berica residential mbs 1 s.r.l. - banca popolare di … residential mbs 1 s.r.l. ... euro 26,640,000...

Pursuant to Article 2, paragraph 3 of Italian Law No. 130 of 30 April 1999

Berica Residential MBS 1 S.r.l.(incorporated with limited liability under the laws of the Republic of Italy)

Euro 553,175,000 Class A Mortgage Backed Floating Rate Notes due 2035Issue Price: 100%

Euro 23,539,000 Class B Mortgage Backed Floating Rate Notes due 2035Issue Price: 100%

Euro 11,769,000 Class C Mortgage Backed Floating Rate Notes due 2035Issue Price: 100%

Application has been made to the Luxembourg Stock Exchange to list the Euro 553,175,000 Class A Mortgage Backed Floating Rate Notes due 2035 (the ‘‘Class

A Notes’’), the Euro 23,539,000 Class B Mortgage Backed Floating Rate Notes due 2035 (the ‘‘Class B Notes’’) and the Euro 11,769,000 Class C Mortgage Backed FloatingRate Notes due 2035 (the ‘‘Class C Notes’’ and, together with the Class A Notes and the Class B Notes, the ‘‘Senior Notes’’) of Berica Residential MBS 1 S.r.l., a limitedliability company organised under the laws of the Republic of Italy (the ‘‘Issuer’’). In connection with the issue of the Senior Notes, the Issuer is also issuingEuro 26,640,000 Class D Mortgage Backed Fixed Rate Notes due 2035 (the ‘‘Class D Notes’’ or the ‘‘Junior Notes’’ and, together with the Class A Notes, the Class B Notesand the Class C Notes, the ‘‘Notes’’). No application has been made to list the Class D Notes on any stock exchange. The Class D Notes are not being offered pursuant tothis Offering Circular. The Notes will be issued on 18 March 2004 (the ‘‘Issue Date’’).

Calculations as to the expected average life of the Senior Notes can be made based on certain assumptions. See ‘‘Expected Average Life of the Senior Notes andAssumptions’’.

The principal source of payment of interest and repayment of principal on the Notes will be collections and recoveries made in respect of the claims and rightsconnected thereto (the ‘‘Claims’’) arising from three portfolios (namely, the ‘‘BPV Portfolio’’, the ‘‘CRP Portfolio’’ and the ‘‘BN Portfolio’’, each of which is referred to in thisOffering Circular as a ‘‘relevant Portfolio’’ and collectively, the ‘‘Portfolios’’) of performing residential mortgage loans (respectively, the ‘‘BPV Mortgage Loans’’, the ‘‘CRP

Mortgage Loans’’ and the ‘‘BN Mortgage Loans’’ and collectively, the ‘‘Mortgage Loans’’) which have been purchased by the Issuer from Banca Popolare di Vicenza S.c. perazioni a r.l. (‘‘BPV’’), Cariprato - Cassa di Risparmio di Prato S.p.A. (‘‘CRP’’) and Banca Nuova S.p.A. (‘‘BN’’) (each, an ‘‘Originator’’ and collectively, the ‘‘Originators’’)pursuant to the terms of three transfer agreements each dated 28 November 2003 (namely, the ‘‘BPV Transfer Agreement’’, the ‘‘CRP Transfer Agreement’’ and the ‘‘BN

Transfer Agreement’’ and collectively, the ‘‘Transfer Agreements’’).

Interest on the Senior Notes will accrue on a daily basis in Euro and be payable in arrear starting on 26 January 2005 (provided that, if such day is aSaturday or a Sunday or is not a day on which banks are generally open for business in Milan, London and Luxembourg and on which the Trans-EuropeanAutomated Real Time Gross Transfer System (or any successor thereto) is open (a ‘‘Business Day’’), then interest on such Senior Notes will be payable on the nextBusiness Day, unless such Business Day would fall in the next calendar month in which case interest will be paid on the immediately preceding Business Day) (the‘‘First Payment Date’’) and thereafter semi-annually in arrear on the 26th day of each January and July (provided that, if such day is not a Business Day, then intereston such Senior Notes will be payable on the next Business Day, unless such Business Day would fall in the next calendar month in which case interest will be paid onthe immediately preceding Business Day) (each, a ‘‘Payment Date’’). The rate of interest applicable to the Senior Notes for each period from (but excluding) a PaymentDate to (and including) the following Payment Date (each, an ‘‘Interest Period’’, provided that the first Interest Period (the ‘‘Initial Interest Period’’) shall begin on (andinclude) the Issue Date and end on (and include) the First Payment Date) shall be the rate per annum equal to the Euro-zone inter-bank offered rate (‘‘Euribor’’) for sixmonth deposits in Euro determined in accordance with Condition 5 (Interest) of the Terms and Conditions of the Notes (‘‘Six Month Euribor’’) (or, in the case of theInitial Interest Period, the rate per annum obtained by linear interpolation of the Euribor for ten month and eleven month deposits in Euro), plus the following relevantmargins with regard to the respective Class of Senior Notes (each, a ‘‘Relevant Margin’’):

up to (and including) the Interest Period ending on the Call Date (as defined below):

* Class A Notes: a margin of 0.20% per annum;

* Class B Notes: a margin of 0.57% per annum;

* Class C Notes: a margin of 1.20% per annum; and

from (and including) the Interest Period beginning on the Call Date:

* Class A Notes: a margin of 0.40% per annum;

* Class B Notes: a margin of 1.14% per annum; and

* Class C Notes: a margin of 2.40% per annum.

All payments in respect of the Notes will be made free and clear of any withholding or deduction for or on account of Italian taxes, unless such withholding ordeduction is required to be made by Italian Law No. 239 of 1 April 1996, as amended by Italian Law No. 409 and No. 410 of 23 November 2001 and as subsequentlyamended and supplemented, or is otherwise required to be made by applicable law. If any withholding or deduction for or on account of tax requirements is made inrespect of any payment under the Notes, neither the Issuer nor any other Person shall have any obligation to pay any additional amount(s) to any Noteholders of anyClass.

By operation of Italian law, the Issuer’s right, title and interest in and to the Portfolios will be segregated from all other assets of the Issuer and amountsderiving therefrom will only be available, both prior to and following a winding up of the Issuer, to satisfy the obligations of the Issuer to the Noteholders and to payany costs, fees and expenses payable, or other amounts due, to the Representative of the Noteholders, the Originators, the Servicers, the Master Servicer, the AdministrativeServices Provider, the Account Bank, the English Account Bank, the Collection Account Bank, the Paying Agents, the Cash Manager, the Calculation Agent, theLuxembourg Listing Agent, the Class D Notes Depository, the Class D Notes Subscribers, the Swap Counterparty, the Funding Provider, the Liquidity Facility Provider,the Subordinated Loan Provider and the Securities Subordinated Loan Provider (each as defined below under ‘‘The Principal Parties’’) and to any third party creditor inrespect of any costs, fees or expenses payable by the Issuer to such third party creditors in relation to the securitisation of the Portfolios (the ‘‘Securitisation’’). Amountsderived from the Portfolios will not be available to any such creditors of the Issuer in respect of any other amounts owed to them or to any other creditors of the Issuer.The Noteholders and the Other Issuer Creditors (as defined in the Glossary of Terms) will agree that the Issuer Available Funds (as defined in Condition 4 (Order of

Priority)) will be applied by the Issuer in accordance with the application of the order of priority of payments of the Issuer Available Funds set forth in the IntercreditorAgreement (the ‘‘Order of Priority’’). The Notes will also be secured by certain assets of the Issuer. See ‘‘Description of the Intercreditor Agreement’’ and ‘‘Description of theSecurity Documents’’.

The Senior Notes will be subject to mandatory redemption, in whole or in part, from time to time on each Payment Date following the expiry of a period ofeighteen months after the Issue Date (the ‘‘Initial Period’’). The aggregate amount to be applied in mandatory pro rata redemption in part will be calculated inaccordance with the provisions set forth in Condition 6.2 (Mandatory Pro Rata Redemption). On any Payment Date falling on or after the Payment Date falling inJanuary 2016 (the ‘‘Call Date’’) the Issuer may, at its option, redeem all (but not some only) of the Senior Notes at the principal amount then outstanding under theSenior Notes of each Class together with accrued interest on such Payment Date in accordance with the provisions set forth in Condition 6.3 (Optional Redemption of theSenior Notes). In addition, on any Payment Date falling after the Initial Period and before the Call Date, all (but not some only) of the Senior Notes may, in certainother circumstances, be redeemed at the option of the Issuer at the principal amount then outstanding under the Senior Notes together with accrued interest on suchPayment Date in accordance with the provisions set forth in Condition 6.3 (Optional Redemption of the Senior Notes). Unless previously redeemed, the Notes will matureon the Payment Date falling in July 2035 (the ‘‘Final Maturity Date’’) after which date if any amounts remain outstanding in respect of the relevant Notes, such amountsshall be deemed to be released by the relevant Noteholders and the Notes shall be cancelled.

The Senior Notes shall be held in a dematerialised form on behalf of the ultimate owners, from the Issue Date until redemption or cancellation thereof, byMonte Titoli S.p.A. (‘‘Monte Titoli’’) for the account of the relevant Monte Titoli Account Holders. The expression ‘‘Monte Titoli Account Holders’’ means any authorisedfinancial intermediary institution entitled to hold accounts on behalf of its customers with Monte Titoli and includes any depository banks appointed by ClearstreamBanking S.A. (‘‘Clearstream’’) and Euroclear Bank S.A./N.V., as operator of the Euroclear System (‘‘Euroclear’’). Monte Titoli shall act as depository for Clearstream andEuroclear. Accordingly, the Senior Notes will be deposited with Clearstream and Euroclear on 18 March 2004. The Senior Notes shall at all times be evidenced by book-entries in accordance with the provisions of Article 28 of Italian Legislative Decree No. 213 of 24 June 1998 and with Resolution No. 11768 of 23 December 1998 of theCommissione Nazionale per le Societa e la Borsa (‘‘CONSOB’’) as subsequently amended and supplemented. No physical document of title will be issued in respect of theSenior Notes.

The Class D Notes shall at all times be represented by note certificate(s). Certificates representing the Class D Notes shall be deposited on the Issue Date onbehalf of the Class D Notes Subscribers with BPV as depository (in such capacity, the ‘‘Class D Notes Depository’’).

The Notes have not and will not be registered under the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’) and are being offered onlyoutside the United States (the ‘‘U.S.’’) in compliance with Regulation S of the Securities Act (‘‘Regulation S’’).

The Class A Notes are expected, on issue, to be rated AAA by Fitch Ratings Ltd. (‘‘Fitch’’) and AAA by Standard & Poor’s Ratings Services, a division of TheMcGraw-Hill Companies, Inc. (‘‘S&P’’, together with Fitch, the ‘‘Rating Agencies’’); the Class B Notes are expected, on issue, to be rated A by Fitch and A by S&P; and theClass C Notes are expected, on issue, to be rated BBB by Fitch and BBB by S&P. It is not expected that the Class D Notes will be rated on issue. A credit rating is not a

recommendation to buy, sell or hold securities and may be subject to revision or withdrawal by the assigning rating organisation.

For a discussion of certain risks and other factors that should be considered in connection with an investment in the Senior Notes, see ‘‘Special Considerations’’.

Sole Arranger and Lead Manager

Morgan StanleyDated 17 March 2004

The Issuer accepts responsibility for the information contained in this offering circular (this ‘‘Offering Circular’’), other thanthat information for which each of BPV, CRP or BN accepts responsibility as described in the following paragraphs. To the bestknowledge and belief of the Issuer (which has taken all reasonable care to ensure that such is the case), such information is true anddoes not omit anything likely to affect the import of such information.

Each of BPV, CRP and BN accepts responsibility for the information included in this Offering Circular in the relevant parts ofthe sections headed ‘‘The Portfolios’’, ‘‘Loan Servicing and Collection Procedures’’ and ‘‘The Originators’’ and any other informationcontained in this Offering Circular relating to itself, the collection procedures relating to the receivables comprising the relevantPortfolio assigned by it to the Issuer together with the Claims, the Mortgage Loans and the Mortgages (as defined in the ‘‘Glossary ofTerms’’) comprised in such relevant Portfolio. To the best knowledge and belief of BPV, CRP and BN (which have taken allreasonable care to ensure that such is the case), such information is true and does not omit anything likely to affect the import of suchinformation.

Each of BPV, CRP and BN has given certain representations and warranties in favour of the Issuer in relation to the BPVPortfolio, the CRP Portfolio and the BN Portfolio, respectively, and has agreed to indemnify the Issuer in respect of certain liabilitiesof the Issuer incurred in connection with the purchase and ownership of the relevant Portfolio. None of the Issuer, the Arranger, theLead Manager or any other party to the Transaction Documents (as defined in the ‘‘Glossary of Terms’’) other than BPV, CRP andBN, has undertaken or will undertake any investigation, search or other action to verify the details of the Portfolios sold by BPV, CRPand BN to the Issuer. The Issuer and the other parties to the Transaction Documents have not undertaken, and will not undertake, anyinvestigation, search or other action to establish the creditworthiness of any Borrower (as defined in ‘‘Glossary of Terms’’).

No Person has been authorised to give any information or to make any representation not contained in this Offering Circularand, if given or made, such information or representation must not be relied upon as having been authorised by or on behalf of theArranger, the Lead Manager, the Issuer, the Representative of the Noteholders, the Servicers, the Master Servicer, the AdministrativeServices Provider, the Account Bank, the English Account Bank, the Collection Account Bank, the Paying Agents, the Cash Manager,the Calculation Agent, the Luxembourg Listing Agent, the Class D Notes Depository, the Swap Counterparty, the Funding Provider,the Subordinated Loan Provider, the Securities Subordinated Loan Provider, the Liquidity Facility Provider and the Quotaholders (eachas defined below in ‘‘Principal Parties’’), or BPV, CRP and BN (in any capacity under the Transaction Documents). None of theaforementioned parties, other than the Issuer, BPV, CRP and BN and to the extent set forth above, accepts responsibility for theaccuracy or completeness of the information contained in this Offering Circular. Neither the delivery of this Offering Circular nor anysale or allotment made in connection with the offering of any of the Notes shall, under any circumstances, constitute a representation orimply that there has been no change in the affairs of the Issuer, BPV, CRP and BN or the information contained herein since the datehereof or that the information contained herein is correct as of any time subsequent to the date hereof.

The Notes shall be direct, secured limited recourse obligations solely of the Issuer. In particular, the Notes shall not beobligations or responsibilities of, or guaranteed by, any of the Representative of the Noteholders, the Servicers, the Master Servicer, theAdministrative Services Provider, the Account Bank, the English Account Bank, the Collection Account Bank, the Paying Agents, theCash Manager, the Calculation Agent, the Luxembourg Listing Agent, the Class D Notes Depository, the Swap Counterparty, theFunding Provider, the Liquidity Facility Provider, the Subordinated Loan Provider, the Securities Subordinated Loan Provider, BPV,CRP and BN (in any capacity), the Arranger, the Lead Manager or the Quotaholders. Furthermore, none of the principal parties(other than the Issuer) or BPV, CRP and BN accepts any liability whatsoever in respect of any failure by the Issuer to make paymentof any amount due on the Notes.

The distribution of this Offering Circular and the offer, sale and delivery of the Senior Notes in certain jurisdictions may berestricted by law. Persons into whose possession this Offering Circular (or any part of it) comes are required by the Issuer, theArranger and the Lead Manager to inform themselves about, and to observe, any such restrictions.

Neither this Offering Circular nor any part of it constitutes an offer, and may not be used for the purpose of an offer to sell anyof the Senior Notes, or a solicitation of any offer to buy any of the Senior Notes, by anyone in any jurisdiction or in any circumstancesin which such offer or solicitation is not authorised or is unlawful.

The Senior Notes have not been and shall not be registered under the Securities Act or any other state securities laws and aresubject to U.S. tax law requirements. Subject to certain exceptions the Senior Notes may not be offered or sold within the U.S. or forthe benefit of U.S. Persons (as defined in Regulation S). See ‘‘Subscription and Sale’’.

The Notes may not be offered or sold directly or indirectly, and neither this Offering Circular nor any other offering circular orany prospectus, form of application, advertisement, other offering material or other information relating to the Issuer or the Notes maybe issued, distributed or published in any country or jurisdiction (including the Republic of Italy, the United Kingdom, France and theU.S.), except under circumstances that will result in compliance with all applicable laws, orders, rules and regulations. For a furtherdescription of certain restrictions on offers and sale of the Notes and the distribution of this Offering Circular. See ‘‘Subscription andSale’’.

No action has or will be taken which would allow an offering (nor a ‘‘sollecitazione all’investimento’’) of the Senior Notes to thepublic in the Republic of Italy unless in compliance with the relevant Italian securities, tax and other applicable laws and regulations.Accordingly, the Senior Notes may not be offered, sold or delivered and neither this Offering Circular nor any other offering materialrelating to the Senior Notes may be distributed or made available to the public in the Republic of Italy. Individual sale of the SeniorNotes to any Persons in the Republic of Italy may only be made in accordance with Italian securities, tax and other applicable laws andregulations.

Capitalised words and expressions in this Offering Circular shall, except so far as the context otherwise requires, have the samemeanings as those set forth in the ‘‘Glossary of Terms’’. These and other terms used in this Offering Circular are subject to thedefinitions of such terms set forth in the Transaction Documents, as amended from time to time.

Certain monetary amounts and currency translations included in this Offering Circular have been subject to rounding adjustments.Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

In this Offering Circular references to ‘‘Euro’’, ‘‘EUR’’ and ‘‘cents’’ are to the single currency introduced in the member statesof the European Community which adopted the single currency in accordance with the Treaty of Rome of 25 March 1957, as amendedby, inter alia, the Single European Act 1986 and the Treaty of European Union of 7 February 1992 establishing the European Unionand the European Council of Madrid of 16 December 1995.

In connection with the issue of the Senior Notes, Morgan Stanley & Co. International Limited may over-allot or effecttransactions with a view to supporting the market price of the Senior Notes at a level higher than that which might otherwise prevail fora limited period after the Issue Date. However, there may be no obligation on Morgan Stanley & Co. International Limited or any ofits agents to take such action. Such stabilising, if commenced, may be discontinued at any time and must be brought to an end after alimited period.

2

CONTENTS

THE PRINCIPAL PARTIES.............................................................................................................. 4

TRANSACTION SUMMARY........................................................................................................... 6

SPECIAL CONSIDERATIONS ......................................................................................................... 30

THE PORTFOLIOS............................................................................................................................ 43

LOAN SERVICING AND COLLECTION PROCEDURES ........................................................... 60

THE ORIGINATORS......................................................................................................................... 63

THE SWAP COUNTERPARTY........................................................................................................ 66

THE ISSUER....................................................................................................................................... 68

USE OF PROCEEDS.......................................................................................................................... 73

DESCRIPTION OF THE TRANSFER AGREEMENTS................................................................. 74

DESCRIPTION OF THE WARRANTY AND INDEMNITY AGREEMENTS ........................... 77

DESCRIPTION OF THE MASTER SERVICING AGREEMENT................................................. 84

DESCRIPTION OF THE CASH ALLOCATION, MANAGEMENT AND

PAYMENTS AGREEMENT ............................................................................................................. 88

DESCRIPTION OF THE INTERCREDITOR AGREEMENT....................................................... 91

DESCRIPTION OF THE SECURITY DOCUMENTS.................................................................... 92

DESCRIPTION OF THE MANDATE AGREEMENT ................................................................... 93

DESCRIPTION OF THE ADMINISTRATIVE SERVICES AGREEMENT ................................. 94

DESCRIPTION OF THE SWAP AGREEMENT............................................................................. 95

DESCRIPTION OF THE LIQUIDITY FACILITY AGREEMENT............................................... 97

DESCRIPTION OF THE SUBORDINATED LOAN AGREEMENT............................................ 99

ACCOUNTS ........................................................................................................................................ 101

EXPECTED AVERAGE LIFE OF THE SENIOR NOTES AND ASSUMPTIONS...................... 104

TERMS AND CONDITIONS OF THE NOTES .............................................................................. 105

SELECTED ASPECTS OF ITALIAN LAW RELEVANT TO THE PORTFOLIOS AND

THE TRANSFER OF THE PORTFOLIOS...................................................................................... 153

TAXATION......................................................................................................................................... 158

SUBSCRIPTION AND SALE............................................................................................................ 165

GLOSSARY OF TERMS ................................................................................................................... 168

GENERAL INFORMATION ............................................................................................................ 185

3

THE PRINCIPAL PARTIES

Issuer Berica Residential MBS 1 S.r.l. is a limited liability company incorporated in

the Republic of Italy under Article 3 of Italian Law No. 130 of 30 April 1999

(Legge sulla cartolarizzazione dei crediti) (the ‘‘Securitisation Law’’) and

registered in the register held by Ufficio Italiano Cambi pursuant to Article

106 of Italian Legislative Decree No. 385 of 1 September 1993 (as amended

and supplemented from time to time, the ‘‘Consolidated Banking Act’’) under

number 35124 and in the Register of Companies of Vicenza under number

03094680240. The Issuer’s registered office is located at Via Btg. Framarin18, 36100 Vicenza, Italy. Application has been made by the Issuer for its

registration in the special register (Elenco Speciale) held by the Bank of Italy

pursuant to Article 107 of the Consolidated Banking Act.

Originators Banca Popolare di Vicenza S.c. per azioni a r.l. (‘‘BPV’’) is a bank organised

under the laws of the Republic of Italy. BPV is registered with the Bank of

Italy under Article 13 of the Consolidated Banking Act under number 1515

and its registered office is located at Via Btg. Framarin 18, 36100 Vicenza,Italy;

and

Cariprato - Cassa di Risparmio di Prato S.p.A. (‘‘CRP’’) is a bank organised

under the laws of the Republic of Italy. CRP is registered with the Bank of

Italy under Article 13 of the Consolidated Banking Act under number 5292.8

and its registered office is located at Via degli Alberti 2, Prato, Italy;

and

Banca Nuova S.p.A. (‘‘BN’’) is a bank organised under the laws of the

Republic of Italy. BN is registered with the Bank of Italy under Article 13 of

the Consolidated Banking Act under number 2009.9.0 and its registered

office is located at Via Vaglica 22, Palermo, Italy.

Servicers BPV, in respect of the BPV Portfolio;

and

CRP, in respect of the CRP Portfolio;

and

BN, in respect of the BN Portfolio.

Master Servicer BPV

Administrative Services

Provider

BPV

Representative of the

Noteholders

Deutsche Trustee Company Limited.

Cash Manager B.P. Vi Fondi SGR S.p.A.

Collection Account Bank BPV, in respect of the Issuer Collection Accounts, the Issuer Expenses

Account and the Issuer Quota Capital Account.

English Account Bank Deutsche Bank AG London, in respect of the Issuer English Account.

Account Bank Deutsche Bank S.p.A., in respect of the Issuer Investment Account, the

Issuer Distribution Account, the Issuer Cash Reserve Account, the Issuer

Securities Account and the Issuer Securities Loan Securities Account

(together with the Issuer Collection Accounts, the Issuer Expenses

Account, the Issuer Quota Capital Account and the Issuer English

Account, the ‘‘Accounts’’).

Calculation Agent Deutsche Bank AG London.

4

Principal Paying Agent Deutsche Bank AG London.

Luxembourg Paying Agent Deutsche Bank Luxembourg S.A.

Italian Paying Agent Deutsche Bank S.p.A. (and together with the Principal Paying Agent and the

Luxembourg Paying Agent, the ‘‘Paying Agents’’).

Luxembourg Listing Agent Deutsche Bank Luxembourg S.A.

Class D Notes Depository BPV

Class D Notes Subscribers BPV, CRP, BN

Swap Counterparty CDC IXIS Capital Markets

Quotaholders Stichting Vicenza and BPV Finance (International) PLC.

Funding Provider BPV

Liquidity Facility Provider BPV

Subordinated Loan

Provider

BPV

Securities Subordinated

Loan Provider

BPV

Arranger Morgan Stanley & Co. International Limited.

Lead Manager Morgan Stanley & Co. International Limited.

5

TRANSACTION SUMMARY

The following is a summary of certain aspects of the transactions relating to the Notes and should be

read in conjunction with, and is qualified in its entirety by reference to, the detailed information presented

elsewhere in this Offering Circular and in the Transaction Documents. All capitalised words and

expressions used in this Transaction Summary, not otherwise defined, shall have the meanings ascribed to

such words and expressions elsewhere in this Offering Circular or in the ‘‘Glossary of Terms’’.

PRINCIPAL FEATURES OF THE NOTES

The Notes On the Issue Date, the Issuer will issue:

* Euro 553,175,000 Class A Mortgage Backed Floating Rate Notesdue 2035 (the ‘‘Class A Notes’’);

* Euro 23,539,000 Class B Mortgage Backed Floating Rate Notes

due 2035 (the ‘‘Class B Notes’’);

* Euro 11,769,000 Class C Mortgage Backed Floating Rate Notes

due 2035 (the ‘‘Class C Notes’’ and together with the Class A

Notes and the Class B Notes, the ‘‘Senior Notes’’); and

* Euro 26,640,000 Class D Mortgage Backed Fixed Rate Notes due

2035 (the ‘‘Class D Notes’’ and together with the Senior Notes,

the ‘‘Notes’’).

Issue Price The Notes will be issued at the following percentages of their principal

amount:

Class Issue PriceClass A Notes .......................................................... 100%

Class B Notes........................................................... 100%

Class C Notes .......................................................... 100%

Class D Notes .......................................................... 100%

Form and Denomination of

the Notes

The authorised denomination of the Senior Notes shall be Euro 50,000 and

additional increments of Euro 1,000 thereafter. The Senior Notes shall be

held in a dematerialised form on behalf of the ultimate owners, from theIssue Date until redemption or cancellation thereof, by Monte Titoli for the

account of the relevant Monte Titoli Account Holder. Monte Titoli shall act

as depository for Clearstream and Euroclear. Title to the Senior Notes will

be evidenced by book entries in accordance with the provisions of Article 28

of Italian Legislative Decree No. 213 of 24 June 1998 and CONSOB

Resolution No. 11768 of 23 December 1998 as amended by CONSOB

Resolution No. 12497 of 20 April 2000, CONSOB Resolution No. 13085 of

18 April 2001, CONSOB Resolution 13659 of 10 July 2002, CONSOBResolution 14003 of 27 March 2003, CONSOB Resolution No. 14146 of 25

June 2003 and CONSOB Resolution No. 14339 of 5 December 2003. No

physical document of title will be issued in respect of the Senior Notes. The

Class D Notes shall at all times be represented by note certificate(s)

deposited with BPV acting in its capacity as the depository (the ‘‘Class D

Notes Depository’’). The Class D Notes will be issued in denominations of

Euro 50,000 and additional increments of Euro 1,000 thereafter and will,

upon issue, be subscribed for by BPV, CRP and BN.

6

Status The Senior Notes will constitute direct, secured and limited recourse

obligations of the Issuer. Each Noteholder and each Other Issuer Creditor

will have a claim against the Issuer only to the extent of the Issuer Available

Funds. The Intercreditor Agreement provides the order of priority of

payments in respect of the application of the Issuer Available Funds.

In respect of the obligation of the Issuer to pay interest on the Notes before

the delivery of a Trigger Notice upon the occurrence of a Trigger Event or

before the occurrence of an Insolvency Event (each such term as defined in

Condition 10 (Trigger Events)), the Class A Notes will rank pari passu

without preference or priority amongst themselves and in priority to theClass B Notes the Class C Notes and the Class D Notes; the Class B Notes

will rank pari passu without preference or priority amongst themselves and

in priority to the Class C Notes and the Class D Notes but subordinated to

the Class A Notes; the Class C Notes will rank pari passu without preference

or priority amongst themselves and in priority to the Class D Notes but

subordinated to the Class A Notes and the Class B Notes; and the Class D

Notes will rank pari passu without preference or priority amongst themselves

but subordinated to the Class A Notes, the Class B Notes and the Class CNotes.

In respect of the obligation of the Issuer to repay, following the InitialPeriod, principal on the Notes before the delivery of a Trigger Notice upon

the occurrence of a Trigger Event or before the occurrence of an Insolvency

Event, the Class A Notes will rank pari passu without preference or priority

amongst themselves and in priority to the Class B Notes and the Class C

Notes; the Class B Notes will rank pari passu without preference or priority

amongst themselves and in priority to the Class C Notes but subordinated to

the Class A Notes; the Class C Notes will rank pari passu without preference

or priority amongst themselves but subordinated to the Class A Notes andthe Class B Notes; and the Class D Notes will rank pari passu without

preference or priority amongst themselves but subordinated to Issuer’s

obligation to set aside on each Payment Date the Senior Notes Available

Funds to Amortisation towards redemption of the Class A Notes, the Class

B Notes (if any) and the Class C Notes (if any).

In respect of the obligation of the Issuer to pay interest and repay principal

on the Notes following the delivery of a Trigger Notice upon the occurrence

of a Trigger Event or following the occurrence of an Insolvency Event, the

Class A Notes will rank pari passu without preference or priority amongst

themselves and in priority to the Class B Notes, the Class C Notes and the

Class D Notes; the Class B Notes will rank pari passu without preference orpriority amongst themselves and in priority to the Class C Notes and the

Class D Notes but subordinated to the Class A Notes; the Class C Notes will

rank pari passu without preference or priority amongst themselves and in

priority to the Class D Notes but subordinated to the Class A Notes and the

Class B Notes; and the Class D Notes will rank pari passu without preference

or priority amongst themselves but subordinated to the Class A Notes, the

Class B Notes and the Class C Notes.

Interest The Senior Notes will bear interest on their respective Outstanding Principal

Amount from and including the Issue Date at the Six Month Euribor (as

determined and defined in accordance with Condition 5 (Interest)) (or, in thecase of the Initial Interest Period, the rate per annum obtained by linear

interpolation of the Euribor for ten month and eleven month deposits in

Euro), plus the following respective margins:

up to (and including) the Interest Period ending on the Call Date:

* Class A Notes: 0.20% per annum;

7

* Class B Notes: 0.57% per annum; and

* Class C Notes: 1.20% per annum,

from (and including) the Interest Period beginning on the Call Date:

* Class A Notes: 0.40% per annum;

* Class B Notes: 1.14% per annum; and

* Class C Notes: 2.40% per annum.

Class D Notes shall accrue interest at a rate of 2.0% per annum.

Interest on the Notes will be payable semi-annually in arrear on 26 January

and 26 July in each year (provided that, if such day is not a Business Day,

then interest on the Senior Notes will be payable on the next Business Day,unless such Business Day would fall in the next calendar month in which

case interest will be paid on the immediately preceding Business Day) as

provided in the Conditions, provided that following the delivery of a Trigger

Notice upon the occurrence of a Trigger Event or following the occurrence

of an Insolvency Event, the Payment Date may be any Business Day as shall

be specified in the Trigger Notice.

The first payment of interest in respect of the Notes will be payable on the

Payment Date falling on 26 January 2005 (provided that if such day is not a

Business Day, then interest on the Notes will be payable on the next Business

Day, unless such Business Day would fall in the next calendar month inwhich case interest will be paid on the immediately preceding Business Day)

(the ‘‘First Payment Date’’). The period from (and including) the Issue Date

to (and including) the First Payment Date (the ‘‘Initial Interest Period’’) and

each successive period from (but excluding) a Payment Date to (and

including) the next Payment Date is referred to as an ‘‘Interest Period’’.

Issuer Available Funds On each Payment Date, the Issuer Available Funds shall comprise:

(a) all the sums received or recovered by the Issuer from or in respect

of the Claims during the Semi-annual Collection Period

immediately preceding such Payment Date, except for amounts

collected in connection with the Claims in respect of which BPV,

CRP or BN has: (i) paid an advance indemnity pursuant toClause 4.5(c) of the Warranty and Indemnity Agreements (an

‘‘Advance Indemnity’’); or (ii) granted a limited recourse loan

pursuant to Clause 5 of the Warranty and Indemnity Agreements

(a ‘‘Limited Recourse Loan’’) or (iii) failed to grant a Limited

Recourse Loan pursuant to Clause 5.1.2 or Clause 5.1.3 of the

Warranty and Indemnity Agreement where as a consequence of

such failure the Debt Securities Initial Market Value will be repaid

in part out of the amounts collected in respect of the MortgageLoan(s) for which such Limited Recourse Loan(s) should have

been granted, (provided that amounts collected in connection with

any such Claim are excluded from the Issuer Available Funds, up

to an amount equivalent to the corresponding Advance Indemnity

plus interest thereon or, as the case may be, Limited Recourse

Loan, such amounts are hereinafter referred to as the ‘‘Excluded

Collections’’);

(b) all amounts paid or to be paid to the Issuer on or immediately

prior to such Payment Date under the terms of the Swap

Agreement and the Liquidity Facility Agreement;

8

(c) all amounts received by the Issuer from each Originator pursuant

to the Transfer Agreements and the Warranty and Indemnity

Agreements during the Semi-annual Collection Period immediately

preceding such Payment Date;

(d) all amounts standing to the credit of the Issuer Cash Reserve

Account as of the last day of the Semi-annual Collection Period

immediately preceding such Payment Date;

(e) interest accrued on and credited to the Cash Accounts in the

Semi-annual Collection Period immediately preceding such

Payment Date, including interest accrued on the Senior Notes

Available Funds for Amortisation deposited in the Issuer

Investment Account and on any amount set aside to such Accountunder item (xxii) of the Pre-Enforcement Order of Priority;

(f) any profit generated by the Eligible Investments until the last day

of the Semi-annual Collection Period immediately preceding suchPayment Date, including profit deriving from Eligible Investments

made in respect of the Senior Notes Available Funds for

Amortisation deposited in the Issuer Investment Account or in

respect of any amount set aside to such Account under item (xxii)

of the Pre-Enforcement Order of Priority;

(g) all amounts received by the Issuer under the terms of the

Quotaholders’ Agreement during the Semi-annual Collection

Period immediately preceding such Payment Date;

(h) with reference to the First Payment Date only, the Securities Loan

Full Liquidation Amount or, as the case may be, the Securities

Loan Partial Liquidation Amount (if any);

(i) any other amount, not included in the foregoing items (a), (b), (c),

(d), (e), (f), (g) and (h) received by the Issuer and deposited in the

Issuer Collection Accounts and/or the Issuer Investment Account

during the Semi-annual Collection Period immediately precedingsuch Payment Date (other than the Senior Notes Available Funds

for Amortisation and any amount set aside under item (xxii) of

the Pre-Enforcement Order of Priority on Payment Date(s) falling

during the Initial Period) but excluding any amount held by the

Issuer which properly belongs to the Swap Counterparty in respect

of any Excess Swap Collateral or Tax Credit (as defined in the

Swap Agreement) and payable to the Swap Counterparty pursuant

to the Swap Agreement; and

(j) all amounts received from the sale of all or part of the Portfolios,

should such sale occur, and proceeds (if any) from theenforcement of the Issuer’s Rights,

provided that following the delivery of a Trigger Notice or upon theoccurrence of an Insolvency Event, the Issuer Available Funds shall also

comprise any Senior Notes Available Funds for Amortisation then retained

in, and any amount set aside under item (xxii) of the Pre-Enforcement Order

of Priority on Payment Date(s) falling during the Initial Period to, the Issuer

Investment Account (if any) and any proceeds from the enforcement of the

Security Documents.

Pre-Enforcement Order of

Priority

Prior to the delivery of a Trigger Notice or the occurrence of an Insolvency

Event, the Issuer Available Funds shall be applied on each Payment Date

(or, in the case of payments that are to be made after the Payment Date and

which are provided for in the Payments Report immediately preceding such

Payment Date, on the payment date specified in such report) to make or

9

provide for the following payments, in the following order of priority (the

‘‘Pre-Enforcement Order of Priority’’) (in each case, only if and to the extent

that payments of a higher priority have been made in full):

(i) in or towards satisfaction of any and all taxes due and payable by

the Issuer;

(ii) in or towards satisfaction, pari passu and pro rata according to

the respective amounts thereof, of: (a) all costs, expenses and any

other amounts due and payable by or on behalf of the Issuer

other than those payable to parties to the Intercreditor Agreement;

(b) any other costs and expenses due and payable in relation topreserving the corporate existence of the Issuer, maintaining it in

good standing and in compliance with applicable legislation, in

each case to the extent such costs and/or expenses are not met by

utilising the amount standing to the credit of the Issuer Expenses

Account; (c) the fees, costs and expenses of, and all other

amounts due and payable to, the Representative of the

Noteholders; and (d) the Issuer Disbursement Amount;

(iii) in or towards satisfaction, pari passu and pro rata according to

the respective amounts thereof, of the fees, costs and expenses of,

and all other amounts due and payable to, the Cash Manager, the

Paying Agents, the Account Bank, the Collection Account Bank,

the English Account Bank and the Calculation Agent under the

Cash Allocation, Management and Payments Agreement; theLuxembourg Listing Agent under the Luxembourg Agency

Agreement; the Administrative Services Provider under the

Administrative Services Agreement; and the Servicers and Master

Servicer under the Master Servicing Agreement, other than

amounts referred to in item (xvii) below and up to an amount not

exceeding, in the case of costs and expenses incurred by the

Servicers and the Master Servicer over any calendar year, Euro

60,000;

(iv) to pay interest and thereafter, to repay principal (if any) due and

payable to the Liquidity Facility Provider under the Liquidity

Facility Agreement;

(v) to pay all amounts due and payable to the Swap Counterparty

under the Swap Agreement (including any termination payment

due and payable to the Swap Counterparty under the Swap

Agreement, other than amounts payable by the Issuer upon

termination of the Swap Agreement in circumstances where the

Swap Counterparty is the Defaulting Party (as defined in the 1992

ISDA Master Agreement (Multicurrency-Cross Border));

(vi) in or towards satisfaction of interest due and payable on the Class

A Notes;

(vii) to pay interest due and payable on the Class B Notes, provided

that so long as the Class A Notes are still outstanding, the

amount to be applied towards payment of interest on the Class B

Notes under this item shall not exceed the Portfolio Yield plus the

amount drawn down under the Liquidity Facility on the Liquidity

Facility Drawdown Date immediately preceding such Payment

Date less the aggregate amount paid under items (i) to (vi)

(inclusive) above;

10

(viii) to pay interest due and payable on the Class C Notes, provided

that so long as the Class A Notes and the Class B Notes are still

outstanding, the amount to be applied towards payment of

interest on the Class C Notes under this item shall not exceed the

Portfolio Yield plus the amount drawn down under the Liquidity

Facility on the Liquidity Facility Drawdown Date immediately

preceding such Payment Date less the aggregate amount paid

under items (i) to (vii) (inclusive) above;

(ix) in or towards provision of the Cash Amortisation Amount;

(x) in or towards provision of an amount (if positive) equal to the

sum of all the Expected Amortisation Amounts less the sum of all

the Cash Amortisation Amounts, in each case, for each preceding

Payment Date, to the extent that such amount has not beenpreviously provisioned in whole or in part;

(xi) to pay interest due and payable on the Class B Notes, to the

extent that such interest has not been paid under item (vii) above;

(xii) to pay interest due and payable on the Class C Notes, to the

extent that such interest has not been paid under item (viii) above;

(xiii) provided that the Senior Notes have not been or will not be

redeemed in full on such Payment Date, to credit the Issuer Cash

Reserve Account with such amount as is necessary to bring the

balance of such Account to the Cash Reserve Scheduled

Maximum Amount;

(xiv) to repay to the Servicers and the Master Servicer costs and

expenses due and payable pursuant to the Master ServicingAgreement, to the extent not paid under item (iii) above;

(xv) in or towards satisfaction of the Interest Component Of The

Purchase Price to be paid pursuant to the Transfer Agreements,

provided that if paid only in part on the First Payment Date, the

residual amount shall be paid on successive Payment Date(s);

(xvi) in or towards satisfaction of the Interest On The Purchase Priceto be paid pursuant to the Transfer Agreements, provided that if

paid only in part on the First Payment Date, the residual amount

shall be paid on successive Payment Date(s);

(xvii) in or towards satisfaction of any amounts (other than the amounts

referred to in items (xv) and (xvi) above and repayment of any

Advance Indemnity and/or Limited Recourse Loan) due and

payable by the Issuer pursuant to the Transfer Agreements, theMiscellaneous Loans Transfer Agreements, the Warranty and

Indemnity Agreements and the Subscription Agreements and to

repay to each Servicer any Servicer Advance Indemnity and

interest thereon;

(xviii) to pay all amounts due and payable to the Swap Counterparty

under the Swap Agreement upon termination of the Swap

Agreement in circumstances where the Swap Counterparty is theDefaulting Party (as defined in the 1992 ISDA Master Agreement

(Multicurrency-Cross Border);

(xix) to pay to the Subordinated Loan Provider interest due and

payable pursuant to the Subordinated Loan Agreement;

(xx) to repay to the Subordinated Loan Provider principal due and


11

(xxi) to pay interest due and payable on the Class D Notes;

(xxii) to pay all amounts due and payable pursuant to the Securities

Subordinated Loan Agreement;

(xxiii) in and towards satisfaction of the Scheduled Class D Notes

Repayment Amount (including any such amount due and payable

but unpaid on preceding Payment Dates), provided that on any

Payment Date falling before January 2006, the amount whichwould otherwise have been paid to the Class D Noteholders under

this item shall be set aside by crediting it to the Issuer Investment

Account and shall be paid to the Class D Noteholders on the

Payment Date falling in January 2006;

(xxiv) to pay any interest and repay principal on any loan made to the

Issuer pursuant to the Quotaholders’ Agreement; and

(xxv) to pay the Additional Return on the Class D Notes.

Post-Enforcement Order of

Priority following the

delivery of a TriggerNotice or upon the

occurrence of an Insolvency

Event

Following the delivery of a Trigger Notice or upon the occurrence of an

Insolvency Event, the Issuer Available Funds shall be applied on each

Payment Date to make or provide for the following payments, in thefollowing order of priority (the ‘‘Post-Enforcement Order of Priority’’) (in

each case, only if and to the extent that payments of a higher priority have

been made in full):

(i) upon the occurrence of an Insolvency Event, in or towardssatisfaction of any mandatory expenses relating to the insolvency

proceedings in accordance with Italian insolvency law and

thereafter, or upon the occurrence of any Trigger Event that is

not an Insolvency Event, in or towards satisfaction of any and all

taxes required to be paid by the Issuer;

(ii) in or towards satisfaction, pari passu and pro rata according to

the respective amounts thereof, of: (a) all costs, expenses and any

other amounts due and payable by or on behalf of the Issuer

other than those payable to parties to the Intercreditor Agreement;

(b) any other costs and expenses due and payable in relation to

preserving the corporate existence of the Issuer, maintaining it ingood standing and in compliance with the applicable legislation, in

each case to the extent such costs and/or expenses are not met by

utilising the amount standing to the credit of the Issuer Expenses

Account; (c) the fees, costs and expenses of, and all other

amounts due and payable to, the Representative of the


(iii) in or towards satisfaction, pari passu and pro rata according to

the respective amounts thereof, of the fees, costs and expenses of,

and all other amounts due and payable to, the Cash Manager, the

Paying Agents, the Account Bank, the Collection Account Bank,

the English Account Bank and the Calculation Agent under the

Cash Allocation, Management and Payments Agreement; theLuxembourg Listing Agent under the Luxembourg Agency

Agreement; the Administrative Services Provider under the

Administrative Services Agreement; and the Servicers and Master

Servicer under the Master Servicing Agreement, other than

amounts referred to in item (xv) below and up to an amount not

exceeding, in the case of costs and expenses incurred by the

Servicers and the Master Servicer over any calendar year, Euro

60,000;

12

(iv) to pay interest and thereafter, to repay principal (if any) due and

payable to the Liquidity Facility Provider under the Liquidity

Facility Agreement;

(v) to pay all amounts due and payable to the Swap Counterparty

under the Swap Agreement (including any termination payment

due and payable to the Swap Counterparty under the SwapAgreement, other than amounts payable by the Issuer upon

termination of the Swap Agreement in circumstances where the

Swap Counterparty is the Defaulting Party (as defined in the 1992

ISDA Master Agreement (Multicurrency-Cross Border));

(vi) in or towards satisfaction of interest due and payable on the Class

A Notes;

(vii) in or towards satisfaction of the Outstanding Principal Amount of

the Class A Notes, provided that if the Trigger Event is not an

Insolvency Event, such amount which would otherwise have been

paid to the Class A Noteholders under this item on any Payment

Date falling before January 2006 shall be set aside by crediting it

to the Issuer Investment Account and shall be paid to the Class A

Noteholders on the Payment Date falling in January 2006;

(viii) in or towards satisfaction of interest due and payable on the Class

B Notes;

(ix) in or towards satisfaction of the Outstanding Principal Amount of

the Class B Notes, provided that if the Trigger Event is not an


paid to the Class B Noteholders under this item on any Payment

Date falling before January 2006 shall be set aside by crediting itto the Issuer Investment Account and shall be paid to the Class B


(x) in or towards satisfaction of interest due and payable on the Class

C Notes;

(xi) in or towards satisfaction of the Outstanding Principal Amount ofthe Class C Notes, provided that if the Trigger Event is not an


paid to the Class C Noteholders under this item on any Payment


to the Issuer Investment Account and shall be paid to the Class C


(xii) to repay to the Servicers and the Master Servicer costs andexpenses due and payable pursuant to the Master Servicing

Agreement, to the extent not paid under item (iii) above;

(xiii) to the extent that the Interest Component Of The Purchase Price

is not yet paid, or paid in full, to pay each Originator the unpaid

portion of such amount;

(xiv) (xxvi) (xxvii) to the extent that Interest On The Purchase Price isnot yet paid, or paid in full, to pay each Originator the unpaid

portion of such amount;

(xv) in or towards satisfaction of any amounts (other than the amounts

referred to in items (xiii) and (xiv) above and repayment of any

Advance Indemnity and/or Limited Recourse Loan) due and

payable by the Issuer pursuant to the Transfer Agreements, the

Miscellaneous Loans Transfer Agreements, the Warranty and

13

Indemnity Agreements and the Subscription Agreements and to

repay to each Servicer any Servicer Advance Indemnity and

interest thereon;

(xvi) to pay all amounts due and payable to the Swap Counterparty

under the Swap Agreement upon termination of the Swap

Agreement in circumstances where the Swap Counterparty is theDefaulting Party (as defined in the 1992 ISDA Master Agreement

(Multicurrency-Cross Border);

(xvii) to pay to the Subordinated Loan Provider interest due and


(xviii) to repay to the Subordinated Loan Provider principal due and


(xix) to pay interest due and payable on the Class D Notes;

(xx) to pay all amounts due and payable pursuant to the Securities


(xxi) in and towards satisfaction of the Outstanding Principal Amount

of the Class D Notes, provided that if the Trigger Event is not anInsolvency Event, such amount which would otherwise have been

paid to the Class D Noteholders under this item on any Payment


to the Issuer Investment Account and shall be paid to the Class D


(xxii) to pay any interest and repay principal on any loan made to the

Issuer pursuant to the Quotaholders’ Agreement; and

(xxiii) to pay the Additional Return on the Class D Notes.

Cash Reserve On the Issue Date, an amount of Euro 8,827,245 (equivalent to 1.5% of the

Initial Principal Amount of the Senior Notes) (the ‘‘Initial Cash Reserve

Amount’’) will be paid into the Issuer Cash Reserve Account out of the

Subordinated Loan provided by the Subordinated Loan Provider pursuant

to the Subordinated Loan Agreement. Credits and debits from the IssuerCash Reserve Account will be made pursuant to the terms of the Cash

Allocation, Management and Payments Agreement.

On each Payment Date, amounts standing to the credit of the Issuer Cash

Reserve Account as of the last day of the Semi-annual Collection Period

immediately preceding such Payment Date will form part of the Issuer

Available Funds on such Payment Date and will be available to meet

shortfalls in payments or provisions due to be made by the Issuer inaccordance with the applicable Order of Priority.

In addition, in certain circumstances set forth in the Securities Subordinated

Loan Agreement, proceeds deriving from the liquidation of all the Debt

Securities plus any interest generated thereby (the ‘‘Securities Loan Full

Liquidation Amount’’) shall be deposited in the Issuer Cash Reserve Account

and shall form part of the Issuer Available Funds of the First Payment Date.

On each Payment Date prior to the delivery of a Trigger Notice or the

occurrence of an Insolvency Event, provided that the Senior Notes have not

been or will not be redeemed in full on such Payment Date, an amount will

be credited to the Issuer Cash Reserve Account out of any Issuer Available

Funds remaining after satisfaction of items (i) to (xii) (inclusive) of the Pre-

Enforcement Order of Priority so as to bring the balance of such Account to

the sum of: (x) the Securities Loan Full Liquidation Amount and (y) the

greater of: (i) two per cent. (2%) of the aggregate Outstanding Principal

14

Amount of the Senior Notes on such Payment Date; and (ii) Euro 2,942,415

(equivalent to 0.5% of the Initial Principal Amount of the Senior Notes) (the

‘‘Cash Reserve Scheduled Maximum Amount’’).

Scheduled Class D Notes

Repayment Amount

‘‘Scheduled Class D Notes Repayment Amount’’ means:

(A) on each Payment Date from (and including) the First Payment

Date to (and including) the Call Date, an amount equal to Euro

1,070,000 plus, (x) if any Limited Recourse Loan has been grantedduring the Semi-annual Collection Period immediately preceding

such Payment Date, such amount of the Limited Recourse Loan(s)

representing the present value of the interest margins of the

Mortgage Loan(s) in relation to which such loan(s) has/have been

granted, plus (y) with reference to the First Payment Date only, if

as a result of any Originator’s failure to make Limited Recourse

Loan(s) pursuant to Clause 5.1.2 or Clause 5.1.3 of the Warranty

and Indemnity Agreement, the Debt Securities Initial MarketValue will be repaid in part out of the amounts collected in

respect of the Mortgage Loan(s) for which such Limited Recourse

Loan(s) should have been granted, an amount representing the

relevant portion of the present value of the interest margins of

such Mortgage Loan(s) ((x) and (y) together, the ‘‘Additional

Repayment Amount’’), provided that the Scheduled Class D Notes

Repayment Amount on each Payment Date thereafter shall be

reduced by a portion of the Additional Repayment Amountresulting from dividing such amount by the number of Payment

Date(s) between (and including) the Payment Date in question and

the Call Date (inclusive); and provided further that the Scheduled

Class D Notes Repayment Amount shall be reduced by an

amount (if any) so that the Outstanding Principal Amount of the

Class D Notes after the repayment of principal on such Payment

Date shall equal at least 1% (one per cent.) of the Initial Principal

Amount of the Class D Notes and the Scheduled Class D NotesRepayment Amount on each Payment Date thereafter to (but

excluding) the Final Maturity Date shall equal zero;

(B) on each Payment Date after the Call Date to (but excluding) the

Final Maturity Date, zero; and

(C) on the Final Maturity Date, the then Outstanding Principal

Amount of the Class D Notes.

Mandatory redemption of

the Senior Notes

On each Payment Date falling in or after January 2006 but before the

delivery of a Trigger Notice or the occurrence of an Insolvency Event, the

Issuer will apply the Senior Notes Available Funds for Amortisation (as

defined below) provisioned on such date (and, in the case of the Payment

Date falling in January 2006 only, on the preceding Payment Dates) in or

towards satisfaction of the mandatory redemption of the Senior Notes (in

whole or in part) in the following order of priority:

(i) First, the Class A Notes, until the Class A Notes have been

redeemed in full;

(ii) Second, the Class B Notes, until the Class B Notes have been

redeemed in full; and

(iii) Third, the Class C Notes, until the Class C Notes have been

redeemed in full.

Senior Notes Available

Funds for Amortisation

On each Payment Date prior to the delivery of a Trigger Notice or the

occurrence of an Insolvency Event, the available funds reserved for the

amortisation of the Senior Notes (the ‘‘Senior Notes Available Funds for

15

Amortisation’’) shall comprise: (a) the Cash Amortisation Amount (as

defined below); and (b) all amounts which have been actually provisioned on

such Payment Date under item (x) of the Pre-Enforcement Order of Priority.

The Senior Notes Available Funds for Amortisation provisioned on

Payment Dates prior to January 2006 shall be set aside to the Issuer

Investment Account and on the Payment Date falling in January 2006, such

sums will be applied, together with the Senior Notes Available Funds for

Amortisation set aside on such Payment Date, towards mandatory pro rata

redemption of the Senior Notes.

Aggregate Notional

Outstanding Amount

Under the terms of the Master Servicing Agreement, the Master Servicer

shall calculate: (a) on each Semi-annual Report Date the aggregate notionaloutstanding amount for all the Mortgage Loans (the ‘‘Aggregate Notional

Outstanding Amount’’) as of the last day of the Semi-annual Collection

Period immediately prior to such Semi-annual Report Date, where the

Aggregate Notional Outstanding Amount equals the sum of the Notional

Outstanding Amount (as defined below) for every Mortgage Loan on such

date; and (b) on each Interim Report Date, starting from the Interim Report

Date falling on 15 October 2004, the Aggregate Notional Outstanding

Amount as of the Interim Calculation Date falling immediately prior to suchInterim Report Date. In such case the Aggregate Notional Outstanding

Amount equals the sum of the Notional Outstanding Amount for every

Mortgage Loan on such Interim Calculation Date.

Notional OutstandingAmount

The notional outstanding amount for each Mortgage Loan (the ‘‘NotionalOutstanding Amount’’) on the last day of any Semi-annual Collection Period

or, as the case may be, the Interim Calculation Date, is equal to the product

of:

(a) (x) the principal amount outstanding on such Mortgage Loan or;(y) if a Limited Recourse Loan has been granted in respect of

such Mortgage Loan or, under the terms of the Securities

Subordinated Loan Agreement, the Debt Securities Initial Market

Value will be repaid in part out of the Excluded Collections in

respect of the Mortgage Loan(s) for which Limited Recourse

Loan(s) was/were due and payable by any Originator pursuant to

Clause 5.1.2 or Clause 5.1.3 of the Warranty and Indemnity

Agreements but unpaid, zero; and

(b) the Performance Factor (as defined below) applicable to such

Mortgage Loan, where:

(i) the applicable performance factor (the ‘‘Performance

Factor’’) on the last day of any Semi-annual Collection

Period or, as the case may be, the Interim Calculation Date,

is the factor applicable to that Mortgage Loan’s current

Arrears Level (as defined below) by reference to that

Mortgage Loan’s payment frequency (i.e. monthly, quarterlyor semi-annully):

Monthly Quarterly Semi-annually

Arrears LevelPerformance

Factor

Arrears

Level

Performance

Factor

Arrears

Level

Performance

Factor

0-6 100% 0-3 100% 0-2 100%

7-10 85% 4-6 85% 3-4 85%

>10 70% > 6 70% > 4 70%

16

(ii) the arrears level for each Mortgage Loan (the ‘‘Arrears

Level’’) on the last day of each Semi-annual Collection

Period or, as the case may be, the Interim Calculation Date,

is an amount equal to a fraction where:

(a) the numerator is an amount equal to all sums due

but unpaid in respect of such Mortgage Loan as ofthe last day of such Semi-annual Collection Period or,

as the case may be, the Interim Calculation Date

(including interest, default interest, principal and other

costs); and

(b) the denominator is an amount equal to the last

instalment of such Mortgage Loan which has become

payable on or prior to the last day of such Semi-annual Collection Period or, as the case may be, the

Interim Calculation Date,

and the resulting amount shall be calculated to the nearest

whole number (with 0.5 and above rounded up).

Cash Amortisation Amount The ‘‘Cash Amortisation Amount’’ on each Payment Date prior to the

delivery of a Trigger Notice or the occurrence of an Insolvency Event, is anamount equal to the lower of:

(a) the Issuer Available Funds available after the payment of items (i)

to (viii) (inclusive) of the Pre-Enforcement Order of Priority; and

(b) the greater of:

(i) nil; and

(ii) the aggregate Outstanding Principal Amount of the Class A

Notes, the Class B Notes and the Class C Notes (less, in

respect of the second and the third Payment Dates only, the

amount of the Senior Notes Available Funds for

Amortisation set aside on preceding Payment Date(s)) minus

the Aggregate Notional Outstanding Amount of allMortgage Loans that have not been classified as non-

performing (in sofferenza), in each case, as of the last day

of the Semi-annual Collection Period immediately preceding

such Payment Date (the ‘‘Expected Amortisation Amount’’).

Application of Senior Notes

Available Funds for

Amortisation prior to thePayment Date falling in

January 2006

On each Payment Date prior to the Payment Date falling in January 2006,

any Senior Notes Available Funds for Amortisation provisioned on such

Payment Date will be deposited in the Issuer Investment Account and on thePayment Date falling in January 2006, such sums will be applied, together

with the Senior Notes Available Funds for Amortisation set aside on such

Payment Date, in accordance with the order of priority of payments for the

redemption of the Senior Notes set forth in Condition 6.2 (Mandatory Pro

Rata Redemption).

Expected Average Life of

the Senior Notes

Calculations as to the expected average life of the Senior Notes is based on

various assumptions of prepayment rates and in particular on theassumptions that the Issuer will exercise its option to redeem the Senior

Notes on the Call Date. The other assumptions relate to unforeseeable

circumstances. See ‘‘Expected Average Life of the Senior Notes and

Assumptions’’.

No assurance can be given that the assumptions and estimates will be accurateand, therefore, calculations as to the expected average life of the Senior Notesmust be viewed with considerable caution.

17

Optional Redemption On the Payment Date falling in January 2016 (the ‘‘Call Date’’) or any

Payment Date thereafter before the delivery of a Trigger Notice or the

occurrence of an Insolvency Event, the Issuer may, at its option, redeem all

(but not some only) of the Senior Notes at their respective Outstanding

Principal Amounts together with all accrued but unpaid interest thereon up

to and including the relevant Payment Date.

The Issuer may also, on any Payment Date falling after the Initial Period but

before the Call Date before the delivery of a Trigger Notice or the

occurrence of an Insolvency Event, redeem all (but not some only) of the

Senior Notes at their respective Outstanding Principal Amounts together

with all accrued but unpaid interest thereon up to and including the relevantPayment Date if the aggregate Outstanding Principal Amount of the Senior

Notes is equal to or less than ten per cent. (10%) of their aggregate Initial

Principal Amount.

Any such redemption (an ‘‘Optional Redemption’’) shall be effected by theIssuer giving not more than 60 and not less than 30 days’ prior written notice

to the Representative of the Noteholders and to the Senior Noteholders in

accordance with Condition 13 (Notices) and provided that the Issuer, prior to

giving such notice to the Representative of the Noteholders, certifies to the

Representative of the Noteholders that it will have the necessary funds, not

subject to interests of any other Person, to discharge all its outstanding

liabilities in respect of the Senior Notes and any amounts required under the

order of priority set forth in Condition 4.1 (Pre-Enforcement Order of

Priority) to be paid in priority to or pari passu with each Class of Senior

Notes.

The funds necessary for the Optional Redemption of the Senior Notes may:(a) be obtained from the sale by the Issuer of all or part of the Portfolios; or

(b) derive from payments made by BPV, at its discretion, pursuant to the

Quotaholders’ Agreement by way of capital contributions or interest free

subordinated loans in order to enable the Issuer to exercise its right of

Optional Redemption of the Senior Notes whenever the provisions of

Condition 6.3 (Optional Redemption of the Senior Notes) are met. Should

any such sale of the Portfolios occur, or should funds be made available to

the Issuer by BPV pursuant to the Quotaholders’ Agreement for suchOptional Redemption, such sale proceeds or funds, as the case may be, will

form part of the Issuer Available Funds on the relevant Payment Date.

Redemption for Tax

Reasons

If, at any time, the Issuer provides the Representative of the Noteholders,

immediately prior to the delivery of the notice referred to below, with a legalopinion (in form and substance satisfactory to the Representative of the

Noteholders) from counsel in the Issuer’s jurisdiction opining that on the

next Payment Date: (a) the Issuer would be required to deduct or withhold

(other than in respect of a withholding tax under Italian Legislative Decree

No. 239 of 1 April 1996, as amended by Italian Law No. 409 and No. 410 of

23 November 2001 and as subsequently amended and supplemented (any

such withholding, a ‘‘Decree 239 Withholding’’)) from any payment of

principal or interest on the Notes of any Class any amount for or on accountof any present or future taxes, duties, assessments or governmental charges

by the Republic of Italy or any political subdivision thereof or any authority

thereof or therein, or (b) as a result of legislative or regulatory changes or

official interpretations thereof by competent authorities, the Issuer would

incur increased costs or charges of a fiscal nature which would materially

affect any Class of Notes, and the Issuer certifies to the Representative of the

Noteholders that the Issuer has the necessary funds, not subject to the

interest of any other Person, to discharge all of its outstanding liabilities in

18

respect of the relevant Class of Notes and any amounts required under the

Conditions to be paid in priority to or pari passu with such Notes, then the

Issuer may redeem, on the next Payment Date, all (but not some only) of the

Notes of such Class at their Outstanding Principal Amount together with

accrued but unpaid interest up to and including the relevant Payment Date,

having given not more than 60 and not less than 30 days’ prior written notice

to the Representative of the Noteholders and to the Noteholders in

accordance with Condition 13 (Notices).

Withholding Tax Payments under the Notes may, in certain circumstances referred to in

the section headed ‘‘Taxation’’ of this Offering Circular, be subject towithholding for or on account of tax, including without limitation a Decree

239 Withholding. In such circumstances, a Noteholder of any Class will

receive interest payment amounts (if any) payable on the Notes of such

Class, net of such withholding tax.

Upon the occurrence of any withholding for or on account of tax from any

payments under the Notes, neither the Issuer nor any other Person shall have

any obligation to pay any additional amount(s) to any Noteholder of any

Class.

Final Redemption Unless previously redeemed in full, the Notes are due to be repaid in full at

their respective Outstanding Principal Amounts on the Payment Date falling

in July 2035 (the ‘‘Final Maturity Date’’).

The Notes, to the extent not redeemed in full by or on their respective Final

Maturity Date, shall be deemed released by the holders thereof and

cancelled.

Ratings The Class A Notes are expected, on issue, to be rated AAA by Fitch and

AAA by S&P; the Class B Notes are expected, on issue, to be rated A by

Fitch and A by S&P; and the Class C Notes are expected, on issue, to be

rated BBB by Fitch and BBB by S&P. A credit rating has not been sought

for the Class D Notes.

A credit rating is not a recommendation to buy, sell or hold securities and maybe subject to revision or withdrawal by the assigning rating organisation.

The Portfolios The Portfolios comprise:

* the BPV Portfolio, which comprises the BPV Claims, with an

aggregate outstanding principal amount as of 1 December 2003 of

Euro 368,933,837.66, arising from 4,273 performing BPV

Mortgage Loans originated by BPV or by certain other banks

(namely, Banca Popolare della Provincia di Belluno S.p.A., Banca

Popolare di Treviso S.p.A., Banca Popolare di Trieste S.p.A. andBanca Popolare Udinese S.p.A. (collectively, the ‘‘Other Banks’’))

and that have been transferred to BPV as a result of the going

concern acquisitions by BPV from these Other Banks pursuant to

Article 58 of the Consolidated Banking Act;

* the CRP Portfolio, which comprises the CRP Claims, with an

aggregate principal outstanding amount as of 1 December 2003 of

Euro 149,764,023.20, arising from 1,732 performing CRP

Mortgage Loans originated by CRP or by Banca Steinhauslin and

transferred to CRP as a result of the going concern acquisition by

CRP from Banca Steinhauslin pursuant to Article 58 of the

Consolidated Banking Act; and

* the BN Portfolio, which comprises the BN Claims, with an

aggregate outstanding principal amount as of 1 December 2003 of

Euro 69,786,363.78, arising from 1,333 performing BN Mortgage

19

Loans originated by Banca del Popolo di Trapani (both before

and after its merger with and incorporation of Banca Nuova

S.p.A., which merged entity then changed its name to Banca

Nuova S.p.A.) or by Banca Nuova S.p.A. prior to the

aforementioned merger,

in each case, together with all ancillary rights and guarantees thereto.

Each relevant Portfolio comprises loans granted to individuals. See ‘‘The

Portfolios’’ and ‘‘Description of the Transfer Agreements’’.

Listing of the Notes Application has been made to list the Senior Notes on the Luxembourg

Stock Exchange. No application has been made to list the Class D Notes on

any stock exchange.

Selling Restrictions There are restrictions on the sale of the Notes and on the distribution of

information relating thereto. The Notes have not been and will not be

registered under the Securities Act and may not be offered, sold or deliveredexcept pursuant to an exemption from, or in a transaction not subject to, the

registration requirements of the Securities Act. See ‘‘Subscription and Sale’’.

Purchase of the Notes The Issuer may not purchase any Notes at any time.

Governing Law The Notes will be governed by Italian law.

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TRANSACTION DOCUMENTS

Transfer Agreements Pursuant to three transfer agreements entered into on 28 November 2003

between each of BPV, CRP and BN on the one hand, and the Issuer on the

other hand (the ‘‘BPV Transfer Agreement’’, the ‘‘CRP Transfer Agreement’’

and the ‘‘BN Transfer Agreement’’ and collectively, the ‘‘Transfer

Agreements’’), BPV, CRP and BN have assigned and transferred,

respectively, claims and connected rights deriving from the BPV Mortgage

Loans, the CRP Mortgage Loans and the BN Mortgage Loans to the Issuerwithout recourse (pro soluto), effective as of 1 December 2003 (the ‘‘Effective

Date’’), in accordance with and subject to the terms and conditions of the

Securitisation Law.

On 17 March 2004, the Issuer entered into an agreement with each of BPV,

CRP and BN (the ‘‘Miscellaneous Loans Transfer Agreements’’) pursuant to

which the Issuer transferred, pursuant to Article 58 of the Consolidated

Banking Act, to the Originators claims and connected rights under 40Mortgage Loans which satisfy the criteria set out in the Miscellaneous Loans

Transfer Agreement (together, the ‘‘Miscellaneous Mortgage Loans’’), for a

total consideration of Euro 3,361,293.34, being the principal balance of such

Miscellaneous Mortgage Loans plus interest accrued thereon and the present

value of interest margins on the Miscellaneous Mortgage Loans.

As used in this Offering Circular, the terms ‘‘BPV Portfolio’’, ‘‘CRP

Portfolio’’ and ‘‘BN Portfolio’’ (each of which is also referred to in thisOffering Circular as a ‘‘relevant Portfolio’’) refer to the BPV Mortgage

Loans, the CRP Mortgage Loans or, as the case may be, the BN Mortgage

Loans transferred pursuant to the Transfer Agreements less, in each case, the

relevant Miscellaneous Mortgage Loans, and the term ‘‘Portfolios’’ shall be

construed accordingly.

The Purchase Price (excluding the Interest Component Of The Purchase

Price) will be paid by the Issuer on the Issue Date out of the net proceeds

from the subscription for the Notes. The Interest On The Purchase Price andthe Interest Component Of The Purchase Price shall be paid by the Issuer to

each Originator on the First Payment Date and, if not paid in full on the

First Payment Date, any shortfall shall be paid on the successive Payment

Date(s), in each case, out of the Issuer Available Funds and in accordance

with the applicable Order of Priority. See ‘‘Description of the Transfer

Agreements’’ and ‘‘The Portfolios’’.

Warranty and IndemnityAgreements

Pursuant to three warranty and indemnity agreements entered into on28 November 2003 between the Issuer on the one hand, and each of BPV,

CRP and BN on the other hand (the ‘‘BPV Warranty and Indemnity

Agreement’’, the ‘‘CRP Warranty and Indemnity Agreement’’ and the ‘‘BN

Warranty and Indemnity Agreement’’ and collectively, the ‘‘Warranty and

Indemnity Agreements’’), each of BPV, CRP and BN has given certain

representations and warranties in favour of the Issuer in relation,

respectively, to the BPV Portfolio, the CRP Portfolio and the BN

Portfolio and has agreed to indemnify the Issuer in respect of certainliabilities of the Issuer incurred in connection with the purchase and

ownership of the relevant Portfolio assigned by each of them to the Issuer.

See ‘‘Description of the Warranty and Indemnity Agreements’’.

Master Servicing

Agreement

Pursuant to the terms of a master servicing agreement entered into on 28

November 2003 between the Issuer, BPV, CRP and BN (the ‘‘Master

Servicing Agreement’’), each of BPV, CRP and BN (each in its capacity as

the ‘‘Servicer’’ in respect of the relevant Portfolio assigned by it to the Issuer

and collectively, the ‘‘Servicers’’) has agreed to administer and service the

21

Claims arising from such relevant Portfolio, including the collection of such

Claims on behalf of the Issuer in accordance with the provisions set forth in

Annex A, B or, as the case may be, C to the Master Servicing Agreement (the

‘‘BPV Collection Policy’’, the ‘‘CRP Collection Policy’’ or the ‘‘BN Collection

Policy’’ respectively) and to carry out activities related to the management of

the Mortgage Loans comprised in such relevant Portfolio, including

commencing, participating in and pursuing all necessary or appropriate

enforcement and insolvency proceedings and negotiating and settling therecovery of the relevant Claims in accordance with the applicable Collection

Policy.

In consideration for the services provided by each Servicer, the Issuer shall

pay to each Servicer, in semi-annual instalments on each Payment Date: (a)

an annual fee equal to zero point fifteen per cent. (0.15%) of the aggregate

outstanding principal amount of the Claims comprised in the relevant

Portfolio as of the beginning of the relevant calendar year; and (b) anadditional fee equal to Euro 251.23 per annum for those Claims comprised

in the relevant Portfolio in respect of which recovery activities have been

carried out. In addition, the Issuer shall pay to BPV, in its capacity as Master

Servicer, in semi-annual instalments on each Payment Date an annual fee

equal to zero point zero one per cent. (0.01%) of the aggregate outstanding

principal amount of all Claims comprised in the Portfolios as of the

beginning of the relevant calendar year.

The Master Servicer has undertaken to prepare and submit to the Issuer, the

Lead Manager, the Calculation Agent, the Swap Counterparty, the

Representative of the Noteholders and the Rating Agencies semi-annual

reports in the form set forth in the Master Servicing Agreement (the ‘‘Semi-

annual Servicer Report’’), on the 15th calendar day of each January and July

of each year or, if such day is not a Business Day, on the next Business Day

(the ‘‘Semi-annual Report Date’’), containing information as to the

Collections made in respect of the Portfolios during the immediatelypreceding Semi-annual Collection Period. The Semi-annual Servicer Reports

will provide the Aggregate Notional Outstanding Amount of the Portfolios

as of the last day of the immediately preceding Semi-annual Collection

Period together with other information relating to the arrears and the

amortisation of the Portfolios and the Servicers’ activity during the period,

including without limitation: a description of the Portfolios (outstanding

amount, principal and interest) as well as information relating to

delinquencies, defaults and collections during the Semi-annual CollectionPeriod. Each Servicer shall procure that a firm of internationally recognised

auditors shall prepare a report in respect of the information and data

contained in each Semi-annual Servicer Report.

The Master Servicer has also undertaken to prepare and submit to the

Issuer, the Lead Manager, the Calculation Agent, the Swap Counterparty,

the Representative of the Noteholders and the Rating Agencies interim

reports in the form set forth in the Master Servicing Agreement (the ‘‘InterimServicer Report’’) on the 15th calendar day of each April and October of

each year or, if such day is not a Business Day, on the next Business Day (the

‘‘Interim Report Date’’), starting from the Interim Report Date falling on

15 October 2004, providing the Aggregate Notional Outstanding Amount of

the Portfolios as of the Interim Calculation Date immediately preceding such

Interim Report Date, together with other information relating to the arrears

and the amortisation of the Portfolios and the Servicers’ activity in respect of

the immediately preceding Interim Calculation Period.

22

Copies of the most recently published Semi-annual Servicer Reports and

Interim Servicer Reports shall be made available for collection and

inspection during normal business hours at the registered offices of the

Luxembourg Listing Agent and of the Representative of the Noteholders.

The Semi-annual Servicer Reports and the Interim Servicer Reports will also

be published on the Bloomberg screen (or any replacement thereof) and/or

on BPV’s web site and/or in such other manner which the Master Servicer

and the Lead Manager may deem appropriate. See ‘‘Description of the

Master Servicing Agreement’’.

Administrative ServicesAgreement

Pursuant to an administrative services agreement entered into on 28November 2003 between the Issuer and BPV (the ‘‘Administrative Services

Agreement’’), BPV (in its capacity as the ‘‘Administrative Services Provider’’)

has agreed to provide the Issuer with a number of administrative services,

including maintenance of the corporate books and of the accounting and tax

registers, compliance with reporting requirements relating to the Claims and

with other regulatory requirements imposed on the Issuer. See ‘‘Description

of the Administrative Services Agreement’’.

Security for the Notes By operation of Italian law, the Issuer’s right, title and interest in and to the

Portfolios will be segregated from all other assets of the Issuer and amounts

deriving therefrom will only be available, both prior to and following a

winding up of the Issuer, to satisfy the obligations of the Issuer to theholders of the Senior Notes (the ‘‘Senior Noteholders’’), the holders of the

Class D Notes (the ‘‘Class D Noteholders’’ and, together with the Senior

Noteholders, the ‘‘Noteholders’’) and any third party creditor to whom the

Issuer owes costs, fees and expenses, or otherwise owes amounts, in relation

to the Securitisation.

