Fiat Finance and Trade Ltd. Fiat Finance Canada Ltd. Fiat Finance North America, Inc. Fiat S.p.A.

Transcription

1 Level: 5 From: 5 Friday, May 9, :53 eprint Intro : 3948 Intro BASE PROSPECTUS Fiat Finance and Trade Ltd. société anonyme (Incorporated with limited liability under the laws of the Grand-Duchy of Luxembourg; Registre de Commerce et des Sociétés de Luxembourg No. B-59500) Fiat Finance Canada Ltd. (Incorporated with limited liability under the laws of the Province of Alberta, Canada) Fiat Finance North America, Inc. (Incorporated under the laws of the State of Delaware) 15,000,000,000 Global Medium Term Note Programme unconditionally and irrevocably guaranteed by Fiat S.p.A. (incorporated as a Società per Azioni under the laws of the Republic of Italy) Under the 15,000,000,000 Global Medium Term Note Programme (the Programme ) described in this base prospectus ( the Base Prospectus ), Fiat Finance and Trade Ltd. société anonyme ( FFT ), Fiat Finance Canada Ltd. ( FFC ) and Fiat Finance North America, Inc. ( FFNA ) (each an Issuer and together, the Issuers ) may from time to time issue notes (the Notes ) denominated in any currency agreed between the relevant Issuer and the relevant Dealer (as defined below). The payments of all amounts due in respect of Notes will be unconditionally and irrevocably guaranteed by Fiat S.p.A. ( Fiat or the Guarantor ). An investment in Notes issued under the Programme involves certain risks. For a discussion of these risks see, Risk Factors. Application has been made to the Irish Financial Services Regulatory Authority (the IFSRA ), as competent authority under the Prospectus Directive, for the Base Prospectus to be approved. Such approval relates only to the Notes which are to be admitted to trading on the regulated market of the Irish Stock Exchange (as defined below) or any other regulated market for the purposes of Directive 2004/39/EC or which are to be offered to the public in any member state of the European Economic Area. There can be no assurance that any such admission to trading will be obtained. Application has been made to the Irish Stock Exchange Limited (the Irish Stock Exchange ) for Notes issued under the Programme during the 12 months from the date of the Base Prospectus to be admitted to listing on the Official List of the Irish Stock Exchange and admitted to trading on its regulated market. References in the Base Prospectus to Irish Stock Exchange (and all related references) shall mean the regulated market of the Irish Stock Exchange. In addition, references in the Base Prospectus to the Notes being listed (and all related references) shall mean that such Notes have been admitted to listing on the Official List of the Irish Stock Exchange and admitted to trading on its regulated market or, as the case may be, a MiFID Regulated Market (as defined below). The regulated market of the Irish Stock Exchange is a regulated market for the purposes of Directive 2004/39/EC (each such regulated market being a MiFID Regulated Market ). This document may be used to list Notes on the regulated market of the Irish Stock Exchange pursuant to the Programme. The Programme provides that Notes may be listed on such other or further stock exchange(s) as may be agreed between the relevant Issuer, the Guarantor and the relevant Dealer. Each Issuer may also issue unlisted Notes. The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme will not exceed 15,000,000,000 (or its equivalent in other currencies, subject to increase as provided herein). The Notes will be issued in such denominations as may be agreed between the relevant Issuer and the relevant Dealer and as specified in the applicable Final Terms, save that the minimum denomination of each Note will be such amount as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant Specified Currency (as defined below) and save that the minimum denomination of each Note admitted to trading on a regulated market situated or operating within the European Economic Area (the EEA ) and/or offered to the public in an EEA State in circumstances which require the publication of a prospectus under the Prospectus Directive will be 50,000 (or, if the Notes are denominated in a currency other than euro, the equivalent amount in such currency). Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price of Notes and any other terms and conditions not contained herein which are applicable to each Tranche (as defined under Terms and Conditions of the Notes ) of Notes will be set out in final terms (the Final Terms ) which, with respect to Notes to be listed on the Irish Stock Exchange, will be delivered to the IFSRA on or before the date of issue of the Notes of such Tranche. Copies of the Final Terms relating to Notes which are listed on the Irish Stock Exchange or offered in circumstances which require a prospectus to be published will be available free of charge, at the registered office of each Issuer and the Guarantor. Arranger UBS Investment Bank Dealers ABN AMRO Barclays Capital CALYON Crédit Agricole CIB Credit Suisse Goldman Sachs International Merrill Lynch International Société Générale Corporate & Investment Banking The Royal Bank of Scotland UBS Investment Bank Banca IMI BNP PARIBAS Citi Deutsche Bank Mediobanca Morgan Stanley TD Securities UniCredit (HVB) The date of the Base Prospectus is 12th May, 2008

