Document:

EX-10.32.1

AMENDED AND RESTATED

BENEFIT RESTORATION PLAN OF

AVERY DENNISON CORPORATION

Avery Dennison Corporation, a Delaware corporation, adopted the Benefit Restoration Plan of Avery
Dennison Corporation (the ”Plan”), effective as of December 1, 1994 (the “Effective Date”), for the
benefit of its eligible Employees. The Plan is amended and restated effective as of December 1,
2005.

The Plan constitutes an unfunded “excess benefit plan” within the meaning of Section 3(36) of the
Employee Retirement Income Security Act of 1974, as amended (”ERISA”). The Plan is maintained
primarily for the purpose of providing deferred Compensation for a select group of management or
highly compensated employees, within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1).

ARTICLE I – DEFINITIONS

Whenever the following terms are used in the Plan with the first letter capitalized, they shall
have the meaning specified below unless the context clearly indicates to the contrary.

”Actuarial Equivalent” shall mean the equivalent of a given Benefit or a given amount payable in
another manner or by other means, determined by or under the direction of the Administrator in
accordance with actuarial principles, methods and assumptions which are found to be appropriate by
the Enrolled Actuary, acting independently of the Administrator or the Company and in the exercise
of his sole professional judgment. Such principles, methods and assumptions, however, shall be
reasonable in the aggregate and shall constitute the Enrolled Actuary’s best estimate of
anticipated experience under the Plan. Such assumptions shall include at any time, those
assumptions then in effect under the Qualified Plan. For purposes of calculating lump sum amounts
under Section 5.2, such assumptions shall be those set forth in Sections 1.2(a)(i)b and
1.2(a)(ii)b of the Qualified Plan (or any successor thereto).

“Administrator” shall mean Avery Dennison Corporation, acting through its Board or its delegates,
except that if it appoints a Committee under Section 6.4, the term ”Administrator” shall mean the
Committee as to those duties, powers and responsibilities specifically conferred upon the
Committee. Avery Dennison Corporation shall have all duties and responsibilities imposed by ERISA,
except as specifically assigned to, delegated to or reserved to the Board, and the Committee under
the Plan.

“Associate Plan” shall mean The Associate Retirement Plan for Employees of Avery Dennison
Corporation as in effect on or after June 1, 2002 and as set forth in Appendix B to the Dennison
Retirement Plan and as may be amended from time to time.

”Beneficiary” shall mean a person or trust properly designated by a Participant or Former
Participant in accordance with the Rules of the Plan.

“Benefit” of a Participant shall mean the benefit payable pursuant to Article IV.

“Benefit Service” of a Participant shall mean his “Benefit Service” as defined in the Qualified
Plan, except that

	 	(a)	 	days of “Service” prior to the Effective Date shall be ignored;

	 	(b)	 	a Participant’s “Service” shall commence with the first year after the
Effective Date for which his “Compensation” exceeded the Code Section 401(a)(17) limit
then in effect; except that each Participant who became a “Participant” under the
Qualified Plan after the Effective Date shall, for his first Plan Year of participation
under the Qualified Plan, be credited with Service only for the period beginning with
the first day of the month following his one year anniversary of his hire date and
through the end of that Plan Year; and

	 	(c)	 	a Participant shall also be credited with a year of “Service” for any year in
which he participates in the Company’s nonqualified deferred compensation program to
the extent that any part of such period of participation is not treated as “Service”
under subsection (b).

“Board” shall mean the Board of Directors of Avery Dennison Corporation. The Board may delegate
any power or duty otherwise allocated to the Administrator to any other person or persons,
including a Committee appointed under Section 6.4.

“CEO” shall mean the Chief Executive Officer of Avery Dennison Corporation.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“Committee” shall mean the BRP Committee of Avery Dennison Corporation, as appointed pursuant to
Section 6.4, if any.

“Company” shall mean Avery Dennison Corporation, any other company which subsequently adopts the
Plan as a whole or as to any one or more divisions, in accordance with Section 7.3(b), and any
successor company which continues the Plan under Section 7.3(a).

“Company Affiliate” shall mean any employer which, at the time of reference, was, with the Company,
a member of a controlled group of corporations or trades or businesses under common control, or a
member of an affiliated service group, as determined under regulations issued by the Secretary
under Code Sections 414(b), (c), (m) and 415(h) and any other entity required to be aggregated with
the Company pursuant to regulations issued under Code Section 414(o).

“Compensation Committee” shall mean the Compensation and Executive Personnel Committee of the
Board.

“Compensation – Unrestricted” of a Participant shall mean his “Compensation,” as defined in the
Qualified Plan, but determined without regard to the limitations of Code Section 401(a)(17),
without application of the limitation on benefits under Code Section 415 and including the
Participant’s deferrals under the Company’s nonqualified deferred compensation program earned on or
after the Effective Date or, if later, the date he commenced participation under the Plan.

“Effective Date” shall mean the effective date of the Plan, which shall be December 1, 1994.

“Employee” shall mean any person who renders services to the Company in the status of an employee
as the term is defined in Code Section 3121(d), excluding: (i) any person retained to render
services as an independent contractor; (ii) leased Employees treated as Employees of the Company
pursuant to Code Sections 414(n) and 414(o); (iii) employees of a Company Affiliate or (iv) any
person whose services with the Company are performed pursuant to a contract or an arrangement that
purports to treat the individual as an independent contractor even if such individual is later
determined (by judicial action or otherwise) to have been a common law employee of the Company
rather than an independent contractor; provided, however, that ”Employee” shall also mean any
Included Affiliate Employee.

For purposes of this Plan, a United States citizen shall be treated as an employee of the Company
if he is employed by a foreign subsidiary of the Company or a Company Affiliate to which there
applies an agreement under Section 3121(a) of the Code and if no contributions to a funded plan of
deferred compensation (whether or not a plan described in Sections 401(a), 403(a) or 405(a) of the
Code) are provided by any other person with respect to the compensation paid to such citizen by the
foreign subsidiary, unless otherwise elected by the Vice President, Compensation and Benefits of
Avery Dennison Corporation

“Enrolled Actuary” shall mean the person enrolled by the Joint Board for the Enrollment of
Actuaries established under subtitle C of title III of ERISA who has been engaged by the
Administrator on behalf of all Participants to make and render all necessary actuarial
determinations, statements, opinions, assumptions, reports and valuations under the Plan as
required by law or requested by the Administrator.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to
time.

“Former Participant” shall mean a Participant who has had a Separation from the Service.

“Grandfathered Amount” of a Participant shall mean the present value as of December 31, 2004 of the
Benefit to which the Participant would have been entitled under the Unamended Plan had such
Participant had a Separation from the Service on such date and received such Benefit on the
earliest date permitted under the Unamended Plan, but increased, as applicable, for any subsequent
calendar year to take account of the actual amount of benefits to which the Participant would have
become entitled under the terms of the Unamended Plan without regard to any further services
rendered by the Participant after December 31, 2004 or any other events affecting the amount or
entitlement to benefits (other than a Participant election with respect to the time or form of an
available Benefit), all within the meaning of Proposed Treasury Regulation Section 1.409A-6 or its
subsequent counterpart.

“Included Affiliate Employee” shall mean any person who is employed by a Company Affiliate and
would not be an Employee but for the fact that the Vice President, Compensation and Benefits of
Avery Dennison Corporation has determined that he be so treated.

“Military Leave” shall mean leave subject to reemployment rights under the Uniformed Services
Employment and Reemployment Rights Act of 1994, as amended from time to time. Any Employee who
leaves the Company or a Company Affiliate directly to perform service in the Armed Forces of the
United States or in the United States Public Health Service under conditions entitling him to such
reemployment rights shall, solely for the purposes of the Plan and irrespective of whether he is
compensated by the Company or such Company Affiliate during such period of service, be presumed an
Employee on Military Leave. An Employee’s Military Leave shall expire if such Employee voluntarily
resigns from the Company or such Company Affiliate during such period of service, or if he fails to
make application for reemployment within the period specified by such laws for the preservation of
his reemployment rights. For purposes of computing an Employee’s service, no more than 365 days of
service shall be credited for any Military Leave except as required by Treas. Reg. Section 1.410(a)
- 7(b) (6) (iii).

“Participant” means any person included in the Plan as provided in Article II.

“Plan” shall mean the Benefit Restoration Plan of Avery Dennison Corporation.

“Plan Year” shall be the twelve month period from December 1 through the last day of the following
November, including all such years prior to the adoption of the Plan.

“Qualified Benefit” of a Participant for a period of time shall mean the benefit accrued pursuant
to Article IV of the Qualified Plan (as applicable based on the circumstances of the Participant’s
Separation from the Service) during such period.

“Qualified Benefit – Unrestricted” of a Participant for a Plan Year shall mean his Qualified
Benefit for such Plan Year but based upon his Compensation – Unrestricted as defined hereunder.

“Qualified Plan” shall mean the Retirement Plan and the Associate Plan as may be amended
from time to time.

“Retirement Plan” shall mean The Retirement Plan for Employees of Avery Dennison Corporation as in
effect on or after June 1, 2002 and as may be amended from time to time.

“Rules of the Plan” shall mean rules adopted by the Administrator pursuant to Section 6.1 for the
administration, interpretation or application of the Plan.

“Separation from the Service” of an Employee shall mean his resignation from or discharge by the
Company or a Company Affiliate, his death, or Early, Normal, Late or Disability Retirement as
defined under the Qualified Plan, but not his transfer among the Company and Company Affiliates. A
leave of absence or sick leave authorized by the Company or a Company Affiliate in accordance with
established policies, a vacation period, a temporary layoff for lack of work or a Military Leave
shall not constitute a Separation from the Service; provided, however, that (i) continuation upon a
temporary layoff for lack of work for a period in excess of twelve months shall be considered a
discharge effective as of the expiration of the twelfth month of such period, and (ii) failure to
return to work upon expiration of any leave of absence, sick leave, Military Leave or vacation or
within three days after recall from a temporary layoff for lack of work shall be considered a
resignation effective as of the date of expiration of such leave of absence, sick leave, Military
Leave, vacation, or the expiration of the third day after recall from any such temporary layoff.

“2004 Average Compensation – Unrestricted” of a Participant shall mean his “2004 Average
Compensation” as defined in the Qualified Plan but based on Compensation – Unrestricted.

“Unamended Plan” shall mean the terms of this Plan as it existed on October 3, 2004 (including
applicable limits under the Code).

“Vested Benefit” of a Participant on a given date shall mean the Benefit provided hereunder if
the Participant were to have a Separation from the Service on such date with a “Vested Retirement
Benefit” under the Qualified Plan.

ARTICLE II -ELIGIBILITY

	 	 	 	Section 2.1 — Requirements for Participation

Only those Employees of the Company who satisfy criteria set by the Administrator from time to
time, shall be Participants. Such criteria are set forth in Appendix A, which may be updated from
time to time without formal amendment of the Plan. Each of the Administrator, the Board, the
Compensation Committee, the Committee or the CEO shall have the power to change or revoke such
criteria hereunder in its sole discretion on a prospective basis, and any such change or revocation
shall be binding and final on all Employees, Beneficiaries and other interested persons.

ARTICLE III — FUNDING OF BENEFITS

	 	 	 	Section 3.1 — Source of Benefits

The Plan shall be unfunded. All benefits payable under the Plan shall be paid from the Company’
general assets, and nothing contained in the Plan shall require the Company to set aside or hold in
trust any funds for the benefit of a Participant or his Beneficiary, each of whom shall have the
status of a general unsecured creditor with respect to the Company’s obligation to make payments
under the Plan. Any funds of the Company available to pay benefits under the Plan shall be subject
to the claims of general creditors of the Company and may be used for any purpose by the Company.

ARTICLE IV — BENEFITS

	 	 	 	Section 4.1 — Determination of Benefits

	 	 	 	Unless otherwise described in Appendix B, a Participant’s Benefit shall be the sum of

	 	(a)	 	for each Participant who, as of December 1, 2004, is entitled to accrue a benefit under the
Plan and is a “Participant” under the Qualified Plan, the excess of

	 	(i)	 	the greater of:

	 	 	 	a one hundred and five percent of the sum of

	 	1	 	his Qualified Benefit (using the “Formula Amount” under Supplement
B of the Associate Plan and Supplement E of the Retirement Plan (as
applicable)) and

	 	2	 	the product of

	 	 	 	A one and three-quarters percent,

	 	 	 	B his years of Benefit Service, and

	 	 	 	C the excess of

	 	 	 	I his Compensation-Unrestricted, over

	 	 	 	II his “Compensation” (as defined under the Qualified
Plan),

	 	 	 	all as of November 30, 2004 or,

	 	 	 	b the sum of

	 	1	 	the product of

	 	 	 	A the sum of

	 	 	 	I one and one-quarter percent of his “2004 Average
Compensation” (as defined under the Qualified Plan), and

	 	 	 	II one-half of one percent of that portion of his
“2004 Average Compensation” (as defined under the
Qualified Plan), as exceeds his “Covered Compensation”
(as defined under the Qualified Plan), and

	 	 	 	B his years of “Benefit Service” (as defined in the Qualified
Plan) as of November 30, 2004, not in excess of 35, and

	 	2	 	the product of

	 	 	 	A one and one-quarter percent of his “2004 Average
Compensation” (as defined under the Qualified Plan), and

	 	 	 	B his years of “Benefit Service” (as defined in the Qualified
Plan”) as of November 30, 2004 in excess of 35, and

	 	3	 	the product of

	 	 	 	A one and three-quarters percent,

	 	 	 	B his years of Benefit Service, and

	 	 	 	C the excess of

	 	 	 	I his 2004 Average Compensation-Unrestricted, over

	 	 	 	II his “2004 Average Compensation” (as defined under
the Qualified Plan),

over

	 	(ii)	 	his Qualified Benefit as of December 1, 2004; and

	 	(b)	 	for each Plan Year beginning on or after December 1, 2004 and for which the Participant is
entitled to accrue a benefit under the Plan, the excess of

	 	(i)	 	his Qualified Benefit – Unrestricted accrued for such Plan Year,

over

	 	(ii)	 	his actual Qualified Benefit accrued for such Plan Year,

	 	 	 	but not less than zero.

If a Participant is not credited with an Hour of Service as a Participant for any period commencing
on or after December 1, 2004, his Benefit under the Plan shall be calculated under Section 4.1 of
the Plan as in effect before December 1, 2004.

ARTICLE V — PAYMENT OF BENEFITS

	 	 	 	Section 5.1 — Beneficiary; Form of Benefits

	 	(a)	 	For distributions commencing on or before December 31, 2006, each Participant shall designate
his Beneficiary and elect the form and the timing of his Benefits hereunder in accordance with
the procedures set forth in the Qualified Plan; provided, however, that any designations
and/or elections made by Participant under Article IV of the Qualified Plan with respect to
his “Benefits” thereunder shall be equally applicable to his Benefit under this Plan. The
intent of this Section is that each Participant shall make a single set of elections
applicable to both the Qualified Plan and this Plan.

	 	(b)	 	For distributions commencing after December 31, 2006:

	 	(i)	 	With respect to the Grandfathered Amount, each Participant shall designate his
Beneficiary and elect the form and the timing of his Benefits hereunder in accordance
with the procedures set forth in the Qualified Plan; provided, however, that any
designations and/or elections made by Participant under Article IV of the Qualified
Plan with respect to his “Benefits” thereunder shall be equally applicable to his
Grandfathered Amount under this Plan. The intent of this Section is that, with respect
to the Grandfathered Amount, each Participant shall make a single set of elections
applicable to both the Qualified Plan and this Plan.

	 	(ii)	 	a Any part of the Benefit that is greater than the Grandfathered Amount
shall be paid in the form of a single life annuity (or such other Actuarially
Equivalent life annuity form consisting of substantially equal periodic payments as is
elected by the Participant under the Qualified Plan if such election as applied hereto
is as to form only (and not timing), or otherwise, and would not be considered to be a
change in the form of payment under Proposed Treasury Regulation Section
1.409A-2(b)(2)(ii) or its subsequent counterpart).

	 	 	 	b Payments thereof shall commence on the first day of the month following
the later of:

	 	1	 	the Participant’s Separation from the Service, or

	 	2	 	the first day thereafter as of which payments could commence
pursuant to Code Section 409A(a)(2)(A)(i) and (2)(B).