After publication in the Official Gazette dated 22 December 2003 of a notice

of the sale of the Portfolios by each Originator to the Issuer, the Claims may

not be seized or attached in any form by third party creditors other than by

the Noteholders and, insofar as the claims concern transaction costs or other

amounts due in connection with the Securitisation, other creditors of the

Issuer, until the Issuer has discharged in full its payment obligations to theNoteholders under the Notes (or the Notes have been cancelled) and to such

other creditors.

Assignments executed under the Securitisation Law are subject to revocationin the event of bankruptcy under Article 67 of Royal Decree No. 267 of 16

March 1942 but only if the securitisation transaction is or was entered into

within three months of the adjudication of bankruptcy of the relevant party

or in cases where paragraph 1 of Article 67 applies, within six months of the

adjudication of bankruptcy. See ‘‘Selected aspects of Italian Law relevant to

the Portfolios and the transfer of the Portfolios - The Assignment’’.

Security Documents Pursuant to a deed of pledge governed by Italian law and executed by the

Issuer on 17 March 2004 (the ‘‘Italian Deed of Pledge’’), the Issuer has: (a)

pledged in favour of the Noteholders and the Other Issuer Creditors: (i) all

monetary claims and rights and all the amounts (including payment for

claims, indemnities, damages, penalties, credits and guarantees) to which theIssuer is entitled pursuant to the Transaction Documents (other than the

Swap Agreement, the Senior Notes Subscription Agreement and the Security

Documents); (ii) any existing or future monetary claims and rights of any

sum credited from time to time to the Accounts (other than the Issuer

Expenses Account, the Issuer English Account and the Issuer Quota Capital

Account), other than the subscription price for the Notes and the Excluded

Collections; and (b) has undertaken to pledge in favour of the Noteholders

and the Other Issuer Creditors the securities deposited in the Issuer

23

Securities Loan Securities Account and the monetary claims deriving from

the Eligible Investments that will be made by the Cash Manager on behalf of

the Issuer pursuant to the Cash Allocation, Management and Payments

Agreement including any interest, dividend, monetary premia and any other

amounts that derive from the Eligible Investments. The Issuer has also

undertaken that should the Liquidity Reserve Account be opened, it shall

forthwith pledge in favour of the Noteholders and the Other Issuer Creditors

any existing or future monetary claims and rights of any sums credited fromtime to time to such Liquidity Reserve Account.

Pursuant to a deed of charge governed by English law and executed by theIssuer on 17 March 2004 (the ‘‘English Deed of Charge’’ and together with

the Italian Deed of Pledge, the ‘‘Security Documents’’), the Issuer has

assigned and charged in favour the Noteholders and the Other Issuer

Creditors, by way of first fixed security, all the Issuer’s rights, title, interest

and benefit (present and future) in, to and under the Swap Agreement and

the Senior Notes Subscription Agreement and in and to all sums of money

which may be, at the time the English Deed of Charge is entered into or

thereafter are from time to time, standing to the credit of the Issuer EnglishAccount and has charged by way of first floating security the whole of the

Issuer’s undertaking, property and assets, present and future, relating to the

Securitisation, with the exception only of: (a) any part of its undertaking or

any property or asset for the time being validly and effectively charged or

assigned by way of fixed security pursuant to the English Deed of Charge;

and (b) any part of its undertaking or any property or asset situated outside

England and Wales to the extent that any such security would be unlawful

under the laws of the jurisdiction in which such property, undertaking orasset is situated or such security is enforced. See ‘‘Description of the Security

Documents’’.

Mandate Agreement Pursuant to a mandate agreement entered into on 17 March 2004 between

the Issuer and the Representative of the Noteholders (the ‘‘Mandate

Agreement’’), the Representative of the Noteholders is authorised to

exercise, in the name and on behalf of the Issuer: (i) subject to a Trigger

Notice being delivered to the Issuer following the occurrence of a Trigger

Event or upon the occurrence of an Insolvency Event, all the Issuer’s Rights

(other than the right to collect and receive Collections under the Master

Servicing Agreement) and the Issuer’s rights in respect of the Claims,including the right to sell (in whole or in part) the Portfolios, provided,

however, that a sufficient amount shall be realised to enable a complete

discharge of all amounts owed to the Senior Noteholders and amounts

ranking in priority thereto or pari passu therewith; and (ii) upon any failure

by the Issuer to exercise its Rights against any defaulting party to procure

remedy of such default, all the Issuer’s Rights against the defaulting

counterparty. See ‘‘Description of the Mandate Agreement’’.

Intercreditor Agreement Pursuant to an intercreditor agreement entered into on 17 March 2004 (the

‘‘Intercreditor Agreement’’) among the Issuer, the Representative of the

Noteholders acting on behalf of the Noteholders, the Representative of the

Noteholders acting on behalf of itself, the Administrative Services Provider,the Servicers, the Master Servicer, the Calculation Agent, the Account Bank,

the English Account Bank, the Collection Account Bank, the Cash

Manager, the Paying Agents, the Originators, the Swap Counterparty, the

Funding Provider, the Liquidity Facility Provider, the Subordinated Loan

Provider, the Securities Subordinated Loan Provider, the Luxembourg

Listing Agent, the Class D Notes Subscribers and the Class D Notes

Depository (such parties other than the Issuer and the Noteholders, the

‘‘Other Issuer Creditors’’), the Representative of the Noteholders will, upon

24

the delivery of a Trigger Notice to the Issuer following the occurrence of a

Trigger Event or following the occurrence of an Insolvency Event, ensure

that all the Issuer Available Funds be applied in or towards satisfaction of all

of the Issuer’s payment obligations towards the Noteholders as well as the

Other Issuer Creditors, in accordance with Post-Enforcement Order of

Priority and the terms of the Intercreditor Agreement. The Noteholders and

the Other Issuer Creditors will irrevocably appoint and grant the right to the

Representative of the Noteholders, upon the delivery of a Trigger Notice orfollowing the occurrence of an Insolvency Event, to receive in their name

and on their behalf payments to be made by the Issuer pursuant to the

applicable Order of Priority.

Pursuant to the terms of the Intercreditor Agreement, the Noteholders and

the Other Issuer Creditors agree that the cash deriving from time to time

from the subject matter of the Security Documents as well as all proceeds

from the enforcement thereof shall be applied to satisfy amounts due to each

of them in accordance with the applicable Order of Priority.

The Issuer’s obligations to each of the Noteholders and to each of the Other

Issuer Creditors will be limited recourse obligations. The Noteholders will

have a claim against the Issuer only to the extent of the Issuer Available

Funds in each case subject to and as provided in the Intercreditor Agreement

and the other Transaction Documents. The costs of the transaction

including the amount payable to the various agents of the Issuer

appointed in connection with the issue of the Notes, but excluding thecommissions of the Lead Manager and the up front costs and expenses of the

Securitisation (which shall be paid directly by the Issuer out of the proceeds

of the subscription for the Notes), will be paid from the Issuer Available

Funds, subject to and as provided in the Intercreditor Agreement and the

other Transaction Documents.

Cash Allocation,

Management and Payments

Agreement

Pursuant to a cash allocation, management and payments agreement entered

into on 17 March 2004 among the Issuer, the Cash Manager, the Account

Bank, the Collection Account Bank, the English Account Bank, the Paying

Agents, the Calculation Agent and the Representative of the Noteholders

(the ‘‘Cash Allocation, Management and Payments Agreement’’), the

Collection Account Bank, the Account Bank, the English Account Bank,the Paying Agents, the Cash Manager and the Calculation Agent have

agreed to provide the Issuer with certain calculation, notification and

reporting services together with account handling and cash management

services in relation to monies and securities, as the case may be, from time to

time standing to the credit of the following accounts: the Issuer Collection

Accounts, the Issuer Expenses Account and the Issuer Quota Capital

Account held with the Collection Account Bank; the Issuer Investment

Account, the Issuer Securities Account, the Issuer Securities Loan SecuritiesAccount, the Issuer Cash Reserve Account and the Issuer Distribution

Account held with the Account Bank; and the Issuer English Account held

with the English Account Bank. The Account Bank and the English Account

Bank shall at all times be Eligible Institutions.

Pursuant to the terms of the Cash Allocation, Management and Payments

Agreement, the Collection Account Bank shall transfer on each Monday,

Wednesday and Friday of every week (or, during the first six months after

the Issue Date, each Monday and Thursday of every week) (or, if such day is

not a Local Business Day, the immediately succeeding Local Business Day)

all sums standing to the credit of the Issuer Collection Accounts, other than

the Excluded Collections, to the Issuer Investment Account. Under the terms

of the Cash Allocation, Management and Payments Agreement, the Cash

25

Manager will be appointed by the Issuer to reinvest on behalf of the Issuer

all and any amounts standing to the credit of the Issuer Investment Account,

the Issuer Cash Reserve Account and the Issuer Distribution Account in

Eligible Investments. The Calculation Agent has agreed, pursuant to the

Cash Allocation, Management and Payments Agreement to prepare, on or

prior to each Calculation Date, a report containing details of amounts to be

paid or provisioned by the Issuer on the Payment Date succeeding the

relevant Calculation Date in accordance with the applicable Order ofPriority (the ‘‘Payments Report’’). The Calculation Agent shall deliver the

Payments Report to, inter alios, the Issuer, the Representative of the

Noteholders, the Servicers and the Rating Agencies. The Calculation Agent

will also calculate and indicate in the Payments Report the Senior Notes

Available Funds for Amortisation and the amounts to be paid by the Issuer

on the relevant Payment Date with respect to the mandatory redemption of

the Senior Notes in accordance with Condition 6.2 (Mandatory Pro Rata

Redemption). The Principal Paying Agent shall instruct the Account Bank toapply amounts credited to the Issuer Distribution Account, to which

amounts credited to the Issuer Investment Account and the Issuer Cash

Reserve Account shall have been transferred on each Semi-annual Collection

Date, to make payments in accordance with the Payments Report. See

‘‘Description of the Cash Allocation, Management and Payments Agreement’’.

Quotaholders’ Agreement At the date of this Offering Circular, the Quotaholders of the Issuer are:

Stichting Vicenza, which holds ninety-five per cent. (95%) of the Issuer’s

quota capital; and BPV Finance (International) PLC (a subsidiary of BPV),

which holds five per cent. (5%) of the Issuer’s quota capital (together the

‘‘Quotaholders’’). On 17 March 2004 the Issuer, BPV and the Quotaholders

entered into a quotaholders agreement in relation to the Issuer (the‘‘Quotaholders’ Agreement’’).

The Quotaholders’ Agreement contains inter alia two call options in favour

of BPV to purchase from Stichting Vicenza: (i) at any time a quota equal to

five per cent. (5%) of the Issuer’s quota capital; or (ii) within six months afterthe Senior Notes have been entirely redeemed a quota equal to ninety-five

per cent. (95%) (or, in the event the call option under (i) has been exercised,

ninety per cent. (90%)) of the Issuer’s quota capital, as well as provisions in

relation to the management of the Issuer.

In addition, BPV (in its capacity as the ‘‘Funding Provider’’) has undertaken

to indemnify the Issuer from, or make available to the Issuer the monies

required to pay, any damages, losses, claims, liabilities, costs and expenses

(other than the current expenses of the Securitisation) incurred by the Issuer

and not paid out of the Issuer Available Funds including, inter alia, any

costs or charges related to regulatory or supervisory liens and charges and/or

resulting from changes of law or regulations applying to the Issuer.

The Funding Provider has also undertaken to ensure that the Issuer is not

subject to insolvency proceedings as a result of its failure to fulfil its

obligations to pay debts in respect of which the Issuer is liable to pay other

than out of assets that are segregated for the purpose of the Securitisation(i.e. not including payment obligations of the Issuer towards the

Noteholders, the Other Issuer Creditors and other creditors of the

Securitisation and not including any other limited recourse payment

obligation of the Issuer for which the Issuer’s liability is, by law or by

contract, limited to the amount of the Claims and any other assets which

constitute segregated assets in accordance with the Securitisation Law) and

ensure that the Issuer is not wound up due to a reduction of the Issuer’s

capital which is below the required minimum as provided by Italian law or

26

regulations from time to time in force. Such undertakings shall remain in

force for a period of twelve calendar months plus one day from (and

including) the day following the date on which all amounts of principal and

interest due and payable in respect of the Senior Notes have been paid in full.

Any payments made by the Funding Provider pursuant to the provisions of

the Quotaholders’ Agreement are to be made by way of interest free

subordinated loans, contributions or other means of funding which are

subordinated in accordance with the applicable Order of Priority.

Under the terms of the Quotaholders’ Agreement, BPV has a right,

exercisable at its own discretion, to make payments to the Issuer by way of

capital contributions or interest free subordinated loans to enable the Issuer

to exercise its right of Optional Redemption of the Senior Notes wheneverthe provisions of Condition 6.3 (Optional Redemption of the Senior Notes)

are met.

Swap Agreement On 17 March 2004, the Issuer entered into a swap agreement with the SwapCounterparty, in order to hedge its interest rate exposure in relation to the

floating rate of interest it is required to pay in respect of the Senior Notes, in

the form of an International Swaps and Derivatives Association, Inc.

(‘‘ISDA’’) 1992 Master Agreement (Multicurrency-Cross Border), together

with a Schedule thereto (the ‘‘Master Agreement’’).

Pursuant to the Master Agreement, the Issuer and the Swap Counterparty

on 17 March 2004, entered into three swap confirmations (the ‘‘Swap

Confirmations’’ and together with the Master Agreement, the ‘‘Swap

Agreement’’) evidencing the terms of a swap transaction in respect of each

relevant Portfolio pursuant to which the Issuer will pay to the SwapCounterparty amounts determined by reference to the rates of interest

payable on the Mortgage Loans comprised in each relevant Portfolio and the

Swap Counterparty will make payments to the Issuer determined by

reference to the floating rate of interest that the Issuer is required to pay with

respect to the Senior Notes. See ‘‘Description of the Swap Agreement’’. The

Issuer will have the benefit of the Additional CDC IXIS Guarantee with

respect to the Swap Agreement. See ‘‘The Swap Counterparty’’.

Liquidity Facility

Agreement

On 17 March 2004, the Issuer and BPV (in its capacity as the ‘‘Liquidity

Facility Provider’’) entered into an agreement (the ‘‘Liquidity Facility

Agreement’’) pursuant to which the Liquidity Facility Provider has agreed

to make available to the Issuer for a 364 day period starting from the IssueDate, a liquidity facility (the ‘‘Liquidity Facility’’) in a maximum aggregate

amount equal to Euro 3 million (the ‘‘Liquidity Facility Limit’’). The Issuer

shall, not earlier than 90 days and not later than 60 days prior to each

Liquidity Facility Commitment Termination Date, request the Liquidity

Facility Provider to renew the Liquidity Facility for a further period of 364

days. If such renewal would cause the Liquidity Facility Commitment

Termination Date to fall after the Payment Date on which the Senior Notes

are redeemed in full (the ‘‘Liquidity Facility Maturity Date’’), the renewalshall be for a shorter period ending on the Liquidity Facility Maturity Date.

The Liquidity Facility Provider must have a rating of at least F-2 by Fitchand A-2 by S&P assigned to its unguaranteed, unsubordinated and

unsecured short-term debt obligations. In the event that the rating of the

Liquidity Facility Provider falls below the aforementioned minimum ratings

or if the Liquidity Facility Provider elects not to renew the Liquidity

Facility, the Liquidity Facility Provider undertakes to procure for the Issuer

a substitute Liquidity Facility with the same terms as the Liquidity Facility

Agreement and with an appropriately rated entity. If: (a) the Liquidity

Facility Provider elects not to renew the Liquidity Facility; or (b) the rating

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of the Liquidity Facility Provider falls below the minimum ratings referred

to above and the Liquidity Facility Provider fails to exercise its right to

procure a successor, the Liquidity Facility Provider shall deposit the then

undrawn commitment under the Liquidity Facility Agreement (the

‘‘Liquidity Facility Undrawn Amount’’) in an account (the ‘‘Liquidity

Reserve Account’’).

The Liquidity Facility Agreement will provide liquidity support in the event

that the Issuer Available Funds as of any Payment Date are not sufficient to

meet the Issuer’s liabilities as set forth in items (i) to (vi) (inclusive) of the

Pre-Enforcement Order of Priority plus, for so long as the Liquidity Facility

Loss Ratio does not exceed 9.9%, the Interest Payment Amount due on the

Class B Notes and for so long as the Liquidity Facility Loss Ratio does notexceed 7.7%, the Interest Payment Amount on the Class C Notes on such

Payment Date or, as the case may be, the Issuer’s payment obligations under

items (i) to (x) (inclusive) of the Post-Enforcement Order of Priority.

All amounts drawn down under the Liquidity Facility will accrue interest at

a rate per annum equal to the Six Month Euribor plus a margin of zero pointzero one per cent. (0.01%), for the entire duration of the Interest Period(s)

during which time such amounts are outstanding. Amounts drawn down

under the Liquidity Facility Agreement will be repayable on each Payment

Date in an amount equal to the Liquidity Facility Repayment Amount out

of the Issuer Available Funds subject to and in accordance with the

applicable Order of Priority.

The Liquidity Reserve Account will be an account in the name of the Issuer

with the Account Bank, unless the Account Bank does not qualify as an

Eligible Institution in which case the Liquidity Reserve Account will be held

with another institution which qualifies as an Eligible Institution. The Issuer

will be entitled to withdraw amounts from the Liquidity Reserve Account

only in those circumstances in which it would have been entitled to make a

draw down under the Liquidity Facility. Interest will accrue on such amountof the Liquidity Facility Undrawn Amount that remains credited to the

Liquidity Reserve Account from time to time and is not withdrawn by the

Issuer in accordance with the terms of the Liquidity Facility Agreement.

Subordinated LoanAgreement

On 17 March 2004, BPV (in its capacity as the ‘‘Subordinated LoanProvider’’) entered into an agreement with the Issuer (the ‘‘Subordinated

Loan Agreement’’) pursuant to which the Subordinated Loan Provider shall

grant the Issuer on the Issue Date a limited recourse subordinated loan (the

‘‘Subordinated Loan’’) equal to Euro 8,827,245 which will be deposited in the

Issuer Cash Reserve Account to fund the Initial Cash Reserve Amount.

Payment of interest and repayment of principal on the Subordinated Loan

rank below the payment of interest and repayment of principal on the Senior

Notes. See ‘‘Description of the Subordinated Loan Agreement’’.

Securities Subordinated

Loan Agreement

On 17 March 2004, BPV entered into a loan agreement with the Issuer (the

‘‘Securities Subordinated Loan Agreement’’ and together with theSubordinated Loan Agreement referred to above, the ‘‘Subordinated Loan

Agreements’’) pursuant to which BPV (in its capacity as the ‘‘Securities

Subordinated Loan Provider’’) granted to the Issuer a subordinated loan to

be advanced in the form of debt securities constituted by French fixed rate

treasury notes (Les bons du Tresor a taux fixe et a interet annuel) (the ‘‘Debt

Securities’’) with a current market value as of 17 March 2004 of Euro

11,986,703.07 (the ‘‘Debt Securities Initial Market Value’’) and a principal

amount upon maturity of Euro 11,770,000 (the ‘‘Debt Securities Nominal

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Value’’, equivalent to approximately 2% of the Initial Principal Amount of

the Senior Notes). Such debt securities have a maturity not exceeding 12

January 2005 and will be deposited on the Issue Date in the Issuer Securities

Loan Securities Account.

If BPV fails to supply certain data on the Portfolios or fails to procure the

completion of a satisfactory review of such data before 30 September 2004

(see ‘‘Description of the Transfer Agreements’’), or if the aggregate amount of

Limited Recourse Loans due and payable pursuant to Clause 5.1.2 or Clause

5.1.3 of the Warranty and Indemnity Agreements but unpaid by the

Originators exceeds the Debt Securities Nominal Value, the Issuer shallrepay to the Securities Subordinated Loan Provider the Debt Securities

Initial Market Value in cash out of the Issuer Available Funds in accordance

with the applicable Order of Priority. Proceeds deriving from the liquidation

of all of the Debt Securities plus any interest generated thereby (the

‘‘Securities Loan Full Liquidation Amount’’) shall be deposited in the Issuer

Cash Reserve Account and shall form part of the Issuer Available Funds on

the First Payment Date.

If the aggregate amount of Limited Recourse Loans due and payable

pursuant to Clause 5.1.2 or Clause 5.1.3 of the Warranty and Indemnity

Agreements but unpaid by the Originators is lower than the Debt SecuritiesNominal Value, an amount corresponding to the aggregate amount of all

Limited Recourse Loans due and payable by the Originators pursuant to

Clause 5.1.2 or Clause 5.1.3 of the Warranty and Indemnity Agreements but

unpaid deriving from the liquidation of part of the Debt Securities (the

‘‘Securities Loan Partial Liquidation Amount’’) shall be transferred to the

Issuer Distribution Account and shall form part of the Issuer Available

Funds of the First Payment Date. The Issuer shall repay to the Securities

Subordinated Loan Provider the Debt Securities Initial Market Value asfollows: (a) out of the Excluded Collections in an amount corresponding to

the aggregate amount of all Limited Recourse Loans due and payable by the

Originators pursuant to Clause 5.1.2 or Clause 5.1.3 of the Warranty and

Indemnity Agreements but unpaid; and (b) the remainder will be repaid in

the form of the residual Debt Securities, provided that if the then market

value of such residual Debt Securities is lower than their initial market value,

the difference shall be repaid by the Issuer to the Securities Subordinated

Loan Provider out of the Issuer Available Funds and in accordance with theapplicable Order of Priority. See further ‘‘Description of the Subordinated

Loan Agreement’’.

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SPECIAL CONSIDERATIONS

The following is a summary of certain aspects of the issue of the Senior Notes of which prospective

Noteholders should be aware. It is not intended to be exhaustive and prospective Noteholders should

make their own independent valuation of all of the special considerations and should also read the

detailed information set forth elsewhere in this Offering Circular and in the Transaction Documents.

Source of Payments to Noteholders

The Notes constitute direct, secured limited recourse obligations solely of the Issuer. In particular,

the Notes will not be obligations or responsibilities of or guaranteed by any of the Arranger, the Lead

Manager, the Representative of the Noteholders, the Quotaholders, the Cash Manager, the Calculation

Agent, the Paying Agents, the Luxembourg Listing Agent, the Account Bank, the English Account

Bank, the Collection Account Bank, the Swap Counterparty, the Funding Provider, the Liquidity

Facility Provider, the Subordinated Loan Provider, the Securities Subordinated Loan Provider or BPV,

CRP and BN (in any capacity under the Transaction Documents). None of the aforementioned parties

accepts any liability whatsoever in respect of any failure by the Issuer to make any payment of anyamount due on the Notes.

The Issuer will not as of the Issue Date have any significant assets other than the Portfolios and

the Issuer’s Rights in respect of those Transaction Documents to which it is a party. Consequently,

upon the occurrence of a Trigger Event, there may be insufficient funds available to repay the Notes

in full.

The ability of the Issuer to meet its obligations in respect of the Notes will be dependent upon

the Issuer’s receipt of collections made on its behalf by the Servicers with respect to the Portfolios,

any payments made by the Swap Counterparty under the Swap Agreement and any other amounts

received by the Issuer pursuant to the provisions of the other Transaction Documents to which it is a

party.

Should an early termination of the Swap Agreement occur, the Issuer may also be exposed to

the interest rate risk related to the floating rate of interest it is required to pay in respect of theSenior Notes. An early termination of the Swap Agreement could result in the Issuer being obliged to

make a termination payment to the Swap Counterparty. Except where the Swap Counterparty has

caused the Swap Agreement to terminate by its own default, any termination payment due to the

Swap Counterparty will rank ahead of payments of interest and/or principal on the Notes.

Furthermore, in the event of an insolvency of the Swap Counterparty, the Issuer will rank as a

general unsecured creditor of the Swap Counterparty in respect of any claim it has for a termination

amount due from the Swap Counterparty under the Swap Agreement.

Risk of Losses Associated with Declining Property Values

The security for the Notes consists of, inter alia, the Issuer’s interest in the Mortgage Loans and

the relevant Collateral Security. The value of this security may be affected by, among other things, a

decline in property values. No assurance can be given that the values of the Real Estate Assets have

remained or will remain at the level at which they were on the origination dates of the related

Mortgage Loans. Should the Italian residential property market experience an overall decline in

property values, such a decline could, in certain circumstances, result in a significantly reduced securityvalue and ultimately, may result in losses to the Noteholders if the security is required to be enforced.

Risk of Losses Associated with Bankruptcy of Borrowers

General economic conditions and other factors (which may not affect property values) have an

impact on the ability of Borrowers to repay Mortgage Loans. Loss of earnings, illness, divorce and

other similar factors may lead to an increase in delinquencies and bankruptcy filings by Borrowers,

which may lead to a reduction in Mortgage Loan payments by such Borrowers and could reduce the

Issuer’s ability to service payments on the Notes.

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Liquidity and Credit Risk

The Issuer is subject to the risk of delay arising from the receipt of payments due from

Borrowers and the scheduled Payment Dates. The Issuer is also subject to the risk of failure by the

Servicers to collect or to recover sufficient funds in respect of the Portfolios which enable the Issuer to

discharge all amounts payable under the Senior Notes when due.

The Issuer is subject to further risk of default in payment by Borrowers and the failure to realise

or to recover sufficient funds in respect of the relevant Mortgage Loans in order to discharge all

amounts due by such Borrowers under the Mortgage Loans. This risk is mitigated, however, with

respect to the Class A Notes, by the credit support provided by the Cash Reserve, the excess spread,

the Class B Notes and the Class C Notes; with respect to the Class B Notes, by the credit support

provided by the Cash Reserve, the excess spread and the Class C Notes; and with respect to theClass C Notes, by the Cash Reserve and the excess spread.

This risk is further mitigated by the Liquidity Facility Agreement which provides for liquidity

support in the event that the Issuer Available Funds as of any Payment Date are not sufficient to

meet the Issuer’s liabilities set forth under items (i) to (vi) (inclusive) of the Pre-Enforcement Order ofPriority plus, for so long as the Liquidity Facility Loss Ratio does not exceed 9.9%, the Interest

Payment Amount due on the Class B Notes and, for so long as the Liquidity Facility Loss Ratio does

not exceed 7.7%, the Interest Payment Amount due on the Class C Notes on such Payment Date or,

as the case may be, the Issuer’s payment obligations under items (i) to (x) (inclusive) of the

Post-Enforcement Order of Priority.

However, in each case, there can be no assurance that the levels of collections and the recoveries

received with respect to the Portfolios will, together with the support provided by the Liquidity

Facility Agreement and the credit support provided by the Cash Reserve, the Class B Notes and/or, as

the case may be, the Class C Notes, be adequate to ensure timely and full receipt of amounts due

under the Senior Notes.

Investment Risk

Although application has been made to list the Senior Notes on the LuxembourgStock Exchange, there can be no assurance that such listing will be obtained, as to the liquidity of

any markets which may develop for the Senior Notes, as to the ability of the Senior Noteholders to

sell their Senior Notes or as to the price at which the Senior Noteholders will be able to sell their

Senior Notes. The market price of the Senior Notes could be subject to fluctuations in response to,

among other things, variations in the value of the Claims, the market for similar securities, prevailing

interest rates, changes in regulations and general market and economic conditions.

Subordination of Interest on the Notes

The rights of the Senior Noteholders to receive payments of interest and repayment of principalare subordinated to the payment of certain costs, expenses, fees, taxes and other amounts.

Further, in respect of the Issuer’s obligation to pay interest on the Notes on any Payment Date

prior to the delivery of a Trigger Notice or the occurrence of an Insolvency Event, the Class A Notes

will rank pari passu without preference or priority amongst themselves and in priority to the Class BNotes, the Class C Notes and the Class D Notes; the Class B Notes will rank pari passu without

preference or priority amongst themselves and in priority to the Class C Notes and the Class D Notes

but subordinated to the Class A Notes; the Class C Notes will rank pari passu without preference or

priority amongst themselves and in priority to the Class D Notes but subordinated to the Class A

Notes and the Class B Notes; and the Class D Notes will rank pari passu without preference or

priority amongst themselves but subordinated to the Class A Notes, the Class B Notes and the Class

C Notes.

Prior to the delivery of a Trigger Notice or the occurrence of an Insolvency Event, the priority

of payment of any sum due and payable in respect of interest on the Class B Notes and the Class C

Notes will depend, inter alia, on the Portfolio Yield, which is equal to the sum of all interest

payments (including default interest (interessi di mora) and interest on the Senior Notes Available

Funds for Amortisation), prepayment penalties paid under the Mortgage Loans in respect of each

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Semi-annual Collection Period and amounts to be received from the Swap Counterparty under the

Swap Agreement and the availability of the Liquidity Facility. On each Payment Date prior to the

delivery of a Trigger Notice or the occurrence of an Insolvency Event, interest on the Class B Notes

and the Class C Notes will be paid after payment by the Issuer of various transaction costs and

interest on the Class A Notes, in an amount, for so long as Notes of a higher ranking are

outstanding, not exceeding the Portfolio Yield plus the amount drawn down under the Liquidity

Facility on the Liquidity Facility Drawdown Date immediately preceding such Payment Date less the

aggregate amount paid under items ranking prior to payment of interest on the Class B Notes or, asthe case may be, the Class C Notes and, to the extent not paid in full, any residual interest amount

due and payable in respect of the Class B Notes and the Class C Notes shall be paid after provisions

have been made for the Senior Notes Available Funds for Amortisation under items (ix) and (x) of

the Pre-Enforcement Order of Priority but before provision to the Issuer Cash Reserve Account under

item (xiii) of the Pre-Enforcement Order of Priority.

In respect of the obligation of the Issuer to pay interest on the Notes on any Payment Date

after the delivery of a Trigger Notice or the occurrence of an Insolvency Event, the Class A Notes

will rank pari passu without preference or priority amongst themselves and in priority to the Class B

Notes, the Class C Notes and the Class D Notes; the Class B Notes will rank pari passu without

preference or priority amongst themselves and in priority to the Class C Notes and the Class D Notes

but subordinated to the Class A Notes; the Class C Notes will rank pari passu without preference or

priority amongst themselves and in priority to the Class D Notes but subordinated to the Class ANotes and the Class B Notes; and the Class D Notes will rank pari passu without preference or

priority amongst themselves but subordinated to the Class A Notes, the Class B Notes and the Class

C Notes. See ‘‘Transaction Summary – Order of Priority’’ and ‘‘Terms and Conditions of the

Senior Notes’’.

Subordination of principal on the Notes

In respect of the Issuer’s obligation to repay, following the expiry of a period of eighteen

months after the Issue Date, principal on the Notes before the delivery of a Trigger Notice or theoccurrence of an Insolvency Event, the Class A Notes will rank pari passu without preference or

priority amongst themselves and in priority to the Class B Notes and the Class C Notes; the Class B

Notes will rank pari passu without preference or priority amongst themselves and in priority to the

Class C Notes but subordinated to the Class A Notes; the Class C Notes will rank pari passu without

preference or priority amongst themselves but subordinated to the Class A Notes and the Class B

Notes; and the Class D Notes will rank pari passu without preference or priority amongst themselves

but subordinated to the Issuer’s obligation to set aside on each Payment Date the Senior Notes

Available Funds for Amortisation towards redemption of the Class A Notes, the Class B Notes(if any) and the Class C Notes (if any).

In respect of the Issuer’s obligation to repay principal on the Notes after the delivery of a

Trigger Notice or the occurrence of an Insolvency Event, the Class A Notes will rank pari passu

without preference or priority amongst themselves and in priority to the Class B Notes, the Class C

Notes and the Class D Notes; the Class B Notes will rank pari passu without preference or priorityamongst themselves and in priority to the Class C Notes and the Class D Notes but subordinated to

the Class A Notes; the Class C Notes will rank pari passu without preference or priority amongst

themselves and in priority to the Class D Notes but subordinated to the Class A Notes and the

Class B Notes; and the Class D Notes will rank pari passu without preference or priority amongst

themselves but subordinated to the Class A Notes, the Class B Notes and the Class C Notes.

As long as the Notes of a Class ranking in priority to the other Classes of Notes are

outstanding, unless notice has been given to the Issuer declaring the Notes of such Class immediately

due and payable, the lower ranking Classes of Notes shall not be declared immediately due and

payable and the Noteholders of the Class ranking in the highest priority shall be entitled to determine

the remedies to be exercised. Remedies pursued by the Noteholders of the Class ranking in the highest

priority could be adverse to the interests of the lower ranking Classes of Noteholders. See ‘‘Transaction

Summary – Order of Priority’’, ‘‘Mandatory Redemption of Notes’’ and ‘‘Terms and Conditions of

the Notes’’.

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Limited Recourse Nature of the Notes

If, upon the delivery of a Trigger Notice or the occurrence of an Insolvency Event or, if no

Trigger Notice has been delivered or no Insolvency Event has occurred, on the Final Maturity Date,

the funds available to the Issuer and/or the Representative of the Noteholders, pursuant to the

Intercreditor Agreement, for any payment obligations in respect of any Class of Notes are not

sufficient to pay such obligations in full, the relevant Class of Noteholders shall be entitled to receive

payments in respect of such obligations to the extent of the available funds (if any) and any shortfall(including, without limitation, in such case, any shortfall in respect of interest on the Senior Notes)

will not be due and payable, will be deemed to be released by the relevant Noteholders and will

be cancelled.

Yield and Payment Considerations

The yield to maturity of each Class of Notes will depend upon, inter alia, the timing of

repayment of principal (including prepayments) on the Mortgage Loans. Such yield may be adverselyaffected by a higher or lower than anticipated rate of prepayment on the Mortgage Loans.

Prepayments may result in connection with refinancing, sales of properties by Borrowersvoluntarily or as a result of enforcement proceedings under the relevant Mortgage Loans, as well as

the receipt of proceeds from building insurance and life insurance policies.

Borrowers are in general entitled to prepay their loans at any time, subject to their paying a

prepayment fee. The prepayment fee varies from loan to loan but generally does not exceed

two per cent. (2%) of the outstanding principal amount of the loan at the time of prepayment. In the

case of mutui fondiari (see below), the right to prepay the loan is provided for by Article 40 of the

Consolidated Banking Act and the prepayment fee is pre-set under the relevant loan agreement.

The rate of prepayment of the Mortgage Loans cannot be predicted and is influenced by a wide

variety of economic, social and other factors, including prevailing mortgage market interest rates and

margin offered by the banking system, the availability of alternative financing, local and regional

economic conditions and homeowner mobility.

Therefore, no assurance can be given as to the level or number of prepayments made in

connection with the Mortgage Loans. See further ‘‘Expected Average Life of the Senior Notes

and Assumptions’’.

Mutui Fondiari

The Portfolios comprise certain Mortgage Loans which are mutui fondiari, in relation to which

special enforcement and foreclosure provisions apply. Pursuant to Article 40, paragraph 2 of the

Consolidated Banking Act, a mortgage lender is entitled to terminate a loan agreement and accelerate

the mortgage loan (diritto di risoluzione contrattuale) if the debtor has delayed an instalment payment

at least seven times whether consecutively or otherwise. For this purpose, a payment is considered

delayed if it is made between 30 and 180 days after the payment due date. Accordingly, thecommencement of enforcement proceedings in relation to mutui fondiari may take longer than usual.

See ‘‘Selected Aspects of Italian Law relevant to the Portfolios and the transfer of the Portfolios–Mutui

Fondiari Foreclosure Proceedings’’.

Loans’ Performance

The Portfolios are exclusively comprised of mortgage backed loans which were performing as of

31 October 2003. There can be no guarantee that the Borrowers will not default under the MortgageLoans and that they will continue to perform. The recovery of amounts due in relation to

non-performing loans will be subject to the effectiveness of enforcement proceedings in respect of each

of the Portfolios, which, in the Republic of Italy, can take a considerable amount of time depending

upon the type of action required and where such action is taken and upon several other factors,

including the following: (i) proceedings in certain courts involved in the enforcement of the Mortgage

Loans and Mortgages may take longer than the national average; (ii) in order to begin the

enforcement procedure on Mortgage Loans that were entered into in the form of a scrittura privata

autenticata (private deed with signatures authenticated), the enforcing party will need to obtain an

33

injunction decree (decreto ingiuntivo esecutivo) or, if such injunction decree is not granted, a judgment

by the competent court; and (iii) if the Borrower raises a defence or counterclaim to the proceedings.

See ‘‘The Portfolios’’.

It takes an average of six to seven years from the time enforcement proceedings are commenced

until the time an auction date is set for a forced sale of any assets.

Italian Law No. 302 of 3 August 1998 (‘‘Law No. 302’’) allows notaries to conduct certain stages

of the foreclosure procedures in place of the courts and is expected to reduce the length of foreclosure

proceedings by between two and three years, although at the date of this Offering Circular, the impact

which the law will have on the Mortgage Loans comprised in the Portfolios cannot be fully assessed.

Claims of Unsecured Creditors of the Issuer

By operation of Italian Law, the Issuer’s right, title and interest in and to the Portfolios will be

segregated from all other assets of the Issuer (including, for the avoidance of doubt, any other

portfolio purchased by the Issuer pursuant to the Securitisation Law) and amounts deriving therefrom

will be available on a winding up of the Issuer only to satisfy the Issuer’s obligations to the

Noteholders, to make payments to the Swap Counterparty under the Swap Agreement and to pay

other costs of the Securitisation. Amounts derived from the Portfolios will not be available to anyother creditors of the Issuer. However, under Italian law, any other creditor of the Issuer would be

able to commence insolvency or winding up proceedings against the Issuer in respect of any

unpaid debt.

Notwithstanding the foregoing, the corporate purpose of the Issuer as contained in its by-laws is

limited and the Issuer has also agreed to certain covenants in the Intercreditor Agreement and the

Conditions restricting the activities that may be carried out by the Issuer and has furthermore

covenanted not to engage in any activity which is not incidental to or necessary in connection with

any of the activities contemplated in the Transaction Documents. To the extent that there are other

creditors of the Issuer, the Issuer has established the Issuer Expenses Account and the funds therein

may be used for the purposes of paying to third parties other than the Other Issuer Creditors theongoing fees, costs, expenses, taxes and other amounts due from the Issuer in respect of the

Securitisation. Furthermore, BPV has made certain undertakings in the Quotaholders’ Agreement to

make funds available to the Issuer in certain circumstances. Such undertakings made by BPV are

unsecured claims of the Issuer. See ‘‘Transaction Summary – Quotaholders’ Agreement’’ and

‘‘The Issuer’’.

Limited Enforcement Rights

The protection and exercise of the Noteholders’ rights against the Issuer and the security under

the Senior Notes is one of the duties of the Representative of the Noteholders. The Rules of the

Organisation of the Noteholders limit the ability of individual Noteholders to commence proceedings

against the Issuer by giving the Meeting (as defined in Exhibit 1 to the Conditions, attached thereto)

the power to decide whether a Noteholder may commence any such individual action.

Italian Usury Law

Italian Law No. 108 of 7 March 1996 (the ‘‘Usury Law’’) introduced legislation preventing

lenders from applying interest rates equal to or higher than the thresholds set on a quarterly basis bya decree issued by the Italian Treasury (the ‘‘Usury Thresholds’’).

Subsequent judgements issued by the Italian Supreme Court (Corte di Cassazione) during 2000

held that the Usury Law, in addition to being applicable to loans and any other credit facilitiesadvanced after the Usury Law came into force, may also apply with respect to loans or other credit

facilities advanced prior to the date on which the Usury Law came into force. Moreover, according to

one interpretation of the Usury Law (which was considered by certain jurists to have been accepted in

the rulings of the Italian Supreme Court), if at any point in time the rate of interest payable on a

loan or any other credit facilities (including those entered into before the entry into force of the

Usury Law or those which, when entered into, were in compliance with the Usury Law) exceeded the

then applicable Usury Thresholds, the contractual provision providing for the borrower’s obligation to

pay interest on the relevant loan or credit facility becomes null and void in its entirety.

34

On 29 December 2000, the Italian Government issued law decree No. 394 (‘‘Decree 394/2000’’),

converted into law by the Italian Parliament on 28 February 2001, which clarified the uncertainty over

the interpretation of the Usury Law and provided, inter alia, that interest will be deemed to be

usurious only if the interest rate agreed to by the parties exceeded the Usury Thresholds applicable at

the time the relevant loan agreement or such other credit facility was entered into or the interest rate

was agreed. Decree 394/2000 also provided that as an extraordinary measure due to the exceptional

fall in interest rates in 1998 and 1999, interest rates due on instalments payable after 2 January 2001

on fixed rate loans (other than subsidised loans) already entered into on the date such decree cameinto force (such date being 31 December 2000) are to be substituted, except where the parties have

agreed to more favourable terms, with a lower interest rate set in accordance with parameters fixed by

such decree by reference to the average gross yield of multi-annual treasury bonds (Buoni Tesoro

Poliennali) in the period from January 1986 to October 2000.

The interpretation of the Usury Law given by Decree 394/2000 as well as the interpretation ofthe law by which Decree 394/2000 was ratified by the Italian Parliament have been challenged before

the Italian Constitutional Court on the ground that they would not comply with the provisions of the

Italian Constitution and there can be no assurance on the outcome of such challenges or that similar

challenges will not arise in the future.

Prospective Noteholders should note that under the terms of the Warranty and IndemnityAgreements, each of BPV, CRP and BN has undertaken to indemnify the Issuer in respect of any

losses, costs and expenses that may be incurred by the Issuer in respect of interest accrued on the

Claims comprised in, respectively, the BPV Portfolio, CRP Portfolio and the BN Portfolio, to (but

excluding) the Effective Date as a result of the application of the Usury Law, as subsequently

amended and supplemented (see ‘‘Description of the Warranty and Indemnity Agreements’’).

The foregoing indemnification obligations undertaken by each Originator are unsecured claims of the

Issuer, and no assurance can be given that the Originators can or will pay the relevant amounts if and

when due.

Perfection of the Sale of the Portfolios

The sale of the Portfolios by each Originator to the Issuer is made in accordance with the

Securitisation Law. Pursuant to Article 4 of the Securitisation Law, the publication in the

advertisement section of the Official Gazette of a notice of the sale of the Portfolios by each

Originator to the Issuer (such notice was published on 22 December 2003) has rendered the

assignment of the Portfolios and the proceeds deriving therefrom immune from any attachment or

other action under Italian law (other than a claw-back action: see ‘‘Claw-Back of the Sale of the

Portfolios’’ below), except to the extent that any such attachment or action is intended to protect the

rights of the Noteholders and the Other Issuer Creditors. In addition, the publication of such notice

means that the sale of the Portfolios cannot be challenged or disregarded by: (i) any third party to

whom BPV, CRP or BN may previously have assigned, respectively, the BPV Portfolio, the

CRP Portfolio or the BN Portfolio or any part thereof; (ii) a creditor of BPV, CRP or BN who has a

right to enforce its claim on such Originator’s assets; or (iii) a receiver or administrative receiver or a

liquidator of any assigned Borrower in the case of the Borrower’s bankruptcy.

Claw-Back of the Sale of the Portfolios

A transfer pursuant to the Securitisation Law may be subject to a claw-back action of such sale

by a liquidator of the transferor: (i) if the sale is not undervalued, within three months following the

transfer if: (a) the transferor was insolvent at the time of the transfer; and (b) the liquidator can prove

that the transferee was, or ought to have been, aware of such insolvency; or (ii) if the sale is

undervalued, within six months following the transfer if: (a) the transferor was insolvent at the time of

the transfer; and (b) the transferee cannot prove that it was not, or ought not to have been, aware of

such insolvency.

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Accordingly, if BPV, CRP or BN was insolvent at the time of the transfer of the relevant

Portfolio pursuant to the BPV Transfer Agreement, the CRP Transfer Agreement of the BN Transfer

Agreement, respectively, and the Issuer was, or ought to have been, aware of such insolvency, the

relevant transfer may, in certain circumstances, be subject to claw-back by a liquidator of BPV, CRP

or BN, as the case may be.

Rights of Set-off and Other Rights of Borrowers

Under the general principles of Italian law, a Borrower is entitled to exercise rights of set-off in

respect of amounts due under his/her Mortgage Loan against any amounts payable by the relevant

Originator to such Borrower if and to the extent that such counterclaims have arisen before the

publication of the notice of the assignment of the relevant Portfolio in the Official Gazette pursuant

to Article 58, paragraph 2 of the Consolidated Banking Act.

Under the terms of the Warranty and Indemnity Agreements, each Originator has agreed to

indemnify the Issuer should the Issuer experience any reduction in amounts collected or recovered in

respect of the Claims comprised in each relevant Portfolio as a result of the legitimate exercise by any

Borrower, Mortgagor or Guarantor of its right of set-off. Notice of the assignment of the Claims

pursuant to the Transfer Agreements was published in the Official Gazette on 22 December 2003.

Risks associated with the BPV Group information technology system

As a result of the Originators’ implementation of regulatory recording requirements and the

reconciliation of the portfolio information following acquisition of the going concerns from other

banks which originated certain of the Mortgage Loans comprised in the BPV Portfolio and the

CRP Portfolio and after the merger of BN, there may be certain potentially material discrepanciesbetween mortgage loans data registered in the BPV Group information technology system

(the ‘‘IT System’’) and the original loan files in respect of the appraisal values of the Real Estate

Assets, the secured amounts under the Mortgages and the interest margins applicable to the

Mortgage Loans.

In particular, a review by the Originators’ auditors of a sample (the ‘‘Sample Summary Data’’) ofsummary data on the Portfolios extracted from the IT System (the ‘‘Summary Data’’), which form the

basis for information on the Portfolios contained in the section headed ‘‘The Portfolios’’ of this

Offering Circular, against the original loan files, has evidenced that, on an aggregate basis, the

appraisal values and the secured amounts under the Mortgages in the Originators’ original loan files

exceed the appraisal values and the secured amounts under the Mortgages in the Sample

Summary Data.

Under the terms of the BPV Transfer Agreement, BPV has undertaken to submit to the Issuer

and to an independent internationally recognised accountant firm data on the Portfolios concerning,

inter alia, the value of the Mortgage Loans and the appraisal value of the Real Estate Assets and to

engage such accountant firm to conduct, before 30 September 2004, a sample review (or, should the

sample review prove to be unsatisfactory, a full review) of such data in order to identify, inter alia,

the current loan-to-value (with reference to outstanding principal of the Mortgage Loans as of 1

December 2003) calculated with reference to the appraisal values of the Real Estate Assets (the‘‘Adjusted Current LTV’’) of the Mortgage Loans. See further ‘‘Description of the Transfer

Agreements’’.

Each Warranty and Indemnity Agreement provides that in the event that the Adjusted Current

LTV exceeds the current loan-to-value set forth in Appendix A to the Warranty and Indemnity

Agreement (the ‘‘Initial Current LTV’’) by 10% or more, such Originator shall, no later than tenBusiness Days after the Issuer’s request, pay to the Issuer, upon first demand, a Limited Recourse

Loan, with reference to such Mortgage Loans. Furthermore, if the weighted Adjusted Current LTV of

the Mortgage Loans comprised in the Portfolios (excluding those Mortgage Loans in respect of which

a Limited Recourse Loan has, or should have, been granted by the Originators) is greater than the

weighted average Initial Current LTV, each Originator shall, no later than ten Business Days after the

Issuer’s request, pay to the Issuer upon first demand a Limited Recourse Loan with reference to one

or more of those Mortgage Loans starting from those with the biggest discrepancies between the

Adjusted Current LTV and the Initial Current LTV so that the weighted average Adjusted Current

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LTV of the remaining Mortgage Loans comprised in the Portfolios is equal to or lower than the

weighted average Initial Current LTV. See further ‘‘Description of the Warranty and Indemnity

Agreement’’.

Should BPV fail:

(a) to provide the necessary data to the independent auditors or procure the completion of a

satisfactory review of the relevant data by the independent auditors before 30 September2004; or

(b) to grant a Limited Recourse Loan in the circumstances described above,

the securities lent by the Securities Subordinated Loan Provider pursuant to the Securities

Subordinated Loan Agreement shall be liquidated (to the extent not otherwise liquidated pursuant to

the terms of the Securities Subordinted Loan Agreement) in whole (in the case of (a) above) or to the

extent of the amount of such Limited Recourse Loan(s) that has/have not been granted (in the case of(b) above), and the proceeds deriving from the liquidation of such securities shall form part of the

Issuer Available Funds of the First Payment Date. See further ‘‘Description of the Subordinated

Loan Agreements’’.

Priority of the Mortgages securing the Mortgage Loans comprised in the Portfolios

Under the terms of the BPV Transfer Agreement, BPV has undertaken to submit to the Issuer

and to an independent internationally recognised accountant firm data on the Portfolios concerning,

inter alia, the ranking of the Mortgages over the Mortgage Loans comprised in the Portfolios and toengage such accountant firm to conduct, before 30 September 2004, a sample review (or, should the

sample review prove to be unsatisfactory, a full review) of such data in order to identify, inter alia,

the ranking of the Mortgages over the Real Estate Assets.

If such review reveals that: (a) any Mortgage Loan is secured by third or successive ranking

Mortgages, or (b) the outstanding principal (as of the Effective Date) of the Mortgage Loans

comprised in each relevant Portfolio that are secured by second-ranking mortgages as a percentage of

the outstanding principal (as of the Effective Date) of all the Mortgage Loans of such Portfolio is

greater than 2%, the Warranty and Indemnity Agreements provides that the relevant Originator shall

take steps, to the extent possible, to upgrade such successive ranking Mortgages to first-ranking or,

alternatively, pay to the Issuer a Limited Recourse Loan. See further ‘‘Description of the Warranty and

Indemnity Agreement’’.

Should BPV fail:

(a) to provide the necessary data to the independent auditors or procure the completion of a

satisfactory review of the relevant data by the independent auditors within six months after

the Issue Date; or

(b) to upgrade such successive ranking Mortgages or grant a Limited Recourse Loan in the

circumstances described above,

the securities lent by the Securities Subordinated Loan Provider pursuant to the Securities

Subordinated Loan Agreement shall be liquidated (to the extent not otherwise liquidated pursuant to

the terms of the Securities Subordinated Loan Agreement) in whole (in the case of (a) above) or to

the extent of the amount of such Limited Recourse Loan(s) that has/have not been granted (in the

case of (b) above), and the proceeds deriving from the liquidation of such securities shall form part of

the Issuer Available Funds of the First Payment Date. See further ‘‘Description of the Subordinated

Loan Agreements’’.

Compounding of Interest (Anatocismo)

According to Article 1283 of the Italian Civil Code, with respect to accrued interest on a

monetary claim or receivable, such accrued interest may be capitalised after a period of not less than

six months or from the date when any legal proceedings were commenced with regard to such

monetary claim or receivable. Article 1283 of the Italian Civil Code allows for derogation from this

provision in the event that there are recognised customary practices (usi normativi) to the contrary.

Banks in the Republic of Italy have traditionally capitalised accrued interest on a quarterly basis on

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the grounds that such practice could be characterised as a customary practice. However, a number of

recent judgements from Italian courts (including judgement No. 2374/99 from the Italian Supreme

Court (Corte di Cassazione)) have held that such practice is not customary.

It should be noted that Article 25, paragraph 3, of Legislative Decree No. 342 of 4 August 1999(‘‘Law No. 342’’) enacted by the Italian Government under a delegation granted pursuant to Law No.

142 of 19 February 1992 (the ‘‘Legge Delega’’) deemed the capitalisation of accrued interest

(anatocismo) made by banks prior to the date on which the resolution of the Interministerial

Committee of Credit and Savings (CICR) of 9 February 2000 (the ‘‘Resolution’’) came into force (such

date being 22 April 2000) to be valid. After 22 April 2000, the capitalisation of accrued interest

will still be possible upon the terms established by the Resolution which further provides that all

conditions applied to contracts executed prior to its coming into force were to be amended, before

30 June 2000 and effective as of 1 July 2000, in accordance with the Resolution. Law No. 342 hasbeen challenged, however, before the Italian Constitutional Court on the grounds that it falls outside

the scope of the legislative powers delegated under the Legge Delega. On these grounds, by decision

No. 425 dated 9 October 2000 issued by the Italian Constitutional Court, Article 25, paragraph 3, of

Law No. 342 has been declared as unconstitutional.

Accordingly, if Borrowers were to challenge this practice and such interpretation of Article 1283of the Italian Civil Code were to be upheld before other courts in the Republic of Italy, the returns

generated from the relevant Mortgage Loans could be negatively affected.

Each of BPV, CRP and BN has consequently undertaken in the BPV Warranty and Indemnity

Agreement, CRP Warranty and Indemnity Agreement and BN Warranty and Indemnity Agreement,respectively, to indemnify the Issuer in respect of any losses, costs and expenses that may be incurred

by the Issuer in connection with any non-compliance of one or more of the Claim(s) with the

provisions of Article 1283 of the Italian Civil Code or the Resolution.

Servicing of the Portfolios

Pursuant to the Master Servicing Agreement, the BPV Portfolio, the CRP Portfolio and the

BN Portfolio will be serviced by BPV, CRP and BN, respectively, as of the Effective Date.

Previously BPV Portfolio, the CRP Portfolio and the BN Portfolio were serviced by BPV, CRPand BN, respectively, as owners of the respective Portfolio. The net cash flows from the Portfolios

may be affected by decisions made, actions taken and the collection procedures adopted by the

Servicers pursuant to the Master Servicing Agreement.

The Master Servicer has undertaken to prepare and submit to the Issuer, the Lead Manager, the

Calculation Agent, the Swap Counterparty, the Representative of the Noteholders and the RatingAgencies on each Semi-annual Report Date the Semi-annual Servicer Report in the form set forth in

the Master Servicing Agreement. Such reports shall provide the Aggregate Notional Outstanding

Amount of the Portfolios as of the last day of the immediately preceding Semi-annual Collection

Period together with information relating to the arrears and the amortisation of the Portfolios as well

as the Servicers’ activity during the preceding Semi-annual Collection Period. Each Servicer shall

procure that a firm of internationally recognised auditors shall prepare a report in respect of the

information and data contained in each Semi-annual Servicer Report.

The Master Servicer has also undertaken to prepare and submit to the Issuer, the Lead

Manager, the Calculation Agent, the Swap Counterparty, the Representative of the Noteholders and

the Rating Agencies on each Interim Report Date the Interim Servicer Report in the form set forth in

the Master Servicing Agreement. Such reports shall provide the Aggregate Notional Outstanding

Amount of the Portfolios as of the Interim Calculation Date immediately preceding the InterimReport Date, together with information relating to the arrears and the amortisation of the Portfolios

and the Servicers’ activity in respect of the immediately preceding Interim Calculation Period.

Copies of the most recently published Semi-annual Servicer Reports and Interim Servicer Reports

shall be made available for inspection during normal business hours at the registered offices of the

Luxembourg Listing Agent and the Representative of the Noteholders. The Semi-annual Servicer

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Reports and the Interim Servicer Reports will be published on the Bloomberg screen (or any

replacement thereof) and/or on BPV’s web site and/or in such other manner as the Master Servicer

and the Lead Manager may deem appropriate.

Further Securitisations

The Issuer may purchase and securitise additional portfolios of monetary claims besides the

Portfolios. Pursuant to Article 3 of the Securitisation Law, the assets relating to each individual

securitisation transaction will, by operation of law, be segregated from all other assets of the company

which purchases the receivables. On a winding up of such company, such assets will only be availableto holders of notes issued to finance the acquisition of the relevant receivables and to certain creditors

claiming payment of debts incurred by such company in connection with the securitisation of the

relevant assets. It is a condition precedent to any such further securitisation by the Issuer that: (i) the

Rating Agencies confirm that the then current ratings of the Senior Notes will not be affected by such

securitisation; and (ii) legal opinions have been issued which confirm that such securitisation will not

affect the then current Senior Noteholders, unless the Issuer has otherwise obtained the prior written

consent of the Representative of the Noteholders further to an Extraordinary Resolution by the

Senior Noteholders.

Administration and Reliance on Third Parties

The ability of the Issuer to make payments in respect of the Notes will depend to a significant

extent upon the due performance by BPV, CRP and BN and the other parties to the Transaction

Documents of their respective obligations under the Transaction Documents to which they are a

party. In particular, among other things, the timely payment of amounts due on the Notes will

depend upon the Servicers’ ability to service the Portfolios and the continued availability of hedging

under the Swap Agreement. In addition, the Issuer’s ability to make payments in respect of the Notes

may depend to an extent upon each Originator’s performance of its obligations under the relevantWarranty and Indemnity Agreement. In each case the Issuer’s performance of its obligations

thereunder is dependent upon the solvency of the Originators, the Servicers, the Master Servicer, the

Liquidity Facility Provider and the Swap Counterparty (or any permitted successors or assigns

appointed pursuant to the Master Servicing Agreement, the Liquidity Facility Agreement and the

Swap Agreement).

It is not certain that a suitable alternative Servicer could be found to service the relevant

Portfolio were a Servicer to become insolvent or fail to fulfil its obligations pursuant to the Master

Servicing Agreement. If such an alternative Servicer were to be found it is not certain whether it

would service the relevant Portfolio on the same terms as provided in the Master Servicing

Agreement. In such circumstances, the Issuer could attempt to sell the relevant Portfolio, but there is

no assurance that the amount received from such sale would be sufficient to repay in full all amounts

due to the Noteholders.

The Representative of the Noteholders and conflicts of interests between holders of different classes

of Notes

The Conditions and the Intercreditor Agreement contain provisions requiring the Representative

of the Noteholders, with respect to all of its powers, authority, duties and discretion, to regard the

interests of the Noteholders of each Class of Notes as if they formed a single Class (except where

expressly provided otherwise) but such Conditions also require the Representative of the Noteholders,

in the event of a conflict among the interests of the Noteholders of different Classes, to have regardonly to the interests of the Noteholders of the Class ranking highest in the then applicable Order of

Priority. Remedies pursued by the Representative of the Noteholders in such circumstances may be

adverse to the interests of the holders of the lower ranking Class(es) of Notes.

No Independent Investigation in relation to the Portfolios

With the exception of a review on certain data concerning the Mortgage Loans to be conducted

by an independent accountant firm upon engagement by BPV, none of the Issuer, the Arranger or the

Lead Manager or any other party to the Transaction Documents (other than BPV, CRP and BN) has

undertaken or will undertake any investigation, search or other action to verify the details of the

39

Portfolios (including the Mortgage Loan Agreements, the Mortgages and the origination procedures of

the Claims) sold by BPV, CRP and BN to the Issuer, and no such parties have undertaken, nor will

any of them undertake, any investigation, search or other action to establish the creditworthiness of

any Borrower.

Each Originator has, pursuant to the relevant Warranty and Indemnity Agreement, made certain

representations and warranties, and undertaken related indemnification obligations, in respect, inter alia,of: (i) the validity and existence of the Claims; (ii) the validity, effectiveness and proper execution of

the Mortgage Loan Agreements; (iii) the perfection of the Mortgages; and (iv) the validity of the

assignment to the Issuer by each Originator of its rights under the insurance policies entered into in

connection with the Mortgage Loan Agreements. Such indemnification obligations undertaken by each

Originator are unsecured claims of the Issuer and no assurance can be given that each Originator can

or will pay the relevant amounts if and when due.

Limited Nature of Credit Ratings assigned to the Senior Notes

Each credit rating assigned to the Senior Notes reflects the relevant Rating Agency’s assessment

only of the likelihood of timely payment of interest (pursuant to the Transaction Documents) and the

ultimate repayment of principal on or before the Final Maturity Date, not that such repayment ofprincipal will be paid when expected or scheduled. These ratings are based, among other things, on

the Rating Agencies’ determination of the value of the Portfolios, the reliability of the payments on

the Portfolios and the availability of credit enhancement.

The ratings do not address the following:

* the likelihood that the principal will be redeemed on the Senior Notes, as expected, on the

scheduled redemption dates;

* the possibility of the imposition of Italian or European withholding tax;

* the marketability of the Senior Notes, or any market price for the Senior Notes; or

* whether an investment in the Senior Notes is a suitable investment for a Noteholder.

A rating is not a recommendation to purchase, hold or sell the Senior Notes.

Any Rating Agency may lower its ratings or withdraw its rating if, in the sole judgement of that

Rating Agency, the credit quality of the Senior Notes has declined or is in question. If any ratingassigned to the Senior Notes is lowered or withdrawn, the market value of the Senior Notes may be

adversely affected.

Legal Proceedings

Each of BPV, CRP and BN is subject to a variety of claims and each such party and other

subsidiaries of BPV are party to a number of legal proceedings arising in the ordinary course of

business. Although the outcome of such claims is inherently uncertain and several litigants have

claimed relatively large sums in damages, the directors of each of BPV, CRP and BN do not believe

that liabilities related to such claims are likely to, individually or in the aggregate, have a material

adverse effect on the non-consolidated (and, in the case of BPV only, consolidated) financial position

or results of operations of BPV, CRP or BN.

Each Originator has undertaken in the relevant Warranty and Indemnity Agreement to

indemnify the Issuer in respect of any losses, costs and expenses that may be incurred by the Issuer as

a consequence of the legitimate exercise by any Borrower and/or Mortgagor and/or Guarantor or, as

the case may be, a receiver thereof, of any right, including right of set-off and/or of any counterclaims

against BPV, CRP or BN, as the case may be. There can be no assurance that each Originator will

have the financial resources to meet its obligations to indemnify the Issuer in the event that any such

losses, costs or expenses arise.

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Historical Information

The historical financial and other information set forth in the sections headed ‘‘The Originators’’,

‘‘Loan Servicing and Collection Procedures’’, and ‘‘The Portfolios’’, including recovery rates, represents

the historical experience of each Originator. There can be no assurance that each Originator’s future

experience and performance as Servicer of the relevant Portfolio will remain constant.

Substitute Tax under the Notes

Payments under the Notes may in certain circumstances, described in the section headed

‘‘Taxation’’ of this Offering Circular, be subject to a Decree 239 Withholding. In such circumstance,

any beneficial owner of an interest payment relating to the Notes of any Class will receive amounts of

interest payable on the Notes net of a Decree 239 Withholding. At the date of this Offering Circular,

such Decree 239 Withholding is levied at the rate of twelve point five per cent. (12.5%), or such lower

rate as may be applicable under the relevant double taxation treaty.

In the event that any Decree 239 Withholding or any other deduction or withholding for or onaccount of tax is imposed in respect of payments to Noteholders of amounts due pursuant to the

Notes, the Issuer will not be obliged to gross-up or otherwise compensate Noteholders for the lesser

amounts the Noteholders will receive as a result of the imposition of any such deduction or

withholding, or otherwise to pay any additional amounts to any of the Noteholders.

In the event that any Notes of any Class are redeemed in whole or in part prior to the end of

the Initial Period, the Issuer will be obliged to pay tax in Italy at a rate of twenty per cent. (20%) of

all interest accrued on the principal amount repaid early up to the relevant repayment date.See ‘‘Taxation’’.

Proposed European Withholding Tax Directive

The EU has adopted a Directive regarding the taxation of savings income. Subject to a number

of important conditions being met, it is proposed that Member States will be required from a date not

earlier than 1 January 2005 to provide to the tax authorities of other Member States details of

payments of interest and other similar income paid by a person to an individual in another MemberState, except that Austria, Belgium and Luxembourg will instead impose a withholding system for a

transitional period unless during such period they elect other otherwise. See ‘‘Taxation’’.

Tax Treatment of the Issuer

Taxable income of the Issuer is determined in accordance with Italian Legislative Decree No. 344

of 12 December 2003. Pursuant to the regulations issued by the Bank of Italy on 29 March 2000

(schema di bilancio delle societa per la cartolarizzazione dei crediti), the assets, liabilities, costs and

revenues of the Issuer in relation to the securitisation of the Claims will be treated as off-balancesheet assets, liabilities, costs and revenues. Based on the general rules applicable to the calculation of

the net taxable income of a company, such taxable income should be calculated on the basis of

accounting, i.e. on-balance sheet earnings, subject to such adjustments as are specifically provided for

by applicable income tax rules and regulations. On this basis, no taxable income should accrue to the

Issuer in the context of the transfer to the Issuer of the Portfolios. This opinion has been expressed

by scholars and tax specialists and has recently been confirmed by the tax authority (Circular No. 8/E

issued by Agenzia delle Entrate per la Lombardia on 6 February 2003) on the grounds that the net

proceeds generated by the securitised assets may not be considered as legally available to the Issuerinsofar as any and all amounts deriving from the underlying assets are specifically destined to satisfy

the obligations of such Issuer to the Noteholders, the Originators and any other creditors of the Issuer

in respect of the Securitisation of the underlying assets in compliance with applicable law.

It is, however, possible that the Ministry of Finance or another competent authority may issue

further regulations, letters or rulings relating to the Securitisation Law which might alter or affect the

tax position of the Issuer as described above in respect of all or certain of its revenues and/or items of

income also through the non-deduction of costs and expenses.

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As recently confirmed by the tax authority (Ruling No. 222 issued by Agenzia delle Entrate on

5 December 2003) the interest accrued on the Accounts will be subject to withholding tax on account

of corporate income tax which, as of the date of this Offering Circular, is levied at the rate of 27%.

Change of Law

The structure of the transaction and, inter alia, the issue of the Notes and ratings assigned to the

Senior Notes are based on Italian law, tax and administrative practice in effect at the date hereof, andhaving due regard to the expected tax treatment of all relevant entities under such law and practice.

No assurance can be given that Italian law, tax or administrative practice will not change after the

Issue Date or that such change will not adversely impact the structure of the transaction and the

treatment of the Notes.

Projections, Forecasts and Estimates

Forward looking statements including estimates of the weighted average lives of the Senior Notesand any other projections, forecasts and estimates in this Offering Circular are necessarily speculative

in nature and some or all of the assumptions underlying the projections may not materialise or may

vary significantly from actual results.

The Issuer believes that the risks described above are the principal risks inherent in the transactionfor Senior Noteholders but the inability of the Issuer to pay interest or repay principal on the SeniorNotes of each Class may occur for other reasons and the Issuer does not represent that the abovestatements of the risks associated with holding the Senior Notes are exhaustive. While the variousstructural elements described in this Offering Circular are intended to lessen some of these risks for theSenior Noteholders, there can be no assurance that these measures will be sufficient or effective to ensurepayment to the Senior Noteholders of interest or principal on the Senior Notes on a timely basis or at all.

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THE PORTFOLIOS

Each relevant Portfolio comprises debt obligations arising from: (i) mortgage loans which qualify

as mutui fondiari (medium, long-term loans secured by mortgages on real estate assets granted in

accordance with the provisions of Article 38 of the Consolidated Banking Act); and (ii) mortgage

loans (mutui ipotecari) which do not qualify as mutui fondiari.

The Portfolios are comprised of Mortgage Loans granted to finance the purchase of residential

use real estate assets. Investors should note however that the Senior Notes may not benefit from the

reduced risk weighting provided by the Bank of Italy and the competent regulatory authorities of

other jurisdictions for debt securities backed by residential mortgage loans.

BPV Portfolio

The BPV Portfolio purchased by the Issuer pursuant to the BPV Transfer Agreement comprises

debt obligations arising from mortgage loans originated by BPV or by certain other banks (namely,

Banca Popolare della Provincia di Belluno S.p.A., Banca Popolare di Treviso S.p.A., Banca Popolaredi Trieste S.p.A. and Banca Popolare Udinese S.p.A. (collectively, the ‘‘Other Banks’’)) and that have

been transferred to BPV as a result of the going concern acquisitions by BPV from these Other Banks

pursuant to Article 58 of the Consolidated Banking Act.

The BPV Portfolio has been selected on the basis of the BPV Criteria (see below).

Characteristics of the BPV Portfolio

The BPV Portfolio comprises debt obligations owed to BPV under 4,273 BPV Mortgage Loans

all of which were classified as performing by BPV as of 31 October 2003. The BPV Mortgage Loans

have been transferred to the Issuer pursuant to the terms of the BPV Transfer Agreement, together

with any ancillary rights and guarantees (but excluding any personal guarantees (i.e. fideiussioni

omnibus) securing simultaneously the Claims and other claims of BPV), or security interests and any

related rights which have been granted to BPV or to the Other Banks to secure or ensure the payment

and/or the recovery of any of the Claims (the ‘‘BPV Collateral Security’’). The total principal balance

of the BPV Portfolio as of 1 December 2003 was equal to Euro 368,933,837.66.

Mortgage Loan Status

(i) as of 31 October 2003, each Mortgage Loan was performing and for those BPV Mortgage

Loans that presented one instalment in arrears as of 31 October 2003, a further check was

performed on 13 November 2003 which confirmed that such unpaid instalment was no

longer in arrears as of such date;

(ii) the plan contractually agreed upon for the amortisation of each BPV Mortgage Loan

provides for monthly, quarterly or semi-annual instalments;

(iii) the outstanding amount due by the Borrower in respect of each BPV Mortgage Loan did

not exceed Euro 516,456.90 as of 31 July 2003; and

(iv) each BPV Mortgage Loan has been entirely advanced by BPV and/or an Other Bank and

no further amount in respect thereof is due by BPV or by any Other Bank.

Security

Each of the BPV Mortgage Loans is secured by a voluntary mortgage on property granted in

favour of BPV or the relevant Other Bank and subsequently transferred to BPV. At least 98% of the

BPV Claims (by principal amount outstanding) are secured by BPV Mortgages that are economically

first-ranking priority mortgages (ipoteche di primo grado): i.e. (i) a first-ranking priority mortgage(ipoteca di primo grado); or (ii) a subsequent ranking priority mortgage (ipoteca di grado successivo)

where the obligations secured by mortgage(s) ranking prior to such subsequent mortgage have been

fully satisfied.

Currency

Each BPV Mortgage Loan is denominated in Euro.

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Interest Rate

Each Mortgage Loan included in the BPV Portfolio is a fixed rate or floating rate loan

referenced to:

* Euribor 3 months

* Euribor 6 months

Repayment Type

4,082 BPV Mortgage Loans, representing 94.21% of the outstanding principal balance of the

BPV Portfolio as of 1 December 2003, provide for annuity payments (french amortisation), while the

remainder provide for increasing instalments.

The BPV Mortgage Loans providing for annuity payment are loans with an amortisation profile

with constant instalments (comprised of principal and interest): for some of such loans, the

amortisation profile is recalculated periodically as a function of the current interest rate.

Repayment Method

Instalments on the BPV Mortgage Loans are generally paid by way of debiting the designated

current account of the Borrowers.

Year of Origination

Each BPV Mortgage Loan was originated between 1 July 1999 (included) and 31 May 2003

(included).

Term

Each Mortgage Loan matures on or before 31 December 2028.

Borrowers

Each Borrower is one or more private individuals.

Prepayment of the Mortgage Loan

The BPV Mortgage Loan Agreements generally provide for a penalty for the prepayment of the

BPV Mortgage Loans. Penalties vary according to the type of loan and/or amounts in question, and

the penalties normally range from zero per cent. (0%) to two per cent. (2%) of the outstandingprincipal amount at the time of the prepayment.

BPV Criteria

The BPV Claims have been selected by BPV on the basis of the following criteria (the ‘‘BPV

Criteria’’) which is set forth in Exhibit ‘‘A’’ to the Transfer Agreement. Each BPV Claim satisfied, as

of 31 October 2003 (and such other date(s) as specified below), the following criteria:

a. the BPV Claims derive from BPV Mortgage Loan Agreements in respect of which the Borrowers

are individuals, including individuals jointly and severally liable, granted in order to finance the

purchase of residential use real estate assets;

b. the BPV Claims derive from BPV Mortgage Loan Agreements entered into by: (i) BPV; or (ii)

one of the Other Banks and such Claims have been transferred to BPV as a result of the going

concern acquisitions by BPV from these Other Banks pursuant to Article 58 of the Consolidated

Banking Act;

c. the BPV Claims are classified as in bonis (as such term is defined in the Manuale della matrice

dei conti issued by circular No. 49 of the Bank of Italy of 8 February 1989, as subsequently

amended and supplemented) as of 31 October 2003, provided that such claims were classified as

in bonis also as of 31 July 2003;

d. the BPV Claims derive from BPV Mortgage Loan Agreements in respect of which no more than

one instalment was due and payable but unpaid as of 31 October 2003 and no more than two

instalments were due and payable but unpaid as of 31 July 2003;

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e. the BPV Claims derive from BPV Mortgage Loan Agreements in respect of which no instalment

which was due and payable but unpaid as of 31 October 2003 was still unpaid as of 13

November 2003 and in respect of which no more than two instalments are due and payable but

unpaid as of 31 July 2003;

f. the BPV Claims derive from BPV Mortgage Loan Agreements in respect of which the loan

amount has been fully disbursed and there is no obligation to advance or disburse any further

amounts, provided that such loan amounts had been already fully disbursed as of 31 July 2003;

g. the BPV Claims derive from Mortgage Loan Agreements entered into between 1 July 1999

(included) and 31 May 2003 (included); n. o. the BPV Claims are denominated in Euro;

i. the BPV Claims derive from BPV Mortgage Loan Agreements (i) with variable or fixed interest

rate of between three point three per cent. (3.3%) (inclusive) and nine point eight per cent.