2 Level: 5 From: 5 Friday, May 9, :53 eprint Intro : 3948 Intro The Base Prospectus comprises a base prospectus for the purposes of Article 5.4 of Directive 2003/71/EC (the Prospectus Directive ). The Guarantor accepts responsibility for the information contained in the Base Prospectus. To the best of the knowledge of the Guarantor, the information in the Base Prospectus is in accordance with the facts and does not omit anything likely to affect the importance of such information. Each of the Issuers accepts responsibility only for the information contained in the Base Prospectus relating to itself. To the best of the knowledge of each of the Issuers, the information contained in those parts of the Base Prospectus relating to such Issuer is in accordance with the facts and does not omit anything likely to affect the importance of such information. Copies of Final Terms will be available from the registered office of each Issuer, the Guarantor and the specified office set out below of each of the Paying Agents (as defined below). Each of the Issuers and the Guarantor has confirmed to the Dealers that the statements contained in the Base Prospectus (including all documents which are incorporated by reference herein see Documents Incorporated by Reference ) relating (in the case of each Issuer) to such Issuer and (in the case of the Guarantor) to such Issuer and the Guarantor are in every material respect true and accurate and not misleading; any opinions, predictions or intentions expressed in the Base Prospectus on the part of any Issuer or the Guarantor (as the case may be) are honestly held or made and are not misleading in any material respect; the Base Prospectus does not omit to state any material fact necessary to make such information, opinions, predictions or intentions (in such context) not misleading in any material respect; and all proper enquiries have been made to ascertain and to verify the foregoing. The Notes may be issued on a continuing basis to one or more of the Dealers specified under Summary of the Programme and any additional Dealer appointed under the Programme from time to time by the Issuers (each a Dealer and together the Dealers ), which appointment may be for a specific issue or on an ongoing basis. References in the Base Prospectus to the relevant Dealer shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing to purchase such Notes. References in the Base Prospectus to the relevant Issuer shall, in relation to an issue of Notes, be to the Issuer of such Notes. The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended, (the Securities Act ) and may not be offered or sold in the United States or to, or for the benefit of, U.S. persons unless the Notes are registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available. See Form of the Notes for a description of the manner in which Notes will be issued. Registered Notes (as defined under Form of the Notes ) are subject to certain restrictions on transfer, see Subscription and Sale and Transfer and Selling Restrictions. The Base Prospectus is to be read in conjunction with all documents which are deemed to be incorporated herein by reference (see Documents Incorporated by Reference below). The Base Prospectus shall be read and construed on the basis that such documents are incorporated and form part of the Base Prospectus. The Dealers have not independently verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Dealers as to the accuracy or completeness of the information contained or incorporated in the Base Prospectus or any other information provided by any Issuer or the Guarantor in connection with the Programme. No Dealer accepts any liability in relation to the information contained or incorporated by reference in the Base Prospectus or any other information provided by any Issuer or the Guarantor in connection with the Programme. No person is or has been authorised by any Issuer to give any information or to make any representation not contained in or not consistent with the Base Prospectus or any other information supplied in connection with the Programme or the Notes and, if given or made, such information or representation must not be relied upon as having been authorised by any Issuer or the Guarantor or any of the Dealers. 2

3 Level: 5 From: 5 Friday, May 9, :53 eprint Intro : 3948 Intro Neither the Base Prospectus nor any other information supplied in connection with the Programme or any Notes (a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as a recommendation by any Issuer, the Guarantor or any of the Dealers that any recipient of the Base Prospectus, or any other information supplied in connection with the Programme or any Notes should purchase any Notes. Each investor contemplating purchasing any Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the relevant Issuer and/or the Guarantor. Neither the Base Prospectus, nor any other information supplied in connection with the Programme or the issue of any Notes constitutes an offer or invitation by or on behalf of any of the Issuers, the Guarantor or any of the Dealers to any person to subscribe for or to purchase any Notes. Neither the delivery of the Base Prospectus, nor the offering, sale or delivery of any Notes shall in any circumstances imply that the information contained herein concerning the Issuers and/or the Guarantor is correct at any time subsequent to the date hereof or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date indicated in the document containing the same. The Dealers expressly do not undertake to review the financial condition or affairs of the Issuers or the Guarantor during the life of the Programme or to advise any investor in the Notes of any information coming to their attention. Investors should review, inter alia, the most recently published audited annual financial statements and, if published later, the most recently published interim financial statements (if any) of the relevant Issuer and Guarantor when deciding whether or not to purchase any Notes. The Notes in bearer form are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to United States persons, except in certain transactions permitted by U.S. tax regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code (the Code ) and the regulations promulgated thereunder. The Base Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of the Base Prospectus and the offer or sale of Notes may be restricted by law in certain jurisdictions. The Issuers, the Guarantor and the Dealers do not represent that the Base Prospectus may be lawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by any Issuer, the Guarantor or the Dealers which would permit a public offering of any Notes or distribution of this document in any jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither the Base Prospectus nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession the Base Prospectus or any Notes may come must inform themselves about, and observe, any such restrictions on the distribution of the Base Prospectus and the offering and sale of Notes. In particular, there are restrictions on the distribution of the Base Prospectus and the offer or sale of Notes in the United States, Canada, Japan and the European Economic Area, including Italy, the United Kingdom and The Netherlands, see Subscription and Sale and Transfer and Selling Restrictions. In making an investment decision, investors must rely on their own examination of the relevant Issuer and the Guarantor and the terms of the Notes being offered, including the merits and risks involved. The Notes have not been approved or disapproved by the United States Securities and Exchange Commission (the Commission ) or any other securities commission or other regulatory authority in the United States, nor have the foregoing authorities approved the Base Prospectus or confirmed the accuracy or determined the adequacy of the information contained in the Base Prospectus. Any representation to the contrary is unlawful. None of the Dealers, the Issuers or the Guarantor makes any representation to any investor in the Notes regarding the legality of its investment under any applicable laws. 3

4 Level: 5 From: 5 Friday, May 9, :53 eprint Intro : 3948 Intro U.S. INFORMATION The Base Prospectus is being submitted on a confidential basis in the United States to a limited number of QIBs (as defined under Form of the Notes ) for informational use solely in connection with the consideration of the purchase of the Notes being offered hereby. Its use for any other purpose in the United States is not authorised. It may not be copied or reproduced in whole or in part; nor may it be distributed or any of its contents disclosed to anyone other than the prospective investors to whom it is originally submitted. Registered Notes may be offered or sold within the United States only to QIBs in transactions exempt from registration under the Securities Act. Each U.S. purchaser of Registered Notes is hereby notified that the offer and sale of any Registered Notes to it is being made in reliance upon the exemption from the registration requirements of the Securities Act provided by Rule 144A under the Securities Act ( Rule 144A ). Each purchaser or holder of Notes represented by a Rule 144A Global Note (as defined under Form of the Notes ) or any Notes issued in registered form in exchange or substitution therefor (together Legended Notes ) will be deemed, by its acceptance or purchase of any such Legended Notes, to have made certain representations and agreements intended to restrict the resale or other transfer of such Notes as set out in Subscription and Sale and Transfer and Selling Restrictions. Unless otherwise stated, terms used in this paragraph have the meanings given to them in Form of the Notes. NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER CHAPTER 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. AVAILABLE INFORMATION To permit compliance with Rule 144A in connection with any resales or other transfers of Notes that are restricted securities within the meaning of the Securities Act, the Issuers and the Guarantor have undertaken in a deed poll dated 12th May, 2008 (the Deed Poll ) to furnish, upon the request of a holder of such Notes or any beneficial interest therein, to such holder or to a prospective purchaser designated by him, the information required to be delivered under Rule 144A(d)(4) under the Securities Act if, at the time of the request, the relevant Issuer is neither a reporting company under Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended, (the Exchange Act ) nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder. SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES FFT, FFC and the Guarantor are corporations incorporated under the laws of the Grand-Duchy of Luxembourg, Alberta (Canada) and the Republic of Italy, respectively. It may not be possible for investors to effect service of process outside the Grand-Duchy of Luxembourg (in the case of FFT), Canada (in the case of FFC) or the Republic of Italy (in the case of the Guarantor) or upon FFT, FFC or the Guarantor or to enforce judgments against them obtained in courts outside the Grand-Duchy of Luxembourg (in the case of FFT), Canada (in the case of FFC) or the Republic of Italy (in the case of the Guarantor) predicated upon civil liabilities of FFT, FFC or the Guarantor, as the case may be, under laws other than those of Luxembourg (in the case of FFT), Canada (in the case of FFC) or the Republic of Italy (in the case of the Guarantor), including any judgment predicated upon United States federal securities laws. There are doubts 4

