Representative of the Masse X shall be Mark Roberts, residing at Morgan Stanley Mortgage Servicing, 25 Cabot Square, Canary Wharf, London E14 4QA. The alternative representative of the Masse X (the "Masse X Alternative Representative") shall be Matthew Grefsheim, residing at Morgan Stanley Mortgage Servicing, 25 Cabot Square, Canary Wharf, London E14 4QA. The initial Representative of the Masse B shall be Nourdin Hadj-Larbi, residing at Morgan Stanley Mortgage Servicing, 25 Cabot Square, Canary Wharf, London E14 4QA. The alternative representative of the Masse B (the "Masse B Alternative Representative") shall be Matthew Carson, residing at Morgan Stanley Mortgage Servicing, 25 Cabot Square, Canary Wharf, London E14 4QA. The initial Representative of the Masse C shall be Helena Day, residing at Morgan Stanley Mortgage Servicing, 25 Cabot Square, Canary Wharf, London E14 4QA. The alternative representative of the Masse C (the "Masse C Alternative Representative") shall be James Bannister, residing at Morgan Stanley Mortgage Servicing, 25 Cabot Square, Canary Wharf, London E14 4QA. In the event of death, incompatibility, resignation or revocation of a Representative, such Representative will be replaced by the relevant Alternative Representative. The replacement Alternative Representative shall have the same powers as the relevant Representative. In the event of death, incompatibility, resignation or revocation of an Alternative Representative, a replacement will be elected by a meeting of the general assembly of the Noteholders of the relevant class. The Representatives will not be remunerated with respect to their duties. All interested parties will at all times have the right to obtain the names and the addresses of the Representatives and the Alternative Representatives at the head office of the Issuer and at the offices of the Paying Agents. 210

211 (c) Powers of the Representatives The Representatives shall, in the absence of any decision to the contrary of the general assembly of the relevant class of Noteholders, have the power to take all acts of management to defend the common interests of such Noteholders. All legal proceedings against the Noteholders or initiated by them, in order to be justifiable, must be brought against the relevant Representative or by it. The Representatives may not interfere in the management of the affairs of the Issuer. (d) General assemblies of Noteholders General assemblies of the Noteholders of each class may be held at any time, on convocation either by the Management Company or by the relevant Representative. One or more Noteholders, holding together at least one-thirtieth of outstanding Notes of a class of Notes may address to the Management Company and the relevant Representative a request for convocation of the general assembly of such class; if such general assembly has not been convened within two months from such demand, such Noteholders may commission one of themselves to petition the competent court in Paris to appoint an agent (mandataire) who will call the meeting. Notice of the date, hour, place, agenda and quorum requirements of any meeting of a general assembly will be published as provided under Condition 10 not less than 15 calendar days prior to the date of the general assembly. Each Noteholder has the right to participate in general assemblies of its relevant Masse in person or by proxy. Each Note carries the right to one vote. In any event, the relevant Representative shall ensure that the Management Company and the Custodian are informed of such meeting not less than 15 calendar days prior to the date of the general assembly and of the decisions taken during such meetings. (e) Powers of general assemblies A general assembly is empowered to deliberate on the remuneration, dismissal and replacement of the relevant Representative and Alternative Representative, and also may act with respect to any other matter that relates to the common rights, actions and benefits which now or in the future may accrue with respect to the relevant Notes, including authorising the Representative to act as law as plaintiff or defendant. A general assembly may further deliberate on any proposal relating to the modification of the Conditions of the Notes, including: (i) (ii) (iii) any proposal, whether for arbitration or settlement, relating to rights in controversy or which were the subject of judicial decisions; any proposal relating to the issue of securities carrying a right of preference compared to the rights of the Noteholders; and any proposal relating to the waiver of all or part of guarantees in favour of the Noteholders, to the postponement in the maturity for the payment of interest or to a modification of the terms of repayment or of the rate of interest. It is specified, however, that a general assembly may not increase amounts payable by the Noteholders nor establish any unequal treatment between the Noteholders. 211

212 Meetings of a general assembly may deliberate validly on first convocation only if Noteholders present or represented hold at least one quarter of the principal amount of the relevant class of Notes then outstanding. On second convocation, no quorum shall be required. Decisions at meetings shall be taken by a two-thirds majority of votes cast by the relevant Noteholders attending such meeting or represented thereat. (f) Notice of Decisions Decisions of the meetings must be published in accordance with the provisions set out in Condition 10 not more than 90 calendar days from the date thereof. (g) Information to the Noteholders Each Noteholder or representative thereof will have the right, during the 15 calendar day period preceding the holding of each meeting of a general assembly, to consult or make a copy of the text of the resolutions which will be proposed and of the reports which will be presented at the meeting. Those documents will be available for inspection at the principal office of the Management Company, at the offices of the Paying Agents and at any other place specified in the notice of meeting. (h) Expenses The Issuer will pay all reasonable expenses incurred in the operation of the different Masses, including expenses relating to the calling and holding of meetings and, more generally, all administrative expenses resolved upon by a general assembly of the Noteholders, it being expressly stipulated that no expenses may be imputed against interest payable on the Notes. (i) Management Company, conflicts between Masses and conflicts between holders of securities issued by the Issuer The Management Company is bound to act pursuant to the decisions taken by the Masses. In the case of a conflict between the decisions taken by the different Masses and/or between the decisions taken by the Masses and the Residual Unitholders, the Management Company shall be bound to abide by the decision of the most senior Class of securities issued by the Issuer, unless such decision would modify the Financial Characteristics of another Class of securities issued by the Issuer (including of a junior rank). In such case, and unless the holders affected by such decision agree to the modification of the Financial Characteristics of the relevant Class of securities, the Management Company shall not be bound to act pursuant to such decisions and shall incur no liability for such inaction. For the purpose of this Condition, "Financial Characteristics" means, in respect of a specified Class of securities issued by the Issuer, the interest rate, the payment dates, the maturity date, the terms of repayment, the orders of priority applicable to it and the allocation of funds provided for in the Issuer Regulations, as well as the level of risk relating to such Class of securities issued by the Issuer (for example, an increase in the level of risk shall be characterised by an increase in the amounts payable by the Issuer to creditors of a higher rank than such Class of securities). 8. Limited Recourse By subscribing to or purchasing a Note issued by the Issuer, the subscriber or purchaser of such Note shall be deemed to have expressly waived: (i) all rights of contractual recourse (responsabilité contractuelle) against the Issuer; 212

