LCP Proudreed PLC - Irish Stock Exchange

egulations will not occur in the future. Sanctions for alleged or actual non-compliance with environmental
laws and/or regulations and the costs of remedying any such breach and the effect of any unremedied
breach could have an adverse effect on the value of Secured Properties or their rental income-generating
capacity.
Upon the original acquisition by the relevant Transferor and/or for previous financings of the Secured
Properties, various Environmental Reports were commissioned from environmental investigation agencies
and consultants. Such reports date from before 2004. No subsequent Environmental Reports have
been commissioned. Some of these assessments were intrusive surveys and audits, but some were based
only upon desktop research. The Secured Properties for which such Environmental Reports were
obtained cover approximately 54 per cent. of the total value of the Secured Properties. These
Environmental Reports were provided to King Sturge and have been taken into account in the
preparation of the Valuation Report, however the Borrowers are not able formally to rely on them.
Various environmental laws may require a current or previous owner, occupier or manager of property to
investigate and/or remediate substances or releases at or from such property that cause or are likely to
cause harm to the environment or water pollution. These owners, occupiers or managers may also be
obliged to pay damages in legal proceedings for property damage, for investigation and clean-up costs and
liabilities to third parties in connection with such substances. Such laws typically impose clean-up
responsibility and liability having regard to whether the owner, occupier or operator knew of or caused
the presence of the substances. Even if more than one person may have been responsible for the
contamination, each person coming within the ambit of the relevant environmental laws may be held
responsible for all of the clean-up costs incurred.
If an environmental liability arises in relation to Secured Properties and it is not remedied, or is not
capable of being remedied, this may result in the affected Secured Properties either being sold at a
reduced sale price or becoming unsaleable. In addition, third parties may bring legal proceedings against
a current or previous owner, occupier or operator of a site for damages and costs resulting from substances
emanating from that site. These damages and costs may be substantial. In addition, the presence of
substances on a Secured Property could result in personal injury or similar claims by private plaintiffs.
Any environmental liability incurred by a Borrower, or by an Occupational Tenant could adversely affect
its ability to service its debt, or, in the case of an Occupational Tenant, pay its rent, thereby reducing the
relevant Borrower’s funds needed to service the relevant Commercial Mortgage Loan. It might also
adversely affect the value of the security granted by such Borrower.
If any environmental liability were to exist or arise in respect of any Secured Property, none of the
Borrower Security Trustee, the Issuer Security Trustee or the Note Trustee should incur any such liability,
unless it could be established that the Borrower Security Trustee, the Issuer Security Trustee or the Note
Trustee, as applicable, had entered into possession of the relevant Secured Property(ies) or had exercised
a significant degree of control or management of either the relevant Secured Property(ies) or the relevant
environmental problem(s). The Borrower Security Trustee, the Issuer Security Trustee or the Note
Trustee, if deemed to be a mortgagee in possession, or a receiver appointed by the Borrower Security
Trustee, the Issuer Security Trustee or the Note Trustee, as applicable, could become responsible for
environmental liabilities in respect of a Secured Property and any such liability could ultimately affect the
amounts available to the Issuer to make payments under the Notes. If the Borrower Security Trustee, the
Issuer Security Trustee or the Note Trustee, as applicable, unduly directed or interfered with the actions
of the directors of the Borrower owning the affected Secured Properties or directed or interfered with the
receiver’s actions or if a receiver’s indemnity had been given and that indemnity covered environmental
liabilities, this could also result in a liability for the Borrower Security Trustee and/or the Issuer Security
Trustee and/or the Note Trustee.
The Borrowers will warrant in the Commercial Mortgage Loan Agreements on the Closing Date, in
respect of each of the Secured Properties, as to environmental matters as summarised in ‘‘Summary of
Principal Documents – The Commercial Mortgage Loan Agreements – Representations and Warranties’’
below. A breach of the environmental representation and warranty contained in a Commercial Mortgage
Loan Agreement will constitute a Loan Event of Default in respect of the relevant Borrower unless the
underlying circumstances are remedied within any relevant rectification period and save where the breach
is immaterial.
There will be no structural survey reports provided, or required to be provided, under the Commercial
Mortgage Loan Agreements.
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