5 Level: 5 From: 5 Friday, May 9, :53 eprint Intro : 3948 Intro as to the enforceability in the Grand-Duchy of Luxembourg (in the case of FFT), Canada (in the case of FFC) and the Republic of Italy (in the case of the Guarantor) in original actions or in actions for enforcement of judgments of United States courts of civil liabilities predicated solely upon the federal securities laws of the United States. PRESENTATION OF INFORMATION All references in the Base Prospectus to U.S. dollars, U.S.$ and $ refer to the currency of the United States of America, references to CAN$ refer to the currency of Canada, references to Sterling and refer to the currency of the United Kingdom, and references to euro and refer to the currency introduced at the start of the third stage of European Economic and Monetary Union pursuant to the Treaty establishing the European Community, as amended. The language of the Base Prospectus is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law. 5

6 Level: 5 From: 5 Friday, May 9, :53 eprint Intro : 3948 Intro Table of Contents Documents Incorporated by Reference... 7 General Description of the Programme... 8 Risk Factors Form of the Notes Applicable Final Terms Terms and Conditions of the Notes Use of Proceeds Fiat Finance and Trade Ltd. société anonyme 69 Financial Information relating to Fiat Finance and Trade Ltd. société anonyme.. 70 Fiat Finance Canada Ltd Financial Information relating to Fiat Finance Canada Ltd Fiat Finance North America, Inc Financial Information relating to Fiat Finance North America, Inc The Fiat Group Financial Information relating to Fiat S.p.A 96 Financial Information relating to the Fiat Group Book-Entry Clearance Systems Taxation Subscription and Sale and Transfer and Selling Restrictions General Information In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable Final Terms may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment shall be conducted by the relevant Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in accordance with all applicable laws and rules. 6

7 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 Documents Incorporated by Reference The documents referred to in paragraphs (a), (b), (c) and (d) below have been published previously and filed with the Irish Stock Exchange and shall be deemed to be incorporated in, and to form part of, this Base Prospectus: (a) the audit report and audited annual financial statements (including a balance sheet, statement of income, statement of changes in stockholder s equity, statement of cash flows and notes to the financial statements) of FFC for the financial years ended 31 December 2007 and 2006; (b) the audit report and audited financial statements (including a balance sheet, statement of income, statement of changes in stockholder s equity, statement of cash flows and notes to financial statements) of FFNA for the financial years ended 31 December 2007 and 2006; (c) the audit report and audited annual financial statements (including a consolidated income statement, consolidated balance sheet, consolidated statement of cash flows, statement of changes in stockholders equity, consolidated statement of recognised income and expense, and notes to the consolidated financial statements) of the Fiat Group as well as audited annual statutory stand-alone financial statements of Fiat S.p.A., including the audit report thereon for the financial years ended 31 December 2007 and 2006; (d) the audit report and audited annual financial statements (including a balance sheet, statement of profit and loss, statement of cash flows, and notes to the financial statements) of FFT for the financial years ended 31 December 2007 and Each Issuer and the Guarantor will provide, without charge, to each person to whom a copy of the Base Prospectus has been delivered, upon the request of such person, a copy of any or all of the documents deemed to be incorporated herein by reference unless such documents have been modified or superseded as specified above. Requests for such documents should be directed to any Issuer or the Guarantor at its address set out at the end of the Base Prospectus. Copies of the Base Prospectus are available on the Guarantor s website at Each Issuer and the Guarantor will, in connection with the listing of the Notes on the Irish Stock Exchange, so long as any Notes remain outstanding and listed on such exchange, in the event of any significant new factor, material mistake or inaccuracy relating to information included in this Base Prospectus, prepare a supplement to the Base Prospectus in accordance with Article 16 of the Prospectus Directive or publish a new Base Prospectus as may be required by the rules of the Irish Stock Exchange for use in connection with any subsequent issue of the Notes to be listed on the Irish Stock Exchange. If the terms of the Programme are modified or amended in a manner which would make the Base Prospectus as so modified or amended, inaccurate or misleading, a new base prospectus will be prepared. 7

