Off-Balance Sheet Secured Securitisations

The following is a summary of the preferred standard procedures for an off-balance sheet secured securitisation involving a Cayman Islands issuer. For a more detailed description and explanation of the legal , regulatory and structural issues , please refer to our memorandum Cayman Islands Special Purpose Vehicles.

• Maples and Calder fee proposal letter agreed in writing by arranger and/or originator.

• The registered office of the issuer will be at the offices of Maples and Calder:

• The address of QSPV Limited ("QSPV") (where appointed as share trustee/administrator) is:

• Typically, the address of the issuer for service of notices will be at QSPV as above.

Full details of the services provided by Maples and Calder and QSPV can be found in their respective brochures.

• Paid-up share capital of issuer (typically US$1,000) to be provided out of the Cayman Islands service provider’s own resources.

• Transaction fee (i.e. profit/corporate benefit) to issuer (typically US$1,000 per transaction).

• Back-up expenses arrangements for issuer, e. g. from sponsor or arranger, t o ensure funding available for ongoing operating etc. expenses and liquidation of issuer. The typical " water fall" allocation may not deal adequately with the service provider, Maples and Calder and Cayman Government fees etc. If the issuer has insufficient funds available to it, it may for instance:--

• be unable to pay the Companies Registry fees due in the Cayman Islands. It will then be in default and can be struck from the register and dissolve d, whereupon any assets vest in the Cayman Islands government and unauthorised dealings therewith are illegal ;

• be unable to secure the services of legal counsel to advise it or to act on its behalf, e.g. in the enforcement of its underlying security;

• be unable to be liquidated in a timely manner;

• Identify responsibility for preparation of issuer financial statements (some service providers do not currently provide this service).

• Identify frequency of financial statements, i.e. annual, semi-annual, quarterly, etc.

• Identify fiscal year.

• Identify auditors, if to be appointed.

• Limited recourse provisions in all relevant documents; and

• provisions extinguishing all outstanding obligations of the issuer after application of charged assets in all relevant documents; and

• non-petition covenants with respect to winding up of the issuer until after an appropriate period e.g. one year, following extinguishment of liabilities; or

• full indemnity to the service provider (where required).

• Carve-out in all security documentation of the paid up share capital of the issuer and also the transaction fee paid to the issuer for entering into the transactions.

• Consent for the issuer to maintain a separate bank account with the service provider (or with some other bank) to hold the share capital and transaction fee.

• Standard ISDA master agreement definition of "Affiliate" (see section 14 of ISDA master agreement) to be amended with respect to the issuer to refer only to entities issuer controls, i.e. so as to exclude the service provider, the charitable trustee, and any other SPVs the charitable trustee controls. Also, non-reliance representation in the Standard Schedule, usually in Part 5, should be narrowed to provide simply that the issuer is acting for its own account.

• Limitation of issuer’s representations and warranties in prospectus, subscription agreement and all relevant documents to matters relating to the issuer and within the knowledge of the directors; and/or

• similar back-up reps and warranties from say originator in the subscription agreement; and/or

• comfort letters, opinions, etc. from third parties to support information and statements in the offering circular, which issuer is required to give and are not within the knowledge of its directors; and/or

• indemnity to issuer/directors from originator, arranger or sponsor.

• Transaction cash-flow chart (including swap) to maturity.
• All relevant legal opinions and comfort letters to be addressed to issuer.
• Issuer to receive copies of all tax/stamp duty clearances, etc.

Note: This memorandum is intended to provide only general information for the clients and professional contacts of Maples and Calder/Maples and Calder Asia/Maples and Calder Europe. It does not purport to be comprehensive or to render legal advice.