	 	 	 	Section 5.2 — Payment of Benefits

A Participant’s Benefits shall be paid in accordance with Section 5.1, except that a Participant
will receive his Benefit in an Actuarially Equivalent lump sum if it would otherwise have been paid
in the form of an annuity with monthly payments of less than $300.

	 	 	 	Section 5.3 — Forfeitures

If a Participant has a Separation from the Service while all or any portion of his Benefit is not a
Vested Benefit, such portion of his Benefit shall immediately be forfeited.

ARTICLE VI — ADMINISTRATIVE PROVISIONS

	 	 	 	Section 6.1 – Administrator’s Duties and Powers

	 	(a)	 	The Administrator shall conduct the general administration of the Plan in accordance with the
Plan and shall have all the necessary power and authority to carry out that function. Among
its necessary powers and duties are the following:

	 	(i)	 	To delegate all or part of its function as Administrator to others and to
revoke any such delegation.

	 	(ii)	 	To determine questions of vesting of Participants and their entitlement to
benefits, subject to the provisions of Section 6.11.

	 	(iii)	 	To select and engage attorneys, accountants, actuaries, appraisers, brokers,
consultants, administrators, physicians, the Committee under Section 6.4, or other
persons to render service or advice with regard to any responsibility the Administrator
or the Board has under the Plan, or otherwise, to designate such persons to carry out
fiduciary responsibilities under the Plan, and (with the Committee, the Companies, the
Board and its officers, and Employees) to rely upon the advice, opinions or valuations
of any such persons, to the extent permitted by law, being fully protected in acting or
relying thereon in good faith.

	 	(iv)	 	To interpret the Plan for purpose of the administration and application of the
Plan, in a manner not inconsistent with the Plan or applicable law and to amend or
revoke any such interpretation.

	 	(v)	 	To conduct claims procedures as provided in Section 6.11

	 	(vi)	 	To adopt Rules of the Plan that are not inconsistent with the Plan or
applicable law and to amend or revoke any such rules.

	 	(b)	 	Every finding, decision and determination made by the Administrator shall, to the full extent
permitted by law, be final and binding upon all parties, except to the extent found by a court
of competent jurisdiction to constitute an abuse of discretion.

	 	 	 	Section 6.2 — Limitations Upon Power

The Plan shall be uniformly and consistently administered, interpreted and applied with regard to
all Participants in similar circumstances. The Plan shall be administered, interpreted and applied
fairly and equitably and accordance with the specified purposes of the Plan.

	 	 	 	Section 6.3 — Final Effect of Administrator Action

Except as provided in Section 6.11, all actions taken and all determinations made by the
Administrator in good faith shall be final and binding upon all Participants and any person
interested in the Plan.

	 	 	 	Section 6.4 — Committee

The Administrator may, but need not, appoint a BRP Committee consisting of three or more members to
hold office during the pleasure of the Administrator. The Committee shall have such powers and
duties as are delegated to it by the Administrator. Committee members shall not receive payment for
their services as such.

	 	 	 	Section 6.5 – Resignation

A Committee member may resign at any time by delivering written notice to the Administrator.

	 	 	 	Section 6.6 — Vacancies

Vacancies in the Committee shall be filled by the Administrator.

	 	 	 	Section 6.7 — Majority Rule

The Committee shall act by a majority of its members in office; provided, however, that the
Committee may appoint one of its members or a delegate to act on behalf of the Committee on matters
arising in the ordinary course of administration of the Plan, or on specific matters.

	 	 	 	Section 6.8 — Indemnification by the Company; Liability Insurance

	 	(a)	 	The Company shall pay or reimburse any of the Company’s officers, directors, Committee
members or Employees who are fiduciaries with respect to the Plan for all expenses incurred by
such persons in, and shall indemnify and hold them harmless from, all claims, liability and
costs (including reasonable attorneys’ fees) arising out of the good faith performance of
their fiduciary functions.

	 	(b)	 	The Company may obtain and provide for any such person, at the Company’s expense, liability
insurance against liabilities imposed on him by law.

	 	 	 	Section 6.9 — Recordkeeping

	 	(a)	 	The Administrator shall maintain suitable records as follows:

	 	(i)	 	Records of each Participant’s individual Benefit.

	 	(ii)	 	Records which show the operations of the Plan during each Plan Year.

	 	(iii)	 	Records of the Administrator’s deliberations and decisions.

	 	(b)	 	The Administrator shall appoint a secretary, and at its discretion, an assistant secretary,
to keep the record of proceedings, to transmit its decisions, instructions, consents or
directions to any interested party, to execute and file, on behalf of the Committee, such
documents, reports or other matters as may be necessary or appropriate to perform ministerial
acts.

	 	(c)	 	The Administrator shall not be required to maintain any records or accounts, which duplicate
any records or accounts maintained by the Company.

	 	 	 	Section 6.10 — Inspection of Records

Copies of the Plan and records of a Participant’s Benefit shall be open to inspection by him or his
duly authorized representatives at the office of the Administrator at any reasonable business hour.

	 	 	 	Section 6.11 — Claims Procedure

The claims procedures hereunder shall be in accordance with the claims procedures set forth in the
Qualified Plan; provided that for purposes of the claims procedure under this Plan, the review
official described in the Qualified Plan shall be the President of the Company.

	 	 	 	Section 6.12 — Conflicting Claims

The procedures for the resolution of conflicting claims by the Committee shall be in accordance
with the procedures set forth in the applicable section of the Qualified Plan.

	 	 	 	Section 6.13 — Service of Process

The Secretary of the Avery Dennison Corporation is hereby designated as agent of the Plan for the
service of legal process.

ARTICLE VII — MISCELLANEOUS PROVISIONS

	 	 	 	Section 7.1 — Amendment, Termination or Suspension of the Plan

	 	(a)	 	The Plan may be amended or terminated by the Board or the Compensation Committee at any time;
the CEO may amend the Plan at any time. Such amendment or termination may modify or eliminate
any benefit hereunder other than a benefit or a portion of a benefit that is a Vested Benefit.

	 	(b)	 	If the Board determines that payments under the Plan would have a material adverse effect on
the Company’s ability to carry on its business, the Board may suspend such payments
temporarily for such time as in its sole discretion it deems advisable, but in no event for a
period in excess of one year. The Company shall pay such suspended payments immediately upon
the expiration of the period of suspension.

	 	(c)	 	The Plan is intended to provide benefits for a “select group of management or highly
compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA, and therefore
to be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. Accordingly, the
Plan shall terminate and, except for benefits or portions of benefits that have vested (which
at the option of the Board, may be accelerated and the balance paid in a single, Actuarial
Equivalent lump sum), no further benefits shall be paid hereunder in the event it is
determined by a court of competent jurisdiction or by an opinion of the Company’s regular
outside employee benefits counsel that the Plan constitutes an employee pension benefit plan
within the meaning of Section 3(2) of ERISA which is not so exempt.

	 	 	 	Section 7.2 — Limitation on Rights of Employees

The Plan is strictly a voluntary undertaking on the part of the Company and shall not constitute a
contract between the Company and any Employee, or consideration for, or an inducement or condition
of, the employment of an Employee. Nothing contained in the Plan shall give any Employee the right
to be retained in the service of the Company or to interfere with or restrict the right of the
Company, which is hereby expressly reserved, to discharge or retire any Employee, except as
provided by law, at any time without notice and with or without cause. Inclusion under the Plan
will not give any Employee any right or claim to any benefit hereunder except to the extent such
right has specifically become fixed under the terms of the Plan and there are funds available
therefor in the hands of the Company. The doctrine of substantial performance shall have no
application to Employees, Participants or any other persons entitled to payments under the Plan.
Each condition and provision, including numerical items, has been carefully considered and
constitutes the minimum limit on performance, which will give rise to the applicable right.

	 	 	 	Section 7.3 — Plan Binding in Event of Consolidation or Merger; Adoption of Plan by Other Companies

	 	(a)	 	In the event of the consolidation or merger of a Company with or into any other corporation,
this Plan shall be binding on such new corporation.

	 	(b)	 	Any Company or Company Affiliate may, with the approval of the Board, the Compensation
Committee or the CEO, adopt the Plan as a whole company or as to any one or more divisions by
resolution of its own board of directors or agreement of its partners. Such Company or
Company Affiliate shall give written notice of such adoption to the Committee by its duly
authorized officers.

	 	 	 	Section 7.4 — Assignments, etc. Prohibited

Except for the withholding of any tax under the laws of the United States or any state or locality,
no part of a Participant’s Benefit hereunder shall be liable for the debts, contracts or
engagements of any Participant, his Beneficiaries or successors in interest, or be taken in
execution by levy, attachment or garnishment or by any other legal or equitable proceeding prior to
distribution, nor shall any such person have any rights to alienate, anticipate, commute, pledge,
encumber or assign any Benefits or payments hereunder in any manner whatsoever except to designate
a Beneficiary as provided herein.

	 	 	 	Section 7.5 — Errors and Misstatements

In the event of any misstatement or omission of fact by a Participant to the Committee or any
clerical error resulting in payment of benefits in an incorrect amount, the Committee shall
promptly cause the amount of future payments to be corrected upon discovery of the facts and shall
cause the Company to pay the Participant or any other person entitled to payment under the Plan any
underpayment in cash in a lump sum or to recoup any overpayment from future payments to the
Participant or any other person entitled to payment under the Plan in such amounts as the Committee
shall direct or to proceed against the Participant or any other person entitled to payment under
the Plan for recovery of any such overpayment.

	 	 	 	Section 7.6 — Payment on Behalf of Minor, Etc.

In the event any amount becomes payable under the Plan to a minor or a person who, in the sole
judgment of the Committee is considered by reason of physical or mental condition to be unable to
give a valid receipt therefore, the Committee may direct that such payment be made to any person
found by the Committee in its sole judgment, to have assumed the care of such minor or other
person. Any payment made pursuant to such determination shall constitute a full release and
discharge of the Company, the Board, the Committee and their officers, directors and employees.

Section 7.7 — Governing Law

This Plan shall be construed, administered and governed in all respects under and by applicable
federal laws and, where, state law is applicable, the laws of the State of California.

	 	 	 	Section 7.8 — Pronouns and Plurality

The masculine pronoun shall include the feminine pronoun, and the singular the plural where the
context so indicates.

	 	 	 	Section 7.9 — Titles

Titles are provided herein for convenience only and are not to serve as a basis for interpretation
or construction of the Plan.

	 	 	 	Section 7.10 — References

Unless the context clearly indicates to the contrary, a reference to a statute, regulation or
document shall be construed as referring to any subsequently enacted, adopted or executed statute,
regulation or document.

1

APPENDIX A

PARTICIPATION CRITERIA

Participation in the Plan shall be limited to Employees of the Company, selected by the
Administrator, who satisfy the following criteria:

	 	1.	 	Employees whose Compensation, as determined under Section 4.1(a)(i) a
1 and 2 of this Plan, exceeds the limitations of Code Section
401(a)(17) (the $150,000 annual limit adjusted for increases in the cost of living)
($170,000 for the Plan Year beginning December 1, 2001), and as amended thereafter.

	 	2.	 	Effective December 1, 1998, Employees who participate in the Company’s
non-qualified deferred compensation program, regardless of whether they satisfy
criterion 1. above.

	 	3.	 	Present or former employees of the Company (or any present or former direct or
indirect subsidiary) listed on Appendix B.

The criteria in this Appendix may be changed or revoked by the Administrator, the Board, the
Compensation Committee, the Committee or the CEO at any time and without formal amendment, as
provided under Section 2.1 of the Plan.

2

APPENDIX B — SPECIAL BENEFIT SCHEDULE

Notwithstanding any provisions of the Plan to the contrary, the following individuals shall receive
the following indicated benefits under the Plan:

	 	 	 
	Recipient

	 	Benefit
	 

	 	 
	 
	 	 
	Nelson Gifford

	 	$3,858.57 per month for life, commencing June 1, 2001

 NY\1095434.3

3exv4w3

 

Exhibit 4.3

Form of Fiscal Agency Agreement

Dated
January [l], 2006

KfW

as Issuer

and

DEUTSCHE BANK TRUST COMPANY AMERICAS

as Fiscal Agent and Registrar

and

DEUTSCHE BANK AKTIENGESELLSCHAFT

as Exchange Rate Agent

in respect of the Issuer’s Medium-Term Notes

Due Nine Months or More from Date of Issue

 

 

     THIS
AGREEMENT is made on January [•], 2006 BETWEEN:

     (1) KfW (the “Issuer”),

     (2) DEUTSCHE BANK TRUST COMPANY AMERICAS (“DBTCA”); and

     (3) DEUTSCHE BANK AKTIENGESELLSCHAFT (“DB”).

     WHEREAS:

	 	(A)	 	The Issuer intends to offer and sell from time to time
medium-term notes due nine months or more from date of issue (the “Notes”).
	 
	 	(B)	 	The Issuer wishes to engage DBTCA as its fiscal agent and
registrar in respect of its Notes.
	 
	 	(C)	 	The Issuer wishes to engage DB as its exchange rate agent of
its Notes, if applicable.

     IT IS HEREBY AGREED as follows:

1. DEFINITIONS AND INTERPRETATION

     1.1 The following terms shall, unless the context otherwise requires, have the respective
meanings indicated below:

     “Administrative Procedures” means the administrative procedures as agreed from time to
time among the Issuer, the Dealers and the Fiscal Agent with respect to and used as guidance in
preparing and executing the issuance and sale of the Notes.

     “Agents” means the Calculation Agent (if applicable), the Exchange Rate Agent (if
applicable), the Determination Agent (if applicable), the Fiscal Agent and the Registrar appointed
by the Issuer in accordance with this Agreement.

     “Calculation Agent” means DBTCA in its capacity as calculation agent in respect of the
Notes or any other calculation agent appointed by the Issuer in accordance with this Agreement.

     “Conditions” means the terms and conditions applicable to a particular issue of Notes,
forming part of the Global Certificate and substantially in the form set out in the attached form
of Global Certificate.

     “Dealers” means the institutions that entered into or acceded to the Distribution
Agreement with the Issuer and shall include any other institution that has entered into a Terms
Agreement with the Issuer to act as dealer for the resale of Notes.

 

 

     “Distribution Agreement” means the agreement entered into between the Issuer and the
Dealers on January [•], 2006 for the sale of Notes by the Issuer to one ore more Dealers as
principal for the resale to investors and other purchasers in the United States of America.

     “DTC” means The Depositary Trust Company, or any successor thereto.

     “Exchange Rate Agent” means DB in its capacity as exchange rate agent in respect of
the Notes or any other exchange rate agent that the Issuer may appoint in accordance with this
Agreement.

     “Fiscal Agent” means DBTCA in its capacity as fiscal agent in respect of the Notes or
any other fiscal agent that the Issuer may appoint in accordance with this Agreement.

     “Frankfurt Business Day” means any day other than a Saturday, Sunday or legal holiday
in Frankfurt am Main, or a day on which commercial banks are authorized or required by law,
regulation, or executive order to close in Frankfurt am Main.

     “Global Certificate” means one or more global certificates representing a particular
issue of Notes, substantially in the form set out in Schedule 1 (in respect of fixed rate notes)
and in Schedule 2 (in respect of floating rate notes) attached hereto, with the Conditions attached
to and forming part of the Global Certificate.

     “Holder” means each actual purchaser having an ownership interest in the Notes
represented by the Global Certificate as recorded in the systems of DTC or its participants.

     “New York Business Day” means any day other than a Saturday, Sunday or legal holiday
in The City of New York, or a day on which commercial banks are authorized or required by law,
regulation, or executive order to close in The City of New York.

     “Registered Holder” means Cede & Co. as nominee of DTC, or any successor nominee of
DTC, shown as the registered holder of the Global Certificate in the register maintained by the
Registrar.

     “Registrar” means DBTCA in its capacity as registrar for the Notes or any other
registrar that the Issuer may appoint in accordance with this Agreement.

     “Relevant Dealer(s)” means any Dealer(s) that has (have) entered into a Terms
Agreement with the Issuer for the purchase of Notes for resale in accordance with the Distribution
Agreement.

     “Specific Terms” means the specific terms applicable to a particular issue of Notes,
forming part of the Global Certificate and substantially in the form set out in the attached form
of Global Certificate.

