Document:

Exhibit 10.1

 

Employee
Options (TARP)

 

AWARD
AGREEMENT

UNDER THE

MAINSOURCE
FINANCIAL GROUP, INC.

2007 Stock
Incentive Plan

 

Notice of
Grant

 

The individual named below has been granted
an “Award” with respect to the common stock of MainSource Financial Group, Inc.,
an Indiana corporation (the “Company”), subject to the terms and conditions of
the MainSource Financial Group, Inc. 2007 Stock Incentive Plan (the “Plan”)
and this Award Agreement (the “Agreement”).

 

	
  1.

  	
  Grantee:

  	
                                               

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Grant Date:

  	
  February 23, 2009

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Type and Size of Award:

  	
  Incentive Stock Option to purchase
                            
  Shares*

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Exercise Price per Share:

  	
  $5.40 (this is the Fair Market Value of the Share on the Grant Date)

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Expiration Date:

  	
  February 23, 2019 (ten years from the Grant Date)

  

 

*For an Incentive Stock Option (an “Option Award”),
this represents the number of shares of common stock of the Company (“Company Stock”)
the Grantee is entitled to purchase upon subsequent exercise of the Option
Award.

 

Agreement
Regarding Terms and Conditions of Grant

 

This Agreement is dated as of the Grant Date
and is between the Company and the Grantee, in accordance with the terms of the
Plan.  Capitalized terms used in this
Agreement and not otherwise defined have the meanings given to them in the
Plan.

 

1.             The
Plan.  The Plan contains terms and conditions
applicable to the Award that are not explicitly set forth in this Award
Agreement, but which are incorporated herein by reference.  The terms of this Agreement shall be subject
to the terms of the Plan.  In the case of
any conflict between the terms of this Agreement and the terms of the Plan, the
terms of the Plan shall control.  Grantee
acknowledges receipt of a copy of the Plan and represents that he or she is
familiar with the terms and provisions of the Plan.  Grantee has reviewed the Plan and this
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to signing this Agreement and fully understands all provisions of
the Award.  Grantee agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator (as defined in the Plan) upon any questions arising under the
Plan or this Agreement.

 

 

2.             Grant
of Option Award.  Subject to the terms of this Agreement and
the Plan, the Company hereby grants to Grantee an Option Award which entitles
Grantee to purchase the number of shares of common stock of Company Stock set
forth in the Notice of Grant above (the “Shares”), at the price per Share set
forth in the Notice of Grant above (the “Exercise Price”) and in the manner and
subject to the conditions provided in this Agreement.

 

3.             Vesting.

 

(a)           Except as otherwise provided in subsection 3(b), the Award is subject
to forfeiture upon the Grantee’s Termination of Employment, unless and until
the Award vests as provided in this subsection.

 

	
  Date of Vesting

  	
   

  	
  Percent of Option Shares Vested

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31,
  2009

  	
   

  	
  10

  	
  %

  
	
  December 31,
  2010

  	
   

  	
  30

  	
  %

  
	
  December 31,
  2011

  	
   

  	
  60

  	
  %

  
	
  December 31,
  2012

  	
   

  	
  100

  	
  %

  

 

(b)           Upon a Change in Control, the Award will be immediately vested and
exercisable.  Additionally, notwithstanding
the foregoing, the Grantee will not become vested in any portion of his or her
Award during the period of time the United States Department of Treasury (“Treasury”)
holds Series A preferred stock of the Company (the “Preferred Stock”).  After the Treasury no longer holds the Preferred
Stock, the Grantee will be credited with vesting service for the period of time
beginning on the Grant Date and ending on the last date that Treasury held any
of the Preferred Stock.

 

4.             Exercise
of Option Award.  The following terms and conditions shall
apply to the exercise of the Option Award.

 

(a)           The Option Award shall not be exercisable after the Expiration
Date.  The Grantee may exercise the
Option Award in whole or in part, at any time on or before the Expiration Date,
as to any Shares which have vested as set forth in this Agreement.  Shares owned by Grantee as a result of his or
her exercise of the Option Award shall be referred to herein as “Purchased
Shares.”

 

(b)           Except to the extent the Grantee uses the sale and remittance procedure
described in this subsection, the Grantee must pay cash for the Exercise Price
for the Shares on the Exercise Date.  The
Grantee may also pay the Exercise Price as follows:

 

(i)            In shares of equivalent equity interests,
held for the requisite period necessary to avoid a charge to the Company’s
earnings for financial reporting purposes and valued at Fair Market Value on
the Exercise Date, or

 

(ii)           Through a special sale and remittance procedure pursuant to which the
Grantee concurrently provides irrevocable written instructions to (A) a
brokerage firm designated by the Company to effect the immediate sale of the
purchased interests and remit to the Company, out of the sale proceeds
available 

 

2

 

on the settlement date, sufficient funds to
cover the aggregate Exercise Price payable for the purchased interests plus all
applicable federal, state and local income and employment taxes required to be
withheld by the Company by reason of such exercise, and (B) the Company to
deliver the certificates for the purchased interests directly to such brokerage
firm to complete the sale.

 

The Company’s obligations to
deliver purchased equity interests under the sale and remittance procedure
described in this subsection shall be conditioned upon receiving sufficient
funds and/or other assets to cover the Exercise Price and tax withholding
obligations described herein.

 

5.             Conditions.  The
Company’s obligation to issue or transfer Shares to Grantee after the exercise
of the Option Award, in whole or in part, is conditioned upon Grantee’s payment
in full for the Shares with respect to which the Option Award was exercised.

 

6.             Change
in Company Stock.  In the event of any change in the Shares, as
described in Section 12.9 of the Plan, the Administrator will make
appropriate adjustment or substitution in the number, kind and price of Shares
under this Agreement, all as provided in the Plan.  Such adjustment or substitution in the
number, kind and price of Shares under this Agreement will be automatic and no
formal amendment will be required to be made to this Agreement to effect the
adjustment or substitution, provided the Participant is provided with adequate
notice of such adjustment or substitution. 
The Administrator’s determination
in this respect will be final, conclusive and binding on all parties.

 

7.             No
Shareholder Rights; No Guarantee of Employment. 
Grantee shall not have any of the rights of a shareholder with respect
to the Shares until such Shares are issued or transferred to Grantee after the
exercise of the Option Award.  Nothing in
this Agreement (a) confers on Grantee any right to continue in the
employment of the Company, or (b) interferes with the Company’s right to
terminate the employment of Grantee at any time, with or without cause.

 

8.             Certain
Tax Consequences.  Grantee acknowledges that the exercise of the
Option Award and any sale of the Purchased Shares may have various tax
consequences under federal and state law. 
Grantee has discussed these consequences with his personal tax
advisor.  Grantee may be required to report
the grant of the Option Award to the Internal Revenue Service and/or to state
tax authorities under applicable state law. 
The Company is not obligated to deliver Shares upon the exercise of any
Option Award issued under the Plan until all applicable federal, state, local
and foreign income and employment tax withholding requirements have been
satisfied.  In accordance with the
foregoing, the Company has the right to withhold sums from compensation
otherwise due to Grantee to satisfy such withholding requirements.

 

9.             Transferability.  An
Option Award granted hereby shall be neither transferable nor assignable by a
Grantee other than by will or by the laws of descent and distribution and may
be exercised, during the lifetime of the Grantee, only by the Grantee, or in
the event of his legal incapacity, by his guardian or legal representative
acting on behalf of the Grantee in a fiduciary capacity under state law and
court supervision.

 

3

 

10.           Successors
and Assigns.  The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the Company and its successors and
assigns and Grantee, Grantee’s assigns and the legal representatives, heir and
legatees of Grantee’s estate.

 

11.           Compliance
with Laws and Regulations.

 

(a)           The grant and exercise of the Award, as applicable, and the issuance of
the Shares shall be subject to compliance by the Company and Grantee with all
applicable requirements of law relating thereto, including but not limited to
federal and state securities laws, and with all applicable regulations of any
stock exchange on which the Shares or an equivalent equity interest may be
listed for trading at the time of such exercise and issuance.

 

(b)           The inability of the Company to obtain approval from any regulatory
body having authority deemed by the Company to be necessary to the lawful
issuance and sale of any Share pursuant to the Award shall relieve the Company
of any liability with respect to the non-issuance or sale of the Shares as to
which such approval shall not have been obtained.  The Company, however, shall use its best
efforts to obtain all such approvals.

 

12.           Restrictive
Covenants.  Grantee acknowledges that without his or her
making the covenants and agreements hereinafter contained in this Section, the
Company would not have granted this Award to the Grantee and the grant of such
Award is in reliance upon Grantee’s compliance with the covenants and agreements
made in this Section.

 

(a)           Noncompetition. 
Grantee hereby covenants and agrees that during Grantee’s employment
with the Company and its Affiliates and for a period of 18 months following the
termination of that employment, for any reason, Grantee agrees that he or she
shall not, directly or directly, whether individually or as a partner, shareholder,
officer, director, employee, independent representative, broker, agent,
consultant or in any other capacity for any other individual, partnership,
firm, corporation, company or other entity, engage in the following prohibited
activities without prior written authorization from the Company:

 

(i)            Have any ownership interest in any Restricted
Organization (as hereinafter defined);

 

(ii)           Work or provide services for any Restricted Organization;

 

(iii)          Employ or seek to employ or engage or seek to engage any person who has
worked for or in conjunction with the Company or an Affiliate during the 12-month
period preceding the termination of Grantee’s employment, specifically
including any consultant, employee, provider or vendor used by the Company or
an Affiliate;

 

(iv)          Solicit or induce any person currently employed by or otherwise
associated with the Company or an Affiliate to terminate such employment or
relationship;

 

4

 

(v)           Solicit or provide or offer to solicit or provide any Restricted
Product or Service to any business account or customer of the Company or an
Affiliate who was a business account or customer of the Company or an Affiliate
during the 12-month period preceding termination of Grantee’s employment or
about whom Grantee obtained confidential information;

 

(vi)          Accept business from any business account or customer of the Company or
an Affiliate who was a business account or customer of the Company or an
Affiliate during the term of Grantee’s employment, including, but not limited
to, any business account or customer serviced or contacted by Grantee, or for
whom Grantee had direct or indirect responsibility, on behalf of the Company or
an Affiliate within the 12-month period preceding the termination of Grantee’s
employment or about whom Grantee obtained confidential information, when that
business pertains to products or services which are competitive with or
substantially similar to any Restricted Product or Service; or

 

(vii)         Otherwise attempt to interfere with the Company or an Affiliate’s
business or its relationship with its business accounts, consultants,
customers, employees or vendors.

