Risk, Conflicts & Tax

Availability of Investment Opportunities.
The success of the Investment Programme will depend on Vita’s ability to identify investment opportunities as well as to assess the import of news and events that may affect the Investment Programme. The identification and exploitation of the investment strategies to be pursued by the Investment Programme involves a high degree of uncertainty. No assurance can be given that Vita will be able to locate suitable investment opportunities in which to deploy all of the borrowings raised under the Loan Programme.

Changes in Applicable Law and Practice.
Vita must comply with various regulatory and legal requirements, potentially including securities laws and tax laws and practices as imposed by the jurisdictions under and in which it operates. Should any of those laws change over the life of the Investment Programme, such regulatory, tax and legal requirements could differ materially from current requirements and adversely impact the Investment Programme.

Potential Loss.
An Investor’s investment in the Loan Programme may fall as well as rise. Vita is not subject to investment restrictions save as specified in this Memorandum and, therefore, there is a potential for above average risk in investing in the Loan Programme. Investment in the Loan Programme is suitable only for prospective investors who are in a position to tolerate such risk.

Any Loan repayments and/or payments of interest are dependent of the performance of the Reference Assets. There can be no assurance or guarantee that the Investment Programme’s investment objective will be achieved or that an Investor will recover any of the amount invested in the Loan Programme.

Legal Risk and Political Risk.
Many of the laws that govern private and foreign investment, securities transactions and other contractual relationships in certain countries, particularly in developing countries of the kind in which Vita will deploy its assets, are new and largely untested. As a result, the Investment Programme may be subject to a number of unusual risks, including inadequate investor protection, contradictory legislation, incomplete, unclear and changing laws, ignorance or breaches of regulations on the part of other market participants, a lack of established or effective avenues for legal redress, a lack of standard practices, a lack of confidentiality, customs characteristic of undeveloped markets and a lack of enforcement of existing regulations. Furthermore, it may be difficult to obtain and enforce a judgement in certain countries in which assets of Vita are invested. There can be no assurance that this difficulty in protecting and enforcing rights will not have a material adverse effect on the Investment Programme.

The performance of the Investment Programme may be affected by changes in economic and market conditions, uncertainties such as political developments, military conflict and civil unrest, changes in government policies, the imposition of restrictions on the transfer of capital and legal, regulatory and tax requirements.

Reputational Risk.
Adverse public comment or local resistance as regards the acquisition or proposed acquisition of an investment and/or the implementation of proposals relating to Reference Asset may undermine the ethical credibility of the Investment Programme. Any local resistance may strain or compromise critical relationships with local authorities or communities or personnel making implementation of the proposals difficult or impossible thereby compromising or eradicating the long term viability and/or profitability of an investment.

Reliance on Vita.
The success of the Investment Programme will depend significantly on the efforts and abilities of the directors and/or employees or consultants (as applicable) of Vita. The loss of these persons’ services could have a detrimental effect or materially adverse impact on the Investment Programme.

Tax Considerations.
Applicable tax regimes and practices, tax charges and withholding taxes in various jurisdictions in which Vita will invest will affect the distributions made to it, its interests and accordingly to Investors. Such, tax regimes, tax laws and practices may change over time and no assurance can be given as to the level of taxation suffered by Vita, its interests or its investments.

Charges to Vita.
Vita is liable for certain costs and expenses associated with its operation and with the acquisition and disposition of the Reference Assets. There can be no assurance that the Investment Programme will be able to generate sufficient income to offset such costs and expenses.

Independent Experts.
While Vita has consulted with counsel, accountants and other experts regarding the structure and terms of the Loan Programme and the Investment Programme, such counsel does not represent the Investors. Prospective investors are urged to consult their own legal, tax and financial advisers regarding the desirability and suitability of making an investment in the Loan Programme.

Participation in Management.
An Investor has no right to participate in the management of Vita or in the conduct of its business. There exists broad discretion to expand, revise or contract Vita’s business without the consent of the Investors. Any decision to engage in a new activity could result in the exposure of Vita’s capital to additional risk.

Loans Are Unsecured. Investments in the Loan Programme are unsecured obligations of the Loan Programme, and the Investors will have no recourse against any of the Reference Assets, Vita or any third party in the event of a loss of amounts invested.

Insurance.
Investments in the Loan Programme are not insured by any governmental or private entity. The risks of an investment in the Loan Programme may be greater than implied by relatively low interest rates on the Loans.

Ratings.
The Loans have not been submitted to any rating agency to obtain an opinion or rating of the risk of timely collection of principal and interest.

Redemption.
Loans cannot be redeemed and there is no known secondary market in which to sell or trade such investments before the Loans reach maturity.

Liquidity.
Loans are not publicly traded and are illiquid. Since the loans themselves are illiquid, the sources of repayment of the Loans are limited to regularly scheduled loan payments.

There is a risk that the investment objective of the Investment Programme may not be achieved in that carbon credits are not generated by the Projects or that no substantive or sustainable market develops for the carbon credits or in that the carbon credits will not be able to be realised by sale or other disposition at attractive prices or at the appropriate times or in response to changing market conditions, or that Vita will otherwise be unable to complete a favourable exit
strategy in respect of any of the Reference Assets.

