guidelines for drawing up the template … · 40003242879, legal address valnu 1, riga, lv-1050,...

GUIDELINES FOR DRAWING UP THE

TEMPLATE DOCUMENTATION FOR BOND ISSUERS

Riga, 2015

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TABLE OF CONTENTS

1. GENERAL PROVISIONS .................................................................................................. 3

PART I .......................................................................................................................................5

PART II .....................................................................................................................................13

PART III .................................................................................................................................... 20

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1. GENERAL PROVISIONS

The documentation template “Prospectus/Offer Document for Public/Non-public Offering

Bond Issue” provides a platform for drafting a prospectus or an offer document for bond

issues.

The template documentation is not binding on upon any party and must be reviewed and

edited before any use.

A full version of the template is applicable for drafting a prospectus for:

- Bond issues to be included in the regulated market organized by NASDAQ OMX Riga, AS

with a denomination per unit of less than EUR 100 000;

- Public offers if the bonds are not traded on the regulated market, where the total

consideration of the offer in the European Union that is calculated for 12 months

exceeds EUR 5 000 000 with a denomination per unit of less than EUR 100 000.

The short version of the template is applicable for drafting an offer document for:

- Public offers if the bonds are not traded on the regulated market, where the total

consideration of the offer in the European Union that is calculated for 12 months is

from EUR 100 000 to EUR 5 000 000, i.e. when the prospectus obligation does not

apply.

The template can also be modified upon the issuer’s necessity to adjust it to public offers if

the bonds are not traded on the regulated market, where the total consideration of the

offer in the European Union that is calculated for 12 months is less than EUR 100 000 as well

as for private placements.

The template includes alternative model terms and conditions that can be used where

applicable.

The template includes essential choices that need to be made based on the characteristics of

the planned issue of bonds. In addition to specific explanations included in the document,

the following is to be noted:

- For the purposes of the template, it is assumed that the bonds are entered into the

book-entry system maintained by AS Latvian Central Depository, registration number

40003242879, legal address Valnu 1, Riga, LV-1050, Latvia;

- The template necessitates choices to be made on key matters such as whether the

issued bonds are listed on the regulated market operated by NASDAQ OMX Riga, AS,

whether the loan is secured or guaranteed as well as whether services of issuing agent

are used etc.

The documentation template “Terms and Conditions for Public/Non-public Bond Issue”

provides a platform for drafting issue terms for bond issues and it is applicable when:

- the placement of bonds is private or;

- the offer of bonds is addressed to qualified investors only or;

- the offer of bonds is addressed to fewer than 150 investors or;

- the nominal value of one bond is not less than 100 000 EUR or;

- one investor can buy bonds with total nominal value not less than 100 000 EUR.

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The template includes alternative model terms and conditions that can be used where

applicable.

The template includes essential choices that need to be made based on the characteristics of

the planned issue of bonds. In addition to specific explanations included in the document,

the following is to be noted:

- For the purposes of the template, it is assumed that the bonds are entered into the

book-entry system maintained by AS Latvian Central Depository, registration number

40003242879, legal address Valnu 1, Riga, LV-1050, Latvia;

- The template necessitate choices to be made on key matters such as whether the loan

is secured or guaranteed as well as whether services of issuing agent are used etc.

The guidelines are structured into 3 parts:

- PART I (applicable for drafting a prospectus for bond issues to be included in the

regulated market organized by NASDAQ OMX Riga, AS and to public offers if the bonds

are not traded on the regulated market, where the total consideration of the offer in

the European Union that is calculated for 12 months exceeds EUR 5 000 000);

- PART II (applicable for drafting an offer document for public offers if the bonds are not

traded on the regulated market, where the total consideration of the offer in the

European Union that is calculated for 12 months is from EUR 100 000 to 5 000 000);

- PART III (applicable for drafting issue terms).

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PART I

1.1. General provisions

This part is applicable for drafting of a bond issue prospectus in accordance with the “Law on

the Financial Instruments Market” of the Republic of Latvia as well as in accordance with the

COMMISSION REGULATION (EC) No 809/2004 of 29 April 2004 implementing Directive

2003/71/EC of the European Parliament and of the Council as regards information contained

in prospectuses as well as the format, incorporation by reference and publication of such

prospectuses and dissemination of advertisements and in accordance with the COMMISSION

DELEGATED REGULATION (EU) No 486/2012 of 30 March 2012 amending Regulation (EC) No

809/2004 as regards the format and the content of the prospectus, the base prospectus, the

summary and the final terms and as regards the disclosure requirements (hereinafter both

regulations together – the Regulation).

The information which shall be included in a bond issue prospectus about the issuer and the

bonds is defined in the Annex IV Minimum Disclosure Requirements for the Debt and

Derivative Securities Registration Document (schedule) (Debt and derivative securities with a

denomination per unit of less than EUR 100 000) and in the Annex V of the Minimum

Disclosure Requirements for the Securities Note related to Debt securities (schedule) (Debt

securities with a denomination per unit of less than EUR 100 000) of the COMMISSION

REGULATION (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the

European Parliament and of the Council as regards information contained in prospectuses as

well as the format, incorporation by reference and publication of such prospectuses and

dissemination of advertisements.