(9.8%) (inclusive); and (ii) whose final instalment is due after 31 December 2004 (excluded) and

before 31 December 2028 (included);

j. the BPV Claims derive from BPV Mortgage Loan Agreements whose amortisation plan

exclusively provides for constant (annuities) or increasing instalments;

k. the BPV Claims derive from BPV Mortgage Loan Agreements, in each case, in respect of which

the residual principal outstanding amount did not exceed, also as of 31 July 2003, Euro

516,456.90;

l. the BPV Claims are not fully reimbursed and in respect of which no instalment is equal to zero

as of 31 October 2003;

m. the BPV Claims derive from BPV Mortgage Loan Agreements whose amortisation plans provide

for monthly, quarterly or semi-annual instalments;

but, in any event, expressly excluding those claims deriving from:

a. mortgage loan agreements benefiting from regional, state and/or European Union financialsubsidies with respect to principal and/or interest or from any other subsidy provided under any

applicable regional, state and/or European Union law or regulation or granted by consorzi o

cooperative di garanzia collettiva;

b. mortgage loan agreements entered into with individuals who were: (i) employees of BPV and/or

of companies belonging to the Banca Popolare di Vicenza Group; (ii) public institutions,

foundations, registered associations; (iii) associations not registered; (iv) religious institutions;

c. mortgage loan agreements which were in a pre-amortisation phase as of 31 July 2003;

d. mortgage loan agreements transferred from Banca Intesa S.p.A. to BPV as a result of a going

concern acquisition made pursuant to Article 58 of Consolidated Banking Act;

e. mortgage loan agreements whose floating rate is indexed to Prime Rate BPV;

f. mortgage loan agreements whose floating rate is indexed to the following rates: one monthEuribor, three month Euribor, six month Euribor, average three month Euribor/Rendistato,

average Bot/three month Euribor, PR ABI, Official Discount Rate and whose spread over such

rates is lower than 25 basis points;

g. mortgage loan agreements that, after disbursement, may be converted, at the borrowers’

discretion, from fixed rate to floating rate or from floating to fixed;

h. all mortgage loan agreements entered into with the same borrower where any one of suchagreements does not satisfy the above, except for any mortgage loan that has been excluded for

one of the following reasons:

(i) final instalment maturity date falling after 31 December 2028 (excluded);

(ii) interest rate between three point three per cent. (3.3%) (excluded) and 3 point twenty-five per

cent. (3.25%) (included);

(iii) execution prior to 1 July 1999 (excluded);

45

(vi) a maximum of two instalments due and payable but unpaid as of 31 July 2003 and also (i) two

or more instalments due and payable but unpaid as of 31 October 2003 or (ii) one instalment

due and payable but unpaid as of 31 October 2003 and still unpaid as of 13 November 2003;

(v) the amortisation plan does not provide for constant (annuities) or increasing instalments;

(vi) the floating rate is indexed to Prime Rate BPV.

Any fideiussioni omnibus that as of 1 December 2003 secure, or prior to such date secured,

simultaneously the BPV Claims transferred pursuant to the BPV Transfer Agreement plus other claims

of BPV towards the same Borrowers are excluded and not transferred together with the BPV Claims.

CRP Portfolio

The CRP Portfolio purchased by the Issuer pursuant to the CRP Transfer Agreement comprises

debt obligations arising from mortgage loans originated by CRP or by Banca Steinhauslin and

transferred to CRP as a result of a going concern acquisition by CRP from Banca Steinhauslinpursuant to Article 58 of the Consolidated Banking Act.

The CRP Portfolio has been selected on the basis of the CRP Criteria (see below).

Characteristics of the CRP Portfolio

The CRP Portfolio comprises debt obligations owed to CRP under 1,732 CRP Mortgage Loans

all of which were classified as performing by CRP as of 31 October 2003. The CRP Mortgage Loans

have been transferred to the Issuer pursuant to the terms of the CRP Transfer Agreement, together

with any ancillary rights and guarantees (but excluding any personal guarantees (i.e. fideiussioni

omnibus) securing simultaneously the CRP Claims and other claims of CRP), or security interests and

any related rights which have been granted to CRP or to Banca Steinhauslin to secure or ensure thepayment and/or the recovery of any of the CRP Claims (the ‘‘CRP Collateral Security’’). The total

principal balance of the CRP Portfolio as of 1 December 2003 was equal to Euro 149,764,023.20.


(i) as of 31 October 2003, each CRP Mortgage Loan was performing and for those CRP MortgageLoans that presented one instalment in arrears as of 31 October 2003, a further check was

performed on 13 November 2003 which confirmed that such unpaid instalment was no longer in

arrears as of such date;

(ii) the plan contractually agreed upon for the amortisation of each CRP Mortgage Loan provides


(iii) the outstanding amount due by the Borrower in respect of each CRP Mortgage Loan did not

exceed Euro 516,456.90 as of 31 July 2003; and

(iv) each CRP Mortgage Loan has been entirely advanced by CRP or Banca Steinhauslin and no

further amount in respect thereof is due by CRP or by Banca Steinhauslin.

Security

Each of the CRP Mortgage Loans is secured by a voluntary mortgage on property granted in

favour of CRP or Banca Steinhauslin and subsequently transferred to CRP. At least 98% of the BPV

Claims (by principal amount outstanding) are secured by CRP Mortgages that are economically first-

ranking priority mortgages (ipoteche di primo grado): i.e. (i) a first-ranking priority mortgage (ipoteca

di primo grado); or (ii) a subsequent ranking priority mortgage (ipoteca di grado successivo) where theobligations secured by mortgage(s) ranking prior to such subsequent mortgage have been fully

satisfied.

Currency

Each CRP Mortgage Loan is denominated in Euro.

46

Interest Rate

Each CRP Mortgage Loan included in the CRP Portfolio is either (x) a multi-rate loan (i.e. a

mortgage loan agreement that, after disbursement, may be converted, at the borrowers’ discretion and

at predetermined dates from fixed rate to floating rate or from floating to fixed rate) or (y) a floating

rate loan referenced to:

* Euribor 1 month;

* Euribor 3 months;

* Euribor 6 months

Repayment Type

1,732 CRP Mortgage Loans, representing 100% of the outstanding principal balance of the CRP

Portfolio as of 1 December 2003, provide for annuity payments (french amortisation).

The CRP Mortgage Loans providing for annuity payment are loans with an amortisation profile



Repayment Method

Instalments on the CRP Mortgage Loans are generally paid by way of debiting the designated


Year of Origination

Each CRP Mortgage Loan was originated between 1 August 1997 (included) and 31 May 2003

(included).

Term

Each CRP Mortgage Loan matures on or before 31 December 2028.

Borrowers



The CRP Mortgage Loan Agreements generally provide for a penalty for the prepayment of the

CRP Mortgage Loans. Penalties vary according to the type of loan and/or amounts in question, and

the penalties normally range from zero per cent. (0%) to two per cent. (2%) of the outstandingprincipal amount at the time of the prepayment.

CRP Criteria

The CRP Claims have been selected by CRP on the basis of the following criteria (the ‘‘CRP

Criteria’’) which is set forth in Exhibit ‘‘A’’ to the CRP Transfer Agreement. Each CRP Claim

satisfied, as of 31 October 2003 (and such other date(s) as specified below), the following criteria:

a. the CRP Claims derive from CRP Mortgage Loan Agreements in respect of which the Borrowers



b the CRP Claims derive from CRP Mortgage Loan Agreements entered into by: (i) CRP; or (ii)

Banca Steinhauslin and have been transferred to CRP as a result of the going concern

acquisition by CRP from Banca Steinhauslin pursuant to Article 58 of the Consolidated Banking

Act;

c. the CRP Claims are classified as in bonis (as such term is defined in the Manuale della matrice

dei conti issued by circular of the Bank of Italy No. 49 of 8 February 1989, as subsequently



47

d. the CRP Claims derive from CRP Mortgage Loan Agreements in respect of which no more than



e. the CRP Claims derive from CRP Mortgage Loan Agreements in respect of which no instalment

which was due and payable but unpaid as of 31 October 2003 was still unpaid as of 13November 2003 and in respect of which no more than two instalments were due and payable but


f. the CRP Claims derive from CRP Mortgage Loan Agreements in respect of which the loan

amount has been fully disbursed and there is no obligation to advance or disburse any further

amounts, provided that such loan amounts had been already fully disbursed as of 31 July 2003;

g. the CRP Claims derive from CRP Mortgage Loan Agreements entered into between 1 August

1997 (included) and 31 May 2003 (included);

h. the CRP Claims are denominated in Euro;

i. the CRP Claims derive from CRP Mortgage Loan Agreements the interest rate in respect of

which is floating or CRP Mortgage Loan Agreements that, after disbursement, may be

converted, at the borrowers’ discretion, from fixed rate to floating rate (i) with an interest rate

between three point thirty-seven per cent. (3.37%) (inclusive) and nine point eight per cent.

(9.8%) (inclusive); and (ii) whose final instalment is due after 31 December 2004 (excluded) and

before 31 December 2028 (included);

j. the CRP Claims derive from CRP Mortgage Loan Agreements whose amortisation plan

exclusively provides for constant (annuities) instalments;

k. the CRP Claims derive from CRP Mortgage Loan Agreements, in each case, in respect of whichthe residual principal outstanding amount did not exceed, also as of 31 July 2003, Euro

516,456.90;

l. the CRP Claims are not fully reimbursed and in respect of which no instalment is equal to zero


m. the CRP Claims derive from CRP Mortgage Loan Agreements whose amortisation plans provide


but, in any event, expressly excluding those claims deriving from:

a. fixed rate mortgage loan agreements;

b. mortgage loan agreements benefiting from regional, state and/or European Union financial

subsidies with respect to principal and/or interest or from any other subsidy provided under any



c. mortgage loan agreements entered into with individuals who were: (i) employees of CRP and/or

of companies belonging to the Banca Popolare di Vicenza Group; (ii) public institutions,


d. mortgage loan agreements which were in a pre-amortisation phase as of 31 July 2003;

e. floating rate mortgage loan agreements or mortgage loan agreements that, after disbursement,

may be converted, at the borrowers’ discretion, from fixed rate to floating rate that are indexed

to the following rates: one month Euribor, three month Euribor, six month Euribor, Prime Rate

ABI and whose spread over such rates is lower than 25 basis points;

f. all mortgage loan agreements entered into with the same borrower where any one of such

agreements does not satisfy the above, except for any mortgage loan that has been excluded for


(i) final instalment maturity date falling after 31 December 2028 (excluded);

(ii) interest rate between three point thirty-seven per cent. (3.37%) (excluded) and 3 point

twenty-five per cent. (3.25%) (included);

(iii) execution prior to 1 August 1997 (excluded);

48

(iv) a maximum of two instalments due and payable but unpaid as of 31 July 2003 and also (i)

two or more instalments due and payable but unpaid as of 31 October 2003 or (ii) one

instalment due and payable but unpaid as of 31 October 2003 and still unpaid as of 13

November 2003;

(v) the amortisation plan does not provide for constant (annuities) instalments.

Any fideiussioni omnibus that as of 1 December 2003 secure, or prior to such date secured,

simultaneously the CRP Claims transferred pursuant to the CRP Transfer Agreement plus other

claims of CRP towards the same Borrowers are excluded and not transferred together with the CRP

Claims.

BN Portfolio

The BN Portfolio purchased by the Issuer pursuant to the BN Transfer Agreement comprisesdebt obligations arising from mortgage loans originated by BN or by Banca del Popolo di Trapani

S.p.A. or by Banca Nuova S.p.A. as existing prior its merger with and incorporation into Banca del

Popolo di Trapani S.p.A..

The BN Portfolio has been selected on the basis of the BN Criteria (see below).

Characteristics of the BN Portfolio

The BN Portfolio comprises debt obligations owed to BN under 1,333 BN Mortgage Loans allof which were classified as performing by BN as of 31 October 2003. The BN Mortgage Loans have

been transferred to the Issuer pursuant to the terms of the BN Transfer Agreement, together with any

ancillary rights and guarantees (but excluding any personal guarantees (i.e. fideiussioni omnibus)

securing simultaneously the BN Claims and other claims of BN), or security interests and any related

rights which have been granted to BN or to Banca del Popolo di Trapani S.p.A., or Banca Nuova

S.p.A. as existing prior its merger with and incorporation into Banca del Popolo di Trapani S.p.A, to

secure or ensure the payment and/or the recovery of any of the BN Claims (the ‘‘BN Collateral

Security’’). The total principal balance of the BN Portfolio as of 1 December 2003 was equal to Euro69,786,363.78.


(i) as of 31 October 2003, each BN Mortgage Loan was performing and for those BN Mortgage

Loans that presented one instalment in arrears as of 31 October 2003, a further check wasperformed on 13 November 2003 which confirmed that such unpaid instalment was no longer in

arrears as of such date;

(ii) the plan contractually agreed upon for the amortisation of each BN Mortgage Loan provides for

monthly, quarterly or semi-annual instalments;

(iii) the outstanding amount due by the Borrower in respect of each BN Mortgage Loan did not

exceed Euro 516,456.90 as of 31 July 2003; and

(iv) each BN Mortgage Loan has been entirely advanced by BN and/or Banca del Popolo di Trapanior Banca Nuova S.p.A., as existing prior to its merger into Banca del Popolo di Trapani S.p.A.,

and no further amount in respect thereof is due by BN or by Banca del Popolo di Trapani or

by Banca Nuova S.p.A. as existing prior to its merger with and incorporation into Banca del

Popolo di Trapani S.p.A..

Security

Each of the BN Mortgage Loans is secured by a voluntary mortgage on property granted in

favour of BN or, as the case may be, Banca del Popolo di Trapani. At least 98% of the BPV Claims

(by principal amount outstanding) are secured by BN Mortgages that are economically first-ranking

priority mortgages (ipoteche di primo grado): i.e. (i) a first-ranking priority mortgage (ipoteca di primo

grado); or (ii) a subsequent ranking priority mortgage (ipoteca di grado successivo) where the

obligations secured by mortgage(s) ranking prior to such subsequent mortgage have been fully

satisfied.

49

Currency

Each BN Mortgage Loan is denominated in Euro.

Interest Rate

Each BN Mortgage Loan included in the BN Portfolio is a fixed rate or floating rate loan

referenced to Euribor 3 months.

Repayment Type

1,333 BN Mortgage Loans, representing 100% of the outstanding principal balance of the BN

Portfolio as of 1 December 2003, provide for annuity payments (french amortisation).

The BN Mortgage Loans providing for annuity payment are loans with an amortisation profile



Repayment Method

Instalments on the BN Mortgage Loans are generally paid by way of debiting the designated


Year of Origination

Each BN Mortgage Loan was originated between 14 February 2001 (included) and 31 May 2003

(included).

Term

Each BN Mortgage Loan matures on or before 1 June 2018.

Borrowers



The BN Mortgage Loan Agreements generally provide for a penalty for the prepayment of the

BN Mortgage Loans. Penalties vary according to the type of loan and/or amounts in question, and

the penalties normally range from zero per cent. (0%) to two per cent. (2%) of the outstanding

principal amount at the time of the prepayment.

BN Criteria

The BN Claims have been selected by BN on the basis of the following criteria (the ‘‘BN

Criteria’’) which is set forth in Exhibit ‘‘A’’ to the BN Transfer Agreement. Each BN Claim satisfied,

as of 31 October 2003 (and such other date(s) as specified below), the following criteria:

a. the BN Claims derive from BN Mortgage Loan Agreements in respect of which the Borrowers



b. the BN Claims derive from BN Mortgage Loan Agreements entered into by: (i) BN; or (ii)

Banca del Popolo di Trapani S.p.A.; or (iii) Banca Nuova S.p.A. as existing prior to its merger

with and incorporation into Banca del Popolo di Trapani S.p.A.;

c. the BN Claims are classified as in bonis (as such term is defined in the Manuale della matrice dei

conti issued by circular No. 49 of the Bank of Italy dated 8 February 1989, as subsequently



d. the BN Claims derive from BN Mortgage Loan Agreements in respect of which no more than



50

e. the BN Claims derive from BN Mortgage Loan Agreements in respect of which no instalment

which was due and payable but unpaid as of 31 October 2003 was still unpaid as of 13

November 2003 and in respect of which no more than two instalments were due and payable but


f. the BN Claims derive from BN Mortgage Loan Agreements in respect of which the loan amount

has been fully disbursed and there is no obligation to advance or disburse any further amounts,

provided that such loan amounts had been already fully disbursed as of 31 July 2003;

g. the BN Claims derive from BN Mortgage Loan Agreements entered into between 14 February

2001 (included) and 31 May 2003 (included);

h. the BN Claims are denominated in Euro;

i. the BN Claims derive from BN fixed or floating rate Mortgage Loan Agreements (i) providing

for an interest rate between three point four per cent. (3.4%) (inclusive) and nine point eight percent. (9.8%) (inclusive); and (ii) whose final instalment is due after 31 December 2004 (excluded)

and before 1 June 2018 (included);

j. the BN Claims derive from BN Mortgage Loan Agreements whose amortisation plan exclusively

provides for constant (annuities) instalments;

k. the BN Claims derive from BN Mortgage Loan Agreements, in each case, in respect of which

the residual principal outstanding amount did not, also as of 31 July 2003, exceed Euro516,456.90;

l. the BN Claims are not fully reimbursed and in respect of which no instalment is equal to zero


m. the BN Claims derive from BN Mortgage Loan Agreements whose amortisation plans provide


but, in any event, expressly excluding those BN Claims deriving from:

a. mortgage loan agreements providing for a fixed interest rate lower than four point five per cent.

(4.5%);

b. mortgage loan agreements benefiting from regional, state and/or European Union financial

subsidies with respect to principal and/or interest or from any other subsidy provided under any



c. mortgage loan agreements entered into with individuals who were: (i) employees of BN and/or of

companies belonging to the Banca Popolare di Vicenza Group; (ii) public institutions,


d. mortgage loan agreements which were in a pre-amortisation phase as of 31 July 2003;

e. mortgage loan agreements transferred from Banca Intesa S.p.A. to BN (through BPV) as a result

of a going concern acquisition made pursuant to Article 58 of Consolidated Banking Act;

f. mortgage loan agreements whose floating rate is indexed to the following rates: three month

Euribor, Prime Rate ABI and whose spread vis-a-vis such rates is lower than 25 basis points;

g. mortgage loan agreements that, after disbursement, may be converted, at the borrowers’

discretion, from fixed rate to floating rate or from floating to fixed;

h. all mortgage loan agreements entered into with the same borrower where any one of suchagreements does not satisfy the above, except for any mortgage loan that has been excluded for


(i) final instalment maturity date falling after 1 June 2018 (excluded);

(ii) interest rate between three point four per cent. (3.4%) (excluded) and 3 point twenty-five

per cent. (3.25%) (included);

(iii) execution prior to 14 February 2001 (excluded);

51

(iv) a maximum of two instalments due and payable but unpaid as of 31 July 2003 and also (i)

two or more instalments due and payable but unpaid as of 31 October 2003 or (ii) one

instalment due and payable but unpaid as of 31 October 2003 and still unpaid as of 13

November 2003;

(v) the amortisation plan does not provide for constant (annuities) instalments.

(vi) Any fideiussioni omnibus that as of 1 December 2003 secure, or prior to such date secured,

simultaneously the BN Claims transferred pursuant to the BN Transfer Agreement plus

other claims of BN towards the same Borrowers are excluded and not transferred together

with the BN Claims.

Reporting duties in respect of the Portfolios

Pursuant to the Master Servicing Agreement, the Master Servicer has undertaken to prepare and

submit to the Issuer, the Lead Manager, the Calculation Agent, the Swap Counterparty, the

Representative of the Noteholders and the Rating Agencies, on each Semi-annual Report Date, the

Semi-annual Servicer Report. The Semi-annual Servicer Report will detail the Aggregate NotionalOutstanding Amount of the Portfolios as of the last day of the immediately preceding Semi-annual

Collection Period together with information relating to the arrears and the amortisation of the

Portfolios and the Servicers’ activity during the preceding Semi-annual Collection Period, including

without limitation: a description of the Portfolios (outstanding amount, principal and interest) as well

as information relating to delinquencies, defaults and collections during the Semi-annual Collection

Period. In order to enable BPV to perform the aforementioned reporting obligations, each of CRP

and BN undertakes to calculate and notify BPV 4 (four) days before each Semi-annual Report Date

the Aggregate Notional Outstanding Amount of the CRP Claims and the BN Claims as of the lastday of the immediately preceding Semi-annual Collection Period.

The information contained in each Semi-annual Servicer Report shall be used by the Calculation

Agent to determine the payments to be made on each immediately succeeding Payment Date. Each

Servicer shall procure that a firm of internationally recognised auditors shall prepare a report in

respect of the information and data contained in each Semi-annual Servicer Report.

Pursuant to the provisions of the Master Servicing Agreement, the Master Servicer has also

undertaken to prepare and submit to the Issuer, the Lead Manager, the Calculation Agent, the Swap

Counterparty, the Representative of the Noteholders and the Rating Agencies, on each Interim Report

Date, the Interim Servicer Report. The Interim Servicer Report will provide the Aggregate Notional

Outstanding Amount of the Portfolios as of the Interim Calculation Date immediately preceding anInterim Report Date, together with other information relating to the arrears and the amortisation of

the Portfolios and the Servicers’ activity in respect of the immediately preceding Interim Calculation

Period. In order to enable BPV to perform the aforementioned reporting obligations, each of CRP

and BN undertakes to calculate and notify BPV, 4 (four) days before each Interim Report Date, the

Aggregate Notional Outstanding Amount of the CRP Claims and the BN Claims as of the

immediately preceding Interim Calculation Date. The first Interim Servicer Report will be prepared on

15 October 2004.

Copies of the most recently published Semi-annual Servicer Report and Interim Servicer Report

shall be made available for collection and inspection during normal business hours at the registered

offices of the Luxembourg Listing Agent and the Representative of the Noteholders. The Semi-annual

Servicer Reports and the Interim Servicer Reports will be published on the Bloomberg screen (or any

replacement thereof) and/or on the BPV’s web site and/or in such other manner as the Master Servicerand the Lead Manager may deem appropriate.

Description of the Portfolios

The following tables set forth the information, provided by each Originator, which is

representative of the characteristics of the Portfolios (excluding, for the avoidance of doubt, the

Miscellaneous Mortgage Loans) as of 1 December 2003. The information in the following tables

reflects the position of the Portfolios as of 1 December 2003, unless otherwise specified. The

52

characteristics of the Portfolios as of the Issue Date may vary from those set forth in the tables as a

result, inter alia, of prepayments (if any) or repayments on the Mortgage Loans prior to the Issue

Date.

General Summary

Current

Outstanding

Balance

Current

Outstanding

Balance

Loan

Count

Loan

Count

Originator (Euro) (%) (%)

Banca Popolare di Vicenza ................... 368,933,838 62.69 4,273 58.23

Banca Nuova ........................................ 69,786,364 11.86 1,333 18.17

Cariprato............................................... 149,764,023 25.45 1,732 23.60

Total:..................................................... 588,484,225 100.00 7,338 100.00

Weighted Average* Minimum Maximum

Current Loan to Value** (%)..................................... 61.08% 1.53% 100.00%

Original Loan to Value** (%) .................................... 64.33% 9.52% 100.00%

Seasoning (Months) .................................................... 15.91 6.13 77.10

Residual Life (Years) .................................................. 16.50 1.26 24.94

Original Life (Years)................................................... 17.82 2.90 25.62

Interest Rate (%)......................................................... 4.17 3.10 9.30

Current Outstanding Balance (Euro).......................... 80,197 2,521 487,943

* by current amount outstanding as of 1 December 2003

** based on the original property valuation of the Real EstateAssets

Total Outstanding Principal Balance (Euro)................ 588,484,225

Number of Loans (No.).............................................. 7,338

Number of Borrowers (Client Codes) (No.)............... 7,268

1. Current Balance

Current

Outstanding

Balance

Current

Outstanding

Balance

Loan

Count

Loan

Count

Current Outstanding Balance (Euro) (Euro) (%) (%)

0.01 – 50,000.00...................................... 75,034,502 12.75 2,130 29.03

50,000.01 – 75,000.00...................................... 106,415,286 18.08 1,683 22.9475,000.01 – 100,000.00 .................................... 129,937,540 22.08 1,477 20.13

100,000.01 – 150,000.00 .................................... 205,419,660 34.91 1,694 23.09

150,000.01 – 250,000.00 .................................... 54,965,195 9.34 303 4.13

250,000.01 – 500,000.00 .................................... 16,712,042 2.84 51 0.70

Total: ................................................................ 588,484,225 100.00 7,338 100.00

Average Current Balance: Euro 80,197

Max Current Balance: Euro 487,943

Minimum Current Balance: Euro 2,521

53

2. Original BalanceCurrent

Outstanding

Balance

Current

Outstanding

Balance

Loan

Count

Loan

Count

Original Term (months) (Euro) (%) (%)

0.01 – 50,000.00...................................... 52,996,780 9.01 1,628 22.19

50,000.01 – 75,000.00...................................... 100,642,637 17.10 1,775 24.19

75,000.01 – 100,000.00 .................................... 130,247,742 22.13 1,587 21.63

100,000.01 – 150,000.00 .................................... 220,920,550 37.54 1,901 25.91

150,000.01 – 250,000.00 .................................... 64,098,217 10.89 382 5.21

250,000.01 – 500,000.00 .................................... 17,789,497 3.02 61 0.83500,000.01 – 800,000.00 .................................... 1,788,803 0.31 4 0.05

Total: ................................................................ 588,484,225 100.00 7,338 100.00

Max Original Balance: Euro 774,685

Min Original Balance: Euro 12,911

Average Original Balance: Euro 85,629

3. Original TermCurrent

Outstanding

Balance

Current

Outstanding

Balance

Loan

Count

Loan

Count

Original Term (months) (Euro) (%) (%)

0.01 – 60.00 ................................................... 405,217 0.07 12 0.16

60.01 – 120.00 ................................................. 12,062,212 2.05 298 4.06

120.01 – 180.00 ................................................. 117,694,084 20.00 2,065 28.14

180.01 – 240.00 ................................................. 168,108,187 28.57 2,238 30.50

240.01 – 300.00 ................................................. 158,318,848 26.90 1,564 21.31

300.01 – 360.00 ................................................. 131,895,676 22.41 1,161 15.82

Total: ................................................................ 588,484,225 100.00 7,338 100.00

Max Term: 307.40 months

Min Term: 34.77 months

Weighted Average Term: 213.86 months

4. SeasoningCurrent

Outstanding

Balance

Current

Outstanding

Balance

Loan

Count

Loan

Count

Seasoning (months) (Euro) (%) (%)

0.01 – 12.00..................................................... 221,691,137 37.67 2,442 33.28

12.01 – 24.00..................................................... 294,850,197 50.10 3,678 50.12

24.01 – 36.00..................................................... 50,300,757 8.55 817 11.13

36.01 – 48.00..................................................... 12,368,938 2.10 208 2.8348.01 – 60.00..................................................... 7,957,160 1.35 160 2.18

60.01 – 72.00..................................................... 928,750 0.16 25 0.34

72.01 – 84.00..................................................... 387,286 0.07 8 0.11

Total: ................................................................ 588,484,225 100.00 7,338 100.00

Max Seasoning: 77.10 months

Min Seasoning: 6.13 months

Weighted Average Seasoning: 15.91 months

54

5. Remaining Term

Current

Outstanding

Balance

Current

Outstanding

Balance

Loan

Count

Loan

Count

Remaining Term (months) (Euro) (%) (%)

0.01 – 60.00....................................................... 8,227,672 1.40 206 2.81

60.01 – 120.00 ................................................... 117,914,826 20.04 2,102 28.65

120.01 – 180.00 ................................................. 167,905,876 28.53 2,254 30.72180.01 – 240.00 ................................................. 161,297,621 27.41 1,605 21.87

240.01 – 300.00 ................................................. 133,138,230 22.62 1,171 15.96

Total: ................................................................ 588,484,225 100.00 7,338 100.00

Max Remaining Term: 299.27 months

Min Remaining Term: 15.17 months

Weighted Average Remaining Term: 197.95 months

6. Current LTV(1)

Current LTV

Current

Outstanding

Balance

(Euro)

Current

Outstanding

Balance

(%)

Loan

Count

Loan

Count

(%)

00.01% – 10.00%............................................... 709,135 0.12 28 0.38

10.01% – 20.00%............................................... 14,716,253 2.50 374 5.10

20.01% – 30.00%............................................... 32,795,879 5.57 658 8.97

30.01% – 40.00%............................................... 49,472,835 8.41 821 11.19

40.01% – 50.00%............................................... 62,602,291 10.64 906 12.35

50.01% – 60.00%............................................... 68,749,394 11.68 871 11.8760.01% – 70.00%............................................... 89,445,170 15.20 1,104 15.04

70.01% – 80.00%............................................... 252,427,257 42.89 2,415 32.91

80.01% – 90.00%............................................... 11,431,397 1.94 103 1.40

90.01% – 100.00%............................................. 6,134,615 1.04 58 0.79

Total: ................................................................ 588,484,225 100.00 7,338 100.00

Max Current LTV: 100.00%

Min Current LTV: 1.53%

Weighted Average Current LTV: 61.08%

(1) In certain instances, the Mortgage over a Real Estate Asset secures more than one Mortgage Loan.

55

7. Original LTV(1)

Original LTV

Current

Outstanding

Balance

(Euro)

Current

Outstanding

Balance

(%)

Loan

Count

Loan

Count

(%)

00.01% – 10.00%............................................... 16,757 0.00 1 0.01

10.01% – 20.00%............................................... 11,426,231 1.94 280 3.82

20.01% – 30.00%............................................... 25,923,923 4.41 522 7.11

30.01% – 40.00%............................................... 41,053,209 6.98 720 9.81

40.01% – 50.00%............................................... 57,491,021 9.77 870 11.86

50.01% – 60.00%............................................... 64,111,801 10.89 838 11.42

60.01% – 70.00%............................................... 75,712,345 12.87 954 13.0070.01% – 80.00%............................................... 287,072,756 48.78 2,900 39.52

80.01% – 90.00%............................................... 16,207,765 2.75 156 2.13

90.01% – 100.00%............................................. 9,468,417 1.61 97 1.32

Total: ................................................................ 588,484,225 100.00 7,338 100.00

Max Original LTV: 100.00%

Min Original LTV: 9.52%

Weighted Average Original LTV: 64.33%

(1) In certain instances, the Mortgage over a Real Estate Asset secures more than one Mortgage Loan.

8. Interest Rate Type

Interest Rate Type

Current

Outstanding

Balance

(Euro)

Current

Outstanding

Balance

(%)

Loan

Count

Loan

Count

(%)

Euribor 1 month............................................... 8,408,116 1.43 98 1.34

Euribor 3 months ............................................. 352,996,434 59.99 3,942 53.72

Euribor 6 months ............................................. 45,112,239 7.67 556 7.58Fixed Rate ........................................................ 86,223,266 14.65 1,664 22.68

Multi-Rate ........................................................ 95,744,169 16.27 1,078 14.69

Total: ................................................................ 588,484,225 100.00 7,338 100.00

56

9. Current Interest Rate (all Loans)

Interest Rate (%)

Current

Outstanding

Balance

(Euro)

Current

Outstanding

Balance

(%)

Loan

Count

Loan

Count

(%)

3.01 – 3.50......................................................... 160,834,041 27.33 1,752 23.88

3.51 – 4.00......................................................... 231,231,372 39.29 2,563 34.93

4.01 – 4.50......................................................... 61,012,986 10.37 753 10.26

4.51 – 5.00......................................................... 28,283,419 4.81 375 5.11

5.01 – 5.50......................................................... 22,770,795 3.87 310 4.22

5.51 – 6.00......................................................... 22,021,016 3.74 360 4.91

6.01 – 6.50......................................................... 28,773,878 4.89 519 7.07

6.51 – 7.00......................................................... 26,967,837 4.58 530 7.227.01 – 7.50......................................................... 4,791,741 0.81 119 1.62

7.51 – 8.00......................................................... 1,249,192 0.21 37 0.50

8.01 – 8.50......................................................... 389,158 0.07 15 0.20

8.51 – 9.00......................................................... 120,915 0.02 4 0.05

9.01 – 9.50......................................................... 37,876 0.01 1 0.01

Total: ................................................................ 588,484,225 100.00 7,338 100.00

Max Interest Rate: 9.30%Min Interest Rate: 3.10%Weighted Average Interest Rate: 4.17%

10. Geographical Region

Geographical Region

Current

Outstanding

Balance

(Euro)

Current

Outstanding

Balance

(%)

Loan

Count

Loan

Count

(%)

Veneto............................................................... 257,005,169 43.66 2,945 40.12

Friuli Venezia Giulia ........................................ 66,268,710 11.26 870 11.86Lombardy ......................................................... 33,897,624 5.76 321 4.37

Emilia Romagna............................................... 5,365,873 0.91 65 0.89

Liguria .............................................................. 2,820,142 0.48 39 0.53

Piedmont........................................................... 2,006,478 0.34 20 0.27

Trentino Alto Adige ......................................... 147,238 0.03 2 0.03

North of Italy: ................................................... 367,511,234 62.44 4,262 58.07

Abruzzo ............................................................ 63,219 0.01 1 0.01

Marche.............................................................. 124,557 0.02 1 0.01Lazio ................................................................. 2,435,270 0.41 24 0.33

Tuscany............................................................. 148,000,615 25.14 1,711 23.31

Umbria ............................................................. 136,203 0.02 2 0.03

Centre of Italy:.................................................. 150,759,864 25.60 1,739 23.69

Basilicata........................................................... 45,759 0.01 1 0.01

Calabria ............................................................ 8,560,248 1.45 166 2.26

Campania.......................................................... 988,558 0.17 10 0.14

Puglia ................................................................ 835,349 0.14 8 0.11Sicily ................................................................. 59,783,213 10.16 1,152 15.69

South of Italy: ................................................... 70,213,127 11.93 1,337 18.21

Total: ................................................................ 588,484,225 100.00 7,338 100.00

57

11. Current Interest Rates for Fixed Rate Loans

Interest Rates for Fixed (%)

Current

Outstanding

Balance

(Euro)

Current

Outstanding

Balance

(%)

Loan

Count

Loan

Count

(%)

3.01 – 4.50......................................................... 240,640 0.28 3 0.18

4.51 – 5.00......................................................... 2,634,941 3.06 61 3.675.01 – 5.50......................................................... 4,815,867 5.59 93 5.59

5.51 – 6.00......................................................... 19,151,168 22.21 320 19.23

6.01 – 6.50......................................................... 26,544,740 30.79 491 29.51

6.51 – 7.00......................................................... 26,247,028 30.44 520 31.25

7.01 – 7.50......................................................... 4,791,741 5.56 119 7.15

7.51 – 8.00......................................................... 1,249,192 1.45 37 2.22

8.01 – 8.50......................................................... 389,158 0.45 15 0.90

8.51 – 9.50......................................................... 158,791 0.18 5 0.30

Total: ................................................................ 86,223,266 100.00 1,664 100.00

Max Interest Rate: 9.30%

Min Interest Rate: 3.40%

Weighted Average Interest Rate: 6.32%

12. Spread for Floating Rate Loans

Spread

Current

Outstanding

Balance

(Euro)

Current

Outstanding

Balance

(%)

Loan

Count

Loan

Count

(%)

0.01 – 0.50......................................................... 465,327 0.11 1 0.02

0.51 – 1.00......................................................... 37,716,679 9.28 424 9.23

1.01 – 1.50......................................................... 289,560,137 71.23 3,225 70.17

1.51 – 2.00......................................................... 74,792,904 18.40 868 18.89

2.01 – 2.50......................................................... 2,120,711 0.52 44 0.962.51 – 3.00......................................................... 1,166,341 0.29 24 0.52

3.01 – 3.50......................................................... 385,067 0.09 5 0.11

3.51 – 4.00......................................................... 309,625 0.08 5 0.11

Total: ................................................................ 406,516,789 100.00 4,596 100.00

Max Spread: 4.00%

Min Spread: 0.30%

Weighted Average Spread: 1.36%

58

13. Amortisation Type

Amortisation Type

Current

Outstanding

Balance

(Euro)

Current

Outstanding

Balance

(%)

Loan

Count

Loan

Count

(%)

Constant Instalment ......................................... 567,107,146 96.37 7,147 97.40

Increasing Instalment........................................ 21,377,079 3.63 191 2.60

Total: ................................................................ 588,484,225 100.00 7,338 100.00

14. Origination Year

Origination Year

Current

Outstanding

Balance

(Euro)

Current

Outstanding

Balance

(%)

Loan

Count

Loan

Count

(%)

1997 .................................................................. 387,286 0.07 8 0.11

1998 .................................................................. 928,750 0.16 25 0.34

1999 .................................................................. 8,283,742 1.41 166 2.26

2000 .................................................................. 13,334,478 2.27 226 3.08

2001 .................................................................. 58,997,009 10.03 934 12.73

2002 .................................................................. 327,164,164 55.59 4,008 54.62

2003 .................................................................. 179,388,796 30.48 1,971 26.86

Total: ................................................................ 588,484,225 100.00 7,338 100.00

15. Payment Periodicity

Payment Periodicity

Current

Outstanding

Balance

(Euro)

Current

Outstanding

Balance

(%)

Loan

Count

Loan

Count

(%)

1 month ............................................................ 437,762,254 74.39 5,593 76.22

3 months ........................................................... 8,436,647 1.43 99 1.35

6 months ........................................................... 142,285,324 24.18 1,646 22.43

Total: ................................................................ 588,484,225 100.00 7,338 100.00

59

LOAN SERVICING AND COLLECTION PROCEDURES

General

Each of BPV, CRP and BN has an automatic debit procedure, Fi.C.S. (Finanziamenti Crediti

Speciali) which manages the payment of interest and repayment of principal under the Mortgage

Loans. Under this system, payments due under the Mortgage Loans are automatically withdrawn fromthe Borrower’s account with each Originator. Each branch responsible for the Mortgage Loan and the

Originator’s relationship with the Borrower receives from Fi.C.S. periodic reports (daily, every ten

days and monthly) indicating all instalments due and payable during the relevant period and any

accrued but unpaid instalments. A copy of such reports is also sent to the Credit Monitoring Office

(Ufficio Crediti Anomali) or, in the case of CRP, the Head Area Branch (Filiale Capozona). As a

result, any unpaid instalments are promptly detected by the branches which subsequently take the

necessary action for their recovery.

The BPV Audit Department is also responsible for performing periodical controls on BPV, CRP

and BN’s loan servicing and collection procedures.

In the event that the Borrower’s account is closed prior to the full repayment of the Mortgage

Loan, the Borrower will receive a notice stating that an instalment is due and that it can be paid by

cheque or cash at any branch of the relevant Originator. If the amount standing to the credit of the

Borrower’s account from which payments in respect of the Mortgage Loan are to be debited isinsufficient to satisfy in full such payment obligations, the instalment that is due and payable will not

be debited to the account, unless the branch has satisfactory evidence that the Borrower’s account will

be credited within a few days with the funds necessary to meet his payment obligations. If instalments

due and payable are not paid within 15 days (90 days for CRP), the Fi.C.S. procedure will send an

overdue payment letter directly to the Borrower. Starting from such date, the Borrower’s position will

be monitored in detail by the relevant Originator.


The Mortgage Loan Agreements generally provide for a penalty for the pre-payment of the

Mortgage Loans. Penalties vary according to the type of loan and/or amounts at issue, and normally

range from 0 % to 2 % of the outstanding principal amount at the time of the pre-payment.

In the case of pre-payment, the Borrower’s account held with the relevant Originator will be

automatically debited with an amount equal to such penalty.

Management of Defaulted Mortgage Loan

Defaulted Mortgage Loans are classified as ‘‘Mortgage Loans under observation’’

(Posizioni sorvegliate) or as ‘‘Watch-list Loans’’ (Posizioni incagliate).

Mortgage Loans under observation (Posizioni sorvegliate)

Borrowers of Mortgage Loans that show anomalies with respect to other positions of BPV

Group (e.g. overdrafts and defaults) and/or with respect to the banking system (e.g. reduction ofcredits, debt consolidation, deterioration of financial ratios), that are such as to warrant strict

supervision and monitoring, will be placed on this list.

In general, the classification of Mortgage Loans under this list is not necessarily connected to a

Borrower’s failure to pay instalments but to an increase in the relevant Originator’s risk exposure

towards the Borrower. Mortgage Loans placed on this list will be subject to monitoring by the branch

(since it has better knowledge of the Borrower) and by the Direzione di Area (Area Management)which supervises the branch, based on data generated by Centrale dei Rischi of the Bank of Italy and

the automated procedure SEAC (Sistema Esperto Andamento Clienti), and aims to prevent the position

from deteriorating.

Generally, a Mortgage Loan will be placed ‘‘under observation’’ for a maximum period of

18-24 months, during which time the relevant Originator begins discussion with the Borrower in order

to set up an ad hoc repayment plan, to be agreed in writing between the branch and the Borrower

and formally approved by the competent body of the relevant Originator. The repayment plan will be

60

restructured to allow deferral of instalments only if the last instalment due date of Mortgage Loans

included in the relevant Portfolio does not exceed the Final Maturity Date of the Senior Notes issued

by the Issuer less three years.

Watch-list Loans (Posizioni Incagliate)

Mortgage Loans classified as ‘‘watch-list’’ loans are generally those which show anomalies of a

‘‘structural’’ nature (i.e. the Borrowers’ creditworthiness falls as a result of, for example, lack of

profitability, loans classified as non-performing, legal actions having been commenced) as a result oftemporary circumstances which are, however, expected to improve shortly. In the event that there are

signs of a real risk of the Borrower’s bankruptcy in the immediate or near future that might suggest

that a precautionary write-off of the claim is necessary, a repayment plan will be agreed.

Any securitised Mortgage Loan will be classified under this list when instalments are overdue for

more than four months. For each of BPV and BN, positions are managed by the relevant branch and

by the Direzione di Area, with the support of the Ufficio Crediti Anomali (Watch-list Credits and

Pre-litigation) Department. In the case of positions in excess of, in the case of BPV, Euro 250,000,

and in the case of BN, Euro 25,000, there will be added support from and involvement of theOperating Unit (Unita Operativa) of the Ufficio Crediti Anomali of the head office. For CRP, positions

are managed by the relevant branch and by the Audit Department that keeps informed its ‘‘Direzione

Legale e Crediti Anomali’’ (Watch-List and Legal Unit).

The approach by these operating units is ‘‘amicable’’ and consists primarily of negotiation of the

terms and conditions of the repayment plan (the repayment plan shall be structured to allow deferral

of instalments only if the last instalment due date of Mortgage Loans included in the relevant

Portfolio does not exceed the Final Maturity Date of the Senior Notes issued by the Issuer, less threeyears), with the aim to reach a faster collection and recovery of the debt. If such ‘‘negotiation’’ is not

possible or if it is not respected, the Borrower will be declared in default and will be notified of this

in writing. If, after a period of approximately thirty days from such default notice, no other

circumstance has emerged to permit a more positive evaluation of the credit, the file will be

transferred to the Litigation Department (Ufficio Contenzioso Interno), which will determine whether to

manage internally or outsource the collection and recovery.

Cancellation of the debt

Any cancellation of the debt will be allowed only to the extent of the amount of the interest

accrued but unpaid on the Mortgage Loan. Cancellation of debt in respect of the principal amount of

the Mortgage Loan is not allowed.

Non-Performing Loans (Posizioni in Sofferenza)

The file is sent to the Litigation Department of the relevant Originator after the formal notice of

overdue payment is sent and after termination of the loan by the Credit Monitoring Department.

If the default notice sent to the client does not result in any progress which could lead to an

amicable resolution, legal proceedings would normally be started immediately and the Litigation

Department may appoint an external counsel to commence and handle the relative judicial proceedings

although BPV, CRP and BN use primarily their in-house legal counsels.

In the case of loans secured by ‘‘voluntary’’ mortgages, foreclosure proceedings may becommenced by seeking a court order or injunction for payment in the form of a titolo esecutivo from

the court in whose jurisdiction the mortgaged property is located. This court order or injunction must

be served on the Borrower.

If the mortgage loan was executed in the form of a public deed, the relevant Originator can

serve a copy of the mortgage loan agreement, stamped by a notary public with an order for the

execution thereof (formula esecutiva) directly on the Borrower without the need to obtain a

titolo esecutivo from the court. An atto di precetto is notified to the debtor together with either the

titolo esecutivo or the Mortgage Loan Agreement, as the case may be.

61

Within ten days of filing, but not later than ninety days from the date on which notice of the

atto di precetto is served, the relevant Originator may request the attachment of the mortgaged

property. The property will be attached by a court order, which must then be filed with the

appropriate land registry (Conservatoria dei Registri Immobiliari).

The relevant Originator is required to search the land registry to ascertain the identity of the

current owner of the property and must then serve a notice of the request for attachment on the

current owner, even if no transfer of the property from the original borrower or mortgagor to a third

party purchaser has been previously notified to the creditor. Not earlier than ten days and not later

than ninety days after serving the attachment order, the relevant Originator may request the court to

sell the mortgaged property. The court may delay its decision in respect of the mortgage lender’srequest in order to hear any challenge by the Borrower to the attachment.

If the court decides to proceed with an auction (vendita con incanto) of the mortgaged property,it will usually appoint an expert to value the property. The court will then order the sale by auction.

The court determines on the basis of the expert’s appraisal the minimum bid price for the property at

the auction. If an auction fails to result in the sale of the property, the court will arrange a new

auction with a lower minimum bid price. The courts have discretion to decide whether, and to what

extent, the bid price should be reduced (the maximum permitted reduction being one-fifth of the

minimum bid price of the previous auction). In practice, the courts tend to apply the one-fifth

reduction and hold auctions until the mortgaged property is sold. Italian Law No. 302 of

3 August 1998 allowed notaries to conduct certain stages of the foreclosure procedures in place of thecourts and is expected to reduce the length of foreclosure proceedings.

Each Originator normally obtains security with registration of a first ranking mortgage(or substantially similar) on assets assessed well beyond the amount of the mortgage loan granted, and

therefore the average judicial or out-of-court recoveries by each Originator is relatively high. In the

case of BPV and BN, based on the available historical data, average judicicial or out-of-court

recoveries amount in most cases to close to 100% of the defaulted amount. The amount to be

recovered is generally within the limits of the amount of the mortgage, which is usually one and a

half or two times the original principal of the loan depending on the terms of the Mortgage Loan.

In certain cases, mortgage loans are settled through gradual repayment plans, and often a

settlement agreement is reached, even where legal proceedings have been commenced, in proximity to

the auction.

Once a position is transferred to the Litigation Department, it will be classified as

non-performing (sofferenza) if it is clear and manifest that the primary debtor (excluding the

guarantor) is insolvent and that the insolvency is continuing.

Any settlement or waiver will be aimed at maximising the recovery amounts and shortening the

recovery time, than in the case of a forced recovery.

62

THE ORIGINATORS

Banca Popolare di Vicenza S.c. per azioni a r.l.

History

BPV was established in 1866 and was the first bank incorporated in Vicenza and the first banca

popolare of the Veneto region. BPV is a limited liability cooperative company whose shares are not

listed on any regulated market.

BPV has operated for approximately 130 years in the province of Vicenza and its network has

gradually extended to the whole north-east region of Italy.

In 1980, BPV began increasing its presence by opening new branches and taking over small local

banks: Banca Popolare Agricola di Lonigo in 1985, Banca Popolare di Thiene in 1988, Banca Popolare

dei Sette Comuni-Asiago in 1991 and Banca Popolare di Venezia in 1994. This enabled BPV to

maintain its leading position in the Vicenza province in spite of the strong banking competition in

this territory.

Beginning in 1996, BPV has been acquiring controlling interests in other banks (Banca Popolare

di Castelfranco Veneto and Banca Popolare di Trieste in 1996; Banca Popolare della Provincia diBelluno in 1997; Banca Popolare ‘‘C. Piva’’ di Valdobbiadene and Banca Popolare Udinese in 1998),

thereby creating the Banca Popolare di Vicenza Group (the ‘‘BPV Group’’ or the ‘‘Group’’).

In September 1998 BPV, together with Banco Bilbao Vizcaya and INA, became one of the

leading shareholders of Banca Nazionale del Lavoro S.p.A. (‘‘BNL’’) by acquiring 7.75% of BNL’s

share capital. In 2001 BPV Group sold a 4.75% stake in BNL, which included also shares owned for

trading purposes and shares owned by BPV Finance (International) PLC.

During 1999 and 2000, the BPV subsidiary banks were merged into BPV. During that same year,

another credit institution, Banca Nuova S.p.A., was created in Palermo. This bank started operating

in Sicily with various branches offering traditional banking services with sophisticated and innovative

‘‘door to door’’ consultancy and Internet methods. The creation of Banca Nuova S.p.A., with the

intention to expand rapidly in both the southern and central regions of Italy, is part of BPV Group’s

strategy to expand at a national level.

In January 2001, the Group strengthened its national presence by acquiring 46 branches from

the Intesa Group mainly located in the north-west and southern regions of Italy. It strengthened its

position in Sicily by acquiring Banca del Popolo di Trapani, a bank operating in a region strategically

located in the heart of the Mediterranean Sea.

As of 1 August 2002, Banca Nuova S.p.A. merged with and was incorporated into Banca del

Popolo S.p.A., and the merged entity changed its corporate name to Banca Nuova S.p.A.

In June 2002, BPV contributed its real estate business to its subsidiary Immobiliare Stampa

S.p.A. with a corresponding increase of the subsidiary’s capital.

In December 2002, BPV agreed to acquire 79% of the share capital in Cariprato – Cassa di

Risparmio di Prato S.p.A., a retail bank operating in the Tuscany region, which acquisition was

completed on 24 March 2003.

BPV Organisation and Distribution

The BPV Group provides its services to customers through various specialised companies

throughout the national territory.

The retail banking activities are divided into two main areas: the north and south-central

regions.

As of 31 December 2003, BPV had 355 branches (including also advice centres and private

banking outlets) and 2,620 employees.

Additional banking services are provided to customers through the following subsidiaries:

* BPV Fondi Sgr S.p.A. for asset management;

* Vicenza Life Ltd for the ‘‘Bancassurance’’ division;

63

* Nordest Merchant S.p.A. for investment banking; and

* BPVi Finance International Limited for corporate finance.

The Group has increased its territorial reach through participation in foreign banks (especially in

Eastern Europe) and expanded its product range through shareholdings in partnerships/arrangements

with financial institutions dealing in asset management, leasing, factoring, merchant banking and

consumer credits. Particularly important are the assistance and financing services offered through

BPVi Finance International Limited and the shareholding interests held in banks in Slovenia, the

Czech Republic, Slovakia, Hungary and Croatia.

Cariprato – Cassa di Risparmio di Prato S.p.A.

CRP was founded, as a limited liability institution affiliated to the Cassa di Risparmio di Firenze,

in 1830 under the name ‘‘Cassa di Risparmio e Depositi di Prato’’. Its name was changed to Cassa di

Risparmio di Prato on Decembre 1988. During 1992 this public credit institution was transformed into

a ‘‘societa per azioni’’ controlled by Monte dei Paschi di Siena, which then held 86.31 per cent of its

share capital, with the remaining shareholders being Ente Cassa di Risparmio di Prato with a12.21 per cent shareholding interest and other third party shareholders with an aggregate interest of

1.479 per cent. In October 1995 Cariprato - Cassa di Risparmio di Prato S.p.A. was incorporated by

means of a contribution of going concerns from Cassa di Risparmio di Prato S.p.A. and Ente Cassa

di Risparmio di Prato: following such contribution, Monte dei Paschi di Siena held 79 per cent of the

share capital and Ente Cassa di Risparmio di Prato held 21 per cent. of the share capital.

In December 2002, BPV entered into an agreement by which it acquired a majority interest,

representing 79% of the share capital, in CRP from Banca Monte dei Paschi di Siena, with the

remaining 21% held by the Ente Cassa di Risparmio di Prato (now called Fondazione Cassa di

Risparmio di Prato). CRP became part of the BPV Group in April 2003.

Through the years CRP managed the wealth of families in Prato and provided full support to

the strong industrial development of the area, which has now become one of the most important

textiles basins in the world.

The activities and initiatives of CRP extended over time to other related sectors and geographical

areas. Its products and services have always been in line with the needs of its clients as they were

created and developed through cooperation with local institutions, category associations, social forces,

companies and local residents.

As of 31 December 2003, CRP had 54 branches in the Tuscuny region and 930 employees.

Banca Nuova S.p.A.

BN was incorporated by BPV in 2000 in the context of the ‘‘Progetto Centro Sud’’ project also

by using the banking license of Banca Popolare ‘‘C. Piva’’ di Valdobbiadene whose branches had been

previously acquired by BPV. In October of 2000 BN opened its first branch in Palermo and in the

shortly thereafter eight branches were opened in the major sites in Sicily. In 2001, BN expanded its

operations in the south to the retail sector when BPV transferred to the bank twenty of the forty-six

branches acquired from Banca Intesa located in the southern regions of Italy. As a result of thesetransactions, BN offers banking services in all the major centres in Sicily and Calabria. In 2001 BPV

acquired control of the Banca del Popolo di Trapani and in the middle of 2002 Banca Nuova S.p.A.

merged with and incorporated into Banca del Popolo di Trapani and the merged entity changed its

name to Banca Nuova S.p.A.. BN is a company limited by shares as of 31 December 2002.

BN has been founded as a modern bank capable of offering innovative solutions to clients,

whose operations are focused on central and southern Italy and in particular with the purpose of:

* orienting its activities towards clients with significant financial assets, also offering e-

banking and e-business services which encompass tranding on-line, second generation home

banking and wap technology;

64

* working, in the corporate sector, only with selected clients performing corporate check-ups,

providing assistance in the definition and implementation of clients’ strategies, granting

diversified facilities primarily based on an assessment of expected revenues, indentifing

solutions to improve competition and the efficiency of the investment policy;

* providing companies and other institutions with assistance and advice regarding European

and state subsidies;

* supporting local administrations in the assessment of projects which could be implemented

through project financing structures;

* assisting companies based in the north that intend to relocate production to southern Italy

with their investments.

As of 30 September 2003, BN had 74 branches (including advice centres and private banking

outlets) and 608 employees.

65

THE SWAP COUNTERPARTY

CDC IXIS Capital Markets is a French law limited liability company (societe anonyme a

Directoire et Conseil de Surveillance), which was incorporated on 31 March 1987 and is regulated by

Articles L.210-1 et seq. of the French Commercial Code. Initially named CDC International, the

company changed its name to CDC Marches. Its name was later changed from CDC Marches to

CDC IXIS Capital Markets, with effect from 12 January 2001. Its registered office is at

47, Quai d’Austerlitz 75648 Paris Cedex 13, France. For the purpose of the Swap Agreement,

CDC IXIS Capital Markets is acting through its London Branch, established in accordance with the

2nd European Directive, registered in England as a branch under No.BR004413 and regulated by theFinancial Services Authority (the FSA) for investment business conducted in the United Kingdom.

CDC IXIS Capital Markets was licensed as a finance company (societe financiere), a type ofFrench credit institution, on 31 May 1996 by the Comite des etablissements de credit et des entreprises

d’investissement. Consequently, it is subject to French and European laws and regulations applicable to

credit institutions (such as capital adequacy, insolvency and prudential ratios) and is regulated by

Livre V of the French Monetary and Financial Code. As a provider of investment services, it is also

subject to the supervision and regulation of the Autorite des marches financiers which grants licences to

providers of investment services and regulates and controls their financial activities.

Transactions (as defined in the CDC IXIS Guarantee) entered into by CDC IXIS Capital

Markets during the period between 24th January, 2004 and at the latest midnight (Paris time) on

23rd January, 2007 are guaranteed by a guarantee in the form of a joint and several obligation

(cautionnement solidaire) dated 28th May, 2003 and with effect from (and including) 24th January,2004 granted to the counterparties of CDC IXIS Capital Markets by CDC IXIS (CDC IXIS), the

parent company of CDC IXIS Capital Markets, (the ‘‘CDC IXIS Guarantee’’). The CDC IXIS

Guarantee extends both to all on-balance sheet and off-balance sheet transactions (subject to the terms

of the CDC IXIS Guarantee) if their respective maturity dates fall before 24th January, 2017, other

than (i) payment obligations arising from any subordinated securities or debts subject to a

subordination provision which is intended for or which results in the assimilation of the securities or

debts to its own funds as defined by banking regulations or (ii) any payment obligations arising under

any transaction which are specifically excluded from the benefit of the CDC IXIS Guarantee.

The counterparties of CDC IXIS benefit from a guarantee also in the form of a joint and several

obligation (cautionnement solidaire) dated 28th May, 2003 with effect from 24th January, 2004 grantedto the counterparties of CDC IXIS by the Caisse des Depts et Consignations (CDC), a French public

financial institution, which is the current ultimate parent of CDC IXIS Capital Markets (the ‘‘CDC

Guarantee’’). The CDC Guarantee extends to the undertakings of CDC IXIS under the CDC IXIS

Guarantee.

Transactions (as defined in the Additional CDC IXIS Guarantee) entered into by CDC IXIS

Capital Markets on or after 24th January, 2004 and which have maturity dates falling after

24th January, 2017 are guaranteed by an additional guarantee in the form of a joint and several

obligation (cautionnement solidaire) dated 7th January, 2004 and with effect from (and including) 24th

January, 2004 granted to the counterparties of CDC IXIS Capital Markets by CDC IXIS (the

‘‘Additional CDC IXIS Guarantee’’). The Additional CDC IXIS Guarantee extends to all Transactionswith respective maturity dates that fall after 24th January, 2017, other than obligations to pay arising

from any subordinated securities or debts issued or entered into by CDC IXIS Capital Markets

subject to a subordination provision which is intended for, or which results in, the assimilation of the

securities or debts to its own funds as defined by banking regulation. For avoidance of doubt, it is

indicated that the undertakings of CDC IXIS under the Additional CDC IXIS Guarantee are not

guaranteed by CDC.

Before claiming under the Additional CDC IXIS Guarantee described above, a counterparty

must first deliver a written payment request to CDC IXIS Capital Markets for amounts due but

unpaid. If the amount claimed remains unpaid by CDC IXIS Capital Markets two business days after

receipt by it of the payment request, the counterparty may issue a written demand on CDC IXIS in

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accordance with the terms of the Additional CDC IXIS Guarantee and CDC IXIS will be obliged to

pay amounts due to the counterparty in accordance with the terms of the Additional CDC IXIS

Guarantee within three Business Days of such written demand.

The Additional CDC IXIS Guarantee may be terminated at any time by CDC IXIS. If the

Additional CDC IXIS Guarantee was terminated, CDC IXIS Capital Markets must inform the

relevant beneficiaries of this guarantee by publishing a public announcement in at least one financial

newspaper in each of Paris, London, Frankfurt, New York and Tokyo at least six months before the

effective date of the intended termination.

Notwithstanding termination of the Additional CDC IXIS Guarantee, relevant Debts (as defined

in the Additional CDC IXIS Guarantee) arising from Transactions entered into by CDC IXIS Capital

Markets from (and including) 24th January, 2004 to its scheduled date of termination and guaranteed

by the Additional CDC IXIS Guarantee will continue to benefit from the undertakings given by CDCIXIS under the Additional CDC IXIS Guarantee until their respective maturity dates.

The long term, unsecured, unsubordinated debt obligations of CDC IXIS Capital Markets arecurrently rated ‘‘AAA/negative’’ by Standard & Poor’s, ‘‘Aaa’’ by Moody’s Investment Service and

‘‘AAA’’ by Fitch when ultimately guaranteed by CDC. The long term, unsecured, unsubordinated and

unguaranteed debt obligations of CDC IXIS are currently rate ‘‘AA’’ by Standard & Poor’s and

‘‘Aa2’’ by Moody’s Investment Service. The short term, unsecured, unsubordinated debt obligations of

CDC IXIS Capital Markets are currently rated ‘‘A-1+’’ by Standard & Poor’s, ‘‘P-1’’ by Moody’s

Investment Service and ‘‘F-1+’’ by Fitch.

In a press release dated 2nd October, 2003, CDC and Caisse Nationale des Caisses d’Epargne

(‘‘CNCE’’) announced that they had signed on 1st October, 2003 a memorandum of agreement to

consolidate their partnership on a long-term basis by constituting a new full service bank to be

created by the integration of CDC IXIS and CDC IXIS Capital Markets in the Caisse d’Epargne

Group. CDC, with a 35% equity interest in this new full service bank, will consolidate its role asmajor long-term investor. The details of the organisation are not yet known but will be completed in

the course of 2004.

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THE ISSUER

Introduction

The Issuer, Berica Residential MBS 1 S.r.l., was incorporated on 11 July 2003 in the Republic of

Italy pursuant to the Securitisation Law as a limited liability company and is registered with the

companies’ registry of Vicenza under registration number 03094680240 and in the general list

(Elenco Generale) held by Ufficio Italiano Cambi pursuant to Article 106 of the Consolidated Banking

Act under registration number 35124. Application has been made by the Issuer for its registration in

the special register (Elenco Speciale) held by the Bank of Italy pursuant to Article 107 of the

Consolidated Banking Act.

Since the date of its incorporation, the Issuer has not engaged in any business other than the

purchase of the Portfolios and related activities, no dividends have been declared or paid and no

indebtedness has been incurred by the Issuer, other than the Issuer’s costs and expenses of

incorporation and payment of the Purchase Price of the Portfolios and interest accrued thereon.

The Issuer has no employees.

The Issuer is a limited liability company (societa a responsabilita limitata) and its equity capital is

represented by quota. The authorised and issued quota capital of the Issuer is Euro 10,000, divided asfollows:

* Stichting Vicenza holds a quota with a nominal value of Euro 9,500; and

* BPV Finance (International) PLC, a subsidiary of BPV, holds a quota with a nominal

value of Euro 500.

On 17 March 2004, the Issuer, BPV, BPV Finance (International) PLC and Stichting Vicenza

entered into a Quotaholders’ Agreement concerning the Issuer, pursuant to which call options weregranted in favour of BPV to purchase from Stichting Vicenza: (i) at any time a quota equal to five

per cent. (5%) of the Issuer’s quota capital; or (ii) within six months after the Senior Notes have been

entirely redeemed a quota equal to ninety-five per cent. (95%) (or, in the event the call option under

(i) has been exercised, ninety per cent. (90%) ) of the Issuer’s quota capital.

Pursuant to the Quotaholders’ Agreement, each of Stichting Vicenza, BPV Finance

(International) PLC and BPV (should it become a quotaholder upon exercise of the call option

referred to above) has undertaken not to approve the payments of any dividends or any repayment or

return of capital by the Issuer prior to the date on which all amounts of principal and interest on theSenior Notes have been paid in full.

Under the terms of the Quotaholders’ Agreement, BPV (in its capacity as the Funding Provider)

has undertaken to indemnify the Issuer from, or make available to the Issuer, the monies required to

pay any damages, losses, claims, liabilities, costs and expenses incurred by the Issuer in relation to:

(i) any tax charge or liability (except a Decree 239 Withholding or any other fiscal charge

under the last paragraph of Article 26(1) of the Presidential Decree No. 600/1973);

(ii) any costs and expenses due and payable to the Issuer’s directors, statutory auditors or

independent auditors and any other costs or expenses related to the Issuer’s corporate

existence; and

(iii) any costs or charges, other than those referred to in (ii) above and other than the

Securitisation Expenses, including costs or charges in respect of regulatory or supervisory

liens or charges, resulting from changes of law or regulations applying to the Issuer,

to the extent that such damages, losses, liabilities, costs and expenses are not paid out of theIssuer Available Funds.

In addition, the Funding Provider has agreed to take the actions necessary to ensure that the

Issuer is not subject to bankruptcy proceedings and/or winding up or similar proceedings as a result

of its failure to fulfil its obligations to pay debts in respect of which the Issuer is liable to pay other

than out of assets that are segregated for the purpose of the Securitisation (i.e. not including payment

obligations of the Issuer towards the Noteholders, the Other Issuer Creditors and other creditors of

the Securitisation and not including any other limited recourse payment obligation of the Issuer for

which the Issuer’s liability is, by law or by contract, limited to the amount of the Claims and any

68

other assets which constitute segregated assets in accordance with the Securitisation Law). BPV will

also undertake to avoid winding up of the Issuer as a result of a reduction in the Issuer’s equity

capital below the minimum requirement under Italian law or regulations from time to time in force.

Such undertakings shall remain in force for a period of twelve calendar months plus one day from

(and including) the day following the date on which all amounts of principal and interest due and

payable on the Senior Notes have been paid in full.

Any payments made by the Funding Provider pursuant to the Quotaholders’ Agreement shall be

made by way of interest free subordinated loans, contributions or other means of funding the

repayment of which is subordinated in accordance with the applicable Order of Priority. The FundingProvider will have no right to repayment of any amounts paid thereto other than pursuant to the

priority of payments set forth in the Intercreditor Agreement.

Under the terms of the Quotaholders’ Agreement, BPV has a right, exercisable at its own

discretion, to effect payments to the Issuer by way of capital contributions or interest free

subordinated loans, the repayment of which is subject to the Order of Priority, to enable the Issuer to

exercise its right of Optional Redemption of the Senior Notes whenever the provisions of Condition 6.3

(Optional Redemption of the Senior Notes) are met.

Issuer Principal Activities

The Issuer’s corporate purpose is set forth in Article 2 of its By-laws (statuto) and is as follows ‘‘...

to carry out one or more receivables securitisation transactions pursuant to the Securitisation law through

the purchase of existing and future monetary claims in such a manner as to exclude the assumption of any

liability by the Issuer. In compliance with the provisions of the Securitisation Law, the receivables relating

to each securitisation are segregated from all other assets of the Issuer and from those of any other

securitsation transaction which may be carried out by the Issuer and, with the exception of holders of the

notes issued to finance the purchase of such receivables, no other creditors of the Issuer may make any

claim with resepct to such receivables. Within the limits permitted by the provisions of the Securitisation

Law, the Issuer may enter into ancillary transactions for the purpose of the securitisation transactions

carried out by it, or which are instrumental or connected to and necessary for the purpose of its corporate

purpose, including investing funds deriving from the administration of the purchased receivables where such

funds are not immediately utilised towards satisfaction of obligations under the notes issued to fund the

purchase of such receivablse and towards payment of the costs of the securitisations.’’.

So long as any of the Senior Notes remain outstanding, the Issuer shall not, without the prior

written consent of the Representative of the Noteholders, incur any other indebtedness for borrowed

monies or engage in any business (other than acquiring and holding the assets securing the SeniorNotes, issuing the Notes and entering into the Transaction Documents to which it is a party), pay any

dividends, repay or otherwise return any equity capital, have any subsidiaries, employees or premises,

consolidate or merge with any other Person or convey or transfer its property or assets to any Person

(except as contemplated in the Conditions or the Intercreditor Agreement) or issue any quota.

The Issuer will also covenant to observe, inter alia, those restrictions which are detailed in

Condition 3 (Covenants).

Directors and Secretary

At the date of this Offering Circular, the directors of the Issuer, appointed at the quotaholders’meeting of the Issuer on 11 July 2003, are Mr. Franco Carulli, Mr. Massimiliano Pellegrini and Mrs.

Emilia Francesca Anna Maria Di Giovanni.

The Issuer’s registered office is located at Via Btg. Framarin 18, 36100 Vicenza, Italy.

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Capitalisation and Indebtedness Statement

The capitalisation of the Issuer as of the date of this Offering Circular, adjusted for the issue of

the Notes to be issued on the Issue Date, is as follows:

Corporate Quota Capital Euro

Issued and authorisedA quota capital .................................................................................................................. 10,000

Loan Capital

Euro 553,175,000 Class A Mortgage Backed Floating Rate Notes due 2035................... 553,175,000.00Euro 23,539,000 Class B Mortgage Backed Floating Rate Notes due 2035 ..................... 23,539,000.00Euro 11,769,000 Class C Mortgage Backed Floating Rate Notes due 2035 ..................... 11,769,000.00Euro 26,640,000 Class D Mortgage Backed Fixed Notes due 2035.................................. 26,640,000.00Euro 8,827,245 Subordinated Loan ................................................................................... 8,827,245.00Euro 11,986,703.07 Securities Subordinated Loan ............................................................ 11,986,703.07

Total Loan Capital ............................................................................................................. 635,936,948.07

Save for the foregoing, at the date of this Offering Circular, the Issuer has no borrowings or

indebtedness in the nature of borrowings (including loan capital issued or created but unissued), term

loans, liabilities under acceptances or acceptance credits, mortgages, charges or guarantees or other

contingent liabilities.

Financial Statements and Report of the Auditors

The financial statements prepared by the Issuer as at and for the period ended 31 December

2003 are set forth below. The Issuer’s accounting reference date is 31 December, with the first

statutory accounts drawn up to 31 December 2003. Under Italian law and the Issuer’s by-laws, the

statutory accounts are to be prepared by the Issuer within four months following the financial year

end.

Financial Statements as at 31 December 2003

Assets Euro

Cash........................................................................................................................................ 59Due from banks...................................................................................................................... 9,831Capitalised costs ..................................................................................................................... 2,217Subscriber capital not paid in ................................................................................................ -Other assets............................................................................................................................. 10,438Accrued income ...................................................................................................................... -

Total Assets............................................................................................................................. 22,545

Liabilities and Quotaholders’ EquityQuota capital .......................................................................................................................... 10,000Other liabilities ....................................................................................................................... 12,545

Total Liabilities and Quotaholders’ Equity............................................................................ 22,545

CostsAdministrative expenses ......................................................................................................... 9,747Commission expenses ............................................................................................................. 138Amortisation of capitalised costs ........................................................................................... 554

Total costs............................................................................................................................... 10,439

RevenueInterest income ....................................................................................................................... 1Other operating income.......................................................................................................... 10,438

Total Revenue ......................................................................................................................... 10,439

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Notes to the Financial Statements

1. Basis of Preparation

The financial statements have been prepared under the historical cost convention and in

accordance with the applicable accounting standards.

2. Quota Capital

The Issuer was incorporated on 11 July 2003 in the Republic of Italy pursuant to the

Securitisation Law as a limited liability company having as its sole corporate objects the realisation ofsecuritisation transactions.

The Issuer has an issued quota capital of Euro 10,000.

3. Commitments

On 28 November 2003, the Issuer entered into three agreements to purchase the Portfolios. See

‘‘Description of the Transfer Agreements’’.

4. Business Activity

Apart from the purchase of the Portfolios pursuant to the Transfer Agreements and the

collection of the Claims, the Issuer did not trade during the period from its incorporation to the Issue

Date nor did it receive any income (other than the Issuer Disbursement Amount) nor did it incur any

expenses (other than the Issuer’s costs and expenses of incorporation and expenses for administrative

servicing) or pay any dividends.

Auditors’ Report

The following is the text of a report received by the Board of Directors of the Issuer from

KPMG S.p.A., the auditors of the Issuer. The Issuer’s accounting reference date is 31 December, with

the first financial statements drawn up to 31 December 2003.

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AUDITOR’S REPORT

(Translation from the Italian original which remains the definitive version)

To the Board of Directors of

Berica Residential MBS 1 S.r.l.

1. We have audited the financial statements of Berica Residential MBS 1 S.r.l. as at and for

the year ended 31 December 2003. These financial statements are the responsibility of the

company’s management. Our responsibility is to express an opinion on these financial

statements based on our audit

2. We conducted our audit in accordance with the auditing standards recommented by

CONSOB, the Italian Commission for Listed Companies and the Stock Exchange. Those

standards require that we plan and perform the audit to obtain reasonable assurance about

whether the financial statements are free of material misstatement and are, as a whole,

reliable. An audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting

principles used and signficiant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonable

basis for our opinion.

3 In our opinion, the financial statements of Berica Residential MBS 1 S.r.l. as at and for the

year ended 31 December 2003 comply with the Italian regulations governing their

preparation; therefore they are clearly stated and give a true and fair view of the financial

position and results of the company.

Verona, 10 March 2004

KPMG S.p.A.

(Signed on the original)

KPMG S.p.A. has not been requested to accept responsibility for any financial or other information

contained in this Offering Circular other than the information referenced to in the report of the auditors

above and, accordingly, accepts no responsibility to any person who may rely on this Offering Circular.

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USE OF PROCEEDS

The proceeds arising out of the subscription of the Notes is Euro 615,123,000 which represent

the sum of the proceeds from the subscription for the Senior Notes (being Euro 588,483,000) and the

Class D Notes (being Euro 26,640,000).

Such proceeds (net of the placement fees and Arranger fees) shall be used by the Issuer to pay

the Purchase Price (excluding the Interest Component of the Purchase Price) pursuant to the Transfer

Agreements and to credit the Issuer Expenses Account with Euro 745,031 towards satisfaction of the

Issuer Disbursement Amount and in order to settle all relevant up-front costs and expenses incurred

by the Issuer in connection with the Securitisation.