-2-

 

     “Terms Agreement” means an agreement entered into from time to time between the Issuer
and any Relevant Dealer(s) for the purchase of a particular issue of Notes by the Relevant
Dealer(s) for resale in accordance with the Distribution Agreement.

     1.2 Terms not defined in this Agreement shall have the same meanings as in the form of Global
Certificate. Any reference herein to “Frankfurt” shall be a reference to Frankfurt am Main,
Federal Republic of Germany and any reference herein to “New York” shall be a reference to The
City of New York in the State of New York, United States of America.

     1.3 All references in this Agreement to costs or charges or expenses shall include any value
added tax or similar tax charged or chargeable in respect thereof, if applicable.

     1.4 All references in this Agreement to principal and/or interest or both in respect of a
particular issue of Notes or to any moneys payable by the Issuer under this Agreement shall have
the meaning set out in the Global Certificate for such issue.

     1.5 All references in this Agreement to an agreement, instrument or other document
(including, without limitation, this Agreement, the Distribution Agreement, the Administrative
Procedures and the Global Certificate) shall be construed as a reference to that agreement,
instrument or document as the same may be amended, varied or supplemented from time to time.

2. APPOINTMENT OF THE FISCAL AGENT AND REGISTRAR

     2.1 The Issuer hereby appoints DBTCA to act as Fiscal Agent and Registrar in respect of the
Notes.

     2.2 DBTCA hereby accepts its appointment, and agrees to act in such capacity, on the terms
and conditions set out in this Agreement and the Global Certificate of the relevant Notes as well
as in accordance with the Administrative Procedures.

3. THE NOTES

     3.1 The Notes will be issued in fully registered form without coupons and represented by one
or more Global Certificates. The Conditions shall be attached to each Global Certificate. Each
Global Certificate shall be signed manually by two authorized representatives of the Issuer, dated
the Original Issue Date, and be authenticated manually by or on behalf of the Fiscal Agent.

     3.2 The parties expect that the Global Certificate will be substantially in the form set
forth in Schedule 1 or 2 hereto, as the case may be.

-3-

 

4. ISSUANCE OF NOTES

     4.1 Upon the conclusion of any Terms Agreement, the Issuer shall, as soon as practicable, but
not later than 11.00 a.m. (New York time) on the second New York Business Day prior to the
proposed Original Issue Date of the respective Notes:

     4.1.1 confirm to the Fiscal Agent by email, fax or any other electronic information
system agreed between the Fiscal Agent and the Issuer all such information as the Fiscal
Agent may reasonably require to carry out its functions under this Agreement and such
details as are necessary to enable it to authenticate and deliver the Global Certificate;

     4.1.2 deliver to the Fiscal Agent a copy of the Terms Agreement, duly executed on
behalf of the Issuer;

     4.1.3 (if no standard payment instructions have been given to the Fiscal Agent or if
they do not apply to the settlement of the relevant issuance) designate by fax the account
of the Issuer to which payment of the proceeds of issue should be made; and

     4.1.4 deliver to the Fiscal Agent the completed Global Certificate (in unauthenticated
form but executed on behalf of the Issuer) in relation to a specific issuance.

     4.2 The Fiscal Agent shall assign in respect of each issuance the CUSIP number, and shall
inform the Issuer thereof.

     4.3 The Fiscal Agent shall hold in safe custody all unauthenticated Global Certificates
delivered to it in accordance with this Clause 4 and shall ensure that the same are authenticated
and delivered only in accordance with the terms hereof and, if applicable, the relevant Global
Certificate.

     4.4 The Fiscal Agent is authorized by the Issuer to authenticate such Global Certificate as
may be required to be authenticated hereunder by the signature of any person duly authorized for
such purpose by the Fiscal Agent.

     4.5 On or before 10.00 a.m. (New York time) on the last New York Business Day prior to the
Original Issue Date in relation to a specific issuance, the Fiscal Agent shall authenticate the
relevant Global Certificate. The Fiscal Agent shall instruct DTC in accordance with DTC’s
settlement procedures to credit the Notes represented by the Global Certificate to the Fiscal
Agent’s participation account and to hold each such Note to the order of the Issuer. The Fiscal
Agent shall instruct DTC (i) to debit the Notes to the Fiscal Agent’s participation account and
credit the Notes to the participation account of the Relevant Dealer and (ii) to debit the
settlement account of the Relevant Dealer and credit the settlement account of the Fiscal Agent,
in an amount equal to the net proceeds of such Notes. By giving such instruction the Fiscal Agent

-4-

 

shall be deemed to confirm to DTC that (i) the Global Certificate representing such Note has
been issued and authenticated and (ii) the Fiscal Agent is holding such Global Certificate as
custodian for DTC pursuant to the relevant agreement with DTC.

     4.6 Upon receipt, the Fiscal Agent will pay the Issuer, by wire transfer of immediately
available funds to the account notified in accordance with Clause 4.1.3 above, the amount
transferred to the Fiscal Agent in accordance with Clause 4.5.

     4.7 If on the relevant Original Issue Date the Fiscal Agent does not receive the full
proceeds of issue in respect of any Note (the “Defaulted Note”) and, as a result, the Defaulted
Note remains in the Fiscal Agent’s distribution account with DTC after such Original Issue Date,
the Fiscal Agent shall:

     4.7.1 continue to hold the Defaulted Note to the order of the Issuer;

     4.7.2 notify the Issuer and the Relevant Dealer forthwith of the non-receipt of the
proceeds of issue in respect of the Defaulted Note; and, subsequently,

     4.7.3 notify the Issuer and the Relevant Dealer forthwith upon receipt of the full
proceeds of issue in respect of such Defaulted Note.

5. PAYMENTS

     5.1 In order to provide for the payment in U.S. dollars of the principal of, and interest on,
the Notes, as such payment shall become due and payable, the Issuer shall pay to the Fiscal Agent
the amount in U.S. dollars of interest on, or principal of, all the Notes outstanding or maturing
on such due date in same day funds by 10.00 a.m. in New York on each payment date to such account
at such bank in New York as the Fiscal Agent may specify. In order to provide for the payment in
a Specified Currency other than U.S. dollars of the principal of, and interest on, the Notes, as
such payment shall become due and payable, the Issuer shall pay to the Fiscal Agent the amount in
such Specified Currency of interest on, or principal of, all the Notes outstanding or maturing on
such due date in same day funds by 10.00 a.m. or such other time as may be specified by the Fiscal
Agent for such Notes with three Frankfurt and New York Business Days prior notice to the Issuer in
the Principal Financial Centre of the Specified Currency on each payment date to such account at
such bank in the Principal Financial Centre of the Specified Currency as the Fiscal Agent may
specify.

     5.2 The Fiscal Agent shall give payment instructions by facsimile or authenticated SWIFT
message to the Issuer not later than five New York Business Days prior to each payment date
stating the amount of principal and/or interest payable by the Issuer on the payment date and the
account and bank to which payment is to be made, provided that if the date on which the interest
for the relevant period is determined falls

-5-

 

on a date later than the date required for the notice to be given under this sentence, such
notice may be given on the date on which such determination is made.

     5.3 Out of the sums paid to the Fiscal Agent in respect of interest and principal on the
Notes, the Fiscal Agent shall make payment to, or to the order of, the Registered Holder (except
as provided under Clause 5.4 below) in accordance with the Conditions and the Administrative
Procedures.

     5.4 In case of any payment to be made by the Fiscal Agent in other currencies than U.S.
dollars, the Fiscal Agent shall make such payment to the account(s) and in an amount as specified
by DTC to the Fiscal Agent prior to 5:00 p.m. New York time on the fifth New York Business Day
following the relevant Record Date in the case of interest and prior to 5:00 p.m. New York time on
the eighth New York Business Day prior to the payment date for the payment of principal.

     5.5 If for any reason (other than negligence or willful misconduct on the part of the Fiscal
Agent or its officers, employees or agents) the Fiscal Agent does not, by the time specified in
Clause 5.1, receive unconditionally the full amount payable by the Issuer on the relevant payment
date in respect of all outstanding Notes of any particular issue of Notes, the Fiscal Agent shall
forthwith notify the Issuer and shall not be bound to make any payment of principal or interest in
respect of such Notes until it has received to its order the full amount of the moneys then due
and payable in respect of all the outstanding Notes.

     5.6 Without prejudice to the obligations of the Issuer to make payments in accordance with
the provisions of Clause 5.1, if payment of the appropriate amount shall be made by or on behalf
of the Issuer later than the time specified in Clause 5.1, but otherwise in accordance with the
provisions thereof, the Fiscal Agent shall forthwith give notice to DTC that it has received such
amount. Promptly after the receipt of the appropriate amount the Fiscal Agent shall make or cause
to be made payments as provided in Clause 5.3.

     5.7 If the Issuer should default in the payment of principal under any issue of Notes, the
Fiscal Agent agrees, upon consultation with the Issuer, to calculate the default rate of interest,
from time to time applicable, referred to in the interest provisions of the Conditions with
respect to such Notes.

     5.8 If for any reason the Fiscal Agent considers in its sole discretion (exercised in good
faith) that the amounts to be received by the Fiscal Agent pursuant to Clause 5.1 will be, or the
amounts actually received by it pursuant thereto are, insufficient to satisfy all claims in
respect of all payments then falling due in respect of the Notes, the Fiscal Agent shall promptly
notify the Issuer thereof. The Fiscal Agent shall not be obliged to pay any such claims until it
has received the full amount of all such payments.

-6-

 

5.9 In respect of moneys paid to it relating to any issue of Notes, the Fiscal Agent

     5.9.1 shall not be entitled to exercise any lien, right of set-off or similar claim,
and

     5.9.2 shall not be liable for interest thereon.

     5.10 All payments by the Fiscal Agent hereunder shall be made without the Fiscal Agent
charging any commission, fee or cost to DTC or to any Holder, except as expressly provided for in
the payment provisions of the Conditions.

     5.11 The Fiscal Agent shall make available to the Issuer, free of charge, the reporting tool
“Global program reporting on the web” that allows the Issuer to track at any time the total
principal amount of outstanding Notes. If such reporting tool is not available to the Issuer, the
Fiscal Agent will, upon request of the Issuer, deliver to the Issuer a written statement
indicating the total principal amount of outstanding Notes as of the close of business at the end
of a month so requested.

6. EARLY REDEMPTION AND REPAYMENT OF NOTES

     6.1 If the Issuer decides to redeem any outstanding Notes prior to their Maturity Date in
accordance with the Conditions, it shall give notice of such decision to the Fiscal Agent not
later than 10.00 a.m. in New York on the fifth New York Business Day immediately preceding the
date on which DTC shall receive notice of such redemption in accordance with the Conditions. The
Fiscal Agent shall deliver to DTC such notice not later than three New York Business Days
immediately preceding such date.

     6.2 The Fiscal Agent shall, upon receipt of any repayment notice by the Registered Holder of
the Global Certificate the conditions of which provide for repayment at the option of the Holders,
notify forthwith the Fiscal Agent and the Issuer thereof. The Fiscal Agent shall, upon payment by
the Issuer of the applicable Repayment Price, together with accrued interest to the applicable
Repayment Date, cancel the Notes in accordance with Clause 7.

7. CANCELLATION OF NOTES

     7.1 Promptly upon the Issuer’s written request, the Fiscal Agent shall take all measures
necessary to cancel any Notes which the Issuer has repurchased or whose maturity has been
accelerated pursuant to the Conditions. The Fiscal Agent shall cause any such Notes represented
by a Global Certificate to be cancelled in accordance with the procedures established for that
purpose by DTC, resulting in a reduction in the

-7-

 

aggregate amount of Notes represented by such Global Certificate by the aggregate amount of
Notes so cancelled.

     7.2 On the same day such cancellation is effected, the Fiscal Agent shall instruct the
Registrar to record such cancellation of Notes on the Register in such a way that the aggregate
amount of Notes cancelled at any time together with the aggregate principal amount of Notes then
outstanding and represented by the Global Certificate shall equal the aggregate principal amount
of Notes originally issued by the Issuer.

     7.3 The Fiscal Agent shall furnish the Issuer within ten Frankfurt Business Days from the
date of such cancellation with a certificate of cancellation signed by an authorized officer
confirming cancellation of such Notes and the corresponding reduction of the relevant Global
Certificate.

			
	8.	 	MISCELLANEOUS DUTIES OF THE ISSUER, REGISTRAR AND THE FISCAL AGENT

     8.1 If the Issuer is, in respect of any payment, required to withhold or deduct any amount
for or on account of taxes or duties of whatever nature as specifically contemplated under the
Conditions, the Issuer shall give notice thereof to the Fiscal Agent as soon as it becomes aware
of the requirement to make such withholding or deduction and shall give to the Fiscal Agent such
information as it shall require to enable it to comply with such requirement.

     8.2 The Registrar shall maintain the Register pertaining to the Notes in New York. The
Register shall show the aggregate amount of Notes represented by each Global Certificate at the
date of issue and all subsequent transfers and exchanges involving a change in such amounts and
the name of the Registered Holder.

     8.3 The Registrar shall at all reasonable times and at the written request during office
hours make the Register available to the Issuer and the Fiscal Agent or any person authorized by
either of them for inspections and for the taking of copies thereof or extracts therefrom, and the
Registrar shall deliver to such persons information contained in the Register or relating to the
Notes as they may reasonably request.

     8.4 On behalf and at the request and expense of the Issuer, the Fiscal Agent shall give any
notices to DTC required to be given by the Issuer in accordance with the Conditions.

9. APPOINTMENT AND DUTIES OF THE EXCHANGE RATE AGENT

     9.1 DB shall act as Exchange Rate Agent in respect of a specific issuance of Notes unless
another institution is appointed as Exchange Rate Agent in respect of such

-8-

 

issuance in accordance with the Specific Terms. If DB shall act as Exchange Rate Agent, such
fact will be indicated in the Specific Terms. In such case the Issuer will notify DB by
forwarding the applicable Specific Terms in a timely manner after the relevant Original Issue
Date. Furthermore, the Fiscal Agent shall inform the Exchange Rate Agent in a timely manner
before any date on which a conversion is required to be made, taking into consideration the
relevant Specific Terms and Conditions.

     9.2 The Exchange Rate Agent shall in respect of each issuance of Notes in relation to which
it is appointed perform such determinations as specified in the Conditions.

10. APPOINTMENT AND DUTIES OF THE CALCULATION AGENT

     10.1 The Fiscal Agent shall act as Calculation Agent in respect of a specific issuance of
Notes unless another institution is appointed as Calculation Agent in respect of such issuance in
accordance with the Specific Terms. If the Fiscal Agent shall act as Calculation Agent, such fact
will be indicated in the Specific Terms. In such case the Issuer will notify the Fiscal Agent by
forwarding the applicable Specific Terms in a timely manner before the first date on which the
Calculation Agent is required to make any calculation or determination.

     10.2 Subject to Clause 10.4, the Calculation Agent shall in respect of each issuance of Notes
in relation to which it is appointed as such:

     10.2.1 obtain such quotes and rates and/or make such determinations, calculations,
adjustments and notifications as may be required to be made by it as specified in the
Conditions and the Administrative Procedures; and

     10.2.2 maintain a record of all quotations obtained by it and of all amounts, rates
and other items determined or calculated by it and make such record available for
inspection at all reasonable times during normal business hours by the Issuer and the
Fiscal Agent.

     10.3 If the Fiscal Agent is unable for any reason to perform the duties specified in Clause
10.2.1 above, it shall forthwith notify the Issuer of such fact.

     10.4 If the Issuer has appointed a Determination Agent in the Specific Terms relating to
floating rate notes with respect to which the Calculation Agent is appointed, the determinations
made by such Determination Agent in respect of the bases (such as interest rates, conversion
rates, prices, indices or otherwise) for the calculations to be made by such Determination Agent
communicated by the Determination Agent to the Calculation Agent shall be binding on the
Calculation Agent.

-9-

 

11. CONDITIONS OF APPOINTMENT

     11.1 The obligations of the Agents hereunder shall be several, and not joint.

     11.2 The Issuer will pay to the Agents a remuneration for all services rendered by the Agents
in connection with the Notes and reimburse the Agents for the expenses incurred in connection with
their appointment or the exercise of their powers and duties hereunder.