213 (ii) all rights of recourse against the Issuer for sums in excess of the amount of the assets of the Issuer that are available to be applied for the benefit of such party in accordance with the cash allocation provisions set out in the Issuer Regulations. In addition, after the Final Maturity Date, the rights of the Noteholders to payment of any principal or interest amounts outstanding under the relevant Notes shall be automatically extinguished, so that the Noteholders shall have no right of recourse against the Issuer in respect of any such amounts (abandon de créances). 9. Taxation All payments in respect of the Notes of any class will be made without withholding or deduction for, or on account of, any present or future taxes, duties or charges of whatsoever nature unless the Issuer or any Paying Agent is required by applicable law to make any payment in respect of any Notes of any class subject to any withholding or deduction for, or on account of, any present or future taxes, duties or charges of whatsoever nature. In that event, the Issuer or such Paying Agent (as the case may be) shall make such payment after such withholding or deduction has been made and shall account to the relevant authorities for the amounts so required to be withheld or deducted. Neither the Issuer nor the Paying Agents will be obliged to make any additional payments to any Noteholders in respect of any such withholding or deduction. 10. Notices All notices to the holders of any Notes shall be deemed to have been duly given if published in a leading daily newspaper printed in the English language and with general circulation in Ireland (which is expected to be the Irish Times) or, if that is not practicable, in another leading newspaper or newspapers having general circulation in Europe or on an electronic screen service in Europe previously approved in writing by the Management Company. Any such notice shall be deemed to have been given on the date of such publication or, if published more than once or on different dates, on the first date on which publication is made in the manner required in the newspaper referred to above. For so long as the Listed Notes are listed on the Irish Stock Exchange, any notice shall be deemed to have been duly given to the holders of the relevant Listed Notes if published as described above or sent to Euroclear France. 11. Governing law and Jurisdiction The Notes, the Terms and Conditions of the Notes, the Paying Agency Agreement, the French Loan Servicing Agreement, the French Loan Transfer Agreement, the Issuer Subscription Agreement, the Issuer Account Agreement, the Issuer Liquidity Facility Agreement, the French Loan Transfer Deeds and the Issuer Regulations are governed by, and shall be construed in accordance with, French law. Any action against the Issuer arising out of or in connection with the Notes will be submitted to the exclusive jurisdiction of the competent courts in Paris. 213

214 USE OF NET PROCEEDS The net proceeds from the issue of the Listed Notes, the Class X Notes and the Residual Units will be approximately 326,805,300. This sum will be applied by the Management Company, acting on behalf of the Issuer, towards payment to (i) MS Bank of the purchase consideration in respect of the French Loan Receivables and the French Related Security, on the Closing Date, upon the terms and subject to the conditions of the French Loan Transfer Agreement, (ii) the Luxembourg Issuer of the subscription price in respect of the subscription for the Luxembourg Notes, and (iii) to fund the Class X Collateral Amount. 214

215 FRENCH TAXATION APPLICABLE TO THE NOTES GENERAL The comments in this section are of a general nature based on current law and practice in France relating to the taxation of the Notes. They relate only to the position of the Noteholders and do not purport to be a complete analysis of all tax considerations relating to the Notes and so should be treated with appropriate caution. Some comments do not apply to certain classes of persons such as dealers. Any prospective Noteholders should consult their professional advisers as to their personal tax position. Noteholders who may be liable to taxation in jurisdictions other than France in respect of their acquisition, holding or disposal of the Notes are particularly advised to consult their professional advisers as to whether they are so liable (and if so under the laws of which jurisdictions), since the following comments relate only to certain French taxation aspects of payments in respect of the Notes. In particular, Noteholders should be aware that they may be liable to taxation under the laws of other jurisdictions in relation to payments in respect of the Notes even if such payments may be made without withholding or deduction for or on account of taxation under the laws of France. It is the responsibility of each subscriber and acquirer of Notes to inform himself in advance of any tax, accounting (including the relevant capital adequacy rules) and more generally all regulatory and statutory aspects in respect of the consequences of subscription, acquisition or transfer of Notes as a result of the laws in force in his country of residence or any other applicable law. 215

216 FRENCH LAW TAX REGIME APPLICABLE TO NOTES Companies and legal entities subject to corporate income tax Non-profit organisations Non-residents French Unit trusts (OPCVM) The interest derived from the Notes is taxable at the end of the year at a normal rate of 33.1/3% increased by following contributions : additional contribution at a rate of 1.5% (as of 1 January 2006, this additional contribution will be abolished) and social contribution at a rate of 3.3% after application of a 763,000 rebate. Interest from Notes is annually subject to corporate income tax at the rate of 10% provided for by Articles and 219 bis I of the French Code général des impôts. Interest from Notes is exempted from the withholding tax (currently 16%), provided the Noteholders prove they have their tax residence or registered office in a country other than France (Article 125-A-III of the French Code général des impôts). French Unit trusts (SICAV or FCP) are not subject to taxation on the interest derived from the notes. The Unit trust unitholders are subject to tax according to their status and residence: - French resident individuals will be subject to income tax in the following conditions : (i) Subject to personal income tax at the progressive rates from 0% to 48.09% 4 (increased by social levies: general social security contribution "CSG" (8.2%), contribution to the reimbursement of the social security debt "CRDS" (0.5%) and social withholdings (2.3%) (Without option for withholding tax) (ii) Taxation at the rate of 27% including the withholding tax itself (16%), the CSG (8.2%), the CRDS (0.5%) and the social withholdings (2.3%) (With option for withholding tax). Interest from the Notes (since no premium is granted) - French corporations: Pursuant to article A of the French Code général des impôts, companies subject to corporate income tax holding units of Unit Trust are subject to a mark-to-market valuation at the end of each financial year, at a normal rate of 33.1/3% increased by following contributions : additional contribution at a rate of 1.5% (as of 1 January 2006, this additional contribution will be abolished) and social contribution at a rate of 3.3% after application of a 763,000 rebate. in conditions. - non residents holding units in French Unit Trust, are treated as if they were directly holding the Notes, provided that the Unit Trust complies with certain conditions. 4 On 1 January 2006, French income tax brackets and French income tax rates should be modified (for 2006 income), pursuant to the draft Finance Bill, which will be discussed in Parliament in the forthcoming weeks. Based on such draft, the highest income tax rate is of 40% above 65,

217 Capital gains from sales of Notes Capital gains from Notes are annually subject to corporate income tax at a normal rate of 33.1/3% increased by following contributions : additional contribution at a rate of 1.5% (as of 1 January 2006, this additional contribution will be abolished) and social contribution at a rate of 3.3% after application of a 763,000 rebate. Not subject to tax. Not subject to tax in France. Capital gains on sales of Notes increase the liquidative value of the units in a French Unit Trust held by individuals and are not directly subject to taxation. Pursuant to article A of the French Code général des impôts, companies subject to corporate income tax holding units of French Unit Trust are subject to a mark-to-market valuation at the end of each financial year. 217

218 FRENCH TAXATION APPLICABLE TO THE RESIDUAL UNITS GENERAL The comments in this section are of a general nature based on current law and practice in France relating to the taxation of the Residual Units. They relate only to the position of the Residual Unitholders. They do not purport to be a complete analysis of all tax considerations relating to the Residual Units and so should be treated with appropriate caution. Some comments do not apply to certain classes of persons such as dealers. Any prospective Residual Unitholders should consult their professional advisers as to their personal tax position. Residual Unitholders who may be liable to taxation in jurisdictions other than France in respect of their acquisition, holding or disposal of the Residual Units are particularly advised to consult their professional advisers as to whether they are so liable (and if so under the laws of which jurisdictions), since the following comments relate only to certain French taxation aspects of payments in respect of the Residual Units. In particular, Residual Unitholders should be aware that they may be liable to taxation under the laws of other jurisdictions in relation to payments in respect of the Residual Units even if such payments may be made without withholding or deduction for or on account of taxation under the laws of France. It is the responsibility of each subscriber and acquirer of Residual Units to inform himself in advance of any tax, accounting (including the relevant capital adequacy rules) and more generally all regulatory and statutory aspects in respect of the consequences of subscription, acquisition or transfer of Residual Units as a result of the laws in force in his country of residence or any other applicable law. 218

