bt · 2009. 7. 22. · notes due 2016 (the "tranche 5 notes") and the €1,000,000,000 floating...

Offering Circular

BT British Telecommunications

public limited company (Incorporated with limited liability in England and Wales under the Companies Acts 1948 to 1981)

(Registered Number: 1800000)

€1,750,000,000 5.625 per cent. Notes due 2004 Issue Price: 99.764 per cent.



£400,000,000 7.125 per cent. Notes due 2006 Issue Price: 99.363 per cent.

£700,000,000 7.5 per cent. Notes due 2016 Issue Price: 99.113 per cent.

€1,000,000,000 Floating Rate Notes due 2003 Issue Price: 99.667 per cent.

Joint-Lead Managers

Barclays Capital Deutsche Bank HSBC

Co-Lead Managers in respect of the sterling Notes

Cazenove & Co. The Royal Bank of Scotland, Financial Markets

Co-Lead Managers in respect of the euro Notes

ABN AMRO Bayerische Landesbank Girozentrale

Mizuho International plc Société Générale

Tokyo-Mitsubishi International plc

Co-Managers in respect of the euro Notes

Merrill Lynch International Morgan Stanley Dean Witter

Schroder Salomon Smith Barney

13th February, 2001

This document comprises l ist ing particulars given in compliance w i th the l ist ing rules made under Section 142 of the Financial Services Act 1986, as amended, by the UK Listing Author i ty for the purpose of giv ing informat ion wi th regard to British Telecommunicat ions public l imited company (the "Issuer", the "Company" or "BT") and its subsidiaries (together the "Group") and the €1,750,000,000 5.625 per cent. Notes due 2004 (the "Tranche 1 Notes"), the €3,000,000,000 6.125 per cent. Notes due 2006 (the "Tranche 2 Notes"), the €2,250,000,000 6.875 per cent. Notes due 2011 (the "Tranche 3 Notes"), the £400,000,000 7.125 per cent. Notes due 2006 (the "Tranche 4 Notes"), the £700,000,000 7.5 per cent. Notes due 2016 (the "Tranche 5 Notes") and the €1,000,000,000 Floating Rate Notes due 2003 (the "Tranche 6 Notes"). Unless expressly indicated otherwise, and apart f rom references to "Notes" in the Terms and Condit ions of each Tranche of Notes where references to "Notes" mean the Notes of the relevant Tranche, the Tranche 1 Notes, the Tranche 2 Notes, the Tranche 3 Notes, the Tranche 4 Notes, the Tranche 5 Notes and the Tranche 6 Notes are together referred to as the "Notes" and each a "Tranche".

The Issuer accepts responsibil i ty for the informat ion contained in this document. To the best of the knowledge and belief of the Issuer (which has taken all reasonable care to ensure that such is the case) the informat ion contained in this document is in accordance wi th the facts and does not omi t anything likely to affect the import of such informat ion.

A copy of this document, which comprises listing particulars approved by the UK Listing Author i ty as required by Section 149 of the Financial Services Act 1986, has been delivered to the Registrar of Companies in England and Wales. Appl icat ion has been made for the Notes to be admitted to the official list maintained by the UK Listing Author i ty (the "Official List") and to London Stock Exchange plc (the "London Stock Exchange") for such Notes to be admit ted to trading by the London Stock Exchange, which together under the Listing Rules of the UK Listing Author i ty wi l l constitute official l isting on the London Stock Exchange.

No person has been authorised to give any informat ion or to make any representations other than those contained in this document in connection wi th the offering of the Notes and, if given or made, such informat ion or representations must not be relied upon as having been authorised by the Issuer or the euro Notes' Managers or the sterl ing Notes' Managers (both as defined herein and, together, the "Managers"). Neither the delivery of this document nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer or the Group since the date hereof. This document does not constitute an offer of, or an invitat ion by, or on behalf of, the Issuer or the Managers to subscribe for, or purchase, any of the Notes.

The distr ibut ion of this document and the offering of the Notes in certain jur isdict ions may be restricted by law. Persons into whose possession this document comes are required by the Issuer and the Managers to in form themselves about and to observe any such restrictions.

The Notes have not been and wi l l 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 wi th in 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 the distr ibut ion of this document, see "Sell ing Restrictions" below.

Each Tranche of Notes wi l l initially be represented by a temporary global note, w i thout interest coupons attached (a "Temporary Global Note"), which wi l l be deposited wi th a common depositary for Clearstream Banking, société anonyme ("Clearstream, Luxembourg") and Euroclear S.A./N.V., as operator of the Euroclear System ("Euroclear") on or about 15th February, 2001 (the "Closing Date"). Each Temporary Global Note wi l l be exchangeable on or after 28th March, 2001 for interests in a permanent global note, w i thout interest coupons attached (a "Permanent Global Note", and together wi th a Temporary Global Note, the "Global Notes"), upon certif ication that the beneficial owners of the relevant Notes are not U.S. persons or persons who have acquired such Notes for resale to any U.S. person. Each Permanent Global Note wi l l be exchangeable in whole for definit ive Notes only in certain l imited circumstances - see "Summary of Provisions relating to the Notes whi le represented by the Global Notes".

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All references herein to the "euro Notes" are to the Tranche 1 Notes, the Tranche 2 Notes, the Tranche 3 Notes and the Tranche 6 Notes, and all references herein to the "ster l ing Notes" are to the Tranche 4 Notes and the Tranche 5 Notes.

Al l references herein to "ster l ing", "pounds" and "£" are to the currency of the United Kingdom and all references herein to "euro" and "€" are to the single currency which was introduced at the start of the third stage of European Economic and Monetary Union, pursuant to the Treaty establ ishing the European Communi t ies (as amended by the Treaty on European Union and the Treaty of Amsterdam).

TABLE OF CONTENTS

Terms and Condit ions of the Tranche 1 Notes 4






Summary of Provisions relating to the Notes whi le represented by the Global Notes 28

Use of Proceeds 30

British Telecommunicat ions public l imited company 31

Capitalisation and Indebtedness of the Issuer and the Subsidiaries 36

United Kingdom Taxation 38

Subscript ion and Sale 41

Sell ing Restrictions 42

General Information 43

In connection with this issue, HSBC Bank plc may over-allot or effect transactions which stabilise or maintain the market price of the Notes at a level which might not otherwise prevail. Such stabilising, if commenced, may be discontinued at any time and will be carried out in accordance with all applicable laws and regulations.