     11.3 The parties to this Agreement agree that, at the request of the relevant Agent, the fees
and expenses may be reviewed from time to time in accordance with such Agent’s then current fee
levels. In addition, each Agent reserves the right to charge the Issuer additional fees and
expenses in respect of the performance by such Agent of any additional services requested by the
Issuer and not provided for in this Agreement.

     11.4 The Issuer will indemnify and hold harmless each of the Agents against any loss,
liability, expense (including legal fees) or claim which it may incur or which may be made against
it arising out of or in connection with its appointment or the exercise of its power and duties
hereunder, except such as may result from such Agent’s own negligence or willful misconduct or
that of its officers, employees or agents.

     11.5 Each Agent will indemnify and hold harmless the Issuer against any loss, liability,
expense (including legal fees) or claim which the Issuer may incur or which may be made against it
resulting from the negligence or willful misconduct on the part of such Agent (or such Agent’s
officers, employees or agents) and arising out of or in connection with such Agent’s duties
hereunder.

     11.6 The indemnity provisions under Clauses 11.4 and 11.5 shall survive the termination or
expiry of this Agreement.

     11.7 Any Agent may consult with legal and other professional advisers selected in good faith
and satisfactory to it, and the legal or other professional opinion of such advisers, as the case
may be, shall be full and complete protection in respect of any action taken, omitted or suffered
hereunder in good faith and in accordance with such opinion.

     11.8 Each of the Agents shall be protected and shall incur no liability for or in respect of
any action taken, omitted or suffered in reliance upon any instruction or communication from the
Issuer or any document reasonably believed by it to be genuine and to have been delivered, signed
or sent by the proper party or parties, except as may result from its own negligence or willful
misconduct or that of its officers, employees or agents.

     11.9 In acting hereunder and in connection with the Notes, the Agents do not assume any
relationship of agency or trust for the Registered Holder or the Holders, and

-10-

 

shall not have any obligation towards them; except that all funds held by the Fiscal Agent
for payment of principal of or interest on the Notes shall be held exclusively for the benefit of
and for payment (i) if in U.S. dollars to, or to the order of, the Registered Holder, or (ii) if
in a currency other than U.S. dollars, to the accounts specified by DTC, but need not be
segregated from other funds, except as required by law and as set forth herein and in the
Conditions, and shall be applied as set forth herein and in the Conditions.

     11.10 Nothing herein shall be deemed to require any Agent to advance its own funds in the
performance of its duties hereunder.

12. CHANGES IN AGENTS

     12.1 Any Agent in its capacity as such may be removed at any time by the giving to it of at
least 30 days’ written notice to that effect signed on behalf of the Issuer specifying the date on
which such removal shall become effective. Any Agent may at any time resign by giving at least 90
days’ written notice (unless the Issuer agrees to accept less notice) to that effect to the Issuer
specifying the date on which such resignation shall become effective. Notwithstanding the
foregoing, no such resignation or removal shall take effect within 30 days before or after any
payment date and, in the case of the resignation or removal of any Agent, as the case may be,
shall not take effect until a successor Agent has been appointed by the Issuer as hereinafter
provided, and such successor Agent has accepted such appointment. Any change in any Agent shall
be notified by the Issuer to the other Agents. The Issuer agrees with each Agent that if by the
day falling 10 days before the expiry of any notice, the Issuer has not appointed a successor
Agent, the relevant Agent shall be entitled on behalf of the Issuer to appoint as a successor
Agent in its place a reputable financial institution.

     12.2 Upon its resignation or removal taking effect, the Fiscal Agent shall hold all moneys
deposited with or held by it hereunder in respect of the Notes to the order of the successor
Fiscal Agent, but shall have no other duties or responsibilities hereunder and shall be entitled
to the payment by the Issuer of its remuneration for services rendered hereunder and to the
reimbursement of its expenses incurred up to its resignation or removal taking effect in
accordance with the terms of Clause 12.1.

     12.3 In case at any time any Agent shall resign or shall be removed, the successor Agent may
be appointed by the Issuer by an instrument in writing given to the successor Agent. Upon the
appointment of such successor Agent and acceptance by it of such appointment, the Agent so
superseded shall cease to be an Agent hereunder.

     12.4 Any successor Agent appointed hereunder shall execute and deliver to the Issuer an
instrument accepting such appointment and, without any further act, deed or conveyance, it shall
become vested with all the authorities, rights, powers, immunities, duties and obligations of its
predecessor with like effect as if originally named as Agent in accordance with this Agreement,
and such predecessor Agent, if any, upon payment

-11-

 

by the Issuer of any amounts due and payable to such Agent pursuant to this Agreement, shall
thereupon become obliged to deliver and pay over to any such successor Agent, and any such
successor Agent shall be entitled to receive, all moneys, documents and records held by it
hereunder. On the termination of its appointment an Agent shall pass all records and documents
held by it pursuant to this Agreement to the respective successor Agent.

     12.5 Each Agent shall give not less than 30 days’ notice to the Issuer of any proposed change
in its specified office.

     12.6 The Issuer shall ensure that prompt notice of any such proposed appointment,
termination, resignation or change of specified office is given to DTC for communication by DTC
and its participants to the Holders in accordance with the Conditions.

13. NOTICES

     13.1 Unless hereunder otherwise specifically provided, any order, notice, request, direction
or other communication from the Issuer made or given in relation to the Notes under any provision
of this Agreement shall be in writing and signed by two duly authorized officers of the Issuer,
and delivered to the Agent(s) by mail, facsimile, or by hand.

     13.2 Notices shall be addressed to the relevant party hereto as follows:

(a) If to the Issuer:

KfW

Palmengartenstrasse 5-9

D-60325 Frankfurt am Main

Federal Republic of Germany

Telefax:       0049 69 7431 4324

Attention:   Bereich FM

(b) If to the Fiscal Agent:

Deutsche Bank Trust Company Americas

60 Wall Street

MS NYC60-2515

New York, NY 10005

Telefax:       001 732-578-4635

Attention:   Trust and Security Services

-12-

 

(c) If to the Exchange Rate Agent:

Deutsche Bank Aktiengesellschaft

Grosse Gallusstraße 10 – 14

60272 Frankfurt/Main

Telefax:       0049 69 910 38672

Attention:   Trust & Security Services

or at any other address of which any of the foregoing shall have notified the others in accordance
with Clause 12.5 and this Clause 13.2.

14. MISCELLANEOUS

     14.1 Amendments to this Agreement, including this Clause 14.1, shall only be made in writing.

     14.2 Should any provision of this Agreement be or become invalid in whole or in part, the
other provisions of this Agreement shall remain in full force and effect. Any invalid provision
shall be deemed to be replaced by a valid provision which accomplishes as far as legally possible
the economic effects of the invalid provision.

     14.3 This Agreement shall in all respects be governed by and construed in accordance with the
laws of the Federal Republic of Germany without regard to conflict of laws principles.

     14.4 Any action or other legal proceedings arising out of or in connection with this
Agreement shall be brought exclusively in the district court (Landgericht) in Frankfurt am Main,
Germany.

     14.5 This Agreement may be executed in one or more counterparts and, if executed in more than
one counterpart, the executed counterparts hereof shall constitute a single instrument.

-13-

 

     This Agreement has been entered into on the date stated at the beginning.

	 	 	 
	KfW
	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	DEUTSCHE BANK TRUST COMPANY AMERICAS
	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	DEUTSCHE BANK AKTIENGESELLSCHAFT
	 	 
	 
	 	 
	 

	 	 

-14-

 

SCHEDULE 1

Form
of Global Certificate (Fixed Rate Notes)

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL,
INASMUCH AS THE REGISTERED HOLDER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN, AND IS WITHOUT ANY
LEGAL EFFECT.

CUSIP NO. _______

KfW

MEDIUM-TERM NOTES

(Fixed Rate)

Global Registered Certificate

Representing a principal amount of

[Specify the Aggregate Principal Amount, Interest Rate and Maturity Date]

issued by KfW (the “Issuer”)

GENERAL

     This Global Certificate represents [•] notes in the principal amount of [•] each (the
“Notes”).

     This Global Certificate has been issued by the Issuer as a registered global certificate to
Cede & Co., as nominee of DTC, and has been deposited in the DTC depositary and clearing system in
order to permit delivery and transfer of Notes within that system in book-entry form without
physical delivery of definitive certificates. DTC and its successor, if any, as depositary for
this Global Certificate shall herein also be referred to as the “Depositary.”

     The Notes represented by this Global Certificate shall be evidenced by the records of the
Depositary, which in turn shall be based on the register (the “Register”) maintained by Deutsche
Bank Trust Company Americas, a New York banking corporation, or any successor in such capacity
appointed by the Issuer, acting as registrar (the “Registrar”) on behalf of the Issuer. In the
case of any inconsistency between the Register and the records of the Depositary, the Register
prevails, except in the case of manifest error.

     The Issuer hereby undertakes to pay to or to the order of Cede & Co., or its registered
assigns, on the maturity date of the Notes the principal sum of the Notes represented hereby and to
pay interest on the principal sum of the Notes represented

1

 

hereby, all in accordance with the specific terms of the Notes set out below (the “Specific
Terms”) and the general terms and conditions of the Notes attached hereto (the “Conditions”). The
Conditions form part of this Global Certificate.

     This Global Certificate may not be transferred except as a whole by DTC to a nominee of DTC,
or by a nominee of DTC to DTC or another nominee of DTC, or by DTC or any such nominee to a
successor depositary or a nominee of such successor depositary. Any transfer shall be effective
only if registered upon the books maintained for that purpose by the Registrar. The Global
Certificate will not be exchangeable for definitive certificates representing individual notes
unless DTC is unable or unwilling to continue providing its services and a successor securities
depositary is not obtained.

     This Global Certificate is only valid if it has been provided with the manual authentication
signature on behalf of the Fiscal Agent appointed by the Issuer in accordance with the fiscal
agency agreement entered into by the Issuer, Deutsche Bank Trust
Company Americas (the “Fiscal Agent”) and Deutsche
Bank Aktiengesellschaft on
January [•], 2006, as
amended from time to time (the “Fiscal Agency Agreement”).

2

 

SPECIFIC TERMS

     The following terms apply to the Notes represented by this Global Certificate as and to the
extent shown below:

 

	 	 	 
	Aggregate Principal Amount:                     

	 	Interest Rate:                      % per annum
	Original Issue Date:                     

	 	Maturity Date:                     

	Interest Commencement Date:                     
	 	Final Redemption Price:                     

 

Payments:

     First Interest Payment Date:                     

     Interest Payment Date(s):                     

Redemption:     o Yes                      o No

     Redemption Commencement Date (as provided in §7(3) of the Conditions):                     

     Redemption Date(s) (as provided in §7(2) of the Conditions):                     

     Minimum Redemption Notice Period:                     

     Redemption Price (expressed as a percentage of the Aggregate Principal Amount to be redeemed):                     

Repayment:     o Yes                     o No

     Repayment Date(s):                     

     Minimum Repayment Notice Period:                     

     Repayment Price (expressed as a percentage of the Aggregate Principal Amount to be repaid):                     

Specified Currency: U.S. dollars for all payments unless otherwise specified below:

     Payments of principal and any premium:                     

     Payments of interest:                     

     Authorized Denomination:                     

     Exchange Rate Agent:                     

Original Issue Discount Note (“OID”):     o Yes                     o No

     Total Amount of OID:                     

     Yield to Maturity:                     

     Initial Accrual Period OID:                     

Other Terms of Notes:

                         

                         

     Terms left blank or marked “N/A,” “No,” “None” or in a similar manner do not apply to the Note
except as may otherwise be specified.

Frankfurt am Main, Federal Republic of Germany                     , 200     

                                                                                     

KfW

                                                                                     

Authentication signature for and on behalf of

Deutsche Bank Trust Company Americas

as Fiscal Agent

3

 

TERMS AND CONDITIONS OF THE NOTES

     Capitalized terms used but not defined in these Terms and Conditions (the “Conditions”) shall
have the same meaning as set out under “General” and “Specific Terms” in the Global Certificate.
In the event of any inconsistency between the Specific Terms and the Conditions, the Specific Terms
shall prevail.

§ 1

Form

     The Notes shall only be issued in book-entry form represented by one or more fully registered
Global Certificates without coupons. Cede & Co. as nominee of DTC, or any successor nominee of
DTC, shall be the registered holder of the Notes (the “Registered Holder”). Each actual purchaser
having an ownership interest in the Notes represented by the Global Certificate(s) as recorded in
the systems of DTC or its participants is referred to as a “Holder.” The Notes may be transferred
only through DTC or its participants.

§ 2

Status

     The Notes constitute unsecured and unsubordinated obligations of the Issuer and rank pari
passu with all other present and future unsecured and unsubordinated obligations of the Issuer, but
subject to any applicable mandatory statutory exceptions.

§ 3

Interest

     Each Note bears interest from the Interest Commencement Date at the rate per annum equal to
the Interest Rate until the principal thereof is paid.

     Interest shall accrue from and including the Interest Commencement Date, if no interest has
yet been paid, or the immediately preceding Interest Payment Date on which interest was paid.
Interest shall accrue until, but excluding, the applicable Interest
Payment Date or the Maturity Date
(or any other day on which the Notes become due for redemption or repayment), as the case may be.
If it is necessary to compute interest for a period other than a full calendar year, interest shall
be calculated on the basis of a 360-day year consisting of twelve 30-day months.

     Interest shall be payable in arrears on each Interest Payment Date and on the Maturity Date
(or any other day on which the Notes become due for redemption or

5

 

repayment). The first interest payment shall be made on the First Interest Payment Date.

     Should the Issuer fail to redeem any Note on its due date, interest on the Note shall continue
to accrue (subject to the provisions of § 5 regarding payments due on a day other than a Business
Day) beyond the due date until actual redemption of the Note at the default rate of interest
established by law.

§ 4

Maturity

     Subject to the provisions of §§ 7, 8, and 11, the Notes shall be redeemed at the Final
Redemption Price on the Maturity Date, unless stated otherwise in the Specific Terms.

§ 5

Payment

     Currency of payment. The Issuer will make payments of all amounts payable on the Notes
in U.S. dollars unless the Specified Currency is a currency other than U.S. dollars and the Holder
elects (in the manner described below) to receive payments in such Specified Currency.

     Any Holder may elect to receive payment of principal and interest with respect to the Notes in
the Specified Currency by causing DTC, through the relevant DTC
participant, to notify the Fiscal
Agent by the time specified below of (i) such Holder’s election to receive all or a portion of such
payment in the Specified Currency and (ii) wire transfer instructions to a specified currency
account (the “Specified Currency Account”). Such election in respect of any payment shall be made
by the Holder at the time and in the manner required by the DTC procedures applicable from time to
time and shall, in accordance with such procedures, be irrevocable.
The Fiscal Agent must receive
DTC’s notification of such election, wire transfer instructions, and the amount payable in the
Specified Currency prior to 5:00 p.m. New York time on the fifth New York Business Day following
the relevant Record Date in the case of interest and prior to 5:00 p.m. New York time on the eighth
New York Business Day prior to the payment date for the payment of principal.

     Absent such election, the Exchange Rate Agent will convert the aggregate amount payable in
U.S. dollars (the “Conversion Amount”) into U.S. dollars. All costs of any such conversion shall
be deducted from such payments. Any such conversion shall be based on the bid quotation of the
Exchange Rate Agent, at or prior to 11:00 a.m. New York time, on the second Conversion Business Day
(as defined below) preceding the relevant payment date, for the purchase by the Exchange Rate Agent
of the Conversion Amount with U.S. dollars for settlement on such payment date. “Conversion
Business Day” means a day which is a New York Business Day and a Frankfurt Business Day (as defined
in the section below entitled “Business Day”). If such bid quotation is not available, the
Exchange Rate Agent shall obtain a bid quotation from a leading foreign exchange bank in The City
of New York selected

6

 

by the Exchange Rate Agent for such purpose. If no bid quotation from a leading foreign
exchange bank is available, payment of the Conversion Amount will be made in the Specified Currency
to the account or accounts specified by DTC to the Fiscal Agent. Until such account or accounts are
so specified, the funds still held by the Fiscal Agent shall bear interest at the rate of interest
quoted by the Fiscal Agent for deposits with it on an overnight basis, to the extent that the
Fiscal Agent is reasonably able to reinvest such funds.