 

(b)           Definitions.  For purposes of this Section:

 

(i)            “Restricted Product or Service” shall
mean a product or service in development or design, or produced, marketed,
sold, disseminated, offered or distributed by the Company or an Affiliate at
any time on or after the date of this Award Agreement and until Grantee’s termination
of employment.

 

(ii)           “Restricted Area” shall mean the county of the Grantee’s
designated office or any county adjacent to that “designated office”
county.  The “designated office” and
county will be listed on the signature page of this document.

 

(iii)          “Restricted Organization” shall mean any bank holding company,
savings association holding company, financial services holding company, bank,
savings bank, thrift, any other financial institution or other organization or
entity that is primarily engaged in the financial services industry within the
Restricted Area, which competes with the Company or an Affiliate.

 

(c)           Adjustments and Extension of Restrictive
Period. Should any covenant
or restriction included in this Section be held to be unreasonable or
unenforceable for any reason, including without limitation the temporal
limitation, geographic restrictions, or scope of activity covered by a
restrictive covenant, then such provision or restriction shall be given effect
and enforced to whatever extent would be reasonable and enforceable.  All remaining covenants and restrictions
shall remain in full force and effect in accordance with the terms
thereof.  If Grantee is deemed to have
breached any of the foregoing restrictive covenants, Grantee agrees that the
restrictive period shall be 

 

5

 

automatically extended by a period of time
equal to the period of such breach, measured from the date of the breach
through the date of such determination.

 

(d)           Survival of Obligations.  Grantee
agrees that his obligations contained in this Section shall survive the
termination of Grantee’s employment with the Company, whether such termination
is voluntary or involuntary.  Grantee further
acknowledges that any breach by the Company of any contractual, statutory, or
other legal obligation to the Grantee shall not excuse or terminate the Grantee’s
obligations hereunder or otherwise preclude the Company from seeking relief
pursuant to any provision of this Agreement.

 

(e)           Reasonableness of Restrictions. 
Grantee hereby agrees and acknowledges that (i) the provisions of
this Section are reasonable, and (ii) Grantee has (A) read the
foregoing provisions of this Section, (B) been given ample time and
opportunity to consult with counsel concerning the meaning and effect of this
Section, and (C) in no way been coerced or in any way forced to agree to
the provisions of those Sections.

 

(f)            Remedies.  Grantee acknowledges and
agrees that any actual or threatened breach of the foregoing provisions of this
Agreement will cause irreparable harm to the Company and/or its Affiliates and
that it may be difficult to determine or adequately compensate the Company and
its Affiliates through monetary damages. 
Accordingly, Grantee hereby agrees that the Company may seek a restraining
order or other injunctive remedy to prevent or restrain such breach without the
requirement to post or obtain a bond or other security.  Grantee further agrees that the Company shall
also be entitled to recover reasonable costs and attorneys fees incurred by it
to enforce the foregoing covenants and agreement.  Grantee further acknowledges that nothing
contained herein shall be construed to prohibit or limit the Company and its
Affiliates from pursuing any other remedies, whether such remedies are contractual
or arise at law or in equity.  Grantee
further agrees to indemnify and hold harmless the Company and its Affiliates,
directors, officers, employees, agents, successors and assigns from and against
any and all losses or liabilities which may result from the breach of the
restrictive covenants set forth in this Section.

 

13.           Amendment.  Subject
to Section 409A of the Internal Revenue Code of 1986, as amended, if
applicable, the Administrator shall have complete and exclusive power and
authority to amend or modify this Agreement (and the Administrator shall have
the power and authority to amend or modify the Plan) in any or all respects;
provided, however, that no such amendment or modification shall adversely
affect, in any material respect, any rights of the Grantee with respect to an Award
granted pursuant to this Agreement, unless the Grantee consents to such
amendment or modification.  However, the
Administrator shall have the power and authority to amend or modify this
Agreement (and the Administrator shall have the power and authority to amend or
modify the Plan) in any manner (including in a manner that adversely affects
the rights of the Grantee with respect to the Award) if such amendment or
modification applies equally to all holders of the type of award granted under
the Plan and is approved by holders of the type of award granted representing a
majority of the Shares issued or issuable pursuant to such awards granted under
the Plan.

 

6

 

Additionally, in the event any laws, rules,
regulations or other guidance enacted or issued by the United States government
or any agency thereof, including the United States Treasury, including but not
limited to any regulations implementing the American Recovery and Reinvestment
Act of 2009 (“ARRA”), make any portion of this Agreement illegal, the
Administrator retains the right to amend the Agreement, without the Grantee’s
consent, to bring the Agreement into compliance with ARRA or, if compliance
with ARRA is not possible, the Administrator has the unilateral right to
terminate this Agreement pursuant to Section 14.

 

14.           Termination.  Except
as otherwise provided in the Plan, this Agreement and any unvested Shares or
Option Awards granted hereby will terminate immediately upon Grantee’s termination
of employment.  Additionally, in the
event any laws, rules, regulations or other guidance enacted or issued by the United
States government or any agency thereof, including the United States Treasury,
including any regulations implementing the American Recovery and Reinvestment
Act of 2009 (“ARRA”), make any portion of this Agreement illegal, this
Agreement shall be null and void, and the Administrator shall have the
unilateral right to terminate this Agreement, without the Grantee’s consent.

 

15.           Entire
Agreement; Governing Law; Attorneys’ Fees.  The Plan is incorporated into
this Agreement by reference.  The Plan
and this Agreement constitute the entire agreement of the parties with respect
to the subject matter of this Agreement and supersede in their entirety all
prior undertakings and agreements of the Company and Grantee with respect to
subject matter of this Agreement.  The Award
and this Agreement shall be construed, administered and governed in all
respects under and by the internal laws (but not the choice of law rules) of
the State of Indiana.  The Company, its
Affiliates and the Grantee irrevocably consent to the jurisdiction and venue of
the Courts of the State of Indiana and the United States federal courts serving
Decatur County, Indiana with respect to any and all actions related to the
Award and this Agreement or the enforcement hereof, and the parties hereto
hereby irrevocably waive any and all objections thereto.  If the Plan or this Agreement is challenged
in a court of law, the prevailing party shall be entitled to receive from the
other party reasonable attorneys’ fees and other costs and expenses incurred by
the prevailing party in connection with such suit regardless of whether such
suit is prosecuted to judgment.

 

16.           Counterparts.  This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original, but all of which collectively will constitute one and the
same instrument.

 

7

 

IN WITNESS WHEREOF, the Company has caused
this Agreement to be executed on its behalf by its duly authorized officer and
Grantee, after thoroughly reviewing and developing a complete understanding of
the restrictions and covenants imposed by Section 12, has also executed
this Agreement as of the date first above written.

 

 

	
  GRANTEE:

  	
   

  	
  MAINSOURCE FINANCIAL GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  (Signature)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Printed Name)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Designate Office)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (County and State)

  	
   

  	
   

  

 

8Exhibit
4(f)

 

TERMS AND
CONDITIONS OF THE NOTES

 

The
following is the text of the terms and conditions which, as supplemented,
amended and/or replaced by the relevant Final Terms, will be endorsed on each
Note in definitive form issued under the Programme.  The terms and conditions applicable to any
Note in global form will differ from those terms and conditions which would
apply to the Note were it in definitive form to the extent described under “Summary
of Provisions Relating to the Notes while in Global Form” below.  All capitalised terms that are not defined in
the terms and conditions shall have the meanings given to them in the relevant
Final Terms.  References in the terms and
conditions to “Notes” are to the Notes of one Series only, not to all Notes
that may be issued under the Programme.

 

1.           Introduction

 

(a)         Programme:  PACCAR Financial Europe B.V., a private
company with limited liability (besloten
vennootschap met beperkte aansprakelijkheid) incorporated under the
laws of The Netherlands, having its corporate seat at Eindhoven (the “Issuer”) has established a Euro Medium Term
Note Programme (the “Programme”)
for the issuance of up to €1,500,000,000 in aggregate principal amount of notes
(the “Notes”).

 

(b)         Final Terms:  Notes issued under the Programme are issued
in series (each a “Series”) and
each Series may comprise one or mo’’’e tranches (each a “Tranche”) of Notes.  Each Tranche is the subject of Final Terms
(the “Final Terms”) which
supplements these terms and conditions (the “Conditions”).
 The terms and conditions applicable to
any particular Tranche of Notes are these Conditions as supplemented, amended
and/or replaced by the relevant Final Terms. 
In the event of any inconsistency between these Conditions and the
relevant Final Terms, the relevant Final Terms shall prevail.

 

(c)         Agency Agreement:  The Notes are the subject of and issued
pursuant to an amended and restated agency agreement dated 7 July 2008
(the “Agency Agreement”) between
the Issuer, Citibank, N.A., London Branch as fiscal agent (the “Fiscal Agent,” which expression includes
any successor fiscal agent appointed from time to time in connection with the
Notes) and the paying agents named therein (together with the Fiscal Agent, the
“Paying Agents,” which expression
includes any successor or additional paying agents appointed from time to time
in connection with the Notes) and with the benefit of a deed of covenant dated
7 July 2008 (the “Deed of Covenant”)
executed by the Issuer in relation to the Notes.

 

(d)         The Notes:  All subsequent references in these Conditions
to “Notes” are to the Notes which are the subject of the relevant Final
Terms.  Copies of the relevant Final
Terms are available during normal business hours at the Specified Office of the
Fiscal Agent or at the office of the Paying Agent in London, the initial
Specified Offices of which are set out below.

 

(e)         Summaries:  Certain provisions of these Conditions are
summaries of the Agency Agreement and are subject to their detailed
provisions.  The holders of the Notes
(the “Noteholders”) and the
holders of the related interest coupons, if any, (the “Couponholders” and the “Coupons,” respectively) are bound by, and
are deemed to have notice of, all the provisions of the Agency Agreement
applicable to them.  Copies of the Agency
Agreement and the Deed of Covenant are available for inspection during normal
business hours at the Specified Offices of each of the Paying Agents, the
initial Specified Offices of which are set out below.