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TERMS AND CONDITIONS OF THE TRANCHE 1 NOTES

The following, subject to alteration, is the text of the Terms and Conditions of the Tranche 7 Notes which will be endorsed on each Tranche 7 Note in definitive form, if issued:

The euro 1,750,000,000 5.625 per cent. Notes due 2004 (the "Notes", which expression shall in these Terms and Condit ions, unless the context otherwise requires, include any further notes issued pursuant to Condit ion 16 and forming a single series therewith) of British Telecommunicat ions public l imited company (the "Issuer") are constituted by a Trust Deed dated 15th February, 2001 (the "Trust Deed") made between the Issuer and The Law Debenture Trust Corporation p.I.c. (the "Trustee") as trustee for the holders of the Notes (the "Noteholders"). The issue of the Notes was authorised pursuant to a resolution of the Board of Directors of the Issuer passed on 26th Apr i l , 1994. The statements in these Terms and Condit ions include summaries of, and are subject to , the detailed provisions of the Trust Deed. In relation to the Notes, the Issuer and the Trustee have entered into an agency agreement dated 15th February, 2001 (the "Agency Agreement") w i th , among others, Citibank, N.A., London branch as initial principal paying agent and calculation agent (the "Calculation Agent"). Copies of the Trust Deed and the Agency Agreement are available for inspection by Noteholders and the holders of the interest coupons (the "Couponholders" and the "Coupons" respectively) appertaining to the Notes at the registered office of the Trustee, being at the date hereof at Fifth Floor, 100 Wood Street, London EC2V 7EX, and at the specified office of each of the paying agents referred to below. The Noteholders and the Couponholders are entit led to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and those provisions of the Agency Agreement applicable to them.

1. FORM AND DENOMINATION The Notes are in bearer fo rm, serially numbered, in denominat ions of euro1,000, euro10,000 and euro100,000, each wi th Coupons attached on issue. Notes of one denominat ion may not be exchanged for Notes of another denominat ion.

2. STATUS The Notes and the Coupons are direct, uncondit ional and (subject to Condit ion 3) unsecured obl igat ions of the Issuer and (subject as aforesaid) rank pari passu, w i thout any preference among themselves, w i th all other outstanding unsecured and unsubordinated obl igat ions of the Issuer, present and future.

3. NEGATIVE PLEDGE So long as any of the Notes is outstanding (as defined in the Trust Deed), the Issuer shall not, and shall cause the Subsidiaries not to, directly or indirectly, create, assume or incur or permit to be created, assumed or incurred, any Lien on or wi th respect to any of the assets of the Issuer or any of the Subsidiaries whether now or hereafter owned, to secure any present or future Capital Markets Indebtedness issued or guaranteed by the Issuer or any other Person wi thout at the same t ime according to the Notes, to the satisfaction of the Trustee, the same security or such other arrangement (whether or not compris ing security) as the Trustee shall , in its absolute discretion, deem not materially less beneficial to the Noteholders, or as shall have been approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders.

Save as provided below, in these Terms and Condit ions:

"Capital Markets Indebtedness" means any obl igat ion for the payment of borrowed money which is in the form of, or represented or evidenced by, a certificate of indebtedness or in the form of, or represented or evidenced by, bonds, notes or other securities which are, or which the Issuer has publicly declared that it intends to have, quoted, l isted, dealt in or traded on a stock exchange or other recognised securities market.

"L ien" means any mortgage, pledge, hypothecation, charge, assignment, deposit arrangement, encumbrance, security interest, lien (statutory or otherwise), or preference, priority or other security or similar agreement or preferential arrangement of any kind or nature whatsoever ( including, w i thout l imitat ion, any agreement to give or grant a Lien or any lease, condit ional

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sale or other t it le retention agreement having substantial ly the same economic effect as any of the foregoing).

"Person" means any indiv idual , corporat ion, partnership, jo int venture, trust, unincorporated organisat ion or government or any agency or polit ical subdivision thereof.

"Subsidiary" means, for the purpose of this Condit ion 3 only, (i) a corporat ion more than 50 per cent. of the outstanding vot ing shares of wh ich is owned , directly or indirectly, by the Issuer, or by one or more other Subsidiaries of the Issuer, or by the Issuer and one or more other Subsidiaries of the Issuer; (ii) any general partnership, jo int venture or similar entity, at least 50 per cent. of the outstanding partnership or simi lar interest of wh ich is owned, directly or indirectly, by the Issuer, or by one or more other Subsidiaries of the Issuer, or by the Issuer and one or more other Subsidiaries of the Issuer; and (iii) any l imited partnership of wh ich the Issuer or any other Subsidiary of the Issuer is a general partner.

4. INTEREST (i) Rate of Interest before Step Up Rating Change (if any)

The Notes bear interest f rom and including 15th February, 2001 (the "Issue Date") at the rate of 5.625 per cent. per annum (the " init ial interest rate") payable annually in arrear on 16th February in each year (each an "Interest Payment Date") to but excluding the first Interest Payment Date fo l lowing the date on which a Step Up Rating Change (as defined in Condit ion 4(iii)(d)) (if any) occurs and thereafter at the applicable rate(s) of interest determined in accordance wi th Condit ion 4(iii) below. The first payment for the period f rom and including 15th February, 2001 to but excluding 16th February, 2002 and amount ing to euro56.40 per euro1,000 principal amount of each Note shall be made on 16th February, 2002.

(ii) Interest Accrual and Payments

If interest is required to be calculated for a period of less than one scheduled interest per iod, it w i l l be calculated on the basis of (A) the actual number of days f rom and including the most recent Interest Payment Date (or, if the relevant payment date falls before the first Interest Payment Date, the Issue Date) to but excluding the relevant payment date divided by (B) 365 days, in the case of the relevant payment date fal l ing before the first Interest Payment Date or, in any other case, the actual number of days in the period f rom and including the most recent Interest Payment Date to but excluding the next Interest Payment Date.

Each Note wi l l cease to bear interest f rom the due date for redempt ion unless, upon due presentation, payment of the principal is improper ly wi thheld or refused. In such event, interest wi l l cont inue to accrue at the rate pertaining on such date (after as wel l as before any judgment) up to but excluding the date on wh ich , upon further presentation, payment in ful l of the principal thereof together wi th all accrued interest thereon is made or (if earlier) the seventh day after notice is duly given to the holder of such Note in accordance wi th Condit ion 13 that upon further presentation of such Note being duly made such payment wi l l be made, provided that upon further presentation thereof being duly made such payment is in fact made.

(iii) The Reset Rate of Interest after a Step Up Rating Change (if any) or a Step Down Rating Change (if any) (a) The rate of interest payable on the Notes wi l l be subject to adjustment f rom t ime to

t ime in the event of a Step Up Rating Change or Step Down Rating Change, as the case may be, (each as defined below).

(b) From and including the first Interest Payment Date fo l lowing the date of a Step Up Rating Change, if any, the rate of interest payable on the Notes shall , subject to any adjustment pursuant to a Step Down Rating Change, be increased by 0.25 per cent. per annum for each Rating Notch per Rating Agency by which either or both Rating Agencies have publicly announced a decrease in the rating of the Issuer's senior unsecured debt below A3, in the case of Moody 's , or below A-, in the case of S&P.