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DESCRIPTION OF THE TRANSFER AGREEMENTS

The description of the Transfer Agreements set forth below is a summary of certain aspects of the

agreements and is qualified by reference to the detailed provisions of the BPV Transfer Agreement, the

CRP Transfer Agreement and the BN Transfer Agreement. All capitalised words or expressions used

below and not otherwise defined herein shall have the meaning ascribed to such words or expressions in

the relevant Transfer Agreement. Prospective Noteholders may inspect a copy of the Transfer Agreements

upon request at the registered office of each of the Representative of the Noteholders and the

Luxembourg Listing Agent.

On 28 November 2003, each of BPV, CRP and BN on the one hand, and the Issuer on the

other hand, entered into a separate Transfer Agreement, pursuant to which each Originator assigned

and transferred without recourse (pro soluto) all of its rights, title and interest in and to the Claims

arising from the Mortgage Loans and the claims arising from the Miscellaneous Mortgage Loans

(see below) in accordance with the Securitisation Law. Exhibit ‘‘B’’ to each Transfer Agreement as

subsequently amended and supplemented contains a list of the Mortgage Loans from which suchclaims arise. The claims transferred under the Transfer Agreements have been selected by each of

BPV, CRP and BN on the basis of the BPV Criteria, the CRP Criteria or the BN Criteria,

respectively. For a description of such eligibility criteria, see ‘‘The Portfolio’’.

Pursuant to the terms of the Transfer Agreements, the economic effects of the assignment of the

claims transferred thereunder from each Originator to the Issuer became effective as of1 December 2003 (the ‘‘Effective Date’’).

On 17 March 2004, the Issuer entered into an agreement with each Originator (the

‘‘Miscellaneous Loans Transfer Agreements’’) pursuant to which the Issuer transferred, pursuant to

Article 58 of the Consolidated Banking Act, to the Originators, claims and connected rights under 40

Mortgage Loans which satisfy one or more of the following criteria:

– the original principal amount of the Mortgage Loan was as of the date of disbursement of

the loan, equal to or higher than 100.01% of the appraisal value of the mortgaged Real

Estate Asset;

– Mortgage Loan Agreements in respect of which two instalments were due and payable but


– BPV fixed or floating rate Mortgage Loan Agreements providing for an interest rate which,

as of 31 July 2003, was lower than three point twenty-five per cent. (3.25%) or higher thannine point eight per cent. (9.8%);

– CRP Mortgage Loan Agreements the interest rate in respect of which is floating or CRP

Mortgage Loan Agreements that, after disbursement, may be converted, at the borrower’s

discretion, from fixed rate to floating rate, with an interest rate, as of 31 July 2003, lower

than three point twenty-five per cent. (3.25%) or higher than nine point eight per cent.(9.8%);

– BN fixed or floating rate Mortgage Loan Agreements providing for an interest rate which,

as of 31 July 2003, was lower than three point four per cent. (3.4%) or higher than nine

point eight per cent. (9.8%);

(together, the ‘‘Miscellaneous Mortgage Loans’’), for a total consideration corresponding to the

principal balance of such Miscellaneous Mortgage Loans plus interest accrued thereon and the

present value of the interest margins of the Miscellaneous Mortgage Loans. The parties have

agreed that the purchase price for the Miscellaneous Mortgage Loan(s) transferred by the Issuer

to each Originator shall be set off against the purchase price for the Mortgage Loans transferred

by such Originator to the Issuer pursuant to the relevant Transfer Agreement.

The purchase price of the claims payable pursuant to each Transfer Agreement (as reduced by

the purchase price of the relevant Miscellaneous Mortgage Loans) is determined on the basis of: (a) the

outstanding principal amount of the relevant Claims (the ‘‘Principal Component Of The Purchase

Price’’); (b) interest accrued but not yet payable as well as interest accrued and unpaid, in each case,

as of the Effective Date plus penalty interest in relation to any instalments in arrears and expenses

74

incurred in relation to the recovery thereof (the ‘‘Interest Component Of The Purchase Price’’); and (c)

the present value of the interest margins of the relevant Claims as of the Effective Date (together, the

‘‘Purchase Price’’), and amounts to Euro 615,926,316.64.

The Purchase Price (other than the Interest Component Of The Purchase Price) shall be paid to

each Originator on the Issue Date out of the proceeds from the issue of the Notes. The Principal

Component Of The Purchase Price will accrue interest from the Effective Date to the Issue Date atthe rate of Six Month Euribor plus zero point fifteen per cent. (0.15%) (the ‘‘Interest On

The Purchase Price’’).

The Interest On The Purchase Price and the Interest Component Of The Purchase Price shall be

paid by the Issuer to each Originator out of the Issuer Available Funds on the First Payment Date in

accordance with the applicable Order of Priority (or, if there are not sufficient funds on the

First Payment Date, on successive Payment Date(s)).

In addition, the Transfer Agreements provide that if, after the Effective Date, any of the

mortgage loans listed in Exhibit ‘‘B’’, as subsequently amended and supplemented, do not meet the

applicable Criteria, then the claims relating to such mortgage loan will be deemed not to have been

assigned and transferred to the Issuer pursuant to the relevant Transfer Agreement. In such event,

BPV, CRP or, as the case may be, BN, shall pay to the Issuer an amount equal to the sum of: (a) the

Individual Purchase Price of such claim, plus interest thereon calculated at the Six Month Euribor

plus the weighted average spread of the Notes from the Effective Date to the date on which suchamount is paid; less (b) any amounts in respect of principal collected in relation to such claim, plus

interest thereon calculated at the Six Month Euribor plus the weighted average spread of the Notes

from the date on which such amount has been collected to the date on which the sum set forth under

(a) above is paid; plus (c) the aggregate of the expenses incurred by the Issuer in respect of such

claim, plus interest thereon calculated at Six Month Euribor plus the weighted average spread of the

Notes from the date on which such amount has been incurred to the date on which the sum set forth

under (a) above is paid.

If, after the Effective Date, any Mortgage Loan originated by BPV, CRP or BN which meets

respectively the BPV Criteria, the CRP Criteria or the BN Criteria has not been included in Exhibit

‘‘B’’, as subsequently amended and supplemented, then such Mortgage Loan shall nonetheless be

deemed to have been assigned and transferred to the Issuer by BPV, CRP or BN, as the case may be,

with effect retroactively as of the Effective Date. In such event, the Issuer shall pay the Originator in

question an amount equal to: (a) the Individual Purchase Price of such Claim, plus interest thereon

calculated at the Six Month Euribor plus the weighted average spread of the Notes from the EffectiveDate to the date on which such amount is paid; less (b) any amount collected or recovered by such

Originator in relation to such claim from the Effective Date, plus interest thereon calculated at the Six

Month Euribor plus the weighted average spread of the Notes from the date on which such amount

has been collected or recovered to the date on which the amount set forth under (a) above is paid.

The Transfer Agreements contain certain representations and warranties made by each

Originator. The principal representations and warranties given by each Originator to the Issuer in

connection with the transfer of, respectively, the BPV Portfolio, the CRP Portfolio or the BN Portfolioare contained in the Warranty and Indemnity Agreements. See ‘‘Description of the Warranty and

Indemnity Agreements’’. However, each of BPV, CRP and BN has, respectively under the BPV Transfer

Agreement, the CRP Transfer Agreement and the BN Transfer Agreement, represented inter alia that:

(i) it has (and on the Effective Date will have) full and unencumbered legal title to, and is

fully and unconditionally the owner of the relevant Claims free and clear of any security

interest, lien, privilege, burden, encumbrance or other right of any third party;

(ii) the relevant Claims are not (and on the Effective Date will not be) subject to attachment,

seizure, confiscation, pledge, encumbrance or other lien, charge or other right in favour of

any third party;

(iii) the relevant Claims are (and will be on the Effective Date) freely assignable and

transferable to the Issuer; and

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(iv) the relevant Claims are valid and existing and on the Effective Date, will be valid and

existing in the amounts set forth in Exhibit ‘‘B’’, as subsequently amended and

supplemented, to the Transfer Agreements.

The Transfer Agreements also contain a number of undertakings by the Originators relating to

the Claims. Each Originator undertakes, inter alia, to refrain from: (a) carrying out activities with

respect to the relevant Claims which may prejudice the validity or recoverability of any relevant

Claims and in particular shall not assign or transfer the relevant Claims to any third party or create

any security interest, charge, lien or encumbrance or other right in favour of any third party in

respect of the relevant Claims between the date of execution of the relevant Transfer Agreement and

the date of publication of notice of the transfer in the Official Gazette; and (b) any action whichcould cause invalidity or a reduction in the value of any of the relevant Claims or in the relevant

collateral security.

BPV has also undertaken to submit to the Issuer and to an independent internationally

recognised accountant firm data concerning the value of the Mortgage Loans, the appraisal value of

the Real Estate Assets and the ranking of the Mortgages over the Mortgage Loans, in each case, in

relation to the Portfolios and to engage such accountant firm to conduct, before 30 September 2004, a

sample review (or, should the sample review prove to be unsatisfactory, a full review) of such data in

order to identify: (a) the current loan-to-value (with reference to outstanding principal of the

Mortgage Loans as of 1 December 2003) of the Mortgage Loans; (b) the ranking of the Mortgages

over the Real Estate Assets; and (c) the secured amount under the Mortgages.

The Transfer Agreements also provide that each Originator shall indemnify the Issuer with

respect to any amounts paid by the Issuer resulting from final judgments of the court ordering therevocation of payments (azioni revocatorie) made by Borrowers in respect of the relevant Claims

during the period between the Effective Date and the date of publication of notice of the transfer of

such Claims in the Official Gazette.

Under the terms of the Transfer Agreements, should the Issuer, with the prior consent of the

Representative of the Noteholders, intend to sell the Claims, in whole or in part, to a third party, the

Issuer shall offer such Claims to each relevant Originator which shall have a right of first refusal to

purchase such Claims pro soluto pursuant to Article 58 of the Consolidated Banking Act, provided

that the Originator(s) in question has/have not ceased to act as the Servicer of the relevant Portfolio

and provided further that the then current rating of the Originator(s) is not below investment grade.

The Transfer Agreements are governed by, and will be construed in accordance with, Italian law.

Any disputes arising from or in connection with the Transfer Agreements shall be settled

pursuant to the National Arbitration Rules of the Chamber of National and International Arbitration

of Milan.

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DESCRIPTION OF THE WARRANTY AND INDEMNITY AGREEMENTS

The description of the Warranty and Indemnity Agreements set forth below is a summary of certain

aspects of the agreements and is qualified by reference to the detailed provisions of the relevant Warranty

and Indemnity Agreement. All capitalised words or expressions used below and not otherwise defined

herein shall have the meaning ascribed to such words or expressions in the relevant Warranty and

Indemnity Agreement. Prospective Noteholders may inspect a copy of the Warranty and Indemnity

Agreements upon request at the registered office of each of the Representative of the Noteholders and the

Luxembourg Listing Agent.

On 28 November 2003, the Issuer on the one hand, and each of BPV, CRP and BN on the

other hand, entered into a separate Warranty and Indemnity Agreement pursuant to which each

Originator has made certain representations and warranties in favour of the Issuer in relation

respectively to the claims transferred by such Originator to the Issuer pursuant to the BPV Transfer

Agreement, the CRP Transfer Agreement and the BN Transfer Agreement.

The Warranty and Indemnity Agreements contain representations and warranties by BPV, CRP

and BN in respect, inter alia, of the following categories:

(a) Mortgage Loans;

(b) Claims;

(c) Mortgages and Collateral Security;

(d) Real Estate Assets;

(e) Disclosure of information; and

(f) Securitisation law.

Specifically, each of BPV, CRP and BN has represented and warranted, as of the Effective Date

and with reference to each Claim and each Mortgage Loan transferred by such Originator to theIssuer inter alia, as follows:

(i) Each Mortgage Loan Agreement is valid and effective and constitutes valid, legal, binding

and enforceable obligations of each party thereto (including the relevant Borrower(s), the

Mortgagor(s) and/or the Guarantor(s)).

(ii) Each Mortgage Loan Agreement has been entered into, executed and performed and the

advances under each Mortgage Loan have been made in compliance with all applicablelaws, rules and regulations, including, without limitation, all laws, rules and regulations

relating to consumer credit protection, credito fondiario, usury, anatocismo, personal data

protection and disclosure at the time in force.

(iii) There is no obligation on the part of BPV, CRP or BN, as the case may be, to advance or

disburse further amounts in connection with the Mortgage Loan Agreements.

(iv) To the knowledge of BPV, CRP or BN, each Mortgage Loan Agreement has been enteredinto and executed without any fraud (frode) or wilful misrepresentation (dolo) or undue

influence by or on behalf of BPV, the Other Banks, CRP, Banca Steinhauslin, BN, Banca

del Popolo di Trapani S.p.A. and/or, as the case may be, Banca Nuova S.p.A. as existing

prior its merger into Banca del Popolo di Trapani S.p.A, or of their respective directors

(amministratori), managers (dirigenti), officers (funzionari) and/or employees (impiegati),

which would entitle the relevant Borrower(s), Mortgagor(s) and/or Guarantor(s) to claim

against BPV, CRP or BN for fraud or wilful misrepresentation or to repudiate any of the

obligations under or in respect of such Mortgage Loan Agreement.

(v) Each Borrower resides in Italy.

(vi) Each Mortgage has been duly granted, created, renewed and preserved, is valid and

enforceable and has been duly and properly registered, meets all requirements under all

applicable laws or regulations and is not affected by any material defect whatsoever.

Each Mortgage has been created simultaneously with the granting of the relevant

Mortgage Loan.

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(vii) All Mortgage Loans granted during the 12 months period before the Effective Date are

mutui fondiari within the meaning of the Consolidated Banking Act.

(viii) None of the Mortgage Loans has been granted to refinance previous financial indebtedness

of such Borrowers against the relevant Originator, unless in the context of such refinancing

the relevant Originator has not acquired new security interests nor the quality of the

mortgages securing the Originator’s claims has been improved, in terms of, inter alia,

hardening period or ranking priority of such mortgages.

(ix) At least 98% of the Claims (by principal amount outstanding) are secured by Mortgages

that are economically first-ranking priority mortgages (ipoteca di primo grado economico) i.e.

(i) a first-ranking priority mortgage (ipoteca di primo grado) or (ii) a subsequent ranking

priority mortgage (ipoteca di grado successivo) when the obligations secured by the

mortgage(s) ranking prior to such subsequent mortgage have been fully satisfied.

(x) The Mortgages do not secure any claims other than the Claims. There are no other

mortgages in relation to the Real Estate Assets which rank pari passu with the Mortgages.

(xi) Each Collateral Security has been duly granted and created by deeds with date certain

(data certa) in accordance with the terms set forth therein and relied upon by BPV, the

Other Banks, CRP, Banca Steinhauslin, BN, Banca del Popolo di Trapani S.p.A. and/or, asthe case may be, Banca Nuova S.p.A. as existing prior its merger into Banca del Popolo di

Trapani S.p.A, and meets all requirements under all applicable laws and regulations.

(xii) BPV, CRP or BN has not (whether in whole or in part) cancelled, released or reduced or

consented to cancel, release or reduce any of the Mortgages except: (i) to the extent such

cancellation, release or reduction is in accordance with prudent and sound banking practice

in Italy; or (ii) when requested by the relevant Borrower or Mortgagor in circumstances

where such cancellation, release or reduction is required by applicable laws or contractual

provisions of the relevant Mortgage Loan Agreement; or (iii) with respect to Mortgages

granted to secure a mutuo fondiario, where the outstanding principal amount of the relevant

Mortgage Loan exceeded the applicable limits set by laws and regulations on credito

fondiario then in force in respect of the appraised value (valore di perizia) of the relevant

Real Estate Asset(s) in order for the Mortgage Loan to qualify as a mutuo fondiario.

No Mortgage Loan Agreement contains provisions entitling the relevant Borrower(s) or

Mortgagor(s) to any cancellation, release or reduction of the relevant Mortgage except and

to the extent required under any applicable law and/or regulation and in the circumstances

under (iii) above.

(xiii) Each Claim is fully and unconditionally owned by and available to BPV, CRP or BN and

is not subject to any lien (pignoramento), seizure (sequestro) or other charge in favour of

any third party and is freely transferable to the Issuer. There are no clauses or provisions

in the Mortgage Loan Agreements pursuant to which the relevant Originator is prevented

from transferring, assigning or otherwise disposing of the Claims or of any of them. Thetransfers of the Claims to the Issuer pursuant to the Transfer Agreements shall not impair

or affect in any manner whatsoever the obligation of the relevant Borrowers to pay the

amounts outstanding in respect of any Claims and the enforceability of the Mortgages and

the Collateral Security.

(xiv) Exhibit ‘‘B’’, as subsequently amended and supplemented, to the Transfer Agreements

contain a list of the Mortgage Loan Agreements from which the Claims identified by each

Originator on the basis of the applicable Criteria derive and indicate the nominal value and

interest accrued of such Claims as of the Effective Date as well as the Individual Purchase

Price for each such Claim.

(xv) BPV, CRP or BN has not cancelled (in whole or in part), released or reduced, or agreed to

the cancellation, release or reduction of, respectively, any BPV Collateral Security, CRP

Collateral Security or BN Collateral Security except to the extent that such cancellation,release or reduction is required by the contractual provisions of the relevant Mortgage

Loan Agreements or by the resolution granting the bank credit (fido).

(xvi) Each Claim is denominated in Euro.

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(xvii) As of 31 October 2003 none of the Claims had more than one instalment due but unpaid

and, to the knowledge of each Originator, no circumstances existed which suggest that there

could be delay in payments due under the Claims in the immediate future. As of

31 October 2003, all amounts of principal or interest or any other amount due by the

Borrowers pursuant to the Mortgage Loan Agreements have been entirely and timely paid,

and any obligation connected thereto has been properly and timely performed by the

relevant Borrowers, except for any delay which is not material in the context of the

relevant Transfer Agreement and the relevant Warranty and Indemnity Agreement.

(xviii) None of the Claims falls within the definition of non-performing (credit in sofferenza),

watch list (credito incagliato), restructured (credito ristrutturato) or under restructuring(credito in corso di ristrutturazione) pursuant to the Manuale della Matrice dei Conti and

the Bank of Italy’s guidelines (Istruzioni di Vigilanza), nor are there any Claims whose

contractually agreed amortisation schedule has been amended to provide for interest rate

reductions or deferral of the loan agreement’s duration.

(xix) None of BPV, CRP and BN has received notification or otherwise has knowledge that any

Borrower or Mortgagor was subject to insolvency proceedings or foreclosure or legal

proceedings in respect of the Claims or have been warned of such proceedings.

(xx) The books, records, data and any other documents relating to the Mortgage Loan

Agreements, the Claims, all instalments and any other amounts paid or repaid thereunder

have been properly maintained and are in all respects complete and up to date, and all

such books, records, data and documents are kept in custody by the relevant Originator.

(xxi) The Real Estate Assets were fully owned by the relevant Mortgagors at the time the

relevant Mortgage was created.

(xxii) The transfers of the Claims to the Issuer is in accordance with the Securitisation Law.

The Claims possess specific objective common elements such as to constitute a portfolio of

homogenous monetary rights within the meaning and for the purposes of Securitisation

Law, the decree dated 4 April 2001 of the Treasury Ministry and, to the extent applicable,the Bank of Italy’s guidelines.

(xxiii) No claims have been made against the relevant Originator for adverse possession (including

usucapione) in respect of any of the Real Estate Assets nor are there any prejudicialregistration or annotations (iscrizioni or trascrizioni pregiudizievoli) or third party claims in

relation to any of the Real Estate Assets which may impair, affect or jeopardise in any

manner whatsoever the relevant Mortgages, their enforceability and/or their ranking.

(xxiv) Risks of damage to or destruction of the Real Estate Assets for events occurring up to the

Effective Date are covered by insurance policies (covering at least the risk of fire and

explosion, for an amount equal to at least 80% (eighty per cent.) of the appraisal value

(valore di perizia) of the relevant Real Estate Assets) (or, in the case of Real Estate Assets

securing the CRP Mortgage Loans, the higher of: (x) 80% (eighty per cent.) of the

appraisal value (valore di perizia) of the relevant Real Estate Assets); and (y) the original

principal amount of such Mortgage Loans) entered into by the Borrower(s) for the benefitof BPV, CRP or BN as beneficiary, and/or by a global insurance policy (covering the same

risks and for the same amount as above) entered into by BPV, the Other Banks, CRP,

Banca Steinhauslin, BN, Banca del Popolo di Trapani S.p.A. and/or, as the case may be,

Banca Nuova S.p.A. as existing prior its merger into Banca del Popolo di Trapani S.p.A,

the premium for which has been fully and timely paid.

(xxv) The Real Estate Assets comply with all applicable planning and building laws and

regulations (legislazione edilizia, urbanistica e vincolistica) or otherwise a valid petition of

amnesty with reference to any existing irregularity had been duly filed with the competent

authorities, and any contribution connected thereto has been paid.

(xxvi) At the time of the advance of the Mortgage Loans and perfection of the Mortgages, the

relevant Real Estate Assets were duly registered with the competent land offices and

registration offices or a valid petition had been presented officially to register them, in

compliance with all applicable laws and regulations.

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(xxvii) To the best knowledge of BPV, CRP or BN at the time of advance of the Mortgage Loans

and perfection of the Mortgages, the Real Estate Assets complied with all applicable laws

and regulations concerning health and safety and environmental protection.

(xxviii) Each Real Estate Asset is located in Italy.

(xxix) All the information supplied by BPV, CRP or BN to the Issuer and/or their respectiveaffiliates, representatives, agents and consultants for the purpose of or in connection with

the Warranty and Indemnity Agreements, the Transfer Agreements and the transactions

contemplated therein or for the purpose of the Securitisation, including information in

relation to the Mortgage Loan Agreements, the Claims, the Mortgages, the Real Estate

Assets, the Collateral Security and the application of the Criteria, is true, accurate and

complete and no material information available to BPV, CRP or BN has been omitted.

(xxx) Information in relation to the Mortgage Loans contained in each Originator’s information

technology system, including, inter alia, interest rates applicable thereto, is true and

accurate.

Each Originator has further represented and warranted that it has obtained all corporate and

other authorisations necessary to execute and perform its obligations under the relevant Warranty and

Indemnity Agreement and Transfer Agreement and that such obligations are legal, valid and binding

on such Originator and enforceable against it in accordance with each agreement’s respective termsand conditions and do not breach any of its constitutional documents or agreements, documents,

other instruments, orders, judgments or decisions to which it is a party or by which it is bound.

The representations and warranties of each Originator will be repeated as of the Issue Date andwill remain valid and effective until the redemption in full of the Notes or, if earlier, the

Final Maturity Date.

Pursuant to the Warranty and Indemnity Agreements, each Originator has agreed to indemnify

and hold harmless the Issuer, its officers, agents or employees or any of its permitted assigns from

and against any and all damages, losses, claims, liabilities, costs and expenses awarded against, or

incurred by it arising from:

(a) default by such Originator in the performance of any its obligations under the relevant

Warranty and Indemnity Agreement;

(b) any representations and/or warranties made by such Originator under the relevant

Warranty and Indemnity Agreement being false or incorrect;

(c) any liability alleged and/or claim raised by any third party against the Issuer, as owner of

the relevant Claim, arising from any failure by such Originator to perform its obligations

under the relevant Warranty and Indemnity Agreement;

(d) any amount due in respect of the Claims not being collected or recovered as a consequence

of the legitimate exercise by any Borrower and/or Mortgagor and/or Guarantor and/or a

receiver of a Borrower and/or Mortgagor and/or Guarantor (as the case may be) of any

right, including the right to set-off, and/or of any counterclaims against such Originator;

(e) the application of the Usury Law to any interest accrued on any relevant Claim up to (but

excluding) the Effective Date; and

(f) the non-compliance of any relevant Claim with the provisions of Article 1283 of the Italian

Civil Code and with the CICR resolution of 9 February 2000, up to the Effective Date.

If a Borrower and/or Mortgagor and/or Guarantor (or the receiver of any of the foregoing)

brings a claim and/or counterclaim in respect of any Claim in the circumstances described under sub-

paragraphs (d), (e) or (f) above, Clause 4.5 of the Warranty and Indemnity Agreements provide that

BPV, CRP or BN, as the case may be, shall pay to the Issuer the amount claimed plus interest

calculated at Six Month Euribor plus 2%. If the relevant Originator does not contest the amount

claimed, such payment shall be in satisfaction of the Originator’s indemnity obligations under the

applicable Warranty and Indemnity Agreement. If the relevant Originator intends to contest the

amount claimed, such payment (an ‘‘Advance Indemnity’’) shall be deemed to be a limited recourse

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loan made by such Originator to the Issuer. Any Advance Indemnity together with interest thereon

shall be repaid to the relevant Originator out of, and to the extent of, the amounts (if any) collected

or recovered in respect of the relevant Claim.

Clause 5.1.1 of the Warranty and Indemnity Agreements furthermore provide that: (i) in the

event that any misrepresentation or breach by BPV, CRP or BN in respect of any of its

representations and warranties set forth under the relevant Warranty and Indemnity Agreement,reduces the value of the BPV Claims, the CRP Claims or the BN Claims, as the case may be, and

such misrepresentation or breach is not remedied by BPV, CRP or BN within a period of 60 days

from receipt of a written notice from the Issuer to that effect; or (ii) in the event that one of the

following events occurs in respect of a Claim which has become a non-performing Claim:

(a) a claw-back action for the revocation of payments (azione revocatoria ordinaria or azione

revocatoria fallimentare) is filed in respect of a Mortgage; or

(b) a Real Estate Asset does not comply as of the Effective Date with the provisions set forth

under Law no. 1089 of 1 June 1939 ‘‘Tutela delle cose di interesse artistico e storico’’,

Law no. 1497 of 29 June 1939 ‘‘Protezione delle bellezze naturali’’ and Law no. 47 of

28 February 1985 ‘‘Norme in materia di controllo dell’attivita urbanistico-edilizia, sanzioni,

recupero e sanatoria delle opere edilizie’’ and any other applicable planning and building

laws and regulations (legislazione edilizia, urbanistica e vincolistica) or any law andregulation providing for the registration of the Real Estate Assets with the competent

authorities (Ufficio del Catasto Urbano e dei Terreni), except where such irregularity has

been remedied or an amnesty with reference to such irregularity has been granted by the

competent authority; or

(c) a Real Estate Asset was not fully owned by the relevant Mortgagor at the time the

Mortgage was created,

BPV, CRP or BN, as the case may be, shall pay to the Issuer, upon first demand, a limited

recourse loan (together with any limited recourse loan to be granted pursuant to Clause 5.1.2 or

Clause 5.1.3 below, a ‘‘Limited Recourse Loan’’) in an amount equal to the sum of: (a) the Individual

Purchase Price of the Claim in question less any principal sum collected or recovered by the Issuer in

relation to such Claim; plus (b) interest on the Individual Purchase Price at the rate equal to the

average weighted spread of the Senior Notes from the Issue Date until the date on which the LimitedRecourse Loan is paid to the Issuer; plus (c) the costs and expenses (including, but not limited to,

legal fees, disbursement and any value added tax thereon) incurred by the Issuer in respect of the

relevant Claim as of the date on which the Limited Recourse Loan is paid to the Issuer; plus (d) any

damages and losses incurred by the Issuer as a consequence of any third party claim in respect of the

Claim in question as of the date on which the Limited Recourse Loan is paid to the Issuer.

Clause 5.1.2 of each Warranty and Indemnity Agreement further provides that in the event thatmore than 2% of the Mortgage Loans comprised in each relevant Portfolio results, on the basis of the

review conducted by the auditors pursuant to the terms of the BPV Transfer Agreement

(see ‘‘ – Description of Transfer Agreement’’), to be secured other than by economically first-ranking

mortgages, such Originator shall, at its option, no later than 30 September 2004:

(A) (x) in the case of third or successive ranking Mortgages, take such action with the

competent land registry – with respect to such Selected Mortgage Loans secured byMortgages over Real Estate Assets over which the relevant Originator benefits from

first-ranking mortgage(s) as security for mortgage loan(s) other than the Mortgage Loans –

for the annotation in the relevant registers of the Mortgages over such Real Estate Assets

as first-ranking in place of the current lower ranking of such Mortgages; and (y) in the

case of second-ranking Mortgages, take the aforementioned action – with respect to such

Selected Mortgage Loans secured by Mortgages over Real Estate Assets over which the

relevant Originator benefits from first-ranking mortgage(s) as security for mortgage loan(s)

other than the Mortgage Loans – so that the outstanding principal (as of the Effective

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Date) of the Mortgage Loans comprised in the relevant Portfolio that are secured by

second-ranking mortgages which are not economically first-ranking, as a percentage of the

outstanding principal (as of the Effective Date) of all the Mortgage Loans of such Portfolio

is equal to or lower than 2%; and/or

(B) (x) in the case of third or successive ranking Mortgages, pay to the Issuer, upon first

demand, a Limited Recourse Loan, with reference to such Selected Mortgage Loans for

which the Originator has not taken the steps referred to in (A)(x) above, in an amount

equal to: (a) the Individual Purchase Price of the Claims in question less any principal sum

collected or recovered by the Issuer in relation to each such Claim less a portion of the

present value of the interest margins of such Claims as of the Effective Date pro rata to

the portion of principal collected or recovered by the Issuer in respect of such Claims; plus

(b) interest on the Individual Purchase Price at the rate equal to the average weightedspread of the Senior Notes from the Issue Date until the date on which the Limited

Recourse Loan is paid to the Issuer; plus (c) the costs and expenses (including, but not

limited to, legal fees, disbursement and any value added tax thereon) incurred by the Issuer

in respect of the relevant Claims as of the date on which the Limited Recourse Loan is

paid to the Issuer; plus (d) any damages and losses incurred by the Issuer as a consequence

of any third party claim in respect of the Claims in question as of the date on which the

Limited Recourse Loan is paid to the Issuer; and (y) in the case of second-ranking

Mortgages, pay to the Issuer, upon first demand, a Limited Recourse Loan calculated asabove, with reference to such Selected Mortgage Loans with the highest loan-to-value, so

that the outstanding principal (as of the Effective Date) of the Mortgage Loans comprised

in the relevant Portfolio that are secured by second-ranking mortgages which are not

economically-first ranking (other than, for the avoidance of doubt, those Mortgage Loans

for which the Originator has taken all the steps referred to in (A) above), as a percentage

of the outstanding principal (as of the Effective Date) of all the Mortgage Loans of such

Portfolio is equal to or lower than 2%.

‘‘Selected Mortgage Loans’’ means one or more of those Mortgage Loans in each relevant

Portfolio secured other than by economically first-ranking mortgages.

Clause 5.1.3 of each Warranty and Indemnity Agreement provides that in the event that thecurrent loan-to-value (with reference to the outstanding principal of the Mortgages as of 1 December

2003) of any Mortgage Loan comprised in the relevant Portfolio, calculated with reference to the

appraisal values of the Real Estate Assets following the review conducted by auditors pursuant to the

terms of the BPV Transfer Agreement (see ‘‘– Description of Transfer Agreement’’) (the ‘‘Adjusted

Current LTV’’), exceeds the current loan-to-value set forth in Appendix A to the Warranty and

Indemnity Agreement (the ‘‘Initial Current LTV’’) by 10% or more, such Originator shall, no later

than ten Business Days after the Issuer’s request, pay to the Issuer, upon first demand, a Limited

Recourse Loan, with reference to such Mortgage Loan, in an amount equal to: (a) the IndividualPurchase Price of the Claims in question less any principal sum collected or recovered by the Issuer in

relation to each such Claim less a portion of the present value of the interest margins of such Claims

as of the Effective Date pro rata to the portion of principal collected or recovered by the Issuer in

respect of such Claims; plus (b) interest on the Individual Purchase Price at the rate equal to the

average weighted spread of the Senior Notes from the Issue Date until the date on which the Limited

Recourse Loan is paid to the Issuer; plus (c) the costs and expenses (including, but not limited to,

legal fees, disbursement and any value added tax thereon) incurred by the Issuer in respect of the

relevant Claims as of the date on which the Limited Recourse Loan is paid to the Issuer; plus (d) anydamages and losses incurred by the Issuer as a consequence of any third party claim in respect of the

Claims in question as of the date on which the Limited Recourse Loan is paid to the Issuer.

Furthermore, if the weighted average Adjusted Current LTV of the Mortgage Loans comprised in the

Portfolios (excluding those Mortgage Loans in respect of which a Limited Recourse Loan has, or

should have, been granted by the Originators) is greater than the weighted average Initial Current

LTV, each Originator shall, no later than ten Business Days after the Issuer’s request, pay to the

Issuer upon first demand a Limited Recourse Loan (as calculated above) with reference to one or

more of those Mortgage Loans starting from those with the biggest discrepancies between the

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Adjusted Current LTV and the Initial Current LTV so that the weighted average Adjusted Current

LTV of the remaining Mortgage Loans comprised in the Portfolios is equal to or lower than the

weighted average Initial Current LTV.

Each Limited Recourse Loan will constitute a non-interest bearing limited recourse loan made by

BPV, CRP or BN to the Issuer which shall be repaid by the Issuer to BPV, CRP or BN only if and

to the extent that the relevant Claim is collected or recovered by the Issuer.

The Warranty and Indemnity Agreements provide that the obligations of the Issuer to make any

payment thereunder shall be equal to the lesser of the amount of such payment and the amount

which may be applied by the Issuer in making such payment in accordance with the applicable

Order of Priority set forth in the Intercreditor Agreement. Any amount which remains unpaid

following completion of all procedures pursued for the recovery of the BPV Claims, the CRP Claims

or the BN Claims or, in any event, on the Final Maturity Date, shall be deemed to be waived andcancelled by BPV, CRP or BPV.

The Warranty and Indemnity Agreements are governed by and will be construed in accordancewith Italian law.

Any disputes arising from or in connection with the Warranty and Indemnity Agreement shall be

settled pursuant to the National Arbitration Rules of the Chamber of National and InternationalArbitration of Milan. Without prejudice for the above, the courts of Milan shall have exclusive

jurisdiction whenever a dispute cannot be settled by arbitration.

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DESCRIPTION OF THE MASTER SERVICING AGREEMENT

The description of the Master Servicing Agreement set forth below is a summary of certain aspects

of that agreement and is qualified by reference to the detailed provisions of the Master Servicing

Agreement. All capitalised words or expressions used below and not otherwise defined herein shall have

the meaning ascribed to such words or expressions in the Master Servicing Agreement. Prospective

Noteholders may inspect a copy of the Master Servicing Agreement at the registered office of each of the

Representative of the Noteholders and the Luxembourg Listing Agent.

On 28 November 2003, BPV, CRP and BN (each in its capacity as the ‘‘Servicer’’ of respectively

the BPV Portfolio, the CRP Portfolio or the BN Portfolio and collectively the ‘‘Servicers’’ and BPValso in its capacity as ‘‘Master Servicer’’) and the Issuer entered into the Master Servicing Agreement

pursuant to which the Servicers have agreed to administer and service the Claims, including the

collection of such Claims on behalf of the Issuer. The receipt of cash collections in respect of the

Mortgage Loans comprised in each relevant Portfolio is the responsibility of each Servicer which will

be the soggetto incaricato della riscossione dei crediti ceduti e dei servizi di cassa e pagamento pursuant

to the Securitisation Law.

In its capacity as the Master Servicer, BPV is also solely responsible for performing the tasks set

forth in Article 2(6) of the Securitisation Law and the Bank of Italy’s guidelines (Disposizioni per le

societa di cartolarizzazione) of 23 August 2000. In particular, BPV shall ensure that such operationscomply with all applicable legislative and regulatory provisions and with the Offering Circular.

Each Servicer has represented to the Issuer that it has all the skills, software, hardware,

information technology and human resources necessary to comply with the efficiency standards

required by the Master Servicing Agreement.

In consideration for the services provided by the Servicers, the Issuer will pay to each Servicer,

in semi-annual instalments in arrear on each Payment Date: (a) an annual fee equal to zero point

fifteen per cent. (0.15%) of the aggregate outstanding principal amount of each relevant Claim existing

as of the beginning of each calendar year, save that in the case of the First Payment Date, the Issuer

shall pay to each Servicer: (x) for the period from (and including) the Effective Date to (andincluding) 31 December 2003, a fee equal to 0.15% of the aggregate outstanding principal of each

relevant Claim existing as of the Effective Date; and (y) for the period from 1 January 2004 to the

first Payment Date, a fee equal to 0.15% of the aggregate outstanding principal of each relevant Claim

existing as of 1 January 2004, in each case, multiplied by the effective number of days of such period

divided by 360; and (b) an additional fee equal to Euro 251.23 plus VAT per annum for each relevant

Claim in respect of which recovery activities have been carried out. In addition, the Issuer shall also

pay to BPV, in its capacity as Master Servicer, in semi-annual instalments on each Payment Date an

annual fee equal to zero point zero one (0.01%) of the aggregate outstanding principal amount ofeach Claim existing as of the beginning of the relevant calendar year, save that in the case of the First

Payment Date, the Issuer shall pay to the Master Servicer: (x) for the period from (and including) the

Effective Date to (and including) 31 December 2003, a fee equal to 0.01% of the aggregate

outstanding principal of each relevant Claim existing as of the Effective Date; and (y) for the period

from 1 January 2004 to the first Payment Date, a fee equal to 0.01% of the aggregate outstanding

principal of each relevant Claim existing as of 1 January 2004, in each case, multiplied by the effective

number of days of such period divided by 360.

Furthermore each Servicer shall be reimbursed for costs and expenses incurred in the

performance of its duties on the Payment Date immediately succeeding the Semi-annual CollectionPeriod during which such costs and expenses are incurred, provided that the repayment of any costs

and expenses in excess of Euro 60,000 during any calendar year shall be subordinated in accordance

with the applicable Order of Priority.

The Master Servicer has undertaken to prepare and submit to the Issuer, the Lead Manager, the

Swap Counterparty, the Calculation Agent, the Representative of the Noteholders and the Rating

Agencies on each Semi-annual Report Date the Semi-annual Servicer Reports in the form set forth in

the Master Servicing Agreement. The Semi-annual Servicer Reports will provide information relating

to the Servicers’ activity during the preceding Semi-annual Collection Period including, without

limitation, the Aggregate Notional Outstanding Amount of the Portfolio as of the last day of the

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immediately preceding Semi-annual Collection Period, the amortisation and the description of the

Portfolios (outstanding amount, principal and interest), the delinquencies, defaults and collections

during the Semi-annual Collection Period. The information contained in each Semi-annual Servicer

Report shall be used by the Calculation Agent to determine the payments to be made on the

immediately succeeding Payment Date. Each Servicer shall procure that a firm of internationally

recognised auditors shall prepare a report in respect of the information and data contained in each

Semi-annual Servicer Report.

The Master Servicer has also undertaken to prepare and submit to the Issuer, the Lead

Manager, the Swap Counterparty, the Calculation Agent, the Representative of the Noteholders and

the Rating Agencies on each Interim Report Date, starting from the Interim Report Date falling on

15 October 2004, the Interim Servicer Reports in the form set forth in the Master Servicing

Agreement providing information regarding the Servicers’ activity in respect of the immediately

preceding Interim Calculation Period including, inter alia, the Aggregate Notional Outstanding

Amount of the Portfolios as of the Interim Calculation Date immediately preceding an Interim ReportDate, the arrears and the amortisation of the Portfolios.

In order to permit the Master Servicer to perform the aforementioned reporting obligations, each

of CRP and BN in their respective capacity as Servicer undertakes to calculate and notify BPV, four

days before each Semi-annual Report Date and Interim Report Date, the Aggregate Notional

Outstanding Amount of the CRP Claims and the BN Claims as of the last day of each immediately

preceding Semi-annual Collection Period or, as the case may be, each relevant Interim Calculation

Date.

Copies of the most recently published Semi-annual Servicer Reports and Interim Servicer Reports

shall be made available for collection and inspection during normal business hours at the registered

offices of the Luxembourg Listing Agent and of the Representative of the Noteholders. The Semi-

annual Servicer Reports and the Interim Servicer Reports will be published on Bloomberg screen (or

any replacement thereof) and/or on BPV’s web site and/ or in such other manner as the Master

Servicer and the Lead Manager may deem appropriate.

Each of BPV, CRP and BN has undertaken, inter alia, in relation to the BPV Claims, the CRP

Claims and the BN Claims, respectively:

(a) to carry out the administration of such Claims in compliance with the relevant Collection Policy

and to take all action necessary or advisable for their management and collection with the best

professional standards and all applicable laws and regulations;

(b) to verify that payments made by the Borrowers are in compliance with the terms and conditionsof the relevant Mortgage Loan Agreements;

(c) to maintain effective accounting and monitoring procedures so as to ensure compliance with the

provisions of the Master Servicing Agreement;

(d) not to authorise any waiver on any Claim, Mortgage or Collateral Security or any amendment

of instalment due dates or any modification or settlement, except to the extent that such waiver,amendment, modification or settlement is made in accordance with the terms of the Master

Servicing Agreement and the BPV Collection Policy, the CRP Collection Policy or the BN

Collection Policy;

(e) upon a Borrower’s default, to take appropriate out-of-court action with a view to recovering the

relevant Claims in compliance with the provisions set forth in the BPV Collection Policy, the

CRP Collection Policy or the BN Collection Policy and, should legal proceedings be necessary,

to commence and/or participate in such proceedings with the utmost diligence;

(f) to ensure the segregation of the Collections arising from the relevant Claims from its other assets

and/or any collections arising from other securitisation transactions; and

(g) to comply with the Usury Law as well as applicable provisions relating to the compounding of

interest in the performance of is duties under the Master Servicing Agreement and, in such

connection, not to accept any payments in relation to the relevant Claims which would cause the

breach by the Issuer of the aforementioned provisions.

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If a Borrower and/or Mortgagor and/or Guarantor (or the receiver of any of the foregoing)

brings a claim and/or counterclaim in respect of any Claim on the basis that interest payments made

in respect of the relevant Mortgage Loan are in excess of those due and payable, Clause 3 of the

Master Servicing Agreement provides that BPV, CRP or BN, as the case may be, shall pay to the

Issuer the amount claimed plus interest calculated at Six Month Euribor plus 2% (a ‘‘Servicer Advance

Indemnity’’). Any Servicer Advance Indemnity together with interest thereon shall be repaid to the

relevant Servicer out of the Issuer Available Funds in accordance with the applicable Order of

Priority.

Pursuant to the Master Servicing Agreement, each Servicer may re-negotiate or otherwise amend

certain terms of individual Mortgage Loan Agreements in each case only with respect to performing

Claims (in bonis). If a Servicer agrees to renegotiate the interest rate applicable under a MortgageLoan Agreement, such Servicer shall pay to the Issuer the present value of any interest payments

which the Issuer would have received in the absence of such renegotiations plus any expenses incurred

by the Issuer as a result of such renegotiations the payment of which rank pari passu or in priority to

the Senior Notes. If a Servicer agrees to re-negotiate the penalty payments due upon early termination

of a Mortgage Loan Agreement, such Servicer shall pay to the Issuer an amount equal to the

difference between: (a) the penalty payment due upon such early termination as agreed under the

relevant Mortgage Loan Agreement; and (b) the re-negotiated penalty payment received from the

relevant Borrower upon early termination of such Mortgage Loan Agreement. If a Servicer agrees toamend the instalment due dates under a Mortgage Loan Agreement and, as a result thereof, one or

more instalments due under such Mortgage Loan Agreement will be paid after the Final Maturity

Date, such Servicer undertakes to pay in advance to the Issuer the aggregate principal amount of such

instalments and the aggregate interest amount of such instalments at Euribor plus the weighted

average spread of the Notes and such Servicer may deduct, by way of reimbursement, any sum

subsequently received in respect of such instalments when paid by the Borrower.

The Issuer and the Representative of the Noteholders have the right to inspect and take copies

of the documentation and records relating to the Claims in order to verify the activities undertaken by

the Servicers pursuant to the Master Servicing Agreement to the extent the Servicers have been

reasonably informed in advance of such inspection.

The Issuer may terminate each Servicer’s appointment if one of the following events takes place:

(i) an order is made by any competent judicial authority providing for a liquidazione coatta

amministrativa of BPV, CRP or BN or in the event that any of the Servicers is admitted to any

other insolvency proceedings or a resolution is passed by BPV, CRP or BN for the purpose of

its admission to any such insolvency proceedings; or

(ii) breach by any of BPV, CRP or BN of any of its obligations under the Master Servicing

Agreement such as to prejudice the collection and the management of the Claims and such

breach fails to be remedied within 15 days (or 5 days, in case of breach of obligations

concerning the collection of the Claims and the transfer of amounts so collected); or

(iii) breach by any of BPV, CRP or BN of the representations and warranties given by it under the

Master Servicing Agreement; or

(iv) the Issuer fails to receive the auditors’ report on the Semi-annual Servicer Report(s) by its due

date, except where such failure is exclusively attributable to the auditors;

(v) the Issuer and the Calculation Agent fail to receive the Semi-annual Servicer Report and the

Interim Servicer Report on their due dates; or

(vi) a Rating Agency determines that the continuance of BPV as Master Servicer or of BPV, CRP or

BN as Servicer would lead to a downgrading of the Senior Notes.

Each of BPV, CRP and BN acknowledges and accepts that it does not have any recourse

against the Issuer for any damages, claims, liabilities, costs, and/or expenses (including, without

limitation, legal fees and expenses) incurred as a result of the performance of its activities under the

Master Servicing Agreement, except where such damages, claims, liabilities, costs or expenses are

attributable to the gross negligence or wilful misconduct of the Issuer.

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Under the terms of the Master Servicing Agreement, each Servicer agrees that any claim for

payment of sums due from the Issuer under the Master Servicing Agreement will be limited to the

lesser of the amount of such claim and the Issuer Available Funds available to satisfy such claim, in

accordance with the Order of Priority set forth in the Intercreditor Agreement. Any amount which

remains unpaid following the completion of all procedures undertaken for the recovery of the BPV

Claims, the CRP Claims or the BN Claims or, in any event, on the Final Maturity Date, shall be

deemed to be waived by BPV, CRP and BN and cancelled.

BPV, as parent company of the BPV group, guarantees the due and punctual performance of all

the obligations of CRP and BN arising under the Master Servicing Agreement and shall be jointly

liable with CRP and BN for each obligation, including damages or indemnification obligations underthe Master Servicing Agreement. It being understood that BPV shall perform its obligations as jointly

liable party only if the Issuer has served a notice on CRP or, as the case may be, BN requesting

fulfilment of the relevant obligations and CRP or, as the case may be, BN fails to act within 15 days

from the receipt of such notice.

The Master Servicing Agreement is governed by, and will be construed in accordance with,

Italian law.

Any disputes arising from or in connection with the Master Servicing Agreement shall be settled

pursuant to the National Arbitration Rules of the Chamber of National and International Arbitration

of Milan.

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DESCRIPTION OF THE CASH ALLOCATION, MANAGEMENT AND PAYMENTS AGREEMENT

The description of the Cash Allocation, Management and Payments Agreement set forth below is a

summary of certain aspects of that agreement and is qualified by reference to the detailed provisions of

the Cash Allocation, Management and Payments Agreement. All capitalised words or expressions used

below and not otherwise defined herein shall have the meaning ascribed to such words or expressions in

the Cash Allocation, Management and Payments Agreement. Prospective Noteholders may inspect a copy

of the Cash Allocation, Management and Payments Agreement upon request at the registered office of

each of the Representative of the Noteholders and the Luxembourg Listing Agent.

On 17 March 2004, the Issuer entered into the Cash Allocation, Management and Payments

Agreement with the Representative of the Noteholders, the Cash Manager, the Account Bank, the

Collection Account Bank, the English Account Bank, the Principal Paying Agent, the Luxembourg

Paying Agent, the Italian Paying Agent and the Calculation Agent.

Pursuant to the Cash Allocation, Management and Payments Agreement:

(i) the Collection Account Bank, the English Account Bank and the Account Bank have agreed to

provide the Issuer with certain reporting services together with account handling services in

relation to monies or securities, as the case may be, from time to time standing to the credit ofthe Accounts;

(ii) the Cash Manager has agreed to provide the Issuer with certain investment and cash

management services in relation to monies standing to the credit of the Issuer Investment

Account, the Issuer Distribution Account and the Issuer Cash Reserve Account;

(iii) the Calculation Agent has agreed to provide the Issuer with the Payments Report and with

certain calculation services; and

(iv) the Principal Paying Agent, the Luxembourg Paying Agent and the Italian Paying Agent have

agreed to provide the Issuer with certain payment services.

The Issuer Collection Accounts, the Issuer Expenses Account and the Issuer Quota Capital

Account have been established in the name of the Issuer and shall be held with BPV, in its capacity

as the Collection Account Bank. The Issuer Investment Account, the Issuer Securities Account, the

Issuer Securities Loan Securities Account, the Issuer Distribution Account and the Issuer Cash

Reserve Account have been opened in the name of the Issuer with, and shall be operated, by

Deutsche Bank S.p.A. in its capacity as the Account Bank. The Issuer English Account has beenopened in the name of the Issuer with, and shall be operated by, Deutsche Bank AG London in its

capacity as the English Account Bank. The amounts or securities, as the case may be, standing to the

credit of the Accounts shall be debited and credited in accordance with the provisions of the Cash


On each Monday, Wednesday and Friday of every week (or, during the first six months after theIssue Date, each Monday and Thursday of every week) (or, if such day is not a Local Business Day,

the immediately succeeding Local Business Day), the Collection Account Bank shall transfer all sums

standing to the credit of the Issuer Collection Accounts to the Issuer Investment Account. Funds

standing from time to time to the credit of the Issuer Investment Account, the Issuer Cash Reserve

Account and the Issuer Distribution Account will be invested by the Cash Manager on behalf of the

Issuer in Eligible Investments, provided that the Eligible Investments shall have a maturity date falling

on or before the Local Business Day preceding the immediately following Semi-annual Collection Date

(exclusive).

Subject to the definition of Eligible Investments and the other restrictions set forth in the Cash

Allocation, Management and Payments Agreement, the Cash Manager shall have absolute discretion

as to the type and the amount of Eligible Investments which it may acquire and as to the terms on

which, through whom and on which markets any purchase of Eligible Investments may be effected.

Any interest accrued on the sums standing to the credit of the Issuer Distribution Account will

be transferred on each Payment Date to the Issuer Investment Account.

On or prior to each Semi-annual Report Date, the Collection Account Bank shall deliver to the

Issuer, the Account Bank, the Calculation Agent and the Representative of the Noteholders a report

(the ‘‘Collection Account Bank Semi-annual Report’’) which shall contain details of the balance of each

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of the Accounts held with the Collection Account Bank; and the Account Bank shall deliver to the

Issuer, the Collection Account Bank, the Calculation Agent, the Paying Agents and the Representative

of the Noteholders a report (the ‘‘Account Bank Semi-annual Report’’) which shall contain details of

the balance of each of the Accounts held with the Account Bank. The English Account Bank shall

deliver to the Issuer, the Calculation Agent and the Representative of the Noteholders a report stating

details of all payments made to and from the Issuer English Account.

Subject to its receipt of the Semi-annual Servicer Report, the Collection Account Bank Semi-

annual Report and the Account Bank Semi-annual Report for the preceding Semi-annual Collection

Period, the Calculation Agent will prepare and deliver on or before each Calculation Date a Payments

Report with respect to such Semi-annual Collection Period setting out, inter alia, payments to bemade on the immediately following Payment Date in accordance with the applicable Order of Priority

set forth in the Intercreditor Agreement. The Calculation Agent shall deliver the Payments Report to,

inter alios, the Issuer, the Representative of the Noteholders, the Servicers and the Rating Agencies.

The Calculation Agent will also calculate and indicate in the Payments Report the Senior Notes

Available Funds for Amortisation on the immediately following Payment Date and the amounts to be

applied towards mandatory pro rata redemption of the Senior Notes on such Payment Date pursuant

to Condition 6 (Redemption, Purchase and Cancellation).

The Principal Paying Agent shall direct the Account Bank to withdraw from the Issuer

Distribution Account such amounts as are indicated in the Payments Report and credit them for value

on each Payment Date to the bank accounts of the Senior Noteholders as indicated by Monte Titoliin so far as such amounts are for payments under the Senior Notes, and in so far as such amounts

are for payments under the Class D Notes to the Class D Notes Depository, and in so far as such

amounts are for payments to the relevant Other Issuer Creditors and to the Issuer, such payments will

be made to their respective bank accounts which they will, from time to time, indicate to the Principal

Paying Agent.

The Collection Account Bank, the English Account Bank and the Account Bank shall, on behalf

of the Issuer, maintain or procure the maintenance of records in respect of the Accounts and such

records will, on each Calculation Date, show separately: (i) all payments made to and from each of

such Accounts and will record these receipts and payments on a basis which is consistent with the

principles set forth in the Cash Allocation, Management and Payments Agreement (including the

Payments Report) and the Intercreditor Agreement; and (ii) all Eligible Investments acquired anddisposed of during the preceding Semi-annual Collection Period.

The Cash Allocation, Management and Payments Agreement contains representations andwarranties by the Issuer, the Cash Manager, the Account Bank, the English Account Bank, the

Collection Account Bank, the Luxembourg Paying Agent, the Principal Paying Agent, the Italian

Paying Agent and the Calculation Agent in respect of, inter alia, their status, powers and

authorisations, non violation and delivery the Cash Allocation, Management and Payments

Agreement. The Account Bank and the English Account Bank shall at all times be an Eligible

Institution.

None of the Account Bank, the English Account Bank, the Collection Account Bank, the Cash

Manager, the Paying Agents or the Calculation Agent shall be liable in respect of any loss, liability,

claim, expense or damage suffered or incurred by any other party hereto as a result of the

performance of its respective obligations under the Cash Allocation, Management and Payments

Agreement save where such loss, liability, claim, expense or damage is suffered or incurred as a resultof any fraud, gross negligence or wilful misconduct of the Account Bank, the English Account Bank,

the Collection Account Bank, the Cash Manager, the Paying Agents or the Calculation Agent or any

of their respective agents, delegates or representatives or of any breach by it or such agents, delegates

or representatives of the terms and conditions of the Cash Allocation, Management and Payments

Agreement.

Upon the occurrence of certain events, either the Representative of the Noteholders or the

Issuer, with the prior written consent of the Representative of the Noteholders, may terminate the

appointment of the Account Bank, the English Account Bank, the Collection Account Bank, the

Calculation Agent, the Paying Agents and/or the Cash Manager, as the case may be, under the terms

of the Cash Allocation, Management and Payments Agreement. In addition, if the rating of the short-

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term unsecured and unsubordinated debt obligations of any of the Account Bank or the English

Account Bank falls below ‘‘F1’’ by Fitch or ‘‘A-1+’’ by S&P or is otherwise withdrawn or if the

Account Bank or the English Account Bank otherwise ceases to be an Eligible Institution, the

appointment of the Account Bank or, as the case may be, the English Account Bank shall be

terminated and the Issuer shall, within 30 days after the relevant event, cause amounts or securities

deposited in the Account(s) held with such bank to be transferred to a new bank that qualifies as an

Eligible Institution which shall substitute such bank as the Account Bank or, as the case may be,

English Account Bank. Should the rating of the short-term unsecured and unsubordinated debtobligations of the Collection Account Bank falls below ‘‘F2’’ by Fitch, amounts shall be transferred

from the Issuer Collection Accounts to the Issuer Investment Account on a daily basis.

Upon the occurrence of certain circumstances, any of the Paying Agents, the Account Bank, the

English Account Bank, the Collection Account Bank, the Cash Manager or the Calculation Agent

may resign from their respective appointment under the Cash Allocation, Management and Payments

Agreement upon giving not less than three months’ prior written notice of termination to the

Representative of the Noteholders, the Issuer and the other parties thereto.

The Issuer and the Representative of the Noteholders may jointly terminate the appointment of

any of the Account Bank, the English Account Bank, the Collection Account Bank, the Cash

Manager, the Paying Agents or the Calculation Agent under the Cash Allocation, Management and

Payments Agreement in any circumstances (whether or not a termination event has occurred) by

giving three months’ prior written notice of such termination to the Account Bank, the EnglishAccount Bank, the Collection Account Bank, the Calculation Agent, the Cash Manager, the Paying

Agents and the other parties thereto, provided that certain requirements are satisfied.

The Cash Allocation, Management and Payments Agreement is governed by, and will be

construed in accordance with, Italian law.

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DESCRIPTION OF THE INTERCREDITOR AGREEMENT

The description of the Intercreditor Agreement set forth below is a summary of certain aspects of

that agreement and is qualified by reference to the detailed provisions of the Intercreditor Agreement. All

capitalised words or expressions used below and not otherwise defined herein shall have the meaning

ascribed to such words or expressions in the Intercreditor Agreement. Prospective Noteholders may

inspect a copy of the Intercreditor Agreement at the registered office of each of the Representative of the

Noteholders and the Luxembourg Listing Agent.

On 17 March 2004, the Issuer, the Representative of the Noteholders on behalf of the

Noteholders and for itself and the Other Issuer Creditors entered into the Intercreditor Agreement.

The Intercreditor Agreement provides for, inter alia, the order of priority of payments to be

made from the Issuer Available Funds, as set forth in Condition 4 (Order of Priority).

The obligations owed by the Issuer to each Noteholder and, in general, to each of the Other

Issuer Creditors will be limited recourse obligations of the Issuer. The Noteholders will have a claim

against the Issuer only to the extent of the Issuer Available Funds in each case subject to and asprovided in the Intercreditor Agreement and the other Transaction Documents.

Under the terms of the Intercreditor Agreement, the Issuer undertakes, following the delivery ofa Trigger Notice or following the occurrence of an Insolvency Event, to comply with all directions of

the Representative of the Noteholders in relation to the management and administration of the

Claims. The Noteholders and the Other Issuer Creditors irrevocably appoint the Representative of the

Noteholders to act as their agent in relation to the Security Documents and authorise the

Representative of the Noteholders to receive, in their name and on their behalf, all payments to be

made by the Issuer pursuant to the applicable Order of Priority following the delivery of a Trigger

Notice or the occurrence of an Insolvency Event and to apply all cash deriving from time to time

from the subject matter of the Security Documents as well as all proceeds upon the enforcementthereof to satisfy amounts payable to each of them in accordance with the applicable Order of

Priority.

The Intercreditor Agreement provides that without prejudice to the application of the IssuerAvailable Funds in accordance with the applicable Order of Priority: (a) to the extent any Senior

Notes are outstanding, the Representative of the Noteholders will have regard for the interests of the

Senior Noteholders with preference to the interests of the Other Issuer Creditors and the Class D

Noteholders; (b) if there is a conflict between the interests of the Senior Noteholders of different

Classes, the Representative of the Noteholders will have regard for the interests of the Senior

Noteholders ranking highest under the applicable Order of Priority; (c) upon the redemption in full of

the Senior Notes, the Representative of the Noteholders will have regard for the interests of the Other

Issuer Creditors and the Class D Noteholders and if there is a conflict between the interests of any ofthe Other Issuer Creditors or between any of the Other Issuer Creditors and the Class D Noteholders,

the Representative of the Noteholders will have regard for the interests of such Other Issuer Creditors

ranking highest under the applicable Order of Priority.

The Intercreditor Agreement furthermore provides that the Issuer, upon exercise of its option for

an early redemption of the Senior Notes or, following the delivery of a Trigger Notice or the

occurrence of an Insolvency Event, the Representative of the Noteholders, shall be entitled, in

accordance with the provisions set forth in the Intercreditor Agreement, Condition 6.3 (Optional

Redemption of the Senior Notes) and Condition 10 (Trigger Events), to direct the sale of one or more

Claims comprised in the Portfolio provided that a sufficient amount would be realised to allow the

discharge in full of all amounts owing to the Senior Noteholders and amounts ranking in prioritythereto or pari passu therewith.

The Intercreditor Agreement is governed by, and will be construed in accordance with, Italianlaw.

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DESCRIPTION OF THE SECURITY DOCUMENTS

The description of the Italian Deed of Pledge and the English Deed of Charge set forth below is a

summary of certain aspects of these security documents and is qualified by reference to the detailed

provisions of such security documents. All capitalised words or expressions used below and not otherwise

defined herein shall have the same meaning ascribed to such words and expressions in the Italian Deed of

Pledge and the English Deed of Charge, respectively, unless otherwise specified. Prospective Noteholders

may inspect a copy of each of the Italian Deed of Pledge and the English Deed of Charge at the

registered office of each of the Representative of the Noteholders and the Luxembourg Listing Agent.

On 17 March 2004, the Issuer executed: (A) the Italian Deed of Pledge, pursuant to which theIssuer has (a) pledged in favour of the Noteholders and the Other Issuer Creditors: (i) all monetary

claims and rights and all the amounts (including payment for claims, indemnities, damages, penalties,

credits and guarantees) to which the Issuer is entitled pursuant to the Transaction Documents, other

than the Swap Agreement, the Senior Notes Subscription Agreement and the Security Documents,

entered into in relation to the Securitisation to which the Issuer is a party; (ii) any existing or future

monetary claims and rights of any sum credited from time to time to the Accounts (other than the

Issuer Expenses Account, the Issuer English Account and the Issuer Quota Capital Account), other

than the subscription price of the Notes and the Excluded Collections; and (b) has undertaken topledge in favour of the Noteholders and the Other Issuer Creditors the securities deposited in the

Issuer Securities Loan Securities Account and the monetary claims deriving from the Eligible

Investments that will be made by the Cash Manager on behalf of the Issuer pursuant to the Cash

Allocation, Management and Payments Agreement including any interest, dividend, monetary premia

and any other amounts arising from the Eligible Investments. The Issuer furthermore undertakes that

should the Liquidity Reserve Account be opened, it shall forthwith pledge in favour of the

Noteholders and the Other Issuer Creditors any existing or future monetary claims and rights of any

sums credited from time to time to such Liquidity Reserve Account; and (B) the English Deed ofCharge, pursuant to which the Issuer has charged and assigned in favour of the Noteholders and the

Other Issuer Creditors, by way of first fixed security all the Issuer’s rights, title, interest and benefit

(present and future) in, to and under the Swap Agreement and the Senior Notes Subscription

Agreement and in and to all sums of money which may be, at the time the English Deed of Charge is

entered into or thereafter are from time to time, standing to the credit of the Issuer English Account

and has charged by way of first floating security the whole of the Issuer’s undertaking, property and

assets, present and future, relating to the Securitisation, with the exception only of (a) any part of its

undertaking or any property or asset for the time being validly and effectively charged or assigned byway of fixed security pursuant to the English Deed of Charge; and (b) any part of its undertaking or

any property or asset situated outside England and Wales to the extent that any such security would

be unlawful under the laws of the jurisdiction in which such property, undertaking or asset is situated

or such security is enforced.

Under the terms of the Intercreditor Agreement, the Noteholders and the Other Issuer Creditors

will appoint the Representative of the Noteholders to act as their agent in relation to the Italian Deed

of Pledge and the English Deed of Charge and agree that the cash deriving from time to time from

the subject matter of the Italian Deed of Pledge and the English Deed of Charge as well as all

proceeds upon the enforcement thereof shall be applied to satisfy amounts due to each of them in

accordance with the applicable Order of Priority.

The Italian Deed of Pledge is governed by, and will be construed in accordance with, Italian

law.

The English Deed of Charge is governed by, and will be construed in accordance with, English

law.

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DESCRIPTION OF THE MANDATE AGREEMENT

The description of the Mandate Agreement set forth below is a summary of certain aspects of that

agreement and is qualified by reference to the detailed provisions of the Mandate Agreement. All

capitalised words or expressions used below and not otherwise defined herein shall have the meaning

ascribed to such words or expressions in the Mandate Agreement. Prospective Noteholders may inspect a

copy of the Mandate Agreement at the registered office of each of the Representative of the Noteholders

and the Luxembourg Listing Agent.

On 17 March 2004, the Issuer and the Representative of the Noteholders have entered into the

Mandate Agreement pursuant to which the Representative of the Noteholders is authorised toexercise, in the name and on behalf of the Issuer: (a) subject to a Trigger Notice being delivered to

the Issuer following the occurrence of a Trigger Event or upon the occurrence of an Insolvency Event,

all the Issuer’s Rights (other than the right to collect and recover Claims under the Master Servicing

Agreement), and the rights in respect of the Claims, including the Issuer’s right to sell (in whole or in

part) the Portfolios, provided, however, that a sufficient amount shall be realised to allow discharge in

full of all amounts due and payable to the Senior Noteholders and amounts ranking in priority

thereto or pari passu therewith; and (b) upon any failure by the Issuer to exercise the Issuer’s Rights

against any party in default to procure remedy of such default, all the Issuer’s Rights against thedefaulting counterparty.

The Issuer shall not revoke or modify the Mandate Agreement without the prior written consent

of the Representative of the Noteholders.

The Mandate Agreement is governed by, and will be construed in accordance with, Italian law.

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DESCRIPTION OF THE ADMINISTRATIVE SERVICES AGREEMENT

The description of the Administrative Services Agreement set forth below is a summary of certain

aspects of that agreement and is qualified by reference to the detailed provisions of the Administrative

Services Agreement. All capitalised words or expressions used below and not otherwise defined herein

shall have the meaning ascribed to such words or expressions in the Administrative Services Agreement.

Prospective Noteholders may inspect a copy of the Administrative Services Agreement at the registered

office of each of the Representative of the Noteholders and the Luxembourg Listing Agent.

On 28 November 2003, the Issuer and BPV (in its capacity as the ‘‘Administrative Services

Provider’’) entered into the Administrative Services Agreement pursuant to which BPV has agreed toprovide the Issuer with a number of administrative services as long as the Notes are outstanding,

including, inter alia, to:

(a) ensure the Issuer’s compliance with all reporting and notification requirements and any otherrequirements relating to the Claims imposed by applicable laws and regulations, including the

maintenance of a computerised archive (archivio unico informativo) relating to the Claims, and

comply with any other applicable money laundering provisions;

(b) keep, on behalf of the Issuer, corporate books and registers and other accounting and tax

records required by Italian law; and

(c) prepare the Issuer’s annual financial statements in compliance with applicable laws and

regulations including, but not limited to, the provisions issued by the Governor of the Bank of

Italy on 29 March 2000, as subsequently amended and supplemented, and prepare all periodical

reports required by applicable money laundering, banking and stock exchange and other

applicable regulations.

The Issuer may terminate the Administrative Services Agreement and appoint a successor in the

event of fraud, gross negligence or default by the Administrative Services Provider in the performance

of its duties and obligations and may, in any event, terminate the Administrative Services Provider’s

appointment with three months’ prior notice.

Pursuant to the terms of the Administrative Services Agreement, the Administrative Services

Provider shall indemnify and hold harmless the Issuer from and against any and all damages and

losses incurred by the Issuer as a result of any fraud or gross negligence on behalf of theAdministrative Services Provider or any breach by the Administrative Services Provider of its

obligations under the Administrative Services Agreement, except in the case of fraud or gross

negligence by the Issuer.

The Administrative Services Agreement is governed by, and will be construed in accordance with,

Italian law.

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DESCRIPTION OF THE SWAP AGREEMENT

The description of the Swap Agreement set forth below is a summary of certain aspects of those

agreement and is qualified by reference to the detailed provisions of the Swap Agreement. All capitalised

words or expressions used below and not otherwise defined herein shall have the meaning ascribed to such

words or expressions in the Swap Agreement. Prospective Noteholders may inspect a copy of the Swap

Agreement at the registered office of each of the Representative of the Noteholders and the Luxembourg

Listing Agent.

In order to hedge its floating interest rate exposure in respect of the Senior Notes, the Issuer, on

17 March 2004, entered into a swap agreement in the form of an International Swaps and Derivatives

Association, Inc. (‘‘ISDA’’) 1992 Master Agreement (Multicurrency-Cross Border) together with a

Schedule thereto (the ‘‘Master Agreement’’) and supplemented by three confirmations (the ‘‘Swap

Confirmations’’ and together with the Master Agreement the ‘‘Swap Agreement’’).

The Swap Confirmations provide evidence of the terms of swap transactions (the ‘‘Swap

Transactions’’) under the terms of which the Swap Counterparty will pay to the Issuer two BusinessDays prior to each Payment Date (each, a ‘‘Swap Payment Date’’) an amount determined by reference

to the floating rate of interest that the Issuer is required to pay with respect to the Senior Notes and

the Issuer, on each Payment Date, will make payments to the Swap Counterparty determined by

reference to the rates of interest payable on the Mortgage Loans. These amounts will be netted

against one another and only the difference will be payable.

The Swap Agreement may be terminated by either party in accordance with certain limited

termination events and events of default, some of which are more particularly described below.

The Swap Counterparty is only obliged to make payments pursuant to the Swap Transactions tothe extent that the Issuer makes the corresponding payments thereunder. A failure by the Issuer to

make a payment of an amount due from it under the Swap Transactions will constitute a default

thereunder and entitle the Swap Counterparty to terminate the Swap Agreement.

The Swap Counterparty will be obliged to make payments under the Swap Agreement without

any deduction or withholding of taxes unless required by law. If any such withholding or deduction is

required by law, the Swap Counterparty will, except in limited circumstances, be required to pay such

additional amount as is necessary to ensure that the net amount actually received by the Issuer willequal the full amount that the Issuer would have received had no such withholding or deduction been

required. The Issuer is similarly obliged to make payments under the Swap Agreement without any

withholding or deduction of taxes unless required by law and, except in limited circumstances, is

similarly obliged to pay additional amounts.

The Swap Agreement provides that if due to action taken by a relevant taxing authority or

brought in a court of competent jurisdiction or any change in tax law, either the Issuer or the Swap

Counterparty will, or there is a substantial likelihood that it will, on the next Swap Payment Date,

either:

(a) receive a payment from the other party from which an amount is required to be deducted or

withheld for or on account of tax and no additional amount is required to be paid by that other

party to ensure that the net amount actually received by the Issuer or the Swap Counterparty, as

the case may be, will equal the full amount that that party would have received had no such

withholding or deduction been required, or

(b) be required to pay additional amounts in respect of tax under the Swap Agreement,

then the Swap Agreement may be terminated. If the Swap Agreement is terminated and theIssuer is unable to find a suitable replacement swap counterparty then the Issuer may not have the

necessary funds to make the interest payments required to be made by it in respect of the Senior

Notes.

The Swap Counterparty may, at its own discretion, novate all of its rights and obligations under

the Swap Agreement to a third party of its choice provided that the Rating Agencies confirm that the

rating of such third party’s short-term, unsecured and unsubordinated debt obligations and/or long-

term, unsecured and unsubordinated debt obligations are such that the then applicable ratings of the

Senior Notes will not be downgraded as a result.

95

The Swap Counterparty must have a rating assigned to its unguaranteed, unsubordinated and

unsecured short-term debt obligations of at least F1 by Fitch and A-1 by S&P. In the event that the

rating of the Swap Counterparty falls below the aforementioned minimum ratings, under the terms of

the Swap Agreement, the Swap Counterparty must take one of a number of actions, including putting

in place mark-to-market collateral arrangements in support of its obligations under the Swap

Agreement or transferring all its rights and obligations with respect to the Swap Agreement to a

replacement swap counterparty whose unguaranteed, unsubordinated and unsecured short-term debt

obligations are rated at least F1 by Fitch and A-1 by S&P or taking such other action as the SwapCounterparty may agree with the Rating Agencies. If none of these actions are taken within 30 days

of the relevant downgrading, a termination event will occur with respect to the Swap Counterparty

giving the Issuer the right to give notice to terminate the Swap Agreement.

If the Swap Agreement is terminated for any reason, the Swap Counterparty or the Issuer may

be required to pay an amount to the other party as a result of the termination. The Issuer will make

any termination payment in accordance with the applicable Order of Priority. Accordingly, any

termination payment to be made:

(i) in circumstances where the Swap Counterparty is not the Defaulting Party (as defined in

the Swap Agreement), will be made in accordance with item (v) of the Pre-Enforcement

Order of Priority, or, as applicable, item (v) of the Post-Enforcement Order of Priority and

therefore will be paid in priority to the Notes; and

(ii) in circumstances where the Swap Counterparty is the Defaulting Party (as defined in the

Swap Agreement), will be made in accordance with item (xviii) of the Pre-Enforcement

Order of Priority, or, as applicable, item (xvi) of the Post-Enforcement Order of Priorityand therefore will be subordinated to the Senior Notes, but will be paid in priority to the

Class D Notes.

Any amount payable by the Issuer to the Swap Counterparty in respect of: (i) any Tax Credit(as defined in the Swap Agreement) realised by the Issuer under the Swap Agreement or (ii) any

Excess Swap Collateral will be paid by the Issuer on the relevant due date and outside of the

applicable Order of Priority. The amounts due by the Issuer under (i) above will be paid out of the

cash realised by the Issuer as a result of the Tax Credit. The amounts due by the Issuer under (ii)

above will be paid out of the collateral released in accordance with the Swap Agreement.

The Swap Agreement provides for all payments required to be made by the Swap Counterparty

to be paid into the Issuer English Account.