8 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 General Description of the Programme This general description must be read as an introduction to the Base Prospectus and any decision to invest in any Notes should be based on a consideration of the Base Prospectus as a whole, including the documents incorporated by reference. The following general description does not purport to be complete and is taken from, and is qualified in its entirety by, the remainder of this Base Prospectus and, in relation to the terms and conditions of any particular Tranche of Notes, the applicable Final Terms. The relevant Issuer, the Guarantor and any relevant Dealer may agree that Notes shall be issued in a form other than that contemplated in the Terms and Conditions, in which event, in the case of listed Notes only and if appropriate, a Base Prospectus supplement will be published. This General Description constitutes a general description of the Programme for the purposes of Article 22.5(3) of Commission Regulation (EC) No. 809/2004 implementing the Prospectus Directive. Words and expressions defined in Form of the Notes and Terms and Conditions of the Notes shall have the same meanings in this general description. Issuers: Guarantor: Risk Factors: Description: Arranger: Dealers: Fiat Finance and Trade Ltd. société anonyme Fiat Finance Canada Ltd. Fiat Finance North America, Inc. Fiat S.p.A. There are certain factors that may affect the ability of each of the Issuers to fulfil its obligations under Notes issued under the Programme. These are set out under Risk Factors below. There are also certain factors that may affect the Guarantor s ability to fulfil its obligations under the Guarantee. These are also set out under Risk Factors below. In addition, there are certain factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme. These are set out under Risk Factors and include the fact that the Notes may not be a suitable investment for all investors, certain risks relating to the structure of particular Series of Notes and certain market risks. Global Medium Term Note Programme UBS Limited ABN AMRO Bank N.V. Banca IMI S.p.A. Barclays Bank PLC Bayerische Hypo- und Vereinsbank AG BNP PARIBAS CALYON Citigroup Global Markets Limited Credit Suisse Securities (Europe) Limited Deutsche Bank AG, London Branch Goldman Sachs International Mediobanca-Banca di Credito Finanziario S.p.A. Merrill Lynch International Morgan Stanley & Co. International plc Société Générale The Royal Bank of Scotland plc The Toronto-Dominion Bank UBS Limited and any other Dealers appointed in accordance with the Programme Agreement (as defined in Subscription and Sale and Transfer and Selling Restrictions ). 8

9 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 GENERAL DESCRIPTION OF THE PROGRAMME Certain Restrictions: Issuing and Principal Paying Agent: Registrar: Programme Size: Distribution: Currencies: Redenomination: Maturities: Issue Price: Form of Notes: Fixed Rate Notes: Floating Rate Notes: Each issue of Notes denominated in a currency in respect of which particular laws, guidelines, regulations, restrictions or reporting requirements apply will only be issued in circumstances which comply with such laws, guidelines, regulations, restrictions or reporting requirements from time to time (see Subscription and Sale and Transfer and Selling Restrictions ) including the following restrictions applicable at the date of the Base Prospectus. Notes issued on terms such that they must be redeemed before their first anniversary will, if the proceeds of the issue are accepted in the United Kingdom, constitute deposits for the purposes of the prohibition on accepting deposits contained in section 19 of the Financial Services and Markets Act 2000 unless they are issued to a limited class of professional investors and have a denomination of at least 100,000 or its equivalent, see Subscription and Sale and Transfer and Selling Restrictions. Citibank, N.A., London office Citigroup Global Markets Deutschland AG & Co. KGaA Up to A15,000,000,000 (or its equivalent in other currencies calculated as described in the Programme Agreement) outstanding at any time. The Issuers and the Guarantor may increase the amount of the Programme in accordance with the terms of the Programme Agreement. Notes may be distributed by way of private or public placement and in each case on a syndicated or non-syndicated basis. Subject to any applicable legal or regulatory restrictions, any currency agreed between the relevant Issuer and the relevant Dealer. The applicable Final Terms may provide that certain Notes may be redenominated in euro. Such maturities as may be agreed between the relevant Issuer and the relevant Dealer, subject to such minimum or maximum maturities as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant Issuer or the relevant Specified Currency. Special provisions will apply to Notes issued by FFNA with a maturity of 183 days or less. Notes may be issued on a fully-paid or a partly-paid basis and at an issue price which is at par or at a discount to, or premium over, par. The Notes will be issued in bearer or registered form as described in Form of the Notes. Registered Notes will not be exchangeable for Bearer Notes and vice versa. Fixed interest will be payable on such date or dates as may be agreed between the relevant Issuer and the relevant Dealer and on redemption and will be calculated on the basis of such Day Count Fraction as may be agreed between the relevant Issuer and the relevant Dealer. Floating Rate Notes will bear interest at a rate determined: (i) on the same basis as the floating rate under a notional interest rate swap transaction in the relevant Specified Currency governed by an agreement incorporating the 2000 ISDA Definitions (as published by the International Swaps and Derivatives Association, Inc. and as amended and updated as at the Issue Date of the first Tranche of the Notes of the relevant Series); (ii) on the basis of a reference rate appearing on the agreed screen page of a commercial quotation service; or 9

10 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 GENERAL DESCRIPTION OF THE PROGRAMME Index Linked Notes: Other provisions in relation to Floating Rate Notes and Index Linked Interest Notes: Dual Currency Notes: Zero Coupon Notes: Redemption: Denomination of Notes: Taxation: (iii)on such other basis as may be agreed between the relevant Issuer and the relevant Dealer. The margin (if any) relating to such floating rate will be agreed between the relevant Issuer and the relevant Dealer for each Series of Floating Rate Notes. Payments of principal in respect of Index Linked Redemption Notes or of interest in respect of Index Linked Interest Notes will be calculated by reference to such index and/or formula or to changes in the prices of securities or commodities or to such other factors as the relevant Issuer and the relevant Dealer may agree. Floating Rate Notes and Index Linked Interest Notes may also have a maximum interest rate, a minimum interest rate or both. Interest on Floating Rate Notes and Index Linked Interest Notes in respect of each Interest Period, as agreed prior to issue by the relevant Issuer and the relevant Dealer, will be payable on such Interest Payment Dates, and will be calculated on the basis of such Day Count Fraction, as may be agreed between the relevant Issuer and the relevant Dealer. Payments (whether in respect of principal or interest and whether at maturity or otherwise) in respect of Dual Currency Notes will be made in such currencies, and based on such rates of exchange, as the relevant Issuer and the relevant Dealer may agree. Zero Coupon Notes will be offered and sold at a discount to their nominal amount and will not bear interest. The applicable Final Terms will indicate either that the relevant Notes cannot be redeemed prior to their stated maturity (other than in specified instalments, if applicable, or for taxation reasons as described in Terms and Conditions of the Notes Redemption for Tax Reasons, or following an Event of Default) or that such Notes will be redeemable at the option of the relevant Issuer and/or the Noteholders upon giving notice to the Noteholders or the Issuer, as the case may be, on a date or dates specified prior to such stated maturity and at a price or prices and on such other terms as may be agreed between the relevant Issuer and the relevant Dealer. The applicable Final Terms may provide that Notes may be redeemable in two or more instalments of such amounts and on such dates as are indicated in the applicable Final Terms. Notes issued on terms such that they must be redeemed before their first anniversary may be subject to restrictions on their denomination and distribution. See Certain Restrictions above. Notes will be issued in such denominations as may be agreed between the relevant Issuer and the relevant Dealer save that the minimum denomination of each Note will be such as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant Specified Currency and save that the minimum denomination of each Note admitted to trading on a regulated market within the European Economic Area will be 50,000 (or, if the Notes are denominated in a currency other than euro, the equivalent amount in such currency). All payments in respect of the Notes will be made without deduction for or on account of withholding taxes imposed by any Relevant Tax Jurisdiction, subject as provided in Condition 8. In the event that any such deduction is made, the relevant Issuer or the Guarantor will, save in certain limited circumstances 10