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In the event of a subsequent Step Up Rating Change, w i th effect f rom and including the first Interest Payment Date fo l lowing the date of such Step Up Rating Change, the rate of interest payable on the Notes shall, subject as aforesaid, be further increased by 0.25 per cent. per annum for each Rating Notch per Rating Agency by which either or both Rating Agencies have publicly announced a decrease in the rating of the Issuer's senior unsecured debt (further) below A3, in the case of Moody 's , or (further) below A-, in the case of S&P.

Furthermore, save as provided below, in the event of a Step Down Rating Change, w i th effect f rom and including the first Interest Payment Date fo l lowing the date of such Step Down Rating Change, the rate of interest payable on the Notes shall, subject to any adjustment pursuant to a Step Up Rating Change, be decreased by 0.25 per cent. per annum for each Rating Notch per Rating Agency by which either or both Rating Agencies have publicly announced an increase in the rating of the Issuer's senior unsecured debt.

In the event that either Moody 's or S&P fails to or ceases to assign a rating to the Issuer's senior unsecured debt, the Issuer shall use its best efforts to obtain a rating of its senior unsecured debt f rom a substitute rating agency that shall be a Statistical Rating Agency (as defined below), and references in this Condit ion to Moody 's or S&P, as the case may be, or the ratings thereof, shall be to such substitute rating agency or, as the case may be, the equivalent ratings thereof. In the event that such a rating is not obtained f rom such a substitute rating agency, then, for the purposes of the foregoing interest rate adjustments, the ratings assigned by the remaining Rating Agency shall be deemed also to be the ratings assigned by the other Rating Agency.

Notwi thstanding anything in the foregoing to the contrary, should Moody 's or S&P increase or decrease the number of Rating Notches, then any Rating Change wi l l be determined by reference to the rating notches equivalent to the Rating Notches in existence at the Issue Date and wi thout regard to the rating notches immediately fo l lowing such increase or, as the case may be, decrease.

(c) There shall be no l imit on the number of t imes that interest rate adjustments may be made pursuant to a Rating Change, dur ing the term of the Notes, provided always that at no t ime dur ing the term of the Notes wi l l the rate of interest applicable to the Notes be less than the initial interest rate.

(d) In these Terms and Condit ions:

"Fi tch" means Fitch Ratings Ltd.

"Moody 's " means Moody 's Investor Service, Inc., or its successor.

"Rating Change" means a Step Up Rating Change and/or a Step Down Rating Change.

A "Rating Notch" shall mean the difference between a particular rating assigned by a Rating Agency and the next lower or, as the case may be, next higher rating that could be assigned by such Rating Agency. For example, in the case of Moody's the difference between Baa1 and Baa2 shall constitute one Rating Notch and in the case of S&P the difference between BBB+ and BBB shall constitute one Rating Notch.

"Reset Date" means the Interest Payment Date immediately fo l lowing the date on which a Rating Change occurs.

"Reset Period" means the period f rom and including a Reset Date to but excluding the next succeeding Reset Date (if any).

"Reset Rate of Interest" means the new rate of interest applicable to the Notes f rom and including each Reset Date.

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"S&P" means Standard and Poor's Rating Services, a div is ion of McGraw-Hil l Companies, Inc., or its successor.

"Statistical Rating Agency" means Fitch, or its successor.

"Step Down Rating Change" means the public announcement of an increase in the rating of the Issuer's senior unsecured debt by either or both of Moody 's and S&P.

"Step Up Rating Change" means the public announcement of a decrease in the rating of the Issuer's senior unsecured debt to below, or, as the case may be, to a rating further below, A3 in the case of Moody 's or A- in the case of S&P (each a "Rating Agency" and, together, the "Rating Agencies").

(e) The Issuer shall cause the Rating Change to be notif ied to the Calculation Agent and the Trustee and shall procure that the Calculation Agent notif ies the Issuer, the Trustee, each of the paying agents and any relevant l isting authori ty of the Reset Rate of Interest as soon as practicable after the determinat ion of such Reset Rate of Interest and shall procure that the principal paying agent shall give notice thereof to the Noteholders in accordance wi th Condit ion 13 no later than the relevant Reset Date.

(f) The Reset Rate of Interest for any Reset Period shall be determined by the Calculation Agent or such other person as may be appointed f rom t ime to t ime pursuant to Condit ion 4(iii)(g).

(g) So long as any of the Notes remains outstanding, the Issuer wi l l maintain a Calculation Agent, which shall init ial ly be Citibank, N.A., London branch.

The Issuer may f rom t ime to t ime appoint another leading bank or investment banking f i rm in London as Calculation Agent as may be approved in wr i t ing by the Trustee. If the Calculation Agent is unable or unwi l l ing to continue to act as the Calculation Agent, the Issuer shall for thwi th appoint such other leading bank or investment banking f i rm in London as may be approved in wr i t ing by the Trustee to act as such in its place. The Calculation Agent may not resign its duties or be removed wi thout a successor having been appointed and approved as aforesaid.

(h) If the Calculation Agent for any reason defaults in its obl igat ion to determine the Reset Rate of Interest for any Reset Period in accordance w i th this Condit ion 4(iii), the Trustee shall determine such Reset Rate of Interest at such rate as, in its absolute discretion (having such regard as it shall think fit to the procedure described in this Condit ion 4(iii)), it shall deem fair and reasonable in all the circumstances, and such determinat ion shall be deemed to be a determinat ion thereof by the Calculation Agent.

(i) Al l notif ications, opinions, determinat ions, certificates, calculations, quotat ions and decisions given, expressed, made or obtained for the purposes of this Condit ion 4(iii), whether by the Calculation Agent or the Trustee, shall (in the absence of wi l fu l default, bad faith or manifest error) be binding on the Issuer, the Calculation Agent, the Trustee, the paying agents and all Noteholders and Couponholders and (in the absence as aforesaid) no l iabil i ty to the Noteholders or Couponholders or the Issuer shall attach to the Calculation Agent or the Trustee in connect ion w i th the exercise or non-exercise of its powers, duties and discretions.

5. PAYMENTS

(i) Payments of principal and interest in respect of the Notes wi l l (subject as provided below) be made against presentation and surrender of the Notes or Coupons, as the case may be, at the specified office of any of the paying agents outside the United States. All such payments wi l l be made in euro, at the opt ion of the holder, by a euro cheque or by transfer to a euro account specified by the holder.

(ii) Payments in respect of principal and interest on the Notes are subject in all cases to any tax, fiscal or other laws and regulations applicable thereto in the place of payment, but w i thout prejudice to the provisions of Condit ion 7.

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(iii) Upon the due date for redemption of any Note, any unmatured Coupons relating to such Note (whether or not attached) shall become void and no payment shall be made in respect of them.

(iv) If the due date for redemption of any Note is not an Interest Payment Date, interest accrued in respect of such Note f rom, and including, the last preceding Interest Payment Date or, if none, the Issue Date to, but excluding, the date of redemption wi l l be paid only against surrender of such Note.