Accordingly, substantial losses or delinquencies in the loan portfolio, accompanied by depletion of Vita’s undeployed cash, may impede the Loan Programme’s ability to yield payments of principal and interest in a timely fashion.

Carbon Credit Markets.
A substantial portion of the Reference Assets may be carbon credits. The markets for these carbon credits are not organised and are generally “thin” or illiquid, making sale of such investments at desired prices or in desired quantities difficult or even impossible. In addition the regulation of the carbon credit market is in its infancy and may change drastically in the future due to new legislation, treaties or other governmental regulation, as well as new methods of trade. The direction of such regulation is impossible to predict and could have an adverse impact on the Reference Assets. While standards exist regarding the monitoring and verification of carbon credits, most carbon credits are traded through contractual arrangements between private parties in an unregulated market which carries inherent risks.

Carbon Credit Income.
The ability to repay Loans is directly linked to the performance of the Reference Assets, which is in part linked to the carbon credit price. The terms of the Loans assume a gross price of €3.00 per carbon credit. If the price drops to €2.50 the Loan can be repaid and the interest can be paid. If the price drops below €2.50 the full loan repayment (or the payment of interest) will not be made. The carbon credit income also assumes that there is no reduction of the full expected number of credits generated from each Project.

Country Risk.
At all times ownership of carbon credits lies with Vita. The register of carbon credits is not held in the country where projects are carried out but in an international registry and cannot be expropriated by any regime change. It is explicit in Gold Standard regulations that the ownership is fully explained to the project beneficiaries before a project starts and that they recognise that the Loan Programme retains the carbon credits in exchange for its intervention. This is formalised through a carbon release form signed by each beneficiary.

Currency Risks.
The Loan Programme’s investments and assets may be denominated in a currency other than the currency which an Investor commits to the Loan Programme
and therefore subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values or similar assets in different currencies, long-terms opportunities for investment and capital appreciation and political developments.

Local Market.
The Reference Assets may be vulnerable to factors affecting the environmental markets, such as changing regulation by local governments, developments in
the energy and natural resources sectors and conservation incentives. Increased energy and natural resources regulations may, among other things, increase compliance cost and affect business opportunities for the companies in the environmental markets.

Market Concentration.
Investments in the rapidly changing environmental marketplace, which may form a substantial part of Vita’s investments, face special risks. For example, the sale or exchange of carbon credits may not prove commercially successful or such assets may become valueless if purchasers of these assets obtain access to more cost effective means of fulfilling their environmental obligations or are otherwise not compelled, bound or obligated to reduce their carbon footprint. The value of the Reference Assets may be susceptible to factors affecting the environmental markets generally and to greater risk and market fluctuation than an investment in a vehicle that invests in a broader or more diversified range of securities or assets not concentrated in any particular industries. As such, the Loan Programme is not an appropriate investment for persons who are not long term investors and who, as their primary objective, require safety of principal from their investments.

Regulatory Risks.
Regulatory changes may be imposed in the carbon credit markets and on the carbon credits themselves in the future, and any such regulations could significantly restrict the Investment Programme’s ability to realise profits and therefore the ability of Vita to make any Loan repayments or payments of interest.

It is possible that Vita may, in the course of business, encounter potential conflicts of interest in relation to the Loan Programme and/or the Investment Programme.

Vita will, at all times, endeavour to ensure that such conflicts are resolved fairly.

Taxation

The comments below are of a general nature and are based on current Irish law and practice. They are limited to a general consideration of the tax position of Investors who are lenders under the Loan Agreements. They do not necessarily apply to certain classes of person (such as dealers) or where the income is deemed for tax purposes to be the income of any other person. The tax treatment of Investors depends on their individual circumstances and may be subject to change in the future Investors who are in any doubt as to their tax position, should consult their professional advisers.

Corporation Tax Payer s.
Corporate Investors within the charge to UK corporation tax will normally recognise any profits, gains or losses on the Loans (including on redemption) for UK corporation tax purposes under the “loan relationship” rules in Part 5 of the Corporation Tax Act 2009. Under these rules, all interest, profits, gains and losses (broadly, measured and recognised in accordance with generally accepted accounting practice) are taxed or relieved as income.

Foreign exchange gains and losses on the Loans will, generally, fall within the “loan relationship” rules. Accordingly, corporate Investors within the charge to UK corporation tax will, generally, be taxed on, or obtain relief for, foreign exchange gains and losses as described above.

Other UK Tax Payers.
Investors who are not subject to UK corporation tax but who are resident for tax purposes in the United Kingdom or who carry on a trade, profession or vocation in the United Kingdom through a branch or agency to which the Loans are attributable will, generally, be subject to income tax on interest arising in respect of the Loans on a receipts basis.

The Loans will not constitute “qualifying corporate bonds”. Therefore, a disposal (including redemption) of a Loan by an Investor who is not within the charge to UK corporation tax may give rise to a chargeable gain or an allowable loss for UK tax purposes, depending on the circumstances of the Investor. In calculating any gain or loss on a disposal (including redemption) of a Loan, sterling values are compared at acquisition and disposal. Accordingly, a taxable profit can arise even where the foreign currency amount received on a disposal (including redemption) is the same as, or less than, the amount paid for the Loan.