11 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 GENERAL DESCRIPTION OF THE PROGRAMME Change of Control: Negative Pledge: Cross Default: Status of the Notes: Guarantee: Listing and admission to trading: Governing Law: Selling Restrictions: provided in Condition 8, be required to pay additional amounts to cover the amounts so deducted. If a Change of Control occurs, except in certain circumstances, the relevant Issuer will be required to offer to repurchase the Notes at a purchase price equal to 101 per cent. of their aggregate principal amount, plus accrued and unpaid interest, if any, to the date of purchase. The terms of the Notes will contain a negative pledge provision as further described in Condition 4. The terms of the Notes will contain a cross default provision as further described in Condition 10. The Notes and any relative Receipts and Coupons are direct, unconditional, unsubordinated and (subject to the provisions of Condition 4) unsecured obligations of the relevant Issuer and (subject as aforesaid) rank and will rank pari passu without any preference among themselves, with all other present and future outstanding unsubordinated and unsecured obligations of the relevant Issuer (subject to mandatorily preferred obligations under applicable laws). The payment of principal and interest in respect of the Notes and any relative Receipts and Coupons has been irrevocably and unconditionally guaranteed by the Guarantor pursuant to the Guarantee. The obligations of the Guarantor under the Guarantee constitute direct, unconditional, unsubordinated and (subject to the provisions of Condition 4) unsecured obligations of the Guarantor and (subject as aforesaid) rank and will rank pari passu (subject to mandatorily preferred obligations under applicable laws) with all other present and future outstanding unsecured and unsubordinated obligations of the Guarantor. Application has been made to have the Notes admitted to the Official List of the Irish Stock Exchange and to be admitted to trading on the Irish Stock Exchange. Notes may be listed or admitted to trading, as the case may be, on other or further stock exchanges or markets agreed between the Issuer and the relevant Dealer in relation to the Series. Notes which are neither listed nor admitted to trading on any market may also be issued. The applicable Final Terms will state whether or not the relevant Notes are to be listed or admitted to trading and, if so, on which stock exchange(s). The Notes will be governed by, and construed in accordance with, English law. There are restrictions on the offer, sale and transfer of the Notes in the United States, Canada, Japan and the European Economic Area (including Italy, the United Kingdom and The Netherlands) and such other restrictions as may be required in connection with the offering and sale of a particular Tranche of Notes. See Subscription and Sale and Transfer and Selling Restrictions. 11

12 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 Risk Factors Each of the Issuers and the Guarantor believes that the following factors may affect its ability to fulfil its obligations under Notes issued under the Programme. Most of these factors are contingencies which may or may not occur and none of the Issuers nor the Guarantor is in a position to express a view on the likelihood of any contingency occurring. In addition, factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme are also described below. Each of the Issuers and the Guarantor believes that the factors described below represent the principal risks inherent in investing in Notes issued under the Programme, but the inability of any Issuer or the Guarantor to pay interest, principal or other amounts on or in connection with any Notes may occur for other reasons which may not be considered significant risks by the Issuers and the Guarantor based on information currently available to them or which they may not currently be able to anticipate and none of the Issuers or the Guarantor represents that the statements below regarding the risks of holding any Notes are exhaustive. Prospective investors should also read the detailed information set out elsewhere in the Base Prospectus and reach their own views prior to making any investment decision. Factors that may affect the ability of the Issuers and the Guarantor to fulfil their obligations under the Notes The Group s businesses are affected by cyclical conditions The Group s businesses depend upon general activity levels in key industries, which historically have been highly cyclical. In particular, both general demand for automobiles and the Group s market shares have been volatile in recent periods, such volatility could further increase as a result of the worldwide credit crunch. Any event adversely affecting activity in the automotive industry, such as an economic downturn in a key market (whether as a result of a credit crunch or otherwise), further increases in energy prices, disruptions of the credit markets, fluctuations in the prices of other key commodities or raw materials, or adverse shifts in factors such as weather, interest rates, government policies (including environmental regulation), infrastructure spending or major epidemics could have a material adverse affect on the Group s business prospects, results of operations and financial condition. The Group operates in highly competitive industries Approximately 96 per cent. of the Group s net revenues in 2007 were generated in the highly competitive worldwide automotive industry, which includes automobiles, commercial vehicles, agricultural and construction equipment and automotive-related components. The Group faces strong competition in Europe and Latin America from other international automobile and commercial vehicle manufacturers, and in Europe, North America and Latin America from global, regional and local agricultural and construction equipment manufacturers and suppliers of automotive-related components. It competes in these markets in terms of product quality and features, innovation and development time, pricing, reliability, safety, fuel economy, customer service and financing terms. Competition, particularly with regard to price, has increased in several of the Group s operating sectors in recent years. In addition, overall manufacturing capacity in the global automobile industry exceeds current demand. This overcapacity, combined with already intense competition in the automotive industry and weakness in the economies of Europe and North America, may intensify pricing pressures. The Group s ability to maintain or improve the quality of its products, increase market share and improve profitability in the face of strong competitive pricing pressures will be fundamental to its future success. Any failure to meet these competitive challenges successfully could have a material adverse effect on the Group s business prospects, results of operations and financial condition. 12