The contents of the summary of a prospectus is defined by the Annex XXII Disclosure

requirements in summaries of the COMMISSION DELEGATED REGULATION (EU) No 486/2012

of 30 March 2012 amending Regulation (EC) No 809/2004 as regards the format and the

content of the prospectus, the base prospectus, the summary and the final terms and as

regards the disclosure requirements.

1.2. Section: Used Definitions and Abbreviations

Please fill in the Section and leave in it all the applicable terms and abbreviations except

those which are not applicable and those which you choose not to include.

Not applicable terms and abbreviations

[Offer Document].

Optional terms and abbreviations

[Collateral] - please use this term if the bond issue is secured by a financial or a commercial

or other type of pledge.

[Collateral Agent]– please use this term if the bond issue is secured by a commercial pledge

and/or financial pledge.

[Commercial pledge]- please use this term if the bond issue is secured by a commercial

pledge.

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[Financial pledge]– please use this term if the bond issue is secured by a financial pledge.

[Guarantor]- please use this term if the bond issue is secured by a guaranty of the third

party.

[Guarantee]- please use this term if the bond issue is secured by a guaranty of the third

party.

[Issuing Agent] - please use this term if you plan to receive services from an issuing agent.

[Paying Agent] - please use this term if you plan to receive services from a paying agent.

[Relevant Market] – please use this term if the bond issue will be included for trading on the

regulated market organized by NASDAQ OMX Riga, AS.

1.3. Section: Persons responsible

Please fill in the Section indicating the respective responsible persons.

If the issue is secured by a guarantee, the responsible persons of the guarantor also shall be

indicated in the Section.

1.4. Section: Summary

Please fill in the Section observing the following principles:

- Summary is constructed on a modular basis according to the Annexes from the

Regulation on which the prospectus has been based. For example, the summary for a

bond prospectus would disclosure the information required for the elements of

Annexes IV and V;

- Each summary will be made up of five tables as detailed in the template;

- The order of the sections A-E is mandatory. Within each of the sections the elements

shall be disclosed in the order they appear in the template;

- Where an element is not applicable to a prospectus, it should appear in the summary

with the mention “not applicable”;

- To the extent required by an element, descriptions should be brief;

- Summary should not contain cross-references to specific parts of the prospectus.

1.5. Section: Risk Factors

Please fill in the Section indicating the risks related to the issuer and the bonds. We have

listed the general risks related with bond issues, however the Section shall be supplemented

with the specific risks in accordance with the character of the issuer’s business activities.

1.6. Section: Bonds

Please fill in the Section all the applicable terms and except those which you choose not to

include due to necessary choices made.

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Optional terms

[5.2.3. The estimated total expenses of the issue are EUR [●].]– please use this clause if you

have made the respective estimate.

[5.2.4. The estimated net amount of the proceeds of EUR [●] generated from the Bonds will

be used observing the following order of priority:

(a) [purpose];

(b) [purpose];

(c)[..].] - please use this clause if you have set the respective priorities.

[5.2.5. The Investor should be aware that the anticipated proceeds will not be sufficient to

fund all the proposed uses, thus the additional amount of EUR [●] will be financed by means

of [description].] – please use this clause if the bond issue is made for a definite purpose and

an extra financing in addition to the proceeds generated from the bonds is necessary.

[5.5.7.The Issuer shall not have the rights to redeem outstanding Bonds at any time prior to

the Maturity Date (call option) and the Bond Holders shall not have rights to demand early

redemption of the Bonds (put option), except occurrence of the Event of Insolvency.] –

please use this clause if it is provided that nor the issuer nor the investors shall have the

rights to earlier redemption of the Bonds.

[5.5.8. The Issuer may redeem all, but not only some, of the outstanding Bonds (call option)

in full [at any time prior to the Maturity Date]/[on DD.MM.YYYY.] at an amount per Bond

equal to [●]per cent of the Nominal Value together with accrued but unpaid Interest, plus

additional premium in amount of [value or method of calculation] per Bond.] - please use

and modify this clause if it is provided that the issuer shall have the rights to redeem the

bonds prior to the maturity date.

[5.5.9. Redemption in accordance with clause 5.5.8. shall be made by the Issuer giving not

less than fifteen (15) Business Days’ notice. Any such notice is irrevocable [but may, at the

Issuer’s discretion, contain one or more conditions precedent]. Upon expiry of such notice

and the fulfilment of the conditions precedent (if any), the Issuer is bound to redeem the

Bonds in full at the applicable amounts.] - please use and modify this clause if it is provided

that the issuer shall have the rights to redeem the bonds prior to the maturity date.

[5.5.10. The Bond Holders have the right to demand early redemption of the Nominal Value

(put option) on [DD.MM.YYYY.] at the price of [●] percent of the Nominal Value.] - please use

and modify this clause if it is provided that the investors shall have the rights to demand

redemption of the bonds prior to the maturity date.