219 FRENCH LAW TAX REGIME APPLICABLE TO RESIDUAL UNITS Companies and legal entities subject to corporate income tax Non-profit organisations Non-residents French Unit trusts (OPCVM) Interest from Units Premium (since less than 10% of the offering price) The French tax authorities (Direction Général des Impôts) have taken the position that Units must be marked-tomarket at the close of each financial year, the result of such valuation being fully taxable or deductible at a normal rate of 33.1/3% increased by following contributions : additional contribution at a rate of 1.5% (as of 1 January 2006, this additional contribution will be abolished) and social contribution at a rate of 3.3% after application of a 763,000 rebate. Interest from Units is annually subject to corporate income tax at the rate of 10% provided for by Articles and 219 bis I of the French Code général des impôts. Interest from Units is exempted from the withholding tax (currently 16%), provided the Unitholders prove they have their tax residence or registered office in a country other than France. The tax treatment of interest of Units distributed to French Unit trust unitholders having their residence in France, depends on the status of each trust Unitholder: - French individual trust unitholders will be subject to income tax in the following conditions : (i) Subject to personal income tax at the progressive rates from 0% to 48.09% 5 (increased by social levies: general social security contribution "CSG" (8.2%), contribution to the reimbursement of the social security debt "CRDS" (0.5%) and social withholdings (2.3%) (Without option for withholding tax) or (ii) Taxation at the rate of 27% including the withholding tax itself (16%), the CSG (8.2%), the CRDS (0.5%) and the social withholdings (2.3%) (With option for withholding tax). - French corporations: Pursuant to article A of the French Code général des impôts, companies subject to corporate income tax holding units of Unit Trust are subject to a mark-tomarket valuation at the end of each financial year, at a normal rate of 33.1/3% increased by following contributions : additional contribution at a rate of 1.5% (as of 1 January 2006, this additional contribution will be abolished) and social contribution at a rate of 3.3% after application of a 763,000 rebate. - non residents holding units in French Unit Trust, are treated as if they were directly holding the Notes, provided that the Unit Trust complies with certain conditions. 5 On January 1, 2006, French income tax brackets and French income tax rates should be modified (for 2006 income), pursuant to the draft Finance Bill, which will be discussed in Parliament in the forthcoming weeks. Based on such draft, the highest income tax rate is of 40% above 65,

220 Capital gains from sales of Residual Units with an expected maturity date superior to 5 year as from the closing date Capital gains from Residual Units are annually subject to corporate income tax at the at a normal rate of 33.1/3% increased by following contributions : additional contribution at a rate of 1.5% (as of 1 January 2006, this additional contribution will be abolished) and social contribution at a rate of 3.3% after application of a 763,000 rebate. Not subject to tax in France. Not subject to tax in France. Capital gains on sales of FCC Residual Units cannot be distributed. Such gains increase the liquidative value of the FCC Residual Unit. This calculation takes into account the unrealised capital gain previously taxed. Capital gains from sales of Residual Units with an expected maturity date under or equal to 5 year as from the closing date Same treatment as capital gains on sales of Residual Units having a maturity superior to five years. Not subject to tax in France. Not subject to tax in France. The tax treatment of capital gains on sales of Residual Units distributed to French Residual Unitholders, depends on the status of each trust Unitholder: - French individual trust unitholders will be subject to income tax as mentioned above with respect to income of units (Article 124 B and 124 C of the French Code général des impôts); - French corporations are subject to tax at a normal rate of 33.1/3% increased by following contributions : additional contribution at a rate of 1.5% (as of 1 January 2006, this additional contribution will be abolished) and social contribution at a rate of 3.3% after application of a 763,000 rebate. The Liquidation Surplus distributed to non-resident Residual Unitholders is subject to a withholding tax equal to 16%, subject to the application of a tax treaty. 220

221 LIQUIDATION OF THE ISSUER Pursuant to Article L of the French Code monétaire et financier, the Management Company shall be responsible for the organisation of the liquidation process of the Issuer no later than six months following the last Receivable held by the Issuer being extinguished, sold or written-off (the "Liquidation Date"). The Management Company shall also be entitled to proceed with the liquidation of the Issuer, in accordance with the provisions below and the provisions of the Issuer Regulations. For the purpose of this section of the Prospectus, a "Receivable" refers to either a French Loan Receivable or a Luxembourg Note. OPTIONAL DISSOULUTION EVENTS - TRANSFER OF UNMATURED RECEIVABLES The Management Company, acting on behalf of the Issuer, may only assign Receivables acquired by the Issuer and which have not matured or been accelerated, in a single or in several transactions or in their entirety, in accordance with the conditions set out in Articles R of the French Code monétaire et financier, and only in the following circumstances: (i) (ii) (iii) (iv) in the event that the Issuer is liquidated in the interests of the holders of Notes or Residual Units; in the event that the outstanding principal amount of the Issuer's receivables which have not matured falls below a percentage of the maximum outstanding principal amount of the Receivables which have not matured since the Closing Date, as set forth in the Issuer Regulations and not exceeding 10 per cent.; in the event that the Notes and the Residual Units issued by the Issuer are held by a single holder and upon the latter's request or in the event that they are held solely by an originator of the Receivables and upon its request; in the event that an unfavourable evolution of the risks suffered by the Issuer occurs within the completion of the Issuer's management strategy (stratégie de gestion) in a manner determined or contemplated under the Issuer Regulations. DISSOLUTION AND LIQUIDATION PROCEDURES Upon the occurrence of any of the dissolution events referred to above other than the occurrence of an event which would result in the purchase of the Senior Debt by the Junior Lenders in accordance with the terms of the Intercreditor Agreements, the Management Company, acting on behalf of the Issuer, shall offer the Receivables to the corresponding originator (in proportion to its respective share in the assignment) for repurchase in accordance with the terms and conditions described hereafter. The Management Company will use its best endeavours to sell (i) the French Loan Receivables to MS Bank for an amount equal to the principal amount outstanding of the French Loan Receivables plus the unpaid amount of all finance charges, interest payments and other amounts accrued on or payable under or in connection with the French Loan Receivables and the French Related Security and (ii) the Luxembourg Notes to the Luxembourg Issuer for an amount equal to the principal amount outstanding of the Luxembourg Notes plus the unpaid amount of all finance charges, interest payments and other amounts accrued on or payable under or in connection with the Luxembourg Notes. In the event that the Receivables are in default, the Management Company will try to sell the Receivables for a purchase price based on the fair market value as agreed by the Management Company and the relevant originator(s). 221

222 MS Bank and the Luxembourg Issuer are entitled to refuse the offer made by the Management Company to repurchase their respective Receivables. If the assignment of the Receivables to the relevant originators in accordance with the conditions set out above does not occur, for whatever reason, the Management Company will try to sell the Receivables to any credit institution (établissement de crédit) or any other entity authorised to acquire the Receivables under the same terms and conditions. The repurchase price of the Receivables under the above conditions must provide the Issuer with sufficient funds, including the Issuer Cash (if any), to pay any amounts due in respect of principal, interest and other amounts due to the Noteholders and the Residual Unitholders. If the purchase price is less than the amount required to pay such amounts in full, the sale shall not be permitted, unless the sale is in the best interests of the Noteholders and the Residual Unitholders. Any transfer back of Receivables by the Issuer shall be carried out in accordance with the relevant provisions of the French Code monétaire et financier. The Issuer shall be dissolved at the time of the assignment of the Receivables by the Issuer and liquidated no later than six months following such Receivable being sold. DUTIES OF THE MANAGEMENT COMPANY Whatever the cause of the early liquidation of the Issuer, the Management Company shall be responsible for the liquidation process. For this purpose it shall be vested with the broadest powers (i) to dispose of the Issuer Assets and, if any, the remaining Issuer Cash and any Eligible Investments purchased with Issuer Cash, (ii) to pay the Issuer's creditors in accordance with the Issuer Regulations and (iii) to distribute any available balance in accordance with the Normal Redemption Orders Priority or the Accelerated Redemption Order of Priority, as applicable. The Statutory Auditors and the Custodian shall continue to exercise their functions until the completion of the liquidation process. LIQUIDATION SURPLUS The Liquidation Surplus (if any) of the Issuer shall be applied in repaying the Principal Amount Outstanding of the Class R Units until the Class R Units have been redeemed in full. Any Liquidation Surplus remaining thereafter (if any) shall be applied to the Class X Notes. 222

