PROMISE-A-2000-1 plc - KfW

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Exposure to Credit Risks of the Reference Obligations In the event that a Reference Entity under a Reference Obligation (a "Reference Entity") or a Reference Obligation experiences a Credit Event and such Credit Event results in an Issuer Payment, then the amount equal to such Issuer Payment will be allocated on each Interest Payment Date to reduce the then Outstanding Principal Amount of the Class G Notes, the Class F Notes, the Class E Notes, the Class D Notes, the Class C Notes, the Class B Notes, the Class A Notes in the Reverse Order of Seniority. Noteholders may therefore suffer a loss of amounts invested in the Notes as a result of allocation of the Settlement Amount with respect to a Reference Obligation. The Reference Obligations are subject to credit, liquidity and interest rate risk. The likelihood and quantum of a Settlement Amount occurring with respect to a Reference Obligation will generally fluctuate with, among other things, the financial condition of the relevant Reference Entity, general economic conditions, the condition of certain financial markets, political events, developments or trends in any particular industry and changes in prevailing interest rates. Accordingly, holders of the Notes will be exposed to the credit risks of the Reference Obligations and the Reference Entities to the full extent of their investment in the Notes but will not acquire any rights or recourse against any of the Reference Entities or the Reference Obligations. No Interest in Reference Obligations The Issuer will not have a contractual relationship with any Reference Entity of any Reference Obligation. The Issuer, therefore, will have rights solely against the Credit Swap Counterparty in accordance with the Credit Swap Agreement and will have no recourse against any Reference Entities in respect of any Reference Obligations. None of the Issuer, the Trustee, the Noteholders or any other entity will have any rights to acquire from either Bank (or to require either Bank to transfer, assign or otherwise dispose of) any interest in any Reference Obligation, notwithstanding the reduction of the Outstanding Principal Amount of any Class of Notes or payment by the Issuer of an Issuer Payment in respect of a Settlement Amount to the Credit Swap Counterparty with respect thereto. Moreover, neither Bank will grant to the Issuer or the Trustee any security interest in any such Reference Obligation. Rights of Replacement and Addition The Servicer is permitted in the limited circumstances described herein to add Eligible Obligations and/or increase the amount of existing Reference Obligations in the Reference Portfolio. If such Reference Obligations are added there is no guarantee that future Reference Obligations, although required to meet respectively the conditions for Replacement and Addition, will perform better than or as well as the initial Reference Obligations. Industry Concentration of the Reference Obligations An attempt has been made to reduce the risk of cumulative Credit Events by imposing industry concentration limits on the Reference Portfolio (see "DESCRIPTION OF THE REFERENCE PORTFOLIO"). Notwithstanding this, if the economic conditions of any industry sector deteriorate then it is likely that Settlement Amounts in respect of any Reference Entity or any Reference Obligations in respect of such industry sector will increase. Limited Information on the Reference Obligations The Servicer is under no obligation to, and will not, provide to the Issuer, the Trustee or any holder of Notes any financial or other information or any notice furnished to it with respect to any Reference Obligation, except for certain information with respect to the designation of loans as Reference 21
Obligations and to Settlement Amounts as well as certain other information under circumstances described in this Offering Circular. See "DESCRIPTION OF THE REFERENCE PORTFOLIO". Accordingly, the Issuer, the Trustee and the holders of the Notes will have no information in relation to a Reference Entity’s financial situation or in relation to other exposures of either Bank to any Reference Entity under Reference Obligation. No Interest in Related Collateral None of the Issuer, the Trustee or the holders of the Notes will have any security interest in any collateral supporting a Reference Obligation (or portion thereof), expressed as a percentage of the Reference Obligation Notional Amount of that Reference Obligation for the purpose of calculation of the Final Value (the "Related Collateral") or any right to require either of the Banks to realise any Related Collateral, or to transfer any Related Collateral to the Issuer, the Trustee or the holders of the Notes at any time. Although the Servicer has undertaken to allocate or procure the allocation of the net proceeds of any realisation of any Related Collateral to the Reference Obligation in question, there can be no assurance that either Bank will actually realise any Related Collateral or that the net proceeds obtained in the event of such realisation and allocation to the Reference Obligations will be sufficient to avoid or reduce the Settlement Amount in respect of such Reference Obligation. No Investigations No investigations, searches or other enquiries have been made by or on behalf of the Issuer or the Trustee in respect of any Reference Entity, Reference Obligation, Related Collateral, the Issuer Collateral or the <strong>KfW</strong> Collateral. No representations or warranties have been given by the Issuer in respect of any Reference Entity, Reference Obligation or Related Collateral. No representations or warranties have been given by the Trustee in respect of the Issuer Collateral or the <strong>KfW</strong> Collateral. Any prospective Noteholders should take their own legal, financial, accounting, tax and other relevant advice as to the structure and the viability of their investments. Reliance on Procedures The Servicer has undertaken to monitor and otherwise administer the Reference Obligations in accordance with the Procedures. It is possible that Reference Collateral will be released by the relevant Bank or other arrangements agreed with the Reference Entities that may adversely affect the ability of the Servicer to collect payments in respect of Reference Obligations, if and to the extent that such release or other arrangements are consistent with the Procedures. Under applicable legal and accounting principles, the Servicer has considerable discretion in deciding when and in what amount to make write-offs in respect of Reference Obligations. See "REFERENCE PORTFOLIO SERVICING". As a consequence, the holders of the Notes are relying on the Servicer’s business judgement and practices in administering the Reference Obligations, enforcing claims against the Reference Entities of the Reference Obligations and taking decisions as to when a particular Reference Obligation should be written-off. Neither the Issuer nor the Trustee nor the holders of the Notes have any right to compel the Servicer to take any action against the Reference Entities of the Reference Obligations. The Servicer may engage in transactions with the Reference Entities of Reference Obligations, including extensions of credit which may be secured by Reference Collateral and may have equity or other interests in such Reference Entities, which interests may influence their judgments and practices with respect to the Reference Obligations. If, however, the Reference Entity is an affiliate of the Servicer (which includes, but is not limited to, the Servicer’s subsidiaries and other entities which, together with the Servicer, would form a group of debtors for the purposes of reporting credit exposures 22