     If the Issuer determines that any amount payable on a relevant payment date in a Specified
Currency other than U.S. dollars is not available to it in freely negotiable and convertible funds
for reasons beyond its control or that such Specified Currency (or any successor currency to it
provided for by law) is no longer used for the settlement of international financial transactions,
the Issuer may fulfill its payment obligations by making such payment in U.S. dollars on, or as
soon as reasonably practicable after, the respective payment date on the basis of the Applicable
Exchange Rate. No further interest or any other payment shall be due as a result thereof. The
“Applicable Exchange Rate” for a Specified Currency other than U.S. dollars means (i) if available,
the noon dollar buying rate in The City of New York for cable transfers for the Specified Currency
on the second Business Day prior to the particular payment as certified for customs purposes (or,
if not so certified, as otherwise determined) by the Federal Reserve Bank of New York or, (ii) if
such rate is not available, the foreign exchange rate for the Specified Currency as determined by
the Issuer in its equitable discretion.

     Manner of payment. The Issuer will make payments of any amount payable on the Notes
through the Fiscal Agent by wire transfer of immediately available funds.

     Payments in U.S. dollars shall be made by the Fiscal Agent on the relevant payment date to, or
to the order of, the Registered Holder as of the Record Date (as defined below). Such funds will
be distributed through the relevant DTC participants to the Holders as of the Record Date. The
“Record Date” shall be the fifteenth calendar day immediately preceding the relevant payment date.

     If a Holder elects payment in a Specified Currency other than U.S. dollars as set out above,
payments in such Specified Currency shall be made by the Fiscal Agent on the relevant payment date
to the Specified Currency Account.

     Payments made by the Issuer to, or to the order of, the Registered Holder (or, if applicable,
to the Specified Currency Account) shall discharge the liability of the Issuer under the Notes to
the extent of the sums so paid. Neither the Issuer nor the Fiscal Agent will have any
responsibility or liability for any aspect of the records of any DTC participant relating to or
payments made by any DTC participant to a Holder or for maintaining, supervising, or reviewing any
such records.

     Payments of principal (except in the case of partial redemption or partial repayment pursuant
to §§ 7, 8, and 11) shall be made upon surrender of the Global Certificates(s) to the Fiscal Agent.
The Fiscal Agent shall maintain records of payments of principal and interest made in respect of
the Notes.

7

 

     Account designation. The Registered Holder shall designate the account for wire
transfer by transmitting the appropriate information to the Fiscal Agent by mail, hand delivery,
fax, or in any other manner approved by the Fiscal Agent. Unless revoked, any such account
designation made with respect to the Notes by the Registered Holder will remain in effect with
respect to any further payments. Holders must make account designations in accordance with the
procedures of DTC and the relevant DTC participant.

     Payments due on a Business Day. Unless otherwise determined in the Specific Terms, if
any amount payable on the Notes is due on a day (a “Specified Day”) that is not a Business Day,
such amount will not be paid or made available for payment until the next succeeding Business Day
with the same force and effect as if such amount were paid on the Specified Day, and no further
interest shall be paid in respect of the delay of such payment.

     Business Day. Unless otherwise designated in the Specific Terms, a “Business Day”
means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive order to close in The
City of New York (such day also being referred to as a “New York Business Day”); provided, however,
that:

     (i) with respect to Notes with a Specified Currency that is euros, the day must also be a day
on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (“TARGET”)
System, or any successor system, is open; and

     (ii) with respect to Notes with a Specified Currency other than U.S. dollars or euros, the day
must also not be a day on which commercial banks are authorized or required by law, regulation or
executive order to close in the Principal Financial Center (as defined below) of the country
issuing the Specified Currency.

“Principal Financial Center” means, as applicable: the capital city of the country issuing
the Specified Currency; provided, however, that with respect to U.S. dollars,
Australian dollars, Canadian dollars, euros, South African rand and Swiss francs, the
“Principal Financial Center” shall be The City of New York, Sydney, Toronto, Johannesburg
and Zurich, respectively.

     A “Frankfurt Business Day” is any day other than a Saturday, Sunday, legal holiday in
Frankfurt am Main, or a day on which commercial banks are authorized or required by law,
regulation, or executive order to close in Frankfurt am Main.

     U.S. dollars. References to U.S. dollars or $ shall mean, as of any time, the coin or
currency that is then lawful currency in the United States of America.

     Euros.
References to the euro or € shall mean, as of any time, the lawful currency
of the member states of the European Union that have adopted the single currency in accordance with
the Treaty establishing the European Community, as amended by the Treaty on European Union and the
Treaty of Amsterdam, and as further amended from time to time.

8

 

     Other currencies. References to a particular currency other than U.S. dollars and
euros shall mean, as of any time, the coin or currency that is then lawful currency in the country
issuing such currency on the Original Issue Date.

§ 6

The Agents

     The
Issuer has initially appointed Deutsche Bank Trust Company Americas
as the Fiscal Agent and Registrar pursuant to the Fiscal Agency Agreement. If the principal of or interest
on the Notes is payable in a Specified Currency other than U.S. dollars, the Issuer has initially
appointed the institution named in the Specific Terms as Exchange Rate Agent to act as such agent
with respect to the Notes. The Fiscal Agent, Registrar and the Exchange Rate Agent
are referred to herein as the “Agents.”

     The Issuer may, in its sole discretion, appoint any other institution to serve as any such
Agent from time to time. The Issuer will give prompt written notice of any change in any such
appointment to the Fiscal Agent and by notification pursuant to § 12 hereof.

     All determinations made by any Agent may be made by such Agent in its sole discretion and,
absent manifest error, shall be conclusive for all purposes and binding on the Registered Holder,
Holders, and the Issuer.

     The Agents in such capacity are acting exclusively as agents of the Issuer and do not have any
legal relationship of whatever nature with the Registered Holder or the Holders and are not in any
event accountable to the Registered Holder or any Holder.

§ 7

Redemption at the Issuer’s Option

     The Notes shall not be redeemable by the Issuer before the Maturity Date unless a Redemption
Date or a Redemption Commencement Date is designated in the Specific Terms.

     If a Redemption Date is so specified, and unless otherwise designated in the Specific Terms,
the Notes may be so redeemed on such Redemption Date, in whole or in part, in any amount equal to
an Authorized Denomination or integral multiple thereof (provided that the remaining principal amount
thereof shall at least equal an Authorized Denomination) at the Redemption Price together with
interest accrued thereon to, but excluding, the Redemption Date. Such redemption shall be upon
notice in compliance with §12 hereof and in compliance with the Minimum Redemption Notice Period as
specified in the Specific Terms.

     If a Redemption Commencement Date is so specified, and unless otherwise designated in the
Specific Terms, the Notes may be so redeemed any time thereafter, in whole or in part, and in any
amount equal to an Authorized Denomination or integral multiple thereof (provided that the remaining
principal amount thereof shall at least

9

 

equal an Authorized Denomination) at the Redemption Price together with interest accrued
thereon to, but excluding, the Redemption Date. Such redemption shall be upon notice of not less
than 30 and not more than 60 calendar days and in compliance with §12 hereof.

§ 8

Repayment at the Holder’s Option

     The Notes shall not be repayable before the Maturity Date unless one or more Repayment Dates
are designated in the Specific Terms. If a Repayment Date is so specified, and unless otherwise
designated in the Specific Terms, a Holder may request (in the manner described below) repayment of
any Note, in whole or in part, in any amount equal to an Authorized
Denomination or integral multiple
thereof (provided that the remaining principal amount thereof shall at least equal an Authorized
Denomination) at the Repayment Price together with interest accrued thereon to, but excluding, the
Repayment Date.

     In order to exercise such repayment option, a Holder must instruct DTC or its participants in
a timely manner as required by the DTC procedures applicable from time to time.

     If so instructed, DTC shall cause the Registered Holder to request such repayment of the
Fiscal Agent on behalf of the Holder in compliance with the Minimum Repayment Notice Period
designated in the Specific Terms. All instructions given to the Fiscal Agent relating to the
option to elect repayment are irrevocable.

     The Issuer shall only be obliged to repay Notes in respect to which a Holder has exercised its
repayment option against transfer of such Holder’s ownership interest in the relevant Notes to the
Fiscal Agent.

§ 9

Further Issues, Purchases and Cancellation

     The Issuer may from time to time, without the consent of the Holders, issue further Notes
having the same terms and conditions as the Notes in all respects (or in all respects except for
the issue date, interest commencement date and/or issue price) so as to form a single issuance with
the Notes. The term “Notes” shall, in the event of such increase, also include such further Notes.

     The Issuer may at any time purchase Notes in the open market or otherwise and at any price.
Notes purchased by the Issuer may, at the option of the Issuer, be held or resold, or transferred
to the Fiscal Agent for cancellation. If such Notes are redeemed in full or are transferred for
cancellation they shall be cancelled forthwith and may not be reissued or resold.

10

 

§ 10

Taxation

     All payments by the Issuer in respect of the Notes shall be made without deduction or
withholding of taxes or other duties, unless such deduction or withholding is required by law. In
the event of such deduction or withholding, the Issuer shall not be required to pay any additional
amounts in respect of the Notes.

§ 11

Termination for Default

     If the Issuer shall fail to pay any amount payable hereunder within 30 days from the relevant
due date, any Holder may, through the Depositary, declare any Notes due and demand repayment
thereof at their principal amount plus interest accrued to the date of repayment. Any notice
declaring the Notes due shall be made by means of written notice to be delivered by hand or
registered mail to the Issuer together with proof that such Holder at the time of such notice has
an ownership interest in the relevant Notes by means of a certificate of the Holder’s Custodian
pursuant to § 14(a) hereof. The right to declare Notes due shall cease if the Issuer has made
payment to or to the order of the Registered Holder (or, in the case of payments to be made in a
Specified Currency other than U.S. dollars, the Specified Currency Account) before the Holder has
exercised such right.

§ 12

Notices

     Any notice required to be made by the Issuer concerning the Notes shall be given in writing to
DTC for communication by DTC and its participants to the Holders. Any such notice shall be deemed
to have been given to the Holders on the third day after the day on which the said notice was given
to DTC.

§ 13

Governing Law, Exclusion of General Business Conditions Law

THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE FEDERAL REPUBLIC OF
GERMANY WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

NOTWITHSTANDING THE ABOVE, THE PROVISIONS ON GENERAL BUSINESS CONDITIONS (ALLGEMEINE
GESCHÄFTSBEDINGUNGEN, §§ 305-310 OF THE GERMAN CIVIL CODE) SHALL NOT APPLY TO THE NOTES.

ANY DISPOSITION OF THE NOTES, INCLUDING TRANSFERS AND PLEDGES OF NOTES EXECUTED BETWEEN DTC
PARTICIPANTS, AND

11

 

BETWEEN DTC AND DTC PARTICIPANTS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

§ 14

Remedies

Jurisdiction. Any action or other legal proceedings arising out of or in connection with
the Notes may exclusively be brought in the District Court (Landgericht) in Frankfurt am Main.

Enforcement. Any Holder may in any proceedings against the Issuer or to which the Holder
and the Issuer are parties protect and enforce in its own name its rights arising under the Notes
on the basis of (a) a certificate issued by its Custodian (as defined below) (i) stating the full
name and address of the Holder, (ii) specifying an aggregate principal amount of Notes credited on
the date of such statement to such Holder’s securities account maintained with such Custodian, and
(iii) confirming that the Custodian has given written notice to DTC and the Registrar containing
the information pursuant to (i) and (ii) and bearing acknowledgements of DTC and the relevant DTC
participant, and (b) copies of the Global Certificate(s) certified as being true copies by a duly
authorized officer of DTC or the Registrar. For purposes of the foregoing, “Custodian” means any
bank or other financial institution of recognized standing authorized to engage in securities
custody business with which the Holder maintains a securities account
in respect of the
Notes and includes DTC and its participants.

12

 

SCHEDULE 2

Form of Global Certificate (Floating Rate Notes)

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL,
INASMUCH AS THE REGISTERED HOLDER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN, AND IS WITHOUT ANY
LEGAL EFFECT.

CUSIP NO. _______

KfW

MEDIUM-TERM NOTES

(Floating Rate)

Global Registered Certificate

Representing a principal amount of

[Title of the securities]

issued by KfW (the “Issuer”)

GENERAL

     This Global Certificate represents [•] notes in the principal amount of [•] each (the
“Notes”).

     This Global Certificate has been issued by the Issuer as a registered global certificate to
Cede & Co., as nominee of DTC, and has been deposited in the DTC depositary and clearing system in
order to permit delivery and transfer of Notes within that system in book-entry form without
physical delivery of definitive certificates. DTC and its successor, if any, as depositary for
this Global Certificate shall herein also be referred to as the “Depositary.”

     The Notes represented by this Global Certificate shall be evidenced by the records of the
Depositary, which in turn shall be based on the register (the “Register”) maintained by Deutsche
Bank Trust Company Americas, a New York banking corporation, or any successor in such capacity
appointed by the Issuer, acting as registrar (the “Registrar”) on behalf of the Issuer. In the
case of any inconsistency between the Register and the records of the Depositary, the Register
prevails, except in the case of manifest error.

1

 

     The Issuer hereby undertakes to pay to or to the order of Cede & Co., or its registered
assigns, on the maturity date of the Notes the principal sum of the Notes represented hereby and to
pay interest on the principal sum of the Notes represented hereby, all in accordance with the
specific terms of the Notes set out below (the “Specific Terms”) and the general terms and
conditions of the Notes attached hereto (the “Conditions”). The Conditions form part of this
Global Certificate.

     This Global Certificate may not be transferred except as a whole by DTC to a nominee of DTC,
or by a nominee of DTC to DTC or another nominee of DTC, or by DTC or any such nominee to a
successor depositary or a nominee of such successor depositary. Any transfer shall be effective
only if registered upon the books maintained for that purpose by the Registrar. The Global
Certificate will not be exchangeable for definitive certificates representing individual notes
unless DTC is unable or unwilling to continue providing its services and a successor securities
depositary is not obtained.

     This Global Certificate is only valid if it has been provided with the manual authentication
signature on behalf of the Fiscal Agent appointed by the Issuer in accordance with the fiscal
agency agreement entered into by the Issuer, Deutsche Bank Trust
Company Americas (the “Fiscal Agent”) and Deutsche
Bank Aktiengesellschaft on January [•], 2006 as
amended from time to time (the “Fiscal Agency Agreement”).

2

 

SPECIFIC TERMS

     The following terms apply to the Notes represented by this Global Certificate as and to the
extent shown below:

 

	 	 	 
	Aggregate Principal Amount:                     

	 	Maturity Date:                     
	 
	 	 
	Original Issue Date:                     

	 	Initial Interest Rate:                     
	 
	 	 
	Interest Commencement Date:                     

	 	First Interest Payment Date:                     
	 
	 	 
	

	 	Final Redemption Price:                     
	 	 	 

 

Indexed Notes:

     Details:                     

Type of Floating Rate Note:

     o Regular Floating Rate

     o Floating Rate/Fixed Rate

          Fixed Interest Rate:                     

          Fixed Rate Commencement Date:                     

     o Fixed Rate/Floating Rate

          Floating Rate Commencement Date:                     

     o Inverse Floating Rate

     o Other:                     

Interest Rate Basis/Bases:

      o CD Rate

      o CMT Rate:                     

          o CMT Moneyline Telerate Page 7051

          o CMT Moneyline Telerate Page 7052

               o Weekly Average

               o Monthly Average

     o Commercial Paper Rate

     o Eleventh District Cost of Funds Rate

     o Federal Funds Rate

     o LIBOR

          LIBOR Currency (if not U.S. dollars):                     

          LIBOR Moneyline Telerate Page:                     

          LIBOR Reuters Screen Page:                     

     o Prime Rate

     o Treasury Rate:                     

     o Other:                     

	 	 	 
	Spread:                     

	 	Maximum Interest Rate:                     
	Spread Multiplier:                     

	 	Minimum Interest Rate:                     
	Index Maturity:                     
	 	 

Interest Reset Period:

					
	o daily

	 	o weekly
	 	o monthly
	o quarterly

	 	o semi-annually
	 	o annually

Interest Reset Date(s): as provided in §3(B) of the Conditions (unless otherwise specified)                     

Interest Determination Date(s): as provided in §3(C) of the Conditions (unless otherwise
specified)                     

 

 

Interest Calculation Date(s): as provided in §3(F)(1) of the Conditions (unless otherwise
specified)                     

     Calculation Agent:

          o Deutsche Bank Trust Company Americas

          o Other:                     

Interest Payment Date(s): unless otherwise specified, the                      of the following

     (subject to §3(E) in the Conditions)

     o Each of the 12 calendar months in each year

     o Each March, June, September and December in each year:

     Each of the following two calendar months in each year:                     

     The following calendar month in each year:                     

Redemption:          o Yes                    o No

     Redemption Commencement Date (as provided in §7(3) of the Conditions):                     

     Redemption Date(s) (as provided in §7(2) of the Conditions):                     

     Minimum Redemption Notice Period:                     

     Redemption Price (expressed as a percentage of the Aggregate Principal Amount to be redeemed):                     

Repayment:          o Yes                    o No

     Repayment Date(s):                     

     Minimum Repayment Notice Period:                     

     Repayment Price (expressed as a percentage of the Aggregate Principal Amount to be repaid):                     

Specified Currency: U.S. dollars for all payments unless otherwise specified below:

     Payments of principal and any premium:                     

     Payments of interest:                     

     Authorized Denomination:                     

     Exchange Rate Agent:                     

Original Issue Discount Note (“OID”):          o Yes                    o No

     Total Amount of OID:                     

     Yield to Maturity:                     

     Initial Accrual Period OID:                     

Other Terms of Notes:

                         

                         

                         

     Terms
left blank or marked “N/A,” “No,” “None” or in a similar manner do not apply to the Note
except as may otherwise be specified.