223 GENERAL ACCOUNTING PRINCIPLES GOVERNING THE ISSUER The accounts of the Issuer shall be drawn up in accordance with the recommendations of the French National Accounting Board (Conseil National de la Comptabilité) as set out in its avis No dated 24 June 2003 implemented by Regulation No of the French Accounting Regulation Board (Comité de la Règlementation Comptable) relating to accounting rules applicable to French fonds commun de créances. The accounts of the Issuer will be prepared in the French language by the Management Company and certified as such by the Statutory Auditors which will translate such reports in English for their disclosure to the Noteholders, the Residual Unitholders and the Irish Stock Exchange. For the purpose of this section of the Prospectus, a "Receivable" refers to either a French Loan Receivable or a Luxembourg Note. RECEIVABLES AND INCOME The Receivables shall be recorded on the Issuer's balance sheet at their nominal value. The potential difference between the purchase price and the nominal value of the Receivables, whether positive or negative, shall be recorded in an adjustment accounts on the asset side of the balance sheet. This difference shall result in a carry-forward pro rata to the amortisation of the Receivables. This difference shall result in a carry-forward prorata to the amortisation of the Receivables. The interest on the Receivables (if any) shall be recorded in the income statement, pro rata temporis. The accrued and overdue interest shall appear on the asset side of the balance sheet in a miscellaneous receivables account. The Receivables which are doubtful (douteuses) or subject to litigation (litigieuses) shall be recorded in the annex to the accounts and shall be provisioned in full. Any recoveries of under such receivables shall be recorded as extraordinary profit. Any financial income derived from the investment of cash surpluses shall be accounted for prorata temporis. NOTES AND INCOME The Notes and the Residual Units shall be recorded at their nominal value and shown separately on the liability side of the balance sheet. The potential difference, whether positive or negative, between the issue price and the nominal value of the Notes and the Residual Units shall be recorded in an adjustment account on the liability side of the balance sheet. This difference shall result in a carry-forward pro rata to the amortisation of the Receivables. The interest due on the Notes and the Residual Units shall be recorded in the income statement pro rata temporis. The accrued and overdue interest shall appear on the liability side of the balance sheet in a miscellaneous liabilities account. COSTS, COMMISSIONS AND PAYMENTS RELATING TO THE ISSUER'S OPERATIONS The various commissions and payments paid to the Custodian, the Management Company, the French Loan Servicer, the Operating Bank, the Paying Agents, the Statutory Auditors, the Issuer Liquidity Facility Provider, the Issuer Swap Provider, the Rating Agencies and the Listing Agent shall be accounted for pro rata temporis over the accounting period. The entire cost of the establishment of the Issuer shall be borne by Morgan Stanley & Co. Bank International. 223

224 COSTS OF THE PLACEMENT OF THE NOTES The costs and expenses of placing the Listed Notes shall be borne by Morgan Stanley Bank International. ISSUER CASH The income derived from the investment of the Issuer Cash in Eligible Investments shall be accounted pro rata temporis. NET INCOME The net income shall be posted to a retained earnings carry-forward account. LIQUIDATION SURPLUS The Liquidation Surplus shall consist of the income from the liquidation of the Issuer and the retained earnings carry-forward. LENGTH OF ACCOUNTING PERIODS Each accounting period of the Issuer shall be a period of 12 months, beginning on 1 January and ending on 31 December of each year, with the exception of the first accounting period of the Issuer, which will begin on the Closing Date and end on 31 December ACCOUNTING INFORMATION IN RELATION TO THE ISSUER The accounting information with respect to the Issuer shall be provided by the Management Company in its annual report of activity and half-yearly report of activity, pursuant to the applicable accounting standards and in accordance with the French laws and regulations. Certain parts of the accounting information with respect to the Issuer may, if requested by the applicable French laws and regulations, be provided by the Management Company after certification by the Custodian. 224

225 GOVERNING LAW AND JURISDICTION GOVERNING LAW The Notes, the Residual Units, the Issuer Regulations, the French Loan Servicing Agreement, the French Loan Transfer Agreement, the Issuer Account Agreement, the Paying Agency Agreement, the French Loan Transfer Deeds, the Issuer Subscription Agreement and the Issuer Liquidity Facility Agreement shall be governed by, and construed and enforced in accordance with the laws of France. The Terms and Conditions of the Luxembourg Notes and the Luxembourg Notes Subscription Agreement shall be governed by the laws of the Grand Duchy of Luxembourg. The Issuer Swap Agreement, the Belgian Bonds Servicing Agreement and the Luxembourg Liquidity Facility shall be governed by the laws of England and Wales and the Issuer Swap Guarantee shall be governed by New York law. SETTLEMENT OF DISPUTES The competent courts of each relevant jurisdiction shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Issuer Transaction Documents or the formation, functioning or liquidation of the Issuer. 225

226 MODIFICATIONS TO THE TRANSACTION MODIFICATIONS Any event which may have a significant impact on the terms and conditions of the Notes and any modification to the information contained in this Prospectus shall be made public in a press release subject to prior notification to the Rating Agencies. The press release shall be incorporated in the next management report issued by the Management Company no later than four months following the end of each financial year of the Issuer. Any such modification shall be enforceable against Noteholders three clear days following publication of the relevant press release. While the Listed Notes are listed on the Irish Stock Exchange, any modifications will be promptly notified to the Irish Stock Exchange. AMENDMENTS TO THE ISSUER REGULATIONS The Management Company and the Custodian, acting in their capacity as founders of the Issuer, may agree to amend the provisions of the Issuer Regulations, provided that: (i) (ii) (iii) (iv) (v) (vi) no such amendment shall result in the reduction of the level of security available to the Noteholders and the Residual Unitholders or the downgrading of any of the then current ratings assigned to any of the Notes or shall be intended to limit such reduction or the downgrading or withdrawal of the then current ratings; the Issuer Regulations may not be amended in a way which would contradict the provisions of the Intercreditor Agreements; all provisions of the laws relating to information to Noteholders and Residual Unitholders are complied with; any amendment to the financial characteristics of any class of Notes shall require the prior approval of the holders of such Notes in accordance with the provisions in the "Terms and Conditions of the Notes"; any amendment to the financial characteristics of the Class R Units shall require the prior approval of the Residual Unitholders in accordance with the Issuer Regulations; and any such amendment shall be disclosed by way of publication on the Management Company's website to the holders of all outstanding Notes and Residual Units, provided that such amendment shall be automatically and without any further formality (de plein droit) enforceable against such Noteholders and Residual Unitholders five clear days after such disclosure. 226