(v) If the date for payment of any amount of principal or interest in respect of any Note or any later date on which any Note or Coupon is presented for payment is not at the relevant place of presentation a business day, then the holder thereof shall not be entit led to payment at that place of presentation of the amount payable until the next fo l lowing business day at that place of presentation and shall not be entit led to any further interest or other payment in respect of any such delay. In this Condit ion 5(v), "business day" means in respect of any place of presentation any day on which commercial banks and foreign exchange markets settle payments in the relevant place of presentation and London and, in the case of payment by transfer to a euro account as referred to above, a day on which the Trans European Real T ime Gross Settlement Express Transfer (TARGET) System is operat ing.

(vi) The names of the initial principal and other paying agents and their initial specified offices are set out below. The Issuer reserves the right (with the prior wri t ten approval of the Trustee) at any t ime to vary or terminate the appointment of any paying agent and to appoint addit ional or other paying agents provided that it w i l l , so long as any of the Notes are outstanding, maintain at least two paying agents having specified offices in European cities approved in wr i t ing by the Trustee, one of wh ich , so long as the Notes are admitted to the Official List of the Financial Services Author i ty in its capacity as the UK Listing Author i ty and to t rading on London Stock Exchange plc's market for listed securities, shall be London and the other of which shall be in a country outside the United K ingdom. Notice of any such terminat ion or appointment and of any changes in the specified offices of the paying agents wi l l be given by the Issuer to the Noteholders in accordance wi th Condit ion 13 as soon as reasonably practicable thereafter.

6. REDEMPTION AND PURCHASE (i) Maturity

Unless previously redeemed or purchased and cancelled as provided below, the Issuer wi l l redeem the Notes at their principal amount on 16th February, 2004.

(ii) Issuer's Optional Redemption The Issuer may, by giving not less than 30 nor more than 60 days' notice to the Noteholders (which notice shall be irrevocable), elect to redeem at any t ime all or, subject as provided below, some only (being euro1,000 in principal amount or an integral mult ip le of euro1,000) of the Notes, each at a redemption price calculated by the Calculation Agent equal to (i) the principal amount of such Note or, if greater, (ii) the sum of the present values of the principal amount of such Note and the Remaining Term Interest on such Note (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on an annual basis at the Government Bond Rate plus 0.20 per cent., plus in each case interest accrued to but excluding the date of redempt ion.

Al l notif ications, opinions, determinat ions, certificates, calculations, quotat ions and decisions given, expressed, made or obtained for the purposes of this Condit ion 6(ii) by the Calculation Agent, shall (in the absence of wi l fu l default, bad faith or manifest error) be binding on the Issuer, the Calculation Agent, the Trustee, the paying agents and all Noteholders and Couponholders and (in the absence as aforesaid) no l iabil i ty to the Noteholders or Couponholders, the Trustee or the Issuer shall attach to the Calculation Agent in connection wi th the exercise or non-exercise of its powers, duties and discretions.

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In these Terms and Conditions:

"Comparable Government Bond" means the European government security or securities selected by one of the Reference Government Bond Dealers appointed by the Issuer after consultation with the Trustee as having an actual or interpolated maturity comparable with the remaining term of the Notes that would be utilised, at the time of selection and in accordance with customary financial practice, in pricing new issues of euro denominated corporate debt securities of a comparable maturity to the remaining term of the Notes.

"Comparable Government Bond Price" means, with respect to any date of redemption, (A) the arithmetic average of the Reference Government Bond Dealer Quotations for such date of redemption, after excluding the highest and lowest such Reference Government Bond Dealer Quotations, or (B) if the Calculation Agent obtains fewer than four such Reference Government Bond Dealer Quotations, the arithmetic average of all such quotations.

"Government Bond Rate" means, with respect to any date of redemption, the rate per annum equal to the annual or the semi-annual yield to maturity (as the case may be) or interpolated yield to maturity (on the relevant day count basis) of the Comparable Government Bond, assuming a price for the Comparable Government Bond (expressed as a percentage of its principal amount) equal to the Comparable Government Bond Price for such date of redemption.

"Reference Government Bond Dealer" means each of five banks selected by the Issuer, or their affiliates, which are (A) primary European government securities dealers, and their respective successors, or (B) market makers in pricing corporate bond issues.

"Reference Government Bond Dealer Quotations" means, with respect to each Reference Government Bond Dealer and any date for redemption, the arithmetic average, as determined by the Calculation Agent, of the bid and offered prices for the Comparable Government Bond (expressed in each case as a percentage of its principal amount) at 11:00 a.m. (Central European Time ("CET")) on the third business day preceding such date for redemption quoted in writing to the Calculation Agent by such Reference Government Bond Dealer.

"Remaining Term Interest" means, with respect to any Note, the aggregate amount of scheduled payment(s) of interest on such Note for the remaining term of such Note determined on the basis of the rate of interest applicable to such Note from and including the date on which such Note is to be redeemed by the Issuer pursuant to this Condition, taking account of any Rating Change that does occur between the date of the notice of redemption in respect of such Note and the date on which such Note is redeemed.

In the case of a partial redemption of Notes, Notes to be redeemed will be selected individually by lot in such place and in such manner as the Trustee may approve without involving any part of a Note not more than 65 days before the date fixed for redemption. Each notice will specify such date fixed for redemption and, in the case of a partial redemption, the aggregate principal amount of the Notes to be redeemed, the serial numbers of the Notes called for redemption, the serial numbers of the Notes previously called for redemption and not presented for payment and the aggregate principal amount of the Notes which will be outstanding after the partial redemption.

(iii) Optional Redemption for Taxation reasons If the Issuer at any time satisfies the Trustee that, as a result of any actual or proposed change in the laws, regulations or treaties of the United Kingdom or any political sub-division thereof or any authority therein or thereof having power to tax, or in the application or interpretation of such laws, regulations or treaties, on the occasion of the next payment of principal or interest in respect of the Notes, the Issuer would be unable to make such payment without having to pay additional amounts as provided or referred to in Condition 7, the Issuer may, unless it has already given notice under Condition 6(ii) above, having given not less than 30 nor more than 60 days' notice to the Noteholders

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(which notice shall be irrevocable), redeem all the Notes, but not some only, at their principal amount together w i th interest accrued to but excluding the date of such redempt ion.

It shall be sufficient to establish the existence of the circumstances required to be established pursuant to this paragraph (iii) if the Issuer shall deliver to the Trustee a certificate of an independent lawyer or accountant satisfactory to the Trustee in a fo rm satisfactory to the Trustee to the effect either that such circumstances exist or that, upon a change in the laws, regulations or treaties of the United Kingdom or any polit ical sub-division thereof or any authori ty therein or thereof having power to tax, or in the application or interpretation thereof, which at the date of such certificate is proposed and which in the opin ion of such lawyer or accountant is reasonably expected to become effective on or prior to the date on wh ich the relevant payment of principal or interest in respect of the Notes wou ld otherwise be made, becoming so effective, such circumstances wou ld exist.