Frankfurt am Main, Federal Republic of Germany                     , 200     

	 	 	 
	 	 	 
	 	 	 

	KfW

	 	 
	 
	 	 
	 	 	 
	 	 	 

Authentication signature for and on behalf of

Deutsche Bank Trust Company Americas

as Fiscal Agent

 

 

TERMS AND CONDITIONS OF THE NOTES

     Capitalized terms used but not defined in these Terms and Conditions (the “Conditions”) shall
have the same meaning as set out under “General” and “Specific Terms” in the Global Certificate.
In the event of any inconsistency between the Specific Terms and the Conditions, the Specific Terms
shall prevail.

§ 1

Form

     The Notes shall only be issued in book-entry form represented by one or more fully registered
Global Certificates without coupons. Cede & Co. as nominee of DTC, or any successor nominee of
DTC, shall be the registered holder of the Notes (the “Registered Holder”). Each actual purchaser
having an ownership interest in the Notes represented by the Global Certificate(s) as recorded in
the systems of DTC or its participants is referred to as a “Holder.” The Notes may be transferred
only through DTC or its participants.

§ 2

Status

     The Notes constitute unsecured and unsubordinated obligations of the Issuer and rank pari
passu with all other present and future unsecured and unsubordinated obligations of the Issuer, but
subject to any applicable mandatory statutory exceptions.

§ 3

Interest

     Each Note bears interest from the Interest Commencement Date pursuant to the interest rate
formula as designated in the Specific Terms until the principal thereof is paid.

     Interest shall accrue from and including the Interest Commencement Date, if no interest has
yet been paid, or the immediately preceding Interest Payment Date on which interest was paid. Interest shall accrue until, but
excluding, the applicable Interest Payment Date or the Maturity Date (or any
other day on which the Notes become due for redemption or repayment), as the case may be.

     Interest shall be payable in arrears on each Interest Payment Date and on the Maturity Date
(or any other day on which the Notes become due for redemption or repayment). The first interest
payment shall be made on the First Interest Payment Date.

     Should the Issuer fail to redeem any Note on its due date, interest on the Note shall continue
to accrue (subject to §3(E) regarding payments due on a day other than

7

 

a Business Day) beyond the due date until actual redemption of the Note at the default rate of
interest established by law.

(A) Types of Notes. All Notes are Regular Floating Rate Notes unless they are designated
as Fixed Rate/Floating Rate Notes, Floating Rate/Fixed Rate Notes or as Inverse Floating Rate Notes in
the Specific Terms or as otherwise determined in the Specific Terms. The interest on the Notes
shall never be less than zero. The Initial Interest Rate will be the interest rate for the period
from the Interest Commencement Date to the first Interest Reset Date; commencing on the first
Interest Reset Date, the interest rate will be reset as of each Interest Reset Date.

	 	(1)	 	If a Note is a Regular Floating Rate Note, the interest rate is any
applicable Interest Rate Basis plus or minus any applicable Spread and/or multiplied
by any applicable Spread Multiplier.
	 
	 	(2)	 	If a Note is a Fixed Rate/Floating Rate Note, the interest rate is the Fixed
Interest Rate designated in the Specific Terms; provided, however, that the interest
rate commencing on the Floating Rate Commencement Date will be the applicable Interest
Rate Basis plus or minus any applicable Spread and/or multiplied by any applicable
Spread Multiplier.
	 
	 	(3)	 	If a Note is a Floating Rate/Fixed Rate Note, the interest rate is the
applicable Interest Rate Basis plus or minus any applicable Spread and/or multiplied
by any applicable Spread Multiplier; provided, however, that the interest rate
commencing on the Fixed Rate Commencement Date will be the Fixed Interest Rate
designated in the Specific Terms (or, if not so specified, the interest rate in effect
on the day immediately preceding the Fixed Rate Commencement Date).
	 
	 	(4)	 	If a Note is an Inverse Floating Rate Note, the interest rate is the Fixed
Interest Rate minus the Interest Rate Basis plus or minus any applicable Spread and/or
multiplied by any applicable Spread Multiplier.

(B) Interest Reset Dates. The interest rate on the Notes will be reset on the dates
provided in the Specific Terms (the “Interest Reset
Dates”), and the period from and including the
most recent Interest Reset Date, to but excluding the next subsequent Interest Reset Dates, will be
the “Interest Reset Period.” Unless otherwise designated in the Specific Terms, the Interest Reset
Dates will be as follows (subject to the following paragraph):

	 	(1)	 	in the case of Notes that reset daily, each Business Day;
	 
	 	(2)	 	in the case of Notes that reset weekly, the Wednesday of each week; however,
if the applicable Interest Rate Basis is the Treasury Rate (except as otherwise
provided with regard to the Treasury Rate in § 3(C)(5) below) the Tuesday of each
week;

8

 

	 	(3)	 	in the case of Notes that reset monthly, the third Wednesday of each month;
however, if the Interest Rate Basis is the Eleventh District Cost of Funds Rate, the
first calendar day of each month;
	 
	 	(4)	 	in the case of Notes that reset quarterly, the third Wednesday of each March,
June, September and December;
	 
	 	(5)	 	in the case of Notes that reset semi-annually, the third Wednesday of each of
the two months in each year specified in the Specific Terms; and
	 
	 	(6)	 	in the case of Notes that reset annually, the third Wednesday of the month in
each year specified in the Specific Terms;

provided, however, that for Floating Rate/Fixed Rate Notes, the interest rate will not reset after
the designated Fixed Rate Commencement Date.

     If any Interest Reset Date would otherwise be a day that is not a Business Day, such Interest
Reset Date shall be postponed to the next succeeding day that is a Business Day (and the interest
rate in effect immediately prior to the postponed Interest Reset Date will remain in effect to but
excluding such Business Day), except that, unless otherwise designated in the Specific Terms, if
the Interest Rate Basis is LIBOR and such next succeeding Business Day falls in the next succeeding
calendar month, such Interest Reset Date shall be the immediately preceding Business Day.

(C) Interest Determination Dates. The interest rate applicable to an Interest Reset Period
commencing as of the applicable Interest Reset Date will be determined by reference to the
applicable Interest Rate Basis as of the particular “Interest
Determination Date,” which will be:

	 	(1)	 	with respect to the Commercial Paper Rate, the Federal Funds Rate and the
Prime Rate, the Business Day immediately preceding the related Interest Reset Date;
	 
	 	(2)	 	with respect to the CD Rate and the CMT Rate, the second Business Day
preceding the related Interest Reset Date;
	 
	 	(3)	 	with respect to the Eleventh District Cost of Funds Rate, the last working
day of the month immediately preceding the related Interest Reset Date on which the
Federal Home Loan Bank of San Francisco publishes the Index (as defined in § 3(J)(2)
below);
	 
	 	(4)	 	with respect to LIBOR, the second London Banking Day (as defined in § 5
below) preceding the related Interest Reset Date; and
	 
	 	(5)	 	with respect to the Treasury Rate, the day on which Treasury Bills (as
defined in § 3(N)(1) below) are normally auctioned for the week in which the related
Interest Reset Date falls; provided, however, that if an auction is held on the Friday
of the week preceding the related Interest Reset Date, the Interest Determination Date
will be such preceding Friday.

9

 

     If the interest rate of a Note is determined with reference to two or more Interest Rate
Bases, the Interest Determination Date pertaining to such Note will be the latest Business Day on
which each Interest Rate Basis is determinable that is at least two Business Days before the
related Interest Reset Date for the applicable Note.

(D) Maximum and Minimum Interest Rates. A Note may also have a maximum numerical
limitation that may accrue during any Interest Reset Period (a
“Maximum Interest Rate”), and/or a
minimum numerical limitation that may accrue during any Interest Reset Period (a “Minimum Interest
Rate”).

(E) Interest Payment Dates. “Interest Payment Dates” means dates on which interest on the
Notes is payable, and the Maturity Date. Unless otherwise designated in the Specific Terms, the
Interest Payment Dates will be:

	 	(1)	 	in the case of Notes that reset daily, weekly or monthly, the third Wednesday
of each month or the third Wednesday of March, June, September and December of each
year, as designated in the Specific Terms;
	 
	 	(2)	 	in the case of Notes that reset quarterly, the third Wednesday of March,
June, September and December of each year;
	 
	 	(3)	 	in the case of Notes that reset semi-annually, the third Wednesday of the two
months of each year designated in the Specific Terms; and
	 
	 	(4)	 	in the case of Notes that reset annually, the third Wednesday of the month of
each year specified in the Specific Terms.

     If any Interest Payment Date other than the Maturity Date would otherwise be a day that is not
a Business Day, such Interest Payment Date will be postponed to the next succeeding Business Day
(and interest will accrue at the rate in effect immediately prior to the postponed Interest Payment
Date to but excluding the postponed Interest Payment Date), except that in the case of a Note as to
which LIBOR is an applicable Interest Rate Basis and that Business Day falls in the next succeeding
calendar month, the particular Interest Payment Date will be the immediately preceding Business Day
(and interest will accrue at the interest rate then in effect only to but excluding such preceding
Business Day).

     If the Maturity Date falls on a day that is not a Business Day, the required payment of
interest will be made on the next succeeding Business Day, and no additional interest will accrue
in respect of the payment made on that next succeeding Business Day.

(F) Interest Calculation. The Calculation Agent will determine the interest rate
applicable to each Interest Reset Period on or prior to the Interest Calculation Date (as defined
below), except with respect to LIBOR and the Eleventh District Cost of Funds Rate, which will be
determined on the particular Interest Determination Date. Upon request of a Holder, the
Calculation Agent will disclose the interest rate then in effect and, if determined, the interest
rate that will become effective as a result of the determination made for the next succeeding
Interest Reset Date with respect to the particular Note.

10

 

	 	(1)	 	The “Interest Calculation Date” if applicable, pertaining to any Interest
Reset Period will be the earlier of (i) the tenth calendar day after the particular
Interest Determination Date for the particular Interest Reset Period or, if such day
is not a Business Day, the next succeeding Business Day; and (ii) the third Frankfurt
Business Day immediately preceding the applicable Interest Payment Date or the
Maturity Date, as the case may be.
	 
	 	(2)	 	All percentages resulting from any calculation on Notes will be rounded to
the nearest one hundred-thousandth of a percentage point, with five one millionths
(0.000005) of a percentage point rounded upwards. All amounts used in or resulting
from any calculation of interest payable on the Notes will be rounded, in the case of
U.S. dollars, to the nearest cent or, in the case of a non-U.S. currency, to the
nearest unit (with one-half cent or unit being rounded upwards).
	 
	 	(3)	 	With respect to each Note, accrued interest is calculated by multiplying the
principal amount of the Note by an accrued interest factor. Unless specified
otherwise, the accrued interest factor is computed by adding the interest factors
calculated for each day in the particular interest period for which accrued interest
is being calculated. The interest factor for each day will be computed by dividing the
interest rate applicable to such day

	 	(a)	 	by 360, in the case of Notes as to which the CD Rate, the
Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the Federal
Funds Rate, LIBOR, or the Prime Rate is an applicable Interest Rate Basis; or
	 
	 	(b)	 	by the actual number of days in the year, in the case of
Notes as to which the CMT Rate or the Treasury Rate is an applicable Interest
Rate Basis.

     The interest factor for Notes as to which the interest rate is calculated with reference to
two or more Interest Rate Bases will be calculated in each period in the same manner as if only the
applicable Interest Rate Basis designated in the Specific Terms applied.

     The Calculation Agent shall determine the rate derived from each Interest Rate Basis in
accordance with the following provisions.

(G) Determination of the CD Rate. The “CD Rate” means:

	 	(1)	 	the rate on the particular Interest Determination Date for negotiable U.S.
dollar certificates of deposit having the Index Maturity designated in the Specific
Terms as published in H.15(519) (as defined below) under the caption “CDs (secondary
market)”; or
	 
	 	(2)	 	if the rate referred to in clause (1) above is not so
published by 3:00 P.M., New York City time, on the related Interest Calculation Date, the rate on the
particular Interest Determination Date for negotiable U.S.

11

 

	 	 	 	dollar certificates of deposit of the particular Index Maturity as published in
H.15 Daily Update (as defined below), or other recognized electronic source used
for the purpose of displaying the applicable rate, under the caption “CDs
(secondary market)”; or
	 
	 	(3)	 	if the rate referred to in clause (2) above is not so published by 3:00 P.M.,
New York City time, on the related Interest Calculation Date, the rate on the
particular Interest Determination Date calculated by the Calculation Agent as the
arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York City
time, on that Interest Determination Date, of three leading nonbank dealers in
negotiable U.S. dollar certificates of deposit in The City of New York (which may
include the Agents or their affiliates) selected by the Calculation Agent for
negotiable U.S. dollar certificates of deposit of major U.S. money market banks for
negotiable U.S. certificates of deposit with a remaining maturity closest to the
particular Index Maturity in an amount that is, in the judgment of the Calculation
Agent, representative for a single transaction in that market at that time; or
	 
	 	(4)	 	if the dealers so selected by the Calculation Agent are not quoting as
mentioned in clause (3) above, the CD Rate in effect on the particular Interest
Determination Date.

“H.15(519)” means the weekly statistical release designated as H.15(519), or any successor
publication, published by the Board of Governors of the Federal Reserve System.

“H.15 Daily Update” means the daily update of H.15(519), available through the
world-wide-web site of the Board of Governors of the Federal Reserve System at
http://www.federalreserve.gov/releases/H15/update, or any successor site or publication.

(H) Determination of the CMT Rate. The “CMT Rate” means:

	 	(1)	 	if CMT Moneyline Telerate Page 7051 is designated in the Specific Terms:

	 	(a)	 	the percentage equal to the yield for United States
Treasury securities at “constant maturity” having the Index Maturity
specified in the Specific Terms as published in H.15(519) under the caption
“Treasury Constant Maturities”, as the yield is displayed on Moneyline
Telerate (or any successor service) on page 7051 (or any other page as may
replace the specified page on that service) (“Moneyline Telerate
Page 7051”),
for the particular Interest Determination Date; or
	 
	 	(b)	 	if the rate referred to in clause (1)(a) above does not so
appear on Moneyline Telerate Page 7051, the percentage equal to the yield for
United States Treasury securities at “constant maturity” having the
particular Index Maturity and for the

12

 

	 	 	 	particular Interest Determination Date as published in H.15(519) under the
caption “Treasury Constant Maturities”; or
	 
	 	(c)	 	if the rate referred to in clause (1)(b) above does not so
appear in H.15(519), the rate on the particular Interest Determination Date
for the period of the particular Index Maturity as may then be published by
either the Federal Reserve System Board of Governors or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate which would otherwise have been published in
H.15(519); or
	 
	 	(d)	 	if the rates referred to in clauses (1)(a) through (c)
above do not so appear, the rate as described in §3(H)(3) below.

