ULSTER BANK FINANCE PLC ULSTER BANK IRELAND LIMITED

Transcription

1 PROSPECTUS ULSTER BANK FINANCE PLC (incorporated with limited liability in Ireland) A1,500,000,000 GUARANTEED FLOATING RATE NOTES DUE 2011 unconditionally and irrevocably guaranteed by ULSTER BANK IRELAND LIMITED (incorporated with limited liability in Ireland) Issue price: per cent. The A1,500,000,000 Guaranteed Floating Rate Notes due 2011 (the Notes) are issued by Ulster Bank Finance PLC (the Issuer). The Notes will be guaranteed by Ulster Bank Ireland Limited (the Guarantor). Interest will be payable in arrear on 29 March, 29 June, 29 September and 29 December of each year subject to adjustment as provided herein (each an Interest Payment Date). Interest will accrue from and including 29 March 2006 (the Closing Date) to but excluding the Interest Payment Date falling in March 2011 and will be at a rate of 0.09 per cent. per annum above three month EURIBOR for the relevant Interest Period as further described, under Conditions of the Notes Interest. The Issuer may, in the event of certain tax changes, redeem the Notes at par on any Interest Payment Date. The Notes mature on the Interest Payment Date falling in March See Conditions of the Notes Redemption and Purchase. An investment in the Notes 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 (as defined below) for this Prospectus to be approved as a prospectus. Application has also been made to the Irish Stock Exchange Limited (the Irish Stock Exchange) for the Notes to be admitted to the official list of the Irish Stock Exchange (the Official List) and to trading on its regulated market. The Irish Stock Exchange s regulated market is a regulated market for the purposes of the Investment Services Directive (Directive 93/22/EEC) and, after its coming into force and implementation, for the purposes of the Markets in Financial Instruments Directive (Directive 2004/35/EC). The Notes will be rated Aa2 by Moody s Investors Service Limited, AA by Standard & Poor s Rating Services, a division of The McGraw-Hill Companies Inc. and AA by Fitch Ratings Limited. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. The Notes will initially be represented by a temporary global note (the Temporary Global Note), without interest coupons, which will be deposited on or about the Closing Date with a common depositary for Euroclear Bank S.A./ N.V., as operator of the Euroclear System, (Euroclear) and Clearstream Banking, société anonyme (Clearstream, Luxembourg). Interests in the Temporary Global Note will be exchangeable for interests in a permanent global note (the Permanent Global Note and, together with the Temporary Global Note, the Global Notes), without interest coupons, on or after 9 May 2006 (the Exchange Date), upon certification as to non-u.s. beneficial ownership. Interests in the Permanent Global Note will be exchangeable for definitive Notes only in certain limited circumstances see Summary of Provisions relating to the Notes while represented by the Global Notes. The Royal Bank of Scotland (Sole Bookrunner and Lead Manager) Banca Akros S.p.A. Gruppo Banca Popolare di Milano DZ BANK AG Natexis Banques Populaires (Co-Lead Managers) The date of this Prospectus is 27 March 2006

2 This document comprises a prospectus for the purposes of Article 5 of Directive 2003/71/EC (the Prospectus Directive). The Issuer and the Guarantor accept responsibility for the information contained in this Prospectus. To the best of the knowledge and belief of the Issuer and the Guarantor (each having taken all reasonable care to ensure that such is the case) the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. This Prospectus is to be read in conjunction with all documents which are incorporated herein by reference (see Documents Incorporated by Reference ). This Prospectus shall be read and construed on the basis that such documents are incorporated and form part of this Prospectus. No person has been authorised to give any information or to make any representation other than those contained in this document in connection with the offering of the Notes and, if given or made, such information or representations must not be relied upon as having been authorised by the Issuer, the Guarantor or the Managers (as defined under Subscription and Sale below). Neither the delivery of this document nor any sale made hereunder shall, under any circumstances, constitute a representation or create any implication that there has been no change in the affairs of the Issuer, the Guarantor or the Guarantor and its subsidiaries (the Issuer, the Guarantor and the Guarantor s subsidiaries together, the Group) since the date hereof. This document does not constitute an offer of, or an invitation by, or on behalf of, the Issuer, the Guarantor or the Managers to subscribe for, or purchase, any of the Notes. This document does not constitute an offer, and may not be used for the purpose of an offer to, or a solicitation by, anyone in any jurisdiction or in any circumstances in which such an offer or solicitation is not authorised or is unlawful. The Managers and The Law Debenture Trust Corporation p.l.c. (the Trustee) have not separately 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 Managers, the Trustee or any of them as to the accuracy or completeness of the information contained in this Prospectus or any other information provided by the Issuer or the Guarantor in connection with the Notes or their distribution. This Prospectus is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by the Issuer, the Guarantor, the Managers or the Trustee that any recipient of this Prospectus should purchase any of the Notes. Each investor contemplating purchasing Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer and/or the Guarantor. The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended, (the Securities Act) and are subject to U.S. tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United States or to U.S. persons. For a further description of certain restrictions on the offering and sale of the Notes and on distribution of this document, see Subscription and Sale below. IN CONNECTION WITH THE ISSUE OF THE NOTES, THE ROYAL BANK OF SCOTLAND PLC (OR PERSONS ACTING ON BEHALF OF THE ROYAL BANK OF SCOTLAND PLC) MAY OVER-ALLOT NOTES (PROVIDED THAT THE AGGREGATE PRINCIPAL AMOUNT OF NOTES ALLOTTED DOES NOT EXCEED 105 PER CENT. OF THE AGGREGATE PRINCIPAL AMOUNT OF THE 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 ROYAL BANK OF SCOTLAND PLC (OR PERSONS ACTING ON BEHALF OF THE ROYAL BANK OF SCOTLAND PLC) 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 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 CLOSING DATE AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE NOTES. All references in this document to euro and C 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 (signed in Rome on 25 March 1957), as amended, and to Sterling and refer to the currency of the United Kingdom. 2

3 CONTENTS Page Risk Factors... 4 Documents Incorporated by Reference... 8 Conditions of the Notes... 9 Summary of Provisions relating to the Notes while represented by the Global Notes Use of Proceeds Description of the Issuer Description of the Guarantor Taxation Subscription and Sale General Information