 

2.           Interpretation

 

(a)         Definitions:  In these Conditions the following expressions
have the following meanings:

 

“Accrual Yield” has the meaning given in the relevant Final
Terms;

 

“Additional Business Centre(s)” means the city or cities
specified as such in the relevant Final Terms;

 

“Additional Financial Centre(s)”  means the city
or cities specified as such in the relevant Final Terms;

 

“Business Day”
means:

 

(i)              in
relation to any sum payable in euro, a TARGET Settlement Day and a day on which
commercial banks and foreign exchange markets settle payments generally in each
(if any) Additional Business Centre; and

 

 

(ii)             in
relation to any sum payable in a currency other than euro, a day on which
commercial banks and foreign exchange markets settle payments generally in
London, in the Principal Financial Centre of the relevant currency and in each
(if any) Additional Business Centre;

 

“Business Day Convention,” in relation to any particular date, has the meaning given in
the relevant Final Terms and, if so specified in the relevant Final Terms, may
have different meanings in relation to different dates and, in this context,
the following expressions shall have the following meanings:

 

(i)              “Following Business Day Convention” means that the relevant
date shall be postponed to the first following day that is a Business Day;

 

(ii)             “Modified Following Business Day Convention” or “Modified Business Day Convention” means that the relevant
date shall be postponed to the first following day that is a Business Day
unless that day falls in the next calendar month in which case that date will
be the first preceding day that is a Business Day;

 

(iii)            “Preceding Business Day Convention” means that the relevant
date shall be brought forward to the first preceding day that is a Business
Day;

 

(iv)           “FRN Convention,” “Floating Rate Convention” or “Eurodollar
Convention” means that each relevant date shall be
the date which numerically corresponds to the preceding such date in the
calendar month which is the number of months specified in the relevant Final
Terms as the Specified Period after the calendar month in which the preceding
such date occurred provided, however, that:

 

(A)      if there is no such
numerically corresponding day in the calendar month in which any such date
should occur, then such date will be the last day which is a Business Day in
that calendar month;

 

(B)      if any such date would
otherwise fall on a day which is not a Business Day, then such date will be the
first following day which is a Business Day unless that day falls in the next
calendar month, in which case it will be the first preceding day which is a
Business Day; and

 

(C)      if the preceding such date
occurred on the last day in a calendar month which was a Business Day, then all
subsequent such dates will be the last day which is a Business Day in the
calendar month which is the specified number of months after the calendar month
in which the preceding such date occurred; and

 

(v)            “No Adjustment” means that the relevant date
shall not be adjusted in accordance with any Business Day Convention;

 

“Calculation Agent” means the Fiscal Agent or such other
Person specified in the relevant Final Terms as the party responsible for
calculating the Rate(s) of Interest and Interest Amount(s) and/or
such other amount(s) as may be specified in the relevant Final Terms;

 

“Calculation Amount” has the meaning given
in the relevant Final Terms;

 

“Consolidated Assets” means the aggregate amount of assets (less
applicable reserves for depreciation, amortisation, unearned finance charges,
allowance for credit losses and other properly deductible items) after
deducting therefrom all goodwill, trade names, trademarks, patents,
organisation expenses and other like intangibles, all as set forth on the most
recent balance sheet of the Issuer and its Subsidiaries and computed in
accordance with generally accepted accounting principles;

 

“Coupon Sheet” means, in respect of a Note, a coupon sheet
relating to the Note;

 

“Day Count Fraction”
means, in respect of the calculation of an amount for any period of time (the “Calculation Period”), such day count
fraction as may be specified in these Conditions or the relevant Final Terms
and:

 

(i)              if
“Actual/Actual (ICMA)” is so
specified, means:

 

(a)       where the Calculation Period
is equal to or shorter than the Regular Period during which it falls, the
actual number of days in the Calculation Period divided by the product of (1) the

 

 

actual number
of days in such Regular Period and (2) the number of Regular Periods in
any year; and

 

(b)       where the Calculation Period
is longer than one Regular Period, the sum of:

 

	
  (A)

  	
   

  	
  the actual
  number of days in such Calculation Period falling in the Regular Period in
  which it begins divided by the product of (1) the actual number of days
  in such Regular Period and (2) the number of Regular Periods in any
  year; and

  
	
  (B)

  	
   

  	
  the actual
  number of days in such Calculation Period falling in the next Regular Period
  divided by the product of (a) the actual number of days in such Regular
  Period and (2) the number of Regular Periods in any year;

  

 

(ii)             if
“Actual/365” or “Actual/Actual (ISDA)” is so specified,
means the actual number of days in the Calculation Period divided by 365 (or,
if any portion of the Calculation Period falls in a leap year, the sum of (A) the
actual number of days in that portion of the Calculation Period falling in a
leap year divided by 366 and (B) the actual number of days in that portion
of the Calculation Period falling in a non-leap year divided by 365);

 

(iii)            if
“Actual/365 (Fixed)” is so
specified, means the actual number of days in the Calculation Period divided by
365;

 

(iv)           if
“Sterling/FRN” is so specified,
means the actual number of days in the Interest Period divided by 365 or, in
the case of an Interest Payment Date falling in a leap year, 366;

 

(v)            if
“Actual/360” is so specified,
means the actual number of days in the Calculation Period divided by 360;

 

(vi)           if
“30/360” is so specified, means
the number of days in the Calculation Period divided by 360 (the number of days
to be calculated on the basis of a year of 360 days with 12 30-day months
(unless (i) the last day of the Calculation Period is the 31st day of a
month but the first day of the Calculation Period is a day other than the 30th
or 31st day of a month, in which case the month that includes that last day
shall not be considered to be shortened to a 30-day month, or (ii) the
last day of the Calculation Period is the last day of the month of February, in
which case the month of February shall not be considered to be lengthened
to a 30-day month)); and

 

(vii)          if
“30E/360” or “Eurobond Basis” is so specified means, the
number of days in the Calculation Period divided by 360 (the number of days to
be calculated on the basis of a year of 360 days with 12 30-day months, without
regard to the date of the first day or last day of the Calculation Period
unless, in the case of the final Calculation Period, the date of final maturity
is the last day of the month of February, in which case the month of February shall
not be considered to be lengthened to a 30-day month);

 

“Early Redemption Amount (Tax)” means, in respect of any
Note, its principal amount or such other amount as may be specified in, or
determined in accordance with, the relevant Final Terms;

 

“Early Termination Amount” means, in respect of any Note, its
principal amount or such other amount as may be specified in, or determined in
accordance with, these Conditions or the relevant Final Terms;

 

“Extraordinary Resolution” has the meaning given in the
Agency Agreement;

 

“Final Redemption Amount” means, in respect of any Note, its
principal amount or such other amount as may be specified in, or determined in
accordance with, the relevant Final Terms;

 

“First Interest Payment Date” means the date
specified in the relevant Final Terms;

 

“Fixed Coupon Amount” has the meaning given in the relevant
Final Terms;

 

“Indebtedness” means any mortgage, indenture
or instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed by the Issuer;

 

 

“Interest Amount” means, in relation to a Note and an
Interest Period, the amount of interest payable in respect of that Note for
that Interest Period;

 

“Interest Commencement Date” means the Issue Date of the
Notes or such other date as may be specified as the Interest Commencement Date
in the relevant Final Terms;

 

“Interest Determination Date” has the meaning given in the
relevant Final Terms;

 

“Interest Payment Date”
means the First Interest Payment Date and any other date or dates specified as
such in, or determined in accordance with the provisions of, the relevant Final
Terms and, if a Business Day Convention is specified in the relevant Final
Terms:

 

(i)              as
the same may be adjusted in accordance with the relevant Business Day
Convention; or

 

(ii)             if
the Business Day Convention is the FRN Convention, Floating Rate Convention or
Eurodollar Convention and an interval of a number of calendar months is
specified in the relevant Final Terms as being the Specified Period, each of
such dates as may occur in accordance with the FRN Convention, Floating Rate
Convention or Eurodollar Convention at such Specified Period of calendar months
following the Interest Commencement Date (in the case of the First Interest
Payment Date) or the previous Interest Payment Date (in any other case);

 

“Interest Period” means each period beginning on (and
including) the Interest Commencement Date or any Interest Payment Date and
ending on (but excluding) the next Interest Payment Date;

 

“ISDA Definitions” means the 2000 ISDA Definitions (as
amended and updated as at the date of issue of the first Tranche of the Notes
of the relevant Series (as specified in the relevant Final Terms) as
published by the International Swaps and Derivatives Association, Inc.)
or, if so specified in the relevant Final Terms, the 2006 ISDA Definitions (as
amended and updated as at the date of issue of the first Tranche of the Notes
of the relevant Series (as specified in the relevant Final Terms) as
published by the International Swaps and Derivatives Association, Inc.);

 

“Issue Date” has the meaning given in the relevant Final
Terms;

 

“Liens” means any interest in Property
securing an obligation owed to, or a claim by, a Person other than the owner of
the Property, including but not limited to a security interest arising from a
mortgage, encumbrance, pledge, conditional sale or trust receipt, or a lease,
consignment or bailment for security purposes. 
For the purposes of this definition, a Person shall be deemed to be the
owner of any Property which it has or holds subject to a conditional sale
arrangement, financing lease or other arrangement pursuant to which title to
the Property has been retained by or is vested in some other Person for
security purposes;

 

“Margin” has the meaning given in the relevant Final Terms;

 

“Maturity Date” has the meaning given in the relevant Final
Terms;

 

“Maximum Redemption Amount” has the meaning
given in the relevant Final Terms;

 

“Minimum Redemption Amount” has the meaning
given in the relevant Final Terms;

 

“Optional Redemption Amount (Call)” means, in respect of any
Note, its principal amount or such other amount as may be specified in, or
determined in accordance with, the relevant Final Terms;

 

“Optional Redemption Amount (Put)” means, in respect of any
Note, its principal amount or such other amount as may be specified in, or
determined in accordance with, the relevant Final Terms;

 

“Optional Redemption Date (Call)” has the meaning given in
the relevant Final Terms;

 

“Optional Redemption Date (Put)” has the meaning given in the
relevant Final Terms;

 

“Participating Member State”
means a Member State of the European Communities which adopts the euro as its
lawful currency in accordance with the Treaty;

 

 

“Payment Business Day”
means:

 

(i)              if
the currency of payment is euro, any day which is:

 

(A)      a day on which banks in the
relevant place of presentation are open for presentation and payment of bearer
debt securities and for dealings in foreign currencies; and

 

(B)      in the case of payment by
transfer to an account, a TARGET Settlement Day and a day on which dealings in
foreign currencies may be carried on in each (if any) Additional Financial
Centre; or

 

(ii)             if
the currency of payment is not euro, any day which is:

 

(A)      a day on which banks in the
relevant place of presentation are open for presentation and payment of bearer
debt securities and for dealings in foreign currencies; and

 

(B)      in the case of payment by
transfer to an account, a day on which dealings in foreign currencies may be
carried on in the Principal Financial Centre of the currency of payment and in
each (if any) Additional Financial Centre;

 

“Person” means any individual, company, corporation, firm,
partnership, joint venture, association, organisation, state or agency of a
state or other entity, whether or not having separate legal personality;