(iv) Put Event

If, at any t ime whi le any of the Notes remains outstanding, a Put Event (as defined below) occurs, then, unless at any t ime the issuer shall have given notice under Condit ion 6(ii) or Condit ion 6(iii) in each case expir ing prior to the Put Date (as defined below), the holder of each Note wi l l , upon the giv ing of a Put Event Notice (as defined below), have the opt ion to require the Successor (as defined below) to purchase such Note (in whole but not in part) on the Put Date at an amount (the "Purchase Price") equal to its principal amount together wi th interest accrued to, but excluding, the Put Date.

Promptly upon becoming aware that a Put Event has occurred, and in any event not later than 30 days after the occurrence of a Put Event, the Successor shall, and at any t ime upon the Trustee becoming similar ly so aware the Trustee may, and if so requested by the holders of at least 25 per cent. in principal amount of the Notes then outstanding shall , (subject in each case to being indemnif ied to its satisfaction) give notice (a "Put Event Notice") to the Noteholders in accordance wi th Condit ion 13, specifying:

(a) the nature of the Put Event pursuant to this Condit ion 6(iv) and that all Notes tendered in accordance w i th this Condit ion 6(iv) wi l l be accepted for purchase;

(b) the Put Date;

(c) the amount of interest accrued to the Put Date on each Note of the m in imum denominat ion;

(d) that any Notes not so tendered shall continue to accrue interest;

(e) that, unless the Successor defaults in the payment of the Purchase Price, all Notes accepted for purchase pursuant to this Condit ion 6(iv) shall cease to accrue interest f rom the Put Date; and

(f) the procedure for exercising the opt ion contained in this Condit ion 6(iv).

To exercise the opt ion to require the Successor to purchase a Note under this Condit ion 6(iv), the Noteholder must deliver such Note at the specified office of any paying agent, on any day which is a day on which banks are open for business in London and in the place of the specified office of such paying agent fal l ing wi th in the Put Period (as defined below), accompanied by a duly signed and completed notice of exercise in the fo rm (for the t ime being current) obtainable f rom the specified office of any paying agent (a "Put Notice"). The paying agent to which such Note and Put Notice are delivered wi l l issue to the Noteholder concerned a non-transferable receipt (a "Receipt") in respect of the Notes so delivered.

On or before the Put Date, the Successor wi l l deposit w i th the principal paying agent an amount equal to the aggregate Purchase Price in respect of all Notes tendered. Payment by the paying agent in respect of any Notes so delivered shall be made, either to the

10

bank account duty specified in the relative Put Notice, or if no account was so specified, by cheque, on or after the Put Date against presentation and surrender of such Receipt at the specified office of any paying agent.

A Put Notice once given shall be irrevocable.

For the purposes of these Terms and Conditions, Receipts issued pursuant to this Condition 6(iv) shall be treated (mutatis mutandis) as if they were Notes.

The Successor shall give notice to the Noteholders of the aggregate principal amount of Notes purchased pursuant to this Condition 6(iv) and the principal amount of Notes remaining outstanding thereafter in accordance with Condition 13 as soon as practicable after the Put Date.

In these Terms and Conditions:

"Put Date" means the date specified by the Issuer in the Put Event Notice which shall be no earlier than 30 days and no later than 60 days after the date of the Put Event Notice.

A "Put Event" shall occur if:

(a) the Issuer, in any transaction or series of transactions, consolidates with or merges into any other Person (other than a merger of a Subsidiary (as defined in the Trust Deed) into the Issuer in which the Issuer is a continuing corporation), or conveys, transfers or leases all or substantially all of its properties and assets to another Person, except for the purpose of a reconstruction or an amalgamation the terms of which have been previously approved in writing by the Trustee; and

(b) the rating assigned to the Notes, after giving effect to any transaction referred to in (a) above, is lower than Baa2, in the case of Moody's, and BBB, in the case of S&P, when Moody's and S&P make their first public confirmation of the ratings for the Notes following the consummation of such transaction or transactions.

"Put Period" means the period from an including the date of the Put Event Notice up to and including the seventh day prior to the Put Date.

"Successor" means the Person formed by the consolidation of the Issuer with another Person or into which the Issuer is merged or to whom the Issuer has conveyed, transferred or leased all or substantially all of its properties or assets.

(v) Purchases The Issuer or any of the Subsidiaries may at any time purchase Notes (provided that all unmatured Coupons appertaining thereto are surrendered therewith) in any manner and at any price. If purchases are made by tender, tenders must be available to all Noteholders alike.

(vi) Cancellation All Notes which are redeemed will be cancelled (together with all unmatured Coupons attached thereto or surrendered therewith) and accordingly may not be reissued or resold. Notes which are purchased by the Issuer or any of the Subsidiaries in accordance with paragraph (v) above may be held and/or resold or surrendered for cancellation.

7. TAXATION All payments of principal and interest made by or on behalf of the Issuer in respect of the Notes and payment of the Purchase Price pursuant to Condition 6(iv) will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the United Kingdom or any political sub-division thereof or any authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law. In that event, the Issuer will pay such additional amounts as may be necessary in order that the net

11

amounts received by the holders of the Notes and Coupons after such withholding or deduction shall equal the respective amounts of principal and interest or, as the case may be, Purchase Price which would have been receivable in respect of the Notes or, as the case may be, Coupons in the absence of such withholding or deduction; except that no such additional amounts shall be payable with respect to any Note or Coupon presented for payment:

(i) by, or on behalf of, a holder who is liable to such taxes, duties, assessments or governmental charges in respect of such Note or Coupon (or as the case may be, the Purchase Price) by reason of his having some connection with the United Kingdom other than the mere holding of the Note or Coupon; or

(ii) by, or on behalf of, a holder who would be able to avoid such withholding or deduction by making a declaration of non-residence or similar claim for exemption or by presenting the relevant Note or Coupon to a paying agent outside the United Kingdom but in either case fails to do so; or

(iii) more than 30 days after the Relevant Date except to the extent that the holder thereof would have been entitled to additional amounts on presenting the same for payment on the last day of such period of 30 days, assuming, whether or not such is in fact the case, such last date to be a business day (as defined in Condition 5).

As used herein, the "Relevant Date" means the date on which such payment first becomes due but if the full amount of the moneys payable has not been received by the principal paying agent or the Trustee on or prior to such due date, it means the date on which the full amount of such moneys having been so received, notice to that effect shall have been duly published in accordance with Condition 13.

Any reference in these Terms and Conditions to principal or interest or the Purchase Price shall be deemed also to refer to any additional amounts which may be payable under this provision or under any undertakings given in addition thereto or in substitution therefor pursuant to the Trust Deed.

8. PRESCRIPTION The Notes will become void unless presented for payment within a period of 10 years and the Coupons will become void unless presented for payment within a period of five years, in each case from the Relevant Date (as defined in Condition 7) in respect thereof.