4 RISK FACTORS Each of the Issuer and the Guarantor believes that the following factors may affect its ability to fulfil its obligations under the Notes. All of these factors are contingencies which may or may not occur and neither the Issuer nor the Guarantor is in a position to express a view on the likelihood of any such contingency occurring. In addition, factors which are material for the purpose of assessing the market risks associated with the Notes are also described below. Each of the Issuer and the Guarantor believes that the factors described below represent the principal risks inherent in investing in the Notes, but the inability of the Issuer or the Guarantor to pay interest, principal or other amounts on or in connection with the Notes may occur for other reasons and neither the Issuer nor the Guarantor represents that the statements below regarding the risks of holding the Notes are exhaustive. Prospective investors should also read the detailed information set out elsewhere in this Prospectus and reach their own views prior to making any investment decision. Factors that may affect (i) the Issuer s ability to fulfil its obligations under the Notes and (ii) the Guarantor s ability to fulfil its obligations under the Guarantee In common with other industry participants a number of factors (risk factors) affect the Ulster Bank Group s operating results and financial condition. Risk factors include economic and market conditions, regulation, government policy and legislation, competition, credit ratings, operational systems and processes, and systemic risk within the financial markets. The risk factors mentioned below should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties. The information given is as at the date of this Prospectus. The Ulster Bank Group s results may be adversely affected by general economic conditions and other business conditions The Ulster Bank Group s results are affected by general economic and other business conditions. These conditions include changing economic cycles that affect demand for banking products. Such cycles are also influenced by global political events, such as terrorist acts, war and other hostilities as well as by market-specific events, such as shifts in consumer confidence and consumer spending, the rate of unemployment, industrial output, labour or social unrest and political uncertainty. The Ulster Bank Group s banking business will also be affected during recessionary conditions as there may be less demand for credit, protection and investment products or certain customers may face financial problems. Interest rate rises may also impact the demand for mortgages and other loan products and credit quality. Changes in interest rates may impact the Ulster Bank Group s results Fluctuations in interest rates can influence the Ulster Bank Group s performance. The results of the Ulster Bank Group s banking operations are affected by the management of interest rate sensitivity. Interest rate sensitivity refers to the relationship between changes in market interest rates and changes in net interest income. The composition of the Ulster Bank Group s assets and liabilities, and any gap position resulting from this composition can cause the reported banking income to vary with changes in interest rates. A mismatch of interest-earning assets and interest-bearing liabilities in any given period may, in the event of changes in interest rates, have an effect on results from the Ulster Bank Group s banking business. The Ulster Bank Group conducts its businesses subject to regulation and associated regulatory risks, including the effects of changes in the laws, regulations, policies and interpretations in the markets in which it operates. Changes in government policy, legislation, regulations or regulatory interpretation applying to the financial services industry in the markets in which the Ulster Bank Group operates may adversely affect the Ulster Bank Group s product range, distribution channels, capital requirements and, consequently, reported results and financing requirements. These changes include possible changes in government pension arrangements and policies, the regulation of selling practices and solvency requirements. 4

5 The Ulster Bank Group s businesses are conducted in highly competitive environments and continued profitability depends on management s ability to respond to these pressures. The Irish market for financial services is highly competitive, with several factors affecting the Ulster Bank Group s ability to sell its products, including price, returns offered, range of product lines, product quality, brand and distribution strength, name recognition and management performance. Within Ireland, the Ulster Bank Group s principal competitors comprise the major Irish banks. Downgrades in the Ulster Bank Group s credit ratings could significantly impact its competitive position and affect its relationships with creditors or trading counterparties. The Ulster Bank Group s credit ratings are an important factor in its continuing financial performance. In particular, the interest rates the Ulster Bank Group pays on its borrowings are affected by its debt credit ratings, which are in place to measure the Ulster Bank Group s ability to satisfy its contractual obligations. The Group s long-term senior debt is rated Aa2 (stable outlook) by Moody s, AA (stable outlook) by Standard & Poor s and AA (stable outlook) by Fitch. The short-term debt is rated P-1 by Moody s, A1+ by Standard & Poor s and F1+ by Fitch. Adverse experience in the operational risks inherent in the Ulster Bank Group s business could have a negative impact on the results of its operations. Operational risks are present in all of the Ulster Bank Group s businesses, including the risk of direct or indirect loss resulting from inadequate or failed internal and external processes, systems and human error or from external events. The Ulster Bank Group s business is dependent on processing a large number of complex transactions across numerous and diverse products and is subject to a number of different legal and regulatory regimes. In addition, the Ulster Bank Group manages a number of outsourced operations which include certain UK processing and IT functions. In turn, the Ulster Bank Group is reliant upon the operational processing performance of its outsourcing partners. Systemic risk could adversely affect our business Concerns about, or a default by, one institution could lead to significant liquidity problems losses or defaults by other institutions because the commercial soundness of many financial institutions may be closely related as a result of credit, trading, clearing or other relationships between institutions. This risk is sometimes referred to as systemic risk and may adversely affect financial intermediaries, such as clearing agencies, clearinghouses, banks, securities firms and exchanges with which the Ulster Bank Group interacts on a daily basis and therefore could adversely affect the Ulster Bank Group. Factors which are material for the purpose of assessing the market risks associated with the Notes 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 this 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; understand thoroughly the terms of the Notes; 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. 5