 

“Principal Financial Centre” means, in
relation to any currency, the principal financial centre for that currency provided, however, that in relation to
euro, it means the principal financial centre of such Member State of the
European Communities as is selected (in the case of a payment) by the payee or
(in the case of a calculation) by the Calculation Agent;

 

“Property” means any kind of property or
asset, whether real, personal or mixed, tangible or intangible;

 

“Put Option Notice” means a notice which must be delivered to
a Paying Agent by any Noteholder wanting to exercise a right to redeem a Note
at the option of the Noteholder;

 

“Put Option Receipt” means a receipt issued by a Paying Agent
to a depositing Noteholder upon deposit of a Note with such Paying Agent by any
Noteholder wanting to exercise a right to redeem a Note at the option of the
Noteholder;

 

“Rate of Interest” means the rate or rates (expressed as a
percentage per annum) of interest payable in respect of the Notes specified in
the relevant Final Terms or calculated or determined in accordance with the
provisions of these Conditions and/or the relevant Final Terms;

 

“Redemption Amount” means, as appropriate, the Final
Redemption Amount, the Early Redemption Amount (Tax), the Optional Redemption
Amount (Call), the Optional Redemption Amount (Put), the Early Termination
Amount or such other amount in the nature of a redemption amount as may be
specified in, or determined in accordance with the provisions of, the relevant
Final Terms;

 

“Reference Banks”  has the meaning given in the relevant Final
Terms or, if none, four major banks selected by the Calculation Agent in the
market that is most closely connected with the Reference Rate;

 

“Reference Price” has the meaning given in the relevant Final
Terms;

 

“Reference Rate”  has the
meaning given in the relevant Final Terms;

 

“Regular Period”
means:

 

(i)              in
the case of Notes where interest is scheduled to be paid only by means of
regular payments, each period from and including the Interest Commencement Date
to but excluding the First Interest Payment Date and each successive period
from and including one Interest Payment Date to but excluding the next Interest
Payment Date;

 

(ii)             in
the case of Notes where, apart from the first Interest Period, interest is
scheduled to be paid only by means of regular payments, each period from and
including a Regular Date falling in any year to but excluding the next Regular
Date, where “Regular Date” means
the day and month (but not the year) on which any Interest Payment Date falls;
and

 

 

(iii)            in
the case of Notes where, apart from one Interest Period other than the first
Interest Period, interest is scheduled to be paid only by means of regular
payments, each period from and including a Regular Date falling in any year to
but excluding the next Regular Date, where “Regular
Date” means the day and month (but not the year) on which any
Interest Payment Date falls other than the Interest Payment Date falling at the
end of the irregular Interest Period;

 

“Relevant Date” means, in relation to any payment, whichever
is the later of (a) the date on which the payment in question first
becomes due and (b) if the full amount payable has not been received in
the Principal Financial Centre of the currency of payment by the Fiscal Agent
on or prior to such due date, the date on which (the full amount having been so
received) notice to that effect has been given to the Noteholders;

 

“Relevant Financial Centre” has the meaning given in the
relevant Final Terms;

 

“Relevant Screen Page”  means the
page, section or other part of a particular information service (including,
without limitation, the Reuter Money 3000 Service and the Telerate Service)
specified as the Relevant Screen Page in the relevant Final Terms, or such
other page, section or other part as may replace it on that information service
or such other information service, in each case, as may be nominated by the
Person providing or sponsoring the information appearing there for the purpose
of displaying rates or prices comparable to the Reference Rate;

 

“Relevant Time” has the meaning given in the relevant Final
Terms;

 

“Reserved Matter” means any proposal

 

(i)              to
change any date fixed for payment of principal or interest in respect of the
Notes, to reduce the amount of principal or interest payable on any date in
respect of the Notes, to alter the method of calculating the amount of any
payment in respect of the Notes or the date for any such payment;

 

(ii)             to
effect the exchange or substitution of the Notes for, or the conversation of
the Notes into, shares bonds or other obligations or securities of the Issuer
or any other Person or body corporate formed or to be formed;

 

(iii)            to
change the currency in which amounts due in respect of the Notes are payable;

 

(iv)           to
change the quorum required at any Meeting or the majority required to pass an
Extraordinary Resolution; or

 

(v)            to
amend this definition;

 

“Restricted Debt”
when used with respect to the Issuer or any Subsidiary of the Issuer, means any
present or future indebtedness for money borrowed evidenced by any note, bond,
debenture or other evidence of indebtedness for money borrowed which is, or is
capable of being, listed, quoted or traded on any stock exchange or in any
securities market (including, without limitation, any over-the counter market),
for which the Issuer or such Subsidiary of the Issuer is liable, directly or
indirectly, absolutely or contingently. 
Restricted Debt shall not include any indebtedness for the payment,
redemption or satisfaction of which money (or other Property permitted under
the instrument creating or evidencing such indebtedness) in the necessary
amount shall have been deposited in trust with a trustee or proper depository
at or before the maturity or redemption date thereof.  For the purposes of this definition, “indebtedness
for money borrowed” shall include, without limitation, obligations created or
arising under any conditional sale, financing lease, or other title retention
agreement and obligations to pay for Property;

 

“Specified Currency” has the meaning given in the relevant
Final Terms;

 

“Specified Denomination(s)” has the meaning given in the
relevant Final Terms;

 

“Specified Office” has the meaning given in the Agency
Agreement;

 

“Specified Period” has the meaning given in the relevant
Final Terms;

 

 

“Subsidiary”
means, in relation to any Person (the “first Person”)
at any particular time, any other Person (the “second
Person”):

 

(i)              whose
affairs and policies the first Person controls or has the power to control,
whether by ownership of share capital, contract, the power to appoint or remove
members of the governing body of the second Person or otherwise; or

 

(ii)             whose
financial statements are, in accordance with applicable law and generally
accepted accounting principles, consolidated with those of the first Person;

 

“Talon” means a talon for further Coupons;

 

“TARGET2” means the Trans-European Automated
Real-Time Gross Settlement Express Transfer payment system which utilises a
single shared platform and which was launched on 19 November 2007;

 

“TARGET Settlement Day” means any day on
which TARGET2 is open for the settlement of payments in euro;

 

“Treaty” means the Treaty establishing the European
Communities, as amended; and

 

“Zero Coupon Note” means a Note specified as such in the
relevant Final Terms.

 

(b)         Interpretation:  In these Conditions:

 

(i)              if
the Notes are Zero Coupon Notes, references to Coupons and Couponholders are
not applicable;

 

(ii)             if
Talons are specified in the relevant Final Terms as being attached to the Notes
at the time of issue, references to Coupons shall be deemed to include
references to Talons;

 

(iii)            if
Talons are not specified in the relevant Final Terms as being attached to the
Notes at the time of issue, references to Talons are not applicable;

 

(iv)           any
reference to principal shall be deemed to include the Redemption Amount, any
additional amounts in respect of principal which may be payable under Condition
12 (Taxation), any premium
payable in respect of a Note and any other amount in the nature of principal
payable pursuant to these Conditions;

 

(v)            any
reference to interest shall be deemed to include any additional amounts in
respect of interest which may be payable under Condition 12 (Taxation) and any other amount in the nature
of interest payable pursuant to these Conditions;

 

(vi)           references
to Notes being “outstanding” shall be construed in accordance with the Agency
Agreement;

 

(vii)          if
an expression is stated in Condition 2(a) to have the meaning given in the
relevant Final Terms, but the relevant Final Terms gives no such meaning or
specifies that such expression is “not applicable” then such expression is not
applicable to the Notes; and

 

(viii)         any
reference to the Agency Agreement shall be construed as a reference to the
Agency Agreement as amended and/or supplemented up to and including the Issue
Date of the Notes.

 

3.           Form Denomination and Title

 

The Notes are
in bearer form in the Specified Denomination(s) with Coupons and, if
specified in the relevant Final Terms, Talons attached at the time of
issue.  In the case of a Series of
Notes with more than one Specified Denomination, Notes of one Specified
Denomination will not be exchangeable for Notes of another Specified
Denomination.  In the case of any Notes
which are to be admitted to trading on a regulated market within the European
Economic Area or offered to the public in a Member State of the European
Economic Area in circumstances which require the publication of a prospectus
under the Prospectus Directive, the minimum Specified Denomination shall be EUR
50,000 (or its equivalent in any other currency as at the date of issue of the
relevant Notes).  Title to the Notes and
the Coupons will pass by delivery.  The
holder of any Note or Coupon shall (except as otherwise required by law) be
treated as its absolute owner for all purposes (whether or not it is overdue
and regardless of any notice of ownership, trust or any other interest therein,
any writing thereon or any notice of any previous loss or theft thereof) and no

 

 

Person shall
be liable for so treating such holder. 
No Person shall have any right to enforce any term or condition of any
Note under the Contracts (Rights of Third Parties) Act 1999.

 

4.           Status of Notes

 

The Notes
constitute direct, general, unconditional, unsubordinated and (without
prejudice to the provisions of Condition 5 (Negative
Pledge)) unsecured obligations of the Issuer which will at all times
rank pari passu among themselves
and at least pari passu with all
other present and future unsecured and unsubordinated obligations of the
Issuer, save for such obligations as may be preferred by provisions of law that
are both mandatory and of general application and subject to Condition 5 (Negative Pledge).

 

5.           Negative Pledge

 

After the date hereof, the Issuer will not itself, and will
not permit any Subsidiary of the Issuer to, create, incur or suffer to exist,
any Lien on any Property of the Issuer or any Subsidiary of the Issuer securing
any Restricted Debt, without effectively providing that the Notes (together
with, if the Issuer shall so determine, any other indebtedness of the Issuer or
such Subsidiary then existing or thereafter created) shall be secured equally
and rateably with (or, at the option of the Issuer, prior to) such secured Restricted
Debt, so long as such secured Restricted Debt shall be so secured, unless,
after giving effect thereto, the aggregate amount of all Restricted Debt of the
Issuer and its Subsidiaries secured by Liens on Property of the Issuer and its
Subsidiaries would not exceed 15% of Consolidated Assets; provided, however, that this Condition 5
shall not apply to, and there shall be excluded from Restricted Debt secured by
Liens in any computation under this Condition 5, Restricted Debt secured only
by:

 

(i)              Liens
on Property of, or on any shares of capital stock of, any corporation existing
at the time such corporation becomes a Subsidiary of the Issuer;

 

(ii)             Liens
in favour of the Issuer or any Subsidiary of the Issuer or Liens securing any
indebtedness of a Subsidiary to the Issuer or of the Issuer or a Subsidiary to
a Subsidiary of the Issuer;

 

(iii)            Liens
in favour of any governmental body (or surety for any governmental body) to
secure progress, advance or other payments pursuant to any contract or provision
of any statute or rule of court;

 

(iv)           Liens
of any other creditors on Property repossessed in the ordinary course of
business which comprises collateral security for defaulted indebtedness or
additional Liens created on any such Property for the purpose of protecting the
interest of the Issuer therein;

 

(v)            A
banker’s Lien or other right of offset in favour of any lender or other holder
of Restricted Debt on money deposited with such lender or holder in the
ordinary course of business;

 

(vi)           Liens
on Property and rentals therefrom existing at the time of acquisition thereof,
or to secure the payment of all or any part of the purchase price thereof or
construction thereon or to secure any Restricted Debt incurred prior to, at the
time of, or within 180 days after the later of the acquisition of such Property
of the completion of construction for the purpose of financing all or any part
of the purchase price thereof or construction thereon; or

 

(vii)          Any
extension, renewal or replacement (or successive extensions, renewals or
replacements), as a whole or in part, of any Lien referred to in the foregoing
clauses (i) through (vi), inclusive; provided,
however, that such extension, renewal or replacement Lien shall be
limited to all or part of the same Property that secured the Lien extended,
renewed or replaced (plus improvements on such Property).