227 ADDITIONAL INFORMATION RELATING TO THE ISSUER The Issuer will not be established prior to the Closing Date. Accordingly, the Issuer has not engaged in any business and has not produced any financial statements. After the Closing Date, the Management Company shall make available to the Noteholders, the Residual Unitholders and the Rating Agencies the following information. ANNUAL INFORMATION No later than four months following the end of each financial year, the Management Company shall prepare and publish an annual report in relation to the immediately preceding financial year, pursuant to then current and applicable accounting rules and practices, containing: (i) the following annual financial information, to be prepared by the Management Company and certified by the statutory auditors: (a) a description of the assets of the Issuer, including: (A) (B) information in relation to the French Loan Receivables and the Luxembourg Notes, and the amounts and types of Eligible Investments in which the Issuer Cash has been invested by the Management Company; (b) the audited annual accounts of the Issuer, including: (A) (B) (C) the balance sheet of the Issuer, the income statement of the Issuer, and an annex detailing the accounting methods used and a detailed description of the debts of the Issuer and of any guarantees in its favour; (ii) a management report containing that will be sufficient to provide a true and fair view (image fidèle) of the assets and liabilities of the Issuer, which shall include: (a) (b) (c) (d) the type, amount and percentages of fees and expenses incurred by the Issuer over the previous financial year; the liquidity ratio as being the ratio (expressed as a percentage) between (i) the amount of moneys, pending allocation and standing from time to time to the credit of the Issuer Accounts and (ii) the assets of the Issuer; a description of the transactions entered into by the Issuer; and information relating to the outstanding French Loan Receivables, the Luxembourg Notes, the Notes and the Residual Units; and (iii) notwithstanding the provisions of Condition 7, any modifications to the rating documents in relation to the Notes, to the principal elements of this Prospectus and any matters that may have an effect on the Notes or the Residual Units issued by the Issuer. The statutory auditors of the Issuer shall certify the accuracy of the information contained in the annual report. 227

228 INTERIM INFORMATION No later than three months following the end of the first six months of each financial year, the Management Company shall prepare and publish an interim report in relation to the immediately preceding six month period, pursuant to then current and applicable accounting rules and practices, containing: (i) (ii) (iii) financial information in relation to the Issuer with a notice indicating a limited review by the statutory auditors; this financial information shall be prepared on a half-yearly basis including the inventory of the assets as specified in paragraph (a) under "Annual Information" above and the statement of liabilities; an interim management report containing the information described in paragraphs (b), (c) and (d) of paragraph (ii) under "Annual Information" above; notwithstanding the provisions of Condition 7, any modifications to the rating documents in relation to the Notes, to the principal elements of this Prospectus and any matters that may have an effect on the Notes or the Residual Units issued by the Issuer. The statutory auditors of the Issuer shall certify the accuracy of the information contained in the interim report. The annual report, the interim report and all other informational documents published by the Issuer shall be provided, free of charge, by the Management Company to Noteholders and Residual Unitholders who request such information. QUARTERLY INFORMATION The Management Company shall prepare a preliminary quarterly report prior to each Note Interest Payment Date and such report shall be made available within one month of the end of each quarter on the website of the Management Company ( and will remain available until the Liquidation Date. A copy of the quarterly report shall be made available to the Rating Agencies. A copy of the quarterly reports issued by the French Loan Servicer, the Belgian Bond Servicer and a copy of the quarterly report prepared by the Management Company will be posted by Wells Fargo on ADDITIONAL INFORMATION Subject to the paragraph below, the Management Company shall be entitled to publish on its website access details for which shall be made available to Noteholders and Residual Unitholders upon request, or on any other medium which it may deem most appropriate, any other information relating to MS Bank, to the Issuer Assets and to the management of the Issuer, such information to be sufficient in its opinion to ensure the most relevant, accurate or reasonable information of the Noteholders and Residual Unitholders. The information contained in the Management Company's website does not form part of this Prospectus. The Management Company shall at such times as it may deem appropriate publish any additional information pursuant to the provisions of this paragraph. The Management Company shall bear any liability arising therefrom. The Management Company, acting in the name and on behalf of 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. The Noteholders or the Rating Agencies may ask questions about any information disclosed by the Management Company by sending an to the following address: [email protected]. 228

229 SUBSCRIPTION AND SALE UNDERWRITING Morgan Stanley & Co. International Limited, whose registered office is at 25 Cabot Square, Canary Wharf, London, E14 4QA, England (the "Manager"), pursuant to subscription agreement dated on our about the Closing Date (the "Issuer Subscription Agreement"), between the Manager and the Management Company, acting on behalf of the Issuer, has agreed, subject to certain conditions, to subscribe and pay for the (i) the Class A Notes at 100 per cent. of the principal amount of such Class A Notes, (ii) the Class X Notes at 100 per cent. of the principal amount of such Class X Notes, (iii) the Class B Notes at 100 per cent. of the principal amount of such Class B Notes, and (iv) the Class C Notes at 100 per cent. of the principal amount of such Class C Notes. WARRANTIES The Management Company, acting on behalf of the Issuer, has agreed to indemnify the Manager in the event of any damage resulting from any misrepresentation or any breach of its contractual obligations in respect of the Issuer Subscription Agreement. SELLING RESTRICTIONS United States of America The Notes have not been and will not be registered under the Securities Act, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the Securities Act or in certain transactions exempt from the registration requirements of the Securities Act. Neither the Manager nor any of its affiliates (as defined in Rule 405 under the Securities Act), nor any person acting on its or their behalf has engaged in any "directed selling efforts" (as defined in Regulation S) with respect to the Notes. The Manager has agreed that, except as permitted by the Subscription Agreement it will not offer, sell or deliver the Notes (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering of the Notes and the Closing Date (for the purpose of this section "Subscription and Sale", the "Distribution Compliance Period") within the United States or to, or for the account or benefit of, U.S. persons, and that the Manager will have sent to each distributor, dealer or other person to which it sells the Notes during the Distribution Compliance Period a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of U.S. persons. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act. In addition, until 40 days after the commencement of the offering of the Notes, an offer or sale of the Notes within the United States by a dealer, whether or not participating in the offering, may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with an available exemption from registration under the Securities Act. European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), the Manager 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 Listed Notes to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of Listed Notes to the public in that Relevant Member State: (i) in the period beginning on the date of publication of a prospectus in relation to those Listed Notes which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in 229

230 that Relevant Member State, all in accordance with the Prospectus Directive and ending on the date which is 12 months after the date of such publication; (ii) (iii) (iv) 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; 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; or at any time in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an "offer of Listed Notes to the public" in relation to any Listed 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 Listed Notes to be offered so as to enable an investor to decide to purchase or subscribe the Listed Notes, as the same may be varied in that 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. United Kingdom The Manager has represented and agreed that: (i) (ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Market Act 2000 ("FSMA") received by it in connection with the issue or sale of any Listed Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer; and it has complied and will comply with all applicable provisions of the FSMA, with respect to anything done by it in relation to the Listed Notes in, from or otherwise involving the United Kingdom. France Each of the Manager and the Issuer has represented and agreed that it has not offered or sold and will not offer or sell, directly or indirectly, the Class A Notes and the Class X Notes to the public in France, and that it has not distributed or caused to be distributed and will not distribute or cause to be distributed to the public in France, the Prospectus or any other offering material relating to the Class A Notes and the Class X Notes and such offers, sales and distributions have been and will be made in France only to (a) providers of investment services relating to portfolio management for the account of third parties (personnes fournissant le service d'investissement de gestion de portefeuille pour compte de tiers), and/or (b) qualified investors (investisseurs qualifiés), all as defined in and in accordance with Articles L , L , D of the French Code monétaire et financier. Each of the Manager and the Issuer has represented and agreed that it has not offered or sold and will not offer or sell, directly or indirectly, the Class B Notes and the Class C Notes to the public in France, and that it has not distributed or caused to be distributed and will not distribute or cause to be distributed to the public in France, the Prospectus or any other offering material relating to the Class B Notes and the Class C Notes and such offers, sales and distributions have been and will be made in France only to (a) qualified investors (investisseurs qualifiés) as defined in and in accordance with Articles L , L , D of the French Code monétaire et financier, and/or (b) non-french resident investors and/or (c) any person as described in paragraphs 3 and 4 of Article R of the French Code monétaire et financier. Only qualified investors (investisseurs qualifiés) (within the meaning of Article L and D of the French Code monétaire et financier) or any person as described in paragraphs 3 and 4 of 230