6 Risks related to the Notes Set out below is a brief description of certain risks relating to the Notes: Modification, waivers and substitution 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. The Conditions of the Notes also provide that the Trustee may, without the consent of Noteholders, (i) agree to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of the Conditions or any of the provisions of the Trust Deed or (ii) determine that any Event of Default or Potential Event of Default shall not be treated as such or (iii) agree to the substitution of (A) another company as principal debtor under the Notes in place of the Issuer or (B) another company as guarantor under the Guarantee in place of the Guarantor, in each case, as described in Condition 13 of the Conditions of the Notes. EU Savings Directive Under EC Council Directive 2003/48/EC on the taxation of savings income, Member States are required, from 1 July 2005, 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 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 including Switzerland have agreed to adopt similar measures (a withholding system in the case of Switzerland) with effect from the same date. If, following implementation of this Directive, 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 Issuer nor any Paying Agent nor any other person would be obliged to pay additional amounts with respect to the Notes as a result of the imposition of such withholding tax. If a withholding tax is imposed on payment made by a Paying Agent following implementation of this Directive, the Issuer will be required to maintain a Paying Agent in a Member State that will not be obliged to withhold or deduct tax pursuant to the Directive. Change of law The Conditions of the Notes are based on English law in effect as at the date of this Prospectus. The Issuer and the Guarantor are incorporated under Irish law. No assurance can be given as to the impact of any possible judicial decision or change to English or Irish law or administrative practice after the date of this Prospectus. Trading in the clearing systems The Notes have a denomination of A50,000 and are tradeable in the clearing systems in integral amounts of A1,000 above such denomination. Should definitive Notes be required to be issued, a holder who does not have an integral multiple of the denomination in his account with the relevant clearing system at the relevant time may not receive all of his entitlement in the form of definitive Notes unless and until such time as his holding becomes an integral multiple of the denomination. 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 The 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 investments that have a developed secondary market. Illiquidity may have a severely adverse effect on the market value of the Notes. 6

7 Exchange rate risks and exchange controls The Issuer will pay principal and interest on the Notes in euro. 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 euro. These include the risk that exchange rates may significantly change (including changes due to devaluation of euro 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. An 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. 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 An investment in the Notes involves the risk that subsequent changes in market interest rates may adversely affect the secondary market sale value of the Notes. 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) the Notes are legal investments for it, (2) the Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of the Notes. Financial institutions should consult their legal advisors or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital or similar rules. 7

8 DOCUMENTS INCORPORATED BY REFERENCE The following documents which have previously been published or are published simultaneously with this Prospectus and have been approved by the IFSRA or filed with it shall be incorporated in, and form part of, this Prospectus: (a) audited financial statements of the Issuer for the financial year ended 31 December 2005 including: (i) balance sheet (page 16); (ii) income statement (page 14); (iii) explanatory notes (pages 18-33); (iv) statement of accounting policies (pages 9-13); and (v) auditors report (pages 7-8); (b) audited financial statements of the Issuer for the financial year ended 31 December 2004 including: (i) balance sheet (page 11); (ii) profit and loss account (page 10); (iii) explanatory notes (pages 12-18); (iv) statement of accounting policies (page 9); and (v) auditors report (pages 7-8). (c) audited consolidated financial statements of the Guarantor for the financial year ended 31 December 2005 including: (i) balance sheet (page 21); (ii) income statement (page 19); (iii) explanatory notes (pages 25-69); (iv) statement of accounting policies (pages 8-18); and (v) auditors report (pages 6-7). (d) audited consolidated financial statements of the Guarantor for the financial year ended 31 December 2004 including: (i) balance sheet (page 13); (ii) profit and loss account (page 11); (iii) explanatory notes (pages 15-48); (iv) statement of accounting policies (pages 8-10); and (v) auditors report (pages 6-7). Following the publication of this Prospectus, a supplement may be prepared by the Issuer and approved by the IFSRA in accordance with Article 16 of the Prospectus Directive. Statements contained in any such supplement (or contained in any document incorporated by reference therein) shall, to the extent applicable (whether expressly, by implication or otherwise), be deemed to modify or supersede statements contained in this Prospectus or in a document which is incorporated by reference in this Prospectus. Any statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this Prospectus. Copies of documents incorporated by reference in this Prospectus can be obtained from the registered office of the Issuer and from the specified offices of the Paying Agents for the time being in London and Dublin. 8

9 CONDITIONS OF THE NOTES The following is the text of the Conditions of the Notes which (subject to modification) will be endorsed on each Note in definitive form (if issued): The A1,500,000,000 Guaranteed Floating Rate Notes due 2011 (the Notes, which expression shall in these Conditions, unless the context otherwise requires, include any further notes issued pursuant to Condition 16 and forming a single series with the Notes) of Ulster Bank Finance PLC (the Issuer) are constituted by a Trust Deed dated 29 March 2006 (the Trust Deed) made between the Issuer, Ulster Bank Ireland Limited (the Guarantor) as guarantor and The Law Debenture Trust Corporation p.l.c. (the Trustee, which expression shall include its successor(s)) as trustee for the holders of the Notes (the Noteholders) and the holders of the interest coupons appertaining to the Notes (the Couponholders and the Coupons respectively). The statements in these Conditions include summaries of, and are subject to, the detailed provisions of and definitions in the Trust Deed. Copies of the Trust Deed and the Agency Agreement dated 29 March 2006 (the Agency Agreement) made between the Issuer, the Guarantor, the initial Paying Agents, the Agent Bank and the Trustee are available for inspection during normal business hours by the Noteholders and the Couponholders at the registered office for the time being of the Trustee, being at the date of issue of the Notes at Fifth Floor, 100 Wood Street, London EC2V 7EX and at the specified office of each of the Paying Agents (including the Irish Paying Agent). The Noteholders and the Couponholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement applicable to them. 1. FORM, DENOMINATION AND TITLE 1.1 Form and Denomination The Notes are in bearer form, serially numbered, in the denomination of A50,000, each with Coupons attached on issue. 1.2 Title Title to the Notes and to the Coupons will pass by delivery. 1.3 Holder Absolute Owner The Issuer, the Guarantor, any Paying Agent and the Trustee may (to the fullest extent permitted by applicable laws) deem and treat the bearer of any Note or Coupon as the absolute owner for all purposes (whether or not the Note or Coupon shall be overdue and notwithstanding any notice of ownership or writing on the Note or Coupon or any notice of previous loss or theft of the Note or Coupon or of any trust or interest therein) and shall not be required to obtain any proof thereof or as to the identity of such bearer. 2. STATUS OF THE NOTES The Notes and the Coupons are direct, unconditional and unsecured obligations of the Issuer and rank and will rank pari passu, without any preference among themselves, with all other outstanding unsecured and unsubordinated indebtedness, of the Issuer, present and future, other than obligations preferred by mandatory provisions of law. 3. GUARANTEE 3.1 Guarantee The payment of the principal and interest in respect of the Notes and all other moneys payable by the Issuer under or pursuant to the Trust Deed and the performance by the Issuer of all its obligations under the Trust Deed has been unconditionally and irrevocably guaranteed by the Guarantor (the Guarantee) in the Trust Deed. 3.2 Status of the Guarantee The obligations of the Guarantor under the Guarantee constitute direct, unconditional and unsecured obligations of the Guarantor and rank and will rank pari passu with all other outstanding unsecured and unsubordinated obligations of the Guarantor, present and future, other than obligations preferred by mandatory provisions of law. 9