9. TITLE Title to the Notes and the Coupons will pass by delivery. The Issuer, the Trustee and any paying agent may deem and treat the bearer of any Note or Coupon as the absolute owner thereof (whether or not such Note or such Coupon shall be overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for the purpose of receiving payment and for all other purposes.

10. DEFAULT AND ENFORCEMENT (i) If:

(a) default is made in the payment of any principal or interest due in respect of the Notes (or any of them) or the Purchase Price (in accordance with Condition 6(iv)) and the default continues for a period of 14 days (in the case of principal or the Purchase Price) or 28 days (in the case of interest); or

(b) there is a failure in the performance by the Issuer or the Successor of any obligation under the Notes or the Trust Deed other than an obligation to make payment of principal or interest or the Purchase Price:

(A) which in the opinion of the Trustee is incapable of remedy; or

(B) which, being in the opinion of the Trustee capable of remedy, continues for more than 90 days after written notification requiring such failure to be

12

remedied shall have been given to the Issuer or, as the case may be, the Successor by the Trustee; or

(c) except for the purpose of a reconstruction or an amalgamation the terms of which have previously been approved in writing by the Trustee or for the purpose of a consolidation or merger or conveyance, transfer or lease permitted by Condition 11, an order is made (and not discharged or stayed within a period of 90 days) or an effective resolution is passed for winding-up the Issuer or an administration order is made in relation to the Issuer; or

(d) an administrative or other receiver is appointed of the whole or substantially the whole of the assets of the Issuer and is not removed, paid out or discharged within 90 days or, following such 90 day period, the appointment is not being disputed in good faith; or

(e) the Issuer is unable to pay its debts or makes a general assignment for the benefit of its creditors; or

(f) any loan or other indebtedness for borrowed money (as defined in the Trust Deed) of the Issuer (if applicable, translated into sterling), amounting in aggregate to not less than the higher of £25,000,000 and one per cent. of the Adjusted Share Capital and Reserves (as defined below), becomes due and payable prematurely by reason of an event of default (however described) or the Issuer fails to make any payment in respect thereof on the due date for such payment (as extended by any applicable grace period as originally provided) or the security for any such loan or other indebtedness for borrowed money becomes enforceable and steps are taken to enforce the same or default is made by the Issuer in making any payment due (if applicable, translated into sterling), amounting in aggregate to not less than the higher of £25,000,000 and one per cent. of the Adjusted Share Capital and Reserves, under any guarantee or indemnity given by it in respect of any loan or other indebtedness for borrowed money,

(each an "Event of Default") the Trustee may at its discretion, and if so directed by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders or in writing by the holders of at least 25 per cent. in principal amount of the Notes then outstanding shall, subject in each case to being indemnified to its satisfaction, (but in the case of (b), (c), (d), (e) and (f) only if it certifies that such event is, in its opinion, materially prejudicial to the interests of Noteholders) give notice to the Issuer that the Notes are, and they shall accordingly immediately become, due and repayable at their principal amount, plus accrued interest (calculated as provided in the Trust Deed).

For the purposes of this Condition 10, "Adjusted Share Capital and Reserves" means at any time the aggregate of:

(A) the amount paid up or credited as paid up on the share capital of the Issuer; and

(B) the total of the capital, revaluation and revenue reserves of the Issuer and the Subsidiaries taken as a whole (the "Group"), including any share premium account, capital redemption reserve and credit balance on the profit and loss account, sums set aside for taxation and amounts attributable to minority interests but deducting any debit balance on the profit and loss account and the cost of any shares of the Issuer held in an employee share ownership trust or otherwise held by a member of the Group,

all as shown in the then latest audited consolidated balance sheet of the Group prepared in accordance with generally accepted accounting principles in the United Kingdom, but adjusted as may be necessary in respect of any variation in the paid up share capital or share premium account of the Issuer since the date of that balance sheet and further adjusted as may be necessary to reflect any change since

13

the date of that balance sheet in the Subsidiaries compris ing the Group. A certificate of the Issuer signed by two Directors of the Issuer as to the amount of the Adjusted Share Capital and Reserves as at any specified date may, in the absence of manifest error, be relied upon by the Trustee and, if so relied upon, shall be conclusive and binding on the Issuer, the Trustee, the Noteholders and the Couponholders.

(ii) At any t ime after the Notes (or any of them) shall have become due and repayable and shall not have been repaid, the Trustee may, at its discretion and wi thout notice, take such proceedings as it may think fit to enforce repayment of the Notes together wi th accrued interest but it shall not be bound to take any such proceedings unless (a) it shall have been so directed by an Extraordinary Resolution of the Noteholders or in wr i t ing by the holders of at least 25 per cent. in principal amount of the Notes then outstanding and (b) it shall have been indemnif ied to its satisfaction.

(iii) No Noteholder or Couponholder shall be entit led to proceed directly against the Issuer, except that if the Trustee, having become bound so to proceed, fails to do so wi th in a reasonable period and such fai lure shall be cont inuing, then any such holder may, on giving an indemnity satisfactory to the Trustee, in the name of the Trustee (but not otherwise), himself take proceedings to the same extent (but not further or otherwise) that the Trustee wou ld have been entit led so to do.

11. MERGER, CONSOLIDATION AND SALE OF SUBSTANTIALLY ALL ASSETS (i) Except for the purpose of a reconstruction or an amalgamat ion the terms of wh ich have

been previously approved in wr i t ing by the Trustee, the Issuer wi l l not, in any transaction or series of transactions, consolidate wi th or merge into any other Person (other than a merger of a Subsidiary into the Issuer in which the Issuer is the cont inuing corporation), or convey, transfer or lease all or substantial ly all of its properties and assets to another Person, unless:

(a) such Person, (i) shall be a corporat ion, partnership or trust, organised and val idly exist ing, and (ii) shall thereupon expressly assume by a supplemental trust deed, executed and delivered to the Trustee, in a form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and interest on , and all other amounts in respect of, the Notes and the performance of every covenant and obl igat ion under the Notes and the Trust Deed on the part of the Issuer to be performed or observed (substituting or adding to references to United K ingdom in Condit ions 6(iii) and 7 wi th the jur isdict ion of incorporat ion or organisation of the successor entity, if such jur isdict ion is outside the United Kingdom);

(b) immediately after giv ing effect to such transaction and treating any indebtedness which becomes an obl igat ion of the Issuer or any Subsidiary as a result of such transaction as having been incurred by the Issuer or such Subsidiary at the t ime of such transaction, no Event of Default and no Potential Event of Default (as defined in the Trust Deed) shall have occurred and be cont inuing;

(c) the Person formed by such consol idat ion or into which the Issuer is merged or to w h o m the Issuer has conveyed, transferred or leased all or substantial ly all of its properties or assets agrees to indemnify the holder of each Note against (i) any tax, assessment or governmental charge imposed on any such holder or required to be wi thheld or deducted f rom any payment to such holder as a consequence of such consol idat ion, merger, conveyance, transfer or lease; and (ii) any costs or expenses associated wi th such consol idat ion, merger, conveyance, transfer or lease;

(d) the first publicly conf i rmed ratings for the Notes by Moody's and S&P fo l lowing the consummat ion of such transaction shall be at least Baa2, in the case of Moody 's , and at least BBB, in the case of S&P (fail ing wh ich , the holder of each Note shall have the right to exercise the opt ion to require the Successor to purchase such Note under Condit ion 6(iv)); and

(e) such Person has delivered to the Trustee a certificate signed by two of its directors and an Opin ion of Counsel (as defined in the Trust Deed), each stating that such

14

consolidation, merger, conveyance, transfer or lease and the supplemental trust deed and any other supplemental documents in relation to the Notes required in connection with such transaction comply with this Condition 11 and that all conditions precedent herein provided for relating to such transaction have been complied with.

