FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
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In relation to industrial activities, French environmental legislation imposes restrictions on certain<br />
activities carried out on specific industrial sites and more generally any activities which may affect, inter<br />
alia, the surrounding area, the environment or public health. A list published by the Ministry of the<br />
Environment (Nomenclature des installations classées) sets out the activities subject to this environmental<br />
legislation and whether an activity is subject to prior authorisation by the Préfet (the head of the public<br />
authority (Préfecture) that administers the relevant département (district) of France) or merely to a<br />
declaration by the operator or the owner. For instance, covered warehouses as well as the storage of<br />
flammable products are regulated under French environmental permits.<br />
The operating conditions for warehouses were strengthened by a ministerial order of 5 August 2002 (as<br />
published in the French Official Journal on 1 January 2003). As a result of this ministerial order, the<br />
operator of a warehouse may now face additional compliance costs under French law.<br />
Failure to obtain or comply with any environmental laws or permits may result in a temporary shutdown<br />
of business operations at the premises. If the operator does not remedy the situation within the prescribed<br />
period, the Préfet may, among other things, order the closure of the facility or the temporary or permanent<br />
prohibition of the carrying out of the business. However, if the business has been in operation for a long<br />
time, current practice is generally for the DRIRE (technical services of the Préfet) to assist the operator<br />
in order to help it remedy the situation, rather than impose sanctions.<br />
Environmental reports produced by Arcadis in June <strong>2005</strong> in relation to Secured <strong>Properties</strong> representing<br />
75% of the Market Value of all warehouse, light industrial and mixed use Secured <strong>Properties</strong> (and 55%<br />
of the Market Value of the Secured <strong>Properties</strong> as a whole) did not reveal any material environmental<br />
issues. The environmental reports produced by Arcadis did not cover office properties.<br />
The Borrowers will warrant in the Commercial Mortgage Loan Agreements on the Closing Date, in<br />
respect of each of the Secured <strong>Properties</strong>, as to environmental matters as summarised in ‘‘Summary of<br />
Principal Documents – The Commercial Mortgage Loan Agreements – Representations and Warranties’’<br />
below. A breach of the environmental representation and warranty contained in a Commercial Mortgage<br />
Loan Agreement will constitute a Loan Event of Default in respect of the relevant Borrower unless the<br />
underlying circumstances are remedied within any relevant grace period and save where the breach is<br />
immaterial.<br />
Reports<br />
Apart from the Certificates of Title, the Orrick Report, the Environmental Reports, the excerpts of the<br />
financial reports of Mazars & Guerard reproduced herein and the Valuation Report reproduced herein,<br />
no new reports have been prepared specifically for the purpose of this Offering Circular or the<br />
transactions contemplated herein and none of the Issuer, the Joint Lead Managers, the Management<br />
Company, the Custodian, the <strong>FCC</strong> Servicers and the Lenders, the Noteholder Representatives, the<br />
Hedging Providers and the Liquidity Facility Provider has made any independent investigation of any of<br />
the matters stated therein except as disclosed in this document.<br />
Compulsory purchase risks<br />
Any property in France may at any time be compulsorily acquired by, inter alia, a local or public authority<br />
or a governmental department in connection with proposed redevelopment or infrastructure projects<br />
which it believes is in the public interest. Compulsory acquisition occurs by way of expropriation which<br />
is deemed to be in the public interest. No such compulsory acquisition proposals have been revealed by<br />
the Certificates of Title prepared by the Notary. However, it is impossible to predict whether any such<br />
proposals will arise in the future.<br />
In the absence of exceptional circumstances (such as war), the expropriation proceedings that would apply<br />
in the case of a property would be the standard expropriation proceedings provided for by the French<br />
Code de l’expropriation.<br />
Administrative authorities need to assert the existence of a public interest in order to justify the<br />
expropriation of a contemplated property. The notion of ‘‘public interest’’ is objectively determined by the<br />
administrative courts and may not be based purely on the economic interests of a specific local authority.<br />
The law provides that public interest applies to various projects pertaining to public health, education,<br />
transport and town planning.<br />
The decision to deprive a private owner of property may only be taken by the judicial courts (as opposed<br />
to the administrative courts mentioned in the paragraph above). Such judicial court will also determine<br />
the amount of the compensation payable to the owner of the relevant property. There is no time limit for<br />
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