VALLAURIS II CLO PLC - Irish Stock Exchange

that Collateral Debt Obligations issued by such obligor that are held by the Issuer should be
equitably subordinated. However, the Issuer does not intend to engage in, and the Collateral
Managers do not intend to act on behalf of the Issuer with respect to, any conduct that would form
the basis for a successful cause of action based upon the equitable subordination doctrine described
above.
The preceding discussion is based upon principles of United States federal and state laws.
Insofar as Collateral Debt Obligations that are obligations of non-United States obligors are
concerned, the laws of certain foreign jurisdictions may impose liability upon lenders or bondholders
under factual circumstances similar to those described above, with consequences that may or may not
be analogous to those described above under United States federal and state laws.
2.14 All Collateral Debt Obligations were Identified Before the Closing Date and the Terms of their
Acquisition may Adversely Affect the Issuer
The Collateral Debt Obligations to be acquired by the Issuer on the Closing Date as part of the
Portfolio were identified prior to the Closing Date by Natexis Banques Populaires as Collateral
Manager. The Issuer has instructed the Collateral Manager that the Collateral Debt Obligations will
be acquired on the Closing Date by the Issuer on the terms prevailing in the market at the time when
the Collateral Manager identified such assets for purchase by the Issuer. Investors in the Notes will
be assuming the risk of market value, currency fluctuations and credit quality changes from the date
such assets were identified for purchase by the Collateral Manager and the date they are in fact
acquired by the Issuer. The Issuer shall not be entitled to any interest accrued but unpaid on the
Collateral Debt Obligations on the Closing Date.
3. Relating to the Notes
3.1 Limited Recourse Obligations
The Notes are limited recourse obligations of the Issuer and are payable solely from amounts
received in respect of the Collateral Debt Obligations, Interest Rate Hedge Agreements, Currency
Swap Hedge Agreements and other Collateral securing the Notes. Payments on the Notes both prior
to and following enforcement of the security over the Collateral or the aggregate proceeds of
liquidation of the Collateral are subordinated to the prior payment of certain fees and expenses of, or
payable by, the Issuer and to payment of principal and interest on prior ranking Classes of Notes.
See Condition 4(c) (Limited Recourse).
None of the Lead Manager, the Joint Lead Managers, the Trustee, the Collateral Managers, the
Collateral Administrator or any of their Affiliates or any other person or entity (other than the
Issuer) will be obliged to make payments on the Notes. Consequently, the Noteholders must rely
solely on distributions on the Collateral Debt Obligations and other Collateral securing the Notes for
the payment of principal and interest. There can be no assurance that the distributions on the
Collateral Debt Obligations, amounts received under the Interest Rate Hedge Agreement and
Currency Swap Agreements and other Collateral securing the Notes will be sufficient to make
payments on any Class of Notes after making payments on more senior Classes of Notes and any
other required amounts payable to other creditors ranking senior to or pari passu with such Class
pursuant to the Priorities of Payment. If distributions on such Collateral Debt Obligations and other
Collateral are insufficient to make payments on the Notes, no other assets will be available for
payment of the deficiency and, following realisation of the security over the Collateral and the
application of the proceeds thereof in accordance with the Priorities of Payment, the obligations of
the Issuer to pay such shortfall shall be extinguished. Such shortfall will be borne by (a) the Class I
Senior Noteholders, (b) the Class II Senior Noteholders, (c) the Class III Mezzanine Noteholders, (d)
the Class IV Mezzanine Noteholders and (c) the Subordinated Noteholders in inverse order in
accordance with the Priorities of Payment. The Structured Combination Noteholders shall bear such
shortfall to the extent that the corresponding Components of their Structured Combination Notes are
affected by the shortfall as described above.
In addition, at any time while the Notes are Outstanding, none of the Noteholders, nor any
other Secured Party (nor any other person acting on behalf of any of them) shall be entitled at any
time to institute against the Issuer, or join in any institution against the Issuer of, any bankruptcy,
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