 

For purposes
of this Condition 5 an “acquisition” of Property shall include any transaction
or Series of transactions by which the Issuer or a Subsidiary of the Issuer
acquires, directly or indirectly, an interest, or an additional interest (to
the extent thereof), in such Property, including without limitation an
acquisition through merger or consolidation with, or an acquisition of an
interest in, a Person owning an interest in such Property.

 

6.           Fixed Rate Note Provisions

 

(a)         Application:  This Condition 6 (Fixed Rate Note Provisions) is applicable to the Notes only
if the Fixed Rate Note Provisions are specified in the relevant Final Terms as
being applicable.

 

 

(b)         Accrual of interest:  The Notes bear interest from
the Interest Commencement Date at the Rate of Interest payable in arrear on
each Interest Payment Date, subject as provided in Condition 11 (Payments). 
Each Note will cease to bear interest from the due date for final
redemption unless, upon due presentation, payment of the Redemption Amount is
improperly withheld or refused, in which case it will continue to bear interest
in accordance with this Condition 6 (as well after as before judgment) until whichever
is the earlier of (i) the day on which all sums due in respect of such
Note up to that day are received by or on behalf of the relevant Noteholder and
(ii) the day which is seven days after the Fiscal Agent has notified the
Noteholders that it has received all sums due in respect of the Notes up to
such seventh day (except to the extent that there is any subsequent default in
payment).

 

(c)         Fixed Coupon Amount:  The
amount of interest payable in respect of each Note for any Interest Period
shall be the relevant Fixed Coupon Amount and, if the Notes are in more than
one Specified Denomination, shall be the relevant Fixed Coupon Amount in
respect of the relevant Specified Denomination.

 

(d)         Calculation of interest
amount:  The
amount of interest payable in respect of each Note for any period for which a
Fixed Coupon Amount is not specified shall be calculated by applying the Rate
of Interest to the Calculation Amount, multiplying the product by the relevant
Day Count Fraction and rounding the resulting figure to the nearest sub-unit of
the Specified Currency (half a sub-unit being rounded upwards) and multiplying
such rounded figure by a fraction equal to the Specified Denomination of such
Note divided by the Calculation Amount. 
For this purpose a “sub-unit”
means, in the case of any currency other than euro, the lowest amount of such
currency that is available as legal tender in the country of such currency and,
in the case of euro, means one cent.

 

7.           Floating Rate Note and Index-Linked Interest Note Provisions

 

(a)         Application:  This Condition 7 (Floating Rate Note and Index-Linked Interest Note
Provisions) is applicable to the Notes only if the Floating Rate
Note Provisions or the Index-Linked Interest Note Provisions are specified in
the relevant Final Terms as being applicable.

 

(b)         Accrual of interest:  The Notes bear interest from
the Interest Commencement Date at the Rate of Interest payable in arrear on
each Interest Payment Date, subject as provided in Condition 11 (Payments). 
Each Note will cease to bear interest from the due date for final
redemption unless, upon due presentation, payment of the Redemption Amount is
improperly withheld or refused, in which case it will continue to bear interest
in accordance with this Condition (as well after as before judgment) until
whichever is the earlier of (i) the day on which all sums due in respect
of such Note up to that day are received by or on behalf of the relevant
Noteholder and (ii) the day which is seven days after the Fiscal Agent has
notified the Noteholders that it has received all sums due in respect of the
Notes up to such seventh day (except to the extent that there is any subsequent
default in payment).

 

(c)         Screen Rate Determination:  If Screen Rate Determination is specified in
the relevant Final Terms      as the manner in which the
Rate(s) of Interest is/are to be determined, the Rate of Interest
applicable to the Notes for each Interest Period will be determined by the
Calculation Agent on the following basis:

 

(i)              if
the Reference Rate is a composite quotation or customarily supplied by one
entity, the Calculation Agent will determine the Reference Rate which appears
on the Relevant Screen Page as of the Relevant Time on the relevant
Interest Determination Date;

 

(ii)             in
any other case, the Calculation Agent will determine the arithmetic mean of the
Reference Rates which appear on the Relevant Screen Page as of the
Relevant Time on the relevant Interest Determination Date;

 

(iii)            if,
in the case of (i) above, such rate does not appear on that page or,
in the case of (ii) above, fewer than two such rates appear on that page or
if, in either case, the Relevant Screen Page is unavailable, the
Calculation Agent will:

 

(A)      request the principal Relevant
Financial Centre office of each the Reference Banks to provide a quotation of
the Reference Rate at approximately the Relevant Time on the Interest
Determination Date to prime banks in the Relevant Financial Centre interbank
market in an amount that is representative for a single transaction in that
market at that time; and

 

 

(B)      determine the arithmetic mean
of such quotations; and

 

(iv)           if
fewer than two such quotations are provided as requested, the Calculation Agent
will determine the arithmetic mean of the rates (being the nearest to the Reference
Rate, as determined by the Calculation Agent) quoted by major banks in the
Principal Financial Centre of the Specified Currency, selected by the
Calculation Agent, at approximately 11.00 a.m. (local time in the
Principal Financial Centre of the Specified Currency) on the first day of the
relevant Interest Period for loans in the Specified Currency to leading
European banks for a period equal to the relevant Interest Period and in an
amount that is representative for a single transaction in that market at that
time,

 

and the Rate
of Interest for such Interest Period shall be the sum of the Margin and the
rate or (as the case may be) the arithmetic mean so determined; provided, however, that if the Calculation
Agent is unable to determine a rate or (as the case may be) an arithmetic mean
in accordance with the above provisions in relation to any Interest Period, the
Rate of Interest applicable to the Notes during such Interest Period will be
the sum of the Margin and the rate or (as the case may be) the arithmetic mean
last determined in relation to the Notes in respect of a preceding Interest
Period.

 

(d)         ISDA Determination:  If ISDA Determination is specified in the relevant
Final Terms as the manner in which the Rate(s) of Interest is/are to be
determined, the Rate of Interest applicable to the Notes for each Interest
Period will be the sum of the Margin and the relevant ISDA Rate where “ISDA
Rate” in relation to any Interest Period means a rate equal to the Floating
Rate (as defined in the ISDA Definitions) that would be determined by the
Calculation Agent under an interest rate swap transaction if the Calculation
Agent were acting as Calculation Agent for that interest rate swap transaction
under the terms of an agreement incorporating the ISDA Definitions and under
which:

 

(i)              the
Floating Rate Option (as defined in the ISDA Definitions) is as specified in
the relevant Final Terms;

 

(ii)             the
Designated Maturity (as defined in the ISDA Definitions) is a period specified
in the relevant Final Terms; and

 

(iii)            the
relevant Reset Date (as defined in the ISDA Definitions) is either (A) if
the relevant Floating Rate Option is based on the London inter-bank offered
rate (LIBOR) for a currency, the first day of that Interest Period or (B) in
any other case, as specified in the relevant Final Terms.

 

(e)         Index-Linked Interest:  If the Index-Linked Interest
Note Provisions are specified in the relevant Final Terms as being applicable,
the Rate(s) of Interest applicable to the Notes for each Interest Period
will be determined in the manner specified in the relevant Final Terms.

 

(f)          Maximum or Minimum Rate of
Interest:  If
any Maximum Rate of Interest or Minimum Rate of Interest is specified in the
relevant Final Terms, then the Rate of Interest shall in no event be greater
than the maximum or be less than the minimum so specified.

 

(g)         Calculation of Interest
Amount:  The
Calculation Agent will, as soon as practicable after the time at which the Rate
of Interest is to be determined in relation to each Interest Period, calculate
the Interest Amount payable in respect of each Note for such Interest
Period.  The Interest Amount will be
calculated by applying the Rate of Interest for such Interest Period to the
Calculation Amount, multiplying the product by the relevant Day Count Fraction,
rounding the resulting figure to the nearest sub-unit of the Specified Currency
(half a sub-unit being rounded upwards) and multiplying such rounded figure by
a fraction equal to the Specified Denomination of the relevant note divided by
the Calculation amount.  For this purpose
a “sub-unit” means, in the case of
any currency other than euro, the lowest amount of such currency that is
available as legal tender in the country of such currency and, in the case of
euro, means one cent.

 

(h)         Calculation of other
amounts:  If
the relevant Final Terms specifies that any other amount is to be calculated by
the Calculation Agent, the Calculation Agent will, as soon as practicable after
the time or times at which any such amount is to be determined, calculate the
relevant amount.  The relevant amount
will be calculated by the Calculation Agent in the manner specified in the
relevant Final Terms.

 

(i)          Publication:  The Calculation Agent will
cause each Rate of Interest and Interest Amount determined by it, together with
the relevant Interest Payment Date, and any other amount(s) required to be
determined by it

 

 

together with
any relevant payment date(s) to be notified to the Paying Agents and each
listing authority, stock exchange and/or quotation system (if any) by which the
Notes have then been admitted to listing, trading and/or quotation as soon as
practicable after such determination but (in the case of each Rate of Interest,
Interest Amount and Interest Payment Date) in any event not later than the
first day of the relevant Interest Period. 
Notice thereof shall also promptly be given to the Noteholders.  The Calculation Agent will be entitled to
recalculate any Interest Amount (on the basis of the foregoing provisions) in
the event of an extension or shortening of the relevant Interest Period.  If the Calculation Amount is less than the
minimum Specified Denomination the Calculation Agent shall not be obliged to
publish each Interest Amount but instead may publish only the Calculation
Amount and the Interest Amount in respect of a Note having the minimum
Specified Denomination.