13 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 RISK FACTORS The Group s future performance depends on its ability to innovate and on market acceptance of new or existing products The Group s ability to improve its position within its product and market segments through research to improve current products and development of innovative new products and services will have a significant impact on its future performance. Failure to develop and offer products that compare favourably to those of its competitors, particularly in more profitable segments, in terms of price, quality, styling, reliability, safety, functionality or otherwise, may result in lower market share, lower sales volumes and margins, and may have a material adverse effect on the Group s business prospects, results of operations and financial condition. Downgrades of the Group s credit ratings would raise its cost of capital and could limit its access to financing and negatively affect its business The Group is currently rated Ba1 with a positive outlook by Moody s Investment Service ( Moody s ), BBB- with a stable outlook by Standard & Poor s Ratings Service, a division of the McGraw Hill Companies, Inc. ( Standard & Poor s ), and BBB- with a stable outlook by Fitch Ratings Ltd. The Group s ability to access capital markets, and the cost of borrowing in those markets, is highly dependent on its credit ratings. The rating agencies may review their ratings, and any downgrades would increase the Group s cost of capital, could potentially limit its access to sources of financing and could have a material adverse effect on its business prospects, results of operations and financial condition, and especially those of the Group s vehicle lease and sales financing businesses, which are typically financed with a high proportion of debt. The Group may not achieve the expected benefits of mergers, acquisitions, joint ventures or other similar corporate transactions The Group has engaged in the past and may engage in the future in significant corporate transactions, such as mergers, acquisitions, joint ventures and restructurings, the success of which is difficult to predict. There can be no assurance that it will be able to enter into such transactions without encountering administrative, technical, political, financial or other difficulties. There can also be no assurance that it will be able to carry out any such transactions now or in the future, or that it will succeed in realising any potential synergies, cost savings or other expected benefits. Any such failure could have a material adverse effect on the Group s business prospects, results of operations and financial condition. The Group is subject to risks relating to international sales and exposure to changing local conditions A significant portion of the Group s current operations is conducted and located outside of Italy, and the Group expects that revenues from sales outside of Italy, and more generally outside of the European Union, will continue to account for an increasingly material portion of its total revenues for the foreseeable future. The Group is subject to risks inherent in operating on a global basis, including risks related to: exposure to local economic and political conditions; export and import restrictions; multiple tax regimes, including regulations relating to transfer pricing and withholding and other taxes on remittances and other payments to or from subsidiaries; foreign investment restrictions or requirements, foreign exchange controls and restrictions on repatriation of funds; and local content laws and other regulatory requirements. The degree of risk and the potential magnitude of effects of unfavourable developments in any one of these areas vary from country to country, and, depending on the circumstances, could have a material adverse effect on the Group s business prospects, results of operations and financial condition. 13

14 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 RISK FACTORS Developments in emerging market countries may adversely affect the Group s business The Group operates in a number of emerging market countries, both directly, in markets such as Brazil and Argentina, and through joint ventures or other cooperation agreements, including in Turkey, India, China and Russia. The Group s exposure to these countries has increased in recent years, as the number and importance of such joint venture and cooperation agreements has increased. Economic and political developments in emerging market countries, including economic crises and political instability, have had, and may in the future have, a material adverse effect on the Group s business prospects, results of operations and financial condition. The Group is subject to extensive environmental and other governmental regulation The Group s products and operations are subject to increasingly stringent environmental laws and regulations in many of the countries in which it operates. Such regulations govern, among other things, vehicle emissions, fuel economy, vehicle safety and the type and level of pollutants generated by industrial production facilities. The Group expends significant resources to comply with such regulations, and expects to continue to incur substantial compliance and remediation costs in the future. In addition, government initiatives that affect consumer demand for its products, such as changes in tax policy or the grant or repeal of subsidies to provide incentives for the purchase of vehicles, can substantially influence the timing and level of its revenue. Such government actions are unpredictable and beyond the Group s control, and any adverse changes in government policy could have a material adverse effect on the Group s business prospects, results of operations and financial condition. Labour matters could impair the Group s flexibility to reposition its businesses Most of the Group s employees worldwide are represented by labour unions. In Europe, the Group s employees are protected by various laws giving them, through local and central works councils, rights of consultation with respect to specific matters regarding their employers businesses and operations, including the downsizing or closure of facilities and employment terminations. These laws and the collective bargaining agreements to which the Group is subject could impair the Group s flexibility in implementing measures to reorganise and restructure its businesses. In the past, union dissatisfaction with the Group s restructuring initiatives has resulted in labour unrest, including occasional wildcat and other strikes of varying severity and duration. Any future work stoppages or labour unrest, whether involving the Group s own employees or those of other companies on which it depends for goods and services, could have a material adverse effect on its business prospects, results of operations and financial condition. The Group is subject to risks associated with exchange rate fluctuations, interest rate changes and other market risks The Group is subject to currency exchange rate risk in the ordinary course of its business to the extent that its costs are denominated in currencies other than those in which it earns revenues. Exchange rate fluctuations also affect the Group s operating results because it recognises revenues in currencies other than euros but publishes its financial statements in euros. Similarly, changes in interest rates affect its results by increasing or decreasing borrowing costs and financial income. The Group s financial services businesses also involve risks relating to changes in interest and inflation rates, consumer and dealer insolvency rates and the overall strength of the economies in which these businesses operate. The Group seeks to manage these risks through the use of financial hedging instruments. However, despite these hedging transactions, exchange rate or interest rate fluctuations could have a material adverse effect on the Group s business prospects, results of operations and financial condition. 14