231 Article R of the French Code monétaire et financier may hold the Class B Notes and the Class C Notes in relation to the opening of a potential secondary market in respect of such Notes. This Prospectus has not been submitted to the clearance procedures of the French Autorité des Marchés Financiers. Italy The offering of the Notes has not been cleared by CONSOB (the Italian Securities Exchange Commission) pursuant to Italian securities legislation and, accordingly, no Notes may be offered, sold or delivered, nor may copies of the Prospectus or of any other document relating to the Notes be distributed in the Republic of Italy, except: (i) (ii) to professional investors (operatori qualificati), as defined in Article 31, second paragraph, of CONSOB Regulation No of 1 July 1998, as amended; or in circumstances which are exempted from the rules on solicitation of investments pursuant to Article 100 of Legislative Decree No. 58 of 24 February 1998, as amended (the Financial Services Act) and Article 33, first paragraph, of CONSOB Regulation No of 14 May 1999, as amended. Any offer, sale or delivery of the Notes or distribution of copies of the Prospectus or any other document relating to the Notes in the Republic of Italy under (i) or (ii) above must be: (a) (b) (c) made by an investment firm, bank or financial intermediary permitted to conduct such activities in the Republic of Italy in accordance with the Financial Services Act and Legislative Decree No. 385 of 1 September 1993, as amended (the Banking Act), CONSOB Regulation No of 1 July 1998 and Regulation No of 14 May 1999, as amended, and any other applicable laws and regulations; and in compliance with Article 129 of the Banking Act and the implementing guidelines of the Bank of Italy, as amended from time to time, pursuant to which the issue or the offer of securities in the Republic of Italy may need to be preceded and followed by an appropriate notice to be filed with the Bank of Italy depending, inter alia, on the aggregate value of the securities issued or offered in the Republic of Italy and their characteristics; and in compliance with all relevant Italian securities, tax and exchange controls and any other applicable laws and regulations. General Except for listing the Listed Notes on the Official List of the Irish Stock Exchange no action is being taken in any jurisdiction that would or is intended to permit a public offering of the Notes, or the possession, circulation or distribution of this Prospectus or any other material relating to the Issuer or the Notes in any jurisdiction where action for that purpose is required. This Prospectus does not constitute, and may not be used for the purpose of, an offer or solicitation in or from any jurisdiction where such an offer or solicitation is not authorised. Accordingly, the Notes may not be offered or sold, directly or indirectly, and neither this Prospectus nor any other offering material or advertisement in connection with the Notes may be distributed or published in or from any country or jurisdiction, except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction. The Manager has undertaken not to offer or sell any of the Notes, or to distribute this document or any other material relating to the Notes, in or from any jurisdiction except under circumstances that will result in compliance with applicable law and regulations. Attention is drawn to the information set out under "Important Notice" at page

232 TRADING CHARACTERISTICS AND PUBLIC MARKET It is expected that the trading of the Listed Notes will be made at a price that takes into account the value, if any, of accrued but unpaid interest. This means that purchasers will not pay, and sellers will not receive accrued and unpaid interest on the Listed Notes that is not included in their trading price. Prior to the Closing Date there has been no public market for the Listed Notes. The Listed Notes are a new issue of securities with no established trading market. The Manager has advised the Issuer that the Manager intends to make a market in the Listed Notes, as permitted by applicable laws and regulations, but are not obligated to do so and may discontinue market trading at any time without notice. Accordingly, neither the Issuer nor the Manager can assure investors and holders of Listed Notes that the trading market for the Listed Notes will be liquid. In connection with the sale of the Listed Notes and in accordance with applicable laws and regulations, the Manager may engage in transactions that stabilise, maintain or otherwise affect the price of the Listed Listed Notes. Specifically, the Manager may over-allot the offering, creating a short position. In addition, the Manager may bid for and purchase the Listed Notes on the open market to cover a short position or to stabilise the price of the Listed Notes. Any of these activities may stabilise or maintain the market price of the Listed Notes above independent market levels. The Manager will not be required to engage in these activities, and may end any of these activities at any time at its sole discretion. LEGAL INVESTMENT CONSIDERATIONS The Notes are securities issued by a French fonds communs de créances. Pursuant to Article L of the French Code monétaire et financier, notes issued by fonds communs de créances are financial instruments (instruments financiers) constitute "obligations" within the meaning of Article L of the French Code monétaire et financier. Pursuant to Article L of the French Code monétaire et financier, fonds communs de créances are organismes de placement collectifs. Nonetheless, fonds communs de créances are not securities mutual funds (organismes de placement collectifs en valeurs mobilières, or "OPCVM") within the meaning of Articles L to L of the French Code monétaire et financier and are not regulated by the provisions of the European Directives relating to, in particular, OPCVM (organismes de placement collectif en valeurs mobilières), "coordinated OPCVM" (OPCVM coordonnés) or to any other European (or other) classes of investment funds of whatever legal nature (including money market funds). 232

233 CD-ROM DISCLAIMER The CD-ROM distributed contemporaneously with this Prospectus contains a summary, in PDF format, of each report compiled for the purposes of ascertaining the Origination Valuation in respect of each Property prior to advancing any amounts under the relevant Loan (each an "Origination Valuation Report"). Prospective investors should be aware that each Origination Valuation Report on which the relevant summary is based was prepared prior to the date of this Prospectus. None of the firms that produced the relevant Origination Valuation Report has been requested to update or revise any of the information contained in the Origination Valuation Report nor to review, update or comment on the information contained in the summaries provided in the enclosed CD-ROM, nor shall they be requested to do so prior to the issue of the Listed Notes. Accordingly, the information included in each Origination Valuation Report and, therefore, the summaries contained in the enclosed CD-ROM, may not reflect the current physical, economic, competitive, market and other conditions with respect to the Properties. The information contained in the CD-ROM does not appear in paper form in this Prospectus and must be considered together with all of the information contained in this Prospectus, including without limitation, the statements made in the section entitled "Risk Factors Valuations" at page 48. All of the information contained in the CD-ROM is subject to the same limitations, qualifications and restrictions contained in this Prospectus. Prospective investors are strongly urged to read this Prospectus in its entirety prior to accessing the CD-ROM. If the CD-ROM was not received in a sealed package, there can be no assurance that it remains in its original format and should not be relied upon for any purpose. The information contained in the CD-ROM does not form part of the information provided for the purposes of this Prospectus. All information contained in the CD-ROM is confidential and must be treated as such by any person into whose possession it comes. 233