As described in more detail in ‘‘The Swap Counterparty’’ above, the Issuer will have the benefit

of the Additional CDC IXIS Guarantee with respect to the Swap Agreement.

The Swap Agreement is governed by, and will be construed in accordance with, English law and

the Additional CDC IXIS Guarantee is governed by, and will be construed in accordance with,

French law.

96

DESCRIPTION OF THE LIQUIDITY FACILITY AGREEMENT

The description of the Liquidity Facility Agreement set forth below is a summary of certain aspects

of that agreement and is qualified by reference to the detailed provisions of the Liquidity Facility

Agreement. All capitalised words or expressions used below and not otherwise defined herein shall have

the meaning ascribed to such words or expressions in the Liquidity Facility Agreement. Prospective

Noteholders may inspect a copy of the Liquidity Facility Agreement at the registered office of each of

the Representative of the Noteholders and the Luxembourg Listing Agent.

On 17 March 2004, the Issuer and the Liquidity Facility Provider have entered into the LiquidityFacility Agreement pursuant to which the Liquidity Facility Provider has agreed to make available to

the Issuer for a 364 day period starting from the Issue Date a Liquidity Facility in a maximum

aggregate amount equal to Euro 3 million (the ‘‘Liquidity Facility Limit’’).

The Issuer shall, not earlier than 90 days and not later than 60 days prior to each Liquidity

Facility Commitment Termination Date, request the Liquidity Facility Provider to renew the Liquidity

Facility for a further period of 364 days. If such a renewal would cause the Liquidity Facility

Commitment Termination Date to occur after the Liquidity Facility Maturity Date, the renewal shall

be for a shorter period ending on the Liquidity Facility Maturity Date.

The Liquidity Facility Provider must have a rating assigned to its unguaranteed, unsubordinatedand unsecured short-term debt obligations of at least F-2 by Fitch and A-2 by S&P. In the event that

the rating of the Liquidity Facility Provider falls below the aforementioned minimum ratings or if the

Liquidity Facility Provider elects not to renew the Liquidity Facility, the Liquidity Facility Provider

undertakes to procure for the Issuer a substitute Liquidity Facility on the same terms of the Liquidity

Facility Agreement with an appropriately rated entity. If: (a) the Liquidity Facility Provider elects not

to renew the Liquidity Facility; or (b) the rating of the Liquidity Facility Provider falls below the

minimum ratings referred to above and the Liquidity Facility Provider fails to exercise its right to

procure a successor, the Liquidity Facility Provider shall deposit the Liquidity Facility UndrawnAmount in the Liquidity Reserve Account.

The Liquidity Facility Agreement provides liquidity support in the event that the Issuer

Available Funds as of any Payment Date (excluding the amount to be drawndown under the

Liquidity Facility) are not sufficient to meet the Issuer’s liabilities set forth in items (i) to (vi)

(inclusive) of the Pre-Enforcement Order of Priority plus, for so long as the Liquidity Facility Loss

Ratio does not exceed 9.9%, the Interest Payment Amount due on the Class B Notes and, for so long

as the Liquidity Facility Loss Ratio does not exceed 7.7%, the Interest Payment Amount on the Class

C Notes on such Payment Date or, as the case may be, the Issuer’s payment obligations under items

(i) to (x) (inclusive) of the Post-Enforcement Order of Priority (excluding, for the avoidance of doubt,in calculating the Issuer Available Funds as of such Payment Date any amount to be drawn down

under the Liquidity Facility in order to meet the aforementioned payment obligations of the Issuer on

such Payment Date). Any draw downs under the Liquidity Facility will be paid by the Liquidity

Facility Provider on the Liquidity Facility Drawdown Date.

All amounts drawn down under the Liquidity Facility will accrue interest at a rate per annum

equal to Six Month Euribor plus a margin of zero point zero one per cent. (0.01%), for the entire

duration of the Interest Periods during which such amounts are outstanding.

Amounts drawn down under the Liquidity Facility Agreement will be repayable on each

Payment Date in an amount equal to the Liquidity Facility Repayment Amount out of the Issuer

Available Funds subject to and in accordance with the applicable Order of Priority.

The Liquidity Reserve Account will be an account in the name of the Issuer and held with theAccount Bank, unless the Account Bank does not qualify as an Eligible Institution in which case the

Liquidity Reserve Account will be held with another institution that qualifies as an Eligible Institution.

The Issuer will only be entitled to withdraw amounts from the Liquidity Reserve Account in those

circumstances in which it would have been entitled to make a draw down under the Liquidity Facility.

Interest accrued on such amount of the Liquidity Facility Undrawn Amount that remains credited to

the Liquidity Reserve Account from time to time and that is not withdrawn by the Issuer in

accordance with the terms of the Liquidity Facility Agreement shall be for the account of the

Liquidity Facility Provider.

97

The Liquidity Facility Provider will have no claim against or recourse to any assets or

contributed capital of the Issuer for any amounts due under the Liquidity Facility in excess of the

amounts permitted to be paid from the Issuer Available Funds from time to time in accordance with

the Intercreditor Agreement.

The Liquidity Facility Agreement will be governed by, and construed in accordance with, Italian

law.

98

DESCRIPTION OF THE SUBORDINATED LOAN AGREEMENTS

The description of the Subordinated Loan Agreement and the Securities Subordinated Loan

Agreement set forth below is a summary of certain aspects of those agreements and is qualified by

reference to the detailed provisions of the Subordinated Loan Agreement and the Securities Subordinated

Loan Agreement. All capitalised words or expressions used below and not otherwise defined herein shall

have the meaning ascribed to such words or expressions in the Subordinated Loan Agreement and the

Securities Subordinated Loan Agreement. Prospective Noteholders may inspect a copy of the

Subordinated Loan Agreement and the Securities Subordinated Loan Agreement at the registered office

of each of the Representative of the Noteholders and the Luxembourg Listing Agent.

On 17 March 2004, BPV (in its capacity as the ‘‘Subordinated Loan Provider’’) entered into the

Subordinated Loan Agreement with the Issuer pursuant to which the Subordinated Loan Provider

shall grant the Issuer on the Issue Date a limited recourse subordinated loan (the ‘‘Subordinated

Loan’’) in an amount equal to Euro 8,827,245 (equivalent to 1.5% of the Initial Principal Amount of

the Senior Notes) which will be deposited in the Issuer Cash Reserve Account to fund the Initial Cash

Reserve Amount.

The sums standing to the credit of the Issuer Cash Reserve Account will form part of the Issuer

Available Funds, which the Issuer will use to make payments of interest and principal to theNoteholders and payments of other amounts in accordance with the applicable Order of Priority.

As consideration for granting the Subordinated Loan, the Issuer shall pay to the Subordinated

Loan Provider interest at a rate equal to the Six Month Euribor plus one per cent. (1%) per annum.

On 17 March 2004, BPV entered into a loan agreement with the Issuer (the ‘‘Securities

Subordinated Loan Agreement’’ and together with the Subordinated Loan Agreement referred to above,

the ‘‘Subordinated Loan Agreements’’) pursuant to which BPV (in its capacity as a ‘‘Securities

Subordinated Loan Provider’’) granted to the Issuer a subordinated loan to be advanced in the form of

debt securities constituted by French fixed rate treasury notes (Les bons du Tresor a taux fixe et a

interet annuel) (the ‘‘Debt Securities’’) with a current market value as of 17 March 2004 of Euro11,986,703.07 (the ‘‘Debt Securities Initial Market Value’’) and a principal amount upon maturity of

Euro 11,770,000 (the ‘‘Debt Securities Nominal Value’’, equivalent to approximately 2% of the Initial

Principal Amount of the Senior Notes). Such debt securities have a maturity not exceeding 12 January

2005 and will be deposited on the Issue Date in the Issuer Securities Loan Securities Account.

Under the terms of the Securities Subordinated Loan Agreement, the securities lent thereunder

shall be restituted by the Issuer if BPV duly supplies, pursuant to the provisions of the BPV Transfer

Agreement, data concerning the Mortgage Loans’ value, appraisal value of the Real Estate Assets and

the Mortgages’ ranking and if the independent accountant firm completes a satisfactory review on

such data before 30 September 2004 and if and to the extent that each Originator fulfils its obligationsto pay Limited Recourse Loans pursuant to Clause 5.1.2 and Clause 5.1.3 of the Warranty and

Indemnity Agreements provided that if the then market value of the Debt Securities is lower than the

Debt Securities Initial Market Value, the difference shall be repaid by the Issuer to the Securities

Subordinated Loan Provider out of the Issuer Available Funds and in accordance with the applicable

Order of Priority. See ‘‘Description of the Warranty and Indemnity Agreements’’.

If BPV fails to supply the aforementioned data or fails to procure the completion of a

satisfactory review of such data before 30 September 2004, or if the aggregate amount of all Limited

Recourse Loans due and payable pursuant to Clause 5.1.2 or Clause 5.1.3 of the Warranty and

Indemnity Agreements but unpaid by the Originators exceeds the Debt Securities Nominal Value, theIssuer shall repay to the Securities Subordinated Loan Provider the Debt Securities Initial Market

Value in cash out of the Issuer Available Funds in accordance with the applicable Order of Priority.

Proceeds deriving from the liquidation of all of the Debt Securities plus any interest generated thereby

(the ‘‘Securities Loan Full Liquidation Amount’’) shall be deposited in the Issuer Cash Reserve Account

and shall form part of the Issuer Available Funds on the First Payment Date.

If the aggregate amount of all Limited Recourse Loans due and payable pursuant to Clause

5.1.2 or Clause 5.1.3 of the Warranty and Indemnity Agreements but unpaid by the Originators is

lower than the Debt Securities Nominal Value, an amount corresponding to the aggregate amount of

all Limited Recourse Loans due and payable by the Originators pursuant to Clause 5.1.2 or Clause

99

5.1.3 of the Warranty and Indemnity Agreements but unpaid deriving from the liquidation of part of

the Debt Securities (the ‘‘Securities Loan Partial Liquidation Amount’’) shall be transferred to the

Issuer Distribution Account and shall form part of the Issuer Available Funds of the First Payment

Date. The Issuer shall repay to the Securities Subordinated Loan Provider the Debt Securities Initial

Market Value as follows: (a) out of the Excluded Collections in an amount corresponding to the

aggregate amount of all Limited Recourse Loans due and payable by the Originators pursuant to

Clause 5.1.2 or Clause 5.1.3 of the Warranty and Indemnity Agreements but unpaid; and (b) the

remainder will be repaid in the form of the residual Debt Securities, provided that if the then marketvalue of such residual Debt Securities is lower than their initial market value, the difference shall be

repaid by the Issuer to the Securities Subordinated Loan Provider out of the Issuer Available Funds

and in accordance with the applicable Order of Priority.

As consideration for granting the Securities Subordinated Loan, the Issuer shall pay to the

Securities Subordinated Loan Provider interest at the rate set forth in the Securities Subordinated

Loan Agreement.

The obligations of the Issuer under the Subordinated Loan Agreements are limited recourse

obligations, and any payment of interest and/or repayment of principal due under the Subordinated

Loan Agreement and any payment of interest and/or repayment of the Debt Securities Initial Market

Value or any other amounts due the Securities Subordinated Loan Agreement will be made by the

Issuer from the Issuer Available Funds in accordance with the applicable Order of Priority or, as the

case may be, the Excluded Collections (if any) in respect of those Mortgage Loans for which LimitedRecourse Loans were due and payable by the Originators pursuant to Clause 5.1.2 or Clause 5.1.3 of

the Warranty and Indemnity Agreements but unpaid.

The Subordinated Loan Agreement and the Securities Subordinated Loan Agreement will be

governed by, and construed in accordance with, Italian law.

100

ACCOUNTS

The Issuer has directed the Collection Account Bank to establish and maintain the following

cash accounts as separate accounts in the name of the Issuer and in the interests of the Representative

of the Noteholders:

(a) a Euro denominated account (the ‘‘BPV Collection Account’’) to which: (a) all BPV Collections,

including the Excluded Collections, will be credited; and out of which: (b) all sums standing to

the credit of such Account, other than the Excluded Collections and the net subscription price of

the Notes, will be transferred on each Monday, Wednesday and Friday of every week (or, duringthe first six months after the Issue Date, each Monday and Thursday of every week) (or, if such

day is not a Local Business Day, the immediately succeeding Local Business Day) to the Issuer

Investment Account; and (c) any Advance Indemnity or Limited Recourse Loan granted by BPV

under the BPV Warranty and Indemnity Agreement will be repaid to BPV;

(b) a Euro denominated account (the ‘‘CRP Collection Account’’) to which: (a) all CRP Collections,



the Notes, will be transferred on each Monday, Wednesday and Friday of every week (or, during

the first six months after the Issue Date, each Monday and Thursday of every week) (or, if suchday is not a Local Business Day, the immediately succeeding Local Business Day) to the Issuer

Investment Account; and (c) any Advance Indemnity or Limited Recourse Loan granted by CRP

under the CRP Warranty and Indemnity Agreement will be repaid to CRP;

(c) a Euro denominated account (the ‘‘BN Collection Account’’) to which: (a) all BN Collections,



the Notes, will be transferred on each Monday, Wednesday and Friday of every week (or, during

the first six months after the Issue Date, each Monday and Thursday of every week) (or, if suchday is not a Local Business Day, the immediately succeeding Local Business Day) to the Issuer

Investment Account; and (c) any Advance Indemnity or Limited Recourse Loan granted by BN

under the BN Warranty and Indemnity Agreement will be repaid to BN;

(d) a Euro denominated account (the ‘‘Issuer Expenses Account’’) to which: (a) all sums payable by

the Issuer on a Payment Date as Issuer Disbursement Amount in accordance with the applicable

Order of Priority will be paid; (b) on the Issue Date, the net subscription price of the Senior

Notes will be credited and a portion of the subscription price of the Class D Notes, will be

credited; and out of which (c) all corporate and out-of-pocket expenses of the Issuer payable out

of the Issuer Disbursement Amount will be paid; (d) on the Issue Date, the Purchase Price foreach relevant Portfolio will be paid to each Originator (to the extent not set off against the

subscription price of the Class D Notes subscribed by such Originator) and the up front costs

and expenses of the Securitisation will be paid out of the funds credited to such Account; and

(e) any profit generated by the Debt Securities advanced pursuant to the Securities Subordinated

Loan Agreement will be credited upon liquidation of such securities; and

(e) a Euro denominated account (‘‘Issuer Quota Capital Account’’) to which all sums contributed by

the Quotaholders as quota capital will be credited.

The Issuer has directed the Account Bank to establish and maintain the following accounts as

separate accounts in the name of the Issuer and in the interests of the Representative of the

Noteholders:

(a) a Euro denominated account (the ‘‘Issuer Investment Account’’) to which: (a) all sums (other thanCollections and the net subscription price of the Notes) collected or received by the Issuer under

the Transaction Documents, other than the Swap Agreement and the Liquidity Facility

Agreement, to which the Issuer is a party will be credited; (b) all sums standing from time to

time to the credit of the Issuer Collection Accounts, other than the Excluded Collections, will be

transferred on each Monday, Wednesday and Friday of every week (or, during the first six

months after the Issue Date, each Monday and Thursday of every week) (or, if such day is not

a Local Business Day, the immediately succeeding Local Business Day); (c) the Senior Notes

Available Funds for Amortisation set aside on each Payment Date prior to the Payment Date

101

falling in January 2006 and any amount to be set aside to such Account under item (xxii) of the

Pre-Enforcement Order of Priority will be credited; (d) interest accrued on the sums standing to

the credit of the Issuer Distribution Account will be transferred on each Payment Date; and out

of which: (e) on each Semi-annual Collection Date (or, if such day is not a Local Business Day,

the immediately succeeding Local Business Day), all sums standing to the credit of such Account

as of the last day of the Semi-annual Collection Period ending on (but excluding) such Semi-

annual Collection Date, including interest accrued on the Senior Notes Available Funds for

Amortisation and interest accrued on any amount set aside under item (xxii) of the Pre-Enforcement Order of Priority on the first two Payment Dates but excluding the Senior Notes

Available Funds for Amortisation and any amount set aside under item (xxii) of the Pre-

Enforcement Order of Priority on such dates, will be transferred to the Issuer Distribution

Account; (f) on the Semi-annual Collection Date immediately preceding the Payment Date falling

in January 2006 (or, if such day is not a Local Business Day, the immediately succeeding Local

Business Day), the Senior Notes Available Funds for Amortisation and any amount set aside

under item (xxii) of the Pre-Enforcement Order of Priority will be transferred to the Issuer

Distribution Account; and (g) any fees, costs, expenses and taxes due and payable by the Issuershall be paid, if and to the extent that the amounts then standing to the credit of the Issuer

Expenses Account are insufficient to satisfy such payment obligations of the Issuer;

(b) a securities account (the ‘‘Issuer Securities Account’’) to which: (a) the securities lent by theSecurities Subordinated Loan Provider pursuant to the Securities Subordinated Loan Agreement

will be deposited; and (b) all securities constituting Eligible Investments will be deposited from

time to time and pledged in accordance with the provisions of the Intercreditor Agreement and

the Italian Deed of Pledge;

(c) the Issuer Securities Loan Securities Account (and together with the Issue Securities Account, the

‘‘Issuer Securities Accounts’’) to which: (a) the Debt Securities advanced pursuant to the Securities

Subordinated Loan Agreement will be deposited; and out of which: (b) all or part of Debt

Securities will be restituted to the Securities Subordinated Loan Provider towards repayment of

the Debt Securities Initial Market Value pursuant to the Securities Subordinated Loan

Agreement.

(d) a Euro denominated account (the ‘‘Issuer Distribution Account’’) to which: (a) on each Semi-

annual Collection Date (or, if such day is not a Local Business Day, the immediately succeeding

Local Business Day), all sums standing to the credit of the Issuer Investment Account (except

for, in the case of the Semi-annual Collection Dates falling before the Payment Date falling in

January 2006, the Senior Notes Available Funds for Amortisation and any amount set asideunder item (xxii) of the Pre-Enforcement Order of Priority) and the Issuer Cash Reserve Account

as of the last day of the Semi-annual Collection Period ending on (but excluding) such Semi-

annual Collection Date will be transferred; (b) interest accrued on the Senior Notes Available

Funds for Amortisation and interest accrued on any amount set aside under item (xxii) of the

Pre-Enforcement Order of Priority on the first two Payment Dates will be transferred on each

Semi-annual Collection Date (or, if such day is not a Local Business Day, the immediately

succeeding Local Business Day); (c) the amounts to be drawn down under the Liquidity Facility

Agreement will be paid; (d) one Business Day before each Payment Date, the amount standingto the credit of the Issuer English Account will be transferred; (e) the Securities Loan Partial

Liquidation Amount or, as the case may be, the Securities Loan Full Liquidation Amount will

be transferred; and out of which: (f) payments will be made on each Payment Date in accordance

with the applicable Order of Priority and payments will be made to the Noteholders towards

mandatory pro rata redemption of the Notes in accordance with the Conditions; and (g) interest

accrued on the sums standing to the credit of such Account will be transferred on each Payment

Date to the Issuer Investment Account; and

(e) a Euro denominated account (the ‘‘Issuer Cash Reserve Account’’) to which: (a) the Initial Cash

Reserve Amount will be credited out of the Subordinated Loan on the Issue Date; (b) on each

Payment Date prior to the delivery of a Trigger Notice or the occurrence of an Insolvency

Event, provided that the Senior Notes have not been or will not be redeemed in full on such

Payment Date, the amount payable under item (xiii) of the Pre-Enforcement Order of Priority

102

will be credited; (c) the Securities Loan Full Liquidation Amount (if any) will be deposited; and

out of which (d) on each Semi-annual Collection Date (or, if such day is not a Local Business

Day, the immediately succeeding Local Business Day), any sums standing to the credit of such

Account as of the last day of the Semi-annual Collection Period ending on (but excluding) such

Semi-annual Collection Date will be transferred to the Issuer Distribution Account; and (e) the

Securities Loan Liquidation Full Amount will be transferred to the Issuer Distribution Account

one Business Day before the First Payment Date.

The Issuer has directed the English Account Bank to establish and maintain a Euro denominated

account (the ‘‘Issuer English Account’’) in the name of the Issuer and in the interests of the

Representative of the Noteholders. On each Swap Payment Date, the amounts payable by the SwapCounterparty under the Swap Agreement will be credited to the Issuer English Account. Out of such

Account, any sums standing to its credit will be transferred to the Issuer Distribution Account one

Business Day before each Payment Date.

All monies credited to the Accounts, other than the Issuer Expenses Account, the Issuer Quota

Capital Account and the Issuer English Account, will be deposited pursuant to the provisions of

Article 2803 of the Italian Civil Code and shall be pledged in favour of the Noteholders and the

Other Issuer Creditors pursuant to the Italian Deed of Pledge.

All monies deposited in the Issuer English Account shall be charged and assigned in favour of

the Noteholders and the Other Issuer Creditors pursuant to the English Deed of Charge.

Except for the aforementioned Accounts, the account to which the Senior Notes will be initially

credited on the Issue Date upon their issue and any other account contemplated in the Transaction

Documents (including the Liquidity Reserve Account), the Issuer will not open or maintain a bank

account with any Person in relation to monies deriving from the collection of the Claims or to monies

or securities in any way connected with the securitisation of the Portfolios, without the prior written

consent of the Representative of the Noteholders.

103

EXPECTED AVERAGE LIFE OF THE SENIOR NOTES AND ASSUMPTIONS

The average life of the Senior Notes cannot be predicted, as the actual rate at which the

Mortgage Loans will be repaid and a number of other relevant factors are unknown.

Calculations as to the expected average life of the Senior Notes can be made based on certain

assumptions.

These estimates have certain inherent limitations. No representations can be made that such

estimates are accurate, or that all assumptions relating to such estimates have been considered or

stated or that such estimates will be realised.

The table below shows the expected average life of the Senior Notes on the basis of various

assumptions of prepayment rates and assuming that the Issuer will exercise its option to redeem the

Senior Notes on the Call Date.

Expected Average Life

Constant Prepayment Rate

Class A

Notes

Class B

Notes

Class C

Notes

(% per annum) (Years)

0.00............................................................................................................. 7.55 11.86 11.86

2.00............................................................................................................. 6.83 11.86 11.863.50............................................................................................................. 6.35 11.86 11.86

5.00............................................................................................................. 5.92 11.86 11.86

6.50............................................................................................................. 5.52 11.86 11.86

8.00............................................................................................................. 5.15 11.86 11.86

10.00........................................................................................................... 4.72 11.86 11.86

The daycount fraction used for the above was ‘‘30/360’’, being the number of days in the

relevant period divided by 360 (the number of days being calculated on the basis of a year of 360

days with 12 30-days months).

The prepayment rate is stated as an average annualised prepayment rate but the prepayment rate

for one Semi-annual Collection Period may be substantially different from another Semi-annual

Collection Period. The constant prepayment rates shown above are purely illustrative and do not

represent the full range of possibilities for constant prepayment rates.

The other assumptions relate to circumstances which are not predictable.

The expected maturity and the average life of the Senior Notes are subject to factors largelyoutside the control of the Issuer and consequently no assurance can be given that the assumptions andestimates above will prove in any way to be realistic and they must therefore be viewed with considerablecaution.

104

TERMS AND CONDITIONS OF THE NOTES

The following is the entire text of the terms and conditions of the Senior Notes (the ‘‘Conditions’’).

In these Conditions, references to the ‘‘holder’’ of a Class A Note, Class B Note and Class C Note, or

to the Class A Noteholders, the Class B Noteholders and the Class C Noteholders, are to the ultimate

owners of Class A Notes, Class B Notes and Class C Notes, as the case may be, issued in bearer form

and dematerialised and evidenced as book entries with Monte Titoli S.p.A. (‘‘Monte Titoli’’) in

accordance with the provisions of: (i) Article 28 of Legislative Decree No. 213 of 24 June 1998; and

(ii) Resolution No. 11768 of 23 December 1998 of the Commissione Nazionale per le Societaı e la Borsa

(‘‘CONSOB’’), as amended by CONSOB Resolution No. 12497 of 20 April 2000, CONSOB Resolution

No. 13085 of 18 April 2001, CONSOB Resolution No. 13659 of 10 July 2002, CONSOB Resolution

14003 of 27 March 2003, CONSOB Resolution No. 14146 of 25 June 2003 and CONSOB Resolution

No. 14339 of 5 December 2003. Reference to the ‘‘holder’’ of the Class D Notes or the Class D

Noteholder means the holder of the Class D Notes pursuant to Article 2021 of the Italian Civil Code.

The Noteholders are deemed to have notice of and are bound by, and shall have the benefit of, inter alia,

the terms of the Rules of the Organisation of Noteholders (as defined below).

The Euro 553,175,000 Class A Mortgage Backed Floating Rate Notes due 2035 (the ‘‘Class ANotes’’), the Euro 23,539,000 Class B Mortgage Backed Floating Rate Notes due 2035 (the ‘‘Class B

Notes’’), the Euro 11,769,000 Class C Mortgage Backed Floating Rate Notes due 2035 (the ‘‘Class C

Notes’’ and, together with the Class A Notes and the Class B Notes the ‘‘Senior Notes’’) and the Euro

26,640,000 Class D Mortgage Backed Fixed Rate Notes due 2035 (the ‘‘Class D Notes’’ and, together

with Senior Notes, the ‘‘Notes’’) have been issued by Berica Residential MBS 1 S.r.l. (the ‘‘Issuer’’) on

18 March 2004 (the ‘‘Issue Date’’) to finance the purchase, pursuant to three transfer agreements

entered into on 28 November 2003 (the ‘‘BPV Transfer Agreement’’, the ‘‘CRP Transfer Agreement’’

and the ‘‘BN Transfer Agreement’’ and collectively the ‘‘Transfer Agreements’’), from Banca Popolaredi Vicenza S.c. per azioni a r.l. (‘‘BPV’’), Cassa di Risparmio di Prato - Cariprato S.p.A. (‘‘CRP’’)

and Banca Nuova S.p.A. (‘‘BN’’) (each, an ‘‘Originator’’ and collectively, the ‘‘Originators’’) of claims

and connected rights (the ‘‘Claims’’) due under performing residential mortgage loans (the ‘‘Mortgage

Loans’’) granted to borrowers thereunder (the ‘‘Borrowers’’) by BPV or by the Other Banks (in the

case of the Mortgage Loans comprised in the BPV Portfolio), CRP or Banca Steinhauslin (in the case

of the Mortgage Loans comprised in the CRP Portfolio) and Banca Nuova S.p.A., Banca del Popolo

di Trapani S.p.A. (each as existing prior to their merger) or BN (being the corporate entity upon

completion of the merger between Banca Nuova S.p.A. and Banca del Popolo di Trapani S.p.A.) (inthe case of the Mortgage Loans comprised in the BN Portfolio). On 17 March 2004, the Issuer

entered into an agreement with each Originator (the ‘‘Miscellaneous Loans Transfer Agreements’’)

pursuant to which the Issuer transferred, pursuant to Article 58 of the Consolidated Banking Act, to

the Originators claims and connected rights under 40 Mortgage Loans which satisfy the criteria set

out in the Miscellaneous Loans Transfer Agreements (together, the ‘‘Miscellaneous Mortgage Loans’’),

for a total consideration corresponding to the principal balance of such Miscellaneous Mortgage

Loans plus interest accrued thereon and the present value of interest margins on the Miscellaneous

Mortgage Loans. As used herein, the terms ‘‘BPV Portfolio’’, ‘‘CRP Portfolio’’ and ‘‘BN Portfolio’’(each of which is also referred to in these Conditions as a ‘‘relevant Portfolio’’) refer to the BPV

Mortgage Loans, the CRP Mortgage Loans or, as the case may be, the BN Mortgage Loans

transferred pursuant to the Transfer Agreements less, in each case, the relevant Miscellaneous

Mortgage Loans, and the term ‘‘Portfolios’’ shall be construed accordingly.

Any reference in these Conditions to: (i) a ‘‘Class’’ of Notes or a ‘‘Class’’ of holders of Notes

(‘‘Noteholders’’) shall be construed as a reference to the Class A Notes, Class B Notes, the Class C

Notes or the Class D Notes, as the case may be, or to the respective Noteholders thereof; and (ii) anyagreement or document shall be construed as a reference to such agreement or document as the same

may have been, or may from time to time be, amended, varied, novated or supplemented.

The principal source of payment of amounts due and payable in respect of the Notes will be

collections made in respect of the Portfolios. The Portfolios will be segregated from all other assets of

the Issuer by operation of Law No. 130 of 30 April 1999 (the ‘‘Securitisation Law’’) and amounts

deriving therefrom will, pursuant to the Intercreditor Agreement (as defined below), be available, both

before and after a winding up of the Issuer, to satisfy the obligations of the Issuer to the Noteholders,

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to pay costs, fees or expenses due to the Issuer’s creditors pursuant to the Transaction Documents (as

defined below) and to pay any other creditor of the Issuer in respect of costs, fees, expenses or other

amounts of the Issuer to such other creditor in relation to the securitisation of the Claims made by

the Issuer through the issuance of the Notes (the ‘‘Securitisation’’). Amounts deriving from the

Portfolios will not be available to any other creditor of the Issuer.

Pursuant to a subscription agreement entered into on 17 March 2004 (the ‘‘Senior Notes

Subscription Agreement’’) among the Issuer, the Originators, Deutsche Trustee Company Limited and

Morgan Stanley & Co. International Limited (the ‘‘Lead Manager’’), the Lead Manager has agreed to

subscribe for the Senior Notes and Deutsche Trustee Company Limited has been appointed as the

legal representative of the Senior Noteholders (together in its capacity as legal representative of the

Class D Noteholders, the ‘‘Representative of the Noteholders’’).

Pursuant to a subscription agreement entered into on 17 March 2004 (the ‘‘Class D Subscription

Agreement’’, and together with the Senior Notes Subscription Agreement, the ‘‘Subscription

Agreements’’) among the Issuer, the Representative of the Noteholders, BPV, CRP and BN, each of

BPV, CRP and CN (each in its capacity as a ‘‘Class D Notes Subscriber’’) has agreed to subscribe for

the Class D Notes in such principal amounts as set out in the Class D Subscription Agreement and

Deutsche Trustee Company Limited has been appointed as the legal representative of the Class DNoteholders.

Pursuant to three warranty and indemnity agreements entered into on 28 November 2003 (the

‘‘Warranty and Indemnity Agreements’’) between the Issuer on the one hand, and each Originator on

the other hand, each of BPV, CRP and BN has made certain representations and warranties in favour

of the Issuer in relation, respectively, to the BPV Portfolio, the CRP Portfolio and the BN Portfolioand certain other matters and each Originator has agreed to indemnify the Issuer in respect of certain

liabilities incurred by the Issuer in connection with the purchase and ownership of the relevant

Portfolio.

Pursuant to a master servicing agreement entered into on 28 November 2003 (the ‘‘MasterServicing Agreement’’) between BPV, CRP and BN (each in its capacity as ‘‘Servicer’’ in respect of the

BPV Portfolio, the CRP Portfolio and the BN Portfolio, respectively, and collectively the ‘‘Servicers’’

and BPV also as ‘‘Master Servicer’’) and the Issuer, each Servicer, as a soggetto incaricato della

riscossione dei crediti ceduti e dei servizi di cassa e di pagamento, has agreed to administer and service

the relevant Portfolio and to collect any amounts in respect of the relevant Portfolio on behalf of the

Issuer.

Pursuant to an administrative services agreement entered into on 28 November 2003 (the

‘‘Administrative Services Agreement’’) between BPV (in its capacity as the ‘‘Administrative Services

Provider’’) and the Issuer, BPV has agreed to provide certain administrative services to the Issuer for

so long as any Note is outstanding.

Pursuant to a cash allocation, management and payments agreement entered into on 17 March

2004 (the ‘‘Cash Allocation, Management and Payments Agreement’’) among the Issuer, B.P.Vi Fondi

SGR S.p.A. in its capacity as the cash manager (the ‘‘Cash Manager’’), BPV in its capacity as the

collection account bank (the ‘‘Collection Account Bank’’), Deutsche Bank AG London as English

account bank, the calculation agent and as the principal paying agent (the ‘‘English Account Bank’’,

the ‘‘Calculation Agent’’ and the ‘‘Principal Paying Agent’’, respectively), Deutsche Bank Luxembourg

S.A. as the Luxembourg paying agent (the ‘‘Luxembourg Paying Agent’’), Deutsche Bank S.p.A. as the

account bank (in its capacity as the ‘‘Account Bank’’) and as the Italian paying agent (the ‘‘ItalianPaying Agent’’ and together with the Principal Paying Agent and the Luxembourg Paying Agent, the

‘‘Paying Agents’’) and the Representative of the Noteholders, the Cash Manager, the Account Bank,

the English Account Bank, the Collection Account Bank and the Calculation Agent have agreed to

provide the Issuer with certain calculation, notification and reporting services together with account

handling and cash management services in relation to monies or securities from time to time standing

to the credit of the Issuer Collection Accounts, the Issuer Investment Account, the Issuer Securities

Account, the Issuer Securities Loan Securities Account, the Issuer Distribution Account, the Issuer

Cash Reserve Account, the Issuer English Account, the Issuer Expenses Account and the Issuer Quota

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Capital Account (all as defined below) and the Principal Paying Agent shall direct the Account Bank

to apply amounts credited to the Issuer Distribution Account in order to make payments in

accordance with the applicable Order of Priority as set forth in the Payments Report.

Pursuant to a Luxembourg agency agreement (the ‘‘Luxembourg Agency Agreement’’) entered

into on 17 March 2004 between the Issuer, the Representative of the Noteholders and Deutsche Bank

Luxembourg S.A. as the Luxembourg listing agent (the ‘‘Luxembourg Listing Agent’’), the

Luxembourg Listing Agent has agreed, so long as any Senior Note remains listed on the LuxembourgStock Exchange, inter alia, to make available for inspection such documents as may from time to time

be required by the Luxembourg Stock Exchange and to arrange for the publication of any notice to

be given to the Senior Noteholders.

Pursuant to a mandate agreement entered into on 17 March 2004 (the ‘‘Monte Titoli Mandate

Agreement’’) between the Issuer and Monte Titoli S.p.A. (‘‘Monte Titoli’’), Monte Titoli has agreed to

provide the Issuer with certain depository and administration services in relation to the Senior Notes.

Pursuant to a limited recourse subordinated loan agreement entered into on 17 March 2004 (the

‘‘Subordinated Loan Agreement’’) between the Issuer and BPV (in its capacity as the ‘‘Subordinated

Loan Provider’’), the Subordinated Loan Provider shall grant the Issuer on the Issue Date with a

limited recourse subordinated loan (the ‘‘Subordinated Loan’’) in an amount equal to Euro 8,827,245

(equivalent to 1.5% of the Initial Principal Amount of the Senior Notes) which will be deposited in

the Issuer Cash Reserve Account (the ‘‘Initial Cash Reserve Amount’’). The Initial Cash Reserve

Amount and thereafter the sums from time to time standing to the credit of the Issuer Cash Reserve

Account will provide liquidity support for the Notes.

Pursuant to a loan agreement entered into on 17 March 2004 (the ‘‘Securities Subordinated Loan

Agreement’’ and together with the Subordinated Loan Agreement referred to above, the ‘‘Subordinated

Loan Agreements’’) between the Issuer and BPV (in its capacity as a ‘‘Securities Subordinated Loan

Provider’’), the Securities Subordinated Loan Provider granted to the Issuer a subordinated loan to be

advanced in the form of debt securities constituted by French fixed rate treasury notes (Les bons du

Tresor a taux fixe et a interet annuel) (the ‘‘Debt Securities’’) with a current market value as of 17

March 2004 of Euro 11,986,703.07 (the ‘‘Debt Securities Initial Market Value’’) and a principalamount upon maturity of Euro 11,770,000 (the ‘‘Debt Securities Nominal Value’’, equivalent to

approximately 2% of the Initial Principal Amount of the Senior Notes). Such debt securities have a

maturity not exceeding 12 January 2005 and will be deposited on the Issue Date in the Issuer

Securities Loan Securities Account. If BPV fails to supply certain data on the Portfolios or fails to

procure the completion of a satisfactory review of such data before 30 September 2004, or if the

aggregate amount of Limited Recourse Loans due and payable pursuant to Clause 5.1.2 or Clause

5.1.3 of the Warranty and Indemnity Agreements but unpaid by the Originators exceeds the Debt

Securities Nominal Value, the Issuer shall repay to the Securities Subordinated Loan Provider theDebt Securities Initial Market Value in cash out of the Issuer Available Funds in accordance with the

applicable Order of Priority. Proceeds deriving from the liquidation of all of the Debt Securities plus

any interest generated thereby (the ‘‘Securities Loan Full Liquidation Amount’’) shall be deposited in

the Issuer Cash Reserve Account and shall form part of the Issuer Available Funds on the First

Payment Date. If the aggregate amount of Limited Recourse Loans due and payable pursuant to

Clause 5.1.2 or Clause 5.1.3 of the Warranty and Indemnity Agreements but unpaid by the

Originators is lower than the Debt Securities Nominal Value, an amount corresponding to the

aggregate amount of all Limited Recourse Loans due and payable by the Originators pursuant toClause 5.1.2 or Clause 5.1.3 of the Warranty and Indemnity Agreements but unpaid deriving from the

liquidation of part of the Debt Securities (the ‘‘Securities Loan Partial Liquidation Amount’’) shall be

transferred to the Issuer Distribution Account and shall form part of the Issuer Available Funds of

the First Payment Date. The Issuer shall repay to the Securities Subordinated Loan Provider the Debt

Securities Initial Market Value as follows: (a) out of the Excluded Collections in an amount

corresponding to the aggregate amount of all Limited Recourse Loans due and payable by the

Originators pursuant to Clause 5.1.2 or Clause 5.1.3 of the Warranty and Indemnity Agreements but

unpaid; and (b) the remainder will be repaid in the form of the residual Debt Securities, provided that

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if the then market value of such residual Debt Securities is lower than their initial market value, the

difference shall be repaid by the Issuer to the Securities Subordinated Loan Provider out of the Issuer

Available Funds and in accordance with the applicable Order of Priority.

Pursuant to a depository agreement entered into on 17 March 2004 (the ‘‘Depository

Agreement’’) among the Issuer, the Representative of the Noteholders and BPV (in its capacity as the

‘‘Class D Notes Depository’’), the Class D Notes Depository has agreed to provide the Issuer with

certain depository and administration services in relation to the Class D Notes.

Pursuant to an intercreditor agreement entered into on 17 March 2004 (the ‘‘Intercreditor

Agreement’’) among the Issuer, the Originators, the Representative of the Noteholders acting on behalf

of the Noteholders and for itself, the Servicers, the Master Servicer, the Administrative Services

Provider, the Account Bank, the English Account Bank, the Collection Account Bank, the Cash

Manager, the Calculation Agent, the Paying Agents, the Luxembourg Listing Agent, the Class D

Notes Depository, the Class D Notes Subscribers, the Swap Counterparty, the Liquidity FacilityProvider, the Funding Provider, the Subordinated Loan Provider and the Securities Subordinated

Loan Provider, terms and conditions are provided with respect to the application of the Issuer

Available Funds (as defined below) and as to the circumstances in which the Representative of the

Noteholders will be entitled to exercise certain rights in relation to the Portfolios. (The Originators,

the Representative of the Noteholders, the Servicers, the Master Servicer, the Administrative Services

Provider, the Calculation Agent, the Cash Manager, the Account Bank, the English Account Bank,

the Collection Account Bank, the Paying Agents, the Luxembourg Listing Agent, the Class D Notes

Depository, the Class D Notes Subscribers, the Swap Counterparty, the Funding Provider, theSubordinated Loan Provider, the Securities Subordinated Loan Provider and the Liquidity Facility

Provider are hereinafter collectively referred to as the ‘‘Other Issuer Creditors’’.)

Pursuant to a swap agreement in the form of an International Swaps and DerivativesAssociation, Inc. (‘‘ISDA’’) 1992 Master Agreement (Multicurrency-Cross Border) together with a

Schedule thereto (the ‘‘Master Agreement’’) and supplemented by three confirmations (the ‘‘Swap

Confirmations’’ and together with the Master Agreement, the ‘‘Swap Agreement’’) entered into on

17 March 2004 between the Issuer and CDC IXIS Capital Markets, London Branch (the ‘‘Swap

Counterparty’’), the Issuer entered into an interest rate swap with the Swap Counterparty in order to

hedge its floating interest rate exposure in relation to the Senior Notes. The Issuer will have the

benefit of a guarantee in the form of a joint and several obligation (cautionnement solidaire) granted

by CDC IXIS (the ‘‘Additional CDC IXIS Guarantee’’) with respect to the Swap Counterparty’sobligations under, inter alios, the Swap Agreement.

Pursuant to a liquidity facility agreement entered into on 17 March 2004 (the ‘‘Liquidity Facility

Agreement’’) between the Issuer and BPV (in its capacity as the ‘‘Liquidity Facility Provider’’), theLiquidity Facility Provider shall provide liquidity support in the event that the Issuer Available Funds

on any Payment Date are insufficient to meet the Issuer’s payment obligations under items (i) to (vi)

(inclusive) of the Pre-Enforcement Order of Priority plus, for so long as the Liquidity Facility Loss

Ratio does not exceed 9.9%, the Interest Payment Amount due on the Class B Notes and, for so long

as the Liquidity Facility Loss Ratio does not exceed 7.7%, the Interest Payment Amount on the Class

C Notes on such Payment Date or, as the case may be, the Issuer’s payment obligations under items

(i) to (x) (inclusive) of the Post-Enforcement Order of Priority. ‘‘Liquidity Facility Loss Ratio’’ means

the ratio between: (A) the sum of the outstanding principal amount, as of the last day of theimmediately preceding Semi-annual Collection Period, of all Mortgage Loans with an Arrears Level

(as defined in Condition 4.3 below) equal to or greater than, in the case of Mortgage Loans which

provides for monthly instalments, 9, in the case of Mortgage Loans which provides for quarterly

instalments, 4 and in the case of Mortgage Loans which provides for semi-annual instalments, 3; and

(B) the outstanding principal amount of all Mortgage Loans comprised in the Portfolios as of the

Issue Date.

Pursuant to a deed of pledge governed by Italian law executed by the Issuer on 17 March 2004

(the ‘‘Italian Deed of Pledge’’), the Issuer has (A) pledged in favour of the Noteholders and the Other

Issuer Creditors: (i) all monetary claims and rights and all the amounts (including payment for claims,

indemnities, damages, penalties, credits and guarantees) to which the Issuer is entitled pursuant to the

Transaction Documents, other than the Swap Agreement, the Senior Notes Subscription Agreement

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and the Security Documents, entered into in relation to the Securitisation to which the Issuer is a

party; (ii) any existing or future monetary claims and rights of any sum credited from time to time to

the Accounts (other than the Issuer Expenses Account, the Issuer English Account and the Issuer

Quota Capital Account), other than the subscription price for the Notes and except for sums collected

in connection with the Claims in respect of which BPV, CRP or BN has (a) paid an advance

indemnity pursuant to Clause 4.5(c) of the Warranty and Indemnity Agreements (an ‘‘Advance

Indemnity’’) or (b) granted a limited recourse loan pursuant to Clause 5 of the Warranty and

Indemnity Agreements (a ‘‘Limited Recourse Loan’’) or (c) failed to grant a Limited Recourse Loanpursuant to clause 5.1.2 or Clause 5.1.3 of the Warranty and Indemnity Agreement where as a

consequence of such failure the Debt Securities Initial Market Value will be repaid in part out of the

amounts collected in respect of the Mortgage Loan(s) for which such Limited Recourse Loan(s)

should have been granted, (provided that (a), (b) and (c) are excluded only, up to an amount

equivalent to the corresponding Advance Indemnity plus interest thereon or, as the case may be,

Limited Recourse Loan; such amounts are herein after referred to as the ‘‘Excluded Collections’’) and

(B) undertaken to pledge in favour of the Noteholders and the Other Issuer Creditors the securities

deposited in the Issuer Securities Loan Securities Account and the monetary claims deriving from theEligible Investments that will be made by the Cash Manager on behalf of the Issuer pursuant to the

Cash Allocation, Management and Payments Agreement including any interest, dividend, monetary

premia and any other amounts arising from the Eligible Investments. The Issuer has also undertaken

that should the Liquidity Reserve Account be opened, it shall forthwith pledge in favour of the

Noteholders and the Other Issuer Creditors any existing or future monetary claims and rights of any

sums credited from time to time to such Liquidity Reserve Account.

Pursuant to a deed of charge governed by English law executed by the Issuer on 17 March 2004(the ‘‘English Deed of Charge’’ and together with the Italian Deed of Pledge, the ‘‘Security

Documents’’), the Issuer has charged and assigned in favour of the Noteholders and the Other Issuer

Creditors, by way of first fixed security, all the Issuer’s rights, title, interest and benefit (present and

future) in, to and under the Swap Agreement and the Senior Notes Subscription Agreement and in

and to all sums of money which may be, at the time the English Deed of Charge is entered into or

thereafter are from time to time, standing to the credit of the Issuer English Account and has charged

by way of first floating security the whole of the Issuer’s undertaking, property and assets, present and

future, relating to the Securitisation, with the exception only of: (a) any part of its undertaking or anyproperty or asset for the time being validly and effectively charged or assigned by way of fixed

security pursuant to the English Deed of Charge; and (b) any part of its undertaking or any property

or asset situated outside England and Wales to the extent that any such security would be unlawful

under the laws of the jurisdiction in which such property, undertaking or asset is situated or such

security is enforced.

Pursuant to a mandate agreement entered into on 17 March 2004 (the ‘‘Mandate Agreement’’)

between the Issuer and the Representative of the Noteholders, the Representative of the Noteholdersis authorised to exercise, in the name and on behalf of the Issuer: (i) subject to a Trigger Notice being

delivered to the Issuer following the occurrence of a Trigger Event or upon the occurrence of an

Insolvency Event, all the Issuer’s Rights (other than the right to collect and recover Collections under

the Master Servicing Agreement) and the Issuer’s rights in respect of the Claims, including the right to

direct the sale (in whole or in part) of the Portfolios, provided, however, that a sufficient amount shall

be realised to allow discharge in full of all amounts due and payable to the Senior Noteholders and

amounts ranking in priority thereto or pari passu therewith in accordance with Condition 4 (Order of

Priority); and (ii) upon any failure by the Issuer to exercise the Issuer’s Rights against any defaultingparty to procure the remedy for such default, all the Issuer’s Rights against the defaulting

counterparty.

Pursuant to a quotaholders’ agreement entered into on 17 March 2004 (the ‘‘Quotaholders’

Agreement’’) among BPV, BPV Finance (International) PLC, a subsidiary of BPV, and Stichting

Vicenza, certain rules have been set forth, inter alia, in relation to the corporate management of the

Issuer and certain indemnification obligations have been undertaken by BPV (in its capacity as the

‘‘Funding Provider’’) in favour of the Issuer.

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Pursuant to a master definition agreement entered into on 17 March 2004 (the ‘‘Master

Definition Agreement’’) among all the parties to each of the Transaction Documents, the definitions of

the certain terms used in the Transaction Documents have been set forth.

A Euro denominated account has been established by BPV in the name of the Issuer which will

be held with the Collection Account Bank (the ‘‘BPV Collection Account’’) and to which: (a) all

amounts collected in respect of the BPV Claims, including the Excluded Collections, will be credited;

and out of which: (b) all sums standing to the credit of such Account, other than the Excluded

Collections and the net subscription price of the Notes, will be transferred on each Monday,

Wednesday and Friday of every week (or, during the first six months after the Issue Date, each

Monday and Thursday of every week) (or, if such day is not a Local Business Day (as defined in

Condition 2.9), the immediately succeeding Local Business Day) to the Issuer Investment Account;and (c) any Advance Indemnity or Limited Recourse Loan granted by BPV pursuant to the BPV

Warranty and Indemnity Agreement will be repaid to BPV.

A Euro denominated account has been established by CRP in the name of the Issuer which will

be held with the Collection Account Bank (the ‘‘CRP Collection Account’’) and to which: (a) allamounts collected in respect of the CRP Claims, including the Excluded Collections, will be credited;




Monday and Thursday of every week) (or, if such day is not a Local Business Day, the immediately

succeeding Local Business Day) to the Issuer Investment Account; and (c) any Advance Indemnity or

Limited Recourse Loan granted by CRP pursuant to the CRP Warranty and Indemnity Agreement

will be repaid to CRP.

A Euro denominated account has been established by BN in the name of the Issuer which will

be held with the Collection Account Bank (the ‘‘BN Collection Account’’ and together with the BPV

Collection Account and the CRP Collection Account, the ‘‘Collection Accounts’’) and to which: (a) allamounts collected in respect of the BN Claims, including the Excluded Collections, will be credited;




Monday and Thursday of every week) (or, if such day is not a Local Business Day, the immediately

succeeding Local Business Day) to the Issuer Investment Account; and (c) any Advance Indemnity or

Limited Recourse Loan granted by BN pursuant to the BN Warranty and Indemnity Agreement will

be repaid to BN.

A Euro denominated account has been established in the name of the Issuer which will be held

with the Account Bank (the ‘‘Issuer Investment Account’’) and to which: (a) all sums (other than

Collections and the net subscription price of the Notes) collected or received by the Issuer under the

Transaction Documents, other than the Swap Agreement and the Liquidity Facility Agreement, towhich the Issuer is a party will be credited; (b) all sums standing from time to time to the credit of

the Issuer Collection Accounts, other than the Excluded Collections, will be transferred on each

Monday, Wednesday and Friday of every week (or, during the first six months after the Issue Date,

each Monday and Thursday of every week) (or, if such day is not a Local Business Day, the

immediately succeeding Local Business Day); (c) the Senior Notes Available Funds for Amortisation

set aside on each Payment Date prior to the Payment Date falling in January 2006 and any amount

to be set aside to such Account under item (xxii) of the Pre-Enforcement Order of Priority will be

credited; (d) interest accrued on the sums standing to the credit of the Issuer Distribution Accountwill be transferred on each Payment Date; and out of which: (e) on each Semi-annual Collection Date

(or, if such day is not a Local Business Day, the immediately succeeding Local Business Day), all

sums standing to the credit of such Account as of the last day of the Semi-annual Collection Period

ending on (but excluding) such Semi-annual Collection Date, including interest accrued on the Senior

Notes Available Funds for Amortisation and interest accrued on any amount set aside under item

(xxii) of the Pre-Enforcement Order of Priority on the first two Payment Dates but excluding the

Senior Notes Available Funds for Amortisation and any amount set aside under item (xxii) of the

Pre-Enforcement Order of Priority on such dates, will be transferred to the Issuer Distribution

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Account; (f) on the Semi-annual Collection Date immediately preceding the Payment Date falling in

January 2006 (or, if such day is not a Local Business Day, the immediately succeeding Local Business

Day), the Senior Notes Available Funds for Amortisation and any amount set aside under item (xxii)

of the Pre-Enforcement Order of Priority will be transferred to the Issuer Distribution Account; and

(g) any fees, costs, expenses and taxes due and payable by the Issuer shall be paid, if and to the

extent that the amounts then standing to the credit of the Issuer Expenses Account are insufficient to

satisfy such payment obligations of the Issuer.

A securities account has been established in the name of the Issuer which will be held with the

Account Bank (the ‘‘Issuer Securities Account’’) and to which the securities lent by the Securities

Subordinated Loan Provider pursuant to the Securities Subordinated Loan Agreement will be

deposited and all securities constituting Eligible Investments will be deposited from time to time and

pledged in accordance with the provisions of the Intercreditor Agreement and the Italian Deed of

Pledge.

A securities account has been established in the name of the Issuer which will be held with the

Account Bank (the ‘‘Issuer Securities Loan Securities Account’’ and together with the Issue Securities

Account, the ‘‘Issuer Securities Accounts’’) to which (a) the Debt Securities advanced pursuant to the

Securities Subordinated Loan Agreement will be deposited; and out of which: (b) all or part of the

Debt Securities will be restituted to the Securities Subordinated Loan Provider towards repayment of

the Debt Securities Initial Market Value pursuant to the Securities Subordinated Loan Agreement.


with the Collection Account Bank (the ‘‘Issuer Quota Capital Account’’) and to which all sums

contributed by the Quotaholders as quota capital will be credited.


with the Account Bank (the ‘‘Issuer Distribution Account’’) and to which: (a) on each Semi-annual

Collection Date (or, if such day is not a Local Business Day, the immediately succeeding Local

Business Day), all sums standing to the credit of the Issuer Investment Account (except for, in the

case of the Semi-annual Collection Dates falling before the Payment Date falling in January 2006, the

Senior Notes Available Funds for Amortisation and any amount set aside under item (xxii) of the

Pre-Enforcement Order of Priority) and the Issuer Cash Reserve Account as of the last day of the

Semi-annual Collection Period ending on (but excluding) such Semi-annual Collection Date will betransferred; (b) interest accrued on the Senior Notes Available Funds for Amortisation and interest

accrued on any amount set aside under item (xxii) of the Pre-Enforcement Order of Priority on the

first two Payment Dates will be transferred on each Semi-annual Collection Date (or, if such day is

not a Local Business Day, the immediately succeeding Local Business Day); (c) the amounts to be

drawn down under the Liquidity Facility Agreement will be paid; (d) one Business Day before each

Payment Date, the amount standing to the credit of the Issuer English Account will be transferred; (e)

the Securities Loan Partial Liquidation Amount or, as the case may be, the Securities Loan Full

Liquidation Amount, will be transferred and out of which: (f) payments will be made on eachPayment Date in accordance with the applicable Order of Priority and payments will be made to the

Noteholders towards mandatory pro rata redemption of the Notes in accordance with the Conditions;

and (g) interest accrued on the sums standing to the credit of such Account will be transferred on

each Payment Date to the Issuer Investment Account.


with the Account Bank (the ‘‘Issuer Cash Reserve Account’’) and to which: (a) an amount of Euro8,827,245 (the ‘‘Initial Cash Reserve Amount’’) will be credited out of the Subordinated Loan on the

Issue Date; (b) on each Payment Date prior to the delivery of a Trigger Notice or the occurrence of

an Insolvency Event, provided that the Senior Notes have not been or will not be redeemed in full on

such Payment Date, the amount payable under item (xiii) of the Pre-Enforcement Order of Priority

will be credited; (c) the Securities Loan Full Liquidation Amount (if any) will be deposited; and out

of which (d) on each Semi-annual Collection Date (or, if such day is not a Local Business Day, the

immediately succeeding Local Business Day), any sums standing to the credit of such Account as of

the last day of the Semi-annual Collection Period ending on (but excluding) such Semi-annual

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Collection Date will be transferred to the Issuer Distribution Account; and (e) the Securities Loan

Full Liquidation Amount will be transferred to the Issuer Distribution Account one Business Day

before the First Payment Date.

A Euro denominated account has been established in the name of the Issuer which will be heldwith the English Account Bank (the ‘‘Issuer English Account’’) to which: (a) on each Swap Payment

Date, the amounts payable by the Swap Counterparty under the Swap Agreement will be credited;

and out of which (b) any sums standing to the credit of such Account will be transferred to the Issuer

Distribution Account one Business Day before each Payment Date.

A Euro denominated account has been established in the name of the Issuer (the ‘‘IssuerExpenses Account’’ and, together with the Issuer Collection Accounts, the Issuer Investment Account,

the Issuer Distribution Account, the Issuer Securities Accounts, the Issuer Quota Capital Account, the

Issuer Cash Reserve Account and the Issuer English Account, the ‘‘Accounts’’ and each an ‘‘Account’’)

which will be held with the Collection Account Bank and to which (a) all sums payable by the Issuer

on a Payment Date as Issuer Disbursement Amount in accordance with the applicable Order of

Priority will be paid; (b) on the Issue Date, the net subscription price of the Senior Notes will be

credited and a portion of the subscription price of the Class D Notes will be credited; and out of

which all corporate and out-of-pocket expenses of the Issuer payable out of the Issuer DisbursementAmount will be paid; (d) on the Issue Date, the Purchase Price for each relevant Portfolio will be

paid to each Originator (to the extent not set off against the subscription price of the Class D Notes

subscribed by such Originator) and the up front costs and expenses of the Securitisation will be paid

out of the funds credited to such Account; and (e) any profit generated by the Debt Securities

advanced pursuant to the Securities Subordinated Loan Agreement will be credited upon liquidation

of such securities; and

These Conditions include summaries of, and are subject to, the detailed provisions of the

Intercreditor Agreement, the Transfer Agreements, the Miscellaneous Loans Transfer Agreements, the

Warranty and Indemnity Agreements, the Administrative Services Agreement, the Master Servicing

Agreement, the Swap Agreement, the Liquidity Facility Agreement, the Subordinated Loan

Agreement, the Securities Subordinated Loan Agreement, the Subscription Agreements, the Cash

Allocation, Management and Payments Agreement, the Luxembourg Agency Agreement, the Mandate

Agreement, the Depository Agreement, the Italian Deed of Pledge, the English Deed of Charge, theMonte Titoli Mandate Agreement, the Master Definition Agreement and the Quotaholders’ Agreement

(together with these Conditions and the Rules of the Organisation of the Noteholders, the

‘‘Transaction Documents’’). Copies of the Transaction Documents are available for inspection by

Noteholders during normal business hours at the specified office of the Representative of the

Noteholders, being as of the Issue Date, Winchester House, 1 Great Winchester Street, London EC2N

2DB, England and, in the case of the Senior Noteholders only, at the registered office of the

Luxembourg Listing Agent, being as of the Issue Date, 2 Boulevard Konrad Adenauer, L-115

Luxembourg.

The Noteholders are entitled to the benefit of, are bound by, and are deemed to have notice of,

all the provisions of the Transaction Documents which are applicable to them.

The rights and powers of the Class A Noteholders, the Class B Noteholders, the Class C

Noteholders (the ‘‘Senior Noteholders’’) and the Class D Noteholders may only be exercised in

accordance with the rules of the organisation of the Noteholders (the association of the Noteholders

created on the Issue Date is hereinafter referred to as the ‘‘Organisation of the Noteholders’’ and the

rules governing such organisation are hereinafter referred to as the ‘‘Rules of the Organisation of the

Noteholders’’) which are deemed to form an integral and substantive part of these Conditions. A copy

of the Rules of the Organisation of the Noteholders may be inspected by the Noteholders uponrequest at the specified office of the Issuer and at the registered office of the Representative of the

Noteholders and, in the case of the Senior Noteholders only, the Luxembourg Listing Agent as

indicated above.

The Recitals hereof and the Exhibits hereto constitute an integral and essential part of these

Conditions and shall have the force of and shall take effect as covenants by the Issuer.

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All capitalised words or expressions used below and not otherwise defined herein shall have the

meaning ascribed to such words or expressions in the Master Definition Agreement.

1. FORM, DENOMINATION AND TITLE

1.1 The Senior Notes are in bearer form and dematerialised and will be wholly and exclusivelydeposited with Monte Titoli in accordance with Article 28 of Italian Legislative Decree No. 213

of 24 June 1998, through the authorised institutions listed in Article 30 of such Legislative

Decree.

1.2 The Senior Notes will be held by Monte Titoli on behalf of the Senior Noteholders untilredemption for the account of the relevant Monte Titoli Account Holder. The expression ‘‘Monte

Titoli Account Holder’’ means any authorised financial intermediary institution entitled to hold

accounts on behalf of its customers with Monte Titoli. Title to the Senior Notes will be

evidenced by one or more book entries in accordance with the provisions of: (i) Article 28 of

Italian Legislative Decree No. 213 of 24 June 1998; and (ii) CONSOB Resolution No. 11768 of

23 December 1998, as amended by CONSOB Resolution No. 12497 of 20 April 2000, CONSOB

Resolution No. 13085 of 18 April 2001, CONSOB Resolution No. 13659 of 10 July 2002,

CONSOB Resolution 14003 of 27 March 2003, CONSOB Resolution No. 14146 of 25 June 2003and CONSOB Resolution No. 14339 of 5 December 2003. No physical document of title will be

issued in respect of the Senior Notes.

1.3 The Class D Notes are issued in registered form and are represented by one or more registered

note certificate (titolo nominativo) without interest coupons attached at the time of issue. TheClass D Notes Depository will maintain a register (registro dell’emittente) (the ‘‘Register’’) in

respect of the Class D Notes. A certificate (a ‘‘Note Certificate’’) will be issued to the holder of

each Class D Note and shall be deposited with the Class D Notes Depository.

1.4 The Class D Notes may be transferred by the Class D Noteholders by submitting a dulycompleted form of transfer to the specified office of the Class D Notes Depository, together with

such evidence as the Class D Notes Depository may reasonably require to prove the title of the

transferor and the authority of the individual who has executed the form of the transfer,

provided that any transfer of the Class D Note will be valid only upon registration of such

transfer in the Register and on the Note Certificate. Within five Business Days of any request

made under this Condition, the Class D Notes Depository will endorse the transfer in question

on the Note Certificate and in the Register.

1.5 The Senior Notes shall be issued in denominations of Euro 50,000 and additional increments of

Euro 1,000 thereafter. The Class D Notes shall be issued in denominations of Euro 50,000 and

additional increments of Euro 1,000 thereafter.

Each Note is issued subject to and with the benefit of the Italian Deed of Pledge and the

English Deed of Charge.

2. STATUS, PRIORITY AND SEGREGATION

2.1 The Notes constitute secured limited recourse obligations of the Issuer and, accordingly, the

extent of the Issuer’s obligation to make payments on the Notes is conditioned upon the receipt

and recovery by the Issuer of amounts due, and is limited to the extent of any amounts received

or recovered by the Issuer, in each case, in respect of the Portfolios and the other Issuer’s Rights

(as defined below). The Noteholders acknowledge that the limited recourse nature of the Notes

produces the effects of a ‘‘contratto aleatorio’’ under Italian law and are deemed to accept the

consequences thereof, including but not limited to the provisions under Article 1469 of the

Italian Civil Code.

2.2 The Notes are secured by certain assets of the Issuer pursuant to the Italian Deed of Pledge and

the English Deed of Charge and in addition, by operation of Italian law, the Issuer’s right, title

and interest in and to the Portfolios is segregated from all other assets of the Issuer. Amounts

deriving from the Portfolios will only be available, both prior to and following the winding up

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of the Issuer, to satisfy the Issuer’s obligations to the Noteholders and the Other Issuer Creditors

in the order of priority set forth in Condition 4 (Order of Priority) and to any third party

creditors in respect of costs, fees and expenses incurred by the Issuer to such third party

creditors in relation to the Securitisation.

2.3 The Notes of each Class will rank pari passu and without any preference or priority among

themselves.

2.4 In respect of the Issuer’s obligation to pay interest on the Notes before the delivery of a TriggerNotice or the occurrence of an Insolvency Event (each such term as defined in Condition 10

(Trigger Events)), the Class A Notes will rank pari passu without preference or priority amongst

themselves and in priority to the Class B Notes, the Class C Notes and the Class D Notes; the

Class B Notes will rank pari passu without preference or priority amongst themselves and in

priority to the Class C Notes and the Class D Notes but subordinated to the Class A Notes; the

Class C Notes will rank pari passu without preference or priority amongst themselves and in

priority to the Class D Notes but subordinated to the Class A Notes and the Class B Notes;

and the Class D Notes will rank pari passu without preference or priority amongst themselvesbut subordinated to the Issuer’s obligation to pay interest and repay principal on the Class A

Notes, the Class B Notes and the Class C Notes.

2.5 In respect of the Issuer’s obligation to repay, following the expiry of a period of eighteenmonths after the Issue Date, principal on the Notes before the delivery of a Trigger Notice or

the occurrence of an Insolvency Event, the Class A Notes will rank pari passu without preference

or priority amongst themselves and in priority to the Class B Notes and the Class C Notes; the

Class B Notes will rank pari passu without preference or priority amongst themselves and in

priority to the Class C Notes but subordinated to the Class A Notes; the Class C Notes will

rank pari passu without preference or priority amongst themselves but subordinated to the Class

A Notes and the Class B Notes; and the Class D Notes will rank pari passu without preference

or priority amongst themselves but subordinated to the Issuer’s obligation to pay interest on theClass A Notes, the Class B Notes and the Class C Notes and to the Issuer’s obligation to set

aside on each Payment Date the Senior Notes Available Funds for Amortisation towards

redemption of the Class A Notes, the Class B Notes and the Class C Notes.

2.6 In respect of the Issuer’s obligation to pay interest and repay principal on the Notes followingthe delivery of a Trigger Notice or the occurrence of an Insolvency Event, the Class A Notes

will rank pari passu without preference or priority amongst themselves and in priority to the

Class B Notes, the Class C Notes and the Class D Notes; the Class B Notes will rank pari passu

without preference or priority amongst themselves and in priority to the Class C Notes and the

Class D Notes but subordinated to the Class A Notes; the Class C Notes will rank pari passu

without preference or priority amongst themselves and in priority to the Class D Notes but

subordinated to the Class A Notes and the Class B Notes; and the Class D Notes will rank pari

passu without preference or priority amongst themselves but subordinated to the Issuer’sobligation to pay interest and repay principal on the Class A Notes, the Class B Notes and the

Class C Notes.

2.7 As long as the Notes of a Class ranking in priority to the other Classes of Notes areoutstanding, unless notice has been given to the Issuer declaring the Notes of such Class

immediately due and payable, the lower ranking Class(es) of Notes shall not be declared

immediately due and payable and the Noteholders of the outstanding Class of Notes ranking in

the highest priority shall be entitled to determine the remedies to be exercised.

2.8 The Intercreditor Agreement contains provisions regarding the protection of the respective

interests of all Noteholders in connection with the exercise of the powers, authority, rights, duties

and discretion of the Representative of the Noteholders under or in relation to the Notes or any

of the Transaction Documents. If, however, in the opinion of the Representative of the

Noteholders, there is or may be a conflict between the interests of the Noteholders of any

Class(es) of Notes, the Representative of the Noteholders is required to have regard only to the

interests of the Noteholders of the Class of Notes ranking highest in the Order of Priority, until

such Class of Notes has been redeemed in full.

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2.9 In these Conditions,

‘‘Issuer’s Rights’’ mean the Issuer’s rights arising from the Transaction Documents and the

Additional CDC IXIS Guarantee.

‘‘Local Business Day’’ means a day on which the bank(s) to and from which funds are to be

transferred are open for business.

3. COVENANTS

For so long as any amount remains outstanding in respect of the Notes, the Issuer shall not,except with the prior written consent of the Representative of the Noteholders (provided that in the

case of Condition 3.9 (Further Securitisations), the Representative of the Noteholders will only give

such consent further to an Extraordinary Resolution by the Senior Noteholders) or as provided in or

contemplated by any of the Transaction Documents:

3.1 Negative Pledge

create or permit to subsist any Security Interest (as defined below) whatsoever on the Portfolios

or any part thereof or on any of its other assets or sell, lend, transfer, assign or otherwise

dispose of all or any part of the Portfolios; or

3.2 Restrictions on Activities

(a) except as provided in Condition 3.9 (Further Securitisation), engage in any activity

whatsoever which is not incidental to or necessary in connection with any of the activities

contemplated in the Transaction Documents; or

(b) have any societa controllata (as defined in Article 2359 of the Italian Civil Code) or any

employees or premises; or

(c) at any time approve or agree or consent to or do, or permit to be done, any act or thing

whatsoever which may be materially prejudicial to the interests of the Class A Noteholdersor, if no Class A Notes are outstanding, the Class B Noteholders or, if no Class B Notes

are outstanding, the Class C Noteholders or, if no Class C Notes are outstanding, the

Class D Noteholders under the Transaction Documents; or

(d) become the owner of any real estate asset; or

3.3 Dividends or Distributions

pay any dividend or make any other distribution or return or repay any equity capital to its

quotaholders, or issue any further quota or shares; or

3.4 Borrowings

incur any indebtedness in respect of borrowed money whatsoever or make any guarantee in

respect of indebtedness or of any obligation of any Person; or

3.5 Merger

consolidate or merge with any other Person or convey or transfer all or substantially all of its

properties or assets to any other Person; or

3.6 No Variation or Waiver

permit any of the Transaction Documents to which it is party to be amended, terminated ordischarged, if such amendment, termination or discharge may negatively affect the interest of the

Senior Noteholders; or exercise any powers of consent or waiver pursuant to the terms of any of

the Transaction Documents to which it is a party in a way which may negatively affect the

interest of the Senior Noteholders; or permit any party to any of the Transaction Documents to

which it is a party to be released from its obligations thereunder, if such release may negatively

affect the interest of the Senior Noteholders; or

3.7 Bank Accounts

have an interest in any bank account other than the Accounts; or

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3.8 Statutory Documents

amend, supplement or otherwise modify its statuto or atto costitutivo except where such

amendment, supplement or modification is required by compulsory provisions of Italian law or

by the competent regulatory authorities; or

3.9 Further Securitisation

carry out other securitisation transactions or, without limiting the generality of the foregoing,implement, enter into, make or execute any document, act, deed or agreement in connection with

any other securitisation transaction without each of the following: (i) prior confirmation of the

Rating Agencies (as defined below) that any such securitisation transaction will not adversely

affect the rating of any of the Senior Notes; and (ii) delivery of legal opinions which confirm

that such securitisation will not affect the then current Senior Noteholders.

In these Conditions:

‘‘Rating Agencies’’ means Fitch Ratings Ltd. (‘‘Fitch’’) and Standard & Poor’s Ratings Services,

a division of The McGraw-Hill Companies, Inc. (‘‘S&P’’).

‘‘Security Interest’’ means any mortgage, charge, pledge, lien, right of set-off, special privilege(privilegio speciale), assignment by way of security, retention of title or any other security interest

whatsoever or any other agreement or arrangement having the effect of conferring security.

4. ORDER OF PRIORITY

4.1 Pre-Enforcement Order of Priority

Prior to the delivery of a Trigger Notice or the occurrence of an Insolvency Event (each suchterm as defined in Condition 10 (Trigger Events)), the Issuer Available Funds shall be applied on

each Payment Date (or, in the case of payments that are to be made after the Payment Date

and which are provided for in the Payments Report immediately preceding such Payment Date,

on the date for payment specified in such report) in making or providing for the following

payments, in the following order of priority (in each case, only if and to the extent that

payments of a higher priority have been made in full) (the ‘‘Pre-Enforcement Order of Priority’’):

(i) in or towards satisfaction of any and all taxes due and payable by the Issuer;

(ii) in or towards satisfaction, pari passu and pro rata according to the respective amounts

thereof, of: (a) all costs, expenses and any other amounts due and payable by or on behalf

of the Issuer other than those payable to parties to the Intercreditor Agreement; (b) any

other costs and expenses due and payable in relation to preserving the corporate existence

of the Issuer, maintaining it in good standing and in compliance with applicable

legislation, in each case to the extent such costs and/or expenses are not met by utilising

the amount standing to the credit of the Issuer Expenses Account; (c) the fees, costs andexpenses of, and all other amounts due and payable to, the Representative of the


(iii) in or towards satisfaction, pari passu and pro rata according to the respective amountsthereof, of the fees, costs and expenses of, and all other amounts due and payable to, the

Cash Manager, the Paying Agents, the Account Bank, the Collection Account Bank, the

English Account Bank and the Calculation Agent under the Cash Allocation, Management

and Payments Agreement; the Luxembourg Listing Agent under the Luxembourg Agency

Agreement; the Administrative Services Provider under the Administrative Services

Agreement; and the Servicers and the Master Servicer under the Master Servicing

Agreement, other than amounts referred to in item (xvii) below and up to an amount not

exceeding, in the case of costs and expenses incurred by the Servicers and the MasterServicer over any calendar year, Euro 60,000;

(iv) to pay interest and thereafter, to repay principal (if any) due and payable to the Liquidity

Facility Provider under the Liquidity Facility Agreement;

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(v) to pay all amounts due and payable to the Swap Counterparty under the Swap Agreement

(including any termination payment due and payable to the Swap Counterparty under the

Swap Agreement, other than amounts payable by the Issuer upon termination of the Swap

Agreement in circumstances where the Swap Counterparty is the Defaulting Party (as

defined in the 1992 ISDA Master Agreement (Multicurrency – Cross Border));

(vi) in or towards satisfaction of interest due and payable on the Class A Notes;

(vii) to pay interest due and payable on the Class B Notes, provided that so long as the Class

A Notes are still outstanding, the amount to be applied towards payment of interest on

the Class B Notes under this item shall not exceed the Portfolio Yield plus the amount

drawn down under the Liquidity Facility on the Liquidity Facility Drawdown Date

immediately preceding such Payment Date less the aggregate amount paid under items (i)

to (vi) (inclusive) above;

(viii) to pay interest due and payable on the Class C Notes, provided that so long as the Class

A Notes and the Class B Notes are still outstanding, the amount to be applied towards

payment of interest on the Class C Notes under this item shall not exceed the Portfolio

Yield plus the amount drawn down under the Liquidity Facility on the Liquidity Facility

Drawdown Date immediately preceding such Payment Date less the aggregate amount paidunder items (i) to (vii) (inclusive) above;

(ix) in or towards provision of the Cash Amortisation Amount;

(x) in or towards provision of an amount (if positive) equal to the sum of all the Expected

Amortisation Amounts less the sum of all the Cash Amortisation Amounts, in each case,

for each preceding Payment Date, to the extent that such amount has not been previously

provisioned in whole or in part;

(xi) to pay interest due and payable on the Class B Notes, to the extent that such interest has

not been paid under item (vii) above;

(xii) to pay interest due and payable on the Class C Notes, to the extent that such interest has

not been paid under item (viii) above;

(xiii) provided that the Senior Notes have not been or will not be redeemed in full on such

Payment Date, to credit the Issuer Cash Reserve Account with the amount necessary to

bring the balance of such Account to the Cash Reserve Scheduled Maximum Amount;

(xiv) to repay to the Servicers and the Master Servicer costs and expenses due and payable

pursuant to the Master Servicing Agreement, to the extent not paid under item (iii) above;

(xv) in or towards satisfaction of the Interest Component Of The Purchase Price to be paid

pursuant to the Transfer Agreements, provided that if paid only in part on the First

Payment Date, the residual amount shall be paid on the successive Payment Date(s);

(xvi) in or towards satisfaction of the Interest On The Purchase Price to be paid pursuant to

the Transfer Agreements, provided that if paid only in part on the First Payment Date, the

residual amount shall be paid on successive Payment Date(s);

(xvii) in or towards satisfaction of any amounts (other than the amounts referred to in items

(xv) and (xvi) above and repayment of any Advance Indemnity and/or Limited Recourse

Loan) due and payable by the Issuer pursuant to the Transfer Agreements, the

Misscellaneous Loans Transfer Agreements, the Warranty and Indemnity Agreements and

the Subscription Agreements and to repay to each Servicer any Servicer Advance

Indemnity and interest thereon;

(xviii) to pay all amounts due and payable to the Swap Counterparty under the Swap Agreement

upon termination of the Swap Agreement in circumstances where the Swap Counterparty

is the Defaulting Party (as defined in the 1992 ISDA Master Agreement (Multicurrency -Cross Border);

(xix) to pay to the Subordinated Loan Provider interest due and payable under the


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(xx) to repay to the Subordinated Loan Provider principal due and payable under the


(xxi) to pay interest due and payable on the Class D Notes;

(xxii) to pay all amounts due and payable pursuant to the Securities Subordinated Loan

Agreement;

(xxiii) in and towards satisfaction of the Scheduled Class D Notes Repayment Amount (including

any such amount due and payable but unpaid on preceding Payment Dates), provided that

on any Payment Date falling before January 2006, the amount which would otherwise

have been paid to the Class D Noteholders under this item shall be set aside by crediting

it to the Issuer Investment Account and shall be paid to the Class D Noteholders on thePayment Date falling in January 2006;

(xxiv) to pay any interest and repay principal on any loan made to the Issuer pursuant to the

Quotaholders’ Agreement; and

(xxv) to pay the Additional Return on the Class D Notes.