[5.5.11. In order to exercise the put option the Bond Holder have to submit an application to

the Issuer or to its appointed agent not earlier than forty five (45) days prior but not later

than thirty (30) days prior the put option date.] - please use and modify this clause if it is

provided that the investors shall have the rights to demand redemption of the bonds prior

to the maturity date.

[5.6.5. Within the framework of the Bond issue described in this [Prospectus]/[this Offer

Document] rights of the Bond Holders to establish and/or authorize an organization/person

to represent interests of all or a part of the Bond Holders are not contemplated, but on the

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other hand these are not restricted.] –please use this clause if it is not provided that the

investors compose a representing institution.

[5.6.6. description of representation of the Bond Holders.] –please use and modify this clause

if it is provided that the investors compose a representing institution.

[5.6.7. The Bonds rank pari passu with other unsecured obligations of the Issuer. In case of

the insolvency of the Issuer, the Bond Holders will be entitled to recover their investment on

the same terms as other creditors in the respective claims’ group according to the relevant

legal acts. There are no contracts or other transaction documents that would subordinate

the claims of the Bond Holders to other unsecured liabilities of the Issuer.] –please use this

clause if it is provided that the bonds are unsecured.

[5.7. Collateral of Bonds- please use and modify this clause if it is provided that the bond

issue will be secured by a financial or a commercial pledge.

[5.7.1. The issued Bonds are secured by the commercial pledge of [the [total assets] and/or

[shares]] of the Issuer [and other company, e.g. if the Issuer is a part of a group company],

[as well as future components of [these assets] and [shares in case of the capital increase]]

pursuant to the terms and conditions of the Commercial pledge agreement No [●].] - please

use and modify this clause if it is provided that the bond issue will be secured by a

commercial pledge.

[5.7.2. The issued Bonds are secured by the financial pledge of the [[cash assets] and

[financial instruments (if existent)]] of the Issuer [group company] held at [respective

institution in accordance to the Financial Collateral Law, e.g. a bank] pursuant to the

Financial pledge agreement [●].]- please use and modify this clause if it is provided that the

bond issue will be secured by a financial pledge.

[5.7.3. The Collateral Agent holds the pledge on behalf of the Bond Holders and is entitled to

dispose the pledge for the benefit of the Bond Holders pursuant to the terms of the

Collateral Agent Agreement No [●] and its amendments thereof. If the Collateral Agent sells

the pledge, it is entitled to a commission fee in the amount of [●%] of the proceeds, but not

less than EUR [●]] – please use this clause if it is provided that services of a collateral agent

will be used.

[5.7.4. The Bond Holders are entitled to access the [Commercial pledge agreement/ Financial

pledge agreement/ Collateral Agent Agreement] in accordance to Clause 9 of [the

Prospectus]/[this Offer Document]. - please use and modify this clause if it is provided that

the bond issue will be secured by a financial or a commercial pledge.

[other requirements of Annexes VII and VIII shall apply in addition.] – please use and modify

this clause if other requirements of the respective annexes are applicable.

[5.8. Guarantee of the Bonds- please use and modify this clause if it is provided that the

bond issue will be secured by a guaranty of the third person.

5.8.1. The redemption of the issued Bonds and payment of the Interest thereon are

guaranteed by the Guarantor [as the principal debtor (the Issuer)] pursuant to the terms and

conditions of the Guarantee agreement No [●]..- please use and modify this clause if it is

provided that the bond issue will be secured by a guaranty of the third person.

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5.8.2. The Bond Holders are entitled to access the Guarantee agreement in accordance to

Clause 9 of [the Prospectus]/[this Offer Document].] please use this clause if it is provided

that the bond issue will be secured by a guaranty of the third person.

[other requirements of Annex VI shall apply in addition.] – please use and modify this clause

if other requirements of the respective annex are applicable.

[5.10. Procedure for Applying for the Waiver- please use and modify this clause if it is

provided that the issuer shall have the rights to apply for the waiver.

5.10.1. The Issuer may apply for the consent (waiver) of Bond Holders to alter the terms

stated in [this Prospectus]/[this Offer Document].

5.10.2. The changes in [the Prospectus]/[the Offer Document] can attribute to such

specifications of the Bonds as the currency and the Interest Rate, the Interest calculation

method, the procedure of Interest Payments and of the redemption, the admission of the

Bonds for trading on other regulated markets, and other terms if only they do not interfere

with Latvian legislation in force.

5.10.3. [description of the procedure for applying for the waiver.]]

1.7. Section: Terms of the Offer



Optional terms

6.1.7.

[(d) the Investor has understood and consents to the circumstance that the Bonds are

secured solely by the Collateral established in the interest of Investors and in favour of

Collateral Agent;] – please use this clause if it is provided that services of a collateral agent

will be used.

[(e)the Investor has understood and consents to the circumstance that the Collateral Agent

will not be liable for any loss sustained by the Investor or the Bond Holder, unless the

Collateral Agent is culpable for the loss due to intentional fault or gross negligence.] – please

use this clause if it is provided that services of a collateral agent will be used.

