iesy Repository GmbH - Irish Stock Exchange

Other than pursuant to the Proceeds Loans, the Issuer currently only has a shareholder’s claim in the assets of its
subsidiaries. This shareholder’s claim is junior to the claims that creditors or preferred stockholders of its subsidiaries have
against such subsidiaries. Holders of the Notes will only be senior subordinated creditors of the Subsidiary Guarantors and
will not be creditors of subsidiaries of the Issuer that are not Subsidiary Guarantors of the Notes. As a result, if the Issuer has
insufficient cash available to service its debt obligations, holders of the Notes will have limited recourse as compared to
certain other creditors of the Issuer’s subsidiaries, including lenders under the Senior Credit Facilities. See “Risk Factors—
Risks Relating to the Notes, the Subsidiary Guarantees and the Security—You may not be able to enforce, or recover any
amounts under, the Subsidiary Guarantees or the Security due to subordination provisions, restrictions on enforcement and
releases,” “—Risks Relating to the Notes, the Subsidiary Guarantees and the Security—The Issuer may not be able to recover
any amounts under the Proceeds Loans because the Issuer’s right to receive payments under the Proceeds Loans is
contractually and legally subordinated to other liabilities of iesy Hessen” and “Description of the Notes—Ranking and
Subsidiary Guarantees.”
We will be exposed to foreign exchange risks that may adversely affect our financial condition and results of operations.
Because substantially all our revenues are denominated in euro, we will be exposed to foreign exchange risks by
issuing and selling Dollar Notes or by incurring other debt in the future that is not denominated in euro. These risks could
lead to increased cash requirements for debt service, higher leverage levels, greater levels of risk in relation to repaying or
refinancing such debt when due, and significant costs (including tax costs) incurred in order to hedge these risks. We intend
to swap our obligations under the Dollar Notes into euro so that our interest payments can be made in euro, ensuring that we
do not subject ourselves to foreign currency exchange risk.
A material decrease in the fair value of our business might result in the insolvency of New iesy or the Issuer.
The Issuer’s principal activity is the direct and indirect holding of partnership interests in iesy’s operating company,
iesy Hessen. New iesy’s principal activity is the holding of its partnership interests in iesy Hessen. Either or both of the Issuer
and New iesy may be deemed to have become over indebted and would be subjected to insolvency proceedings in Germany
if the fair values of their respective direct or indirect investments in iesy Hessen are less than the amounts of indebtedness
shown on their respective balance sheets. Such condition could arise, for example, as a result of lower net earnings of iesy
Hessen than currently anticipated by iesy or if iesy is unable to reduce its net debt as currently anticipated. The value of the
investment in iesy Hessen will also be affected by the operating performance of ish.
Risks Relating to the Notes, the Subsidiary Guarantees and the Security
German insolvency laws may preclude the recovery of payments due under the Notes.
Any insolvency proceedings with regard to the Issuer and the Subsidiary Guarantors would most likely be based on and
governed by the insolvency laws of Germany, the jurisdiction under which the Issuer and the Subsidiary Guarantors are
organized and in which all of their assets are located. The provisions of such insolvency laws differ substantially from U.S.
bankruptcy laws and may in many instances be less favorable to holders of the Notes than comparable provisions of U.S. law.
Under German insolvency law, insolvency proceedings will be opened following application to the insolvency court if
certain requirements are fulfilled. Only the management is entitled to file for insolvency in the case of imminent illiquidity.
In the case of illiquidity or over indebtedness, the application can be made by any creditor or the management of the
respective company. In any of the two latter cases, the management of the Issuer or a Subsidiary Guarantor is obligated to file
a petition for the commencement of insolvency proceedings with the competent insolvency court without undue delay, but in
no event later than three weeks after the insolvency event occurred. Upon receipt of such petition, the insolvency court would
initiate temporary insolvency proceedings. During these temporary insolvency proceedings, the insolvency court is likely to
impose a stay on any execution levied upon the assets of the Issuer or any Subsidiary Guarantor.
Once it is established that the Issuer or any Subsidiary Guarantor is insolvent, i.e. imminently illiquid, illiquid or over
indebted, but holds sufficient (unencumbered) assets to at least cover the costs of the insolvency process, formal insolvency
proceedings would be opened by court order. The most important consequences of such opening of formal insolvency
proceedings for the holders of the Notes would be the following:
• The right to administer and dispose of assets of the Issuer or such Subsidiary Guarantor would generally pass to
the insolvency administrator (Insolvenzverwalter) as sole representative of the insolvency estate.
• Disposals effected by management of the Issuer or such Subsidiary Guarantor after the opening of formal
insolvency proceedings are null and void by operation of law.
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