(ii) Upon any consolidation of the Issuer with another Person, or merger of the Issuer into any other Person or any conveyance, transfer or lease of all or substantially all of the properties and assets of the Issuer to another Person in accordance with Condition 11 (i), the Successor shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the Notes, the Coupons and the Trust Deed with the same effect as if such Successor had been named as the Issuer herein and in the Trust Deed, and thereafter, except in the case of a lease, the predecessor person shall be relieved of all obligations and covenants under the Notes, the Coupons and the Trust Deed.

12. 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 payment agent upon payment by the claimant of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses incurred in connection therewith (including the fees and expenses of the principal payment agent and its designated agents) 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.

13. NOTICES All notices to the Noteholders will be valid if published in a leading London daily newspaper (which is expected to be the Financial Times) or such other English language newspaper with general circulation in Europe as the Trustee may approve. Such notices shall be deemed to have been given on the date of such publication or, if published more than once, on the date of the first such publication. If publication is not practicable as aforesaid, notice will be given in such other manner as the Trustee may approve.

14. MEETINGS OF NOTEHOLDERS, MODIFICATION, WAIVER AND SUBSTITUTION (i) The Trust Deed contains provisions for convening meetings of Noteholders to consider

any matter affecting their interests, including the modification by Extraordinary Resolution of these Terms and Conditions or the provisions of the Trust Deed. The quorum at any such meeting for passing an Extraordinary Resolution is one or more persons holding or representing a clear majority in principal amount of the Notes for the time being outstanding, or at any adjourned such meeting one or more persons being or representing Noteholders whatever the principal amount of the Notes so held or represented, except that at any meeting the business of which includes the modification of certain of these Terms and Conditions and provisions of the Trust Deed, the necessary quorum for passing an Extraordinary Resolution is one or more persons holding or representing not less than two-thirds, or at any adjourned such meeting not less than one-third, of the principal amount of the Notes for the time being outstanding. An Extraordinary Resolution passed at any meeting of Noteholders will be binding on all Noteholders, whether or not they are present at the meeting, and on all Couponholders. 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 Terms and 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 shall not be treated as such, which in any such case is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders or to any modification which is of a formal or minor or technical nature or is made to correct a manifest error.

(ii) The Trustee may also agree, without the consent of the Noteholders or Couponholders, to the substitution of a Subsidiary in place of the Issuer as principal debtor under the Trust Deed, the Notes and the Coupons, subject to the Notes and the Coupons carrying

15

the irrevocable and uncondit ional guarantee of the Issuer, and subject to the provisions of the Trust Deed and such other amendments to the Trust Deed and such other condit ions as the Trustee may require.

(iii) The Issuer may at any t ime, w i thout the consent of the Noteholders or Couponholders, substitute a parent hold ing company of the Issuer as substitute obl igor (the "Substi tuted Company") in respect of all obl igat ions arising f rom the Notes or under the Trust Deed provided:

(a) the Substi tuted Company shall be a corporat ion, partnership or trust, organised and validly existing and concurrently assuming all the Capital Markets Indebtedness of the Issuer, and shall expressly assume by a supplemental trust deed, executed and delivered to the Trustee, in fo rm reasonably satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest on all the Notes and the performance of every obl igat ion imposed by the Trust Deed on the Issuer to be performed or observed (substi tut ing or adding references to United Kingdom in Condit ions 6(iii) and 7 wi th the jur isdict ion of incorporat ion or organisation of the Substi tuted Company, if such jur isdict ion is outside the United Kingdom);

(b) immediately after g iv ing effect to such subst i tut ion and treating any indebtedness wh ich becomes an obl igat ion of the Substituted Company as a result of such subst i tut ion as having been incurred by the Issuer at the t ime of such subst i tut ion, no Event of Default and no Potential Event of Default shall have occurred and be cont inuing;

(c) the Substi tuted Company shall agree to indemnify the holder of each Note against (a) any tax, assessment or governmental charge imposed on any such holder or required to be wi thheld or deducted f rom any payment to such holder as a consequence of such subst i tut ion and (b) any costs or expenses associated wi th such subst i tut ion;

(d) each stock exchange or l isting authori ty on which the Notes are listed shall have conf i rmed that, fo l lowing the proposed subst i tut ion of the Substituted Company, such Notes wi l l cont inue to be listed on such stock exchange or l ist ing authori ty, and each rating agency that rates the senior unsecured indebtedness of the Issuer shall have conf i rmed that, fo l lowing the proposed substi tut ion of the Substi tuted Company, the senior unsecured indebtedness, including the Notes, of the Substi tuted Company wi l l have the same or better rat ing; and

(e) the Issuer shall have delivered to the Trustee a certificate signed by two of its directors and an Opinion of Counsel, each stating that such substi tut ion and, if a supplemental trust deed is required in connection wi th such subst i tut ion, such supplemental trust deed comply w i th this Condit ion 14 (iii) and that all condit ions precedent herein provided relating to such subst i tut ion have been compl ied w i th .

(iv) In connection w i th the exercise by it of any of its trusts, powers, authorit ies and discretions ( including, w i thout l imi tat ion, any modif icat ion, waiver, authorisat ion, determinat ion or substi tut ion), the Trustee shall have regard to the general interests of the Noteholders as a class but shall not have regard to any interests arising f rom circumstances particular to individual Noteholders or Couponholders (whatever their number) and, in particular but w i thout l imi tat ion, shall not have regard to the consequences of any such exercise for individual Noteholders or Couponholders (whatever their number) resulting f rom their being for any purpose domici led or resident in, or otherwise connected w i th , or subject to the jur isdict ion of, any particular terr i tory or any polit ical sub-division thereof and the Trustee shall not be entit led to require, nor shall any Noteholder or Couponholder be entit led to c la im, f rom the Issuer, the Trustee or any other person any indemnif icat ion 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 Condit ion 7 and/or any undertaking given in addit ion to, or in subst i tut ion for, Condit ion 7 pursuant to the Trust Deed.