4.2 Post-Enforcement Order of Priority

Following the delivery of a Trigger Notice or upon the occurrence of an Insolvency Event, the

Issuer Available Funds shall be applied on each Payment Date in making or providing for the

following payments, in the following order of priority (in each case, only if and to the extent that

payments of a higher priority have been made in full) (the ‘‘Post-Enforcement Order of Priority’’):

(i) upon the occurrence of an Insolvency Event, in or towards satisfaction of any mandatory

expenses relating to the insolvency proceedings in accordance with Italian insolvency law

and thereafter, or upon the occurrence of any Trigger Event that is not an InsolvencyEvent, in or towards satisfaction of any and all taxes required to be paid by the Issuer;

(ii) in or towards satisfaction, pari passu and pro rata according to the respective amounts

thereof, of: (a) all costs, expenses and any other amounts due and payable by or on behalf

of the Issuer other than those payable to parties to the Intercreditor Agreement; (b) any

other costs and expenses due and payable in relation to preserving the corporate existence

of the Issuer, maintaining it in good standing and in compliance with the applicable

legislation, in each case to the extent such costs and/or expenses are not met by utilising

the amount standing to the credit of the Issuer Expenses Account; (c) the fees, costs and

expenses of, and all other amounts due and payable to, the Representative of theNoteholders; and (d) the Issuer Disbursement Amount;

(iii) in or towards satisfaction, pari passu and pro rata according to the respective amounts

thereof, of the fees, costs and expenses of, and all other amounts due and payable to, the

Cash Manager, the Paying Agents, the Account Bank, the Collection Account Bank, the

English Account Bank and the Calculation Agent under the Cash Allocation, Management

and Payments Agreement; the Luxembourg Listing Agent under the Luxembourg Agency

Agreement; the Administrative Services Provider under the Administrative Services

Agreement; and the Servicers and the Master Servicer under the Master ServicingAgreement, other than amounts referred to in item (xv) below and up to an amount not

exceeding, in the case of costs and expenses incurred by the Servicers and the Master

Servicer over any calendar year, Euro 60,000;

(iv) to pay interest and thereafter, to repay principal (if any) due and payable to the Liquidity

Facility Provider under the Liquidity Facility Agreement;

(v) to pay all amounts due and payable to the Swap Counterparty under the Swap Agreement

(including any termination payment due and payable to the Swap Counterparty under the

Swap Agreement, other than amounts payable by the Issuer upon termination of the Swap

Agreement in circumstances where the Swap Counterparty is the Defaulting Party (as

defined in the 1992 ISDA Master Agreement (Multicurrency – Cross Border));

(vi) in or towards satisfaction of interest due and payable on the Class A Notes;

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(vii) in or towards satisfaction of the Outstanding Principal Amount of the Class A Notes,

provided that if the Trigger Event is not an Insolvency Event, such amount which would

otherwise have been paid to the Class A Noteholders under this item on any Payment

Date falling before January 2006 shall be set aside by crediting it to the Issuer Investment

Account and shall be paid to the Class A Noteholders on the Payment Date falling in

January 2006;

(viii) in or towards satisfaction of interest due and payable on the Class B Notes;

(ix) in or towards satisfaction of the Outstanding Principal Amount of the Class B Notes,


otherwise have been paid to the Class B Noteholders under this item on any Payment


Account and shall be paid to the Class B Noteholders on the Payment Date falling inJanuary 2006;

(x) in or towards satisfaction of interest due and payable on the Class C Notes;

(xi) in or towards satisfaction of the Outstanding Principal Amount of the Class C Notes,


otherwise have been paid to the Class C Noteholders under this item on any PaymentDate falling before January 2006 shall be set aside by crediting it to the Issuer Investment

Account and shall be paid to the Class C Noteholders on the Payment Date falling in

January 2006;

(xii) to repay to the Servicers and the Master Servicer costs and expenses due and payable

pursuant to the Master Servicing Agreement, to the extent not paid under item (iii) above;

(xiii) to the extent that the Interest Component Of The Purchase Price is not yet paid, or paid

in full, to pay to each Originator the unpaid portion of such amount;

(xiv) to the extent that Interest On The Purchase Price is not yet paid, or paid in full, to pay to

each Originator the unpaid portion of such amount;

(xv) in or towards satisfaction of any amounts (other than the amounts referred to in items

(xiii) and (xiv) above and repayment of any Advance Indemnity and/or Limited Recourse

Loan) due and payable by the Issuer pursuant to the Transfer Agreements, the

Miscellaneous Loans Transfer Agreements, the Warranty and Indemnity Agreements and

the Subscription Agreements and to repay to each Servicer any Servicer Advance

Indemnity and interest thereon;

(xvi) to pay all amounts due and payable to the Swap Counterparty under the Swap Agreement

upon termination of the Swap Agreement in circumstances where the Swap Counterparty

is the Defaulting Party (as defined in the 1992 ISDA Master Agreement (Multicurrency -

Cross Border);

(xvii) to pay to the Subordinated Loan Provider interest due and payable under the


(xviii) to pay to the Subordinated Loan Provider principal due and payable under the


(xix) to pay interest due and payable on the Class D Notes;

(xx) to pay all amounts due and payable pursuant to the Securities Subordinated Loan

Agreement;

(xxi) in and towards satisfaction of the Outstanding Principal Amount of the Class D Notes,


otherwise have been paid to the Class D Noteholders under this item on any Payment


Account and shall be paid to the Class D Noteholders on the Payment Date falling in

January 2006;

(xxii) to pay any interest and repay principal on any loan made to the Issuer pursuant to the

Quotaholders’ Agreement; and

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(xxiii) to pay the Additional Return on the Class D Notes.

4.3 In these Conditions:

‘‘Additional Return’’ means, on each Payment Date until the Payment Date (inclusive) on which

the Senior Notes have been or will be redeemed in full, an amount equal to the Issuer Available

Funds available on such Payment Date after the payments of items from (i) to (xxiv) (inclusive)

of the Pre-Enforcement Order of Priority or items from (i) to (xxii) (inclusive) of the Post-

Enforcement Order of Priority.

‘‘Aggregate Notional Outstanding Amount’’ means as of the last day of the Semi-annualCollection Period immediately prior to each Semi-annual Report Date or, as the case may be,

each Interim Calculation Date, the sum of the Notional Outstanding Amount for every

Mortgage Loan on each such date.

‘‘Arrears Level’’ means for each Mortgage Loan on the last day of each Semi-annual Collection

Period or, as the case may be, the Interim Calculation Date, an amount equal to the fraction

where: (a) the numerator is an amount equal to all sums due but unpaid in respect of such

Mortgage Loan as of the last day of such Semi-annual Collection Period or, as the case may be,

Interim Calculation Date, (including interest, default interest, principal and other costs); and (b)the denominator is an amount equal to the last instalment of such Mortgage Loan which has

become payable on or prior to the last day of such Semi-annual Collection Period or, as the

case may be, the Interim Calculation Date, the resulting amount being calculated to the nearest

whole number (with 0.5 and above being rounded up).

‘‘Calculation Date’’ means the fifth Business Day before each Payment Date.

‘‘Cash Accounts’’ means the Issuer Collection Accounts, the Issuer Investment Account, the

Issuer Cash Reserve Account, the Issuer Distribution Account, the Issuer Expenses Account, theIssuer English Account and the Issuer Quota Capital Account.

‘‘Cash Amortisation Amount’’ means, on each Payment Date prior to the delivery of a Trigger

Notice or the occurrence of an Insolvency Event, an amount equal to the lower of:

(a) the Issuer Available Funds available after the payment of items (i) to (viii) (inclusive) of

the Pre-Enforcement Order of Priority; and

(b) the greater of:

(i) nil; and

(ii) the aggregate Outstanding Principal Amount of Class A Notes, the Class B Notes

and the Class C Notes (less, in respect of the second and the third Payment Dates

only, the amount of the Senior Notes Available Funds for Amortisation set aside on

preceding Payment Date(s)) minus the Aggregate Notional Outstanding Amount of

all Mortgage Loans that have not been classified as non-performing (in sofferenza),

in each case, as of the last day of the Semi-annual Collection Period (the ‘‘ExpectedAmortisation Amount’’).

‘‘Cash Reserve Scheduled Maximum Amount’’ means, on each Payment Date prior to the delivery

of a Trigger Notice or the occurrence of an Insolvency Event, provided that the Senior Notes

have not been or will not be redeemed in full on such Payment Date, an amount equal to the

sum of: (x) the Securities Loan Full Liquidation Amount; and (y) the greater of: (i) two per

cent. (2%) of the aggregate Outstanding Principal Amount of the Senior Notes on such Payment

Date; and (ii) Euro 2,942,415 (equivalent to 0.5% of the Initial Principal Amount of the SeniorNotes).

‘‘Claims’’ means each and every right arising from the Mortgage Loans comprised in the

Portfolios, and ‘‘relevant Claims’’ means those Claims comprised in each relevant Portfolio.

‘‘Class’’ refers to the classification of the Notes.

‘‘Conditions’’ means the terms and conditions of the Class A Notes, the Class B Notes, the Class

C Notes and the Class D Notes, as the context may require and any reference to a numbered

relevant ‘‘Condition’’ is to the corresponding numbered provision thereof.

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‘‘Eligible Institution’’ means any depository institution, approved by the Representative of the

Noteholders, organised under the laws of any state which is a member of the European Union

or of the United States of America, whose short-term, unsecured and unsubordinated debt

obligations are rated at least ‘‘F1+’’ (or, for the purpose of the Account Bank, the English

Account Bank and the Liquidity Reserve Account only, ‘‘F1’’) by Fitch and ‘‘A-1+’’ (or, for the

purpose of the Liquidity Reserve Account ‘‘A-2’’) by S&P and (ii) Deutsche Bank S.p.A. for so

long as (A) its controlling parent company’s short-term, unsecured and unsubordinated debt

obligations are rated at least ‘‘F1+’’ by Fitch and ‘‘A-1+’’ by S&P; (B) the shareholding held byits controlling parent company does not fall below 90 per cent.; (C) there are no material

changes in the ownership structure of its controlling parent company which would result in the

downgrading of any of the Senior Notes; and (D) the words ‘‘Deutsche Bank’’ are contained in

its legal name and, in any case, only until such date when S&P notifies the Issuer that Deutsche

Bank S.p.A. no longer qualifies as an Eligible Institution.

‘‘Eligible Investments’’ means:

(i) any Euro denominated senior (unsubordinated) debt securities or other debt instrumentsproviding a fixed principal amount at maturity, issued by or fully and unconditionally

guaranteed on an unsubordinated basis by an Eligible Institution; or

(ii) repurchase transactions between the Issuer and an Eligible Institution, in respect of debtsecurities or other debt instruments having the characteristics under (i) above,

provided that, in both cases, such investments are immediately repayable on demand, disposable

without penalty and have a maturity date falling on or before the Local Business Day preceding

the last day of the then current Semi-annual Collection Period or, in the case of investments tobe made out of funds standing to the balance of the Issuer Distribution Account, on or before

the fourth Business Day before the next Payment Date; and is not subject to any Decree 239

Deduction or withholding pursuant to Article 26.3 bis of Presidential Decree 600/1973, in each

case, as subsequently amended or supplemented; and provided further that the purchase price of

such Eligible Investment must not be greater than its nominal value.

‘‘Effective Date’’ means 1 December 2003 (00.01 Milan time).

‘‘Excess Swap Collateral’’ means an amount equal to the value of any collateral (or theapplicable part thereof) transferred by the Swap Counterparty to the Issuer pursuant to the

Swap Agreement that is in excess of the Swap Counterparty’s liability to the Issuer thereunder (i)

as at the date of termination of a transaction thereunder and (ii) that the Swap Counterparty is

otherwise entitled to have returned to it in accordance with the terms of the Swap Agreement.

‘‘Excluded Collections’’ means amounts collected by the Issuer in connection with any Claim in

respect of which BPV, CRP or BN has (i) paid an Advance Indemnity, and/or (ii) granted a

Limited Recourse Loan, and/or (iii) failed to grant a Limited Recourse Loan pursuant to Clause

5.1.2 or Clause 5.1.3 of the Warranty and Indemnity Agreement where as a consequence of such

failure the Debt Securities Initial Market Value will be repaid in part out of the amounts

collected in respect of the Mortgage Loan(s) for which such Limited Recourse Loan(s) should

have been granted, up to an amount equivalent to the corresponding Advance Indemnity plusinterest thereon or, as the case may be, Limited Recourse Loan.

‘‘Interest Component Of The Purchase Price’’ means interest accrued but not yet payable as well

as interest accrued and unpaid, in each case, as of the Effective Date in respect of the Claims

(excluding, for the avoidance of doubt, the claims arising from the Miscellaneous MortgageLoans) plus penalty interest in relation to any instalments in arrears and expenses incurred in

relation to the recovery thereof.

‘‘Interest On The Purchase Price’’ means the amount of interest due and payable on the PrincipalComponent Of The Purchase Price from the Effective Date to the Issue Date at the rate of Six

Month Euribor plus zero point fifteen per cent. (0.15%).

‘‘Interim Calculation Date’’ means the last calendar day of each March and September of each

year.

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‘‘Interim Calculation Period’’ means each three month period commencing on (and including) the

first calendar day of each January and July, respectively, and ending on (and including) the last

calendar day of each March and September, respectively.

‘‘Interim Report Date’’ means the 15th calendar day of April and October of each calendar year

or, if such day is not a Business Day, the immediately succeeding Business Day.

‘‘Issuer Available Funds’’ on each Payment Date shall comprise:

(a) all the sums received or recovered by the Issuer from or in respect of the Claims during

the Semi-annual Collection Period immediately preceding such Payment Date, except for

the Excluded Collections;

(b) all amounts paid or to be paid to the Issuer on or immediately prior to such Payment

Date under the terms of the Swap Agreement and the Liquidity Facility Agreement;

(c) all amounts received by the Issuer from the Originators pursuant to the Transfer

Agreements and the Warranty and Indemnity Agreements during the Semi-annual

Collection Period immediately preceding such Payment Date;

(d) all amounts standing to the credit of the Issuer Cash Reserve Account as of the last day

of the Semi-annual Collection Period immediately preceding such Payment Date;

(e) interest accrued on and credited to the Cash Accounts in the Semi-annual Collection

Period immediately preceding such Payment Date, including interest accrued on the Senior

Notes Available Funds for Amortisation deposited in the Issuer Investment Account and

on any amount set aside to such Account under item (xxii) of the Pre-Enforcement Order

of Priority;

(f) any profit generated by the Eligible Investments until the last day of the Semi-annual

Collection Period immediately preceding such Payment Date, including profit deriving from

Eligible Investments made in respect of the Senior Notes Available Funds for Amortisationdeposited in the Issuer Investment Account or in respect of any amount set aside to such

Account under item (xxii) of the Pre-Enforcement Order of Priority;

(g) all amounts received by the Issuer under the terms of the Quotaholders’ Agreement duringthe Semi-annual Collection Period immediately preceding such Payment Date;

(h) with reference to the First Payment Date only, the Securities Loan Full Liquidation

Amount or, as the case may be, the Securities Loan Partial Liquidation Amount (if any);

(i) any other amount, not included in the foregoing items (a), (b), (c), (d), (e), (f), (g) and (h)

received by the Issuer and deposited in the Issuer Collection Accounts and/or the Issuer

Investment Account during the Semi-annual Collection Period immediately preceding suchPayment Date (other than the Senior Notes Available Funds for Amortisation and any

amount set aside under item (xxii) of the Pre-Enforcement Order of Priority on Payment

Date(s) falling during the Initial Period) but excluding any amount held by the Issuer

which properly belongs to the Swap Counterparty in respect of any Excess Swap Collateral

or Tax Credit (as defined in the Swap Agreement) and payable to the Swap Counterparty

pursuant to the Swap Agreement; and

(j) all amounts received from the sale of all or part of the Portfolios, should such sale occur

and proceeds (if any) from the enforcement of the Issuer’s Rights,

provided that following the delivery of a Trigger Notice or upon the occurrence of an Insolvency

Event, the Issuer Available Funds shall also comprise any Senior Notes Available Funds for

Amortisation then retained in, and any amount set aside under item (xxii) of the Pre-

Enforcement Order of Priority on Payment Date(s) falling during the Initial Period to, the Issuer

Investment Account (if any) and any proceeds from the enforcement of the Security Documents.

‘‘Issuer Disbursement Amount’’ means, on the Issue Date, Euro 20,000 and on any other Payment

Date, the difference between Euro 20,000 and the amount standing to the credit of the Issuer

Expenses Account under the entry ‘‘Issuer Disbursement Amount’’ on the last day of the Semi-

annual Collection Period immediately preceding such Payment Date.

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‘‘Noteholders’’ means holders of the Class A Notes, the holders of the Class B Notes, the holders

of the Class C Notes and/or the holders of the Class D Notes.

‘‘Notional Outstanding Amount’’ means, in respect of each Mortgage Loan, on the last day of

any Semi-annual Collection Period or, as the case may be, the Interim Calculation Date, an

amount equal to the product of: (a) the Performance Factor applicable to such Mortgage Loan;

and (b) (x) the principal amount outstanding on such Mortgage Loan or; (y) if a Limited

Recourse Loan has been granted in respect of such Mortgage Loan or, under the terms of theSecurities Subordinated Loan Agreement, the Debt Securities Initial Market Value will be repaid

in part out of the Excluded Collections in respect of the Mortgage Loan(s) for which Limited

Recourse Loan(s) was/were due and payable by any Originator pursuant to Clause 5.1.2 or

Clause 5.1.3 of the Warranty and Indemnity Agreements but unpaid, zero.

‘‘Outstanding Principal Amount’’ means, on each day:

(a) in relation to each Class of Notes, the aggregate principal amount outstanding of all Notes

in such Class; and

(b) in relation to a Note, the principal amount of that Note upon issue less the aggregate

amount of all Principal Payments (as defined in Condition 6.2 (Mandatory Pro Rata

Redemption)) on that Note that have been repaid on or prior to that date.

‘‘Payments Report’’ means the report to be made by the Calculation Agent on or prior to the

Calculation Date immediately succeeding each Semi-annual Report Date pursuant to the Cash


‘‘Performance Factor’’ means, in respect of each Mortgage Loan, on the last day of any Semi-

annual Collection Period or, as the case may be, the Interim Calculation Date, the factor

applicable to that Mortgage Loan’s Arrears Level by reference to that Mortgage Loan’s payment

frequency (i.e. monthly, quarterly and semi-annually), as set forth in the following table:


Arrears Level

Performance

Factor Arrears Level

Performance

Factor Arrears Level

Performance

Factor

0-6 100% 0-3 100% 0-2 100%7-10 85% 4-6 85% 3-4 85%

> 10 70% > 6 70% > 4 70%

‘‘Person(s)’’ means any natural person, partnership, corporation, company, limited liability

company, trust, estate, joint-stock partnership or company joint venture, governmental entity,unincorporated organization or other entity or association.

‘‘Portfolio Yield’’ means, on each Semi-annual Collection Date, the sum of: (a) the interest

payments (other than those comprised in the Excluded Collections) collected in respect of the

Mortgage Loans (including the default interest) during the Semi-annual Collection Period ending

on (but excluding) such Semi-annual Collection Date; (b) all Prepayment Penalties paid in

respect of any Mortgage Loan during such Semi-annual Collection Period; (c) any amount to be

paid on or prior to the immediately succeeding Payment Date by the Swap Counterparty underthe Swap Agreement, as determined by the Calculation Agent based on, inter alia, the data

provided by BPV in the Semi-annual Servicer Report; and (d) interest accrued on the Senior

Notes Available Funds for Amortisation.

‘‘Prepayment Penalties’’ means the prepayment penalties as agreed in the Mortgage Loans.

‘‘Principal Component Of The Purchase Price’’ means the aggregate principal amount outstanding

of the Claims (excluding, for the avoidance of doubt, the claims arising from the Miscellaneous

Mortgage Loans) as of the Effective Date.

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(A) on each Payment Date from (and including) the First Payment Date to (and including) the

Call Date, an amount equal to Euro 1,070,000 plus, (x) if any Limited Recourse Loan has

been granted during the Semi-annual Collection Period immediately preceding such

Payment Date, such amount of the Limited Recourse Loan(s) representing the present

value of the interest margins of the Mortgage Loan(s) in relation to which such loan(s)

has/have been granted, plus (y) with reference to the First Payment Date only, if as a

result of any Originator’s failure to make Limited Recourse Loan(s) pursuant to Clause5.1.2 or Clause 5.1.3 of the Warranty and Indemnity Agreement, the Debt Securities Initial

Market Value will be repaid in part out of the amounts collected in respect of the

Mortgage Loan(s) for which such Limited Recourse Loan(s) should have been granted, an

amount representing the relevant portion of the present value of the interest margins of

such Mortgage Loan(s) ((x) and (y) together, the ‘‘Additional Repayment Amount’’),

provided that the Scheduled Class D Notes Repayment Amount on each Payment Date

thereafter shall be reduced by a portion of the Additional Repayment Amount resulting

from dividing such amount by the number of Payment Date(s) between (and including) thePayment Date in question and the Call Date (inclusive); provided further that the

Scheduled Class D Notes Repayment Amount shall be reduced by an amount (if any) so

that the Outstanding Principal Amount of the Class D Notes after the repayment of

principal on such Payment Date shall equal at least 1% (one per cent.) of the Initial

Principal Amount of the Class D Notes and the Scheduled Class D Notes Repayment

Amount on each Payment Date thereafter to (but excluding) the Final Maturity Date shall

equal zero;

(B) on each Payment Date after the Call Date to (but excluding) the Final Maturity Date,zero; and

(C) on the Final Maturity Date, the then Outstanding Principal Amount of the Class D Notes.

‘‘Semi-annual Collection Date’’ means the first calendar day of each January and July of each

year.

‘‘Semi-annual Collection Period’’ means each period commencing on (and including) a Semi-

annual Collection Date and ending on (but excluding) the next Semi-annual Collection Date, and

in the case of the first Semi-annual Collection Period, commencing on (and including) the

Effective Date and ending on (but excluding) 1 January 2005, provided that following thedelivery of a Trigger Notice upon the occurrence of a Trigger Event or following the occurrence

of an Insolvency Event, references to the Semi-annual Collection Period shall be deemed to refer

to the relevant period on the basis of which the Calculation Agent has, in the Payments Report,

calculated the Issuer Available Funds.

‘‘Semi-annual Report Date’’ means the 15th calendar day of each January and July of each

calendar year or, if such day is not a Business Day, the immediately succeeding Business Day.

‘‘Senior Noteholder(s)" means the holder(s) of a Senior Note or Senior Notes.

‘‘Senior Notes Available Funds for Amortisation’’ means, on each Payment Date prior to thedelivery of a Trigger Notice or prior to the occurrence of an Insolvency Event, the sum of: (a)

the Cash Amortisation Amount; and (b) such amount as has been actually provisioned on such

Payment Date under item (x) of the Pre- Enforcement Order of Priority. The Senior Notes

Available Funds for Amortisation provisioned on Payment Dates prior to January 2006 shall be

set aside to the Issuer Investment Account and on the Payment Date falling in January 2006,

such sums will be applied, together with the Senior Notes Available Funds for Amortisation set

aside on such Payment Date, towards mandatory pro rata redemption of the Senior Notes.

‘‘Servicer Advance Indemnity’’ means any indemnity payment made by each Servicer pursuant to

Clause 3 of the Master Servicing Agreement.

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5. INTEREST

5.1 Payment Dates and Interest Periods

Each Note bears interest on its Outstanding Principal Amount from (and including) the Issue

Date. Interest in respect of the Notes is payable in Euro semi-annually in arrear on 26th January

and 26th July in each year (or if such day is not a Business Day, the immediately succeedingBusiness Day, unless such Business Day would fall in the next calendar month in which case

interest will be paid on the immediately preceding Business Day) (each a ‘‘Payment Date’’),

provided that, following the delivery of a Trigger Notice upon the occurrence of a Trigger Event

or following the occurrence of an Insolvency Event, the Payment Date may be any Business

Day. The First Payment Date shall be 26 January 2005 (or if such day is not a Business Day,

the immediately succeeding Business Day, unless such Business Day would fall in the next

calendar month in which case interest will be paid on the immediately preceding Business Day)

(the ‘‘First Payment Date’’). The period from (and including) the Issue Date to the FirstPayment Date is referred to herein as the ‘‘Initial Interest Period’’ and each successive period

from (but excluding) a Payment Date to (and including) the next Payment Date is referred to as

an ‘‘Interest Period’’.

Interest shall cease to accrue on any part of the Outstanding Principal Amount of a Note from

(and including) the Final Maturity Date (as defined in Condition 6 (Redemption, Purchase and

Cancellation)) of such part unless payment of principal due and payable but unpaid is improperly

withheld or refused, whereupon interest shall continue to accrue on such principal (as well after

as before judgement) at the rate from time to time applicable to each Class of Notes until

whichever is the earlier of: (i) the day on which all sums due in respect of such Note up to thatday are received by or on behalf of the relevant Noteholder; and (ii) the day on which all such

sums have been received by the Representative of the Noteholders or a Paying Agent on behalf

of the relevant Noteholder and notice to that effect is given in accordance with Condition 13

(Notices).

5.2 Rate of Interest

The rate of interest payable from time to time in respect of each Class of Notes (each, a ‘‘Rate

of Interest’’) will be determined by the Calculation Agent on the Interest Determination Date (asdefined below).

The Rate of Interest applicable to each Class of Senior Notes for each Interest Period (other

than the Initial Interest Period) shall be the aggregate of:

(i) the Relevant Margin (as defined below); and

(ii) (a) the Euro-zone inter-bank offered rate (‘‘Euribor’’) for six month Euro deposits which

appears on Euribor01 Reuter or (aa) such other page as may replace Euribor01

Reuter on that service for the purpose of displaying such information or (bb) if that

service ceases to display such information, such page as displays such information on

such equivalent service (or, if more than one, that one which is approved by the

Representative of the Noteholders) as may replace the Euribor01 Reuter) at or about11.00 a.m. (Brussels time) on the Interest Determination Date (rounded to four

decimal places with the mid-point rounded upwards) (the ‘‘Screen Rate’’); or

(b) if the Screen Rate is unavailable at such time for six month Euro deposits, then the

rate for any relevant Interest Period shall be the arithmetic mean (rounded to four

decimal places with the mid-point rounded up) of the rates notified to the

Calculation Agent at its request by each of the Reference Banks as the rate at which

six month Euro deposits in a representative amount are offered by that Reference

Bank to leading banks in the Euro-zone inter-bank market at or about 11.00 a.m.

(Brussels time) on that date; or

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(c) if on any such Interest Determination Date, the Screen Rate is unavailable and only

two of the Reference Banks provide such offered quotations to the Calculation

Agent the relevant rate shall be determined, in the manner specified in item (b)

above, on the basis of the offered quotations of those Reference Banks providing

such quotations; or

(d) if, on any Interest Determination Date, the Screen Rate is unavailable and only oneof the Reference Banks provides the Calculation Agent with an offered quotation,

the Rate of Interest for the relevant Interest Period shall be the Rate of Interest in

effect for the immediately preceding Interest Period and one of items (a) or (b)

above shall have been applied

(the ‘‘Six Month Euribor’’).

In the case of the Initial Interest Period, the Rate of Interest applicable to each Class of Senior

Notes for each Interest Period (other than the Initial Interest Period) shall be the aggregate of:

(i) the Relevant Margin; and the rate per annum obtained by linear interpolation of the Euribor

for ten month and eleven month deposits in Euro.

Interest in respect of any Interest Period or any other period shall be calculated on the basis ofthe actual number of days elapsed and a 360 day year. There shall be no maximum or minimum

Rate of Interest.

For the purpose of these Conditions, the ‘‘Relevant Margin’’ shall be:

- up to (and including) the Interest Period ending on the Call Date:

* 0.20% per annum of the Class A Notes;

* 0.57% per annum of the Class B Notes; and

* 1.20% per annum of the Class C Notes,

- from (and including) the Interest Period beginning on the Call Date:

* 0.40% per annum of the Class A Notes;

* 1.14% per annum of the Class B Notes; and

* 2.40% per annum of the Class C Notes.

The Class D Notes shall accrue interest at a rate of 2.00% per annum.

5.3 Determination of Rates of Interest and Calculation of Interest Payments

The Calculation Agent shall, on each Interest Determination Date, determine and notify to the

Issuer, the Paying Agents and the Representative of the Noteholders:

(i) the Rate of Interest applicable to the Interest Period beginning after such InterestDetermination Date (or in the case of the Initial Interest Period, beginning on and

including the Issue Date) in respect of each Class of Notes; and

(ii) the Euro amount payable on each Class of Notes in respect of such Interest Period (the

‘‘Interest Payment Amount’’). The Interest Payment Amount payable in respect of any

Interest Period in respect of each Class of Notes shall be calculated by applying the

relevant Rate of Interest to the Outstanding Principal Amount of each Class of Notes onthe Payment Date (or, in the case of the Initial Interest Period, the Issue Date), at the

commencement of such Interest Period (after deducting therefrom any payment of principal

due and paid on that Payment Date), multiplying the product of such calculation by the

actual number of days in the Interest Period and dividing by 360, and rounding the

resultant figure to the nearest cent (half a cent being rounded up) plus any Interest

Payment Amount in respect of previous Interest Periods that remains unpaid.

Unpaid interest due on the Notes shall accrue no interest.

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5.4 Publication of the Rate of Interest and the Interest Payment Amount

The Calculation Agent will, at the Issuer’s expense, cause the Rate of Interest and the Interest

Payment Amount applicable to each Class of Notes for each Interest Period and the Payment

Date in respect of such Interest Payment Amount to be notified promptly after determination to

the Issuer, the Representative of the Noteholders, Monte Titoli S.p.A. and the Luxembourg

Stock Exchange or, as the case may be, the Class D Notes Depository and will cause the same

to be published in accordance with Condition 13 (Notices) on or as soon as possible after therelevant Interest Determination Date.

The Calculation Agent will be entitled to recalculate any Interest Payment Amount (on the basis

of the foregoing provisions) without notice in the event of an extension or shortening of the

relevant Interest Period.

5.5 Determination or Calculation by the Representative of the Noteholders

If the Calculation Agent does not at any time for any reason determine the Rate of Interest and/

or calculate the Interest Payment Amount for each Class of Notes in accordance with the

foregoing provisions of this Condition 5 (Interest), the Representative of the Noteholders shall:

(i) determine the Rate of Interest for each Class of Notes at such rate as (with regard to the

procedure described above) it shall consider fair and reasonable in all the circumstances;

and/or

(ii) calculate the Interest Payment Amount for each Class of Notes in the manner specified in

Condition 5.3 (Determination of Rates of Interest and Calculation of Interest Payments)

above;

any such determination and/or calculation shall be deemed to have been made by the Calculation

Agent.

5.6 Notifications to be Final

All notifications, opinions, determinations, certificates, calculations, quotations and decisions

given, expressed, made or obtained for the purposes of this Condition 5 (Interest) and Condition6 (Redemption, Purchase and Cancellation), whether by the Reference Banks (as defined in

Condition 5.8 (Reference Banks and Calculation Agent)) (or any of them), the Calculation Agent,

the Issuer or the Representative of the Noteholders shall (in the absence of wilful misconduct

(dolo) or gross negligence (colpa grave)) be binding on the Reference Banks, the Calculation

Agent, the Issuer, the Cash Manager, the Paying Agents, the Representative of the Noteholders

and all Noteholders and (in such absence as aforesaid) no liability of the Noteholders shall

attach to the Reference Banks, the Calculation Agent, the Issuer or the Representative of the

Noteholders in connection with the exercise or non-exercise by them or any of them of theirpowers, duties and discretion hereunder.

5.7 Reference Banks and Calculation Agent

The Issuer shall ensure that, so long as any of the Notes remains outstanding, there shall at all

times be three Reference Banks (the ‘‘Reference Banks’’) and a Calculation Agent. The Reference

Banks shall be three major banks in the Euro-zone inter-bank market selected by the Calculation

Agent with the prior written approval of the Issuer. Pursuant to the Cash Allocation,Management and Payments Agreement, the Calculation Agent may not resign until a successor

approved in writing by the Representative of the Noteholders has been appointed. If a new

Calculation Agent is appointed, a notice will be published in accordance with Condition 13

(Notices).

In this Condition 5:

‘‘Business Day’’ shall mean a day (other than a Saturday or a Sunday) on which banks are

generally open for business in Milan, London and Luxembourg and on which the Trans-

European Automated Real Time Gross Transfer System (or any successor thereto) is open;

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‘‘Euro-zone’’ means the region comprised of member states of the European Union that adopted

the single currency in accordance with the Treaty establishing the European Community (signed

in Rome on 25 March 1957) as amended by the Treaty on European Union (signed in

Maastricht on 7 February 1992); and

‘‘Interest Determination Date’’ means the second Business Day before each Payment Date,

provided that the first Interest Determination Date is the second Business Day before the Issue

Date.

6. REDEMPTION, PURCHASE AND CANCELLATION

6.1 Final Maturity Date

Unless previously redeemed in full as provided in this Condition 6 (Redemption, Purchase and

Cancellation), the Issuer shall, subject to the provisions in Condition 6.8 (Limited Recourse),

redeem the Notes at their Outstanding Principal Amount, plus any accrued but unpaid interest,

on the Payment Date falling in July 2035 (the ‘‘Final Maturity Date’’).

All Notes will, immediately following the Final Maturity Date, be deemed to be discharged in

full and any amount in respect of principal, interest or other amounts due and payable in

respect of the Notes will (unless payment of any such amount is improperly withheld or refused)

be finally and definitively cancelled.

6.2 Mandatory Pro Rata Redemption

6.2.1 On each Payment Date falling in or after January 2006 prior to the delivery of a Trigger

Notice or the occurrence of an Insolvency Event, the Issuer shall apply:

(A) the Senior Notes Available Funds for Amortisation provisioned on such Payment

Date (and, in the case of the Payment Date falling in January 2006 only, on

preceding Payment Dates) in or towards the mandatory redemption of the Senior

Notes (in whole or in part) in the following order of priority:

(i) first, the Class A Notes, until the Class A Notes have been redeemed in full;

(ii) second, the Class B Notes, until the Class B Notes have been redeemed in full;

and

(iii) third, the Class C Notes, until the Class C Notes have been redeemed in full.

(B) the Issuer Available Funds available, after satisfaction items (i) to (xxi) (inclusive) of

the Pre-Enforcement Order of Priority, in or towards satisfaction of the Scheduled

Class D Notes Repayment Amount of such Payment Date, plus any Scheduled Class

D Notes Repayment Amount of previous Payment Date(s) that remains unpaid as aresult of the insufficiency of the Issuer Available Funds, which amounts shall be

applied by the Issuer in or towards the mandatory redemption of the Class D Notes

(in whole or in part).

6.2.2 Following the delivery of a Trigger Notice or the occurrence of an Insolvency Event, the

Issuer shall apply the Issuer Available Funds available, in accordance with the Post-

Enforcement Order of Priority for the redemption of each Class of Notes on such Payment

Date, in or towards the mandatory redemption of such Class of Notes (in whole or in

part).

6.2.3 The principal amount redeemable in respect of each Note (‘‘Principal Payment’’) shall be a

pro rata share of the aggregate amount determined in accordance with this Condition 6.2

(Mandatory Pro Rata Redemption) to be available for redemption of the Notes of the same

Class of such Note on such date, calculated by reference to the ratio between the then

Outstanding Principal Amount of such Note to the then Outstanding Principal Amount of

all the Notes of the same Class (rounded down to the nearest Euro cent), provided always

that no such Principal Payment may exceed the Outstanding Principal Amount of the

relevant Note.

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‘‘Senior Notes Available Funds for Amortisation’’ means, on each Payment Date prior to the

delivery of a Trigger Notice or prior to the occurrence of an Insolvency Event, the sum of: (a)

the Cash Amortisation Amount; and (b) such amount as has been actually provisioned on such

Payment Date under item (x) of the Pre-Enforcement Order of Priority.

6.3 Optional Redemption of the Senior Notes

On:

(A) the Payment Date falling in January 2016 (the ‘‘Call Date’’) and any Payment Date

thereafter, the Issuer may, at its option, redeem all (but not some only) of the Senior

Notes at their Outstanding Principal Amount together with all accrued but unpaid interest

thereon up to and including the relevant Payment Date;

(B) any Payment Date falling after the Initial Period but prior to the Call Date, the Issuer

may redeem all (but not some only) of the Senior Notes at their Outstanding PrincipalAmount together with all accrued but unpaid interest thereon up to and including the

relevant Payment Date if the aggregate Outstanding Principal Amount of the Senior Notes

is equal or less than ten per cent. (10%) of the Initial Principal Amount of the Senior

Notes.

Any such redemption (‘‘Optional Redemption’’) shall be effected by the Issuer on giving not more

than 60 and not less than 30 days’ prior written notice to the Representative of the Noteholders

and to the Senior Noteholders in accordance with Condition 13 (Notices) and provided that the

Issuer, prior to giving such notice to the Representative of the Noteholders, certifies to the

Representative of the Noteholders that it has the funds, not subject to interests of any otherPerson, to discharge all its outstanding liabilities in respect of the Senior Notes and any amounts

required pursuant to the Intercreditor Agreement to be paid in priority to or pari passu with

each Class of Senior Notes. The funds necessary for the Optional Redemption of the Senior

Notes may: (a) be obtained from the sale by the Issuer, of all or part of the Portfolios; or (b)

derive from payments made by BPV, at its discretion, under the Quotaholders’ Agreement by

means of capital contributions or interest free subordinated loans in order to enable the Issuer to

exercise its right of Optional Redemption of the Senior Notes whenever the provisions set forth

in this Condition 6.3 are met. Should any such sale of the Portfolios occur, or should funds bemade available to the Issuer by BPV under the terms of the Quotaholders’ Agreement for the

purpose of Optional Redemption, such sale proceeds or funds, as the case may be, will form

part of the Issuer Available Funds on the relevant Payment Date.

6.4 Optional Redemption of the Class D Notes

On any Payment Date falling in or after January 2006, the Issuer may redeem all (but not some

only) of the Class D Notes at their Outstanding Principal Amount together with all accrued but

unpaid interest thereon up to and including the relevant Payment Date provided that the Senior

Notes have been or, will on such Payment Date be, redeemed in full.

Any such redemption shall be effected by the Issuer on giving not more than 60 and not less

than 30 days’ prior written notice to the Representative of the Noteholders and to the Class D

Noteholders in accordance with Condition 13 (Notices) and provided that the Issuer, prior togiving such notice to the Representative of the Noteholders, certifies to the Representative of the

Noteholders that it has the funds, not subject to interests of any other Person, to discharge all

its outstanding liabilities in respect of the Class D Notes and, if the Senior Notes have not

already been redeemed, the Senior Notes, and any amounts required pursuant to the

Intercreditor Agreement to be paid in priority to or pari passu with such Notes. The necessary

funds for the optional redemption of the Class D Notes may be obtained from the sale by the

Issuer, of all or part of the Portfolios and should such sale of the Portfolios occur, such sale

proceeds will form part of the Issuer Available Funds on the relevant Payment Date.

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6.5 Redemption for Taxation

If, at any time, the Issuer provides to the Representative of the Noteholders immediately prior to

the service of the notice referred to below a legal opinion (in form and substance satisfactory to

the Representative of the Noteholders) from counsel in the Issuer’s jurisdiction opining that on

the next Payment Date (a) the Issuer would be required to deduct or withhold (other than in

respect of a Decree 239 Withholding) any amount from any payment of principal or interest on

any Class of Notes for or on account of any present or future taxes, duties, assessments orgovernmental charges of whatever nature imposed, levied, collected, withheld or assessed by the

Republic of Italy or any political sub-division thereof or any authority thereof or therein, or (b)

as a result of legislative or regulatory changes or official interpretations thereof by competent

authorities, the Issuer would incur increased costs or charges of a fiscal nature which would

materially affect any Class of Notes, and the Issuer certifies to the Representative of the

Noteholders that the Issuer will have the necessary funds not subject to the interest of any other

Person to discharge all its outstanding liabilities in respect of the relevant Class of Notes and

any amounts required under Condition 4 (Order of Priority) to be paid in priority to or pari

passu with such Notes, then the Issuer may redeem on the next Payment Date all but not some

only of the Notes of such Class at their Outstanding Principal Amount together with accrued

but unpaid interest up to and including the relevant Payment Date, with not more than 60 and

not less than 30 days’ prior written notice to the Representative of the Noteholders and to the

relevant Noteholders in accordance with Condition 13 (Notices).

If the Issuer chooses to redeem the Senior Notes of all Classes pursuant to this Condition 6.5

before the Payment Date falling in January 2006, the funds for the purpose of redeeming the

Senior Notes shall also comprise the Senior Notes Available Funds for Amortisation provisioned,

and any amount set aside under item (xxii) of the Pre-Enforcement Order of Priority, onpreceding Payment Date(s).

For the purposes of these Conditions:

‘‘Decree 239 Withholding’’ means any withholding or deduction for or on account of ‘‘imposta

sostitutiva’’ under Italian Legislative Decree No. 239 of 1 April 1996, as amended by Italian LawNo. 409 and No. 410 of 23 November 2001 and as subsequently amended.

‘‘Initial Principal Amount’’ means the principal amount of the Notes of the relevant Class on the

Issue Date.

6.6 Note Principal Payments, Redemption Amounts and Outstanding Principal Amount

On each Calculation Date, the Issuer shall ensure that the Calculation Agent determines:

(i) the available funds for amortisation for each Class of Notes;

(ii) the Principal Payment (if any) due on each Note on the next Payment Date; and

(iii) the Outstanding Principal Amount of each Note and on each Class of Notes on the next

Payment Date (after deducting any principal payment due to be made on that Payment

Date).

Each determination on behalf of the Issuer of any available funds for amortisation, the Principal

Payment on each Note and the Outstanding Principal Amount of each Note and on each Class

of Notes shall in each case (in the absence of wilful misconduct (dolo) or gross negligence (colpa

grave)) be final and binding on all Persons.

The Issuer will, no later than the fifth Business Day prior to each Payment Date, cause eachdetermination of a Principal Payment on each Note (if any) and of the Outstanding Principal

Amount on each Note and on each Class of Notes to be notified forthwith by the Calculation

Agent to the Representative of the Noteholders, Monte Titoli, the Class D Notes Depository,

the Paying Agents, the Luxembourg Listing Agent and the Luxembourg Stock Exchange and will

cause a notice thereof to be distributed in accordance with Condition 13 (Notices). If no

Principal Payment is due to be made on any Class of Notes on a Payment Date, a notice to this

effect will be given by or on behalf of the Issuer to the Noteholders of such Class or Classes in

accordance with Condition 13 (Notices).

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If no available funds for amortisation, Principal Payment on each Note or Outstanding Principal

Amount on each Note and on each Class of Notes is determined by the Calculation Agent in

accordance with the preceding provisions of this Condition, such available funds for

amortisation, Principal Payment on each Note and Outstanding Principal Amount on each Note

and on each Class of Notes shall be determined by the Representative of the Noteholders in

accordance with the provisions of this Condition 6 and each such determination or calculation

shall be deemed to have been made by the Calculation Agent.

6.7 Notice of Redemption

Any such notice as is referred to in Conditions 6.2 (Mandatory Pro Rata Redemption), 6.3

(Optional Redemption of the Senior Notes), 6.4 (Optional Redemption of the Class D Notes) and

6.5 (Redemption for Taxation) above shall be irrevocable and, upon the expiration of such notice,

the Issuer shall be bound to redeem the Notes of the relevant Class or Classes in accordancewith this Condition 6 (Redemption, Purchase and Cancellation).

All notices referred to in the immediately preceding paragraph shall be delivered to the

Luxembourg Stock Exchange or, as the case may be, the Class D Notes Depository and the

Noteholders will be informed in accordance with Condition 13 (Notices).

6.8 No purchase by Issuer

The Issuer shall not purchase any of the Notes.

6.9 Limited Recourse

If:

(a) following the delivery of a Trigger Notice or the occurrence of an Insolvency Event andfollowing the taking by the Representative of the Noteholders of all actions to enforce the

Noteholders’ rights in respect of the Portfolios and all the Issuer’s Rights; or

(b) no Trigger Notice has been delivered or Insolvency Event has occurred, on the Final

Maturity Date,

the aggregate funds available to the Issuer for application in or towards any payment obligation

in accordance with the provisions of the relevant Order of Priority (for the purposes of this

Condition, the ‘‘Relevant Obligation’’) on any Class of Notes (for the purpose of this Condition,

the ‘‘Relevant Notes’’) which, but for the operation of this Condition 6.9, would be due andpayable, are not sufficient to pay in full the aggregate amount which, but for the operation of

this Condition 6.9, would be due and payable on the Relevant Notes in respect of the Relevant

Obligations on the relevant date, then, notwithstanding any other provision in these Conditions,

only a pro rata share of the funds which are available to make payments in respect of the

Relevant Obligation on the Relevant Notes shall be due and payable on any Relevant Note on

the relevant date and the balance of the amount outstanding in respect of the Relevant

Obligation on the Relevant Notes which, but for the operation of this Condition 6.9, would be

due and payable, shall not become due and payable and shall be definitively cancelled. The pro

rata amount due and payable in respect of any Relevant Note shall be calculated by multiplying

the amounts available to make payments in respect of the Relevant Obligation on the Relevant

Note by a fraction, the numerator of which is the Outstanding Principal Amount of such

Relevant Note and the denominator of which is the aggregate Outstanding Principal Amount of

all the Relevant Notes (rounding down the resulting figure to the nearest Euro cent).

7. PAYMENTS

7.1 Payment of principal and interest in respect of the outstanding Senior Notes will be credited,

according to the instructions of Monte Titoli, by the Account Bank upon instructions from the

Principal Paying Agent on behalf of the Issuer to the accounts of those banks and authorised

brokers whose accounts with Monte Titoli are credited with such Senior Notes and thereafter

credited by such banks and authorised brokers from such aforementioned accounts to the

accounts of the beneficial owners of the Senior Notes or through Euroclear Bank S.A./N.V., as

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operator of the Euroclear system (‘‘Euroclear’’) and Clearstream Banking S.A. (‘‘Clearstream’’) to

the accounts with Euroclear and Clearstream of the beneficial owners of the Senior Notes, in

accordance with the rules and procedures of Monte Titoli, Euroclear or Clearstream, as the case

may be.

7.2 Payment of interest, Additional Return and repayment of principal on the Class D Notes shall

be made against presentation and (in the case of final redemption) surrender of the Note

Certificate at the specified office of the Class D Notes Depository outside the United States by aEuro cheque drawn on, or by transfer to a Euro account maintained by the payee with, a bank

in a city in the European Union in which banks have access to the TARGET System.

7.3 Payments of principal and interest in respect of the Notes and the payment of Additional Return

on the Class D Notes are subject in all cases to any fiscal or other laws and regulations

applicable thereto.

7.4 If the due date for any payment of principal and/or interest (or any later date on which anyNote could otherwise be presented for payment) is not a Business Day, the relevant Noteholder

will not be entitled to payment of the relevant amount until the immediately succeeding Business

Day. Noteholders will not be entitled to any interest or other payment for any delay in receiving

the amount due as a result of the due date thereof not being a Business Day.

7.5 The Issuer reserves the right, at any time to vary or terminate the appointment of the Principal

Paying Agent and to appoint another Principal Paying Agent in accordance with the terms and

conditions of Cash Allocation, Management and Payments Agreement. The Issuer shall make

certain that there is at least 30 days’ prior written notice with respect to any replacement of thePrincipal Paying Agent in accordance with Condition 13 (Notices).

7.6 The Issuer reserves the right, at any time to vary or terminate the appointment of the

Luxembourg Listing Agent and to appoint another Luxembourg Listing Agent in accordance

with the terms and conditions of the Luxembourg Agency Agreement, provided that (for as long

as the Senior Notes are listed on the Luxembourg Stock Exchange and the rules of the

Luxembourg Stock Exchange so require) the Issuer will at all times maintain a listing agent with

a specified office in Luxembourg.

7.7 The Issuer reserves the right, at any time to vary or terminate the appointment of the Class D

Notes Depository and to appoint another Class D Notes Depository in accordance with the

terms and conditions of the Depository Agreement.

8. TAXATION

All payments in respect of the Notes will be made without withholding or deduction for or on

account of any present or future taxes, duties or charges of any nature whatsoever other than a

Decree 239 Withholding or any other withholding or deduction required to be made by

applicable law. The Issuer shall not be obliged to pay any additional amount to any Noteholder

on account of such withholding or deduction.

9. PRESCRIPTION

9.1 Claims against the Issuer for payments in respect of the Notes shall be prescribed and become

void unless made within ten years (in the case of principal) or five years (in the case of interest)

from the Relevant Date in respect thereof.

9.2 In this Condition 9 (Prescription), the ‘‘Relevant Date’’, in respect of a Note, is the date on

which a payment in respect thereof first becomes due and payable or (if the full amount of the

monies payable in respect of all the Notes and accrued on or before that date has not been dulyreceived by the Principal Paying Agent or the Representative of the Noteholders on or prior to

such date) the date on which notice that the full amount of such monies has been received is

duly given to the Noteholders in accordance with Condition 13 (Notices).

10. TRIGGER EVENTS

If any of the following events occur:

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a. Non-payment of interest

the Interest Payment Amount on any Class A Notes on a Payment Date is not paid in full on

the due date or within a period of three Business Days; or

b. Breach of obligations

the Issuer defaults in the performance or observance of any of its other obligations under or in

respect of the Notes or any of the Transaction Documents to which it is a party (other than any

obligation for the payment of interest on the Class A Notes) and (except where, in the sole and

absolute opinion of the Representative of the Noteholders, such default is incapable of remedy

(in which case no notice will be required)), such default continues and remains unremedied for

30 days after the Representative of the Noteholders has given written notice thereof to theIssuer, certifying that such default is, in the opinion of the Representative of the Noteholders,

materially prejudicial to the interests of the Senior Noteholders; or

c. Insolvency etc.

(i) an administrator, administrative receiver or liquidator of the Issuer is appointed overor in respect of the whole or any part of the undertaking, assets and/or revenues of

the Issuer or the Issuer becomes subject to any bankruptcy, liquidation,

administration, insolvency, composition, reorganisation (among which, without

limitation, ‘‘fallimento’’, ‘‘concordato preventivo’’ and ‘‘amministrazione controllata’’

within the meaning ascribed to those expressions by the laws of the Republic of

Italy) or similar proceedings (or application for the commencement of any such

proceeding) or an encumbrancer takes possession of the whole or any substantial

part of the undertaking or assets of the Issuer; or

(ii) proceedings are initiated against the Issuer under any applicable bankruptcy,liquidation, administration, insolvency, composition, reorganisation or similar laws

and proceedings are not, in the opinion of the Representative of the Noteholders,

being disputed in good faith; or

(iii) the Issuer takes any action for a readjustment or deferment of any of its obligations

or makes a general assignment or an arrangement or composition with or for the

benefit of its creditors or is granted by a competent court a moratorium in respect

of any of its indebtedness or any guarantee of any indebtedness given by it or

applies for bankruptcy or suspension of payments; or

d. Winding up etc.

an order is made or an effective resolution is passed for the winding up, liquidation or

dissolution of the Issuer except a winding up for the purposes of or pursuant to an

amalgamation or reconstruction, the terms of which have been previously approved in writing by

the Representative of the Noteholders or by an extraordinary resolution of the Class ANoteholders or, if no Class A Notes are outstanding, the Class B Noteholders or, if no Class B

Notes are outstanding, the Class C Noteholders or, if no Class C Notes are outstanding, the

Class D Noteholders; or

e. Unlawfulness

it is or will become unlawful in any respect deemed by the Representative of the Noteholders to

be material for the Issuer to perform or comply with any of its obligations under or in respect

of the Notes or any Transaction Document to which it is a party,

(each a ‘‘Trigger Event’’):

(i) if the Trigger Event is other than an Insolvency Event, the Representative of the

Noteholders may, at its sole discretion (but not in the case of events under paragraph (b)

(Breach of Obligations) above), or if instructed by an Extraordinary Resolution of the

Class A Noteholders or, if no Class A Notes are outstanding, the Class B Noteholders or,

if no Class B Notes are outstanding, the Class C Noteholders or, if no Class C Notes are

outstanding, the Class D Noteholders, shall serve a notice (the ‘‘Trigger Notice’’) on the

Issuer; and/or

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(ii) (x) if the Trigger Event is an Insolvency Event; or (y) if the Trigger Event is other than an

Insolvency Event, subject to the delivery of a Trigger Notice pursuant to sub-paragraph (i)

above, the Representative of the Noteholders shall be entitled to direct the sale of the

Portfolios (in whole or in part), provided, however, that a sufficient amount shall be

realised to allow discharge in full of all amounts owing to the Senior Noteholders and

amounts ranking in priority thereto or pari passu therewith.

Upon the delivery by the Representative of the Noteholders of a Trigger Notice or upon the

occurrence of an Insolvency Event, the Notes shall forthwith become immediately due and

repayable at their Outstanding Principal Amount together with interest accrued as provided in

Condition 4.2 (Post-Enforcement Order of Priority).

In these Conditions,

‘‘Insolvency Event’’ means any of the events set forth in Condition 10 (Trigger Events), sub-

paragraphs (c)(i), (ii) or (iii) above.

11. ENFORCEMENT

11.1 At any time after a Trigger Notice has been delivered or upon the occurrence of an Insolvency

Event, the Representative of the Noteholders may and shall, if so requested or authorised by anExtraordinary Resolution of the Noteholders of the Class A Notes or, if no Class A Notes are

outstanding, of the Class B Notes or, if no Class B Notes are outstanding, of the Class C Notes

or, if no Class C Notes are outstanding, of the Class D Notes, take such steps and/or institute

such proceedings against the Issuer as it may think fit to enforce repayment of the Notes and

payment of accrued interest thereon in accordance with the Rules of the Organisation of the

Noteholders.

11.2 All notifications, opinions, determinations, certificates, calculations, quotations and decisions

given, expressed, made or obtained for the purposes of Condition 10 (Trigger Events) or this

Condition 11 (Enforcement) by the Representative of the Noteholders shall (in the absence of

wilful misconduct (dolo) or gross negligence (colpa grave)) be binding on the Issuer and allNoteholders and (in such absence as aforesaid) no liability to the Noteholders or the Issuer shall

attach to the Representative of the Noteholders in connection with the exercise or non-exercise

by it of its powers, duties and discretion hereunder.

11.3 In the event that the Representative of the Noteholders takes action to enforce the rights of

Noteholders of any Class in respect of the Portfolios and the Issuer’s Rights and after payment

of all other claims ranking in priority to the Notes under the Conditions and the Intercreditor

Agreement, if the remaining proceeds of such enforcement (the Representative of the Noteholders

having taken action to enforce the Noteholders’ rights in respect of the Portfolios and all the

Issuer’s Rights) are insufficient to pay in full all principal and interest and other amounts

howsoever due in respect of any Class of Notes and all other claims ranking pari passu

therewith, then the Noteholders’ claims against the Issuer in respect of such Notes will be limitedto the extent of their respective pro rata share of such remaining proceeds (if any) and the

obligations of the Issuer to such Noteholders under the relevant Class of Notes will be deemed

discharged in full and any amount in respect of principal, interest or other amounts due under

such Class of Notes will be finally and definitively cancelled.

12. APPOINTMENT AND REMOVAL OF THE REPRESENTATIVE OF THE NOTEHOLDERS

12.1 The Organisation of the Noteholders shall be established upon and by virtue of the issuance of

the Notes and shall remain in force and in effect until repayment in full or cancellation of the

Notes.

12.2 Pursuant to the Rules of the Organisation of the Noteholders (attached hereto as Exhibit 1), for

as long as any Note is outstanding, there shall at all times be a Representative of the

Noteholders. The Representative of the Noteholders is the legal representative (rappresentante

legale) of the Organisation of the Noteholders. The appointment of the Representative of the

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Noteholders is made by the Noteholders subject to and in accordance with the Rules of the

Organisation of the Noteholders, except for the initial Representative of the Noteholders, who is

appointed at the time of issue of the Notes pursuant to the Subscription Agreements. Each

Noteholder is deemed to accept such appointment.

12.3 Pursuant to the provisions of the Rules of the Organisation of the Noteholders, the

Representative of the Noteholders can be removed by the Noteholders at any time, provided a

successor Representative of the Noteholders is appointed and such appointment is notified in

accordance with Condition 13 (Notices). Such successor to the Representative of the Noteholders

shall be:

(a) a bank incorporated in any jurisdiction of the European Union or a bank incorporated inany other jurisdiction acting through an Italian branch or through a branch situated in a

European Union country; or

(b) a company or financial institution registered under article 107 of the Consolidated Banking

Act; or

(c) any other entity which may be permitted by any specific provisions of Italian law

applicable to the securitisation of monetary rights and/or by any regulations, instructions,

guidelines and/or specific approvals issued by the competent Italian supervising authorities.

12.4 The Rules of the Organisation of the Noteholders contain provisions governing, inter alia, the

terms of appointment, indemnification and exoneration from responsibility (and relief from

responsibility) of the Representative of the Noteholders (including provisions relieving it from

taking action unless indemnified to its satisfaction and providing for the indemnification of theRepresentative of the Noteholders in certain other circumstances) and provisions which govern

the termination of the appointment of the Representative of the Noteholders and amendments to

the terms of such appointment.

13. NOTICES

13.1 So long as the Senior Notes are held by Monte Titoli on behalf of the beneficial owners thereof,

notices to the Senior Noteholders may be given through the systems of Monte Titoli. In

addition, so long as the Senior Notes of any Class are listed on the Luxembourg StockExchange and the rules of the Luxembourg Stock Exchange so require, any notice regarding the

Senior Notes of such Class to such Noteholders shall be deemed to have been duly given if

published in a leading newspaper that has general circulation in Luxembourg (which is expected

to be the Luxemburger Wort) or if this is not practicable, in another appropriate English

language newspaper that has general circulation in Europe. Any such notice shall be deemed to

have been given on the date of such publication or, if published more than once or on different

dates, on the first date on which publication is made in the manner required in a newspaper as

referred to above.

13.2 Any notice to the Class D Noteholders shall be deemed to have been duly given if given to theClass D Notes Depository.

13.3 The Representative of the Noteholders may sanction some other method of giving notice to the

Noteholders of the relevant Class if, in its opinion, such other method is reasonable with regard

to prevailing market practices and to the rules of the stock exchange on which the Notes of the

relevant Class are listed and provided that notice of such other method is given to the

Noteholders of the relevant Class in such manner as the Representative of the Noteholders shall

require.

14. GOVERNING LAW

14.1 The Notes are governed by Italian law.

14.2 All the Transaction Documents are governed by Italian law with the exception of the Senior

Notes Subscription Agreement, the English Deed of Charge and the Swap Agreement which are

governed by English law.

14.3 The Courts of Milan, Italy shall have exclusive jurisdiction to settle any disputes that may arise

out of or in connection with the Notes.

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EXHIBIT 1

RULES OF THE ORGANISATION OF THE NOTEHOLDERS

TITLE I

GENERAL PROVISIONS

Article 1

(General)

The Organisation of the Noteholders is created by the issue and by the subscription for the

Notes, and shall remain in force and in effect until full repayment or cancellation of the Notes.

The contents of these Rules are deemed to form part of each Note issued by the Issuer.

Article 2

(Definitions)

In these Rules, the following expressions have the following meanings:

‘‘Agent’’ means each of Deutsche Bank S.p.A., Deutsche Bank AG London and Deutsche Bank

Luxembourg S.A. in respect of the Senior Notes, and the Class D Notes Depository in respect

of the Class D Notes.

‘‘Arbitration Panel’’ means the arbitration panel as set forth in Article 32.

‘‘Basic Terms Modification’’ means:

(a) a modification of the date of maturity of the relevant Class of Notes;

(b) a modification which would have the effect of postponing any date for payment of interest

on the Notes;

(c) a modification which would have the effect of reducing or cancelling the amount ofprincipal repayable in respect of a Class of Notes or the rate of interest applicable in

respect of a Class of Notes;

(d) a modification which would have the effect of altering the majority of votes required to

pass a specific resolution or the quorum required at any meeting;

(e) a modification which would have the effect of altering the currency of payment of a Class

of Notes or any alteration of the date of redemption or priority of a Class of Notes;

(f) a modification which would have the effect of altering the authorisation or consent by the

Noteholders, as pledgees, to applications of funds as provided for in the Transaction

Documents;

(g) the appointment and removal of the Representative of the Noteholders; and/or

(h) an amendment of this definition.

‘‘Block Voting Instruction’’ means, in relation to any Meeting, a document:

(a) certifying that certain specified Notes (the ‘‘Blocked Notes’’) have been blocked in an

account with a clearing system or the Depository, as the case may be, and will not be

released until the conclusion of the Meeting;

(b) certifying that the holder of each Blocked Note or a duly authorised Person on its behalf

has instructed the relevant Agent that the votes attributable to such Blocked Note are to be

cast in a particular way on each resolution to be put to the Meeting and that, during the

period of 48 hours before the time fixed for the Meeting, such instructions may not be

amended or revoked;

(c) listing the total number of the Blocked Notes, distinguishing for each resolution between

those in respect of which instructions have been given to vote for, or against, the

resolution; and

(d) authorising a named individual or individuals to vote in respect of the Blocked Notes in

accordance with such instructions.

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‘‘Board of Directors’’ means the board of directors of the Issuer.

‘‘Business’’ means, in relation to any Meeting, the matters to be proposed to a vote of the

Noteholders at the Meeting.

‘‘Chairman’’ means, in relation to any Meeting, the individual who takes the chair in accordance

with Article 9 of these Rules.

‘‘Class A Noteholders’’ means the holders of the Class A Notes.

‘‘Class B Noteholders’’ means the holders of the Class B Notes.

‘‘Class C Noteholders’’ means the holders of the Class C Notes.

‘‘Class D Noteholders’’ means the holders of the Class D Notes.

‘‘Class of Notes’’ means the Class A Notes, the Class B Notes, the Class C Notes or the Class D

Notes.

‘‘Conditions’’ means the terms and conditions of the Class A Notes, the Class B Notes, the Class

C Notes or the Class D Notes, as the context may require and any reference to a numbered

relevant ‘‘Condition’’ is to the corresponding numbered provision thereof.

‘‘Depository’’ means BPV in its capacity as the depository of the Class D Notes.

‘‘Extraordinary Resolution’’ means a resolution of a Meeting of the Relevant Class Noteholders,

duly convened and held in accordance with the provisions contained in these Rules.

‘‘Issuer’’ means Berica Residential MBS 1 S.r.l.

‘‘Meeting’’ means a meeting of the Noteholders or a Class of Noteholders (whether originallyconvened or resumed following an adjournment).

‘‘Notes’’ and ‘‘Noteholders’’ shall mean:

(a) in connection with a Meeting of Class A Noteholders, the Class A Notes and the Class A

Noteholders respectively;

(b) in connection with a Meeting of Class B Noteholders, the Class B Notes and the Class B


(c) in connection with a Meeting of Class C Noteholders, the Class C Notes and Class C

Noteholders

(d) respectively;

(e) in connection with a Meeting of Class D Noteholders, the Class D Notes and Class D


and otherwise, in the case of a joint Meeting of the Noteholders of more than one Class, any or

all of the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes and any

or all of the Class A Noteholders, the Class B Noteholders, the Class C Noteholders and the

Class D Noteholders, respectively.

‘‘Proxy’’ means, in relation to any Meeting, a person appointed to vote under a Block Voting

Instruction.

‘‘Relevant Class Noteholders’’ means the Class A Noteholders, the Class B Noteholders, the Class

C Noteholders or the Class D Noteholders, as the context may require.

‘‘Relevant Fraction’’ means:

(a) one-twentieth of the Outstanding Principal Amount of the outstanding Notes in that Class

for all business other than voting on an Extraordinary Resolution;

(b) for voting on any Extraordinary Resolution other than one relating to a Basic Terms

Modification, two-thirds of the Outstanding Principal Amount of the outstanding Notes in

that Class (in case of a meeting of a particular Class of the Notes), or two-thirds of the

Outstanding Principal Amount of the outstanding Notes of such Classes (in case of a

meeting of a joint meeting of more than one Class of Notes); and

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(c) for voting on any Extraordinary Resolution relating to a Basic Terms Modification (which

must be proposed separately to each Class of Noteholders), three-quarters of the

Outstanding Principal Amount of the outstanding Notes in that Class,

provided, however, that, in the case of a Meeting which has resumed after adjournment for lack

of a quorum, it means:

(a) for all business other than voting on an Extraordinary Resolution relating to a Basic Terms

Modification, more than one third of the Outstanding Principal Amount of the outstanding

Notes in that Class or, in the case of a joint Meeting of more than one Class of Notes,those Classes; and

(b) for voting on any Extraordinary Resolution relating to a Basic Terms Modification (which

must be proposed separately to each Class of Noteholders), more than fifty per cent. (50%)

of the Outstanding Principal Amount of the outstanding Notes in that Class.

‘‘Rules’’ means these Rules of the Organisation of the Noteholders;

‘‘Senior Noteholders’’ means the Class A Noteholders, the Class B Noteholders and the Class C

Noteholders.

‘‘Senior Notes’’ means Class A Notes, Class B Notes and Class C Notes.

‘‘Specified Office’’ means the office of the Agent located at, in the case of the Senior Notes,Deutsche Bank S.p.A., Viale Legioni Romane 27, 20147 Milan, Italy, in respect of Deutsche

Bank AG London, Winchester House, 1 Great Winchester Street, London, England, in respect

of Deutsche Bank Luxembourg S.A., 2 Boulevard Konrad Adenauer, L-1115 Luxembourg and in

the case of the Class D Notes and the Class D Notes Depository, Via Btg. Framarin 18, 36100

Vicenza, Italy.

‘‘Voter’’ means, in relation to any Meeting, the holder of a Blocked Note.

‘‘Voting Certificate’’ means, in relation to any Meeting, a certificate issued by the Agent and

dated in which it is stated:

(a) that the Blocked Notes have been blocked in an account with a clearing system or the

Depository, as the case may be, and will not be released until the conclusion of the

Meeting; and

(b) that the bearer of such certificate is entitled to attend and vote at the Meeting in respect of

the Blocked Notes.

‘‘Written Resolution’’ means a resolution in writing signed by or on behalf of all Noteholders

who for the time being are entitled to receive notice of a Meeting in accordance with the

provisions of these Rules, whether contained in one document or several documents in the sameform, each signed by or on behalf of one or more such Noteholders.

‘‘24 hours’’ means a period of 24 hours including all or part of a day upon which banks are

open for business in the place where the Meeting of the Relevant Class Noteholders is to be held

and in the place where the Agent has its Specified Office (disregarding for this purpose the day

upon which such Meeting is to be held) and such period shall be extended by one or, to the

extent necessary, more periods of 24 hours until there is included as aforesaid all or part of a

day upon which banks are open for business as aforesaid.

‘‘48 hours’’ means two consecutive periods of 24 hours.

Other defined terms and expressions shall have the meaning given to them in the Conditions.

Article 3

(Organisation purpose)

Each Noteholder is a member of the Organisation of Noteholders.

The purpose of the Organisation of the Noteholders is to coordinate the exercise of the rights of

the Noteholders and, more generally, the taking of any action for the protection of theirinterests.

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In these Rules, any reference to Noteholders shall be considered as a reference as the case may

be, to the Class A Noteholders, the Class B Noteholders, the Class C Noteholders and/or the

Class D Noteholders or, where the context requires, a reference to the Class A Noteholders, the

Class B Noteholders, the Class C Noteholders and the Class D Noteholders collectively.

TITLE II

THE MEETING OF NOTEHOLDERS

Article 4

(General)

Subject to Article 20 below, any resolution passed at a Meeting duly convened and held in

accordance with these Rules shall be binding upon all the Noteholders of such Class, whether or

not present at such Meeting and whether or not voting, and:

(a) any resolution passed at a meeting of the Class A Noteholders duly convened and held as

aforesaid shall also be binding upon all the Class B Noteholders, the Class C Noteholders

and the Class D Noteholders;

(b) any resolution passed at a meeting of the Class B Noteholders duly convened and held as

aforesaid shall also be binding upon all the Class C Noteholders and the Class D

Noteholders;

(c) any resolution passed at a meeting of the Class C Noteholders duly convened and held as

aforesaid shall also be binding upon all the Class D Noteholders; and

(d) in each case above, all the relevant Classes of Noteholders shall be bound to give effect to

any such resolution accordingly and the passing of any such resolution shall be conclusive

evidence that the circumstances justify the passing thereof.

Notice of the result of every vote on a resolution duly considered by the Noteholders shall be

published, at the expense of the Issuer, in accordance with the Conditions and given to the

Agent (with a copy to the Board of Directors and the Representative of the Noteholders) within14 days of the conclusion of the Meeting.

Subject to the provisions of these Rules and the Conditions, joint meetings of the Class ANoteholders, the Class B Noteholders, the Class C Noteholders and the Class D Noteholders

may be held to consider the same resolution and/or, as the case may be, the same Extraordinary

Resolution (other than an Extraordinary Resolution relating to a Basic Terms Modification) and

the provisions of these Rules shall apply mutatis mutandis thereto.

The following provisions shall apply where outstanding Notes belong to more than one Class:

(a) Business which in the opinion of the Representative of the Noteholders affects only one

Class of Notes shall be transacted at a separate Meeting of the relevant Noteholders;

(b) Business which in the opinion of the Representative of the Noteholders affects more than

one Class of Notes but does not give rise to an actual or potential conflict of interest

between the Noteholders of one such Class of Notes and the Noteholders of any other

Class of Notes shall be transacted either at separate Meetings of the Noteholders of each

such Class of Notes or at a single Meeting of the Noteholders of all such Classes of Notes

as the Representative of the Noteholders shall determine in its absolute discretion; and

(c) Business which in the opinion of the Representative of the Noteholders affects the

Noteholders of more than one Class of Notes and gives rise to an actual or potential

conflict of interest between the Noteholders of one such Class of Notes and the

Noteholders of any other Class of Notes shall be transacted at separate Meetings of the

Noteholders of each such Class.