 

(j)                               Notifications etc:  All
notifications, opinions, determinations, certificates, calculations, quotations
and decisions given, expressed, made or obtained for the purposes of this
Condition by the Calculation Agent will (in the absence of manifest error) be
binding on the Issuer, the Paying Agents, the Noteholders and the Couponholders
and (subject as aforesaid) no liability to any such Person will attach to the
Calculation Agent in connection with the exercise or non-exercise by it of its
powers, duties and discretions for such purposes.

 

8.                                 Zero Coupon Note Provisions

 

(a)                            Application:  This
Condition 8 (Zero Coupon Note Provisions) is
applicable to the Notes only if the Zero Coupon Note Provisions are specified
in the relevant Final Terms as being applicable.

 

(b)                           Late payment on Zero Coupon Notes: 
If the Redemption Amount payable in
respect of any Zero Coupon Note is improperly withheld or refused, the
Redemption Amount shall thereafter be an amount equal to the sum of:

 

(i)                                         the
Reference Price; and

 

(ii)                                      the
product of the Accrual Yield (compounded annually) being applied to the
Reference Price on the basis of the relevant Day Count Fraction from (and
including) the Issue Date to (but excluding) whichever is the earlier of (i) the
day on which all sums due in respect of such Note up to that day are received
by or on behalf of the relevant Noteholder and (ii) the day which is seven
days after the Fiscal Agent has notified the Noteholders that it has received
all sums due in respect of the Notes up to such seventh day (except to the extent
that there is any subsequent default in payment).

 

9.                                 Dual Currency Note Provisions

 

(a)                            Application:  This
Condition 9 (Dual Currency Note Provisions) is
applicable to the Notes only if the Dual Currency Note Provisions are specified
in the relevant Final Terms as being applicable.

 

(b)                           Rate of Interest:  If the rate or amount of interest falls to be
determined by reference to an exchange rate, the rate or amount of interest
payable shall be determined in the manner specified in the relevant Final Terms.

 

10.                           Redemption and Purchase

 

(a)                            Scheduled redemption:  Unless previously redeemed, or purchased and
cancelled, the Notes will be redeemed at their Final Redemption Amount on the
Maturity Date, subject as provided in Condition 11 (Payments).

 

(b)                           Redemption for tax reasons:  The
Notes may be redeemed at the option of the Issuer in whole, but not in part:

 

(i)                                         at
any time (if neither the Floating Rate Note Provisions or the Index-Linked
Interest Note Provisions are specified in the relevant Final Terms as being
applicable); or

 

(ii)                                      on
any Interest Payment Date (if the Floating Rate Note Provisions or the
Index-Linked Interest Note Provisions are specified in the relevant Final Terms
as being applicable),

 

on giving not less than 30 nor more than 60 days’ notice to
the Noteholders (which notice shall be irrevocable), at their Early Redemption
Amount (Tax), together with interest accrued (if any) to the date fixed for
redemption, if:

 

(A)                 (x) the
Issuer has or will become obliged to pay additional amounts as provided or
referred to in Condition 12 (Taxation)
as a result of any change in, or amendment to, the laws or 

 

 

regulations
of The Netherlands or the United States of America or the United Kingdom or any
political subdivision or any authority thereof or therein having power to tax,
or any change in the application or official interpretation of such laws or
regulations (including a holding by a court of competent jurisdiction), which
change or amendment becomes effective on or after the date of issue of the
first Tranche of the Notes; and (y) such obligation cannot be avoided by
the Issuer taking reasonable measures available to it; or

 

(B)                   the
Issuer shall determine that any payment made outside the United States by the
Issuer or any Paying Agents in respect of any Note or Coupon appertaining
thereto would, under any present or future laws or regulations of the United
States affecting taxation or otherwise, be subject to any certification,
information or other reporting requirement of U.S. law or regulation with
regard to the nationality, residence or identity of a beneficial owner, who is
not a U.S. Person, of such instrument or Coupon (other than a requirement that:
(x) would not be applicable to a payment made (1) directly to the
beneficial owner or (2) to a custodian, nominee or other agent of the
beneficial owner; or (y) could be satisfied by the holder, custodian,
nominee or other agent certifying that the beneficial owner is not a U.S.
Person, provided, however, that
in each case referred to in (x)(2) or (y) payment by any such
custodian, nominee or agent to the beneficial owner is not otherwise subject to
any requirement referred to in this sentence; or (z) would not be
applicable to a payment made by at least one paying agent),

 

provided, however, that
no such notice of redemption shall be given earlier than:

 

(1)                    where
the Notes may be redeemed at any time, 90 days prior to the earliest date on
which the Issuer would be obliged to pay such additional amounts if a payment
in respect of the Notes were then due; or

 

(2)                    where
the Notes may be redeemed only on an Interest Payment Date, 60 days prior to
the Interest Payment Date occurring immediately before the earliest date on
which the Issuer would be obliged to pay such additional amounts if a payment
in respect of the Notes were then due.

 

Prior to the
publication of any notice of redemption pursuant to this paragraph, the Issuer
shall deliver to the Fiscal Agent (A) a certificate signed by two members
of the Board of Management of the Issuer stating that the Issuer is entitled to
effect such redemption and setting forth a statement of facts showing that the
conditions precedent to the right of the Issuer so to redeem have occurred of
and (B) (in the case of redemption under Condition 10(b)(A)) an opinion of
independent legal advisers of recognised standing to the effect that the Issuer
has or will become obliged to pay such additional amounts as a result of such
change or amendment.  Upon the expiry of
any such notice as is referred to in this Condition 10(b), the Issuer shall be
bound to redeem the Notes in accordance with this Condition 10(b).

 

(c)                            Redemption at the option of the Issuer: 
If the Call Option is specified in the
relevant Final Terms as being applicable, the Notes may be redeemed at the
option of the Issuer in whole or, if so specified in the relevant Final Terms,
in part on any Optional Redemption Date (Call) at the relevant Optional
Redemption Amount (Call) on the Issuer giving not less than 30 nor more than 60
days’ notice to the Noteholders (which notice shall be irrevocable and shall
oblige the Issuer to redeem the Notes or, as the case may be, the Notes
specified in such notice on the relevant Optional Redemption Date (Call) at the
Optional Redemption Amount (Call) plus accrued interest (if any) to such date).

 

(d)                           Partial redemption:  If the Notes are to be redeemed in part only
on any date in accordance with Condition 10(c) (Redemption at the option of the Issuer), the Notes to be
redeemed shall be selected by the drawing of lots in such place and in such
manner as may be fair and reasonable in the circumstances, taking into account
prevailing market practices, subject to compliance with applicable law and the rules of
each listing authority, stock exchange and/or quotation system (if any) by
which the Notes have then been admitted to listing, trading and/or quotation,
and the notice to Noteholders referred to in Condition 10(c) (Redemption at the option of the Issuer)
shall specify the serial numbers of the Notes so to be redeemed.  If any Maximum Redemption Amount or Minimum
Redemption Amount is specified in the relevant Final Terms, then the Optional
Redemption Amount (Call) shall in no event be greater than the maximum or be
less than the minimum so specified.

 

 

(e)                            Redemption at the option of Noteholders:  If the Put Option is specified
in the relevant Final Terms as being applicable, the Issuer shall, at the
option of the holder of any Note, redeem such Note on the Optional Redemption
Date (Put) specified in the relevant Put Option Notice at the relevant Optional
Redemption Amount (Put) together with interest (if any) accrued to such
date.  In order to exercise the option
contained in this Condition 10(e), the holder of a Note must, not less than 30
nor more than 60 days before the relevant Optional Redemption Date (Put),
deposit with any Paying Agent such Note together with all unmatured Coupons
relating thereto and a duly completed Put Option Notice in the form obtainable
from any Paying Agent.  The Paying Agent
with which a Note is so deposited shall deliver a duly completed Put Option
Receipt to the depositing Noteholder.  No
Note, once deposited with a duly completed Put Option Notice in accordance with
this Condition 10(e), may be withdrawn; provided,
however, that if, prior to the relevant Optional Redemption Date
(Put), any such Note becomes immediately due and payable or, upon due
presentation of any such Note on the relevant Optional Redemption Date (Put),
payment of the redemption moneys is improperly withheld or refused, the
relevant Paying Agent shall mail notification thereof to the depositing
Noteholder at such address as may have been given by such Noteholder in the
relevant Put Option Notice and shall hold such Note at its Specified Office for
collection by the depositing Noteholder against surrender of the relevant Put
Option Receipt.  For so long as any
outstanding Note is held by a Paying Agent in accordance with this Condition
10(e), the depositor of such Note and not such Paying Agent shall be deemed to
be the holder of such Note for all purposes.

 

(f)                              No other redemption:  The
Issuer shall not be entitled to redeem the Notes otherwise than as provided in
paragraphs (a) to (e) above.

 

(g)                           Early redemption of Zero Coupon Notes: 
Unless otherwise specified in the
relevant Final Terms, the Redemption Amount payable on redemption of a Zero
Coupon Note at any time before the Maturity Date shall be an amount equal to
the sum of:

 

(i)                                         the
Reference Price; and

 

(ii)                                      the
product of the Accrual Yield (compounded annually) being applied to the
Reference Price from (and including) the Issue Date to (but excluding) the date
fixed for redemption or (as the case may be) the date upon which the Note
becomes due and payable.

 

Where such calculation
is to be made for a period which is not a whole number of years, the
calculation in respect of the period of less than a full year shall be made on
the basis of such Day Count Fraction as may be specified in the Final Terms for
the purposes of this Condition 10(g) or, if none is so specified, a Day
Count Fraction of 30E/360.

 

(h)                           Purchase:  The
Issuer or any of its Subsidiaries may at any time purchase Notes in the open
market  or otherwise and at any price,
provided that all unmatured Coupons are purchased therewith.

 

(i)                               Cancellation:  All
Notes so redeemed or purchased by the Issuer or any of its Subsidiaries and any
unmatured Coupons attached to or surrendered with them shall be cancelled and
may not be reissued or resold.

 

11.                           Payments

 

(a)                            Principal:  Payments
of principal shall be made only against presentation and (provided that payment
is made in full) surrender of Notes at the Specified Office of any Paying Agent
outside  the United States by cheque
drawn in the currency in which the payment is due on, or by transfer to an
account denominated in that currency (or, if that currency is euro, any other
account to which euro may be credited or transferred) and maintained by the
payee with, a bank in the Principal Financial Centre of that currency (in the
case of a sterling cheque, a town clearing branch of a bank in the City of
London).  No payments on Notes will be
made by mail to an address in the United States of America or by transfer to an
account maintained in the United States of America.