	 	(2)	 	if CMT Moneyline Telerate Page 7052 is designated in the Specific Terms:

	 	(a)	 	the percentage equal to the one-week or one-month, as
specified in the Specific Terms, average yield for United States Treasury
securities at “constant maturity” having the Index Maturity specified in the
Specific Terms as published in H.15(519) opposite the caption “Treasury
Constant Maturities”, as the yield is displayed on Moneyline Telerate (or any
successor service) (on page 7052 or any other page as may replace the
specified page on that service) (“Moneyline Telerate Page
7052”), for the
week or month, as applicable, ending immediately preceding the week or month,
as applicable, in which the particular Interest Determination Date falls; or
	 
	 	(b)	 	if the rate referred to in clause (2)(a) above does not so
appear on Moneyline Telerate Page 7052, the percentage equal to the one-week
or one-month, as specified in the Specific Terms, average yield for United
States Treasury securities at “constant maturity” having the particular Index
Maturity and for the week or month, as applicable, preceding the particular
Interest Determination Date as published in H.15(519) opposite the caption
“Treasury Constant Maturities”; or
	 
	 	(c)	 	if the rate referred to in clause (2)(b) above does not so
appear in H.15(519), the one-week or one-month, as specified in the Specific
Terms, average yield for United States Treasury securities at “constant
maturity” having the particular Index Maturity as otherwise announced by the
Federal Reserve Bank of New York for the week or month, as applicable, ending
immediately preceding the week or month, as applicable, in which the
particular Interest Determination Date falls; or
	 
	 	(d)	 	if the rates referred to in clauses (2)(a) through (c)
above do not so appear, the rate as described in §3(H)(3) below.

13

 

	 	(3)	 	If either the Moneyline Telerate Page 7051 or the Moneyline Telerate
Page 7052 is designated in the Specific Terms and

	 	(a)	 	if the rates referred to in clauses (1)(c) or (2)(c) above
(as appropriate) are not so published, the rate on the particular Interest
Determination Date calculated by the Calculation Agent as a yield to maturity
based on the arithmetic mean of the secondary market bid prices at
approximately 3:30 P.M., New York City time, on that Interest Determination
Date of three leading primary United States government securities dealers in
The City of New York (which may include the Agents or their affiliates)
(each, a “Reference Dealer”), selected by the Calculation Agent from five
Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation, or, in the event of equality, one of the highest, and the
lowest quotation or, in the event of equality, one of the lowest, for United
States Treasury securities with an original maturity equal to the particular
Index Maturity, a remaining term to maturity no more than one year shorter
than that Index Maturity and in a principal amount that is, in the judgment
of the Calculation Agent, representative for a single transaction in the
securities in that market at that time; or
	 
	 	(b)	 	if fewer than five but more than two of secondary market
bid prices referred to in clause (3)(a) above are provided as requested, the
rate on the particular Interest Determination Date calculated by the
Calculation Agent based on the arithmetic mean of the secondary market bid
prices obtained and neither the highest nor the lowest of the quotations
shall be eliminated; or
	 
	 	(c)	 	if fewer than three secondary market bid prices referred to
in clause (3)(a) above are provided as requested, the rate on the particular
Interest Determination Date calculated by the Calculation Agent as a yield to
maturity based on the arithmetic mean of the secondary market bid prices as
of approximately 3:30 P.M., New York City time, on that Interest Determination
Date of three Reference Dealers selected by the Calculation Agent from five
Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation or, in the event of equality, one of the highest and the
lowest quotation or, in the event of equality, one of the lowest, for United
States Treasury securities with an original maturity greater than the
particular Index Maturity, a remaining term to maturity closest to that Index
Maturity and in a principal amount that is, in the judgment of the
Calculation Agent, representative for a single transaction in the securities
in that market at that time; or
	 
	 	(d)	 	if fewer than five but more than two secondary market bid
prices referred to in clause (3)(c) above are provided as

14

 

	 	 	 	requested, the rate on the particular Interest Determination Date
calculated by the Calculation Agent based on the arithmetic mean of the
secondary market bid prices obtained and neither the highest nor the
lowest of the quotations will be eliminated; or
	 
	 	(e)	 	if fewer than three secondary market bid prices referred to
in clause (3)(d) above are provided as requested, the CMT Rate in effect on
the particular Interest Determination Date.

If two United States Treasury securities with an original maturity greater than the Index
Maturity specified in the Specific Terms have remaining terms to maturity equally close to
the particular Index Maturity, the quotes for the United States Treasury security with the
shorter original remaining term to maturity will be used.

(I) Determination of the Commercial Paper Rate. “Commercial Paper Rate” means:

	 	(1)	 	the Money Market Yield (as defined below) on the particular Interest
Determination Date of the rate for commercial paper having the Index Maturity
specified in the Specific Terms as published in H.15(519) under the caption
“Commercial Paper-Nonfinancial”; or
	 
	 	(2)	 	if the rate referred to in clause (1) above is not so published by 3:00 P.M.,
New York City time, on the related Interest Calculation Date, the Money Market Yield
of the rate on the particular Interest Determination Date for commercial paper having
the particular Index Maturity as published in H.15 Daily Update, or such other
recognized electronic source used for the purpose of displaying the applicable rate,
under the caption “Commercial Paper-Nonfinancial”; or
	 
	 	(3)	 	if the rate referred to in clause (2) above is not so
published by 3:00 P.M.,
New York City time, on the related Interest Calculation Date, the rate on the
particular Interest Determination Date calculated by the Calculation Agent as the
Money Market Yield of the arithmetic mean of the offered rates at
approximately 11:00 A.M., New York City time, on that Interest Determination Date of three leading dealers
of U.S. dollar commercial paper in The City of New York (which may include the Agents
or their affiliates) selected by the Calculation Agent for commercial paper having the
particular Index Maturity placed for industrial issuers whose bond rating is “Aa”, or
the equivalent, from a nationally recognized statistical rating organization; or
	 
	 	(4)	 	if the dealers so selected by the Calculation Agent are not quoting as
mentioned in clause (3) above, the Commercial Paper Rate in effect on the particular
Interest Determination Date.

“Money Market Yield” means a yield (expressed as a percentage) calculated in accordance
with the following formula:

15

 

	 	 	 	 	 	 	 
	 

	 	 	 	D x 360	 	 
	 
	 	Money Maket Yield   =	 	 

	 	x 100
	 

	 	 	 	360 - (D x M)	 	 

where “D” refers to the applicable per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal and “M” refers to the actual number of days in
the applicable Interest Reset Period.

(J) Determination of the Eleventh District Cost of Funds Rate. “Eleventh District Cost of
Funds Rate” means:

	 	(1)	 	the rate equal to the monthly weighted average cost of funds for the calendar
month immediately preceding the month in which the particular Interest Determination
Date falls as set forth under the caption “11th District” on the display on Moneyline
Telerate (or any successor service) on page 7058 (or any other page as may replace the
specified page on that service) (“Moneyline Telerate Page
7058”) as of 11:00 A.M., San Francisco time, on that Interest Determination Date; or
	 
	 	(2)	 	if the rate referred to in clause (1) above does not so appear on Moneyline
Telerate Page 7058, the monthly weighted average cost of funds paid by member
institutions of the Eleventh Federal Home Loan Bank District that was most recently
announced (the “Index”) by the Federal Home Loan Bank of San Francisco as the cost of
funds for the calendar month immediately preceding that Interest Determination Date;
or
	 
	 	(3)	 	if the Federal Home Loan Bank of San Francisco fails to announce the Index on
or prior to the particular Interest Determination Date for the calendar month
immediately preceding that Interest Determination Date, the Eleventh District Cost of
Funds Rate in effect on the particular Interest Determination Date.

(K) Federal Funds Rate. “Federal Funds Rate” means:

	 	(1)	 	the rate with respect to the particular Interest Determination Date for U.S.
dollar federal funds as published in H.15(519) under the caption “Federal Funds
(Effective)” and displayed on Moneyline Telerate (or any
successor service) on page 120 (or any other page as may replace
the specified page on that service) (“Moneyline
Telerate Page 120”); or
	 
	 	(2)	 	if the rate referred to in clause (1) above does not so appear on Moneyline
Telerate Page 120 or is not so published by 3:00 P.M., New York
City time, on the
related Interest Calculation Date, the rate with respect to the particular Interest
Determination Date for U.S. dollar federal funds as published in H.15 Daily Update,
or such other recognized electronic source used for the purpose of displaying the
applicable rate, under the caption “Federal Funds (Effective)”; or
	 
	 	(3)	 	if the rate referred to in clause (2) above is not so
published by 3:00 P.M., New York City time, on the related Interest Calculation Date, the

16

 

	 	 	 	rate with respect to the particular Interest Determination Date calculated by the
Calculation Agent as the arithmetic mean of the rates for the last transaction in
overnight U.S. dollar federal funds arranged by three leading brokers of U.S.
dollar federal funds transactions in The City of New York (which may include the
Agents or their affiliates), selected by the Calculation Agent prior
to 9:00 A.M.,
New York City time, on the Business Day following that Interest Determination Date;
or
	 
	 	(4)	 	if the brokers so selected by the Calculation Agent are not quoting as
mentioned in clause (3) above, the Federal Funds Rate in effect on the particular
Interest Determination Date.

(L) Determination of LIBOR. “LIBOR” means:

	 	(1)	 	if “LIBOR Moneyline Telerate” is designated in the Specific Terms or if
neither “LIBOR Reuters” nor “LIBOR Moneyline Telerate” is designated in the Specific
Terms as the method for calculating LIBOR, the rate for deposits in the LIBOR Currency
(as defined below) having the Index Maturity designated in the Specific Terms,
commencing on the related Interest Reset Date, that appears on the LIBOR Page (as
defined below) as of 11:00 A.M., London time, on the particular Interest Determination
Date; or
	 
	 	(2)	 	if “LIBOR Reuters” is designated in the Specific Terms, the arithmetic mean
of the offered rates, calculated by the Calculation Agent, or the offered rate, if the
LIBOR Page by its terms provides only for a single rate, for deposits in the LIBOR
Currency having the particular Index Maturity, commencing on the related Interest
Reset Date, that appear or appears, as the case may be, on the LIBOR Page as of 11:00
A.M., London time, on the particular Interest Determination Date; or
	 
	 	(3)	 	if fewer than two offered rates appear, or no rate appears, as the case may
be, on the particular Interest Determination Date on the LIBOR Page as specified in
clause (1) or (2) above, as applicable, the rate calculated by the Calculation Agent
of at least two offered quotations obtained by the Calculation Agent after requesting
the principal London offices of each of four major reference banks (which may include
the Agents or their affiliates), in the London interbank market to provide the
Calculation Agent with its offered quotation for deposits in the LIBOR Currency for
the period of the particular Index Maturity, commencing on the related Interest Reset
Date, to prime banks in the London interbank market at approximately 11:00 A.M.,
London time, on that Interest Determination Date and in a principal amount that is, in
the judgment of the Calculation Agent, representative for a single transaction in the
LIBOR Currency in that market at that time; or
	 
	 	(4)	 	if fewer than two offered quotations referred to in clause (3) above are
provided as requested, the rate calculated by the Calculation Agent as the arithmetic
mean of the rates quoted at approximately 11:00 A.M.,

17

 

	 	 	 	in the applicable Principal Financial Center (as defined in § 5 below), on the
particular Interest Determination Date by three major banks (which may include the
Agents or their affiliates), in that Principal Financial Center selected by the
Calculation Agent for loans in the LIBOR Currency to leading European banks,
having the particular Index Maturity and in a principal amount that is, in the
judgment of the Calculation Agent, representative for a single transaction in the
LIBOR Currency in that market at that time; or
	 
	 	(5)	 	if the banks so selected by the Calculation Agent are not quoting as
mentioned in clause (4) above, LIBOR in effect on the particular Interest
Determination Date.

“LIBOR Currency” means the currency designated in the Specific Terms as to which LIBOR
shall be calculated or, if no currency is specified in the Specific Terms, U.S. dollars.

“LIBOR Page” means either:

	 	(a)	 	if “LIBOR Reuters” is specified in the Specific Terms, the
display on the Reuter Monitor Money Rates Service (or any successor service)
on the page designated in the Specific Terms (or any other page as may
replace that page on that service) for the purpose of displaying the London
interbank rates of major banks for the LIBOR Currency; or
	 
	 	(b)	 	if “LIBOR Moneyline Telerate” is specified in the Specific
Terms or neither “LIBOR Reuters” nor “LIBOR Moneyline Telerate” is designated
in the Specific Terms as the method for calculating LIBOR, the display on
Moneyline Telerate (or any successor service) on the page designated in the
Specific Terms (or any other page as may replace such page on such service)
for the purpose of displaying the London interbank rates of major banks for
the LIBOR Currency.

(M) Determination of Prime Rate.
 “Prime Rate” means:

	 	(1)	 	the rate on the particular Interest Determination Date as published in
H.15(519) under the caption “Bank Prime Loan”; or
	 
	 	(2)	 	if the rate referred to in clause (1) above is not so
published by 3:00 P.M.,
New York City time, on the related Interest Calculation Date, the rate on the
particular Interest Determination Date as published in H.15 Daily Update, or such
other recognized electronic source used for the purpose of displaying the applicable
rate, under the caption “Bank Prime Loan”; or
	 
	 	(3)	 	if the rate referred to in clause (2) above is not so
published by 3:00 P.M.,
New York City time, on the related Interest Calculation Date, the rate on the
particular Interest Determination Date calculated by the Calculation Agent as the
arithmetic mean of the rates of interest

18

 

	 	 	 	publicly announced by each bank that appears on the Reuters Screen US PRIME 1 Page
(as defined below) as the applicable bank’s prime rate or base lending rate as of
11:00 A.M., New York City time, on that Interest Determination Date; or
	 
	 	(4)	 	if fewer than four rates referred to in clause (3) above are so published by
3:00 P.M., New York City time, on the related Interest Calculation Date, the rate
calculated by the Calculation Agent as the particular Interest Determination Date
calculated by the Calculation Agent as the arithmetic mean of the prime rates or base
lending rates quoted on the basis of the actual number of days in the year divided by
a 360-day year as of the close of business on that Interest Determination Date by
three major banks (which may include the Agents or their affiliates) in The City of
New York selected by the Calculation Agent; or
	 
	 	(5)	 	if the banks so selected by the Calculation Agent are not quoting as
mentioned in clause (4) above, the Prime Rate in effect on the particular Interest
Determination Date.

“Reuters Screen US PRIME 1 Page”  means the display on the Reuter Monitor Money Rates
Service (or any successor service) on the “US PRIME 1” page (or any other page as may
replace that page on that service) for the purpose of displaying prime rates or base
lending rates of major United States banks.

(N) Determination of Treasury Rate. “Treasury Rate”  means:

	 	(1)	 	the rate from the auction held on the particular Interest Determination Date
(the “Auction” ) of direct obligations of the United
States (“Treasury Bills” ) having
the Index Maturity designated in the Specific Terms under the caption “INVESTMENT
RATE” on the display on Moneyline Telerate (or any successor service) on page 56 (or
any other page as may replace that page on that service) (“Moneyline Telerate Page
56”) or page 57 (or any other page as may replace that page on that service)
(“Moneyline Telerate Page 57”); or
	 
	 	(2)	 	if the rate referred to in clause (1) above is not so
published by 3:00 P.M.,
New York City time, on the related Interest Calculation Date, the Bond Equivalent Yield
(as defined below) of the rate for the applicable Treasury Bills as published in H.15
Daily Update, or another recognized electronic source used for the purpose of
displaying the applicable rate, under the caption “U.S. Government Securities/Treasury
Bills/Auction High”; or
	 
	 	(3)	 	if the rate referred to in clause (2) above is not so
published by 3:00 P.M.,
New York City time, on the related Interest Calculation Date, the Bond Equivalent Yield
of the auction rate of the applicable Treasury Bills as announced by the United States
Department of the Treasury; or

19

 

	 	(4)	 	if the rate referred to in clause (3) above is not so announced by the United
States Department of the Treasury, or if the Auction is not held, the Bond Equivalent
Yield of the rate on the particular Interest Determination Date of the applicable
Treasury Bills as published in H.15(519) under the caption “U.S. Government
Securities/Treasury Bills/Secondary Market”; or
	 
	 	(5)	 	if the rate referred to in clause (4) above is not so
published by 3:00 P.M.,
New York City time, on the related Interest Calculation Date, the rate on the
particular Interest Determination Date of the applicable Treasury Bills as published
in H.15 Daily Update, or another recognized electronic source used for the purpose of
displaying the applicable rate, under the caption “U.S. Government Securities/Treasury
Bills/Secondary Market”; or
	 
	 	(6)	 	if the rate referred to in clause (5) above is not so
published by 3:00 P.M.,
New York City time, on the related Interest Calculation Date, the rate on the
particular Interest Determination Date calculated by the Calculation Agent as the Bond
Equivalent Yield of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 P.M., New York City time, on that Interest Determination Date, of
three primary United States government securities dealers (which may include the
Agents or their affiliates) selected by the Calculation Agent, for the issue of
Treasury Bills with a remaining maturity closest to the Index Maturity designated in
the Specific Terms; or
	 
	 	(7)	 	if the dealers so selected by the Calculation Agent are not quoting as
mentioned in clause (6) above, the Treasury Rate in effect on the particular Interest
Determination Date.