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Article 5

(Issue of Voting Certificates and Block Voting Instructions)

Noteholders may obtain a Voting Certificate from the Agent or require the Agent to issue a

Block Voting Instruction by arranging for such Note to be blocked in an account with a clearing

system or the Depository, as the case may be, not less than 48 hours before the time fixed for a

Meeting, providing to the Agent, where appropriate, evidence that the Notes are so blocked. Inthe case of the Senior Notes, Noteholders may obtain such evidence by requesting their Monte

Titoli Account Holders to release a certificate in accordance with Article 34 of CONSOB

Regulation 11768 of 23 December 1998 (as subsequently amended and supplemented). A Voting

Certificate or Block Voting Instruction shall be valid until the release of the Blocked Notes to

which it relates. So long as a Voting Certificate or Block Voting Instruction is valid, the bearer

thereof (in the case of a Voting Certificate) or any Proxy named therein (in the case of a Block

Voting Instruction) shall be deemed to be the holder of the Blocked Notes to which it relates for

all purposes in connection with the Meeting. A Voting Certificate and a Block Voting Instructioncannot be outstanding simultaneously in respect of the same Note.

Article 6

(Validity of Block Voting Instructions)

A Block Voting Instruction shall be valid only if it is deposited at the Specified Office of the

Agent, or at some other place approved by the Agent, at least 24 hours before the time fixed fora Meeting and if not deposited before such deadline, the Block Voting Instruction shall not be

valid unless the Chairman decides otherwise before the Meeting proceeds to Business. If the

Agent requires, a notarised copy of each Block Voting Instruction and satisfactory proof of the

identity of each Proxy named therein shall be produced at the Meeting, but the Agent shall not

be obliged to investigate the validity of any Block Voting Instruction or the authority of any

Proxy.

Article 7

(Convening of Meeting)

The Board of Directors and the Representative of the Noteholders may convene a Meeting at

any time, and shall be obliged to do so upon the request in writing of Noteholders holding not

less than one-twentieth of the aggregate principal amount of the outstanding Notes of the Class

or Classes in respect of which the Meeting is being convened.

Whenever the Board of Directors intends to convene any such Meeting, it shall immediately givewritten notice to the Representative of the Noteholders of the day, time and place thereof and of

the nature of the Business to be transacted thereat. Every such Meeting shall be held at such

place as the Representative of the Noteholders may designate or approve.

Article 8

(Notice)

At least 21 days’ prior notice (exclusive of the day on which the notice is given and of the day

on which the Meeting is to be held) specifying the date, time and place of the Meeting shall be

given to the relevant Noteholders and the Agent (with a copy to the Board of Directors and to

the Representative of the Noteholders) and published in accordance with Condition 13 (Notices)

at least 15 days before the date of the Meeting. The notice shall set forth the full text of any

resolutions to be proposed and shall state that the Notes may be deposited with, or to the order

of, the Agent for the purpose of obtaining Voting Certificates or appointing Proxies not later

than 48 hours before the time fixed for the Meeting.

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Article 9

(Chairman of the Meeting)

Any individual (who may, but need not, be a Noteholder) nominated in writing by the

Representative of the Noteholders may take the chair at any Meeting but: (i) if no such

nomination is made; (ii) if the individual nominated is not present within 15 minutes after the

time fixed for the Meeting; or (iii) the Meeting resolves not to approve the appointment made by

the Representative of the Noteholders, those present shall elect one of themselves to take the

chair failing which, the Board of Directors may appoint a Chairman. The Chairman of an

adjourned Meeting need not be the same person as the Chairman of the original Meeting.

The Chairman coordinates matters to be transacted at the Meeting and monitors the fairness of

the Meeting’s proceedings.

Article 10

(Quorum)

The quorum at any Meeting shall be at least two Voters representing or holding not less than

the Relevant Fraction of the aggregate principal amount outstanding on the Notes of the

relevant Class or Classes.

Article 11

(Adjournment for want of quorum)

If within 15 minutes after the time fixed for any Meeting a quorum is not present, then it shall

be adjourned for such period (which shall be not less than 14 days and not more than 42 days)and at such place as the Chairman determines; provided, however, that no Meeting may be

adjourned more than once by resolution of Meeting that represents less than a Relevant Fraction

applicable in the case of Meetings which have been resumed after adjournment. Notice shall be

published in accordance with Condition 13 (Notices) of the relevant Class of Notes at least 8

days before the date of the meeting.

Article 12

(Adjourned Meeting)

The Chairman may, with the consent of (and shall if directed by) any Meeting, adjourn such

Meeting from time to time and from place to place, provided that no Business shall be transacted

at any adjourned Meeting except Business which might lawfully have been transacted at theMeeting from which the adjournment took place.

Article 13

(Notice following adjournment)

Article 8 shall apply to any Meeting which is to be resumed after adjournment save that:

(a) 8 days’ prior notice (exclusive of the day on which the notice is given and of the day on

which the Meeting is to be resumed) shall be sufficient; and

(b) the notice shall specifically set forth the quorum requirements which will apply when the

Meeting resumes.

It shall not be necessary to give notice of the resumption of a Meeting which has been

adjourned for any other reason.

Article 14

(Participation)

The following may attend and speak at a Meeting:

(a) Voters;

(b) members of the Board of Directors or other representatives of the Issuer and the Agent;

(c) the financial advisers to the Issuer;

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(d) the legal counsel to the Issuer, the Representative of the Noteholders and the Agent;

(e) the Representative of the Noteholders; and

(f) such other person as may be resolved by the Meeting.

Article 15

(Show of hands)

Every question submitted to a Meeting shall be decided in the first instance by a show of hands.Unless a poll is validly demanded before or at the time that the result of the show of hands is

declared, the Chairman’s declaration that on a show of hands a resolution has been passed,

passed by a particular majority, rejected or rejected by a particular majority shall be conclusive,

without proof of the number of votes cast for, or against, the resolution.

Article 16

(Poll)

A demand for a poll shall be valid if it is made by the Chairman, the Issuer, the Representative

of the Noteholders or one or more Voters representing or holding not less than ten (10) Notes.

The poll may be taken immediately or after such adjournment as the Chairman directs, but any

poll demanded on the election of the Chairman or on any question of adjournment shall be

taken at the Meeting without adjournment. A valid demand for a poll shall not prevent the

continuation of the Meeting for any other Business as the Chairman directs.

Article 17

(Votes)

Every Voter shall have:

(i) on a show of hands, one vote; and

(ii) on a poll, one vote in respect of each Euro 1,000 in aggregate face amount of the

outstanding Note(s) represented or held by such Voter.

In the case of a voting tie the Chairman shall have a casting vote.

Unless the terms of any Block Voting Instruction state otherwise, a Voter shall not be obliged toexercise all the votes to which he is entitled or to cast all the votes which he exercises in the

same manner.

Article 18

(Vote by Proxies)

Any vote by a Proxy in accordance with the relevant Block Voting Instruction shall be valid

even if such Block Voting Instruction or any instruction pursuant to which it was given has beenamended or revoked, provided that the Agent has been notified in writing of such amendment or

revocation not less than 24 hours before the time fixed for the Meeting. Unless revoked, any

appointment of a Proxy under a Block Voting Instruction in relation to a Meeting shall remain

in force in relation to any Meeting resumed following an adjournment, except for any

appointment of a Proxy in relation to a Meeting originally convened which has been adjourned

for want of a quorum. Any person appointed to vote at such a Meeting must be re-appointed

under a Block Voting Instruction to vote at the Meeting when it is resumed.

Article 19

(Exclusive Powers of the Meeting)

The Meeting shall have exclusive powers on the following matters:

(a) to approve any Basic Terms Modification;

(b) to approve any proposal by the Issuer for any modification, abrogation, variation or

compromise of any of the Conditions or any arrangement in respect of the obligations of

the Issuer under or in respect of the Notes;

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(c) to approve the substitution of any Person for the Issuer (or any previous substitute) as

principal obligor under the Notes;

(d) to authorise the Representative of the Noteholders to deliver a Trigger Notice, as a

consequence of a Trigger Event, under Condition 10 (Trigger Events);

(e) to waive any breach or authorise any proposed breach by the Issuer of its obligations

under or in respect of the Notes or any act or omission which might otherwise constitute a

Trigger Event under the Notes;

(f) to authorise the Representative of the Noteholders to agree to and execute and perform all

such documents, acts and things as may be necessary to carry out and give effect to any

Written Resolution;

(g) to exercise, enforce or dispose of any right and power on payment and application of funds

deriving from any claims on which a pledge or other security interest is created in favour

of the Noteholders, otherwise than in accordance with the Transaction Documents; and

(h) to appoint and remove the Representative of the Noteholders.

Article 20

(Powers exercisable by Extraordinary Resolution)

A Meeting shall, in addition to the powers noted herein, have the following powers exercisable

by Extraordinary Resolution:

(a) power to sanction any proposal by the Issuer for any alteration, abrogation, variation or

compromise of, or arrangement in respect of, the rights of the Noteholders against the

Issuer or against any of its property or against any other Person whether such rights shall

arise under these Rules, the Notes or otherwise;

(b) power to sanction any scheme or proposal for the exchange or substitution or sale of any

of the Notes or of any Class of Notes for, or the conversion of any of the Notes or any

Class of Notes into, or the cancellation of any of the Notes or any Class of Notes, in

consideration of shares, stock, notes, bonds, debentures, debenture stock and/or other

obligations and/or securities of the Issuer or of any other body corporate formed or to beformed, or for or into or in consideration of cash, or partly for or into or in consideration

of such shares, stock, notes, bonds, debenture stock and/or other obligations and/or

securities as aforesaid and partly for or into or in consideration of cash;

(c) power to assent to any alteration of the provisions contained in these Rules, the Notes orany Class of Notes, the Intercreditor Agreement, the Cash Allocation, Management and

Payments Agreement or any other Transaction Document which shall be proposed by the

Issuer and/or the Representative of the Noteholders or any other party thereto;

(d) power to discharge or exonerate the Representative of the Noteholders from any liability inrespect of any act or omission for which the Representative of the Noteholders may have

become responsible under or in relation to these Rules, the Notes, any Class of Notes or

any other Transaction Document;

(e) power to give any authority, direction or sanction which under the provisions of these

Rules or the Notes or any Class of Notes, is required to be given by ExtraordinaryResolution;

(f) power to authorise and sanction the actions, in compliance with these Rules, of the

Representative of the Noteholders under the terms of the Intercreditor Agreement and any

other Transaction Documents and in particular power to sanction the release of the Issuerby the Representative of the Noteholders;

(g) following the delivery of a Trigger Notice or upon the occurrence of an Insolvency Event,

power to resolve on the sale of one or more Claim(s) comprised in the Portfolios; and

(h) power to sanction a Basic Terms Modification,

provided that:

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(a) no Extraordinary Resolution involving a Basic Terms Modification passed by:

a. the Class D Noteholders shall be effective unless it is sanctioned by an Extraordinary

Resolution of the Class A Noteholders, the Class B Noteholders and the Class C

Noteholders (to the extent that the Class A Notes, the Class B Notes and Class C Notes

are then outstanding);

b. the Class C Noteholders shall be effective unless it is sanctioned by an Extraordinary

Resolution of the Class A Noteholders and the Class B Noteholders (to the extent that the

Class A Notes and Class B Notes are then outstanding); and

c. the Class B Noteholders shall be effective unless it is sanctioned by an Extraordinary

Resolution of the Class A Noteholders (to the extent that the Class A Notes are then

outstanding);

(b) no Extraordinary Resolution involving a Basic Terms Modification passed by:

(i) the Class A Noteholders shall be effective unless it is also sanctioned by an Extraordinary

Resolution of the Class B Noteholders, the Class C Noteholders and the Class DNoteholders;

(ii) the Class B Noteholders shall be effective unless it is also sanctioned by an Extraordinary

Resolution of the Class C Noteholders and the Class D Noteholders; and

(iii) the Class C Noteholders shall be effective unless it is also sanctioned by an Extraordinary

Resolution of the Class D Noteholders; or

(c) no other Extraordinary Resolution of:

(i) the Class D Noteholders shall be effective unless (A) the Representative of the Noteholders

is of the opinion that it will not be materially prejudicial to the interests of the Class A

Noteholders, the Class B Noteholders and the Class C Noteholders (to the extent that the

Class A Notes, the Class B Notes and Class C Notes are then outstanding) or (B) (to the

extent that the Representative of the Noteholders is not of that opinion) it is sanctioned by

an Extraordinary Resolution of the Class A Noteholders, the Class B Noteholders and the

Class C Noteholders (to the extent that the Class A Notes, the Class B Notes and Class CNotes are then outstanding);

(ii) the Class C Noteholders shall be effective unless (A) the Representative of the Noteholders

is of the opinion that it will not be materially prejudicial to the interests of the Class A

Noteholders and the Class B Noteholders (to the extent that the Class A Notes and the

Class B Notes are then outstanding) or (B) (to the extent that the Representative of the

Noteholders is not of that opinion) it is sanctioned by an Extraordinary Resolution of the

Class A Noteholders and the Class B Noteholders (to the extent that the Class A Notes

and the Class B Notes are then outstanding); or

(iii) the Class B Noteholders shall be effective unless (A) the Representative of the Noteholders

is of the opinion that it will not be materially prejudicial to the interests of the Class ANoteholders (to the extent that the Class A Notes are then outstanding) or (B) (to the

extent that the Representative of the Noteholders is not of that opinion) it is sanctioned by

an Extraordinary Resolution of the Class A Noteholders (to the extent that the Class A

Notes are then outstanding).

Article 21

(Challenge of Resolution)

Each Noteholder who was absent and/or dissenting can challenge Resolutions which are notpassed in conformity with the provisions of these Rules.

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Article 22

(Minutes)

Minutes shall be made of all resolutions and proceedings at each Meeting. The Chairman shall

sign the minutes, which shall be prima facie evidence of the proceedings recorded therein. Unless

and until the contrary is proved, every such Meeting in respect of the proceedings of whichminutes have been summarised and signed shall be deemed to have been duly convened and held

and all resolutions passed or proceedings transacted at it to have been duly passed and

transacted.

Article 23

(Written Resolution)

A Written Resolution shall take effect as if it were an Extraordinary Resolution.

Article 24

(Individual Actions and Remedies)

The right of each Noteholder to bring individual actions or take other individual remedies to

enforce his/her rights under the Notes will be subject to a Meeting authorising such individual

action or other remedy, provided that the Noteholders may only bring individual actions or take

individual remedies with respect to bankruptcy, insolvency or compulsory liquidation or similar

proceedings against the Issuer in accordance with the Intercreditor Agreement. In this respect,

the following provisions shall apply:

(a) the Noteholder intending to enforce his/her rights under the Notes will notify theRepresentative of the Noteholders of his/her intention;

(b) the Representative of the Noteholders will, without delay, call for the Meeting, in

accordance with these Rules;

(c) if the Meeting passes a resolution objecting to the enforcement of the individual action or

remedy, the Noteholder will be prevented from taking such action or remedy (provided that

the same matter can be submitted again to a further Meeting of Noteholders after a

reasonable period of time has elapsed); and

(d) if the Meeting passes a resolution authorising the enforcement of the individual action or

remedy, or if no resolution is taken by the Meeting for lack of a quorum, the Noteholderwill not be prevented from taking such individual action or remedy.

No individual action or remedy can be taken by a Noteholder to enforce his/her rights under the

Notes unless a Meeting of Noteholders has been held to resolve on such action or remedy and

in accordance with the provisions of this Article 24 and Article 4 above.

The provisions of the Intercreditor Agreement govern the right of the Noteholders to institute

against, or join any other Person in instituting against, the Issuer any bankruptcy, insolvency or

compulsory liquidation or similar proceedings.

TITLE III

THE REPRESENTATIVE OF THE NOTEHOLDERS

Article 25

(Appointment, Removal and Remuneration)

The appointment of the Representative of the Noteholders takes place at a Meeting in

accordance with the provisions of this Article 25, except with respect to the appointment of the

first Representative of the Noteholders that will be Deutsche Trustee Company Limited.

The Representative of the Noteholders shall be:

(i) a bank incorporated in any jurisdiction of the European Union or a bank incorporated in

any other jurisdiction acting through an Italian bank or through a branch situated in a

European Union country; or

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(ii) a company or financial institution registered under Article 107 of the Italian Legislative

Decree No. 385 of 1993; or

(iii) any other entity which may be permitted to act in such capacity by any specific provisions

of Italian law applicable to the securitisation of monetary rights and/or by any regulations,instructions, guidelines and/or specific approvals issued by the competent Italian supervising

authorities.

The Representative of the Noteholders shall be appointed for an unlimited term and can be

removed by the Meeting at any time.

In the event of a termination of the appointment of the Representative of the Noteholders for

any reason whatsoever, the Representative of the Noteholders shall remain in office until

acceptance of appointment by the substitute Representative of the Noteholders designated among

the entities indicated in (i), (ii) and (iii) above, and the powers and authority of Representativeof the Noteholders whose appointment has been terminated shall be limited to those necessary

for the performance of the essential functions which are required to be complied with in

connection with the Notes.

Directors, auditors, employees of Issuer and those who fall within the conditions indicated inArticle 2382 and Article 2399 of the Italian Civil Code cannot be appointed as Representative of

the Noteholders, and, if appointed, shall be automatically removed from the appointment.

The Issuer shall pay to the Representative of the Noteholders an annual fee for its services as

Representative of the Noteholders as from the date hereof, such fee being agreed in a separateside letter plus value added tax, if applicable.

The above fees and remuneration shall accrue from day to day and shall be payable in

accordance with the applicable Order of Priority up to (and including) the date when the Notes

have been repaid in full or cancelled in accordance with the Conditions.

Article 26

(Duties and Powers)

The Representative of the Noteholders is the legal representative of the Organisation of

Noteholders.

The Representative of the Noteholders is responsible for implementing the decisions of the

Meeting and for protecting the Noteholders’ interests vis-A-vis the Issuer. The Representative ofthe Noteholders has the right to attend Meetings. The Representative of the Noteholders may

convene a Meeting to obtain instructions and authorisation from Noteholders of the relevant

Class or Classes on actions to be taken.

All actions taken by the Representative of the Noteholders in the execution and exercise of all of

its powers and authority and discretion vested in it shall be taken by duly authorised officer(s)for the time being of the Representative of the Noteholders.

The Representative of the Noteholders may also, whenever it considers it expedient and in the

interests of the Noteholders, whether by power of attorney or otherwise, delegate to any

Person(s) all or any of its aforesaid powers and authority or discretion. Any such delegation maybe made upon such terms and conditions and subject to such regulations (including power to

sub-delegate) as the Representative of the Noteholders may think fit with respect to the interests

of the Noteholders, provided that: (a) the Representative of the Noteholders shall use all

reasonable care and skill in the selection of the sub-agent, sub-contractor or representative which

must fall within one of the categories set forth in Article 25 herein and shall not be liable for

such selection in the absence of wilful misconduct (dolo) and/or gross negligence (colpa grave);

and (b) the sub-agent, sub-contractor or representative shall undertake to perform the obligations

of the Representative of the Noteholders in respect of which it has been appointed.

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The Representative of the Noteholders shall not, other than in the normal course of its business,

be bound to supervise the proceedings and shall not in any way or to any extent be responsible

for any loss incurred by any misconduct or default on the part of such delegate or sub-delegate.

The Representative of the Noteholders shall as soon as reasonably practicable give notice to the

Issuer of the appointment of any delegate and any renewal, extension and termination of such

appointment and shall ensure that any delegate shall also as soon as reasonably practicable give

notice to the Issuer of any sub-delegate.

The Representative of the Noteholders shall be authorised to represent the Organisation of the

Noteholders in judicial proceedings, including in proceedings involving the Issuer in courtsupervised administration (amministrazione controllata), creditors’ agreement (concordato

preventivo), forced liquidation (fallimento) or compulsory administrative liquidation (liquidazione

coatta amministrativa).

Article 27

(Resignation of Representative of the Noteholders)

The Representative of the Noteholders may resign at any time upon giving not less than 3calendar months’ written notice to the Issuer without assigning any reason therefor and without

being responsible for any costs incurred as a result of such resignation. The resignation of the

Representative of the Noteholders shall not become effective until a Meeting has appointed a

new representative of the Noteholders. If a new representative of the Noteholders is not

appointed by the Meeting 60 days after such notice of resignation, the resigning Representative

of the Noteholders will be entitled to appoint its own successor, provided that any such successor

shall satisfy the conditions of Article 25 herein.

Article 28

(Exoneration of the Representative of the Noteholders)

The Representative of the Noteholders shall not assume any other obligations in addition to

those expressly provided herein and in the Transaction Documents.

Without limiting the generality of the foregoing, the Representative of the Noteholders shall not

be:

(a) under obligation to take any steps to ascertain whether a Trigger Event or any other event,

condition or act, the occurrence of which would cause a right or remedy to become

exercisable by the Representative of the Noteholders hereunder or under any of the other

Transaction Documents has happened and, until it shall have actual knowledge or expressnotice to the contrary, the Representative of the Noteholders shall be entitled to assume

that no Trigger Event has occurred;

(b) under any obligation to monitor or supervise the observance and performance by the Issuer

or any of the other parties to these Rules or the Transaction Documents of their

obligations hereunder and thereunder and, until it shall have actual knowledge or express

notice to the contrary, it shall be entitled to assume that the Issuer and each other party to

these Rules or any Transaction Document is observing and performing all their respective

obligations contained herein and therein;

(c) under any obligation to give notice to any Person of the execution of these Rules or any of

the Transaction Documents or any transaction contemplated hereby or thereby;

(d) responsible for or for investigating the legality, validity, effectiveness, adequacy, suitabilityor genuineness of these Rules or of any Transaction Document, or any other document or

any obligation or rights created or purported to be created hereby or thereby or pursuant

hereto or thereto, and (without prejudice to the generality of the foregoing), it shall not

have any responsibility for or have any duty to make any investigation in respect of or in

any way be liable whatsoever for: (i) the nature, status, creditworthiness or solvency of the

Issuer; (ii) the existence, accuracy or sufficiency of any legal or other opinions, searches,

reports, certificates, valuations or investigations delivered or obtained or required to be

delivered or obtained at any time in connection herewith; (iii) the suitability, adequacy or

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sufficiency of any collection procedures operated by the Servicers or compliance therewith;

(iv) the failure by the Issuer to obtain or comply with any licence, consent or other

authority in connection with the purchase or administration of the Portfolios; and (v) any

accounts, books, records or files maintained by the Issuer, the Servicers and the Agent or

any other person in respect of the Portfolios;

(e) responsible for the receipt or application by the Issuer of the proceeds of the issue of the

Notes or the distribution of any of such proceeds to the Persons entitled thereto;

(f) responsible for the maintenance of any rating of any Class of the Senior Notes by the

Rating Agencies or any other credit or rating agency or any other Person;

(g) responsible for or for investigating any matter which is the subject of, any recitals,

statements, warranties or representations of any party other than the Representative of the

Noteholders contained herein or in any other Transaction Document;

(h) bound or concerned to examine or enquire into or be liable for any defect or failure in the

right or title of the Issuer to the Portfolios or any part thereof whether such defect or

failure was known to the Representative of the Noteholders or might have been discovered

upon examination or enquiry or whether capable of remedy or not;

(i) liable for any failure, omission or defect in registering or filing or procuring registration or

filing of or otherwise protecting or perfecting these Rules or any Transaction Document;

(j) under any obligation to insure the Portfolios or any part thereof;

(k) obliged to regard the consequences of any modification of these Rules or any of the

Transaction Documents for the Noteholders or any relevant Persons resulting from their

being for any purpose domiciled or resident in, or otherwise connected with, or subject to,

the jurisdiction of any particular territory; and

(l) under any obligation to disclose to any Noteholder, any Other Issuer Creditor or any other

party any confidential, financial, price sensitive or other information made available to the

Representative of the Noteholders by the Issuer or any other Person in connection withthese Rules and none of the Noteholders, the Other Issuer Creditors or any other party

shall be entitled to take any action to obtain from the Representative of the Noteholders

any such information (unless and to the extent ordered so to do by a court of competent

jurisdiction).

The Representative of the Noteholders may:

(a) agree to amendments or modifications to these Rules or to any of the Transaction

Documents which in the opinion of the Representative of the Noteholders it is expedient to

make or in order to correct a manifest error or an error of a formal, minor or technical

nature. Any such modification shall be binding on the Noteholders and, unless the

Representative of the Noteholders otherwise agrees, the Issuer shall cause such modification

to be notified to the Noteholders as soon as practicable thereafter;

(b) agree to amendments or modifications to these Rules (other than in respect of a Basic

Terms Modification or any provision in these Rules referred to in the definition of Basic

Terms Modification) or to the Transaction Documents, which, in the opinion of the

Representative of the Noteholders it may be proper to make, provided that theRepresentative of the Noteholders is of the opinion that such modification will not be

materially prejudicial to the interests of the Class A Noteholders, or, in the event the Class

A Notes have been redeemed in full, the Class B Noteholders, or, in the event the Class B

Notes have been redeemed in full, the Class C Noteholders, or, in the event the Class C

Notes have been redeemed in full, the Class D Noteholders;

(c) act on the advice or a certificate or opinion of or any information obtained from any

lawyer, accountant, banker, broker, credit or rating agency or other expert whether

obtained by the Issuer, the Representative of the Noteholders or otherwise and shall not, in

the absence of fraud (frode), gross negligence (colpa grave) or wilful misconduct (dolo) on

the part of the Representative of the Noteholders, be responsible for any loss incurred by

so acting. Any such advice, opinion or information may be sent or obtained by letter, telex,

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telegram, facsimile transmission or cable and, in the absence of fraud (frode), gross

negligence (colpa grave) or wilful misconduct (dolo) on the part of the Representative of the

Noteholders, the Representative of the Noteholders shall not be liable for acting on any

advice, opinion or information contained in or purported to be conveyed by any such

letter, telex, telegram, facsimile transmission or cable, notwithstanding any error contained

therein or the non-authenticity of the same;

(d) call for and shall be at liberty to accept as sufficient evidence of any fact or matter, unless

any of its officers in charge of the administration of these Rules shall have actual

knowledge or express notice to the contrary, a certificate duly signed by the Issuer, and the

Representative of the Noteholders shall not be bound in any such case to call for further

evidence or be responsible for any loss that may be incurred as a result of acting on suchcertificate;

(e) except as expressly otherwise provided herein, have absolute discretion as to the exercise,

the non exercise or refraining from exercising any right, power and discretion vested in the

Representative of the Noteholders by these Rules or by operation of law and theRepresentative of the Noteholders shall not be responsible for any loss, costs, damages,

expenses or inconveniences that may result from the exercise, non-exercise or refraining

from exercise thereof except insofar as the same are incurred as a result of its fraud (frode),

gross negligence (colpa grave) or wilful misconduct (dolo);

(f) hold or leave in custody these Rules, the Transaction Documents and any other documents

relating hereto in any part of the world with any bank officer, financial institution or

company whose business includes undertaking the safe custody of documents or lawyer or

firm of lawyers considered by the Representative of the Noteholders to be of good repute,

and the Representative of the Noteholders shall not be responsible for or required to insure

against any loss incurred in connection with any such custody and may pay all sums

required to be paid on account of or in respect of any such custody;

(g) in connection with matters in respect of which the Representative of the Noteholders is

entitled to exercise its discretion hereunder or in respect of which the Representative of the

Noteholders’ consent is required, the Representative of the Noteholders is entitled to

convene a Meeting in order to obtain from them instructions as to how the Representativeof the Noteholders should exercise such discretion or whether the Representative of the

Noteholders should give such consent provided that nothing herein shall be construed so as

to oblige the Representative of the Noteholders to convene such a Meeting. Prior to

undertaking any action, the Representative of the Noteholders shall be entitled to request

at the Meeting to be indemnified and/or provided with security to its satisfaction against all

actions, proceedings, claims and demands which may be brought against it and against all

costs, charges, damages, expenses and liabilities which it may incur by taking such action,

and shall not be obliged to take such action unless it shall have been indemnified and/orprotected to its satisfaction against all liabilities to which it may thereby become liable or

which it may incur by taking such action;

(h) in connection with matters in respect of which the Noteholders are entitled to direct theRepresentative of the Noteholders, the Representative of the Noteholders shall not be liable

for acting upon any resolution purporting to have been passed at any Meeting in respect of

which minutes have been drawn up and signed notwithstanding that subsequent to so

acting, it transpires that the Meeting was not duly convened or constituted, such resolution

was not duly passed or that the resolution was otherwise not valid or binding upon the

Noteholders;

(i) call for, accept and place full reliance on and as sufficient evidence of the facts stated

therein, a certificate or letter of confirmation certified as true and accurate and signed on

behalf of any common depository as the Representative of the Noteholders considers

appropriate, or any form of record made by any such depository to the effect that at any

particular time or throughout any particular period any particular Person is, was, or will

be, shown in its records as entitled to a particular number of Notes;

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(j) certify whether or not a Trigger Event is in its opinion materially prejudicial to the interests

of the Noteholders and any proceedings referred to under Condition 10(c) (Insolvency etc.)

are disputed in good faith, and any such certificate or opinion shall be conclusive and

binding upon the Issuer, the Noteholders, the Other Issuer Creditors and any other relevant

Person;

(k) determine whether or not a default in the performance by the Issuer of any obligation

under the provisions of these Rules, the Notes or any other Transaction Documents is

capable of remedy and, if the Representative of the Noteholders certifies that any such

default is, in its opinion, not capable of remedy, such certificate shall be conclusive and

binding upon the Issuer, the Noteholders, the Other Issuer Creditors and any relevant

Person; and

(l) assume without enquiry that no Notes are for the time being held by or for the benefit of

the Issuer.

The Representative of the Noteholders shall be entitled to:

(a) call for and to rely upon a certificate or any letter of confirmation or explanation

reasonably believed by it to be genuine, of any party to the Intercreditor Agreement, or

any Other Issuer Creditor or any rating agency in respect of any matter and circumstance

for which a certificate is expressly provided for hereunder or any other Transaction

Document or in respect of the rating of any Class of the Senior Notes and it shall not be

bound in any such case to call for further evidence or be responsible for any loss, liability,

costs, damages, expenses or inconvenience that may be incurred by its failing so to do; and

(b) assume, for the purposes of exercising any power, authority, duty or discretion under or in

relation hereto that such exercise will not be materially prejudicial to the interests of the

Noteholders if the Rating Agencies have confirmed that the then current rating of any

Class of the Senior Notes would not be adversely affected by such exercise, or have

otherwise given their consent.

Any consent or approval given by the Representative of the Noteholders under these Rules and

any other Transaction Document may be given on such terms and subject to such conditions (if

any) as the Representative of the Noteholders thinks fit and notwithstanding anything to the

contrary contained herein, or in other Transaction Documents, such consent or approval may be

given retroactively.

No provision of these Rules shall require the Representative of the Noteholders to do anything

which may be illegal or contrary to applicable law or regulations or expend or risk its own

funds or otherwise incur any financial liability in the performance of any of its duties, or in the

exercise of any of its powers or discretion, and the Representative of the Noteholders may

refrain from taking any action if it has reasonable grounds to believe that it will not bereimbursed for any amounts, or that it will not be indemnified against any loss or liability which

it may incur as a result of such action.

Article 29

(Security Documents)

The Representative of the Noteholders shall be entitled to exercise all the rights granted by the

Issuer in favour of the Noteholders under the Italian Deed of Pledge and the English Deed of

Charge. The Italian Deed of Pledge and the English Deed of Charge are referred to herein as

the ‘‘Security Documents’’ and the beneficiaries of the Security Documents are referred to herein

as the ‘‘Secured Parties’’.

The Representative of the Noteholders, acting on behalf of the Secured Parties, may:

(a) appoint and entrust the Issuer to collect, in the Secured Parties’ interest and on their

behalf, any amounts deriving from the pledged claims and rights and may instruct, jointly

with the Issuer, the relevant debtors of the pledged claims to make any payments to be

made thereunder to an Account of the Issuer;

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(b) acknowledge that the account(s) to which payments have been made in respect of the

pledged claims shall be deposit accounts for the purpose of Article 2803 of the Italian Civil

Code and agrees that such account(s) shall be operated in compliance with the provisions

of the Cash Allocation, Management and Payments Agreement and the Intercreditor

Agreement;

(c) agree that all funds credited to the relevant Accounts from time to time shall be applied in

accordance with the Cash Allocation, Management and Payments Agreement and the

Intercreditor Agreement and that available funds standing to the credit of the Issuer

Distribution Account, the Issuer Investment Account and the Issuer Cash Reserve Account

may be used for investments in Eligible Investments; and

(d) agree that cash deriving from time to time from the pledged claims and the amounts

standing to the credit of the relevant Accounts shall be applied in and towards satisfaction

of amounts due to the Secured Parties and any other parties according to the applicableOrder of Priority.

The Secured Parties irrevocably waive any right which they may have hereunder in respect of

cash deriving from time to time from the pledged claims and amounts standing to the credit ofthe Accounts which is not in accordance with the foregoing. The Representative of the

Noteholders shall not be entitled to collect, withdraw or apply, or issue instructions for the

collection, withdrawal or application of, cash deriving from time to time from the pledged claims

under the Security Documents except in accordance with the foregoing and the Intercreditor

Agreement.

Article 30

(Indemnity)

It is hereby acknowledged that the Issuer has covenanted and undertaken under the Subscription

Agreements to reimburse, pay or discharge (on a full indemnity basis) on demand, to the extent

not already reimbursed, paid or discharged by any Noteholders, all costs, liabilities, losses,

charges, expenses, damages, actions, proceedings, claims and demand (including, withoutlimitation, legal fees and any applicable value added tax or similar tax) properly incurred by or

made against the Representative of the Noteholders or by any Persons to whom the

Representative of the Noteholders has delegated any power, authority or discretion, in relation

to the preparation and execution of, the exercise, the non exercise or purported exercise of its

powers, authority and discretion and performance of its duties under and in any other manner in

relation to, these Rules or the Transaction Documents, including but not limited to legal and

travelling expenses and any stamp, issue, registration, documentary and other taxes or duties

paid by the Representative of the Noteholders in connection with any action and/or legalproceedings brought or contemplated by the Representative of the Noteholders pursuant the

Transaction Documents, against the Issuer or any other Person for enforcing any obligations

hereunder, the Notes or the Transaction Documents, except insofar as the same are incurred as a

result of fraud (frode), gross negligence (colpa grave) or wilful misconduct (dolo) of the

Representative of the Noteholders.

TITLE IV

THE ORGANISATION OF NOTEHOLDERS UPON A SERVICE OF A TRIGGER NOTICE OR

UPON THE OCCURRENCE OF AN INSOLVENCY EVENT

Article 31

(Powers)

It is hereby acknowledged that, upon delivery of a Trigger Notice or the occurrence of an

Insolvency Event, the Representative of the Noteholders shall, pursuant to the Mandate

Agreement, be entitled, in its capacity as the legal representative of the Organisation of the

Noteholders, also in the interest and for the benefit of the Other Issuer Creditors, pursuant to

Articles 1411 and 1723 of the Italian Civil Code, to exercise certain rights in relation to the

Portfolios pursuant to the Transaction Documents and, in particular, to dispose of the Portfolios

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in accordance with Condition 10 (Trigger Events). Therefore, the Representative of the

Noteholders, in its capacity as the legal representative of the Organisation of the Noteholders,

will be authorised, pursuant to the terms of the Mandate Agreement, to exercise, in the name

and on behalf of the Issuer and as mandatario in rem propriam of the Issuer, all and any of the

Issuer’s Rights, including the right to give directions and instructions to the relevant parties to

the Transaction Documents. In connection with any proposed sale of one or more Claim(s)

comprised in the Portfolios, the Representative of the Noteholders may, but shall not be obliged

to, convene a Meeting in accordance with the provisions set forth in these Rules to resolve onthe proposed sale.

TITLE V

ALTERNATIVE DISPUTES RESOLUTIONS

(Article 32)

These Rules are governed by, and will be construed in accordance with, the laws of Italy.

All disputes arising from the present Rules, including those concerning its validity, interpretation,

performance and termination, shall be settled, irrespective of the number of the parties, by anarbitral panel consisting of three arbitrators, one of whom shall be the President and who shall

be directly appointed by the Chamber of National and International Arbitration of Milan. The

arbitration shall be conducted in accordance with the Rules of the Chamber of National and

International Arbitration of Milan (Regole di Arbitrato Internazionale della Camera di Commercio

Nazionale e Internazionale di Milano), of which each of the Noteholders acknowledge to have

read and to accept in its entirety.

The arbitrators shall decide according to the laws of Italy and not ex aequo et bono.

The seat of the arbitration shall be in Milan. The language of the arbitration shall be English.

Any disputes that cannot be settled by arbitration shall be submitted to the exclusive jurisdiction

of the Courts of Milan.

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SELECTED ASPECTS OF ITALIAN LAW RELEVANT TO THE PORTFOLIOS AND THE

TRANSFER OF THE PORTFOLIOS

The Securitisation Law

The Securitisation Law was enacted on 30 April 1999 and was conceived to simplify the

securitisation process and to facilitate the increased use of securitisation as a financing technique in

the Republic of Italy.

It applies to securitisation transactions involving the ‘‘true’’ sale (by way of non-gratuitous

assignment) of receivables, where the sale is to a company created in accordance with Article 3 of the

Securitisation Law and all amounts paid by the assigned debtors are to be used by the relevant

company exclusively to meet its obligations under notes issued to fund the purchase of such

receivables and all costs and expenses associated with the securitisation transaction.

The Assignment

The assignment of the receivables under the Securitisation Law is governed by Article 58,

paragraphs 2, 3 and 4, of the Consolidated Banking Act and by Article 4 of the Securitisation Law.

According to such provisions, the assignment can be perfected against the originator, assigned debtors

and third party creditors by way of publication in the Official Gazette, so avoiding the need for

notification to be served on each assigned debtor.

As of the date of publication of the notice in the Official Gazette, the assignment becomes

enforceable against:

(a) the assigned debtors and any creditors of the originator who have not prior to the date of

publication of the notice commenced enforcement proceedings in respect of the relevantreceivables;

(b) the liquidator or any other bankruptcy officials of the assigned debtors (so that any

payments made by an assigned debtor to the purchasing company may not be subject to

any claw-back action according to Article 67 of Italian Royal Decree No. 267 of 16 March

1942 (Legge Fallimentare) (the ‘‘Bankruptcy Law’’)); and

(c) other permitted assigns of the originator who have not perfected their assignment prior to

the date of publication. (f) The benefit of any privilege, guarantee or security interest

guaranteeing or securing repayment of the assigned receivables will automatically be

transferred to and perfected with the same priority in favour of the company which haspurchased the receivables, without the need for any formality or annotation.

As from the date of publication of the notice of the assignment in the Official Gazette, no legal

action may be brought against the receivables assigned or the sums derived therefrom other than for

the purposes of enforcing the rights of the Noteholders issued for the purpose of financing the

acquisition of the relevant receivables and to meet the costs of the transaction.

Notice of the assignment of the Claims pursuant to the Transfer Agreements was published in

the Official Gazette on 22 December 2003.

Assignments executed under the Securitisation Law are subject to revocation upon bankruptcy

under Article 67 of the Bankruptcy Law but only in the event that the securitisation transaction is

entered into within three months of the adjudication of bankruptcy of the relevant party or in caseswhere paragraph 1 of Article 67 applies, within six months of the adjudication of bankruptcy.

Ring-Fencing of the Assets

Under the terms of Article 3 of the Securitisation Law, the assets relating to each securitisation

transaction will, by operation of law, be segregated for all purposes from all other assets of the

company which purchases the receivables (including, for the avoidance of doubt, any other portfolio

purchased by the company pursuant to the Securitisation Law). On a winding up of such a company,

such assets will only be available to Noteholders issued to finance the acquisition of the relevant

receivables and to certain creditors claiming payment of debts incurred by the company in connection

with the securitisation of the relevant assets. In addition, the assets relating to a particular transaction

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will not be available to the holders of notes issued to finance any other securitisation transaction or to

general creditors of the issuer. However, under Italian law, any other creditor of the issuer would be

able to commence insolvency or winding up proceedings against the issuer in respect of any unpaid

debt.

Claw-Back of the Sale of the Claims

The sale of the BPV Claims by BPV, the CRP Claims by CRP and the BN Claims by BN to

the Issuer may be clawed back by a receiver of BPV, CRP or BN under Article 67 of the Bankruptcy

Law but only in the event that BPV, CRP or BN was insolvent when the assignment was entered into

and its execution was made within three months of the admission of BPV, CRP or BN to compulsory

liquidation (liquidazione coatta amministrativa) pursuant to Title IV, Heading I, Section III of theConsolidated Banking Act or in cases where paragraph 1 of Article 67 applies, within six months of

the admission to the compulsory liquidation. Under the Warranty and Indemnity Agreements, each of

BPV, CRP and BN has represented and warranted that it was solvent as of the Effective Date and it

shall represent and warrant that it is solvent on the Issue Date.

Claw-Back Action Against the Payments Made to the Company Incorporated under the

Securitisation Law

According to Article 4 of the Securitisation Law the payments made by an assigned debtor to

the Issuer may not be subject to any claw-back action according to Article 67 of the Bankruptcy Law.

All other payments made to the Issuer by any party under a Transaction Document in the one

year suspect period prior to the date on which such party has been declared bankrupt or has been

admitted to the compulsory liquidation may be subject to claw-back action according to Article 67 of

the Bankruptcy Law. The relevant payment will be set aside and clawed back if the receiver givesevidence that the recipient of the payments had knowledge of the state of insolvency when the

payments were made. The question as to whether or not the Issuer had actual or constructive

knowledge of the state of insolvency at the time of the payment is a question of fact with respect to

which a court may in its discretion consider all relevant circumstances.

Foreclosure Proceedings

Mortgages may be ‘‘voluntary’’ (ipoteche volontarie) if granted by a borrower or a third party

guarantor by way of a deed or ‘‘judicial’’ (ipoteche giudiziarie) if registered in the appropriate land

registry (Conservatoria dei Registri Immobiliari) following a court order or injunction to pay amounts

in respect of any outstanding debt or unperformed obligation.

A mortgage lender (whose credit is secured by a mortgage whether ‘‘voluntary’’ or ‘‘judicial’’)

may commence foreclosure proceedings by seeking a court order or injunction for payment in the

form of an enforcement order (titolo esecutivo) from the court in whose jurisdiction the mortgaged

property is located. This court order or injunction must be served on the debtor.

If the mortgage loan was executed in the form of a public deed, a mortgage lender can serve a

copy of the mortgage loan agreement, stamped by a notary public with an order for the execution

thereof (formula esecutiva) directly on the debtor without the need to obtain an enforcement order

(titolo esecutivo) from the court. A writ of execution (atto di precetto) is notified to the debtor

together with either the enforcement order (titolo esecutivo) or the loan agreement, as the case may be.

Within ten days of filing, but not later than ninety days from the date on which notice of the

writ of execution (atto di precetto) is served, the mortgage lender may request the attachment of the

mortgaged property.

The property will be attached by a court order, which must then be filed with the appropriate

land registry (Conservatoria dei Registri Immobiliari). The court will, at the request of the mortgage

lender, appoint a custodian to manage the mortgaged property in the interest of the mortgage lender.

If the mortgage lender does not make such a request, the debtor will automatically become the

custodian of such property.

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The mortgage lender is required to search the land registry to ascertain the identity of the

current owner of the property and must then serve notice of the request for attachment on the current

owner, even if no transfer of the property from the original borrower or mortgagor to a third party

purchaser has been previously notified to the mortgage lender. Not earlier than ten days and not later

than ninety days after serving the attachment order, the mortgage lender may request the court to sell

the mortgaged property. The court may delay its decision in respect of the mortgage lender’s request

in order to hear any challenge by the debtor to the attachment.

Technical delays may be caused by the need to append to the mortgage lender’s request forattachment copies of the relevant mortgage and cadastral (i.e. land registry) certificates (certificati

catastali), which usually take some time to obtain. Law No. 302 of 3 August 1998 should reduce the

duration of the foreclosure proceedings by allowing the mortgage lender to substitute such cadastral

certificates with certificates obtained from public notaries and by allowing public notaries to conduct

various activities which were previously exclusively within the powers of the court.

If the court decides to proceed with an auction (vendita con incanto) of the mortgaged property,

it will usually appoint an expert to value the property. The court will then order the sale by auction.

The court determines on the basis of the expert’s appraisal the minimum bid price for the property atthe auction. If an auction fails to result in the sale of the property, the court will arrange a new

auction with a lower minimum bid price. The courts have discretion to decide whether, and to what

extent, the bid price should be reduced (the maximum permitted reduction being one-fifth of the

minimum bid price of the previous auction). In practice, the courts tend to apply the one-fifth

reduction. In the event that no offer is made during an auction, the mortgage lender may apply to the

court for a direct assignment of the mortgaged property to the mortgage lender itself. In practice,

however, the courts tend to hold auctions until the mortgaged property is sold.

The sale proceeds, after deduction of the expenses of the foreclosure proceedings, INVIM (a taxpayable by the debtor in respect of any increase in the value of the mortgaged property during the

time it was owned by him until 31 December 1992 but which has been abolished with effect from 1

January 2003) and any expenses for the deregistration of the mortgages, will be applied in satisfaction

of the claims of the mortgage lender in priority to the claims of any other creditor of the debtor

(except for the claims for taxes due in relation to the mortgaged property and for which the collector

of taxes participates in the foreclosure proceedings).

Upon payment in full of the purchase price by the purchaser within the specified time period,

title to the property will be transferred after the court issues an official decree ordering the transfer. Inthe event that proceedings have been commenced by creditors other than the mortgage lender, the

mortgage lender will have priority over such other creditors in having recourse to the assets of the

borrower during such proceedings, such recourse being limited to the value of the mortgaged property.

The average length of foreclosure proceedings beginning with the court order or injunction of

payment until the final sharing out is between six and seven years. In the medium-sized central and

northern Italian cities, it can be significantly less whereas in major cities or in southern Italy, the

duration of the procedure can significantly exceed the average.

Law No. 302 has been passed with the aim of reducing the duration of foreclosure proceedings.

The Impact of Law No. 302

Law No. 302 amending the Italian Civil Procedure Code has introduced certain rules according

to which some of the activities to be carried on in a foreclosure procedure may be entrusted to anotary public duly registered with the relevant register of a court. In particular, if requested by a

creditor, the notary public may issue a notarial certificate attesting the results of the searches with the

‘‘catasto’’ and with the appropriate land registry (Conservatoria dei Registri Immobiliari). Such notarial

certificate replaces several documents which are usually required to be attached to the motion for the

auction and reduces the timing normally required to obtain the documentation from the relevant

public offices. Moreover, if appointed by the foreclosure judge, the notary public may execute the sale

by auction by: (a) determining the value of the property; (b) deciding on the offers received after the

auction and concerning the payment of the relevant price; (c) initiating further auctions or transfer;

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(d) executing certain formal documents relating to the registration and filing with the land registry of

the transfer decree prepared by the same notary public and issued by the foreclosure judge; and (e)

preparing the proceeds’ distribution plan and forwarding the same to the foreclosure judge.

With regard to the above, the involvement of a notary public by the foreclosure judge is

permitted when: (a) the foreclosure judge has not yet decided on the motion for an auction; (b) a salewithout auction has not been performed successfully and the foreclosure judge after consultation with

the creditors decides to proceed with an auction; and (c) a possible receivership has ceased and the

foreclosure judge decides to proceed with a sale by auction. On the other hand, the involvement of a

notary public does not seem to be possible both when a decree providing for the sale without auction

has already been issued and when an auction before the foreclosure judge has already been fixed. If

the auction is concluded without a sale, it is possible that the foreclosure judge may delegate the

power to execute further auctions to the notary public.

Mutui Fondiari Foreclosure Proceedings

The Mortgage Loans comprised in the Portfolios are mutui fondiari or mutui ipotecari.Foreclosure Proceedings in respect of mutui fondiari commenced after 1 January 1994 are currently

regulated by Article 38 (and subsequent provisions) of the Consolidated Banking Act in which several

exceptions to the rules applying to foreclosure proceedings in general are provided for. In particular,

there is no requirement to serve a copy of the loan agreement directly on the borrower and the

mortgage lender of mutui fondiari is entitled to commence or continue foreclosure proceedings after

the debtor is declared insolvent or insolvency proceedings have been commenced.

Moreover, the custodian appointed to manage the mortgaged property in the interests of the

fondiario lender pays directly to the lender the revenues recovered on the mortgaged property (net of

administration expenses and taxes).

After the sale of the mortgaged property, the court orders the purchaser (or the assignee in the

case of an assignment) to pay that part of the price corresponding to the mutui fondiari lender’s debtdirectly to the lender.

Pursuant to Article 58 of the Consolidated Banking Act, as amended by Article 12 of Italian

Legislative Decree No. 342 of 4 August 1999, the Issuer will be entitled to benefit from such

procedural advantages which apply in favour of a lender of a mutui fondiari loan.

Foreclosure proceedings for mutui fondiari commenced on or before 31 December 1993 are

regulated by Italian Regio Decreto No. 646 of 16 July 1905 which confers on the mutuo fondiario

lender rights and privileges which are not provided for by the Consolidated Banking Act with respect

to foreclosure proceedings on mutui fondiari commenced on or after 1 January 1994. Such additional

rights and privileges include the right of the bank to commence foreclosure proceedings against the

borrower even after the real estate has been sold to a third party who has taken the place of the

borrower as debtor under the mutuo fondiario provided that the name of such third party has notbeen notified to the lender. Further rights include the right of the bank to apply for the real estate to

be valued by the court after commencement of foreclosure proceedings, at the value indicated in the

mutuo fondiario agreement without having to have a further expert appraisal.

Pursuant to Article 40, paragraph 2 of the Consolidated Banking Act, a mortgage lender is

entitled to terminate a loan agreement and accelerate the mortgage loan (diritto di risoluzione

contrattuale) if the debtor has delayed payment of an instalment at least seven times whether

consecutively or otherwise. For this purpose, a payment is considered delayed if it is made between 30

and 180 days after the due date for payment.

Priority of Interest claims

Pursuant to Article 2855 of the Italian Civil Code, the claims of a mortgage lender in respect of

interest may be satisfied in priority to the claims of all other unsecured creditors in an amount equal

to the aggregate of: (i) the interest accrued at the contractual rate in the calendar year in which the

initial stage of the foreclosure proceedings are taken and in the two preceding calendar years; and (ii)

the interest accrued at the legal rate (currently two point five per cent. (2.5%)) from the end of the

calendar year in which the initial stage of the foreclosure proceeding is commenced to the date on

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which the mortgaged property is sold. Any amount recovered in excess of this will be applied to

satisfy the claims of any other creditor participating in the foreclosure proceedings. The mortgage

lender will be entitled to participate in the distribution of any such excess as an unsecured creditor.

The balance, if any, will then be paid to the debtor.

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TAXATION

The following is a general summary of current Italian law and practice relating to certain Italian

tax considerations concerning the purchase, ownership and disposition of the Notes. It does not purport to

be a complete analysis of all tax considerations that may be relevant to your decision to purchase, own

or dispose of the Notes and does not purport to deal with the tax consequences applicable to all

categories of prospective beneficial owners of Notes, some of which may be subject to special rules.

The following summary does not discuss the treatment of Notes that are held in connection with a

permanent establishment or fixed base through which a non-Italian resident beneficial owner carries on

business or performs professional services in Italy.

This summary is based upon tax laws and practice of Italy in effect on the date of this Offering

Circular which are subject to change potentially retroactively.

Prospective purchasers of Notes should consult their tax advisers as to the consequences under

Italian tax law, under the tax laws of the country in which they are resident for tax purposes and of any

other potentially relevant jurisdiction of acquiring, holding and disposing of Notes and receiving payments

of interest, principal and/or other amounts under the Notes, including in particular the effect of any state,

regional or local tax laws.

Prospective noteholders should in any event seek their own professional advice regarding the Italian

or other tax consequences of the subscription, purchase, ownership and disposition of the Notes in these

circumstances, including the effect of any state, local or foreign tax laws.

Income Tax

Under the current legislation, pursuant to the provision of Article 6, paragraph 1, of theSecuritisation Law and Legislative Decree No. 239 of 1 April 1996, as amended and restated (‘‘Decree

No. 239’’), payments of interest and other proceeds in respect of the Notes:

(a) will be subject to imposta sostitutiva at the rate of 12.5 per cent. in the Republic of Italy if

made to beneficial owners who are: (i) individuals resident in the Republic of Italy for tax

purposes, holding Notes not in connection with entrepreneurial activities (unless they have

entrusted the management of their financial assets, including the Notes, to an authorised

intermediary and have opted for the so-called risparmio gestito regime according to Article

7 of Legislative Decree No. 461 of 21 November 1997 – the ‘‘Asset Management Option’’);

(ii) Italian resident non commercial partnerships; (iii) Italian resident public and private

entities, other than companies, not carrying out commercial activities as their exclusive orprincipal purpose (including the Italian State and public entities); (iv) Italian resident

entities exempt from corporate income tax; and (v) non-Italian resident entities or persons

without a permanent establishment in Italy to which the Notes are effectively connected,

which are not eligible for the exemption from the imposta sostitutiva and/or do not timely

comply with the requirements set forth in Decree No. 239 and the relevant application rules

in order to benefit from the exemption from imposta sostitutiva. As to non-Italian resident

beneficial owners, imposta sostitutiva may be reduced under double taxation treaties entered

into by Italy, where applicable.

The 12.5 per cent. final imposta sostitutiva will be applied by the Italian resident qualifiedfinancial intermediaries that will intervene, in any way, in the collection of interest and

other proceeds on the Notes or in the transfer of the Notes;

(b) will not be subject to the imposta sostitutiva at the rate of 12.5 per cent. if made to

beneficial owners who are: (i) Italian resident corporations, commercial partnerships,

individual entrepreneurs holding Notes in connection with entrepreneurial activities or

permanent establishments in Italy of non resident corporations to which the Notes are

effectively connected; (ii) Italian resident collective investment funds, SICAVs and Italian

pension funds referred to in Legislative Decree No. 124 of 21 April 1993; (iii) Italian

resident individuals holding Notes not in connection with entrepreneurial activity who have

entrusted the management of their financial assets, including the Notes, to an Italian

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authorised financial intermediary and have opted for the Asset Management Option; (iv)

Italian real estate investment funds (‘‘Fondi comuni di investimento immobiliare’’); and (v),

non-Italian resident beneficial owners of the Notes with no permanent establishment in

Italy to which the Notes are effectively connected, provided that:

(a) they are resident of a country which allows an adequate exchange of information.

With reference to the above condition, according to Ministerial Decree of 12

December 2001, the present list of the countries allowing an adequate exchange of

information is that contained in the Ministerial Decree 4 September, 1996 – as

subsequent amended and supplemented – which contemplates all the countries with

which Italy has entered into a double taxation treaty providing for an exchange of

information clause. The exemption from ‘‘imposta sostitutiva’’ also applies to (i) nonresident ‘‘istitutional investors’’ (i.e. entities the activity of which consists of making or

managing investments on their own behalf or on behalf of other persons, as defined

by Circolare dell’Agenzia delle Entrate dated 1 March 2002 No. 23/E), even if they are

not treated as taxpayers in their country of residence, but provided that they are

resident in a country which allows an adequate exchange of information, (ii)

international organizations created pursuant to international treaties that are effective

in Italy, and (iii) central banks or entities managing also the official reserves of the

State;

(b) the Notes are deposited directly or indirectly: (i) with a bank or an Italian securities

dealing firm (‘‘SIM’’) resident in Italy; (ii) with the Italian permanent establishment of

a non-resident bank or brokerage company which is electronically connected with theItalian Ministry of Economy and Finance; or (iii) with a non-resident entity or

company which has an account with a centralised clearance and settlement system

(such as Euroclear or Clearstream Luxembourg) which has a direct relationship with

the Italian Ministry of Economy and Finance; or (iv) a centralized managing company

of financial instruments, authorized in accordance with Article 80 of Legislative

Decree no. 58 of 24 February 1998;

(c) the banks or brokers mentioned in (b) above receive a self-declaration from the

beneficial owner of the interest which states that the beneficial owner is a resident of

that country. The self-declaration, which must be in conformity with the model

approved by the Ministry of Economy and Finance (approved with Decree of the

Ministry of Economy and Finance 12 December 2001, published on the OrdinarySupplement No. 287 to the Official Journal No. 301 of 29 December 2001), is valid

until revoked by the investor and does not have to be filed if an equivalent self-

declaration (including Form 116/IMP) has been submitted to the same intermediary

for the same or different purposes; in the case of institutional investors not subject to

tax, the institutional investor shall be regarded as the beneficial owner and the

relevant self-declaration shall be produced by the management company; and

(d) the banks or brokers mentioned in (b) and (c) above receive all necessary information

to identify the non-resident beneficial owner of the deposited debt securities, and all

necessary information in order to determine the amount of interest that such beneficial

owner is entitled to receive.

Non-resident holders are subject to the 12.5 per cent. substitute tax on interest and other

proceeds on the Notes if any of the above conditions (a), (b), (c) and (d) is not satisfied.

Italian resident individuals holding Notes not in connection with entrepreneurial activity who

have opted for the Asset Management Option are subject to a 12.5 per cent. annual substitute tax (the

‘‘Asset Management Tax’’) on the increase in value of the managed assets accrued at the end of each

tax year (which increase would include interest and other proceeds accrued on the Notes). The Asset

Management Tax is applied on behalf of the taxpayer by the managing authorised intermediary.

Interest and other proceeds accrued on the Notes held by Italian resident corporations,

commercial partnerships, individual entrepreneurs holding the Notes in connection with entrepreneurial

activities or permanent establishments in Italy of non-resident corporations to which the Notes are

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effectively connected, are included in the taxable base for the purposes of: (i) corporate income tax

(imposta sul reddito delle societa, ‘‘IRES’’) at 33 per cent.; or (ii) individual income tax (imposta sul

reddito delle persone fisiche, ‘‘IRPEF’’), at progressive rates, plus local surtaxes, if applicable; under

certain circumstances, such interest is included in the taxable basis of the regional tax on productive

activities (imposta regionale sulle attivita produttive, ‘‘IRAP’’), at a rate of 4.25 per cent. (regions may

vary the rate up to 1 per cent.).

Italian resident collective investment funds and SICAVs are subject to a 12.5 per cent. annual

substitute tax (the ‘‘Collective Investment Fund Tax’’) on the increase in value of the managed assets

accrued at the end of each tax year (which increase would include interest and other proceeds accrued

on the Notes). Pursuant to article 12 of the Law Decree n. 269 of 30 September 2003, from the 2nd

of October 2003, the Italian resident collective investment funds are subject to a 5 per cent. (instead of

a 12.5 per cent) annual substitute tax if, according to the fund regulations, at least 2/3 of the fund’s

assets are invested in stock of small or medium capitalization companies, listed in an EU regulated

market.

Starting from 1 January 2001, Italian resident pension funds are subject to an 11 per cent.

annual substitute tax (the ‘‘Pension Fund Tax’’) on the increase in value of the managed assets accrued

at the end of each tax year.

Italian real estate funds created under Article 37 of Legislative Decree No. 58 dated 24 February

1998 and Article 14bis of Law No. 86 dated 25 January 1994 (the ‘‘Real Estate Funds’’) are notsubject to any substitute tax at the fund level, but any income realized by certain investors is subject

to 12,5% withholding tax.

Any positive difference between the nominal amount of the Notes and their issue price is deemed

to be interest for tax purposes.

Without prejudice to the above provisions, in the event that the Notes are redeemed in full or inpart prior to the end of the Initial Period, the Issuer may be required to pay an additional amount

equal to twenty per cent. (20%) of interest and other proceeds accrued on the Notes up to the time of

the early redemption.

Capital Gains

Any capital gain realised upon the sale for consideration or redemption of the Notes would be

treated for the purpose of corporate income tax and of individual income tax as part of the taxable

business income of Noteholders (and, in certain cases, depending on the status of the Noteholders,

may also be included in taxable basis of the regional tax on productive activities), and therefore

subject to tax in Italy according to the relevant tax provisions, if derived by Noteholders who are:

(a) Italian resident corporations;

(b) Italian resident commercial partnerships;

(c) permanent establishments in Italy of foreign corporations to which the Notes are effectively

connected; or

(d) Italian resident individuals carrying out a commercial activity, as to any capital gains

realised within the scope of the commercial activity carried out.

Pursuant to Legislative Decree No. 461 of 21 November 1997, any capital gain realised by

Italian resident individuals holding Notes not in connection with entrepreneurial activity and certain

other persons upon the sale for consideration or redemption of the Notes would be subject to animposta sostitutiva at the current rate of 12.5 per cent. Under the tax declaration regime, which is the

standard regime for taxation of capital gains realised by Italian resident individuals not engaged in

entrepreneurial activity, imposta sostitutiva on capital gains will be chargeable, on a cumulative basis,

on all capital gains, net of any incurred capital loss. These individuals must report overall capital

gains realised in any tax year, net of any relevant incurred capital loss, in the annual tax declaration

to be filed with the Italian tax authorities for such year and pay imposta sostitutiva on such gains

together with any balance income tax due for such year. Capital losses in excess of capital gains may

be carried forward against capital gains realised in any of the four succeeding tax years.

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As an alternative to the tax declaration regime, Italian resident individual noteholders holding

Notes not in connection with entrepreneurial activity may elect to pay imposta sostitutiva separately

on capital gains realised on each sale or redemption of the Notes (the ‘‘Risparmio Amministrato’’

regime). Such separate taxation of capital gains is allowed subject to: (i) the Notes being deposited

with Italian banks, societa di intermediazione mobiliare (SIM) or certain authorised financial

intermediaries; and (ii) an express election for the Risparmio Amministrato regime being timely made

in writing by the relevant Noteholder. The financial intermediary, on the basis of the information

provided by the taxpayer, accounts for imposta sostitutiva in respect of capital gains realised on eachsale or redemption of Notes (as well as in respect of capital gains realised at revocation of its

mandate), net of any incurred capital loss, and is required to pay the relevant amount to the Italian

fiscal authorities on behalf of the taxpayer, deducting a corresponding amount from proceeds to be

credited to the Noteholder. Under the Risparmio Amministrato regime, where a sale or redemption of

Notes results in capital loss, such loss may be deducted from capital gains subsequently realised in the

same tax year or in the following tax years up to the fourth. Under the Risparmio Amministrato

regime, the Noteholder is not required to declare capital gains in its annual tax declaration and

remains anonymous.

Any capital gains realised by Italian resident individuals holding Notes not in connection with

entrepreneurial activity who have elected for the Asset Management Option will be included in the

computation of the annual increase in value of the managed assets accrued, even if not realised, at

year end, subject to the Asset Management Tax to be applied on behalf of the taxpayer by the

managing authorised intermediary. Under the Asset Management Option, any depreciation of the

managed assets accrued at year end may be carried forward against increase in value of the managed

assets accrued in any of the four succeeding tax years. Under the Asset Management Option, the

Noteholder is not required to report capital gains realised in its annual tax declaration and remainsanonymous.

Any capital gains realised by Noteholders who are Italian resident collective investment funds

and SICAVs will be included in the computation of the taxable basis of the Collective Investment

Fund Tax.

Any capital gains realised by Noteholders who are Italian resident pension funds will be included

in the computation of the taxable basis of Pension Fund Tax.

The tax regime of capital gains in respect of the Notes realized by real estate funds depends on

the funds status and the applicable legislation. Capital gains realised by Italian real estate funds set up

after 26 September 2001 on the disposal of the Notes are not subject to any withholding or substitute

tax.

The 12.5 per cent. final imposta sostitutiva may in certain circumstances be payable on capitalgains realised upon sale for consideration or redemption of Notes by non-Italian resident persons or

entities without a permanent establishment in Italy to which the Notes are effectively connected, if the

Notes are held in Italy.

However, pursuant to Article 23 of Legislative Decree of 12 December 2003, No. 344, any

capital gains realised, by non-Italian residents without a permanent establishment in Italy to which the

Notes are effectively connected, through the sale for consideration or redemption of Notes are exempt

from taxation in Italy to the extent that the Notes are listed on a regulated market in Italy or abroad

(including the Luxembourg Stock Exchange) and in certain cases subject to filing of requireddocumentation, even if the Notes are held in Italy and regardless of the provisions set forth by any

applicable double taxation treaty.

In case the Notes are not listed on a regulated market in Italy or abroad:

(1) as to capital gains realised by non-Italian resident beneficial owners of the Notes with no

permanent establishment in Italy to which the Notes are effectively connected are exempt

from imposta sostitutiva in the Republic of Italy on any capital gains realised upon sale for

consideration or redemption of the Notes if they are resident, for tax purposes, in a

country which recognises the Italian fiscal authorities’ right to an adequate exchange of

information. If non-Italian residents without a permanent establishment in Italy to which

the Notes are effectively connected are within the Risparmio Amministrato regime or the

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Asset Management Option, exemption from Italian capital gains tax will apply upon

condition that they file in time with the authorised financial intermediary an appropriate

self-declaration stating that they are resident in a country which allows an adequate

exchange of information; and

(2) in any event, non-Italian resident persons or entities without a permanent establishment in

Italy to which the Notes are effectively connected that may benefit from a double taxation

treaty with the Republic of Italy, providing that capital gains realised upon the sale or

redemption of the Notes are to be taxed only in the country of tax residence of therecipient, will not be subject to imposta sostitutiva in the Republic of Italy on any capital

gains realised upon sale for consideration or redemption of Notes; in this case, if non-

Italian residents without a permanent establishment in Italy to which the Notes are

effectively connected are within the Risparmio Amministrato regime or the Asset

Management Option, exemption from Italian capital gains tax will apply upon the

condition that they file in time with the authorised financial intermediary appropriate

documents which include, inter alia, a statement from the competent tax authorities of the

country of residence of the non-Italian residents.

Inheritance and Gift Taxes

Italy no longer applies inheritance and gift taxes.

However, according to Law 18 October 2001 No. 383, for donees other from spouses, directdescendants or ancestors and other relatives within the fourth degree, if and to the extent that the

value of gift attributable to each such donee exceeds Euro 180,759.91, the gift of Notes is subject to

the ordinary transfer taxes provided for the transfer thereof for consideration.

Article 16 of Law. No. 383 of 18 October 2001, provides certain anti avoidance provisions in

case of abusive transactions, the application of which may deny the benefits of the exemption on

inheritance and gift tax as described above.

Transfer tax

General

Pursuant to Italian Legislative Decree No. 435 of 21 November 1997, which amended the regime

laid down by Royal Decree No. 3278 of 30 December 1923, the transfer of the Notes may be subject

to Italian transfer tax (tassa sui contratti di borsa) in the following cases and at the following rates:

(i) contracts entered into directly between private parties or between the parties through

entities other than authorised intermediaries (banks, SIMs or other professional

intermediaries authorised to perform investment services, pursuant to the Legislative DecreeNo. 415 of 23 July 1996, as superseded by Legislative Decree No. 58 of 24 February 1998,

or stockbrokers) are subject to a transfer tax of Euro 0.0082 for every Euro 51.65 (or a

fraction thereof) of the price at which the Notes are transferred;

(ii) contracts between private parties through banks, SIMs or other authorised professional

intermediaries or stockbrokers, or between private parties and banks, SIMs or other

authorised intermediaries or stockbrokers, are subject to a transfer tax of Euro 0.00464 for

every Euro 51.65 (or a fraction thereof) of the price at which the Notes are transferred;

and

(iii) contracts between banks, SIMs or other authorised professional intermediaries or

stockbrokers are subject to a transfer tax of Euro 0.00464 for every Euro 51.65 (or afraction thereof) of the price at which the Notes are transferred.

In the cases listed above under (ii) and (iii), however, the amount of transfer tax cannot exceed

Euro 929.62 for each transaction.

Exemptions

In general, transfer tax is not levied, inter alia, in the following cases:

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(i) contracts relating to listed securities entered into on regulated markets (e.g. the

Luxembourg Stock Exchange);

(ii) contracts relating to securities which are admitted to listing on regulated markets and

finalised outside such markets and entered into:

a. between banks or SIMs or other professional intermediaries authorised to performinvestment services, pursuant to the Legislative Decree No. 415 of 23 July 1996, as

superseded by Legislative Decree No. 58 of 24 February 1998, or stockbrokers among

themselves; or

b. between authorised intermediaries as referred to in paragraph (a) above and non-

Italian residents; or

c. between authorised intermediaries as referred to in paragraph (a) above, also non-Italian residents, and undertakings for collective investment in transferable securities;

(iii) contracts relating to public sale offers for the admission to listing on regulated markets or

relating to financial instruments already admitted to listing on said markets;

(iv) contracts for a consideration of less than Euro 206.58; and

(v) contracts regarding securities not listed on a regulated market entered into between

authorised intermediaries as referred to in (ii) (a) above, on the one hand, and non-Italian

residents, on the other hand.

Proposed European Withholding Tax Directive

On 3 June 2003, the European Union Council of Economic and Finance Ministers (the

‘‘Council’’) adopted a new directive regarding the taxation of savings income (the ‘‘Directive’’).

The Council agreed that the Directive should be implemented into national laws of the member

states of the European Union (each a ‘‘Member State’’ and together, ‘‘Member States’’) from 1

January 2004 and be applied from 1 January 2005. The Council also approved a draft agreement with

Switzerland concerning the taxation of savings income. The Council agreed that the agreement with

Switzerland should also constitute the basis for agreements between the European Union andLiechtenstein, Andorra, Monaco and San Marino.

On 31 October 2003 the Italian Parliament passed the Law No 306, which authorized the Italian

Government to implement the Directive in Italy within 18 months (i.e. 30 May 2005).

Under the Directive, each Member State will ultimately be expected to provide information to

other Member States on interest paid from that Member State to individual savers resident in those

other Member States. But for a transitional period, Belgium, Luxembourg and Austria will be allowedto apply a withholding instead of providing information, at a rate of 15% the first three years (2005-

2007), 20% for the subsequent three years (2008-2010) and 35% from 2011 onwards. These three

Member States will implement automatic exchange of information:

if and when the EC enters into an agreement by unanimity in the Council with Switzerland,

Liechtenstein, San Marino, Monaco and Andorra in exchange of information upon request as

defined in the OECD Agreement on Exchange of Information on Tax Matters (as developed by

the OECD global forum working group on effective exchange of information in 2002) in relation

to interest payments, and to continue to apply simultaneously the withholding tax; and

if and when the Council agrees by unanimity that the United Sates is committed to exchange

information upon request as defined in the 2002 OECD Agreement in relation to interest

payments.

The Directive has a broad scope, covering interest from debt-claims of every kind, including cash

deposits and corporate and government bonds and other similar negotiable debt securities. The

definition of interest extends to cases of accrued and capitalised interest. This includes, for example,

interest that is calculated to have accrued by the date of sale or redemption of a bond of a type

where normally interest is only paid on maturity together with the principal (a so-called ‘‘zero-coupon

bond’’). The definition also includes interest income obtained as a result of indirect investment via

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collective investment undertakings (i.e. investment funds managed buy specialist fund manager who

placed the investments made by individuals in a diverse range of Assets according to defined risk

criteria).

The European Commission, further to a mandate received from the Council on 16 October 2001,

is conducting negotiations with key non-EU countries (Switzerland, Liechtenstein, Monaco, Andorra,

San Marino) to ensure the adoption of equivalent measures in those countries in order to allow

effective taxation of savings income paid to EU residents.

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SUBSCRIPTION AND SALE

Pursuant to the Senior Notes Subscription Agreement entered into on 17 March 2004 among

Morgan Stanley & Co. International Limited (the ‘‘Lead Manager’’), the Issuer, the Originators and

the Representative of the Noteholders, the Lead Manager has agreed to subscribe and pay the Issuer

for the Senior Notes at the issue price of one hundred per cent. (100%) of their respective principal

amounts. The Issuer will pay to the Lead Manager, in relation to the Senior Notes, placement fees of

0.065 per cent. of the aggregate principal amount of the Class A Notes, the Class B Notes and the

Class C Notes.

Each of BPV, CRP and BN has, pursuant to the Class D Notes Subscription Agreement entered

into on 17 March 2004 among the Originators, the Issuer and the Representative of the Noteholdersin respect of the Class D Notes, agreed to subscribe and pay the Issuer for the Class D Notes, each

in such principal amount as set forth in the Class D Notes Subscription Agreement, at the issue price

of one hundred per cent. (100%) of the principal amount of the Class D Notes.

The Senior Notes Subscription Agreement is subject to a number of conditions and may be

terminated by the Lead Manager in certain circumstances prior to payment for the Senior Notes to

the Issuer. The Issuer and the Originators have agreed to indemnify the Lead Manager against certain

liabilities in connection with the issue of the Senior Notes.

United States of America

The Notes have not been and will not be registered under the Securities Act and may not be

offered or sold within the U.S. or to, or for the account or benefit of, U.S. Persons, except pursuant

to an exemption from or in a transaction not subject to the registration requirements of the Securities

Act. The Notes are subject to U.S. tax law requirements.