234 GENERAL INFORMATION 1. It is expected that listing of the Listed Notes on the Official List of the Irish Stock Exchange will be granted on or about 8 December 2005 subject only to the establishment of the Issuer and the subsequent issue of such Listed Notes. The listing of the Listed Notes will be cancelled if the Issuer is not established and the Listed Notes are not issued. In December 2004, Directive 2004/109/EC (the "Transparency Directive") was formally adopted. The Transparency Directive relates to information about the issuers whose securities are admitted to trading on a regulated market in the European Union (the "EU") such as the Irish Stock Exchange. Should the Transparency Directive impose requirements on the Issuer that it in good faith determines are unduly burdensome, the Issuer may de-list the Listed Notes by another listing authority, exchange and/or system or market outside the EU (or on an alternative non-regulated market in the EU) and outside the United States, as it may decide, in any case such that the Transparency Directive would not apply to the Issuer. If such an alternative admission is not available to the Issuer or is, in the Issuer's good faith opinion, unduly burdensome, an alternative admission may not be obtained. Although no assurance is made as to the liquidity of the Listed Notes as a result of the listing on the Irish Stock Exchange, de-listing the Listed Notes from the Irish Stock Exchange may have a material effect on the ability to resell the Listed Notes in the secondary market. 2. The Notes and the Residual Units have been accepted for clearance through Euroclear Bank, Euroclear France and Clearstream, Luxembourg as follows: Class Common Code ISIN Class A Notes FR Class X Notes FR Class B Notes FR Class C Notes FR Class R Units FR No statutory or non-statutory accounts in respect of any financial year of the Issuer have been prepared. So long as the Listed Notes are listed on the Official List of the Irish Stock Exchange, the most recently published audited annual accounts of the Issuer from time to time will be available at the specified offices of the Irish Paying Agent in Dublin. No accounts or financial statements of the Issuer will be produced prior to 31 December The Issuer is not, and has not been, in any legal or arbitration proceeding (including governmental proceedings and any such proceedings which are pending or threatened of which the Issuer is aware) which may have, or have had, since the date of establishment of the Issuer, a significant effect on the Issuer's financial position. 5. Copies of the following documents will be available in electronic or physical format and may be inspected during normal business hours on any week day (excluding public holidays) at the respective offices of the Management Company and the Irish Paying Agent in Dublin: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) the Issuer Regulations; the French Loan Transfer Agreement; the French Loan Servicing Agreement; the French Loan Transfer Deeds; the Paying Agency Agreement; the Issuer Account Agreement; the Issuer Subscription Agreement; the Luxembourg Notes Subscription Agreement; the Issuer Liquidity Facility Agreement; the Issuer Swap Agreement; the Issuer Swap Guarantee; 234

235 (l) (m) French Loan Agreements; Belgian Bond Issue Documents. 6. Settlement of trades in relation to the Listed Notes listed on the Irish Stock Exchange are subject to the laws and regulations of the Irish Stock Exchange and to customary fees. 7. It is the responsibility of each subscriber for or acquirer of Listed Notes to inform himself in advance of the tax consequences of subscription for, or acquisition or transfer of Listed Notes as a result of the laws in force in his country of residence and prospective subscribers for or acquirers of Listed Notes who are in any doubt about their tax position should seek their own professional advice. 235

236 APPENDIX 1 INDEX OF PRINCIPAL DEFINED TERMS... 3 Accelerated Redemption Event.. 26, 41, 196, 205 Accelerated Redemption Order of Priority... 41, Accrued Interest Drawing... 11, 181 Accrued Interest Shortfall Actual Interest Cover Percentage Adjusted Interest Amount Administrative Cost Factor... 23, 194 Administrative Cost Rate... 23, 194 Administrative Fees... 23, 194 Agent Aggregate Cut-Off Date Balance All-In Rate Appraisal Reduction Asset Transfer Agreements Available Issuer Interest Receipts... 36, 199 Available Issuer Principal Receipts... 37, 201 Basel Committee Belgian Account Bank Belgian Bank Account Pledges Belgian Bond Amortisation Funds Belgian Bond Balance Belgian Bond Event of Default Belgian Bond Final Redemption Funds Belgian Bond Interest Payment Date Belgian Bond Interest Receipts Belgian Bond Issue Date... 7, 118 Belgian Bond Issue Documents Belgian Bond Originator... 9 Belgian Bond Prepayment Redemption Funds. 29 Belgian Bond Principal Receipts Belgian Bond Principal Recovery Funds Belgian Bond Servicer Belgian Bond Transfer Date... 7 Belgian Bonds... 7, 167 Belgian Bonds Pledge Agreement Belgian Bonds Servicing Agreement Belgian Borrower Belgian Collateral Account... 19, 120 Belgian Collection Account... 19, 120 Belgian Disclosure Letter Belgian Due Diligence Report Belgian Finance Documents Belgian Guarantee Belgian Intra-Group Loan Agreements Belgian Intra-Group Loans... 7 Belgian Issuer... 7, 16 Belgian Issuer Related Parties Belgian Issuer's Lawyers Belgian Managing Agent Belgian Mortgage Deed Belgian Mortgage Mandates Belgian Mortgages Belgian Occupation Lease Belgian Occupational Tenants Belgian Originated Assets Belgian Prepayment Fees...29 Belgian Properties...7 Belgian Property Owning Companies7, 17, 94, Belgian Property Owning Company...7 Belgian Receivables Pledge Belgian Security Agent...17 Belgian Security Agreements Belgian Share Pledge Belgian Shareholders BNP Paribas Securities Services...9 Borrower...7 Borrowers...7 Brussels Properties Business Day CAD Carillon Borrower Carillon Loan , 157 Carillon Loan Agreement Carillon Property CEGI Class A Noteholders...25 Class A Notes... 1, 190 Class B Noteholders...25 Class B Notes... 1, 190 Class C Noteholders...25 Class C Notes... 1, 190 class of Notes Class R Unitholders...24 Class R Units...24 Class X Amount... 22, 193 Class X Collateral Amount... 26, 146, 198 Class X Noteholders...25 Class X Notes... 1, 190 Class X Weighted Average Strip Rate... 22, 193 Clearstream, Luxembourg...1 Closing Date... 1, 190 Collection Period Commercial Pledge Conditions Corrected French Loan Credit Agreement Custodian...9 Cut-Off Date Definitive Suspension Period...64 Directive... 74, 134 Disposal Proceeds...8 Distinct Tenants Distribution Compliance Period