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[6.4. Cancelation of the placement– please use this clause if you want to grant the issuer the

rights to cancel the placement.

6.4.1. Within 10 (ten) Business Days from the finishing date of the Subscription Period, the

Issuer will consider the results of the Bonds placement. [If the total amount of the Bonds

subscribed produce more than EUR [●], the Issue shall be completed in the actual subscribed

amount.] / [If the total amount of the Bonds subscribed produce less than EUR [●], the Issue

shall be declared null and void and the initial offering shall be terminated.] / [If the total

number of the Bonds subscribed is less than total number of Bonds of the Issue, the Issuer

has the right to declare the Issue completed in the actual subscribed amount, reduce the

amount of issued Bonds defined or declare the Issue null and void and terminate the initial

offering.]]

[6.5. Inclusion in the regulated market - please use and modify these clauses if you plan to

include the bonds in the regulated market.

6.5.1. The Issuer intends to apply for inclusion of the issued Bonds in the Relevant Market

within [●] months after the prospectus is registered by the Financial and Capital Market

Commission of Latvia. Please note that such application does not have to be necessarily

approved.

6.5.2. The Issuer undertakes to cover all costs and expenses required for including the Bonds

in the Relevant Market on the terms and according to the procedure stipulated in the

applicable legislation.

6.5.3. The Bonds will be available for trading after the decision on inclusion them in the

regulated market adopted by the Board of the Relevant Market.

6.5.4. In the Bond list of the Relevant Market will be included all the Bonds sold during the

initial offer.]

1.8. Section: Issuer



Optional terms

[7.3.2. The sworn auditor [has refused to provide a report for financial information included

in the annual report]/[provided a report for financial information included in the annual

report containing reservations] due to [reason]. – please use and modify this clause if the

issuer’s auditor has refused to provide a report for financial information included in the

annual report or provided a report for financial information included in the annual report

containing reservations.

[7.3.3. The sworn auditor [has resigned] / [has been removed]/[ has not been re-appointed]

during the period covered by the historical financial information due to [reason]. – please

use and modify this clause if the issuer’s auditor has resigned or has been removed, or has

not been re-appointed during the period covered by the historical financial information.

[7.7. Recent significant developments –please use and modify this clause if in your opinion it

could help potential investors to make investment decisions.

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Below are listed the most significant developments since [Year]:

[Year] [Description of development/-s]


[Current Year] [Description of development/-s]

[7.14.4. The composition of the Supervisory Board:] – please use and modify this clause if

the Articles of Association of the issuer provides the obligation to elect a Supervisory Board.

Note: Clauses 7.2. Organizational structure of the Issuer, 7.13. Other securities issued by the

Issuer, 7.15. Management practices 7.19. Selected financial information are obligatory for

completion of the template in accordance with the terms of Part I.

Note: If the bond issue will be secured by a guaranty of the third person the Sections Issuer,

and Financial statements of the Issuer shall be completed for each of the guarantors as well.

1.9. Section: Additional information

Please fill in the Section all the applicable terms and except those which you do not include

due to characteristics of the bond issue.

Note: Clauses 8.1.3. – 8.1.7. are obligatory for completion of the template in accordance

with the terms of Part I if the respective services of the mentioned third persons are used,

information included in the prospectus has been sourced from a third party or any credit

ratings are assigned to the issuer or its debt securities.

1.10. Section Documents on display

Please fill in the Section all the documentation which you plan to discover to the investors.

Optional documentation

(d) [Commercial pledge agreement No. [●]]/ [Financial pledge agreement No. [●]]/

[Collateral Agent Agreement No. [●]]/[Guarantee agreement No [●]] – please use and

modify this clause if it is provided that the bond issue will be secured by a financial or a

commercial pledge or by a guarantee.

1.11. Section References

Please fill in the Section cross-references of provisions of the prospectus with provisions of

Annexes IV and V of the the COMMISSION REGULATION (EC) No 809/2004 of 29 April 2004

implementing Directive 2003/71/EC of the European Parliament and of the Council as

regards information contained in prospectuses as well as the format, incorporation by

reference and publication of such prospectuses and dissemination of advertisements.

Note: This Section is obligatory for completion of the template in accordance with the terms

of Part I.

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1.12. Financial statements of the Issuer

Please add to the prospectus financial statements of the issuer and the guarantor

corresponding to the following requirements:

- Audited historical financial information covering the latest 2 financial years (or such

shorter period that the issuer or the guarantor has been in operation), and the audit

report in respect of each year. Such financial information must be prepared according

to Regulation (EC) No 1606/2002;

- The most recent year’s historical financial information must be presented and prepared

in a form consistent with that which will be adopted in the issuer’s or the guarantor’s

next published annual financial statements having regard to accounting standards and

policies and legislation applicable to such annual financial statements;

- If the issuer has been operating in its current sphere of economic activity for less than

one year, the audited historical financial information covering that period must be

prepared in accordance with the standards applicable to annual financial statements

under the Regulation (EC) No 1606/2002;