10 4. INTEREST 4.1 Interest Payment Dates The Notes bear interest from and including 29 March 2006 (the Interest Commencement Date), and interest will be payable on 29 March, 29 June, 29 September and 29 December in each year (each an Interest Payment Date). If any Interest Payment Date would otherwise fall on a day which is not a Business Day (as defined below) it shall be postponed to the next day which is a Business Day unless it would then fall into the next calendar month in which event the Interest Payment Date shall be brought forward to the immediately preceding Business Day. The first Interest Payment Date will fall in June The period from and including the Interest Commencement Date to but excluding the first Interest Payment Date, and each successive period from and including an Interest Payment Date to but excluding the next succeeding Interest Payment Date, is called an Interest Period. 4.2 Interest Accrual Each Note will cease to bear interest from and including the due date for redemption unless, upon due presentation, payment of the principal in respect of the Note is improperly withheld or refused or unless default is otherwise made in respect of the payment, in which event interest shall continue to accrue as provided in the Trust Deed. 4.3 Rate of Interest The rate of interest payable from time to time in respect of the Notes (the Rate of Interest) will be determined on the basis of the following provisions: (a) (b) (c) (d) (e) On each Interest Determination Date (as defined below) JPMorgan Chase Bank, N.A., or its duly appointed successor (in such capacity, the Agent Bank) will determine the Screen Rate (as defined below) at approximately a.m. (Brussels time) on that Interest Determination Date. If the Screen Rate is unavailable, the Agent Bank will request the principal Euro-zone (as defined below) office of each of the Reference Banks (as defined below) to provide the Agent Bank with the rate at which deposits in euro are offered by it to prime banks in the Euro-zone interbank market for three months at approximately a.m. (Brussels time) on the Interest Determination Date in question and for a Representative Amount (as defined below). The Rate of Interest for the Interest Period shall be the Screen Rate plus the Margin (as defined below) or, if the Screen Rate is unavailable, and at least two of the Reference Banks provide such rates, the arithmetic mean (rounded if necessary to the fifth decimal place, with being rounded upwards) as established by the Agent Bank of such rates, plus the Margin. If fewer than two rates are provided as requested, the Rate of Interest for that Interest Period will be the arithmetic mean of the rates quoted by major banks in the Euro-zone selected by the Agent Bank, at approximately a.m. (Brussels time) on the first day of such Interest Period for loans in euro to leading European banks for a period of three months commencing on the first day of such Interest Period and for a Representative Amount, plus the Margin. If the Rate of Interest cannot be determined in accordance with the above provisions, the Rate of Interest shall be determined as at the last preceding Interest Determination Date. The Margin (the Margin) is 0.09 per cent. per annum. In these Conditions, (except where otherwise defined), the expression: (i) (ii) (iii) Business Day means a day which is both a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in London and a TARGET Settlement Day; Euro-zone means the region comprised of the member states of the European Union that have adopted the single currency in accordance with the Treaty establishing the European Community (signed in Rome on 25 March 1957) as amended; Interest Determination Date means the second TARGET Settlement Day before the commencement of the Interest Period for which the rate will apply; 10

11 (iv) (v) (vi) Reference Banks means the principal Euro-zone office of each of four major banks engaged in the Euro-zone interbank market selected by the Agent Bank with the approval of the Issuer, provided that, once a Reference Bank has been selected by the Agent Bank, that Reference Bank shall not be changed unless and until it ceases to be capable of acting as such; Representative Amount means, in relation to any quotation of a rate for which a Representative Amount is relevant, an amount that is representative for a single transaction in the relevant market at the relevant time; Screen Rate means the rate for three month deposits in euro which appears on the Telerate page 248 (or such replacement page on that service which displays the information); and (vii) TARGET Settlement Day means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open. 4.4 Determination of Rate of Interest and Interest Amount The Agent Bank shall, as soon as practicable after a.m. (Brussels time) on each Interest Determination Date, but in no event later than the third Business Day thereafter, determine the euro amount (the Interest Amount) payable in respect of interest on each A50,000 principal amount of Notes for the relevant Interest Period. The Interest Amount shall be determined by applying the Rate of Interest to such principal amount, multiplying the sum by the actual number of days in the Interest Period concerned divided by 360 and rounding the resultant figure to the nearest cent (half a cent being rounded upwards). 4.5 Publication of Rate of Interest and Interest Amount The Agent Bank shall cause the Rate of Interest and the Interest Amount for each Interest Period and the relative Interest Payment Date to be notified to the Issuer, the Guarantor, the Trustee and to any stock exchange or other relevant authority on which the Notes are at the relevant time listed and to be notified to the Noteholders in accordance with Condition 12 as soon as possible after their determination, and in no event later than the second Business Day thereafter. The Interest Amount and Interest Payment Date may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of an extension or shortening of the Interest Period. 4.6 Determination by the Trustee The Trustee shall, if the Agent Bank defaults at any time in its obligation to determine the Rate of Interest and Interest Amount in accordance with the above provisions, determine the Rate of Interest and Interest Amount, the former at such rate as, in its absolute discretion (having such regard as it shall think fit to the procedure described above), it shall deem fair and reasonable in all the circumstances and the latter in the manner provided in paragraph 4.4 and the determinations shall be deemed to be determinations by the Agent Bank. 4.7 Notifications, etc. to be final All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition, whether by the Reference Banks (or any of them), the Agent Bank or the Trustee, will (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, the Guarantor, the Trustee, the Agent Bank, the Paying Agents and all Noteholders and Couponholders and (in the absence of wilful default, bad faith or manifest error) no liability to the Issuer, the Guarantor, or the Noteholders or the Couponholders shall attach to the Reference Banks (or any of them), the Agent Bank or, if applicable, the Trustee in connection with the exercise or non-exercise by any of them of their powers, duties and discretions under this Condition. 4.8 Agent Bank The Issuer shall procure that, so long as any of the Notes remains outstanding, there is at all times an Agent Bank for the purposes of the Notes and the Issuer may, subject to the prior written approval of the Trustee, terminate the appointment of the Agent Bank. In the event of the appointed office of any bank being unable or unwilling to continue to act as the Agent Bank or 11