 

(b)                           Interest:  Payments
of interest shall, subject to paragraph (h) below, be made only against
presentation and (provided that payment is made in full) surrender of the
appropriate Coupons at the Specified Office of any Paying Agent outside the
United States in the manner described in paragraph (a) above.

 

(c)                            Payments in The City of New York: 
Payments of principal or interest in U.S.
dollars may be made at the Specified Office of a Paying Agent in The City of
New York if (i) the Issuer has appointed Paying Agents 

 

 

outside the
United States with the reasonable expectation that such Paying Agents will be
able to make payment of the full amount of the interest on the Notes in U.S.
dollars when due, (ii) payment of the full amount of such interest in U.S.
dollars at the offices of all such Paying Agents is illegal or effectively
precluded by exchange controls or other similar restrictions and (iii) payment
is permitted by applicable United States law.

 

(d)                           Payments subject to fiscal laws: 
All payments in respect of the Notes are
subject in all cases to any applicable fiscal or other laws and regulations in
the place of payment, but without prejudice to the provisions of Condition 12 (Taxation). 
No commissions or expenses shall be charged to the Noteholders or
Couponholders in respect of such payments.

 

(e)                            Deductions for unmatured Coupons: 
If the relevant Final Terms specifies
that the Fixed Rate Note Provisions are applicable and a Note is presented
without all unmatured Coupons relating thereto:

 

(i)                                         if
the aggregate amount of the missing Coupons is less than or equal to the amount
of principal due for payment, a sum equal to the aggregate amount of the
missing Coupons will be deducted from the amount of principal due for payment; provided, however, that if the gross
amount available for payment is less than the amount of principal due for
payment, the sum deducted will be that proportion of the aggregate amount of
such missing Coupons which the gross amount actually available for payment
bears to the amount of principal due for payment;

 

(ii)                                      if
the aggregate amount of the missing Coupons is greater than the amount of
principal due for payment:

 

(A)                 so
many of such missing Coupons shall become void (in inverse order of maturity)
as will result in the aggregate amount of the remainder of such missing Coupons
(the “Relevant Coupons”) being
equal to the amount of principal due for payment; provided, however, that where this sub-paragraph would
otherwise require a fraction of a missing Coupon to become void, such missing
Coupon shall become void in its entirety; and

 

(B)                   a
sum equal to the aggregate amount of the Relevant Coupons (or, if less, the
amount of principal due for payment) will be deducted from the amount of
principal due for payment; provided,
however, that, if the gross amount available for payment is less
than the amount of principal due for payment, the sum deducted will be that
proportion of the aggregate amount of the Relevant Coupons (or, as the case may
be, the amount of principal due for payment) which the gross amount actually available
for payment bears to the amount of principal due for payment.

 

Each sum of
principal so deducted shall be paid in the manner provided in paragraph (a) above
against presentation and (provided that payment is made in full) surrender of
the relevant missing Coupons.

 

(f)                              Unmatured Coupons void:  If the relevant Final Terms specifies that
this Condition 11(f) is applicable or that the Floating Rate Note
Provisions or the Index-Linked Interest Note Provisions are applicable, on the
due date for final redemption of any Note or early redemption of such Note
pursuant to Condition 10(b) (Redemption
for tax reasons), Condition 10(e) (Redemption at the option of Noteholders), Condition 10(c) (Redemption at the option of the Issuer) or
Condition 13 (Events of Default),
all unmatured Coupons relating thereto (whether or not still attached) shall
become void and no payment will be made in respect thereof.

 

(g)                           Payments on Business Days:  If the due date for
payment of any amount in respect of any Note or Coupon is not a Payment
Business Day in the place of presentation, the holder shall not be entitled to
payment in such place of the amount due until the next succeeding Payment
Business Day in such place and shall not be entitled to any further interest or
other payment in respect of any such delay.

 

(h)                           Payments other than in respect of matured Coupons:  Payments of interest other
than in respect of matured Coupons shall be made only against presentation of
the relevant Notes at the Specified Office of any Paying Agent outside the
United States (or in The City of New York if permitted by paragraph (c) above).

 

(i)                               Partial payments:  If a Paying Agent makes a partial payment in
respect of any Note or Coupon presented to it for payment, such Paying Agent
will endorse thereon a statement indicating the amount and date of such
payment.

 

 

(j)                               Exchange of Talons:  On
or after the maturity date of the final Coupon which is (or was at the time of
issue) part of a Coupon Sheet relating to the Notes, the Talon forming part of
such Coupon Sheet may be exchanged at the Specified Office of the Fiscal Agent
or at the office of the Paying Agent in London for a further Coupon Sheet
(including, if appropriate, a further Talon but excluding any Coupons in
respect of which claims have already become void pursuant to Condition 14 (Prescription)).  Upon the due date for redemption of any Note,
any unexchanged Talon relating to such Note shall become void and no Coupon
will be delivered in respect of such Talon.

 

12.                           Taxation

 

(a)                            Gross up:  All
payments of principal and interest in respect of the Notes and the Coupons by
or on behalf of the Issuer shall be made free and clear of, and without
withholding or deduction for or on account of, any present or future taxes,
duties, assessments or governmental charges of whatever nature imposed, levied,
collected, withheld or assessed by or on behalf of The Netherlands, the United
States of America or the United Kingdom or any political subdivision therein or
any authority therein or thereof having power to tax, unless the withholding or
deduction of such taxes, duties, assessments, or governmental charges is
required by law.  In that event, the
Issuer shall pay such additional amounts as will result in receipt by the
Noteholders and the Couponholders of such amounts as would have been received
by them had no such withholding or deduction been required, except that no such
additional amounts shall be payable in respect of any Note or Coupon presented
for payment:

 

(i)                                         by
or on behalf of a holder which is liable for such taxes, duties, assessments or
governmental charges in respect of such Note or Coupon by reason of its having
some connection with the jurisdiction by which such taxes, duties, assessments
or charges have been imposed, levied, collected, withheld or assessed other
than the mere holding of the Note or Coupon; or

 

(ii)                                      where
such withholding or deduction is required to be made pursuant to European
Council Directive 2003/48/EC or any other Directive implementing the
conclusions of the ECOFIN Council meeting of 26-27 November 2000 on the
taxation of savings income or any law implementing or complying with, or
introduced in order to conform to, such Directive; or

 

(iii)                                   by
or on behalf of a holder who would have been able to avoid such withholding or
deduction by presenting the relevant Note or Coupon to another Paying Agent in
a Member State of the EU; or

 

(iv)                                  more
than 30 days after the Relevant Date except to the extent that the holder of
such Note or Coupon would have been entitled to such additional amounts on
presenting such Note or Coupon for payment on the last day of such period of 30
days;

 

(v)                                     where
such withholding or deduction would not have been imposed but for the holder’s
past or present status as a personal holding company, foreign personal holding
company or passive foreign investment company with respect to the United States
or a corporation that accumulates earnings to avoid U.S. federal income tax; or

 

(vi)                                  where
such withholding or deduction would not have been imposed but for the holder’s
past or present status as a “10 per cent. shareholder” of the obligor of the
Note as defined in Section 871(h)(3) of the U.S. Internal Revenue
Code or any successor provisions, a controlled foreign corporation related to
the obligor of the Note or a bank that has invested in the Note as an extension
of credit in the ordinary course of its trade or business.

 

(b)                           Taxing jurisdiction:  If the Issuer becomes subject at any time to any
taxing jurisdiction other than The Netherlands, references in these Conditions
to The Netherlands shall be construed as references to The Netherlands and/or
such other jurisdiction.

 

13.                           Events of Default

 

If any of the following events occurs and is continuing:

 

(a)                                      Non-payment:  the
Issuer fails to pay any amount of principal in respect of the Notes on the due
date for payment thereof or fails to pay any amount of interest in respect of
the Notes within 14 days of the due date for payment thereof; or

 

 

(b)                                     Breach of other obligations:  the Issuer defaults in the performance or
observance of any of its other obligations under or in respect of the Notes and
such default remains unremedied for 30 days after written notice thereof,
addressed to the Issuer by any Noteholder has been delivered to the Issuer or
to the Specified Office of the Fiscal Agent; or

 

(c)                                      Cross-default of Issuer:  the Issuer defaults under any Indebtedness, whether
such Indebtedness now exists or shall hereafter be created, which default shall
have resulted in Indebtedness in an aggregate principal amount exceeding €10,000,000
(or its equivalent in any other currency or currencies) (except that such euro
amount shall not apply with respect to a default with respect to Notes of any
other Series), becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, without such acceleration
having been rescinded or annulled or such Indebtedness having been discharged
within a period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by any Noteholder, a written notice specifying
such default and requiring the Issuer to cause such acceleration to be
rescinded or annulled or such Indebtedness to be discharged and stating that
such notice is a “Notice of Default” under this Condition 13(c); or

 

(d)                                     Security enforced:  a
secured party or encumbrancer takes possession, or a receiver, manager or other
similar officer is appointed, of the whole or a substantial part of the
undertaking, assets and revenues of the Issuer or any of its Subsidiaries; or

 

(e)                                      Insolvency etc: (i) the Issuer becomes
insolvent or admits in writing that it is unable to pay its debts as they fall
due, (ii) an administrator (including a bewindvoerder)
or liquidator (including a curator) of the Issuer or the whole or a substantial
part of the undertaking, assets and revenues of the Issuer is appointed (or
application for any such appointment is made including an application for the
Issuer to be declared bankrupt (failliet)
or to be granted a moratorium of payments (surseance
van betaling), unless such application is contested by the Issuer
and/or discharged or stayed within 90 days or is cancelled or withdrawn within
90 days after the making thereof), (iii) the Issuer takes any action for a
readjustment or deferment of any of its obligations or makes a general
assignment or an arrangement or composition (verag)
with or for the benefit of its creditors or declares a moratorium in respect of
any of its Indebtedness; or

 

(f)                                        Winding up etc:  an
order is made or an effective resolution is passed for the winding up,
liquidation or dissolution (ontbinding en
vereffening) of the Issuer or any of its Subsidiaries (otherwise
than, in the case of a Subsidiary of the Issuer, for the purposes of or
pursuant to an amalgamation, reorganisation or restructuring whilst solvent);
or

 

(g)                                     Attachment etc:  an
executory attachment (executorial beslag)
or interlocutory attachment (conservatoir
beslag) is made on all or a substantial part of the assets of the
Issuer, or a similar measure under foreign law is made, unless such application
is contested by the Issuer and/or discharged or stayed within 90 days, or is
cancelled or withdrawn within 90 days after the making thereof; or

 

(h)                                     Enforcement proceedings: 
a distress, attachment, execution or other
legal process is levied, enforced or sued out on or against the whole or a
substantial part of the property, assets or revenues of the Issuer or any of
its Subsidiaries and is not discharged or stayed within 90 days,

 

(i)                                         Keep Well Agreement etc. not in force:  the Keep Well Agreement is not
(or is claimed by either party thereto not to be) in full force and effect or
is modified, amended or terminated in contravention of the provisions thereof,
or the Issuer waives, or fails to take all reasonable steps to exercise, any of
its rights under the Keep Well Agreement or PACCAR or the Issuer fails to
perform or observe any obligation on its part under the Keep Well Agreement so
as to affect materially and adversely the interests of any Noteholder or Couponholder;

 

then any
outstanding Notes of a particular Series may by written notice, addressed
by any Noteholder, delivered to the Issuer or to the Specified Office of the
Fiscal Agent, be declared immediately due and payable, whereupon they shall
become immediately due and payable at their Early Termination Amount together
with accrued interest (if any) without further action or formality.  Upon payment of the Early Termination Amount,
all obligations of the Issuer in respect of payment of the principal amount of
the Notes of such Series shall terminate.

