MMCapS XVII Final Offering Circular - Irish Stock Exchange

There are no terms in the Insurance Surplus Note that limit the ability of the Insurance Surplus Note Issuer
to incur additional indebtedness, secured or unsecured, including any Senior Indebtedness, or to be subject to Senior
Claims. Additionally, no such terms limit the Insurance Surplus Note Issuer from issuing any future surplus notes or
any other similar obligations. Unless expressly subordinated to the Insurance Surplus Note, any future surplus notes
or other similar obligations issued by the Insurance Surplus Note Issuer would rank pari passu or senior in right of
payment to the Insurance Surplus Note issued by the Insurance Surplus Note Issuer. See “Security for the Notes—
Description of the Insurance Surplus Note— Subordination.”
The regulation and authority for the issuance of the Insurance Surplus Note are governed by the laws of the
state having jurisdiction over the Insurance Surplus Note Issuer, which authorize the issuance of surplus notes and
address their accounting treatment and repayment terms. In addition, the Applicable Regulator will generally
require that the terms of the Insurance Surplus Note are consistent with SAP accounting guidelines, which provide
for accounting treatment of surplus notes. Consistent with SAP guidelines relating to surplus notes, the Insurance
Surplus Note can only be issued pursuant to the approval of the Applicable Regulator. Further, each payment of
principal of or premium, if any, and interest on the Insurance Surplus Note is subject to the approval of the
Applicable Regulator, which approval may be subject to a determination by the Applicable Regulator that the
financial condition of the Insurance Surplus Note Issuer warrants the making of such payments. The Applicable
Regulator will have broad discretion in determining whether to allow payments to be made on the Insurance Surplus
Note. Accordingly, because the ability of the Insurance Surplus Note Issuer to redeem or make scheduled or other
payments on its Insurance Surplus Note is subject to the Applicable Regulator’s prior approval, there can be no
assurance as to whether and when any such payments will be made, and if made, the amount of any such payments.
The order of the Applicable Regulator approving the issuance of the Insurance Surplus Note also provides a
cap on the rate or amount of interest that the Insurance Surplus Note Issuer may pay under its Insurance Surplus
Note (“Regulatory Interest Rate Limitation”). Specifically, the Insurance Surplus Note Issuer, which represents
2.7% of the aggregate Principal Balance of the Collateral Debt Securities, is subject to an interest rate cap equal to
12.5% per annum. In addition, payments of principal of and premium, if any, and interest on the Insurance Surplus
Note may only be made from the funds and other assets of the Insurance Surplus Note Issuer legally available to
make payments with respect to the Insurance Surplus Note under Applicable Insurance Laws. Furthermore, the
funds available to make payments on the Insurance Surplus Note on any given date, whether with respect to
principal, premium, if any, or interest, will be determined by the Applicable Regulator and may be limited by
various factors, such as requirements under a given state’s insurance laws affecting the relative level of surplus (e.g.,
minimum surplus requirements and risk based capital standards specifying minimum capital levels). For the
purposes of determining compliance with such surplus adequacy requirements, the surplus of an insurance company
is determined on the basis of SAP rather than GAAP, which is generally a more conservative measure of an
insurance company’s surplus.
The approval of the issuance of the Insurance Surplus Note by an Applicable Regulator does not constitute
a guarantee or recommendation of the Insurance Surplus Note by the Applicable Regulator or approval of any
payments to be made in respect of the Insurance Surplus Note.
Any failure by the Insurance Surplus Note Issuer to (i) make a payment of principal of or premium, if any,
or interest on its Insurance Surplus Note due to a disapproval of such payment by the Applicable Regulator or
(ii) pay the portion of any interest payment that would exceed a Regulatory Interest Rate Limitation, as applicable,
will not constitute a default under the Insurance Surplus Note. However, the Insurance Surplus Note will be deemed
to be a Defaulted Security under the Indenture if any payment of principal or premium, if any, or interest by the
Insurance Surplus Note Issuer is not made when scheduled as a result of any Payment Restrictions, even though the
failure to make any such payment is permitted by the terms of the Insurance Surplus Note Indenture.
Prospective purchasers of the Notes should consider and assess for themselves the likely level of defaults,
the likely level and timing of recoveries on the Insurance Surplus Note in the Trust Estate, and the likely levels of
interest rates during the term of the Notes.
Certain criteria relating to the Insurance Surplus Note Issuer were required to be met as of the date of the
acquisition by the Issuer. However, the Insurance Surplus Note Issuer is under no obligation to maintain such
criteria after such date and none of the Insurance Surplus Note Issuer, the Initial Purchasers, the Placement Agents
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