15 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 RISK FACTORS The Group s success is largely dependent on the ability of its current management team to operate and manage effectively The Group s success depends in large part on the ability of its executive officers and other members of senior management to operate and manage effectively, both independently and as a group. The loss of the services of any executive officer, senior manager or other key employee without adequate replacement or the inability to attract and retain new qualified personnel could have a material adverse effect upon the Group s business prospects, results of operations and financial condition. The Guarantor is a holding company The Guarantor is organised as a holding company that conducts essentially all of its operations through its subsidiaries and depends primarily on the earnings and cash flows of, and the distribution of funds from, these subsidiaries to meet its debt obligations, including its guarantee obligations with respect to the Notes. Generally, creditors of a subsidiary, including trade creditors, secured creditors and creditors holding indebtedness and guarantees issued by the subsidiary, and preferred shareholders, if any, of the subsidiary, will be entitled to the assets of that subsidiary before any of those assets can be distributed to shareholders upon liquidation or winding up. As a result, the Guarantee will effectively be subordinated to the prior payment of all the debts and other liabilities, including the right of trade creditors and preferred shareholders, if any, of the Guarantor s direct and indirect subsidiaries. The Guarantor s subsidiaries have other liabilities, including contingent liabilities, which could be substantial. The Guarantor s Guarantee of the Notes may be limited by applicable laws or subject to certain procedures that could limit or prevent the Guarantor from making payments under the Guarantee The Guarantee provides the holders of the Notes with a direct claim against the Guarantor. However, the enforcement of the Guarantee against Fiat would be subject to certain defences generally available in connection with guarantees. These laws and defences include those that relate to fraudulent conveyance or transfer, bankruptcy claw-back, corporate purpose, conflicts of interest, or similar laws, regulations or defences affecting the rights of creditors generally. Factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme The Notes may not be a suitable investment for all investors Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: (i) (ii) (iii) (iv) (v) have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of investing in the Notes and the information contained or incorporated by reference in the Base Prospectus or any applicable supplement; have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Notes and the impact the Notes will have on its overall investment portfolio; have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, including Notes with principal or interest payable in one or more currencies, or where the currency for principal or interest payments is different from the potential investor s currency; understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevant indices and financial markets; and be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks. 15

16 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 RISK FACTORS Some Notes are complex financial instruments. Sophisticated institutional investors generally do not purchase complex financial instruments as stand-alone investments. They purchase complex financial instruments as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in Notes which are complex financial instruments unless it has the expertise (either alone or with a financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of the Notes and the impact this investment will have on the potential investor s overall investment portfolio. Risks related to the structure of a particular issue of Notes A wide range of Notes may be issued under the Programme. A number of these Notes may have features which contained particular risks for potential investors. Set out below is a description of the most common such features: Notes subject to optional redemption by the Issuer An optional redemption feature of Notes is likely to limit their market value. During any period when the relevant Issuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period. The relevant Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time. Index Linked Notes and Dual Currency Notes An Issuer may issue Notes with principal or interest determined by reference to an index or formula, to changes in the prices of securities or commodities, to movements in currency exchange rates or other factors (each, a Relevant Factor ). In addition, an Issuer may issue Notes with principal or interest payable in one or more currencies which may be different from the currency in which the Notes are denominated. Potential investors should be aware that: (i) (ii) (iii) (iv) (v) (vi) (vii) the market price of such Notes may be volatile; they may receive no interest; payment of principal or interest may occur at a different time or in a different currency than expected; they may lose all or a substantial portion of their principal; a Relevant Factor may be subject to significant fluctuations that may not correlate with changes in interest rates, currencies or other indices; if a Relevant Factor is applied to Notes in conjunction with a multiplier greater than one or contains some other leverage factor, the effect of changes in the Relevant Factor on principal or interest payable likely will be magnified; and the timing of changes in a Relevant Factor may affect the actual yield to investors, even if the average level is consistent with their expectations. In general, the earlier the change in the Relevant Factor, the greater the effect on yield. The historical experience of an index should not be viewed as an indication of the future performance of such index during the term of any Index Linked Notes. Accordingly, each potential investor should consult its own financial and legal advisers about the risk entailed by an investment in any Index Linked Notes and the suitability of such Notes in light of its particular circumstances. 16

17 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 RISK FACTORS Partly-paid Notes An Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay any subsequent instalment could result in an investor losing all of his investment. Variable rate Notes with a multiplier or other leverage factor Notes with variable interest rates can be volatile investments. If they are structured to include multipliers or other leverage factors, or caps or floors, or any combination of those features or other similar features, their market values may be even more volatile than those for securities that do not include those features. Inverse Floating Rate Notes Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon a reference rate such as LIBOR. The market values of those Notes typically are more volatile than market values of other conventional floating rate debt securities based on the same reference rate (and with otherwise comparable terms). Inverse Floating Rate Notes are more volatile because an increase in the reference rate not only decreases the interest rate of the Notes, but may also reflect an increase in prevailing interest rates, which further adversely affects the market value of these Notes. Fixed/Floating Rate Notes Fixed/Floating Rate Notes may bear interest at a rate that converts from a fixed rate to a floating rate, or from a floating rate to a fixed rate. Where an Issuer has the right to effect such conversion, this will affect the secondary market and the market value of the Notes since an Issuer may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing. If an Issuer converts from a fixed rate to a floating rate in such circumstances, the spread on the Fixed/Floating Rate Notes may be less favourable than then prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate at any time may be lower than the rates on other Notes. If an Issuer converts from a floating rate to a fixed rate in such circumstances, the fixed rate may be lower than then prevailing rates on its Notes. Notes issued at a substantial discount or premium The market values of securities issued at a substantial discount or premium from their principal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities. Risks related to Notes generally Set out below is a brief description of certain risks relating to the Notes generally. Modification and waivers The conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority. EU Savings Directive Under the EC Council Directive 2003/48/EC on the taxation of savings income (the Savings Directive ), each member state of the European Union is required to provide to the tax authorities of another member state details of payments of interest (or similar income) paid by a person within its jurisdiction to an individual resident in that other member state. However, for a transitional period, Belgium, Luxembourg and Austria are instead required (unless during that period they elect otherwise) to operate a withholding 17