237 DSCR Eligible Investments Enforcement Action Escrow Account EU... 78, 233 EUR... 3 EURIBOR EURIBOR... 1 euro... 3 Euro... 3 Euroclear... 1 Euroclear France... 1 Expense Shortfall Expenses Drawings... 11, 181 External Legal Advisers Final Maturity Date... 1, 26 Financial Characteristics Ford Borrower Ford Litigation Reserve Account... 46, 145 Ford Loan Ford Loan Agreement France Telecom Borrower France Telecom Loan France Telecom Loan Agreement France Telecom Property French Available Cash Account French Borrower... 8 French Borrower Account... 13, 142 French Borrower Shareholders French Borrowers... 8 French Borrowers Interest Receipts... 32, 198 French Duty of Care Agreement French Finance Documents French Loan... 6 French Loan Agreements... 7 French Loan Amortisation Funds... 33, 199 French Loan Documentation French Loan Event of Default French Loan Final Redemption Funds... 33, 199 French Loan Liquidation Fee French Loan Originator... 9 French Loan Payment Date French Loan Prepayment Fees... 33, 199 French Loan Prepayment Redemption Funds. 33, French Loan Principal Recovery Funds... 33, 199 French Loan Receivables... 6 French Loan Restructuring Fee French Loan Servicer... 9 French Loan Servicer Enforcement Procedures French Loan Servicing Fee French Loan Sub-Servicer... 9, 89 French Loan Sub-Servicing Agreement... 9 French Loan Transfer Agreement French Loan Transfer Deeds French Loan Work-out Fee French Loans... 6, 107 French Occupational Lease French Originated Assets French Parent Company French Portfolio Loan Agreements French Properties...7 French Property...7 French Related Security...6 French Rent Account... 13, 142 French Reserve Accounts French Security Agreements French Seller Guarantee French Subordinated Lender French Subordinated Loan Agreements FSMA Gross Rental Income ICR IFSRA...1 Independent Manager...19 Insolvency Law...59 Insolvency Proceedings...59 Intercreditor Agreement Interest Amount Interest Determination Date Interest Drawings... 11, 181 Interest Period Interest Shortfall Irish Paying Agent...10 ISDA...10 Issuer... 1, 8, 190 Issuer Account Agreement...89 Issuer Asset Interest Receipts... 32, 198 Issuer Asset Principal Receipts... 33, 199 Issuer Assets...7 Issuer Cash...90 Issuer Liquidity Drawings Issuer Liquidity Facility Issuer Liquidity Facility Agreement...8, 10 Issuer Liquidity Facility Deficiency Issuer Liquidity Facility Provider...8, 10 Issuer Liquidity Subordinated Amounts... 37, 202 Issuer Priority Payments... 34, 198 Issuer Related Parties...11 Issuer Subscription Agreement Issuer Swap Agreement...10 Issuer Swap Agreement Credit Support Document Issuer Swap Collateral Cash Account Issuer Swap Collateral Custody Account Issuer Swap Guarantee...10 Issuer Swap Guarantor...10 Issuer Swap Provider...10 Issuer Swap Transaction...8 Issuer Transaction Documents...83 Junior Debt Junior Lenders Junior Tranche

238 Lending Criteria Lexin Portfolio Loan Lexin Portfolio Borrowers... 98, 161 Lexin Portfolio Loan Lexin Portfolio Loan Agreement Lexin Properties Lexin Seller Guarantee Reserve Account Liquidation Date Liquidation Surplus Listed Notes... 1, 24, 187, 190 Loans... 7 LTV Ratio... 11, 12 Luxembourg Accrued Interest Drawing Luxembourg Accrued Interest Shortfall Luxembourg Banking Law Luxembourg Corporate Services Agreement Luxembourg Corporate Services Provider Luxembourg Expense Shortfall Luxembourg Expenses Drawing Luxembourg Issuer... 6, 14 Luxembourg Issuer Priority Payments Luxembourg Issuer Related Parties Luxembourg Issuer Statutory Auditor Luxembourg Issuer Transaction Documents Luxembourg Issuer Trustee Luxembourg Liquidity Drawings Luxembourg Liquidity Facility Luxembourg Liquidity Provider Luxembourg Liquidity Subordinated Amounts... 30, 132 Luxembourg Note Available Interest Receipts 30 Luxembourg Note Available Interest Receipts Priority of Payments Luxembourg Note Available Principal Receipts Luxembourg Note Calculation Date Luxembourg Note Collection Period Luxembourg Note Final Maturity Date Luxembourg Note Interest Payment Date Luxembourg Note Interest Period Luxembourg Note Interest Receipts... 33, 199 Luxembourg Note Issue Date Luxembourg Note Principal Receipts... 33, 199 Luxembourg Note Redemption Funds... 33, 199 Luxembourg Notes... 6 Luxembourg Notes Principal Amount Outstanding Luxembourg Notes Subscription Agreement Luxembourg Securitisation Law Luxembourg Security Agent Luxembourg Stand-by Account Luxembourg Stand-by Drawing Luxembourg Transaction Account Management Company... 9 Manager Market Valuation Masse Masse A Masse A Alternative Representative Masse B Masse B Alternative Representative Masse C Masse C Alternative Representative Masse X Masse X Alternative Representative Material Senior Default ME-A Lease ME-B Lease MICP Moody's...1, 91 Morgan Stanley...82 MS Bank... 1, 9, 82 MSEOF MSMS... 9, 89, 170, 174 Net Initial Yield Net Mortgage Rate... 23, 194 Net Rental Income Normal Redemption Orders of Priority Note Calculation Date Note Interest Payment Date... 1, 25, 191 Note Principal Payment Noteholders...25 Notes... 1, 24, 187, 190 Occupational Leases Operating Bank...9 Originated Assets...7 Origination Valuation Report Origination Valuations...11 Originator...9 Pascal Borrowers Pascal Loan Pascal Loan Agreement Pascal Properties Paying Agency Agreement...90 Paying Agents...10 Pool Factor Preliminary Suspension Period...64 Prepayment Fees... 34, 207 Principal Amount Outstanding... 26, 197 Principal Paying Agent...10 Properties...7 Property...7 Prospectus...1, 2 Prospectus Directive... 1, 2, 229 Rate of Interest Rating Agencies...1 ratings...73 Receivable , 222 Recovery Plan...64 Reference Banks Refinancing Proceeds...8 Reformed Insolvency Law...59 Register...21 Relevant Clearing Systems

239 Relevant Implementation Date Relevant Jurisdictions Relevant Margin... 25, 192 Relevant Member State Rental Income... 7, 68 Representative Requisite Rating Residual Unitholders Residual Units S&P... 1, 91 SA/NV SARL SAS Scheduled Interest Receipts SCI Screen Rate Second Belgian Bond Sale Agreement Securities Act... 1 Senior Debt Senior Lender Senior Tranche... 6, 115 Sequential Redemption Event... 39, 204 Servicing Standard SNC SPE Special French Loan Servicing Fee Specially Serviced French Loan SPRL/BVBA Standard and Poor's...91 Stand-by Account , 183 Stand-by Drawing Swap Breakage Receipts... 33, 199 Swap Tax Event , 196 Target Redemption Amount... 38, 203 Target Settlement Day Terms and Conditions Terms and Conditions of the Luxembourg Notes Tranched Carillon Loan Tranched French Loan Tranched French Loans... 6, 114 Tranched Lexin Portfolio Loan Tranching Account , 143 Transparency Directive... 28, 78, 233 Treaty...74 Weighted Average Cut-Off Date LTV/Cut-Off Date ICR/Cut-Off Date DSCR/Exit LTV Weighted Average LTV at Maturity Weighted Average Net Mortgage Rate... 23, 193 Weighted Average Unexpired Lease/Loan Terms

240 ISSUER French fonds commun de créances (mutual debt fund) Odysseus (European Loan Conduit No. 21) FCC MANAGEMENT COMPANY OF THE ISSUER EuroTitrisation 20, rue Chauchat Paris, France CUSTODIAN OF THE ISSUER BNP Paribas Securities Services 3, rue d'antin Paris, France AUDITORS TO THE ISSUER BDO Marque et Gendrot 23, rue de Cronstadt Paris, France LEGAL ADVISERS To the Lead Manager To the Lead Manager As to French law As to Belgian law Gide Loyrette Nouel Nauta Dutilh 26, cours Albert Ier Chaussée de la Hulpe, 177/ Paris, France 1170 Brussels, Belgium To the Lead Manager As to Luxembourg law Arendt & Medernach 14, rue Erasme B.P. 39 L-2010 Luxembourg PRINCIPAL PAYING AGENT AND OPERATING BANK BNP Paribas Securities Services 3, rue d'antin Paris, France IRISH PAYING AGENT AIB/BNY Fund Management(Ireland) Limited Guild House Guild Street Dublin 1, Ireland LISTING AGENT The Bank of New York One Canada Square London E14 5AL, United Kingdom 240