12 failing duly to determine the Rate of Interest and the Interest Amount for any Interest Period, the Issuer shall, subject to the prior written approval of the Trustee, appoint the Eurozone office of another major bank engaged in the Euro-zone interbank market to act in its place. The Agent Bank may not resign its duties or be removed without a successor having been appointed. 5. PAYMENTS 5.1 Payments in respect of Notes Payments of principal and interest in respect of each Note will be made against presentation and surrender (or, in the case of part payment only, endorsement) of the Note, except that payments of interest due on an Interest Payment Date will be made against presentation and surrender (or, in the case of part payment only, endorsement) of the relevant Coupon, in each case at the specified office outside the United States of any of the Paying Agents. 5.2 Method of Payment Payments will be made by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by euro cheque. 5.3 Missing Unmatured Coupons Upon the date on which any Note becomes due and repayable, all unmatured Coupons appertaining to the Note (whether or not attached) shall become void and no payment shall be made in respect of such Coupons. 5.4 Payments subject to applicable laws Payments in respect of principal and interest on the Notes are subject in all cases to any fiscal or other laws and regulations applicable in the place of payment, but without prejudice to the provisions of Condition Payment only on a Presentation Date A holder shall be entitled to present a Note or Coupon for payment only on a Presentation Date and shall not, except as provided in Condition 4, be entitled to any further interest or other payment if a Presentation Date is after the due date. Presentation Date means a day which (subject to Condition 8): (a) is or falls after the relevant due date; (b) (c) is a Business Day in the place of the specified office of the Paying Agent at which the Note or Coupon is presented for payment; and in the case of payment by credit or transfer to a euro account as referred to above, is a TARGET Settlement Day. In this Condition, Business Day means, in relation to any place, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in that place. 5.6 Initial Paying Agents The names of the initial Paying Agents and their initial specified offices are set out at the end of these Conditions. The Issuer and the Guarantor reserve the right, subject to the prior written approval of the Trustee, at any time to vary or terminate the appointment of any Paying Agent and to appoint additional or other Paying Agents provided that: (a) (b) (c) there will at all times be a Principal Paying Agent; there will at all times be at least one Paying Agent (which may be the Principal Paying Agent) having its specified office in a city in continental Europe; so long as the Notes are listed or admitted to trading on any stock exchange or other relevant authority, there will at all times be a Paying Agent with a specified office in such place as may 12

13 be required by the rules and regulations of that stock exchange or other relevant authority; and (d) the Issuer undertakes that it will ensure that it maintains a Paying Agent in a Member State of the European Union that is not obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or introduced in order to conform to, such Directive. Notice of any termination or appointment and of any changes in specified offices will be given to the Noteholders promptly by the Issuer in accordance with Condition REDEMPTION AND PURCHASE 6.1 Redemption at Maturity Unless previously redeemed or purchased and cancelled as provided below, the Issuer will redeem the Notes at their principal amount on the Interest Payment Date falling in March Redemption for Taxation Reasons If the Issuer satisfies the Trustee immediately before the giving of the notice referred to below that: (a) (b) as a result of any change in, or amendment to, the laws or regulations of a Relevant Jurisdiction (as defined in Condition 7), or any change in the application or official interpretation of the laws or regulations of a Relevant Jurisdiction, which change or amendment becomes effective after 27 March 2006, on the next Interest Payment Date either (i) the Issuer would be required to pay additional amounts as provided or referred to in Condition 7 or (ii) the Guarantor would be unable for reasons outside its control to procure payment by the Issuer and in making payment itself would be required to pay such additional amounts; and the requirement cannot be avoided by the Issuer or, as the case may be, the Guarantor taking reasonable measures available to it. The Issuer may at its option, having given not less than 30 nor more than 60 days notice to the Noteholders in accordance with Condition 12 (which notice shall be irrevocable), redeem all the Notes, but not some only, on the next Interest Payment Date at their principal amount, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer or, as the case may be, the Guarantor would be required to pay such additional amounts, were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Trustee a certificate signed by two Directors of the Issuer or, as the case may be, the Guarantor stating that the requirement referred to in (a) above will apply on the next Interest Payment Date and cannot be avoided by the Issuer or, as the case may be, the Guarantor taking reasonable measures available to it, and the Trustee shall be entitled to accept the certificate as sufficient evidence of the satisfaction of the conditions precedent set out above, in which event it shall be conclusive and binding on the Noteholders and the Couponholders. 6.3 Purchases The Issuer or the Guarantor may at any time purchase Notes (provided that all unmatured Coupons appertaining to the Notes are purchased with the Notes) in any manner and at any price. Such Notes may be held, reissued, resold or, at the option of the Issuer or the Guarantor, as the case may be, surrendered to any Paying Agent for cancellation. 6.4 Cancellations All Notes which are (a) redeemed or (b) purchased by or on behalf of the Issuer or the Guarantor and surrendered to a Paying Agent for cancellation, will forthwith be cancelled, together with all relative unmatured Coupons attached to the Notes or surrendered with the Notes, and accordingly may not be held, reissued or resold. 6.5 Notices Final Upon the expiry of any notice as is referred to in paragraph 6.2 above the Issuer shall be bound to redeem the Notes in accordance with the terms of such paragraph. 13