- If the issuer or the guarantor prepares both own and consolidated financial statements,

include at least the consolidated financial statements in the registration document;

- The last year of audited financial information may not be older than 18 months from

the date of the prospectus;

- If the issuer or the guarantor has published quarterly or half yearly financial information

since the date of its last audited financial statements, these must be included in the

registration document. If the quarterly or half yearly financial information has been

reviewed or audited the audit or review report must also be included. If the quarterly or

half yearly financial information is un-audited or has not been reviewed state that fact;

- If the prospectus is dated more than nine months after the end of the last audited

financial year, it must contain interim financial information, covering at least the first six

months of the financial year. If the interim financial information is un-audited state that

fact. The interim financial information must include comparative statements for the

same period in the prior financial year, except that the requirement for comparative

balance sheet information may be satisfied by presenting the years end balance sheet.

Note:

If the bond issue will be secured by a guaranty of the third person the Sections Issuer, and

Financial statements of the Issuer shall be completed for each of the guarantors as well.

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PART II

2.1. General provisions

This part is applicable for drafting of an offer document in accordance with the “Law on the

Financial Instruments Market” of the Republic of Latvia as well as in accordance with the

Regulations of the Financial and Capital Market Commission No. 86 On the information

which should be included in documentation of a public offer (hereinafter – the FCMC

Regulations).

The information which shall be included in an offer document about the issuer and the

bonds is defined in the FCMC Regulations.

2.2. Section: Used Definition and abbreviations

Please fill in the Section and leave in it all the applicable terms and abbreviations except

those which are not applicable and those which you choose not to include due to

necessitate choices made.

Not applicable terms and abbreviations

[Prospectus].

[Relevant Market].

Optional terms and abbreviations

[Collateral] - please use this term if the bond issue is secured by a financial or a commercial

or other type of pledge.

[Collateral Agent]– please use this term if the bond issue is secured by a commercial pledge

and/or financial pledge.

[Commercial pledge]- please use this term if the bond issue is secured by a commercial

pledge.

[Financial pledge]– please use this term if the bond issue is secured by a financial pledge.

[Guarantor]- please use this term if the bond issue is secured by a guaranty of the third

party.

[Guarantee]- please use this term if the bond issue is secured by a guaranty of the third

party.

[Issuing Agent] - please use this term if you plan to receive services from an issuing agent.

[Paying Agent] - please use this term if you plan to receive services from a paying agent.

2.3. Section: Persons Responsible

Please fill in the Section indicating the respective responsible persons.

If the issue is secured by a guarantee, the responsible persons of the guarantor also shall be

indicated in the Section.

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2.4. Section: Summary

In accordance with the applicable legislation you have no obligation to fill in the Section

Summary. However if you choose to do it, please strictly observe the following principles:

- Summary is constructed on a modular basis according to the Annexes from the

Regulation on which the issue terms has been based. For example, the summary for a

bond issue terms would disclosure the information required for the Elements for

Annexes IV and V;

- Each summary will be made up of five tables as detailed in the template;

- The order of the sections A-E is mandatory. Within each of the sections the elements

shall be disclosed in the order they appear in the template;

- Where an element is not applicable to issue terms the element should appear in the

summary with the mention “not applicable”;

- To the extent required by an element, descriptions should be brief;

- Summary should not contain cross-references to specific parts of the offer document.

2.5. Section Risk Factors

Please fill in the Section indicating the risks related to the issuer and the bonds. We have

listed the general risks related with bond issues, however the Section shall be amended with

the specific risks in accordance with the character of the issuer’s business activities.

2.6. Section: Bonds



Optional terms

[5.2.3. The estimated total expenses of the issue are EUR [●].]– please use this clause if you

have made the respective estimate.

[5.2.4. The estimated net amount of the proceeds of EUR [●] generated from the Bonds will

be used observing the following order of priority:

(a) [purpose];

(b) [purpose];

(c)[..].] - please use this clause if you have set the respective priorities.

[5.2.5. The Investor should be aware that the anticipated proceeds will not be sufficient to

fund all the proposed uses, thus the additional amount of EUR [●] will be financed by means

of [description].] – please use this clause if the bond issue is made for a definite purpose and

an extra financing in addition to the proceeds generated from the bonds is necessary.

[5.5.7.The Issuer shall not have the rights to redeem outstanding Bonds at any time prior to

the Maturity Date (call option) and the Bond Holders shall not have rights to demand early

15

redemption of the Bonds (put option), except occurrence of the Event of Insolvency.] –

please use this clause if it is provided that nor the issuer nor the investors shall have the

rights to earlier redemption of the Bonds.

[5.5.8. The Issuer may redeem all, but not only some, of the outstanding Bonds (call option)

in full [at any time prior to the Maturity Date]/[on DD.MM.YYYY.] at an amount per Bond

equal to [●]per cent of the Nominal Value together with accrued but unpaid Interest, plus

additional premium in amount of [value or method of calculation] per Bond.] - please use

and modify this clause if it is provided that the issuer shall have the rights to redeem the

bonds prior to the maturity date.

