PROSPECTUS ARLO II Limited - Irish Stock Exchange

RISK FACTORS
The following is a description of certain aspects of the issue of the Notes of which any
prospective purchaser of the Notes should be aware, but it is not intended to be
exhaustive and any prospective purchaser of the Notes should also read the detailed
information set out elsewhere in this document and the other documents relating to the
Notes and take their own tax, legal and other relevant advice as to the advisability,
structure and viability of their investment. In particular, the attention of prospective
purchasers of the Notes is drawn to “Investor Suitability” and “Risk Factors” in the Base
Prospectus.
General
Credit Considerations
Prospective purchasers of Notes should take into account, when making a decision as to whether
or not to invest in the Notes, that the timing of redemption of the Notes, the amount due to be
paid and/or delivered upon redemption of the Notes and the timing and the amount of any interest
and principal due on the Notes is dependent on the performance of the Charged Assets and the
Charged Agreement.
Security
There can be no assurance that the amount payable and/or, as the case may be, the market
value of the Charged Assets (as defined in the Charged Agreement) deliverable, in each case, to
the Noteholders on any early redemption of the Notes or upon enforcement of the security for the
Notes will be equal to the Issue Price or the outstanding Principal Amount of the Notes. Any
shortfall in payments due to the Noteholders will be borne in accordance with the Priority of
Payments specified in Paragraph 4 of “Conditions of the Notes”, and any claims of the
Noteholders remaining after a mandatory redemption of the Notes or a realisation of the security
and application of the proceeds as aforesaid shall be extinguished. None of the Programme
Parties or the obligors under the Collateral (other than the Issuer) has any obligation to
Noteholders for payment of any amount owing by the Issuer in respect of the Notes.
Custody Arrangements
The Issuer and the Trustee have appointed the Custodian to hold the Charged Assets on their
respective behalfs in accordance with the Custody Agreement, and the Custodian has appointed
the Sub-Custodian to hold the Charged Assets in the Alternative Clearing System in accordance
with the Sub-Custody Arrangements. The Issuer has no direct contractual relationship with the
Sub-Custodian, and the Custodian has not created security over its rights against the Sub-
Custodian in favour of the Issuer. Accordingly, in the event that the Trustee enforces its security,
it will have no direct rights against the Sub-Custodian or the Alternative Clearing System for
delivery of the Charged Assets, but rather will be relying on the rights it has against the Custodian
for such delivery.
Physical Settlement upon occurrence of a Charged Assets Redemption Event
The Notes may be subject to physical settlement upon the occurrence of a default or similar
events by, or in respect of, the issuer or other obligor of the Charged Assets, and this may result
in delivery to the Noteholders of obligations of such issuer (or such other obligor) of the Charged
Assets in lieu of a cash payment under the Notes, or payment of the cash value thereof in lieu of
such delivery. Such obligations may have a market value which is at a substantial discount to par.
Expenses
5