Each of the Issuer and the Originators has represented, warranted and undertaken to the LeadManager that: (a) none of the Issuer, each Originator or any of their respective affiliates (as defined in

Rule 501(b) of Regulation D under the Securities Act, each an ‘‘Affiliate’’) has directly or through any

agent (except the Lead Manager) sold, offered for sale, solicited offers to buy or otherwise negotiated

in respect of any security (as defined in the Securities Act) which is or will be integrated with the sale

of the Notes in a manner that would require the registration of the Notes under the Securities Act or

offered, solicited offers to buy or sold the Notes in any manner involving a public offering within the

meaning of Section 4(2) of the Securities Act; (b) none of the Issuer, the Originators or any of their

respective Affiliates or any Persons acting on behalf of one or more of them has engaged or willengage in any directed selling efforts (within the meaning of Regulation S) with respect to the Notes;

and (c) each of the Issuer and the Originators and each of their respective Affiliates and any Person

acting on behalf of one or more of them has complied and will comply with the offering restrictions

requirement of Regulation S. The Issuer has represented, warranted and undertaken to the Lead

Manager that the Issuer is a ‘‘foreign issuer’’ (as defined in Regulation S) and reasonably believes that

there is no ‘‘substantial U.S. market interest’’ (as defined in Regulation S) in the securities of the

Issuer of the same class as the Notes and that the Issuer is not, and after giving effect to the offering

and sale of the Notes and the application of the proceeds thereof as described in this OfferingCircular, will not be, required to register as an ‘‘investment company’’ as such term is defined in the

Investment Company Act of 1940, as amended.

The Lead Manager has represented, warranted and undertaken that it will not offer or sell any

Notes within the U.S. except in accordance with Rule 903 of Regulation S under the Securities Act

and, accordingly, that neither it nor any Persons acting on its behalf nor any of their respective

Affiliates has engaged nor will engage in any directed selling efforts with respect to the Notes and it

and its Affiliates and any Person acting on its or their behalf has complied and will comply with the

offering restrictions of Regulation S.

Terms used in the paragraphs above have the meanings ascribed to them in Regulation S under

the Securities Act.

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Republic of Italy

The Lead Manager under the Senior Notes Subscription Agreement has acknowledged that no

action has or will be taken by it which would allow an offering (or a ‘‘sollecitazione all’investimento’’)

of the Notes of the relevant Class or Classes to the public in the Republic of Italy unless in

compliance with the relevant Italian securities, tax and other applicable laws and regulations.

Individual sales of the Notes to any Persons in the Republic of Italy may only be made in accordance

with Italian securities, tax and other applicable laws and regulations.

The Lead Manager has under the Senior Notes Subscription Agreement acknowledged that no

application has been made by it to obtain an authorisation from CONSOB for the public offering of

the Notes of the relevant Class or Classes in the Republic of Italy.

Accordingly, the Lead Manager has represented and agreed that it has not offered, sold or

delivered, and will not offer, sell or deliver, and has not distributed and will not distribute and has

not made and will not make available in the Republic of Italy, Notes of the relevant Class or Classes,

this Offering Circular nor any other offering material relating to Notes of such Class or Classes other

than to professional investors (‘‘operatori qualificati’’) as defined in Article 31, paragraph 2, ofCONSOB Regulation No. 11522 of 1 July 1998, as subsequently amended and supplemented, pursuant

to Article 100, paragraph 1, letter b) and Article 30, paragraph 2, of Italian Legislative Decree No. 58

of 24 February 1998 (the ‘‘Financial Laws Consolidation Act’’) and in accordance with applicable

Italian laws and regulations.

Any offer of the Notes of the relevant Class or Classes to professional investors in the Republic

of Italy shall be made only by banks, investment firms or financial companies enrolled in the special

register provided for in Article 107 of the Consolidated Banking Act, to the extent that they are duly

authorised to engage in the placement and/or underwriting of financial instruments in the Republic of

Italy in accordance with the relevant provisions of the Financial Laws Consolidation Act and in

compliance with Article 129 of the Consolidated Banking Act.

United Kingdom

The Lead Manager under the Senior Notes Subscription Agreement has represented and agreed

with the Issuer that:

(i) No offer to public: it has not offered or sold and, prior to the expiry of the period of six

months from the Issue Date, will not offer or sell any Senior Notes of the relevant Class or

Classes to Persons in the United Kingdom except to Persons whose ordinary activities

involve them in acquiring, holding, managing or disposing of investments (as principal or

agent) for the purposes of their businesses or otherwise in circumstances which have not

resulted and will not result in an offer to the public in the United Kingdom within themeaning of the Public Offers of Securities Regulations 1995;

(ii) General compliance: it has complied and will comply with all applicable provisions of the

Financial Services and Markets Act 2000 (the ‘‘FSMA’’) with respect to anything done by

it in relation to the Senior Notes of the relevant Class or Classes in, from or otherwiseinvolving the United Kingdom; and

(iii) Financial promotion: it has only communicated or caused to be communicated and will only

communicate or cause to be communicated any invitation or inducement to engage in

investment activity (within the meaning of section 21 of the FSMA received by it inconnection with the issue or sale of the Senior Notes in circumstances in which section

21(1) of the FSMA does not apply to the Issuer.

France

Each of the Lead Manager and the Issuer has represented and agreed that:

(i) in connection with their initial distribution, it has not offered or sold and will not offer or

sell, directly or indirectly, any Notes by way of a public offering in France (an appel public

a l’epargne, as defined in Article L.411-1 of the French Code monetaire et financier); and

166

(ii) offers and sales of Notes will be made in the Republic of France only to qualified investors

(investisseurs qualifies) in accordance with Article L.411-2 of the French Code monetaire et

financier and Decree 98-880 dated 1 October 1998.

General Restrictions

In addition, the Lead Manager under the Senior Notes Subscription Agreement has represented

and agreed with the Issuer that no action has been or will be taken in any jurisdiction by it thatwould permit a public offering of the Senior Notes of the relevant Class or Classes, or possession or

distribution of this Offering Circular or any other offering or publicity material relating to the Senior

Notes of the relevant Class or Classes, in any country or jurisdiction where action for that purpose is

required. The Lead Manager under the Senior Notes Subscription Agreement has represented and

agreed that it will comply with, and obtain any consent, approval or permission required under, all

applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Senior

Notes of the relevant Class or Classes or has in its possession or distributes this Offering Circular or

any such other material, in all cases at its own expense. The Lead Manager has also agreed that itwill ensure that no obligations are imposed on the Issuer in any such jurisdiction as a result of any of

the foregoing actions. The Lead Manager under the Senior Notes Subscription Agreement will obtain

any permission required by it for, the acquisition, offer, sale or delivery by it of Senior Notes of the

relevant Class or Classes under the laws and regulations in force in any jurisdiction to which it is

subject or in or from which it makes any acquisition, offer, sale or delivery.

The Lead Manager under the Senior Notes Subscription Agreement is not authorised to make

any representation or use any information in connection with the issue, subscription and sale of the

Senior Notes of the relevant Class or Classes other than as contained in this Offering Circular or any

amendment or supplement to it.

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GLOSSARY OF TERMS

These and other terms used in this Offering Circular are subject to, and in some cases are

summaries of, the definitions of such terms set forth in the Transaction Documents, as they may be

amended from time to time. Certain terms derive from Transaction Documents which have been executed

in the Italian language. These terms have been translated into English language from their definitions in

Italian language contained in such Transaction Documents for the purposes of this ‘‘Glossary of Terms’’

and to the extent that there is any discrepancy between the definitions of such terms as set forth in the

Italian language Transaction Documents and as set forth in the ‘‘Glossary of Terms’’ below, the

definitions contained in such Italian language Transaction Documents shall prevail.

‘‘Accounts’’ means the Issuer Collection Accounts, the Issuer Investment Account, the Issuer

Distribution Account, the Issuer Cash Reserve Account, the Issuer Expenses Account, the Issuer

Securities Account, the Issuer Securities Loan Securities Account, the Issuer English Account and the

Issuer Quota Capital Account.

‘‘Account Bank’’ means Deutsche Bank S.p.A., or its permitted successors or assigns from time totime, which must qualify as an Eligible Institution, with which the Issuer Investment Account, the

Issuer Distribution Account, the Issuer Cash Reserve Account, the Issuer Securities Loan Securities

Account and the Issuer Securities Account have been opened.

‘‘Account Bank Semi-annual Report’’ means the report to be made by the Account Bank on each

Semi-annual Report Date pursuant to the Cash Allocation, Management and Payments Agreement.

‘‘Additional CDC IXIS Guarantee’’ means the guarantee in the form of a joint and several obligation

(cautionnement solidaire) dated 7 January 2004 and with effect from (and including) 24 January 2004

granted to the counterparties of CDC IXIS Capital Markets by CDC IXIS, guaranteeing transactions

entered into by CDC IXIS Capital Markets on or after 24 January 2004 and which have maturity

dates falling after 24 January 2017, other than transactions specifically excluded from the benefit of

the Additional CDC IXIS Guarantee.

‘‘Additional Return’’ means on each Payment Date until the Payment Date (inclusive) on which theSenior Notes have been or will be redeemed in full, an amount equal to the Issuer Available Funds

available on such Payment Date after the payments of items from (i) to (xxiv) (inclusive) of the Pre-

Enforcement Order of Priority or items from (i) to (xxii) (inclusive) of the Post-Enforcement Order of

Priority.

‘‘Administrative Services Agreement’’ means the administrative services agreement entered into on 28

November 2003 between the Issuer and the Administrative Services Provider, as from time to timemodified in accordance with the provisions therein contained and including any agreement or other

document expressed to be supplemental thereto.

‘‘Administrative Services Provider’’ means BPV, in its capacity as the Administrative Services Provider,

or its permitted successors or assigns from time to time.

‘‘Advance Indemnity’’ means such amount advanced by BPV, CRP or BN to the Issuer pursuant toClause 4.5(c) of the Warranty and Indemnity Agreements.

‘‘Aggregate Notional Outstanding Amount’’ means as of the last day of the Semi-annual Collection

Period immediately prior to each Semi-annual Report Date or, as the case may be, each Interim

Calculation Date, the sum of the Notional Outstanding Amount for every Mortgage Loan on each

such date.

‘‘Arranger’’ means Morgan Stanley & Co. International Limited.

‘‘Arrears Level’’ means for each Mortgage Loan on the last day of each Semi-annual Collection

Period or, as the case may be, the Interim Calculation Date, an amount equal to the fraction where:

(a) the numerator is an amount equal to all sums due but unpaid in respect of such Mortgage Loan

as of the last day of such Semi-annual Collection Period or, as the case may be, Interim Calculation

Date, (including interest, default interest, principal and other costs); and (b) the denominator is an

amount equal to the last instalment of such Mortgage Loan which has become payable on or prior

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the last day of such Semi-annual Collection Period or, as the case may be, the Interim Calculation

Date, the resulting amount being calculated to the nearest whole number (with 0.5 and above being

rounded up).

‘‘BN’’ means Banca Nuova S.p.A..

‘‘BN Claims’’ means each and every right arising from the BN Mortgage Loans.

‘‘BN Collection Account’’ means a Euro denominated account opened in the name of the Issuer withthe Collection Account Bank to which the BN Collections will be credited and to be operated

pursuant to the provisions of the Cash Allocation, Management and Payments Agreement.

‘‘BN Collection Policy’’ means the procedures for the management, collection and recovery of the BNClaims as set forth in the Master Servicing Agreement.

‘‘BN Collections’’ means all immediately available funds including cash amounts derived from the BNClaims received by the Issuer from time to time in respect of the BN Claims pursuant to the Master

Servicing Agreement.

‘‘BN Collateral Security’’ means any security interest other than a Mortgage (excluding any personal

guarantees securing the Claims or other claims of BN, i.e. fideiussioni omnibus) granted by a Borrower,

a Guarantor or any other party in order to secure the BN Claims.

‘‘BN Criteria’’ means the criteria on the basis of which BN has selected the BN Claims as set forth in

Exhibit ‘‘A’’ to the BN Transfer Agreement.

‘‘BN Mortgage Loan’’ means each loan, secured by a mortgage, granted by BN or by Banca del

Popolo di Trapani or Banca Nuova S.p.A., as existing prior to its merger into Banca del Popolo di

Trapani S.p.A., to a Borrower and classified as performing as of 28 November 2003, the BN Claims

in respect of which have been transferred by BN to the Issuer pursuant to the BN Transfer

Agreement and ‘‘BN Mortgage Loans’’ means all of them.

‘‘BN Mortgage Loan Agreement’’ means each loan agreement entered into by BN or by Banca del

Popolo di Trapani or Banca Nuova S.p.A., as existing prior to its merger into Banca del Popolo di

Trapani S.p.A., secured by a mortgage from which the relevant BN Claim originate, as amended and/

or supplemented by any related agreement, deed or document including but not limited to deeds of

assumption (accollo), and ‘‘BN Mortgage Loan Agreements’’ means all of them.

‘‘BN Portfolio’’ means the portfolio of performing mortgage loan receivables and connected rights

purchased by the Issuer from BN pursuant to the terms of the BN Transfer Agreement, less the

Miscellaneous Mortgage Loans transferred by the Issuer to BN pursuant to the relevant MiscellaneousLoans Transfer Agreement.

‘‘BN Transfer Agreement’’ means the receivables purchase agreement entered into 28 Novemberbetween BN and the Issuer, as from time to time modified in accordance with the provisions therein

contained and including any agreement or other document expressed to be supplemental thereto.

‘‘BN Warranty and Indemnity Agreement’’ means the warranty and indemnity agreement entered into

on 28 November 2003 between BN and the Issuer, as from time to time modified in accordance with

the provisions therein contained and including any agreement or other document expressed to be

supplemental thereto.

‘‘Borrower’’ means any Person who is a borrower of a Mortgage Loan.

‘‘BPV’’ means Banca Popolare di Vicenza S.c. per azioni a r.l.

‘‘BPV Claims’’ means each and every right arising from the BPV Mortgage Loans.

‘‘BPV Collection Account’’ means a Euro denominated account opened in the name of the Issuer with

the Collection Account Bank to which the BPV Collections will be credited and to be operated

pursuant to the provisions of the Cash Allocation, Management and Payments Agreement

‘‘BPV Collateral Security’’ means any security interest other than a Mortgage (excluding any personal

guarantees securing the Claims or other claims of BPV, i.e. fideiussioni omnibus) granted by aBorrower, a Guarantor or any other party in order to secure the BPV Claims.

‘‘BPV Collection Policy’’ means the procedures for the management, collection and recovery of theBPV Claims as set forth in the Master Servicing Agreement.

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‘‘BPV Collections’’ means all immediately available funds including cash amounts derived from the

BPV Claims received by the Issuer from time to time in respect of the BPV Claims pursuant to the

Master Servicing Agreement.

‘‘BPV Criteria’’ means the criteria on the basis of which BPV has selected the BPV Claims as set

forth in Exhibit ‘‘A’’ to the BPV Transfer Agreement.

‘‘BPV Mortgage Loan’’ means each loan, secured by a mortgage, granted by BPV or by the Other

Banks to a Borrower and classified as performing as of 28 November 2003, the BPV Claims in respect

of which have been transferred by BPV to the Issuer pursuant to the BPV Transfer Agreement and

‘‘BPV Mortgage Loans’’ means all of them.

‘‘BPV Mortgage Loan Agreement’’ means each loan agreement entered into by BPV or by the Other

Banks, secured by a mortgage from which the relevant BPV Claim originate, as amended and/orsupplemented by any related agreement, deed or document including but not limited to deeds of

assumption (accollo), and ‘‘BPV Mortgage Loan Agreements’’ means all of them.

‘‘BPV Portfolio’’ means the portfolio of performing mortgage loan receivables and connected rights

purchased by the Issuer from BPV pursuant to the terms of the BPV Transfer Agreement, less the

Miscellaneous Mortgage Loans transferred by the Issuer to BPV pursuant to the relevant

Miscellaneous Loans Transfer Agreement.

‘‘BPV Transfer Agreement’’ means the receivables purchase agreement entered into 28 November

between BPV and the Issuer, as from time to time modified in accordance with the provisions therein


‘‘BPV Warranty and Indemnity Agreement’’ means the warranty and indemnity agreement entered into

on 28 November 2003 between BPV and the Issuer, as from time to time modified in accordance withthe provisions therein contained and including any agreement or other document expressed to be


‘‘Business Day’’ shall mean a day (other than a Saturday or a Sunday) on which banks are generally

open for business in Milan, London and Luxembourg and on which the Trans-European Automated

Real Time Gross-Settlement Express Transfer System (or any successor thereto) is open.

‘‘Calculation Agent’’ means Deutsche Bank AG London, in its capacity as the Calculation Agent, or

its permitted successors or assigns from time to time.

‘‘Calculation Date’’ means the fifth Business Day before each Payment Date.

‘‘Call Date’’ means the Payment Date falling in January 2016.

‘‘Cash Accounts’’ means the Issuer Collection Accounts, the Issuer Investment Account, the Issuer

Cash Reserve Account, the Issuer Distribution Account, the Issuer Expenses Account, the Issuer

English Account and the Issuer Quota Capital Account.

‘‘Cash Allocation, Management and Payments Agreement’’ means the cash allocation, management and

payments agreement dated 17 March 2004 between the Issuer, the Representative of the Noteholders,the Cash Manager, the Account Bank, the Collection Account Bank, the English Account Bank, the

Paying Agents and the Calculation Agent, as from time to time modified in accordance with the

provisions therein contained and including any agreement or other document expressed to be


‘‘Cash Amortisation Amount’’ means, on each Payment Date prior to the delivery of a Trigger Notice

further to the occurrence of an Insolvency Event, an amount equal to the lower of:

(a) the Issuer Available Funds available after the payment of items from (i) to (viii) (inclusive)

of the Pre-Enforcement Order of Priority; and

(b) the greater of:

(i) nil; and

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(ii) the aggregate Outstanding Principal Amount of Class A Notes, the Class B Notes and

the Class C Notes (less, in respect of the second and the third Payment Dates only,

the amount of the Senior Notes Available Funds for Amortisation set aside on

preceding Payment Date(s)) minus the Aggregate Notional Outstanding Amount of all

Mortgage Loans that have not been classified as non-performing (in sofferenza), in

each case, as of the last day of the Semi-annual Collection Period.

‘‘Cash Manager’’ means B.P.Vi Fondi SGR S.p.A., in its capacity as the Cash Manager, or its

permitted successors or assigns from time to time.

‘‘Cash Reserve’’ means the amount deposited from time to time in the Issuer Cash Reserve Account

‘‘Cash Reserve Scheduled Maximum Amount’’ means, on each Payment Date prior to the delivery of a

Trigger Notice or the occurrence of an Insolvency Event, provided that the Senior Notes have not

been or will not be redeemed in full on such Payment Date, an amount equal to the sum of: (x) theSecurities Loan Full Liquidation Amount (if any); and (y) the greater of: (i) two per cent. (2%) of the

aggregate Outstanding Principal Amount of the Senior Notes on such Payment Date; and (ii) Euro

2,942,415 (equivalent to 0.5% of the Initial Principal Amount of the Senior Notes).

‘‘Claims’’ means the BPV Claims, the CRP Claims and the BN Claims and ‘‘relevant Claims’’ means

those Claims comprised in each relevant Portfolio (and exclude, for the avoidance of doubt, the claims

arising from the Miscellaneous Mortgage Loans).

‘‘Class’’ refers to the classification of the Notes.

‘‘Class A Margin’’ means a margin of 0.20% per annum up to (but excluding) the Call Date and a

margin of 0.40% per annum from and including the Call Date.

‘‘Class A Notes’’ means the Euro 553,175,000 Class A Mortgage Backed Floating Rate Notes due

2035.

‘‘Class A Noteholders’’ means the holder(s) of the Class A Notes.

‘‘Class B Margin’’ means a margin of 0.57% per annum up to (but excluding) the Call Date and a


‘‘Class B Notes’’ means the Euro 23,539,000 Class B Mortgage Backed Floating Rate Notes due 2035.

‘‘Class B Noteholders’’ means the holder(s) of the Class B Notes.

‘‘Class C Margin’’ means a margin of 1.20% per annum up to (but excluding) the Call Date and a


‘‘Class C Notes’’ means the Euro 11,769,000 Class C Mortgage Backed Floating Rate Notes due 2035.

‘‘Class C Noteholders’’ means the holder(s) of the Class C Notes.

‘‘Class D Notes’’ means the Euro 26,640,000 Class D Mortgage Backed Fixed Rate Notes due 2035.

‘‘Class D Noteholders’’ means the holder(s) of the Class D Notes.

‘‘Class D Notes Depository’’ means BPV, or its permitted successors or assigns from time to time.

‘‘Class D Notes Subscribers’’ means BPV, CRP and BN.

‘‘Class D Notes Subscription Agreement’’ means a subscription agreement entered into on 17 March

2004 between BPV, CRP, BN (each as subscriber of the Class D Notes) the Issuer and the

Representative of the Noteholders, as from time to time modified in accordance with the provisions

therein contained and any deed or other document expressed to be supplemental thereto, as from time

to time modified.

‘‘Clearstream’’ means Clearstream Banking, societe anonyme.

‘‘Collateral Security’’ means the BPV Collateral Security, the CRP Collateral Security and the BN

Collateral Security.

‘‘Collection Accounts’’ means the BPV Collection Account, the CRP Collection Account and the BNCollection Account.

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‘‘Collection Account Bank’’ means BPV in its capacity as the collection account bank pursuant to the

Cash Allocation, Management and Payments Agreement, or its permitted successors and assigns from

time to time.

‘‘Collection Account Bank Semi-annual Report’’ means the report to be made by the Collection

Account Bank on each Semi-annual Report Date pursuant to the Cash Allocation, Management and

Payments Agreement.

‘‘Collections’’ means the BPV Collections, the CRP Collections and the BN Collections.

‘‘Conditions’’ means the terms and conditions of the Class A Notes, the Class B Notes, the Class C

Notes and the Class D Notes, as the context may require and any reference to a numbered relevant

‘‘Condition’’ is to the corresponding numbered provision thereof.

‘‘CONSOB’’ means the Commissione Nazionale per le Societa e la Borsa.

‘‘Consolidated Banking Act’’ means Legislative Decree No. 385 of 1 September 1993 (Testo unico delle

leggi in materia bancaria e creditizia) as subsequently amended and supplemented.

‘‘CRP’’ means Cassa di Risparmio di Prato – Cariprato S.p.A..

‘‘CRP Claims’’ means each and every right arising from the CRP Mortgage Loans.

‘‘CRP Collection Account’’ means a Euro denominated account opened in the name of the Issuer with

the Collection Account Bank to which the CRP Collections will be credited and to be operated

pursuant to the provisions of the Cash Allocation, Management and Payments Agreement.

‘‘CRP Collection Policy’’ means the procedures for the management, collection and recovery of the

CRP Claims as set forth in the Master Servicing Agreement.

‘‘CRP Collections’’ means all immediately available funds including cash amounts derived from the

CRP Claims received by the Issuer from time to time in respect of the CRP Claims pursuant to the

Master Servicing Agreement.

‘‘CRP Collateral Security’’ means any security interest other than a Mortgage (excluding any personal

guarantees securing the Claims or other claims of CRP, i.e. fideiussioni omnibus) granted by aBorrower, a Guarantor or any other party in order to secure the CRP Claims.

‘‘CRP Criteria’’ means the criteria on the basis of which CRP has selected the CRP Claims as setforth in Exhibit ‘‘A’’ to the CRP Transfer Agreement.

‘‘CRP Mortgage Loan’’ means each loan, secured by a mortgage, granted by CRP or by Banca

Steinhauslin to a Borrower and classified as performing as of 28 November 2003, the CRP Claims inrespect of which have been transferred by CRP to the Issuer pursuant to the CRP Transfer

Agreement and ‘‘CRP Mortgage Loans’’ means all of them.

‘‘CRP Mortgage Loan Agreement’’ means each loan agreement entered into by CRP or by the Banca

Steinhauslin, secured by a mortgage from which the relevant claim originate, as amended and/or

supplemented by any related agreement, deed or document including but not limited to deeds of

assumption (accollo), and ‘‘CRP Mortgage Loan Agreements’’ means all of them.

‘‘CRP Portfolio’’ means the portfolio of performing mortgage loan receivables and connected rights

purchased by the Issuer from CRP pursuant to the terms of the CRP Transfer Agreement, less the

Miscellaneous Mortgage Loans transferred by the Issuer to CRP pursuant to the relevant

Miscellaneous Loans Transfer Agreement.

‘‘CRP Transfer Agreement’’ means the receivables purchase agreement entered into 28 November

between CRP and the Issuer, as from time to time modified in accordance with the provisions therein


‘‘CRP Warranty and Indemnity Agreement’’ means the warranty and indemnity agreement entered into

on 28 November 2003 between CRP and the Issuer, as from time to time modified in accordance with

the provisions therein contained and including any agreement or other document expressed to be


‘‘Debt Securities’’ means the debt securities constituted by French fixed rate treasury notes (Les bons

du Tresor a taux fixe et a interet annuel) (the ‘‘Debt Securities’’) advanced to the Issuer pursuant tothe Securities Subordinated Loan Agreement.

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‘‘Decree 239 Withholding’’ means any withholding or deduction for or on account of ‘‘imposta

sostitutiva’’ under Italian Legislative Decree No. 239 of 1 April 1996, as amended by Italian Law No.

409 and No. 410 of 23 November 2001 and as subsequently amended.

‘‘Depository Agreement’’ means the depository agreement to be entered into on 17 March 2004 by and

among the Class D Notes Depository, the Representative of the Noteholders and the Issuer, as from

time to time modified in accordance with the provisions therein contained and including any

agreement or other document expressed to be supplemental thereto.

‘‘Effective Date’’ means 1 December 2003 (00.01 Milan time).

‘‘Eligible Institution’’ means (i) any depository institution, approved by the Representative of the

Noteholders, organised under the laws of any state which is a member of the European Union or of

the United States of America, whose short-term, unsecured and unsubordinated debt obligations are

rated at least ‘‘F1+’’ (or, for the purpose of the Account Bank, the English Account Bank and the

Liquidity Reserve Account only, ‘‘F1’’) by Fitch and ‘‘A-1+’’ (or, for the purpose of the Liquidity

Reserve Account, ‘‘A-2’’) by S&P and (ii) Deutsche Bank S.p.A. for so long as (A) its controlling

parent company’s short-term, unsecured and unsubordinated debt obligations are rated at least ‘‘F1+’’by Fitch and ‘‘A-1+’’ by S&P; (B) the shareholding held by its controlling parent company does not

fall below 90 per cent.; (C) there are no material changes in the ownership structure of its controlling

parent company which would result in the downgrading of any of the Senior Notes; and (D) the

words ‘‘Deutsche Bank’’ are contained in its legal name and, in any case, only until such date when

S&P notifies the Issuer that Deutsche Bank S.p.A. no longer qualifies as an Eligible Institution.

‘‘Eligible Investments’’ means:

(i) any Euro denominated senior (unsubordinated) debt securities or other debt instruments

providing a fixed principal amount at maturity, issued by or fully and unconditionally

guaranteed on an unsubordinated basis by an Eligible Institution; or

(ii) repurchase transactions between the Issuer and an Eligible Institution, in respect of debt

securities or other debt instruments having the characteristics under (i) above,

provided that, in both cases, such investments are immediately repayable on demand, disposable

without penalty and have a maturity date falling on or before the Local Business Day preceding the

last day of the then current Semi-annual Collection Period (or, in the case of investments to be made

out of funds standing to the balance of the Issuer Distribution Account, on or before the fourth

Business Day before the next Payment Date); and is not subject to any Decree 239 Deduction or

withholding pursuant to Article 26.3 bis of Presidential Decree 600/1973, in each case, as subsequentlyamended or supplemented; and provided further that the purchase price of such Eligible Investment

must not be greater than its nominal value.

‘‘EMU’’ means the European Economic and Monetary Union pursuant to the Treaty establishing the

European Communities.

‘‘English Account Bank’’ means Deutsche Bank AG London.

‘‘English Deed of Charge’’ means the deed of charge governed by English law executed on 17 March

2004, pursuant to which the Issuer has charged and assigned in favour of the Noteholders and theOther Issuer Creditors, by way of first fixed security, all the Issuer’s rights, title, interest and benefit

(present and future) in, to and under the Swap Agreement and the Senior Notes Subscription

Agreement and in and to all sums of money which may be, at the time the English Deed of Charge is

entered into or thereafter are from time to time, standing to the credit of the Issuer English Account

and has charged by way of first floating security the whole of the Issuer’s undertaking, property and

assets, present and future, relating to the Securitisation, with the exception only of: (a) any part of its

undertaking or any property or asset for the time being validly and effectively charged or assigned by

way of fixed security pursuant to the English Deed of Charge; and (b) any part of its undertaking orany property or asset situated outside England and Wales to the extent that any such security would

be unlawful under the laws of the jurisdiction in which such property, undertaking or asset is situated

or such security is enforced.

‘‘Euroclear’’ means Euroclear Bank SA/NV as operator of the Euroclear system.

‘‘Euribor’’ means the Euro-zone inter-bank offered rate.

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‘‘Euro-zone’’ means the region comprised of member states of the European Union that adopted the

single currency in accordance with the Treaty establishing the European Community (signed in Rome

on 25 March 1957) as amended by the Treaty on European Union (signed in Maastricht on 7

February 1992).

‘‘Excess Swap Collateral’’ means an amount equal to the value of any collateral (or the applicable

part thereof) transferred by the Swap Counterparty to the Issuer pursuant to the Swap Agreement

that is in excess of the Swap Counterparty’s liability to the Issuer thereunder (i) as at the date of

termination of a transaction thereunder and (ii) that the Swap Counterparty is otherwise entitled to

have returned to it in accordance with the terms of the Swap Agreement.

‘‘Excluded Collections’’ means amounts collected by the Issuer in connection with any Claim in respect

of which BPV, CRP or BN has (i) paid an Advance Indemnity, and/or (ii) granted a Limited

Recourse Loan, and/or (iii) failed to grant a Limited Recourse Loan pursuant to Clause 5.1.2 or

Clause 5.1.3 of the Warranty and Indemnity Agreement where as a consequence of such failure the

Debt Securities Initial Market Value will be repaid in part out of the amounts collected in respect ofthe Mortgage Loan(s) for which such Limited Recourse Loan(s) should have been granted, up to an

amount equivalent to the corresponding Advance Indemnity plus interest thereon or, as the case may

be, Limited Recourse Loan.

‘‘Expected Amortisation Amount’’ means, on each Payment Date, the aggregate Outstanding Principal

Amount of the Class A Notes, the Class B Notes and the Class C Notes (less, in respect of the

second and the third Payment Dates only, the amount of the Senior Notes Available Funds for

Amortisation set aside on preceding Payment Date(s)) minus the Aggregate Notional Outstanding

Amount on all Mortgage Loans that have not been classified as non-performing (in sofferenza), in

each case, as of the last day of the Semi-annual Collection Period immediately preceding such

Payment Date.

‘‘Final Maturity Date’’ means the Payment Date falling in July 2035.

‘‘First Payment Date’’ means the Payment Date falling on 26 January 2005 (or, if such day is not a

Business Day, the immediately succeeding Business Day, unless such Business Day would fall in the

next calendar month in which case interest will be paid on the immediately preceding Business Day).

‘‘Fitch’’ means Fitch Ratings Ltd.

‘‘Funding Provider’’ means BPV, in its capacity as the funding provider pursuant to the Quotaholders’Agreement.

‘‘FSMA’’ means the Financial Services and Markets Act 2000.

‘‘Guarantor’’ means any Person, entity or subject, other than a Borrower or a Mortgagor, who has

granted a guarantee or a security in favour of any of BPV, the Other Banks, CRP, Banca

Steinhauslin, BN, Banca del Popolo di Trapani or Banca Nuova S.p.A. as existing prior to its merger

into Banca del Popolo di Trapani S.p.A., to secure the payment or repayment of any amounts due in

respect of a Claim, and its successors or assigns from time to time.

‘‘Individual Purchase Price’’ means the purchase price of each Claim as indicated in Exhibit ‘‘B’’ to the

Transfer Agreements.

‘‘Initial Cash Reserve Amount’’ means on the Issue Date an amount of Euro 8,827,245.

‘‘Initial Period’’ means the period of eighteen months after the Issue Date.

‘‘Initial Principal Amount’’ means the principal amount of the Notes of the relevant Class on the IssueDate.

‘‘Insolvency Event’’ means any of the events set forth in Condition 10 (Trigger Events), sub-paragraphs

(c)(i), (ii) or (iii).

‘‘Intercreditor Agreement’’ means an agreement dated 17 March 2004 between the Issuer, the

Representative of the Noteholders acting on behalf of the Noteholders and for itself and the Other

Issuer Creditors, as from time to time modified in accordance with the provisions therein contained

and including any agreement or other document expressed to be supplemental thereto.

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‘‘Interest Component Of The Purchase Price’’ means interest accrued but not yet payable as well as

interest accrued and unpaid, in each case, as of the Effective Date in respect of the Claims plus

penalty interest in relation to any instalments in arrears and expenses incurred in relation to the

recovery thereof.

‘‘Interest Determination Date’’ means the second Business Day before each Payment Date, providedthat the First Interest Determination Date is the second Business Day before the Issue Date.

‘‘Interest On The Purchase Price’’ means the amount of interest due and payable on the Principal

Component Of The Purchase Price from the Effective Date to the Issue Date at the rate of Six

Month Euribor plus zero point fifteen per cent. (0.15%).

‘‘Interest Payment Amount’’ means the amount of interest, in Euro, determined by the Calculation

Agent for each Note in respect of each Interest Period pursuant to Condition 5.3(ii) (Determination of

Rates of Interest and Calculation of Interest Payments).

‘‘Interest Period’’ means each period commencing on (but excluding) a Payment Date and ending on

(and including) the next Payment Date and, in the case of the first Interest Period (the ‘‘Initial Interest

Period’’), commencing on (and include) the Issue Date and ending on the First Payment Date.

‘‘Interim Calculation Date’’ means the last calendar day of each March and September of each year.

‘‘Interim Calculation Period’’ means each three month period commencing on (and including) the first

calendar day of each January and July, respectively, and ending on (and including) the last calendarday of each March and September, respectively.

‘‘Interim Report Date’’ means the 15th calendar day of April and October of each calendar year or, if

such day is not a Business Day, the immediately succeeding Business Day.

‘‘Interim Servicer Report’’ means the report to be made by BPV pursuant to the Master ServicingAgreement on each Interim Report Date.

‘‘Issue Date’’ means 18 March 2004.

‘‘Issuer’’ means Berica Residential MBS 1 S.r.l.

‘‘Issuer Available Funds’’ on each Payment Date shall comprise:

(a) all the sums received or recovered by the Issuer from or in respect of the Claims during the

Semi-annual Collection Period immediately preceding such Payment Date, except for the

Excluded Collections;

(b) all amounts paid or to be paid to the Issuer on or immediately prior to such Payment Date

under the terms of the Swap Agreement and the Liquidity Facility Agreement;

(c) all amounts received by the Issuer from the Originators pursuant to the Transfer

Agreements and the Warranty and Indemnity Agreements during the Semi-annualCollection Period immediately preceding such Payment Date;

(d) all amounts standing to the credit of the Issuer Cash Reserve Account as of the last day of

the Semi-annual Collection Period immediately preceding such Payment Date;

(e) interest accrued on and credited to the Cash Accounts in the Semi-annual Collection Period

immediately preceding such Payment Date, including interest accrued on the Senior Notes

Available Funds for Amortisation deposited in the Issuer Investment Account and on any

amount set aside to such Account under item (xxii) of the Pre-Enforcement Order of

Priority;

(f) any profit generated by the Eligible Investments to the last day of the Semi-annualCollection Period immediately preceding such Payment Date, including profit deriving from

Eligible Investments made in respect of the Senior Notes Available Funds for Amortisation

deposited in the Issuer Investment Account or in respect of any amount set aside to such

Account under item (xxii) of the Pre-Enforcement Order of Priority;

(g) all amounts received by the Issuer under the terms of the Quotaholders’ Agreement during

the Semi-annual Collection Period immediately preceding such Payment Date;

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(h) with reference to the First Payment Date only, the Securities Loan Full Liquidation

Amount or, as the case may be, the Securities Loan Partial Liquidation Amount (if any);

(i) any other amount, not included in the foregoing items (a), (b), (c), (d), (e), (f), (g) and (h),received by the Issuer and deposited in the Issuer Collection Accounts and/or the Issuer

Investment Account during such Semi-annual Collection Period immediately preceding such

Payment Date (other than the Senior Notes Available Funds for Amortisation and any

amount set aside under item (xxii) of the Pre-Enforcement Order of Priority on Payment

Date(s) falling during the Initial Period) but excluding any amount held by the Issuer

which properly belongs to the Swap Counterparty in respect of any Excess Swap Collateral

or Tax Credit (as defined in the Swap Agreement) and payable to the Swap Counterparty

pursuant to the Swap Agreement; and

(j) all amounts received from the sale of all or part of the Portfolios, should such sale occur,

and proceeds (if any) from the enforcement of the Issuer’s Rights,

provided that following the delivery of a Trigger Notice or upon the occurrence of an Insolvency

Event, the Issuer Available Funds shall also comprise any Senior Notes Available Funds for

Amortisation then retained in, and any amount set aside under item (xxii) of the Pre-Enforcement

Order of Priority on Payment Date(s) falling during the Initial Period to, the Issuer InvestmentAccount (if any) and any proceeds from the enforcement of the Security Documents.

‘‘Issuer Cash Reserve Account’’ means a Euro denominated account opened in the name of the Issuer

with the Account Bank and to be operated pursuant to the provisions of the Cash Allocation,Management and Payments Agreement.

‘‘Issuer Collection Accounts’’ means the BPV Collection Account, the CRP Collection Account and the

BN Collection Account.

‘‘Issuer Disbursement Amount’’ means, on the Issue Date, Euro 20,000 and on any other Payment

Date, the difference between Euro 20,000 and the amount standing to the credit of the Issuer

Expenses Account under the entry ‘‘Issuer Disbursement Amount’’ on the last day of the Semi-annualCollection Period immediately preceding such Payment Date.

‘‘Issuer Distribution Account’’ a Euro denominated account opened in the name of the Issuer with the

Account Bank and to be operated pursuant to the provisions of the Cash Allocation, Managementand Payments Agreement.

‘‘Issuer English Account’’ means a Euro denominated account opened in the name of the Issuer with

the English Account Bank and to be operated pursuant to the provisions of the Cash Allocation,Management and Payments Agreement.

‘‘Issuer Expenses Account’’ means a Euro denominated account opened in the name of the Issuer with

the Collection Account Bank and to be operated pursuant to the provisions of the Cash Allocation,Management and Payments Agreement.

‘‘Issuer Investment Account’’ means a Euro denominated account opened in the name of the Issuer

with the Account Bank and to be operated pursuant to the provisions of the Cash Allocation,Management and Payments Agreement.

‘‘Issuer Quota Capital Account’’ means a Euro denominated account opened in the name of the Issuer

with the Collection Account Bank and to be operated pursuant to the provisions of the CashAllocation, Management and Payments Agreement.

‘‘Issuer Securities Account’’ means a securities account opened in the name of the Issuer with the

Account Bank and to be operated pursuant to the provisions of the Cash Allocation, Managementand Payments Agreement.

‘‘Issuer Securities Loan Securities Account’’ means a securities account opened in the name of the

Issuer with the Account Bank and to be operated pursuant to the provisions of the Cash Allocation,Management and Payments Agreement.

‘‘Issuer’s Rights’’ mean the Issuer’s rights arising from the Transaction Documents and the Additional

CDC IXIS Guarantee.

176

‘‘Italian Civil Code’’ means the Royal decree (Regio decreto) No. 262, 16 March 1942 as subsequently

amended and supplemented.

‘‘Italian Deed of Pledge’’ means the deed of pledge governed by Italian law executed on 17 March2004, pursuant to which the Issuer has (a) pledged in favour of the Noteholders and the Other Issuer

Creditors: (i) all monetary claims and rights and all the amounts (including payment for claims,

indemnities, damages, penalties, credits and guarantees) to which the Issuer is entitled pursuant to the

Transaction Documents, other than the Swap Agreement, the Senior Notes Subscription Agreement

and the Security Documents, to which the Issuer is a party; (ii) any existing or future monetary claims

and rights and any sum credited from time to time in the Accounts (other than the Issuer Expenses

Account, the Issuer English Account and the Issuer Quota Capital Account), other than the

subscription price of the Notes and the Excluded Collections; and (b) undertaken to pledge in favourof the Noteholders and the Other Issuer Creditors the securities deposited in the Issuer Securities

Loan Securities Account and the monetary claims deriving from the Eligible Investments that will be

made by the Cash Manager on behalf of the Issuer pursuant to the Cash Allocation, Management

and Payments Agreement including any interest, dividend, monetary premia and any other amounts

arising from the Eligible Investments.

‘‘Italian Paying Agent’’ means Deutsche Bank S.p.A., in its capacity as the paying agent pursuant to

the Cash Allocation, Management and Payments Agreement and its permitted successors or assigns

from time to time.

‘‘Law No. 342’’ means Legislative Decree No. 342 of 4 August 1999.

‘‘Lead Manager’’ means Morgan Stanley &Co. International Limited.

‘‘Legge Delega’’ means Law No. 142 of 19 February 1992.

‘‘Limited Recourse Loan’’ means a first demand limited recourse loan advanced by BPV, CRP or BN

to the Issuer pursuant to Article 5, respectively, of the BPV Warranty and Indemnity Agreement, the

CRP Warranty and Indemnity Agreement and the BN Warranty and Indemnity Agreement and in the

circumstances set forth thereunder.

‘‘Liquidity Facility Agreement’’ means the liquidity facility agreement entered into on 17 March 2004

between the Issuer and the Liquidity Facility Provider, as from time to time modified in accordance

with the provisions therein contained and including any agreement or other document expressed to be


‘‘Liquidity Facility Commitment Termination Date’’ means the date falling the 364th day after the date

of execution of the Liquidity Facility Agreement or the date of its renewal.

‘‘Liquidity Facility Drawdown Date’’ means each day which falls on the Business Day before each

Payment Date to (and including) the Liquidity Facility Maturity Date.

‘‘Liquidity Facility Limit’’ means Euro 3 million.

‘‘Liquidity Facility Loss Ratio’’ means the ratio between: (A) the sum of the outstanding principal

amount, as of the last day of the immediately preceding Semi-annual Collection Period, of all

Mortgage Loans with an Arrears Level equal to or greater than, in the case of Mortgage Loans whichprovides for monthly instalments, 9, in the case of Mortgage Loans which provides for quarterly

instalments, 4 and in the case of Mortgage Loans which provides for semi-annual instalments, 3; and

(B) the outstanding principal amount of all Mortgage Loans comprised in the Portfolios as of the

Issue Date.

‘‘Liquidity Facility Maturity Date’’ means the Payment Date on which interest and principal on the

Class A Notes, the Class B Notes and the Class C Notes have been paid and repaid, respectively, in

full.

‘‘Liquidity Facility Provider’’ means BPV, in its capacity as the liquidity facility provider pursuant to

the Liquidity Facility Agreement, and its permitted successors or assigns from time to time.

‘‘Liquidity Facility Repayment Amount’’ means, on each Payment Date, an amount equal to the lesser

of:

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(a) the amount of the Issuer Available Funds following the satisfaction in full of the

obligations under items (i) to (iii) (inclusive) of the Pre-Enforcement Order of Priority or,

as the case may be, Post-Enforcement Order of Priority, available to repay principal due

and payable under the Liquidity Facility Agreement; and

(b) an amount equal to the revolving draw downs (including those drawn on the Liquidity

Reserve Account) existing on such date (before any draw down made on the Liquidity

Facility Drawdown Date immediately preceding such Payment Date or repayments to be

made on such date).

‘‘Liquidity Facility Undrawn Amount’’ means an amount equal to the difference between Liquidity

Facility Limit and all amounts then drawn down under the Liquidity Facility but not yet reimbursed.

‘‘Liquidity Reserve Account’’ means an account to be opened by the Issuer to which, if (a) the

Liquidity Facility Provider elects not to renew the Liquidity Facility; or (b) the rating of the Liquidity

Facility Provider falls below the minimum requisite ratings and the Liquidity Facility Provider fails to

exercise its right to procure a successor, the Liquidity Facility Provider shall be requested to deposit

the then undrawn commitment under the Liquidity Facility Agreement.

‘‘Local Business Day’’ means a day on which the bank(s) to, and from which, funds are to be

transferred are open for business.

‘‘Luxembourg Agency Agreement’’ means an agency agreement entered into on 17 March 2004 between

the Issuer, the Representative of the Noteholders and the Luxembourg Listing Agent, as from time to

time modified in accordance with the provisions therein contained and including any agreement or

other document expressed to be supplemental thereto.

‘‘Luxembourg Listing Agent’’ means Deutsche Bank Luxembourg S.A. or its permitted successors or

assigns from time to time.

‘‘Luxembourg Paying Agent’’ means Deutsche Bank Luxembourg S.A. or its permitted successors or


‘‘Mandate Agreement’’ means a mandate agreement dated 17 March 2004 between the Issuer and theRepresentative of the Noteholders, pursuant to which the Issuer conferred the Representative of the

Noteholders with certain rights and powers, as from time to time modified in accordance with the



‘‘Master Agreement’’ means a swap agreement with the Swap Counterparty in the form of an

International Swaps and Derivatives Association, Inc. (‘‘ISDA’’) 1992 Master Agreement

(Multicurrency – Cross Border), together with the Schedule thereto.

‘‘Master Definition Agreement’’ means the master definition agreement dated 17 March 2004 among all

the parties to each of the Transaction Documents, in which the definitions of certain terms used in the

Transaction Documents are set forth, as from time to time modified in accordance with the provisions

therein contained and including any agreement or other document expressed to be supplemental

thereto.

‘‘Master Servicer’’ means BPV, or any successor thereto appointed in accordance with the Master

Servicing Agreement.

‘‘Master Servicing Agreement’’ means the master servicing agreement entered into on 28 November

2003 between the Issuer and the Servicers and the Master Servicer, as from time to time modified in

accordance with the provisions therein contained and including any agreement or other document

expressed to be supplemental thereto.

‘‘Meetings of Noteholders’’ means the meeting of any Class of Noteholders pursuant to the Rules of

Organisation of Noteholders.

‘‘Monte Titoli’’ means Monte Titoli S.p.A.

‘‘Monte Titoli Account Holders’’ means any authorised financial intermediary institution entitled to

hold accounts on behalf of its customers with Monte Titoli.

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‘‘Monte Titoli Mandate Agreement’’ means the agreement (convenzione) between the Issuer and Monte

Titoli, pursuant to which Monte Titoli has agreed to provide certain services in relation to the Senior

Notes on behalf of the Issuer.

‘‘Mortgage Loans’’ means the BPV Mortgage Loans, the CRP Mortgage Loans and the BN Mortgage

Loans.

‘‘Mortgage Loan Agreements’’ means the BPV Mortgage Loan Agreements, the CRP Mortgage LoanAgreements and the BN Mortgage Loan Agreements.

‘‘Mortgages’’ means the mortgage securities (‘‘ipoteche’’) created on the Real Estate Assets pursuant to

Italian law in order to secure the Claims.

‘‘Mortgagor’’ means any Person, either a Borrower or a third party, who has granted a Mortgage in

favour of BPV, the Other Banks, CRP, Banca Steinhauslin, BN, Banca del Popolo di Trapani or, as

the case may be, Banca Nuova S.p.A. as existing prior to its merger into Banca del Popolo di

Trapani S.p.A., to secure the payment or repayment of any amounts payable in respect of a MortgageLoan, and/or his/her successor in interest.

‘‘Noteholders’’ means the holders of the Class A Notes, the holders of the Class B Notes, the holders

of the Class C Notes and/or the holders of the Class D Notes.

‘‘Notes’’ means the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes.

‘‘Notional Outstanding Amount’’ means, in respect of each Mortgage Loan, on the last day of any

Semi-annual Collection Period or, as the case may be, the Interim Calculation Date, an amount equal

to the product of: (a) the Performance Factor applicable to such Mortgage Loan; and (b) (x) the

principal amount outstanding on such Mortgage Loan or; (y) if a Limited Recourse Loan has been

granted in respect of such Mortgage Loan or, under the terms of the Securities Subordinated Loan

Agreement, the Debt Securities Initial Market Value will be repaid in part out of the ExcludedCollections in respect of the Mortgage Loan(s) for which Limited Recourse Loan(s) was/were due and

payable by any Originator pursuant to Clause 5.1.2 or Clause 5.1.3 of the Warranty and Indemnity

Agreements but unpaid, zero.

‘‘Official Gazette’’ means the Gazzetta Ufficiale della Repubblica Italiana.

‘‘Order of Priority’’ means the order in which the Issuer Available Funds shall be applied on each

Payment Date prior to and/or following the delivery of a Trigger Notice or the occurrence of an

Insolvency Event in accordance with the Conditions and the Intercreditor Agreement.

‘‘Organisation of Noteholders’’ means the association of the Noteholders created on the Issue Date.

‘‘Originators’’ means Banca Popolare di Vicenza S.c. per azioni a r.l., Cariprato – Cassa di Risparmio

di Prato S.p.A. and Banca Nuova S.p.A..

‘‘Other Banks’’ means Banca Popolare della Provincia di Belluno S.p.A., Banca Popolare di Treviso

S.p.A., Banca Popolare di Trieste S.p.A. and Banca Popolare Udinese S.p.A.

‘‘Other Issuer Creditors’’ means the Originators, the Representative of the Noteholders, the CalculationAgent, the Administrative Services Provider, the Servicers, the Master Servicer, the Cash Manager, the

Account Bank, the Collection Account Bank, the English Account Bank, the Paying Agents, the

Luxembourg Listing Agent, the Swap Counterparty, the Funding Provider, the Liquidity Facility

Provider, the Subordinated Loan Provider, the Securities Subordinated Loan Provider, the Class D

Notes Subscribers and the Class D Notes Depository.

‘‘Outstanding Principal Amount’’ means, on each day:

(a) in relation to each Class of Notes, the aggregate principal amount outstanding of all Notesin such Class; and

(b) in relation to a Note, the principal amount of that Note upon issue less the aggregate

amount of all Principal Payments (as defined in Condition 6.2 (Mandatory Pro Rata

Redemption)) on that Note that have been repaid on or prior to that date.

‘‘Paying Agents’’ means the Principal Paying Agent, the Luxembourg Paying Agent and the Italian

Paying Agent and, if any, such additional paying agents or their permitted successors or assigns fromtime to time.

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‘‘Payment Date’’ means 26 January and 26 July of each year or, if such day is not a Business Day,

the next Business Day, unless such Business Day would fall in the next calendar month in which case

payment will be made on the immediately preceding Business Day, provided that following the delivery

of a Trigger Notice upon the occurrence of a Trigger Event or following the occurrence of an

Insolvency Event, the Payment Date may be any Business Day.

‘‘Payments Report’’ means the report to be made by the Calculation Agent on or prior to the

Calculation Date immediately succeeding each Semi-annual Report Date pursuant to the Cash


‘‘Performance Factor’’ means, in respect of each Mortgage Loan, on the last day of any Semi-annual

Collection Period or, as the case may be, the Interim Calculation Date, the factor applicable to that

Mortgage Loan’s Arrears Level by reference to that Mortgage Loan’s payment frequency (i.e.monthly, quarterly and semi-annually), as set forth in the following table:


Arrears Level

Performance

Factor

Arrears

Level

Performance

Factor

Arrears

Level

Performance

Factor

0-6 100% 0-3 100% 0-2 100%

7-10 85% 4-6 85% 3-4 85%

> 10 70% > 6 70% > 4 70%

‘‘Person(s)’’ means any natural person, partnership, corporation, company, limited liability company,

trust, estate, join-stock partnership or company, joint venture, governmental entity, unincorporated

organisation or other entity or association.

‘‘Portfolios’’ means the BPV Portfolio, CRP Portfolio and BN Portfolio and ‘‘relevant Portfolio’’

means any of them.

‘‘Portfolio Yield’’ means, on each Semi-annual Collection Date, the sum of: (a) the interest payments

(other than those comprised in the Excluded Collections) collected in respect of the Mortgage Loans

(including the default interest) during the Semi-annual Collection Period ending on (but excluding)such Semi-annual Collection Date; (b) all Prepayment Penalties paid in respect of any Mortgage Loan

during such Semi-annual Collection Period; (c) any amount to be paid on or prior to the immediately

succeeding Payment Date by the Swap Counterparty under the Swap Agreement, as determined by the

Calculation Agent based on, inter alia, the data provided by BPV in the Semi-annual Servicer Report;

and (d) interest accrued on the Senior Notes Available Funds for Amortisation.

‘‘Post-Enforcement Order of Priority’’ means the order in which the Issuer Available Funds shall be

applied on each Payment Date following the delivery of a Trigger Notice or following the occurrence

of an Insolvency Event in accordance with the Conditions and the Intercreditor Agreement.

‘‘Pre-Enforcement Order of Priority’’ means the order in which the Issuer Available Funds shall be

applied on each Payment Date prior to the delivery of a Trigger Notice or prior to the occurrence of

an Insolvency Event in accordance with the Conditions and the Intercreditor Agreement.

‘‘Prepayment Penalties’’ means the prepayment penalties as agreed in the Mortgage Loans.

‘‘Principal Component Of The Purchase Price’’ means the aggregate principal amount outstanding of

the Claims (excluding, for the avoidance of doubt, the claims arising from the Miscellaneous Mortgage

Loans) as of the Effective Date.

‘‘Principal Paying Agent’’ means Deutsche Bank AG London, in its capacity as the principal paying

agent pursuant to the Cash Allocation, Management and Payment Agreement and its permittedsuccessors or assigns from time to time.

‘‘Principal Payment’’ means the principal amount redeemable in respect of each Senior Note asdetermined in accordance with Condition 6.2 (Mandatory Pro Rata Redemption).

‘‘Purchase Price’’ means the purchase price of the Claims payable pursuant to the TransferAgreements less the purchase price of the claims arising from the Miscellaneous Mortgage Loans.

‘‘Quotaholders’’ means BPV Finance (International) PLC and Stichting Vicenza.

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‘‘Quotaholders’ Agreement’’ means a quotaholders’ agreement entered into on 17 March 2004 between

the Issuer, BPV and the Quotaholders pursuant to which certain rules have been set forth in relation

to the corporate management of the Issuer and certain obligations have been undertaken by BPV in

favour of the Issuer, as from time to time modified in accordance with the provisions herein contained

and including any agreement or other document expressed to be supplemental hereof.

‘‘Rate of Interest’’ means the rate of interest payable from time to time in respect of the Notes.

‘‘Rating Agencies’’ means Fitch and S&P.

‘‘Real Estate Assets’’ means the real estate properties which have been mortgaged in order to secure

the Claims.

‘‘Reference Banks’’ means three major banks in the Euro-zone inter-bank market selected by the

Calculation Agent with the approval of the Issuer.

‘‘Relevant Date’’ means, in respect of each Class of Notes, the date on which a payment in respect

thereof first becomes due and payable or (if the full amount of the monies payable in respect of all

the Notes and accrued on or before that date has not been duly received by the Principal Paying

Agent or the Representative of the Noteholders on or prior to such date) the date on which notice

that the full amount of such monies has been received is duly given to the Noteholders in accordancewith the Conditions.

‘‘Relevant Margin’’ means the Class A Margin, the Class B Margin or the Class C Margin.

‘‘Representative of the Noteholders’’ means Deutsche Trustee Company Limited.

‘‘Rules of the Organisation of the Noteholders’’ means the By-laws of the Organisation of Noteholders.

‘‘S&P’’ Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.


(A) on each Payment Date from (and including) the First Payment Date to (and including) the

Call Date, an amount equal to Euro 1,070,000 plus, (x) if any Limited Recourse Loan has

been granted during the Semi-annual Collection Period immediately preceding such

Payment Date, such amount of the Limited Recourse Loan(s) representing the present value

of the interest margins of the Mortgage Loan(s) in relation to which such loan(s) has/have

been granted, plus (y) with reference to the First Payment Date only, if as a result of anyOriginator’s failure to make Limited Recourse Loan(s) pursuant to Clause 5.1.2 or Clause

5.1.3 of the Warranty and Indemnity Agreement, the Debt Securities Initial Market Value

will be repaid in part out of the amounts collected in respect of the Mortgage Loan(s) for

which such Limited Recourse Loan(s) should have been granted, an amount representing

the relevant portion of the present value of the interest margins of such Mortgage Loan(s)

((x) and (y) together, the ‘‘Additional Repayment Amount’’), provided that the Scheduled

Class D Notes Repayment Amount on each Payment Date thereafter shall be reduced by a

portion of the Additional Repayment Amount resulting from dividing such amount by thenumber of Payment Date(s) between (and including) the Payment Date in question and the

Call Date (inclusive); provided further that the Scheduled Class D Notes Repayment

Amount shall be reduced by an amount (if any) so that the Outstanding Principal Amount

of the Class D Notes after the repayment of principal on such Payment Date shall equal at

least 1% (one per cent.) of the Initial Principal Amount of the Class D Notes and the

Scheduled Class D Notes Repayment Amount on each Payment Date thereafter to (but

excluding) the Final Maturity Date shall equal zero;

(B) on each Payment Date after the Call Date to (but excluding) the Final Maturity Date,

zero; and

(C) on the Final Maturity Date, the then Outstanding Principal Amount of the Class D Notes.

‘‘Securities Act’’ means the U.S. Securities Act of 1933, as amended.

‘‘Securities Loan Full Liquidation Amount’’ means the proceeds deriving from the full liquidation of all

of the Debt Securities plus any interest generated thereby.

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‘‘Securities Loan Partial Liquidation Amount’’ means an amount corresponding to the amount of any

Limited Recourse Loan due and payable by the Originators pursuant to Clause 5.1.2 or Clause 5.1.3

of the Warranty and Indemnity Agreements but unpaid deriving from the liquidation of part of the

Debt Securities.

‘‘Securities Subordinated Loan Agreement’’ means the securities subordinated loan agreements entered

into on 17 March 2004 between the Issuer and the Securities Subordinated Loan Provider, as fromtime to time modified in accordance with the provisions therein contained and including any

agreement or other document expressed to be supplemental thereto.

‘‘Securities Subordinated Loan Provider’’ means BPV in its capacity as securities subordinated loan

provider under the Securities Subordinated Loan Agreement, or its permitted successors or assigns.

‘‘Security Interest’’ means any mortgage, charge, pledge, lien, right of set-off, special privilege(privilegio speciale), assignment by way of security, retention of title or any other security interest

whatsoever or any other agreement or arrangement having the effect of conferring security.

‘‘Securitisation’’ means the securitisation of the Claims made by the Issuer through the issuance of the

Notes.

‘‘Securitisation Expenses’’ means the costs and expenses of the Securitisation, all amounts due andpayable by the Issuer to the Other Issuer Creditors under the Transaction Documents and any other

costs, expenses or amounts due and payable under items (i) and (ii)(a) and (b) of the applicable Order

of Priority.

‘‘Securitisation Law’’ means Italian Law No. 130 of 30 April 1999.

‘‘Security Documents’’ means the Italian Deed of Pledge and the English Deed of Charge.

‘‘Selected Mortgage Loans’’ means one or more of those Mortgage Loans in each relevant Portfolio

with the highest loan-to-value secured other than by economically first-ranking mortgages.

‘‘Semi-annual Collection Date’’ means the first calendar day of each January and July of each year.

‘‘Semi-annual Collection Period’’ means each period commencing on (and including) a Semi-annual

Collection Date and ending on (but excluding) the next Semi-annual Collection Date, and in the case

of the first Semi-annual Collection Period, commencing on (and including) the Effective Date and

ending on (but excluding) 1 January 2005, provided that following the delivery of a Trigger Notice

upon the occurrence of a Trigger Event or following the occurrence of an Insolvency Event, references

to the Semi-annual Collection Period shall be deemed to refer to the relevant period on the basis of

which the Calculation Agent has, in the Payments Report, calculated the Issuer Available Funds.

‘‘Semi-annual Report Date’’ means the 15th calendar day of each January and July of each calendar

year or, if such day is not a Business Day, the immediately succeeding Business Day.

‘‘Semi-annual Servicer Report’’ means the report to be made by BPV pursuant to the Master Servicing

Agreement on each Semi-annual Report Date.

‘‘Senior Noteholder(s)’’ means the holder(s) of a Senior Note or Senior Notes.

‘‘Senior Notes’’ means the Class A Notes, the Class B Notes and the Class C Notes.

‘‘Senior Notes Available Funds for Amortisation’’ means, on each Payment Date prior to the delivery

of a Trigger Notice or prior to the occurrence of an Insolvency Event, the sum of: (a) the Cash

Amortisation Amount; and (b) such amount as has been actually provisioned on such Payment Dateunder item (x) of the Pre- Enforcement Order of Priority.

‘‘Senior Notes Subscription Agreement’’ means the subscription agreement entered into on 17 March

2004 between the Issuer, the Originators, the Representative of the Noteholders and the Lead

Manager as subscriber of the Senior Notes, as from time to time modified in accordance with the



182

‘‘Servicer’’ means BPV, or any successor thereto appointed in accordance with the Master Servicing

Agreement, in respect of the BPV Portfolio; CRP, or any successor thereto appointed in accordance

with the Master Servicing Agreement, in respect of the CRP Portfolio; or, as the case may be, BN, or

any successor thereto appointed in accordance with the Master Servicing Agreement, in respect of the

BN Portfolio and ‘‘Servicers’’ means all of them.

‘‘Servicer Advance Indemnity’’ means any indemnity payment made by each Servicer pursuant to

Clause 3 of the Master Servicing Agreement.

‘‘Six Month Euribor’’ means: (a) the Euro-zone inter-bank offered rate (‘‘Euribor’’) for six month Eurodeposits which appears on Euribor01 Reuter or (aa) such other page as may replace Euribor01 Reuter

on that service for the purpose of displaying such information or (bb) if that service ceases to display

such information, such page as displays such information on such equivalent service (or, if more than

one, that one which is approved by the Representative of the Noteholders) as may replace the

Euribor01 Reuter) at or about 11.00 a.m. (Brussels time) on the Interest Determination Date (rounded

to four decimal places with the mid-point rounded upwards) (the ‘‘Screen Rate’’); or (b) if the Screen

Rate is unavailable at such time for six month Euro deposits, then the rate for any relevant period

shall be the arithmetic mean (rounded to four decimal places with the mid-point rounded upwards) ofthe rates notified to the Calculation Agent at its request by each of the Reference Banks as the rate at

which six month Euro deposits in a representative amount are offered by that Reference Bank to

leading banks in the Euro- zone inter-bank market at or about 11.00 a.m. (Brussels time) on that

date; or (c) If on any such Interest Determination Date, the Screen Rate is unavailable and only two

of the Reference Banks provide such offered quotations to the Calculation Agent the relevant rate

shall be determined, as aforesaid, on the basis of the offered quotations of those Reference Banks

providing such quotations; or (d) If, on any Interest Determination Date, the Screen Rate is

unavailable and only one of the Reference Banks provides the Calculation Agent with such an offeredquotation, the Rate of Interest for the relevant Interest Period shall be the Rate of Interest in effect

for the immediately preceding Interest Period which one of sub-paragraph (a) or (b) above shall have

been applied to.

‘‘Subordinated Loan’’ means the limited recourse subordinated loan granted by the Subordinated Loan

Provider to the Issuer pursuant to the Subordinated Loan Agreement.

‘‘Subordinated Loan Agreement’’ means the subordinated loan agreement entered into on 17 March

2004 between the Issuer and the Subordinated Loan Provider, as from time to time modified in

accordance with the provisions therein contained and including any agreement or other documentexpressed to be supplemental thereto.

‘‘Subordinated Loan Provider’’ means BPV, in its capacity as the subordinated loan provider under the

Subordinated Loan Agreement, or its permitted successors or assigns.

‘‘Subscription Agreements’’ means the Senior Notes Subscription Agreement and the Class D Notes

Subscription Agreement.

‘‘Swap Agreement’’ means the International Swaps and Derivatives Association, Inc. (‘‘ISDA’’) Master

Agreement (Multicurrency – Cross Border) (1992 edition) and schedule thereto together with three

swap confirmations entered into on 17 March 2004 between the Swap Counterparty and the Issuer, as

from time to time modified in accordance with the provisions therein contained and including anyagreement or other document expressed to be supplemental thereto..

‘‘Swap Confirmations’’ means the swap confirmations entered into between the Issuer and the Swap

Counterparty pursuant to the Master Agreement.

‘‘Swap Counterparty’’ means CDC IXIS Capital Markets, acting through its London branch, in its

capacity as the swap counterparty pursuant to the Swap Agreement or its permitted successors or


‘‘Swap Payment Date’’ means two Business Days prior to each Payment Date.

‘‘Swap Transactions’’ means, the swap transactions entered into between the Issuer and the Swap

Counterparty pursuant to the Swap Agreement.

183

‘‘Transaction Documents’’ means the Intercreditor Agreement, the Luxembourg Agency Agreement, the

Transfer Agreements, the Miscellaneous Loans Transfer Agreements, the Master Servicing Agreement,

the Italian Deed of Pledge, the English Deed of Charge, the Securities Subordinated Loan Agreement,

the Administrative Services Agreement, the Warranty and Indemnity Agreements, the Subscription

Agreements, the Cash Allocation, Management and Payments Agreement, the Mandate Agreement,

the Quotaholders’ Agreement, the Swap Agreement, the Liquidity Facility Agreement, the

Subordinated Loan Agreement, the Depository Agreement, the Monte Titoli Mandate Agreement, the

Conditions and the Master Definition Agreement.

‘‘Transfer Agreements’’ means the BPV Transfer Agreement, the CRP Transfer Agreement and the BN

Transfer Agreement.

‘‘Trigger Event’’ means any of the events described in Condition 10 (Trigger Events).

‘‘Trigger Notice’’ means the notice described in Condition 10 (Trigger Events).

‘‘usi’’ means customary practices as provided by Article 8 of the general provisions of law

(Disposizioni sulla legge in generale) set forth in the Italian Civil Code.

‘‘U.S.’’ means the United States of America.

‘‘U.S. Persons’’ has the meaning given to it in the Securities Act.

‘‘Warranty and Indemnity Agreements’’ means the BPV Warranty and Indemnity Agreement, the CRP

Warranty and Indemnity Agreement and the BN Warranty and Indemnity Agreement.

184

GENERAL INFORMATION

The Class A Notes have been accepted for clearance through Monte Titoli, Euroclear and Clearstream

under common code number 018898896. The ISIN number for the Class A Notes is IT0003641005.

The Class B Notes have been accepted for clearance through Monte Titoli, Euroclear and

Clearstream under common code number 018898900. The ISIN number for the Class B Notes is

IT0003641039.

The Class C Notes have been accepted for clearance through Monte Titoli, Euroclear and

Clearstream under common code number 018898918. The ISIN number for the Class C Notes is

IT0003641047.

Application has been made to list the Senior Notes on the Luxembourg Stock Exchange. In

connection with the listing application, the constitutional documents of the Issuer and a legal notice

relating to the issue of the Notes will be deposited with the Registre de Commerce et de Societes a

Luxembourg, where they will be available for inspection and where copies thereof may be obtained

upon request.

The Issuer has obtained all necessary consents, approvals and authorisations in Italy in

connection with the issue and performance of the Notes. The issue of the Notes was authorised by a

resolution of the meeting of the Quotaholders passed on 10 March 2004.

As long as the Senior Notes are listed on the Luxembourg Stock Exchange, copies of the

following documents may be inspected during normal business hours at the registered office of theLuxembourg Listing Agent:

(i) Transfer Agreements;

(ii) Warranty and Indemnity Agreements;

(iii) Master Servicing Agreement;

(iv) Administrative Services Agreement;

(v) Miscellaneous Loans Transfer Agreements;

(vi) Intercreditor Agreement;

(vii) Cash Allocation, Management and Payments Agreement;

(viii) Italian Deed of Pledge;

(ix) English Deed of Charge;

(x) Subordinated Loan Agreement;

(xi) Securities Subordinated Loan Agreement;

(xii) Mandate Agreement;

(xiii) Quotaholders’ Agreement;

(xiv) Swap Agreement;

(xv) Liquidity Facility Agreement;

(xvi) Depository Agreement;

(xvii) Monte Titoli Mandate Agreement;

(xviii) Master Definition Agreement;

(xix) Rules of Organisation of Noteholders; and

(xx) Luxembourg Agency Agreement.

The independent auditors of the Issuer were KPMG S.p.A. for the financial statements as of and

for the period ended 31 December 2003. The Issuer was incorporated on 11 July 2003 and no other

financial statements of the Issuer have been or have been required to be prepared.

The audited financial statements of the Issuer as at and for the period ended on 31 December

2003 will be available for collection at the registered offices of the Luxembourg Listing Agent. No

interim financial statements will be prepared by the Issuer. So long as any of the Senior Notes

185

remains outstanding, copies of the Semi-annual Servicer Reports and Interim Servicer Reports and

copies of the Issuer’s annual audited financial statements shall be made available for collection at the

registered offices of the Luxembourg Listing Agent and of the Representative of the Noteholders. The

date of the first Interim Servicer Report is 15 October 2004 and the date of the first Semi-annual

Servicer Report is 15 January 2005.

The Issuer has undertaken to maintain a Luxembourg Listing Agent so long as the Senior Notes

are listed on the Luxembourg Stock Exchange and the Rules of the Luxembourg Stock Exchange so

require.

The Issuer estimates that its aggregate ongoing expenses in connection with the Securitisation

(excluding any fees and expenses payable to the Servicers and custodian fees payable to the Account

Bank) will be equal to approximately Euro 149,500 (exclusive of any value added tax) per annum.

The Issuer is not involved in any litigation, arbitration or administrative proceedings and, so far

as the Issuer is aware, no such litigation, arbitration or administrative proceedings are pending or

threatened.

Save as disclosed in this Offering Circular, there has been no material adverse change, or any

development reasonably likely to involve a material adverse change, in the condition (financial or

otherwise) or general affairs of the Issuer since the date of its incorporation that is material in thecontext of the issue of the Notes.

186

REGISTERED OFFICE OF THE ISSUERBerica Residential MBS 1 S.r.l.

Via Btg. Framarin No.1836100 Vicenza,

Italy

ORIGINATORS and SERVICERS

Banca Popolare di Vicenza S.c.per azioni a r.l.

Via Btg. Framarin No.1836100 Vicenza,

Italy

Cariprato – Cassa di Risparmio di PratoS.p.A.

Via degli Alberti 2Prato,Italy

Banca Nuova S.p.A.Via Vaglica 22

Palermo,Italy

SOLE ARRANGER AND LEAD MANAGERMorgan Stanley & Co. International Limited

25 Cabot Square, Canary Wharf,London E14 4QA,United Kingdom

MASTER SERVICER REPRESENTATIVE OF THE NOTEHOLDERS

Banca Popolare di Vicenza S.c. per azioni a r.l.Via Btg. Framarin No. 18

36100 Vicenza,Italy

Deutsche Trustee Company LimitedWinchester House

1 Great Winchester StreetLondon EC2N 2DB,

England

ACCOUNT BANK and PAYING AGENT COLLECTION ACCOUNT BANK

Deutsche Bank S.p.A.Viale Legioni Romane No. 27

20147 Milan,Italy

Banca Popolare di Vicenza S.c. per azioni a r.l.Via Btg. Framarin No. 18

36100 Vicenza,Italy

ENGLISH ACCOUNT BANK and CALCULATIONAGENT

PRINCIPAL PAYING AGENT

Deutsche Bank AG LondonWinchester House


England

Deutsche Bank AG LondonWinchester House


England

CASH MANAGER LUXEMBOURG PAYING AGENTB.P Vi Fondi SGR S.p.A.

Via Btg. Framarin No. 1836100 Vicenza,

Italy

Deutsche Bank Luxembourg SA2, Boulevard Konrad Adenauer

L-1115Luxembourg

ADMINISTRATIVE SERVICES PROVIDER LUXEMBOURG LISTING AGENTBanca Popolare di Vicenza S.c. per azioni a r.l.


Italy

Deutsche Bank Luxembourg SA2, Boulevard Konrad Adenauer

L-1115Luxembourg

SWAP COUNTERPARTYCDC IXIS Capital Markets

47, Quai d’Austerlitz75648 Paris Cedex 13,

France

LIQUIDITY FACILITY PROVIDER, SUBORDINATEDLOAN PROVIDER and SECURITIES SUBORDINATED

LOAN PROVIDERBanca Popolare di Vicenza S.c. per azioni a r.l.


Italy

LEGAL ADVISERS

To the Issuer, the Arranger and the Lead ManagerAs to Italian Law

To the Representative of the NoteholdersAs to Italian Law

Bonelli Erede PappalardoVia Barozzi, 120122 Milan,

Italy

Bonelli Erede PappalardoVia G. Paisiello, 39

00198 Rome,Italy

ADVISER TO THE ORIGINATORSSocieta Italiana di Monitoraggio

Via Giulio Caccini No. 100100 Rome,

Italy

imprima de bussy — C89341