18 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 RISK FACTORS system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A number of non-eu countries and territories have agreed to adopt similar measures (some of which involve a withholding system). If a payment were to be made or collected through a member state which has opted for a withholding system and an amount of, or in respect of tax were to be withheld from that payment, neither the relevant Issuer nor any Paying Agent nor any other person would be obliged to pay additional amounts with respect to any Note as a result of the imposition of such withholding tax. The relevant Issuer is required to maintain a Paying Agent in a member state that will not be obliged to withhold or deduct tax pursuant to the Savings Directive. Bearer Notes where denominations involve integral multiples: definitive bearer Notes In relation to any issue of bearer Notes which have denominations consisting of a minimum Specified Denomination and one or more higher integral multiples of another smaller amount, it is possible that such Notes may be traded in amounts that are not integral multiples of such minimum Specified Denomination. In such a case, a holder who, as a result of such trading, holds an amount which is less than the minimum Specified Denomination in his account with the relevant clearing system at the relevant time may not receive a definitive bearer Note in respect of such holding (should definitive bearer Notes be printed) and would need to purchase a principal amount of Notes such that its holding amounts to the minimum Specified Denomination. If definitive Notes are issued, holders should be aware that definitive Notes which have a denomination which is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult to trade. Risks related to the market generally Set out below is a brief description of the principal market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk: The secondary market generally Notes may have no established trading market when issued, and one may never develop. If a market does develop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar instruments that have a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. These types of Notes generally would have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a severely adverse effect on the market value of the Notes. Exchange rate risks and exchange controls The relevant Issuer will pay principal and interest on the Notes and the Guarantor will make any payments under the Guarantee in the Specified Currency. This presents certain risks relating to currency conversions if an investor s financial activities are denominated principally in a currency or currency unit (the Investor s Currency ) other than the Specified Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor s Currency) and the risk that authorities with jurisdiction over the Investor s Currency may impose or modify exchange controls. Appreciation in the value of the Investor s Currency relative to the Specified Currency would decrease (1) the Investor s Currency-equivalent yield on the Notes, (2) the Investor s Currencyequivalent value of the principal payable on the Notes and (3) the Investor s Currency-equivalent market value of the Notes. 18

19 Level: 5 From: 5 Friday, May 9, :46 eprint Section 01 : 3948 Section 01 RISK FACTORS Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal. Interest rate risks Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates may adversely affect the value of the Fixed Rate Notes. Credit ratings may not reflect all risks One or more independent credit rating agencies may assign credit ratings to the Notes. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time. Legal investment considerations may restrict certain investments The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) Notes are legal investments for it, (2) Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital or similar rules. 19

20 Level: 5 From: 5 Friday, May 9, :47 eprint Section 02 : 3948 Section 02 Form of the Notes The Notes of each Series will be in either bearer form ( Bearer Notes ), with or without interest coupons ( Coupons ) attached, or registered form ( Registered Notes ), without Coupons attached. Bearer Notes will be issued outside the United States in reliance on Regulation S under the Securities Act ( Regulation S ) and Registered Notes will be issued both outside the United States in reliance on the exemption from registration provided by Regulation S and within the United States in reliance on Rule 144A. BEARER NOTES Each Tranche of Bearer Notes will be initially issued in the form of either a temporary bearer global note (a Temporary Bearer Global Note ) or a permanent bearer global note (a Permanent Bearer Global Note ) as indicated in the applicable Final Terms, which, in either case, will be delivered on or prior to the original issue date of the Tranche to a common depository (the Common Depository ) for Euroclear Bank S.A./N.V. ( Euroclear ) and Clearstream Banking, société anonyme ( Clearstream ). Whilst any Bearer Note is represented by a Temporary Bearer Global Note, payments of principal, interest (if any) and any other amount payable in respect of the Notes due prior to the Exchange Date (as defined below) will be made against presentation of the Temporary Bearer Global Note only to the extent that certification (in a form to be provided) to the effect that the beneficial owners of interests in such Bearer Note are not U.S. persons or persons who have purchased for resale to any U.S. person, as required by U.S. Treasury regulations, has been received by Euroclear and/or Clearstream and Euroclear and/or Clearstream, as applicable, has given a like certification (based on the certifications it has received) to the Principal Paying Agent. On and after the date (the Exchange Date ) which is, in respect of each Tranche in respect of which a Temporary Bearer Global Note is issued, 40 days after the Temporary Bearer Global Note is issued, interests in such Temporary Bearer Global Note will be exchangeable (free of charge) upon a request as described therein either for (i) interests in a Permanent Bearer Global Note of the same Series or (ii) for definitive Bearer Notes of the same Series with, where applicable, receipts, interest coupons and talons attached (as indicated in the applicable Final Terms and subject, (i) in the case of definitive Bearer Notes, to such notice period as is specified in the applicable Final Terms), (ii) in the case of Notes issued by FFC, against certification of non-canadian residence and (iii) in each case, against certification of beneficial ownership as described above unless such certification has already been given, provided that purchasers in the United States and certain U.S. persons will not be able to receive definitive Bearer Notes. The holder of a Temporary Bearer Global Note will not be entitled to collect any payment of interest, principal or other amount due on or after the Exchange Date unless, upon due certification, exchange of the Temporary Bearer Global Note for an interest in a Permanent Bearer Global Note or for definitive Bearer Notes is improperly withheld or refused. Payments of principal, interest (if any) or any other amounts on a Permanent Bearer Global Note will be made through Euroclear and/or Clearstream against presentation or surrender (as the case may be) of the Permanent Bearer Global Note without any requirement for certification. The applicable Final Terms will specify that a Permanent Bearer Global Note will be exchangeable (free of charge), in whole but not in part, for definitive Bearer Notes with, where applicable, receipts, interest coupons and talons attached upon either (a) not less than 60 days written notice from Euroclear and/or Clearstream (acting on the instructions of any holder of an interest in such Permanent Bearer Global Note) to the Principal Paying Agent as described therein or (b) only upon the occurrence of an Exchange Event*. For these purposes, Exchange Event means that (i) an Event of Default (as defined in Condition 10) has occurred and is continuing, (ii) the relevant Issuer has been notified that both Euroclear and Clearstream have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and no successor clearing system is available or (iii) unless otherwise specified in the applicable Final Terms, the relevant Issuer has or will become subject to adverse tax consequences which would not be suffered were * (b) is not applicable where FFNA is the relevant Issuer. 20