14 7. TAXATION 7.1 Payment without Withholding All payments in respect of the Notes by or on behalf of the Issuer or the Guarantor shall be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (Taxes) imposed or levied by or on behalf of the Relevant Jurisdiction, unless the withholding or deduction of the Taxes is required by law. In that event, the Issuer or, as the case may be, the Guarantor will pay such additional amounts as may be necessary in order that the net amounts received by the Noteholders and Couponholders after the withholding or deduction shall equal the respective amounts which would have been receivable in respect of the Notes or, as the case may be, Coupons in the absence of the withholding or deduction; except that no additional amounts shall be payable in relation to any payment in respect of any Note or Coupon: (a) (b) (c) (d) (e) (f) presented for payment by or on behalf of, a holder who is liable to the Taxes in respect of the Note or Coupon by reason of his having some connection with the Relevant Jurisdiction other than the mere holding of the Note or Coupon; or presented for payment in the Relevant Jurisdiction; or presented for payment by or on behalf of a holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or other similar claim for exemption to the relevant tax authority; or where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or introduced in order to conform to, such Directive; or presented for payment 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 European Union; or presented for payment more than 30 days after the Relevant Date (as defined below) except to the extent that a holder would have been entitled to additional amounts on presenting the same for payment on the last day of the period of 30 days assuming, whether or not such is in fact the case, that day to have been a Presentation Date (as defined in Condition 5). 7.2 Interpretation In these Conditions: (a) (b) Relevant Date means the date on which the payment first becomes due but, if the full amount of the money payable has not been received by the Principal Paying Agent or the Trustee on or before the due date, it means the date on which, the full amount of the money having been so received, notice to that effect has been duly given to the Noteholders by the Issuer in accordance with Condition 12; and Relevant Jurisdiction means Ireland or any political subdivision or any authority thereof or therein having power to tax or any other jurisdiction or any political subdivision or any authority thereof or therein having power to tax to which the Issuer or the Guarantor, as the case may be, becomes subject in respect of payments made by it of principal and interest on the Notes and Coupons. 7.3 Additional Amounts Any reference in these Conditions to any amounts in respect of the Notes shall be deemed also to refer to any additional amounts which may be payable under this Condition or under any undertakings given in addition to, or in substitution for, this Condition pursuant to the Trust Deed. 8. PRESCRIPTION Notes and Coupons will become void unless presented for payment within periods of 10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date in respect of the Notes or, as the case may be, the Coupons, subject to the provisions of Condition 5. 14

15 9. EVENTS OF DEFAULT 9.1 Events of Default The Trustee at its discretion may, and if so requested in writing by the holders of at least one-fifth in principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of the Noteholders shall (subject in each case to being indemnified and/or secured to its satisfaction), (but, in the case of the happening of any of the events described in subparagraphs (b) or (c) (other than the winding up or dissolution of the Issuer or the Guarantor), and (d) to (f) inclusive and (h) (in respect of any event having an analogous effect to any event referred to in subparagraph (c) (other than as aforesaid) or (d) to (f) inclusive) below, only if the Trustee shall have certified in writing to the Issuer and the Guarantor that such event is, in its opinion, materially prejudicial to the interests of the Noteholders) give notice to the Issuer and the Guarantor that the Notes are, and they shall accordingly forthwith become, immediately due and repayable at their principal amount, together with accrued interest as provided in the Trust Deed, in any of the following events (Events of Default): (a) (b) (c) (d) (e) (f) if default is made in the payment of any principal or interest due in respect of the Notes or any of them and the default continues for a period of 7 days in the case of principal or 14 days in the case of interest; or if the Issuer or the Guarantor fails to perform or observe any of its other obligations under these Conditions or the Trust Deed and (except in any case where the Trustee considers the failure to be incapable of remedy, when no continuation or notice as is hereinafter mentioned will be required) the failure continues for the period of 30 days (or such longer period as the Trustee may permit) following the service by the Trustee on the Issuer or the Guarantor (as the case may be) of notice requiring the same to be remedied; or if any order is made by any competent court or effective resolution is passed for the winding up or dissolution of the Issuer, the Guarantor, Ulster Bank Limited (UBL) or any of UBL s Principal Subsidiaries, save for the purposes of reorganisation (which shall include a statutory bank merger scheme under Part III of the Irish Central Bank Act, 1971 or similar statutory scheme under any applicable law) on terms approved in writing by the Trustee or by an Extraordinary Resolution of the Noteholders; or if the Issuer, the Guarantor, UBL or any of UBL s Principal Subsidiaries ceases or threatens to cease to carry on the whole or substantially the whole of its business, save for the purposes of reorganisation (which shall include a statutory bank merger scheme under Part III of the Irish Central Bank Act, 1971 or similar statutory scheme under any applicable law) on terms approved in writing by the Trustee or by an Extraordinary Resolution of the Noteholders, or the Issuer, the Guarantor, UBL or any of UBL s Principal Subsidiaries stops or threatens to stop payment of, or is unable to, or admits inability to, pay, its debts (or any class of its debts) as they fall due or is deemed unable to pay its debts pursuant to or for the purposes of any applicable law, or is adjudicated or found bankrupt or insolvent; or if (i) an administrative or other receiver, manager, administrator, examiner or other similar official is appointed in relation to the Issuer, the Guarantor, UBL or any of UBL s Principal Subsidiaries or, as the case may be, in relation to the whole or any substantial part of the undertaking or assets of any of them or an encumbrancer takes possession of the whole or any substantial part of the undertaking or assets of any of them, or a distress, execution, attachment, sequestration or other process is levied, enforced upon, sued out or put in force against the whole or any substantial part of the undertaking or assets of any of them, and (ii) in any such case (other than the appointment of an administrator or an administrative receiver appointed following presentation of a petition for an administration order) unless initiated by the relevant company, is not discharged within 14 days; or if the Issuer, the Guarantor, UBL or any of UBL s Principal Subsidiaries (or their respective directors or shareholders) initiates or consents to judicial proceedings relating to itself under any applicable liquidation, insolvency, examinership, composition, reorganisation or other similar laws (including the obtaining of a moratorium) or makes a conveyance or assignment for the benefit of, or enters into any composition or other arrangement with, its creditors generally (or any class of its creditors) or any meeting is convened to consider a proposal for an arrangement or composition with its creditors generally (or any class of its creditors); or 15