“Bond Equivalent Yield” means a yield (expressed as a percentage) calculated in accordance
with the following formula:

	 	 	 	 	 	 	 
	 

	 	 	 	D x N	 	 
	 

	 	Bond Equivalent Yield =
	 	 

	 	x 100
	 

	 	 	 	360 - (D x M)	 	 

where “D” refers to the applicable per annum rate for Treasury Bills quoted on a bank
discount basis and expressed as a decimal, “N” refers to 365 or 366, as the case may be,
and “M” refers to the actual number of days in the applicable Interest Reset Period.

§ 4

Maturity

     Subject to the provisions of §§ 7, 8, and 11, the Notes shall be redeemed at the Final
Redemption Price on the Maturity Date, unless stated otherwise in the Specific Terms. If the
Maturity Date falls on a day that is not a Business Day, the required payment of principal and
premium, if any will be made on the next succeeding

20

 

Business Day, and no interest will accrue in respect of the payment made on that next
succeeding Business Day.

§ 5

Payment

     Currency of payment. The Issuer will make payments of all amounts payable on the Notes
in U.S. dollars unless the Specified Currency is a currency other than U.S. dollars and the Holder
elects (in the manner described below) to receive payments in such Specified Currency.

     Any Holder may elect to receive payment of principal and interest with respect to the Notes in
the Specified Currency by causing DTC, through the relevant DTC participant, to notify the Fiscal
Agent by the time specified below of (i) such Holder’s election to receive all or a portion of such
payment in the Specified Currency and (ii) wire transfer instructions to a specified currency
account (the “Specified Currency Account”). Such election in respect of any payment shall be made
by the Holder at the time and in the manner required by the DTC procedures applicable from time to
time and shall, in accordance with such procedures, be irrevocable. The Fiscal Agent must receive
DTC’s notification of such election, wire transfer instructions, and the amount payable in the
Specified Currency prior to 5:00 P.M., New York time, on the fifth New York Business Day following
the relevant Record Date in the case of interest and prior to 5:00
P.M., New York time, on the eighth
New York Business Day prior to the payment date for the payment of principal.

     Absent such election, the Exchange Rate Agent will convert the aggregate amount payable in
U.S. dollars (the “Conversion Amount”) into U.S. dollars. All costs of any such conversion shall
be deducted from such payments. Any such conversion shall be based on the bid quotation of the
Exchange Rate Agent, at or prior to 11:00 A.M., New York time, on the second Conversion Business Day
(as defined below) preceding the relevant payment date, for the purchase by the Exchange Rate Agent
of the Conversion Amount with U.S. dollars for settlement on such payment date. “Conversion
Business Day” means a day which is a New York Business Day and a Frankfurt Business Day (as defined
in the section below entitled “Business Day”). If such bid quotation is not available, the
Exchange Rate Agent shall obtain a bid quotation from a leading foreign exchange bank in The City
of New York selected by the Exchange Rate Agent for such purpose. If no bid quotation from a
leading foreign exchange bank is available, payment of the Conversion Amount will be made in the
Specified Currency to the account or accounts specified by DTC to the Fiscal Agent. Until such
account or accounts are so specified, the funds still held by the Fiscal Agent shall bear interest
at the rate of interest quoted by the Fiscal Agent for deposits with it on an overnight basis, to
the extent that the Fiscal Agent is reasonably able to reinvest such funds.

     If the Issuer determines that any amount payable on a relevant payment date in a Specified
Currency other than U.S. dollars is not available to it in freely negotiable and convertible funds
for reasons beyond its control or that such Specified Currency (or any successor currency to it
provided for by law) is no longer used for the settlement of international financial transactions,
the Issuer may fulfill its payment

21

 

obligations by making such payment in U.S. dollars on, or as soon as reasonably practicable
after, the respective payment date on the basis of the Applicable Exchange Rate. No further
interest or any other payment shall be due as a result thereof. The “Applicable Exchange Rate” for
a Specified Currency other than U.S. dollars means (i) if available, the noon dollar buying rate in
The City of New York for cable transfers for the Specified Currency on the second Business Day
prior to the particular payment date as certified for customs purposes (or, if not so certified, as
otherwise determined) by the Federal Reserve Bank of New York or,
(ii) if such rate is not
available, the foreign exchange rate for the Specified Currency as determined by the Issuer in its
equitable discretion.

     Manner of payment. The Issuer will make payments of any amount payable on the Notes
through the Fiscal Agent by wire transfer of immediately available funds.

     Payments in U.S. dollars shall be made by the Fiscal Agent on the relevant payment date to, or
to the order of, the Registered Holder as of the Record Date (as defined below). Such funds will
be distributed through the relevant DTC participants to the Holders as of the Record Date. The
“Record Date” shall be the fifteenth calendar day immediately preceding the relevant payment date.

     If a Holder elects payment in a Specified Currency other than U.S. dollars as set out above,
payments in such Specified Currency shall be made by the Fiscal Agent on the relevant payment date
to the Specified Currency Account.

     Payments made by the Issuer to, or to the order of, the Registered Holder (or, if applicable,
to the Specified Currency Account) shall discharge the liability of the Issuer under the Notes to
the extent of the sums so paid. Neither the Issuer nor the Fiscal Agent will have any
responsibility or liability for any aspect of the records of any DTC participant relating to or
payments made by any DTC participant to a Holder or for maintaining, supervising, or reviewing any
such records.

     Payments of principal (except in the case of partial redemption or partial repayment pursuant
to §§ 7, 8, and 11) shall be made upon surrender of the Global Certificates(s) to the Fiscal Agent.
The Fiscal Agent shall maintain records of payments of principal and interest made in respect of
the Notes.

     Account designation. The Registered Holder shall designate the account for wire
transfer by transmitting the appropriate information to the Fiscal Agent by mail, hand delivery,
fax, or in any other manner approved by the Fiscal Agent. Unless revoked, any such account
designation made with respect to the Notes by the Registered Holder will remain in effect with
respect to any further payments. Holders must make account designations in accordance with the
procedures of DTC and the relevant DTC participant.

     Business Day. Unless otherwise designated in the Specific Terms, a “Business Day”
means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive order to close in The
City of New York (such day also being referred to as a “New York Business Day”); provided, however,
that:

22

 

     (i) with respect to Notes with a Specified Currency that is euros, the day must also be a day
on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (“TARGET”)
System, or any successor system, is open;

     (ii) with respect to Notes with a Specified Currency other than U.S. dollars or euros, the day
must also not be a day on which commercial banks are authorized or required by law, regulation or
executive order to close in the Principal Financial Center (as defined below) of the country
issuing the Specified Currency; and

     (iii) with respect to Notes as to which LIBOR is an applicable Interest Rate Basis, the day
must also be a London Banking Day.

“London Banking Day” means a day on which commercial banks are open for business (including
dealings in the LIBOR Currency (as defined in §3(L) above)) in London.

“Principal Financial Center” means, as applicable: the capital city of the country issuing
the Specified Currency; or the capital city of the country to which the LIBOR Currency
relates; provided, however, that with respect to U.S. dollars, Australian dollars,
Canadian dollars, euros, South African rand and Swiss francs, the “Principal Financial
Center” shall be The City of New York, Sydney, Toronto, London (solely in the case of the
LIBOR Currency), Johannesburg and Zurich, respectively.

          A “Frankfurt Business Day” is any day other than a Saturday, Sunday, legal holiday in
Frankfurt am Main, or a day on which commercial banks are authorized or required by law,
regulation, or executive order to close in Frankfurt am Main.

     U.S. dollars. References to U.S. dollars or $ shall mean, as of any time, the coin or
currency that is then lawful currency in the United States of America.

     Euros. References to the euro or € shall mean, as of any time, the lawful currency of
the member states of the European Union that have adopted the single currency in accordance with
the Treaty establishing the European Community, as amended by the Treaty on European Union and the
Treaty of Amsterdam, and as further amended from time to time.

     Other currencies. References to a particular currency other than U.S. dollars and
euros shall mean, as of any time, the coin or currency that is then lawful currency in the country
issuing such currency on the Original Issue Date.

§ 6

The Agents

     The Issuer has initially appointed Deutsche Bank Trust Company Americas as the Fiscal Agent
and Registrar pursuant to the Fiscal Agency Agreement. The Issuer has initially appointed the
institutions named in the Specific Terms as Calculation Agent, Determination Agent, and, if the
principal of or interest on the Notes is payable in a Specified Currency other than U.S. dollars,
as Exchange Rate Agent, to

23

 

act as such agent with respect to the Notes. The Fiscal Agent, Registrar, the Exchange Rate
Agent, Calculation Agent and Determination Agent are referred to herein as the “Agents.”

     The Issuer may, in its sole discretion, appoint any other institution to serve as any such
Agent from time to time. The Issuer will give prompt written notice of any change in any such
appointment to the Fiscal Agent and by notification pursuant to § 12 hereof.

     All determinations made by any Agent may be made by such Agent in its sole discretion and,
absent manifest error, shall be conclusive for all purposes and binding on the Registered Holder,
Holders, and the Issuer.

     The Agents in such capacity are acting exclusively as agents of the Issuer and do not have any
legal relationship of whatever nature with the Registered Holder or the Holders and are not in any
event accountable to the Registered Holder or any Holder.

§ 7

Redemption at the Issuer’s Option

     The Notes shall not be redeemable by the Issuer before the Maturity Date unless a Redemption
Date or a Redemption Commencement Date is designated in the Specific Terms.

     If a Redemption Date is so specified, and unless otherwise designated in the Specific Terms,
the Notes may be so redeemed on such Redemption Date, in whole or in part, in any amount equal to
an Authorized Denomination or integral multiple thereof (provided that the remaining principal amount
thereof shall at least equal an Authorized Denomination) at the Redemption Price together with
interest accrued thereon to, but excluding, the Redemption Date. Such redemption shall be upon
notice in compliance with §12 hereof and in compliance with the Minimum Redemption Notice Period as
specified in the Specific Terms.

     If a Redemption Commencement Date is so specified, and unless otherwise designated in the
Specific Terms, the Notes may be so redeemed any time thereafter, in whole or in part, and in any
amount equal to an Authorized Denomination or integral multiple thereof (provided that the remaining
principal amount thereof shall at least equal an Authorized Denomination) at the Redemption Price
together with interest accrued thereon to, but excluding, the Redemption Date. Such redemption
shall be upon notice of not less than 30 and not more than 60 calendar days and in compliance with
§12 hereof.

§ 8

Repayment at the Holder’s Option

     The Notes shall not be repayable before the Maturity Date unless one or more Repayment Dates
are designated in the Specific Terms. If a Repayment Date is so specified, and unless otherwise
designated in the Specific Terms, a Holder may

24

 

request (in the manner described below) repayment of any Note, in whole or in part, in any
amount equal to an Authorized Denomination or integral multiple thereof (provided that the remaining
principal amount thereof shall at least equal an Authorized Denomination) at the Repayment Price
together with interest accrued thereon to, but excluding, the Repayment Date.

     In order to exercise such repayment option, a Holder must instruct DTC or its participants in
a timely manner as required by the DTC procedures applicable from time to time.

     If so instructed, DTC shall cause the Registered Holder to request such repayment of the
Fiscal Agent on behalf of the Holder in compliance with the Minimum Repayment Notice Period
designated in the Specific Terms. All instructions given to the Fiscal Agent relating to the
option to elect repayment are irrevocable.

     The Issuer shall only be obliged to repay Notes in respect to which a Holder has exercised its
repayment option against transfer of such Holder’s ownership interest in the relevant Notes to the
Fiscal Agent.

§ 9

Further Issues, Purchases and Cancellation

     The Issuer may from time to time, without the consent of the Holders, issue further Notes
having the same terms and conditions as the Notes in all respects (or in all respects except for
the issue date, interest commencement date and/or issue price) so as to form a single issuance with
the Notes. The term “Notes” shall, in the event of such increase, also include such further Notes.

     The Issuer may at any time purchase Notes in the open market or otherwise and at any price.
Notes purchased by the Issuer may, at the option of the Issuer, be held or resold, or transferred
to the Fiscal Agent for cancellation. If such Notes are redeemed in full or are transferred for
cancellation they shall be cancelled forthwith and may not be reissued or resold.

§ 10

Taxation

     All payments by the Issuer in respect of the Notes shall be made without deduction or
withholding of taxes or other duties, unless such deduction or withholding is required by law. In
the event of such deduction or withholding, the Issuer shall not be required to pay any additional
amounts in respect of the Notes.

§ 11

Termination for Default

     If the Issuer shall fail to pay any amount payable hereunder within 30 days from the relevant
due date, any Holder may, through the Depositary, declare any

25

 

Notes due and demand repayment thereof at their principal amount plus interest accrued to the
date of repayment. Any notice declaring the Notes due shall be made by means of written notice to
be delivered by hand or registered mail to the Issuer together with proof that such Holder at the
time of such notice has an ownership interest in the relevant Notes by means of a certificate of
the Holder’s Custodian pursuant to § 14(a) hereof. The right to declare Notes due shall cease if
the Issuer has made payment to or to the order of the Registered Holder (or, in the case of
payments to be made in a Specified Currency other than U.S. dollars, the Specified Currency
Account) before the Holder has exercised such right.

§ 12

Notices

     Any notice required to be made by the Issuer concerning the Notes shall be given in writing to
DTC for communication by DTC and its participants to the Holders. Any such notice shall be deemed
to have been given to the Holders on the third day after the day on which the said notice was given
to DTC.

§ 13

Governing Law, Exclusion of General Business Conditions Law

THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE FEDERAL REPUBLIC OF
GERMANY WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

NOTWITHSTANDING THE ABOVE, THE PROVISIONS ON GENERAL BUSINESS CONDITIONS (ALLGEMEINE
GESCHÄFTSBEDINGUNGEN, §§ 305-310 OF THE GERMAN CIVIL CODE) SHALL NOT APPLY TO THE NOTES.

ANY DISPOSITION OF THE NOTES, INCLUDING TRANSFERS AND PLEDGES OF NOTES EXECUTED BETWEEN DTC
PARTICIPANTS, AND BETWEEN DTC AND DTC PARTICIPANTS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.

§ 14

Remedies

Jurisdiction. Any action or other legal proceedings arising out of or in connection with
the Notes may exclusively be brought in the District Court (Landgericht) in Frankfurt am Main.

Enforcement. Any Holder may in any proceedings against the Issuer or to which the Holder
and the Issuer are parties protect and enforce in its own name its rights arising under the Notes
on the basis of (a) a certificate issued by its Custodian (as defined below) (i) stating the full
name and address of the Holder, (ii) specifying an aggregate principal amount of Notes credited on
the date of such statement to such Holder’s securities account maintained with such Custodian, and
(iii) confirming that the Custodian has given written notice to DTC and the Registrar containing
the

26

 

information pursuant to (i) and (ii) and bearing acknowledgements of DTC and the relevant DTC
participant, and (b) copies of the Global Certificate(s) certified as being true copies by a duly
authorized officer of DTC or the Registrar. For purposes of the foregoing, “Custodian” means any
bank or other financial institution of recognized standing authorized to engage in securities
custody business with which the Holder maintains a securities account
in respect of the
Notes and includes DTC and its participants.

27

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