FCC Proudreed Properties 2005 HSBC SG CORPORATE ...

after among other things, payments of fees, remuneration and expenses of the Management Company and
the Custodian and their appointees, respectively (if any) and the auditors of the Issuer; the fees and
expenses of the Paying Agents, the Issuer Account Bank and the Cash Manager; amounts due to the
Liquidity Facility Provider (other than the Liquidity Subordinated Amounts) and the Hedging Providers
under the Hedging Agreements (other than the Hedging Subordinated Amounts) and the fees and
expenses of the FCC Servicers.
The Management Company is required always to act in the best interest of the Unitholders and the
Noteholders, although the Issuer Regulations provide that in the event of a conflict between decisions
made by (i) the Noteholders and the Unitholders, or (ii) between Noteholders of different classes, the
Management Company shall apply the decisions made by the Noteholders in the case referred to in (i)
above, or the Noteholders ranking in priority in the case referred to in (ii) above, unless any such decision
would result in a modification of the financial characteristics of the other Units or Notes. In such a case,
unless the relevant holders of Units or Notes agree to modify their rights in accordance with the
provisions of the Issuer Regulations, the Management Company shall not be obliged to carry out such a
decision.
Monitoring of compliance with representations, warranties and covenants and the occurrence of a Loan
Event of Default or Potential Loan Event of Default
The Issuer is a fonds commun de créances, a form of special purpose vehicle, and therefore will not, nor
does it possess the resources actively to, monitor whether a Loan Event of Default or a Potential Loan
Event of Default has occurred, including, for this purpose, the continued accuracy of the respective
representations and warranties made by the Borrowers and compliance by the Borrowers with their
respective covenants and undertakings.
The FCC Servicers will have no obligation under the Issuer Transaction Documents to monitor whether
a Loan Event of Default or a Potential Loan Event of Default has occurred but will (unless expressly
informed to the contrary by the relevant Borrower) rely on certificates delivered under the applicable
Commercial Mortgage Loan Agreement to determine whether a Loan Event of Default or a Potential
Loan Event of Default has occurred. For further details concerning Loan Events of Default or Potential
Loan Events of Default, see further the section entitled ‘‘Summary of Principal Documents – The
Commercial Mortgage Loan Agreements’’ below.
Each Commercial Mortgage Loan Agreement with a Borrower will require the relevant Borrower (or the
Borrower’s Agent) to inform the relevant FCC Servicer and the Management Company of the occurrence
of any Loan Event of Default and Potential Loan Event of Default promptly upon becoming aware of the
same. In addition, each Borrower is required to confirm in each compliance certificate delivered
thereunder (each of which will be delivered to, among other recipients, the Management Company)
whether or not any Loan Event of Default or Potential Loan Event of Default has occurred (and, if one
has, what action is being or proposed to be taken to remedy it).
The occurrence of a Loan Event of Default will entitle the relevant FCC Servicer to pursue any of the
courses of action available to it in respect of the affected Borrower and its Property Portfolio, as set out
under the sections entitled ‘‘Summary of Principal Documents – The Commercial Mortgage Loan
Agreements’’ and ‘‘Summary of Principal Documents – The Commercial Mortgage Loan Agreements’’
below.
Direct exercise of rights
The Management Company has the exclusive right to exercise the Issuer’s rights under or in connection
with the Transaction Documents, including, without limitation, in relation to the Commercial Mortgage
Loans. The Noteholders will not have the right to give directions to the Management Company in relation
to the exercise of its rights or to exercise any such rights directly. See further the section entitled
‘‘Directions/Instructions of Noteholders’’.
Early liquidation of the Issuer
The Issuer Regulations set out a number of circumstances in which the Management Company would be
entitled or obliged to liquidate the Issuer. These circumstances may occur prior to the Final Maturity
Date, in which case the Notes may be prepaid in accordance with the mandatory redemption provisions
of Condition 5(c). It is possible that the funds available to the Issuer following its early liquidation may
be insufficient to redeem the Notes in full after payment of amounts ranking in priority in the applicable
Issuer Priority of Payments.
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