 

 

14.                           Prescription

 

Claims for
principal shall become void unless the relevant Notes are presented for payment
within ten years of the appropriate Relevant Date.  Claims for interest shall become void unless
the relevant Coupons are presented for payment within five years of the
appropriate Relevant Date.

 

15.                           Replacement of Notes and Coupons

 

If any Note
or Coupon is lost, stolen, mutilated, defaced or destroyed, it may be replaced
at the Specified Office of the Fiscal Agent (and, if the Notes are then
admitted to listing, trading and/or quotation by any listing authority, stock
exchange and/or quotation system which requires the appointment of a Paying
Agent in any particular place, the Paying Agent having its Specified Office in
the place required by such listing authority, stock exchange and/or quotation
system), subject to all applicable laws and listing authority, stock exchange
and/or quotation system requirements, upon payment by the claimant of the expenses
incurred in connection with such replacement and on such terms as to evidence,
security, indemnity and otherwise as the Issuer may reasonably require.  Mutilated or defaced Notes or Coupons must be
surrendered before replacements will be issued.

 

16.                           Agents

 

In acting
under the Agency Agreement and in connection with the Notes and the Coupons,
the Paying Agents act solely as agents of the Issuer and do not assume any
obligations towards or relationship of agency or trust for or with any of the
Noteholders or Couponholders.

 

The initial Paying Agents and their initial Specified
Offices are listed below.  The initial
Calculation Agent (if any) is specified in the relevant Final Terms.  The Issuer reserves the right at any time to
vary or terminate the appointment of any Paying Agent and to appoint a
successor fiscal agent or Calculation Agent and additional or successor paying
agents; provided, however, that:

 

(a)                                      the
Issuer shall at all times maintain a Fiscal Agent; and

 

(b)                                     the
Issuer undertakes that it will ensure that it maintains a paying agent in an EU
Member State that will not be obliged to withhold or deduct tax pursuant to
European Council Directive 2003/48/EC or any other Directive implementing the
conclusions of the ECOFIN Council meeting of 26-27 November 2000 or any
law implementing or complying with, or introduced in order to conform to, such
Directive; and

 

(c)                                      if
a Calculation Agent is specified in the relevant Final Terms, the Issuer shall
at all times maintain a Calculation Agent; and

 

(d)                                     if
and for so long as the Notes are admitted to listing, trading and/or quotation
by any listing authority, stock exchange and/or quotation system which requires
the appointment of a Paying Agent in any particular place, the Issuer shall
maintain a Paying Agent having its Specified Office in the place required by
such listing authority, stock exchange and/or quotation system.

 

In addition,
the Issuer shall forthwith appoint a Paying Agent in New York City in respect
of any Notes denominated in U.S. dollars in the circumstances described in
Condition 11(c).

 

Notice of any
change in any of the Paying Agents or in their Specified Offices shall promptly
be given to the Noteholders.

 

17.                           Meetings of Noteholders; Modification and Waiver

 

(a)                            Meetings of Noteholders:  The Agency Agreement contains provisions for
convening meetings of Noteholders to consider matters relating to the Notes,
including the modification of any provision of these Conditions.  Any such modification may be made if
sanctioned by an Extraordinary Resolution. 
Such a meeting may be convened by the Issuer and shall be convened by
them upon the request in writing of Noteholders holding not less than one-tenth
of the aggregate principal amount of the outstanding Notes.  The quorum at any meeting convened to vote on
an Extraordinary Resolution will be two or more Persons holding or representing
one more than half of the aggregate principal amount of the outstanding Notes
or, at any adjourned meeting, two or more Persons being or representing Noteholders
whatever the principal amount of the Notes held or represented; provided, however, that Reserved Matters
may only be sanctioned by an Extraordinary Resolution passed at a meeting of
Noteholders at which two or more Persons holding or 

 

 

representing
not less than three-quarters or, at any adjourned meeting, one quarter of the
aggregate principal amount of the outstanding Notes form a quorum.  Any Extraordinary Resolution duly passed at
any such meeting shall be binding on all the Noteholders and Couponholders,
whether present or not.

 

In addition,
a resolution in writing signed by or on behalf of all Noteholders who for the
time being are entitled to receive notice of a meeting of Noteholders will take
effect as if it were an Extraordinary Resolution.  Such a resolution in writing may be contained
in one document or several documents in the same form, each signed by or on
behalf of one or more Noteholders.

 

(b)                           Modification:  The
Notes and these Conditions may be amended without the consent of the Noteholders
or the Couponholders to correct a manifest error.  In addition, the parties to the Agency
Agreement may agree to modify any provision thereof, but the Issuer shall not
agree, without the consent of the Noteholders, to any such modification unless
it is of a formal, minor or technical nature, it is made to correct a manifest
error or it is, in the opinion of the Issuer, not materially prejudicial to the
interests of the Noteholders.

 

18.                           Further Issues

 

The Issuer
may from time to time, without the consent of the Noteholders or the
Couponholders, create and issue further notes having the same terms and
conditions as the Notes in all respects (or in all respects except for the
first payment of interest) so as to form a single series with the Notes.

 

19.                           Notices

 

Notices to
the Noteholders shall be valid if published in a leading English language daily
newspaper published in London (which is expected to be the Financial Times) or,
if such publication is not practicable, in a leading English language daily
newspaper having general circulation in Europe. 
Any such notice shall be deemed to have been given on the date of first
publication.  Couponholders shall be
deemed for all purposes to have notice of the contents of any notice given to
the Noteholders.

 

20.                           Currency Indemnity

 

If any sum
due from the Issuer in respect of the Notes or the Coupons or any order or
judgment given or made in relation thereto has to be converted from the
currency (the “first currency”) in
which the same is payable under these Conditions or such order or judgment into
another currency (the “second currency”)
for the purpose of (a) making or filing a claim or proof against the
Issuer, (b) obtaining an order or judgment in any court or other tribunal
or (c) enforcing any order or judgment given or made in relation to the
Notes, the Issuer shall indemnify each Noteholder, on the written demand of
such Noteholder addressed to the Issuer and delivered to the Issuer or to the
Specified Office of the Fiscal Agent, against any loss suffered as a result of
any discrepancy between (i) the rate of exchange used for such purpose to
convert the sum in question from the first currency into the second currency
and (ii) the rate or rates of exchange at which such Noteholder may in the
ordinary course of business purchase the first currency with the second
currency upon receipt of a sum paid to it in satisfaction, in whole or in part,
of any such order, judgment, claim or proof.

 

This
indemnity constitutes a separate and independent obligation of the Issuer,
shall give rise to a separate and independent cause of action and shall
continue in full force and effect despite any other judgment, order, claim or
proof for a liquidated amount in respect of any sum due under the Note or
Coupon or any other judgment or order.

 

21.                           Rounding

 

For the
purposes of any calculations referred to in these Conditions (unless otherwise
specified in these Conditions or the relevant Final Terms), (a) all
percentages resulting from such calculations will be rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point, (b) U.S. dollar
amounts used in or resulting from such calculations will be rounded to the
nearest cent (with one half cent being rounded up), (c) all Japanese Yen
amounts used in or resulting from such calculations will be rounded downwards
to the next lower whole Japanese Yen amount, and (d) all amounts
denominated in any other currency used in or resulting from such calculations
will be rounded to the nearest two decimal places in such currency, with 0.005
being rounded upwards.

 

 

22.                           Governing Law and Jurisdiction

 

(a)                            Governing law:  The Notes and all matters arising from or
connected with the Notes are governed by, and shall be construed in accordance
with, English law.

 

(b)                           English courts:  The courts of England have exclusive
jurisdiction to settle any dispute (a “Dispute”)
arising from or connected with the Notes.

 

(c)                            Appropriate forum:  The Issuer agrees that the courts of England
are the most appropriate and convenient courts to settle any Dispute and,
accordingly, that it will not argue to the contrary.

 

(d)                           Rights of the Noteholders to take proceedings outside England:  Condition 22(b) (English courts) is for the benefit of the
Noteholders only.  As a result, nothing
in this Condition 22 (Governing law and
jurisdiction) prevents any Noteholder from taking proceedings
relating to a Dispute (“Proceedings”)
in any other courts with jurisdiction. 
To the extent allowed by law, Noteholders may take concurrent
Proceedings in any number of jurisdictions.

 

(e)                            Process agent:  The Issuer agrees that the documents which
start any Proceedings and any other documents required to be served in relation
to those Proceedings may be served on it by being delivered to PACCAR Financial
Limited at Croston Road, Leyland, Preston, Lancs PR5 3LZ, United Kingdom or, if
different, its registered office for the time being or at any address of the
Issuer in Great Britain at which process may be served on it in accordance with
Part XXIII of the Companies Act 1985. 
If such Person is not or ceases to be effectively appointed to accept
service of process on behalf of the Issuer, the Issuer shall, on the written
demand of any Noteholder addressed and delivered to the Issuer or to the
Specified Office of the Fiscal Agent appoint a further Person in England to
accept service of process on its behalf and, failing such appointment within 15
days, any Noteholder shall be entitled to appoint such a Person by written
notice addressed to the Issuer and delivered to the Issuer or to the Specified
Office of the Fiscal Agent.  Nothing in
this paragraph shall affect the right of any Noteholder to serve process in any
other manner permitted by law.  This Condition
applies to Proceedings in England and to Proceedings elsewhere.

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