ROCKALL CLO B.V. - Irish Stock Exchange

will be to enable the Custodian, on enforcement, to sell the securities in the pledged account on behalf
of the Security Trustee. Such Belgian law pledge will not entitle the Security Trustee to require delivery
of the relevant securities from the depositary or depositaries that have physical custody of such
securities or allow the Security Trustee to rehypothecate such securities.
However, the English law charge and Belgian law pledge created pursuant to the Security Documents
may be insufficient to secure or ineffective in securing the Issuer Investments which are securities for
the benefit of VF Noteholders and Noteholders, particularly in the event of any insolvency or liquidation
of the Custodian or any sub-custodian that has priority over the right of the Issuer to require delivery of
such assets from the Custodian in accordance with the terms of the Agency Agreement. Any risk of loss
arising from any insufficiency or ineffectiveness of the security for the VF Notes or Notes must be borne
by the VF Noteholders or Noteholders without recourse to the Issuer, the Trustee, the Security Trustee,
the Placement Agent, the Collateral Manager, the Collateral Administrator or any other party.
In addition, custody and clearance risks may be associated with Issuer Investments which are securities
that do not clear through DTC, Euroclear or Clearstream, Luxembourg. There is a risk, for example, that
such securities could be counterfeit, or subject to a defect in title or claims to ownership by other parties.
Fixed Security
Although the English law security constituted by the Security Documents over the Issuer Investments
held from time to time, including the security over the Accounts, is expressed to take effect as fixed
security, it may (as a result of the substitutions of Issuer Investments contemplated by the Collateral
Management Agreement and the payments to be made from the Accounts in accordance with the
Conditions and the Trust Deed) take effect as a floating charge which, in particular, would rank after a
subsequently created fixed security interest. However, the Issuer has covenanted not to create any
such subsequent security interests without the consent of the Trustee.
Governing Law of Portfolio
The Security Documents other than the Pledge Agreement (which will be governed by Belgian law) will
be governed by English law. Some of the Issuer Investments may be obligations governed by laws of
jurisdiction other than England (or, as the case may be, Belgium) and which may require different and/or
additional procedures and/or documentation to create or perfect any security interest.
2.20 Event-Orientated Trading and Special Situation Investments
The Collateral Manager may cause the Issuer to engage in event-orientated trading and investment in
special situation investments, which often involve the purchase of a company's securities after the
company's announcement of a significant event.
The Collateral Manager, on behalf of the Issuer may invest and trade in securities of companies that it
believes are undervalued because, although such companies are not the subject of an announced
tender offer, merger or acquisition transaction, in the Collateral Manager's view such companies are
likely candidates for such a transaction. In such a case, if the anticipated transaction does not in fact
occur, the Collateral Manager, on behalf of the Issuer, may sell the securities at a loss.
The Issuer may, invest in securities of issuers in weak financial condition, experiencing poor operating
results, having substantial capital needs or negative net worth, facing special competitive or product
obsolescence problems, or that are involved in bankruptcy or reorganisation proceedings. Investments
of this type may involve financial and business risks that can result in losses. Among the risks inherent
in investments in troubled entities is the inability to obtain information as to the true condition of such
issuers. Such investments may also be affected adversely by laws relating to, among other things,
fraudulent transfers and other voidable transfers or payments, lender liability and the courts' power to
disallow, reduce, subordinate or disenfranchise particular claims. The market prices of such securities
are also subject to abrupt and erratic market movements and above-average price volatility, and the
spread between the bid and asked prices of such securities may be greater than normally expected with
respect to non-troubled issuers. It may take a number of years for the market price of such securities to
reflect their intrinsic value.
Securities of financially troubled companies require active monitoring and may, at times, require
participation in bankruptcy or reorganisation proceedings by the Collateral Manager. To the extent that
the Collateral Manager becomes involved in such proceedings, the Issuer may have a more active
participation in the affairs of the issuer than that assumed generally by an investor.
In liquidation (both in and out of bankruptcy) and other forms of corporate reorganisation, there exists
the risk that the reorganisation either will be unsuccessful (due to, for example, failure to obtain requisite
approvals), will be delayed (for example, until various liabilities, actual or contingent, have been
satisfied) or will result in a distribution of cash or a new security the value of which will be less than the
purchase price to the Issuer of the security in respect of which such distribution was made.
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