VALLAURIS II CLO PLC - Irish Stock Exchange

connection with any such sale or reinvestment are satisfied or, if any such criteria are not satisfied,
shall notify the Collateral Manager of the reasons and the extent to which such criteria are not so
satisfied, following written request by the Collateral Manager, which request shall specify all necessary
details of the Collateral Debt Obligation or Defaulted Equity Security to be sold and the proposed
Substitute Collateral Debt Obligations to be purchased.
Sale of Collateral Debt Obligations: Subject to the terms of the Collateral Management
Agreement, each Collateral Manager, acting on behalf of the Issuer, may sell the category of
Collateral Debt Obligations or Defaulted Equity Securities held by or on behalf of the Issuer for
which it has management responsibility, in the following circumstances (and as further described
below):
(a) at any time:
(i) any Defaulted Obligation;
(ii) any Defaulted Equity Security;
(iii) any Credit Risk Obligation; and
(iv) any Credit Improved Obligation;
(b) at any time during the Reinvestment Period: any Collateral Debt Obligation which is not a
Credit Improved Obligation, a Credit Risk Obligation or a Defaulted Obligation provided
that all such sales (measured by reference to the aggregate Principal Balance of the
Collateral Debt Obligations (excluding any Credit Improved Obligations, Credit Risk
Obligations or Defaulted Obligations) sold in that year (each such year being a year from,
but excluding, the Closing Date or, as the case may be an anniversary thereof, to, but
excluding, the next succeeding anniversary thereof)(and excluding any sales pursuant to
paragraph (a) above)) do not exceed 20 per cent. of the CDO Principal Balance as at the
most recent to have occurred of the Closing Date and each anniversary thereof.
In addition, in the event that a Currency Swap Agreement is terminated in respect of an
outstanding Non-Euro Obligation and no Replacement Currency Swap Agreement is entered into by
the Issuer within 10 Business Days in accordance with the Collateral Management Agreement, then
such Non-Euro Obligation shall be sold.
Tax Subsidiary: In the event that the ownership of a Collateral Debt Obligation would result in
the Issuer being or becoming subject to U.S. tax on a net income basis or being or becoming subject
to the U.S. branch profits tax (in either case, such Collateral Debt Obligation becoming a ‘‘Taxed
Collateral Debt Obligation’’), the Collateral Manager on behalf of and at the expense of the Issuer
shall, within ten (10) Business Days of the date on which the Collateral Manager becomes aware or
acquires knowledge that such Collateral Debt Obligation is a Taxed Collateral Debt Obligation, either
(i) sell or otherwise dispose of all or a portion of such Taxed Collateral Debt Obligation in
accordance with the provisions of the Trust Deed, or (ii) (subject to Rating Agency Confirmation) set
up a special purpose subsidiary (a ‘‘Tax Subsidiary’’) to receive and hold any such Taxed Collateral
Debt Obligation, unless the Issuer has received an opinion of nationally recognized counsel that the
Issuer can hold such Taxed Collateral Debt Obligation directly without causing the Issuer to be
treated as engaged in a trade or business in the United States for U.S. federal income tax purposes.
The Issuer shall cause the purposes and permitted activities of any such subsidiary to be restricted
solely to the acquisition, holding and disposition of such Taxed Collateral Debt Obligation and shall
require such subsidiary to distribute 100% of the proceeds of any sale of such Taxed Collateral Debt
Obligation, net of any tax liabilities, to the Issuer.
Treatment of Sale Proceeds and Principal Proceeds: The proceeds of sale of Collateral Debt
Obligations in the circumstances provided above, together with any other Principal Proceeds received,
will be applied by the Collateral Administrator, acting on behalf of the Issuer, subject to and in
accordance with the Priorities of Payment:
(a)
during the Non-Call Period: in the acquisition of Substitute Collateral Debt Obligations,
subject to satisfaction of the Reinvestment Criteria and other conditions (as described
further below) or in payment into the Principal Account pending such reinvestment, (save
in the case of the proceeds of sale of any Collateral Debt Obligations above which
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