[5.5.9. Redemption in accordance with clause 5.5.8. shall be made by the Issuer giving not

less than fifteen (15) Business Days’ notice. Any such notice is irrevocable [but may, at the

Issuer’s discretion, contain one or more conditions precedent]. Upon expiry of such notice

and the fulfilment of the conditions precedent (if any), the Issuer is bound to redeem the

Bonds in full at the applicable amounts.] - please use and modify this clause if it is provided

that the issuer shall have the rights to redeem the bonds prior to the maturity date.

[5.5.10. The Bond Holders have the right to demand early redemption of the Nominal Value

(put option) on [DD.MM.YYYY.] at the price of [●] percent of the Nominal Value.] - please use

and modify this clause if it is provided that the investors shall have the rights to demand

redemption of the bonds prior to the maturity date.

[5.5.11. In order to exercise the put option the Bond Holder have to submit an application to

the Issuer or to its appointed agent not earlier than forty five (45) days prior but not later

than thirty (30) days prior the put option date.] - please use and modify this clause if it is

provided that the investors shall have the rights to demand redemption of the bonds prior

to the maturity date.

[5.6.5. Within the framework of the Bond issue described in this [Prospectus]/[this Offer

Document] rights of the Bond Holders to establish and/or authorize an organization/person

to represent interests of all or a part of the Bond Holders are not contemplated, but on the

other hand these are not restricted.] –please use this clause if it is not provided that the

investors compose a representing institution.

[5.6.6. description of representation of the Bond Holders.] –please use and modify this clause

if it is provided that the investors compose a representing institution.

[5.6.7. The Bonds rank pari passu with other unsecured obligations of the Issuer. In case of

the insolvency of the Issuer, the Bond Holders will be entitled to recover their investment on

the same terms as other creditors in the respective claims’ group according to the relevant

legal acts. There are no contracts or other transaction documents that would subordinate

the claims of the Bond Holders to other unsecured liabilities of the Issuer.] –please use this

clause if it is provided that the bonds are unsecured.

[5.7. Collateral of Bonds- please use and modify this clause if it is provided that the bond

issue will be secured by a financial or a commercial pledge.

[5.7.1. The issued Bonds are secured by the commercial pledge of [the [total assets] and/or

[shares]] of the Issuer [and other company, e.g. if the Issuer is a part of a group company],

[as well as future components of [these assets] and [shares in case of the capital increase]]

pursuant to the terms and conditions of the Commercial pledge agreement No [●].] - please

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use and modify this clause if it is provided that the bond issue will be secured by a

commercial pledge.

[5.7.2. The issued Bonds are secured by the financial pledge of the [[cash assets] and

[financial instruments (if existent)]] of the Issuer [group company] held at [respective

institution in accordance to the Financial Collateral Law, e.g. a bank] pursuant to the

Financial pledge agreement [●].]- please use and modify this clause if it is provided that the

bond issue will be secured by a financial pledge.

[5.7.3. The Collateral Agent holds the pledge on behalf of the Bond Holders and is entitled to

dispose the pledge for the benefit of the Bond Holders pursuant to the terms of the

Collateral Agent Agreement No [●] and its amendments thereof. If the Collateral Agent sells

the pledge, it is entitled to a commission fee in the amount of [●%] of the proceeds, but not

less than EUR [●]] – please use this clause if it is provided that services of a collateral agent

will be used.

5.7.4. The Bond Holders are entitled to access the [Commercial pledge agreement/ Financial

pledge agreement/ Collateral Agent Agreement] in accordance to Clause 9 of [the

Prospectus]/[this Offer Document].] - please use and modify this clause if it is provided that

the bond issue will be secured by a financial or a commercial pledge.

[5.8. Guarantee of the Bonds- please use and modify this clause if it is provided that the

bond issue will be secured by a guaranty of the third person.

5.8.1. The redemption of the issued Bonds and payment of the Interest thereon are

guaranteed by the Guarantor [as the principal debtor (the Issuer)] pursuant to the terms and

conditions of the Guarantee agreement No [●]

5.8.2. The Bond Holders are entitled to access the Guarantee agreement in accordance to

Clause 9 of [the Prospectus]/[this Offer Document].]

[5.10. Procedure for Applying for the Waiver- please use and modify this clause if it is

provided that the issuer shall have the rights to apply for the waiver.

5.10.1. The Issuer may apply for the consent (waiver) of Bond Holders to alter the terms

stated in [this Prospectus]/[this Offer Document].

5.10.2. The changes in [the Prospectus]/[the Offer Document] can attribute to such

specifications of the Bonds as the currency and the Interest Rate, the Interest calculation

method, the procedure of Interest Payments and of the redemption, the admission of the

Bonds for trading on other regulated markets, and other terms if only they do not interfere

with Latvian legislation in force.

5.10.3. [description of the procedure for applying for the waiver.]]

2.7. The Section Terms of the Offer


include due to necessitate elections made.