16 (g) (h) if the Guarantee ceases to be, or is claimed by the Issuer or the Guarantor not to be, in full force and effect; or if any event occurs which, under the laws of any Relevant Jurisdiction, has or may have, in the Trustee s opinion, an analogous effect to any of the events referred to in subparagraphs (c) to (g) above. 9.2 Interpretation For the purposes of this Condition: A Principal Subsidiary means at any time a Subsidiary of UBL: (a) (b) (c) whose gross revenues (consolidated in the case of a Subsidiary which itself has Subsidiaries) or whose total assets (consolidated in the case of a Subsidiary which itself has Subsidiaries) represent in each case (or, in the case of a Subsidiary acquired after the end of the financial period to which the then latest audited consolidated accounts of UBL and its Subsidiaries relate, are equal to) not less than 10 per cent. of the consolidated gross revenues of UBL, or, as the case may be, consolidated total assets, of UBL and its Subsidiaries taken as a whole, all as calculated respectively by reference to the then latest audited accounts (consolidated or, as the case may be, unconsolidated) of such Subsidiary and the then latest audited consolidated accounts of UBL and its Subsidiaries, provided that in the case of a Subsidiary of UBL acquired after the end of the financial period to which the then latest audited consolidated accounts of UBL and its Subsidiaries relate, the reference to the then latest audited consolidated accounts of UBL and its Subsidiaries for the purposes of the calculation above shall, until consolidated accounts for the financial period in which the acquisition is made have been prepared and audited as aforesaid, be deemed to be a reference to such first-mentioned accounts as if such Subsidiary had been shown in such accounts by reference to its then latest relevant audited accounts, adjusted as deemed appropriate by UBL; to which is transferred the whole or substantially the whole of the undertaking and assets of a Subsidiary of UBL which immediately prior to such transfer is a Principal Subsidiary, provided that the transferor Subsidiary shall upon such transfer forthwith cease to be a Principal Subsidiary and the transferee Subsidiary shall cease to be a Principal Subsidiary pursuant to this subparagraph (b) on the date on which the consolidated accounts of UBL and its Subsidiaries for the financial period current at the date of such transfer have been prepared and audited as aforesaid but so that such transferor Subsidiary or such transferee Subsidiary may be a Principal Subsidiary on or at any time after the date on which such consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (a) above or, prior to or after such date, by virtue of any other applicable provision of this definition; or to which is transferred an undertaking or assets which, taken together with the undertaking or assets of the transferee Subsidiary, generated (or, in the case of the transferee Subsidiary being acquired after the end of the financial period to which the then latest audited consolidated accounts of UBL and its Subsidiaries relate, generate gross revenues equal to) not less than 10 per cent. of the consolidated gross revenues of UBL, or represent (or, in the case aforesaid, are equal to) not less than 10 per cent. of the consolidated total assets of UBL and its Subsidiaries taken as a whole, all as calculated as referred to in subparagraph (a) above, provided that the transferor Subsidiary (if a Principal Subsidiary) shall upon such transfer forthwith cease to be a Principal Subsidiary unless immediately following such transfer its undertaking and assets generate (or, in the case aforesaid, generate gross revenues equal to) not less than 10 per cent. of the consolidated gross revenues of UBL, or its assets represent (or, in the case aforesaid, are equal to) not less than 10 per cent. of the consolidated total assets of UBL and its Subsidiaries taken as a whole, all as calculated as referred to in subparagraph (a) above, and the transferee Subsidiary shall cease to be a Principal Subsidiary pursuant to this subparagraph (c) on the date on which the consolidated accounts of UBL and its Subsidiaries for the financial period current at the date of such transfer have been prepared and audited but so that such transferor Subsidiary or such transferee Subsidiary may be a Principal Subsidiary on or at any time after the date on which such consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (a) above or, prior to or after such date, by virtue of any other applicable provision of this definition, all as more particularly defined in the Trust Deed. 16

17 9.3 Reports A report by two Directors of the Guarantor or UBL whether or not addressed to the Trustee that in their opinion a Subsidiary of UBL is or is not or was or was not at any particular time or throughout any specified period a Principal Subsidiary may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence of manifest or proven error, be conclusive and binding on all parties. 10. ENFORCEMENT 10.1 Enforcement by the Trustee The Trustee may at any time, at its discretion and without notice, take such proceedings against the Issuer and/or the Guarantor as it may think fit to enforce the provisions of the Trust Deed, the Notes and the Coupons, but it shall not be bound to take any such proceedings or any other action in relation to the Trust Deed, the Notes or the Coupons unless (a) it has been so directed by an Extraordinary Resolution of the Noteholders or so requested in writing by the holders of at least one-fifth in principal amount of the Notes then outstanding and (b) it has been indemnified and/or secured to its satisfaction Enforcement by the Noteholders No Noteholder or Couponholder shall be entitled to proceed directly against the Issuer or the Guarantor unless the Trustee, having become bound so to proceed, fails so to do within a reasonable period and the failure shall be continuing. 11. REPLACEMENT OF NOTES AND COUPONS Should any Note or Coupon be lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified office of the Principal Paying Agent upon payment by the claimant of the expenses incurred in connection with the replacement and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued. 12. NOTICES All notices to the Noteholders will be valid if published in a leading English language daily newspaper published in London or such other English language daily newspaper with general circulation in Europe as the Trustee may approve and, so long as the Notes are listed in the Official List of the Irish Stock Exchange Limited and the rules of that exchange so require, in one daily English Language newspaper published in Ireland or by way of formal notice approved and inserted in the Daily Official List of the Irish Stock Exchange Limited (the Daily Official List). It is expected that publication will normally be made in the Financial Times in London and by way of formal notice approved and inserted in the Daily Official List. The Issuer shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange or the relevant authority on which the Notes are for the time being listed or admitted to trading, as the case may be. Any such notice will be deemed to have been given on the date of the first publication or, where required to be published in more than one newspaper or source, as applicable, on the date of the first publication in all required newspapers or sources, as applicable. If publication as provided above is not practicable, notice will be given in such other manner, and shall be deemed to have been given on such date, as the Trustee may approve. Couponholders will be deemed for all purposes to have notice of the contents of any notice given to the Noteholders in accordance with this paragraph. 13. SUBSTITUTION The Trustee may, without the consent of the Noteholders or Couponholders, agree with the Issuer and the Guarantor to the substitution in place of (i) the Issuer (or of any previous substitute under this Condition) as the principal debtor under the Notes, the Coupons and the Trust Deed of the Guarantor or any Holding Company (as defined in the Trust Deed) or any Subsidiary of any such Holding Company or a Successor in Business (as defined in the Trust Deed) or any Subsidiary of any Successor in Business or (ii) the Guarantor (or of any previous substitute under this Condition) as the guarantor under the Guarantee of any Holding Company of the Guarantor or a Successor in Business of the Guarantor, subject to: 17