Page 1 and 2: PROMISE-A-2000-1 plc (a company inc
Page 3 and 4: to, and including, the Final Maturi
Page 5 and 6: PROGRAMME BANK OR THE CREDIT SWAP C
Page 7 and 8: Info-Memo_HVB.2000.doc TABLE OF CON
Page 9 and 10: 2. DOCUMENTS INCORPORATED BY REFERE
Page 11 and 12: 4. SUMMARY The following summary is
Page 13 and 14: Sources of Interest Payments Condit
Page 15 and 16: Collateral As security for the obli
Page 17 and 18: Issuer shall not be liable for any
Page 19 and 20: Outstanding Principal Amount will i
Page 21 and 22: action if, in its reasonable opinio
Page 23 and 24: Application of Cash Proceeds period
Page 25 and 26: (a) shall remove any Obligation fro
Page 27: 5. RISK FACTORS The following is a
Page 31 and 32: HVB may hold and/or service claims
Page 33 and 34: agent who collects interest, discou
Page 35 and 36: 7. TERMS AND CONDITIONS OF THE NOTE
Page 37 and 38: Pursuant to the Trust Agreement, th
Page 39 and 40: 2.4 Limited Recourse The Notes are
Page 41 and 42: are then subject to the pledge over
Page 43 and 44: Agent on the second TARGET Day befo
Page 45 and 46: (f) sixth, in or towards payment of
Page 47 and 48: law affecting creditors’ rights,
Page 49 and 50: "Failure to Pay" means, with respec
Page 51 and 52: (b) the Bundesland in which the Ref
Page 53 and 54: the manner in which the Basel Accor
Page 55 and 56: (a) first, in or towards payment of
Page 57 and 58: (p) sixteenth, in or towards paymen
Page 59 and 60: prior to the date of the redemption
Page 61 and 62: Note being damaged, such Global Not
Page 63 and 64: principal amount of €11,000,000 (
Page 65 and 66: Agreement and/or the other Transact
Page 67 and 68: Upon such replacement, the parties
Page 69 and 70: 9.4 At any time before any Collater
Page 71 and 72: The Servicer covenants with the Iss
Page 73 and 74: Agreement and KfW shall, at the req
Page 75 and 76: (d) fourth, in or towards payment p
Page 77 and 78: 16.2 The Servicer shall, subject to
Page 79 and 80:
Primary Credit Swaps Counterparty a
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20.5 Each of the Issuer, the Admini
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24. COVENANTS OF THE ISSUER AND THE
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deduction or withholding compelled
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(o) subject as provided herein or i
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31.2 The Trustee may rely on such i
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34.5 The costs incurred in connecti
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Munich Germany Fax No.: + 49 89 378
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41.4 No person shall have any recou
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9. THE COLLATERAL The following des
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If the Pledgee directly receives an
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"Initial Reference Portfolio Notion
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"Credit Event" means each of (a) Ba
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Swap Counterparty to the Issuer, up
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espect of which no Bankruptcy (as d
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(j) the weighted average life shall
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(e) has a resolution passed for its
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Collateral, relative to the amount
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Geographic Distribution Percent Ref
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Fitch Industry Description Percent
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e, exceeds such approval limits, ap
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HVB continuously updates and refine
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13. THE ISSUER Introduction PROMISE
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Board of Directors The Directors of
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Such financial statements are the r
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Administrator Deutsche Internationa
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made by the Issuer pursuant to the
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• Focused universal bank. HVB is
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HVB believes the merger offers sign
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Until September 1999, HVB was organ
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cooperation with Vorsorge Lebensver
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Girozentralen), and co-operative ba
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The International Markets division
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Bayerische Kapitalanlagegesellschaf
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corporations doing business in seve
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General Information HVB's Internal
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customers are reviewed once a year
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oth market risk and credit risk. Th
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Euro On January 1, 1999, the Euro w
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conversion ratio applied in the mer
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Hanns-Peter Kreuser, HVB Employee,
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(1) (2) (3) Difference between hold
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ordinary and preferred shares outst
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158 Nine Months Ended Year Ended Se
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The redenomination of the share cap
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Horst Becker, Rosengarten Chairman
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audited by KPMG Deutsche Treuhand-G
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16. THE TRUSTEE The Trustee, KPMG D
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18. TAXATION The information contai
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(b) is quoted on a recognised stock
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allowed to tax the capital gains, a
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19. SUBSCRIPTION AND SALE Bayerisch
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except in either case in accordance
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20. GENERAL INFORMATION Authorisati
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The Notes will bear a legend to the
Page 189:
LEGAL ADVISORS TO THE MANAGER as to
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PROMISE-A-2000-1 plc - KfW

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