Not applicable terms

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[6.5. Inclusion in the regulated market

6.5.1. The Issuer intends to apply for inclusion of the issued Bonds in the Relevant Market

within [●] months after the prospectus is registered by the Financial and Capital Market

Commission of Latvia. Please note that such application does not have to be necessarily

approved.

6.5.2. The Issuer undertakes to cover all costs and expenses required for including the Bonds

in the Relevant Market on the terms and according to the procedure stipulated in the

applicable legislation.

6.5.3. The Bonds will be available for trading after the decision on inclusion them in the

regulated market adopted by the Board of the Relevant Market.

6.5.4. In the Bond list of the Relevant Market will be included all the Bonds sold during the

initial offer.]

Optional terms

6.1.7.

[(d) the Investor has understood and consents to the circumstance that the Bonds are

secured solely by the Collateral established in the interest of Investors and in favour of

Collateral Agent;] – please use this clause if it is provided that services of a collateral agent

will be used.

[(e)the Investor has understood and consents to the circumstance that the Collateral Agent

will not be liable for any loss sustained by the Investor or the Bond Holder, unless the

Collateral Agent is culpable for the loss due to intentional fault or gross negligence.] – please

use this clause if it is provided that services of a collateral agent will be used.

[6.4. Cancelation of the placement– please use this clause if you want to grant the issuer the

rights to cancel the placement.

6.4.1. Within 10 (ten) Business Days from the finishing date of the Subscription Period, the

Issuer will consider the results of the Bonds placement. [If the total amount of the Bonds

subscribed produce more than EUR [●], the Issue shall be completed in the actual subscribed

amount.] / [If the total amount of the Bonds subscribed produce less than EUR [●], the Issue

shall be declared null and void and the initial offering shall be terminated.] / [If the total

number of the Bonds subscribed is less than total number of Bonds of the Issue, the Issuer

has the right to declare the Issue completed in the actual subscribed amount, reduce the

amount of issued Bonds defined or declare the Issue null and void and terminate the initial

offering.]]

2.8. Section: Issuer



Not applicable terms

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[7.2. Organizational structure of the Issuer] – however you may choose in to fill in this

Section.

[7.13. Other securities issued by the Issuer] – however you may choose in to fill in this

Section.

[7.15. Management practices] – however you may choose in to fill in this Section.

[7.18. Development plans – however you may choose in to fill in this Section.

[7.19. Selected financial information] – however you may choose in to fill in this Section.

Optional terms

[7.3.2. The sworn auditor [has refused to provide a report for financial information included

in the annual report]/[provided a report for financial information included in the annual

report containing reservations] due to [reason]. – please use and modify this clause if the

issuer’s auditor has refused to provide a report for financial information included in the

annual report or provided a report for financial information included in the annual report

containing reservations.

[7.3.3. The sworn auditor [has resigned] / [has been removed]/[ has not been re-appointed]

during the period covered by the historical financial information due to [reason]. – please

use and modify this clause if the issuer’s auditor has resigned or has been removed, or has

not been re-appointed during the period covered by the historical financial information.

[7.7. Recent significant developments –please use and modify this clause if in your opinion it

could help potential investors to make investment decisions.

Below are listed the most significant developments since [Year]:



[Current Year] [Description of development/-s]

[7.14.4. The composition of the Supervisory Board:] – please use and modify this clause if

the Articles of Association of the issuer provides the obligation to elect a Supervisory Board.

2.9. Section: Additional information

Please fill in the Section all the applicable terms and except those which you do not include

due to characteristics of the bond issue.

2.10. The Section Documents on display

In accordance with the applicable legislation you have no obligation to fill in this Section. If

you choose to fill in the Section, please indicate in it all the documentation which you plan to

discover to the investors.

Optional documentation

(d) [Commercial pledge agreement No. [●]]/ [Financial pledge agreement No. [●]]/

[Collateral Agent Agreement No. [●]]/[Guarantee agreement No [●]] – please use and

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modify this clause if it is provided that the bond issue will be secured by a financial or a

commercial pledge or by a guarantee.

2.11. Section References

Note: This Section is not applicable for completion of the template in accordance with the

terms of Part II.

2.12. Financial statements of the Issuer

Please add to the issue terms financial statements of the issuer corresponding to the

following requirements:

- The annual report for the last reporting date. If the issuer corresponds to the criteria

indicated in the Article 62 part 2 of the Annual Accounts Law of the Republic of Latvia

the annual report shall be audited by a sworn auditor;

- If the issuer has prepared intermediate financial reports since the end of the last

reporting year, these must be included in the offer document;

- If the duration of the issuer does not exceed 1 year, the financial statements shall be

prepared for the period from the date of incorporation of the issuer till the date of

preparation of the offer document;

- If there have been substantial changes in the financial situation of the issuer which may

affect decisions of the investors financial information shall be provided for the period

from the last reporting date.

Note:

If the bond issue will be secured by a guaranty of the third person the Sections Issuer, and

Financial statements of the Issuer shall be completed for each of the guarantors.