18 (a) (b) the Trustee being satisfied that the interests of the Noteholders will not be materially prejudiced by the substitution; and certain other conditions set out in the Trust Deed being complied with. 14. MEETINGS OF NOTEHOLDERS, MODIFICATION, WAIVER, AUTHORISATION AND DETERMINATION 14.1 Meetings of Noteholders The Trust Deed contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the modification or abrogation by Extraordinary Resolution of any of these Conditions or any of the provisions of the Trust Deed. The quorum at any meeting for passing an Extraordinary Resolution will be one or more persons present holding or representing more than 50 per cent. in principal amount of the Notes for the time being outstanding, or at any adjourned such meeting one or more persons present whatever the principal amount of the Notes held or represented by him or them, except that, at any meeting the business of which includes the modification or abrogation of certain of the provisions of these Conditions and certain of the provisions of the Trust Deed, the necessary quorum for passing an Extraordinary Resolution will be one or more persons present holding or representing not less than two-thirds, or at any adjourned such meeting not less than onethird, of the principal amount of the Notes for the time being outstanding. An Extraordinary Resolution passed at any meeting of the Noteholders will be binding on all Noteholders, whether or not they are present at the meeting, and on all Couponholders. The Trust Deed provides that a resolution in writing signed by or on behalf of the holders of at least 90 per cent. in aggregate principal amount of the Notes for the time being outstanding shall be effective as an Extraordinary Resolution Modification, Waiver, Authorisation and Determination The Trustee may agree, without the consent of the Noteholders or Couponholders, to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of these Conditions or any of the provisions of the Trust Deed, or determine, without any such consent as aforesaid, that any Event of Default or Potential Event of Default (as defined in the Trust Deed) shall not be treated as such (provided that, in any such case, it is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders) or may agree, without any such consent as aforesaid, to any modification which, in its opinion, is of a formal, minor or technical nature or to correct a manifest error or an error which, in the opinion of the Trustee, is proven or to comply with mandatory provisions of the law of the jurisdiction, in which the Issuer and/or the Guarantor is incorporated Trustee to have Regard to Interests of Noteholders as a Class In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation, determination or substitution), the Trustee shall have regard to the general interests of the Noteholders as a class but shall not have regard to any interests arising from circumstances particular to individual Noteholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer, the Guarantor, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders except to the extent already provided for in Condition 7 and/or any undertaking given in addition to, or in substitution for, Condition 7 pursuant to the Trust Deed Notification to the Noteholders Any modification, abrogation, waiver, authorisation, determination or substitution shall be binding on the Noteholders and the Couponholders and, unless the Trustee agrees otherwise, shall be notified by the Issuer to the Noteholders as soon as practicable thereafter in accordance with Condition

19 15. INDEMNIFICATION OF THE TRUSTEE AND ITS CONTRACTING WITH THE ISSUER AND THE GUARANTOR 15.1 Indemnification of the Trustee The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking action unless indemnified and/or secured to its satisfaction Trustee Contracting with the Issuer and the Guarantor The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (a) to enter into business transactions with the Issuer and/or the Guarantor and/or any of the Guarantor s other Subsidiaries and/or any Holding Company and to act as trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer and/or the Guarantor and/or any of the Guarantor s other Subsidiaries and/or any Holding Company, (b) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders or Couponholders, and (c) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith. 16. FURTHER ISSUES The Issuer is at liberty from time to time without the consent of the Noteholders or Couponholders to create and issue further notes or bonds (whether in bearer or registered form) either (a) ranking pari passu in all respects (or in all respects save for the first payment of interest thereon) and so that the same shall be consolidated and form a single series with the outstanding notes or bonds of any series (including the Notes) constituted by the Trust Deed or any supplemental deed or (b) upon such terms as to ranking, interest, conversion, redemption and otherwise as the Issuer may determine at the time of the issue. Any further notes or bonds which are to form a single series with the outstanding notes or bonds of any series (including the Notes) constituted by the Trust Deed or any supplemental deed shall, and any other further notes or bonds may (with the consent of the Trustee) be constituted by a deed supplemental to the Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of notes or bonds of other series in certain circumstances where the Trustee so decides. 17. GOVERNING LAW AND SUBMISSION TO JURISDICTION 17.1 Governing Law The Trust Deed (including the Guarantee), the Notes and the Coupons are governed by, and will be construed in accordance with, English law Jurisdiction of English Courts Each of the Issuer and the Guarantor has, in the Trust Deed, irrevocably agreed for the benefit of the Trustee, the Noteholders and the Couponholders that the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Trust Deed, the Notes or the Coupons and accordingly has submitted to the exclusive jurisdiction of the English courts. Each of the Issuer and the Guarantor has, in the Trust Deed, waived any objection to the courts of England on the grounds that they are an inconvenient or inappropriate forum. The Trustee, the Noteholders and the Couponholders may take any suit, action or proceeding arising out of or in connection with the Trust Deed, the Notes or the Coupons respectively (together referred to as Proceedings) against the Issuer or the Guarantor in any other court of competent jurisdiction and concurrent Proceedings in any number of jurisdictions Appointment of Process Agent Each of the Issuer and the Guarantor has, in the Trust Deed, irrevocably and unconditionally appointed The Royal Bank of Scotland plc, at Fifth Floor, 280 Bishopsgate, London EC2M 4RB, as its agent for service of process in England in respect of any Proceedings and has undertaken that in the event of such agent ceasing so to act it will appoint such other person as the Trustee may approve as its agent for that purpose. 19

20 18. RIGHTS OF THIRD PARTIES No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Note, but this does not affect any right or remedy of any person which exists or is available apart from that Act. 20