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PART III

3.1. General Provisions

The issue terms provide the terms and conditions for the bond issue A bond is a basis for a

legal relationship between the bond holder and the issuer under which the issuer is obliged

to render payments according to the terms and dates stipulated in the issue terms. Hence

the provisions of the issue terms constitute the characteristics of the bonds.

As a minimum, the issue terms should cover the following issues:

- Rights and obligations related to the bond issue;

- Terms and conditions of the primary distribution of bonds;

- Terms and conditions of redemption of bonds;

- Any other rights and obligations of the issuer, bond holders, investors when making transactions and operations related to the primary distribution and redemption of bonds.

If a collateral is provided to secure the obligations arising from the bonds the provisions

relating to the setup of the collateral should be provided in the issue terms. A separate

collateral agreement may be concluded, if necessary.

If a collateral agent is deployed there should also be a separate section regarding the rights

and obligations of the collateral agent. In addition, a separate collateral agent agreement

should be drafted and concluded.

If a guarantee is provided to secure the rights arising from the bonds the provisions in

relation to the guarantee and the guarantor should be provided in the issue terms.

If a paying agent is deployed there should also be terms included in relation to the paying

agent. In addition, a separate paying agent agreement, stipulating the obligations of the

paying agent should be drafted and concluded.

3.2. Section Interpretation

Please fill in the Section and keep in it all the applicable terms and abbreviations. Please

note that the list of abbreviations does not have to be identical with the list provided in a

prospectus or in an offer document.

3.3. Section Terms of Bonds

The Section lays down the main terms of the respective bond issue At least one of the

following terms should be included in the Section:

- Nominal value of each bond and the total amount and nominal value of the bond issue;

- Term of the bonds and the maturity date;

- Declaration whether the bonds are convertible (so called C-Bonds) or non-convertible to the equity of the issuer;

21

- Interest rate of the bonds. The description of calculation of the interest rate should be clear and precise. If possible, a formula should be provided for calculation of the interest;

- Default interest rate of the bonds.

The exact terms are dependent on each case and are not directly prescribed by the law. If

there are specific and detailed terms that have been agreed upon regarding the bonds it is

advisable to create a separate subparagraph for more detailed terms.

3.4. Section Registration of Bond Issue

Issue terms should entail clear declaration whether the bond issue is to be regarded as a

public offer or not – see Section 1 of these guidelines for details.

For the purposes of the template, it is assumed that the bonds are entered into the book-

entry system maintained by AS Latvian Central Depository, registration number

40003242879, legal address Valnu 1, Riga, LV-1050, Latvia.

It is also advisable to add a declaration of who will bear the costs of the issue.

3.5. Section Issue Documentation

The Section sets down the list of documents that are regarded as the ones stipulating the

terms and hence legal obligations and rights arising from the bonds. The bond issue

documentation should be comprised of the issue terms document and also of all the

purchase offers gathered from the interested investors as well as of the confirmations

provided by the issuer. If any collateral is placed to secure the bonds and a collateral agent is

deployed, both the collateral agreement(s) and the collateral agent agreement should also

be considered to be a part of the issue terms. The mentioned documents are separate

documents but through the mechanism created by a clause of the issue terms 5.1 are

viewed as an entity constituting the terms of the bonds.

Together with the samples of a purchase offer and confirmation documents the drafts of the

respective documents should be added to the issue terms when distributed prior to the

primary distribution to avoid any misconceptions.

3.6. Section Primary Distribution

The section lays down the rules for organisation of the primary distribution of the bonds.

The section should provide description of the process of the subscription to the issue as

detailed as possible: starting from submission of the purchase offers to ensuring

settlements for the bonds.

3.7. Section Representations and Warranties of the Issuer

The exact content of the section on representations and warranties is dependent on the

exact issuer and the bonds issued.

22

3.8. Section Collateral of Bonds

If a collateral is used to secure the fulfilment of the obligations from the issued bonds the

issue terms should cover the most relevant characteristics of the collateral/-s provided by

the issuer. A separate collateral agreement/-s can be used for placing the collaterals.

If a collateral agent is deployed then the issue terms should entail the basic description of

the main obligations of the collateral agent. The detailed obligations, fees and liability of the

collateral agent should be agreed upon separately with the collateral agent in a collateral

agent agreement.

3.9. Section Event of Insolvency

The section should define what is to be deemed as an event of insolvency e.g. what are the

grounds on the basis of which an immediate redemption can be demanded as well as the

exact procedure of the redemption.

3.10. Section Ordinary Redemption

The section lays down the main terms of the redemption of the bond issue. It would be

advisable to have the same level of detail as in clause 5.5. of the documentation template ”

“Prospectus/Offer Document for Public/Non-public Offering Bond Issue” also in the issue

terms for bonds not offered publicly as the clause regarding the grounds and also the

process of an ordinary redemption may be one of the most important in the eyes of a

potential investor.

3.11. Section Final Provisions

The section defines the general provisions of the issue e.g. the applicable legislation, dispute

resolution, the official language of the documentation etc. Please modify the section

according to the characteristics of the definite issue.