16

(v) Any such modification, waiver, authorisation, determination or substitution or related matter shall be binding on the Noteholders and Couponholders and, unless the Trustee agrees otherwise, shall be notified to the Noteholders as soon as practicable thereafter in accordance with Condition 13.

15. 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 proceedings to enforce repayment unless indemnified to its satisfaction.

16. FURTHER ISSUES The Issuer is at liberty from time to time without the consent of the Noteholders or the Couponholders to create and issue further notes or bonds either so as to form a single series with the outstanding notes or bonds of any series (including the Notes) or upon such terms as to interest, conversion, premium, redemption and otherwise as the Issuer may at the time of issue thereof determine. Any such notes or bonds, if they are to form a single series with the Notes or the notes or bonds of any other series constituted by a deed supplemental to the Trust Deed, shall be constituted by a deed supplemental to the Trust Deed and in any other case, if the Trustee so agrees, any such notes or bonds may be so constituted. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of notes or bonds of other series for the purpose of passing an Extraordinary Resolution in certain circumstances where the Trustee decides that the resolution in question does not give rise to a conflict of interest between the Noteholders and the holders of the notes or bonds of the relevant series.

17. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 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.

18. GOVERNING LAW The Trust Deed, the Notes and the Coupons are governed by, and will be construed in accordance with, English law.

17


The terms and condit ions of the Tranche 2 Notes wi l l be identical to those described under "Terms and Condit ions of the Tranche 1 Notes" above, w i th the fo l lowing alternative or supplemental provisions, references to the "Notes" in the terms and condit ions of the Tranche 1 Notes being construed as references to the Tranche 2 Notes:

(A) The reference in the introductory paragraph to "euro 1,750,000,000 5.625 per cent. Notes due 2004" shall be replaced by a reference to "euro 3,000,000,000 6.125 per cent. Notes due 2006".

(B) Condit ion 4(i) shall be amended as fo l lows:

(i) the reference to the Notes bearing interest "at the rate of 5.625 per cent. per a n n u m " shall be replaced by a reference to interest "at the rate of 6.125 per cent. per annum" ;

(ii) the reference in the third line to "16th February in each year" shall be replaced by a reference to "15th February in each year";

(iii) the references in the last sentence to "16th February, 2002" shall be replaced by references to "15th February, 2002"; and

(iv) the reference to "euro56.40 per euro1,000" shall be replaced by a reference to "euro61.25 per euro1,000".

(C) The reference in Condit ion 6(i) to "16th February, 2004" shall be replaced by a reference to "15th February, 2006".

(D) The reference in Condit ion 6(ii) to "0,20 per cent." shall be replaced by a reference to "0.25 per cent.".

18


The terms and conditions of the Tranche 3 Notes will be identical to those described under "Terms and Conditions of the Tranche 1 Notes" above, with the following alternative or supplemental provisions, references to the "Notes" in the terms and conditions of the Tranche 1 Notes being construed as references to the Tranche 3 Notes:

(A) The reference in the introductory paragraph to "euro 1,750,000,000 5.625 per cent. Notes due 2004" shall be replaced by a reference to "euro 2,250,000,000 6.875 per cent. Notes due 2011".

(B) Condition 4(i) shall be amended as follows:

(i) the reference to the Notes bearing interest "at the rate of 5.625 per cent. per annum" shall be replaced by a reference to interest "at the rate of 6.875 per cent. per annum";

(ii) the reference in the third line to "16th February in each year" shall be replaced by a reference to "15th February in each year";

(in) the references in the last sentence to "16th February, 2002" shall be replaced by references to "15th February, 2002"; and

(iv) the reference to "euro56.40 per euro1,000" shall be replaced by a reference to "euro68.75 per euro1,000".

(C) The reference in Condition 6(0 to "16th February, 2004" shall be replaced by a reference to "15th February, 2011".

(D) The reference in Condition 6(ii) to "0.20 per cent." shall be replaced by a reference to "0.30 per cent".

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The terms and conditions of the Tranche 4 Notes will be identical to those described under "Terms and Conditions of the Tranche 1 Notes" above, with the following alternative or supplemental provisions, references to the "Notes" in the terms and conditions of the Tranche 1 Notes being construed as references to the Tranche 4 Notes;

(A) The reference in the introductory paragraph to "euro 1,750,000,000 5.625 per cent. Notes due 2004" shall be replaced by a reference to "£400,000,000 7.125 per cent. Notes due 2006".

(B) The reference in Condition 1 to "denominations of euro1,000, euro10,000 and euro100,000" shall be replaced by a reference to "denominations of £1,000, £10,000 and £100,000".

(C) Condition 4(i) shall be amended as follows:

(i) the reference to the Notes bearing interest "at the rate of 5.625 per cent. per annum" shall be replaced by a reference to interest "at the rate of 7.125 per cent. per annum";

(ii) the reference in the third line to "16th February in each year" shall be replaced by a reference to "7th December in each year";

(iii) the references in the last sentence to "16th February, 2002" shall be replaced by references to "7th December, 2001"; and

(iv) the reference to "euro56.40 per euro1,000" shall be replaced by a reference to "£57.59 per £1,000".

(D) The references in Condition 5(i) to "euro", a "euro cheque" and a "euro account" shall be replaced by references to "sterling", a "sterling cheque drawn on a bank in London" and a "sterling account maintained with a bank in the United Kingdom", respectively.

(E) Condition 5(v| shall be replaced by the following;

If the date for payment of any amount of principal or interest in respect of any Note or any later date on which any Note or Coupon is presented for payment is not at the relevant place of presentation and at the place where the holder's sterling account is located (in the latter case, where payment is to be made by transfer to a sterling account specified by the holder) a business day, then the holder thereof shad not be entitled to payment at that place of presentation (or, if applicable, payment) of the amount payable until the next following business day at that place of presentation (and, if applicable, payment) and shall not be entitled to any further interest or other payment in respect of any such delay. In this Condition 5(v), "business day" means, in relation to any place, any day (not being a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments in London and in that place.

(F) The reference in Condition 6(i) to "16th February, 2004" shall be replaced by a reference to "7th December, 2006".

(G) The references in Condition 6(ii) to "euro1,000" shall be replaced by references to "£1,000" and the reference in the same Condition to "0.20 per cent." shall be replaced by a reference to "0.25 per cent.".

(H) The definition of "Comparable Government Bond" in Condition 6(ii) shall be amended in the first line so that the reference to "European" is replaced by a reference to "United Kingdom" and the reference to "euro" in such definition shall be replaced by a reference to "sterling".

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(I) The definition of "Government Bond Rate" in Condition 6(ii) shall be deleted and replaced with the following:

"means, with respect to any date of redemption, the rate per annum equal to the semi-annual yield to maturity or interpolated yield to maturity (on an Actual/365 day count basis) of the Comparable Government Bond, assuming a price for the Comparable Government Bond (expressed as a percentage of its principal amount) equal to the Comparable Government Bond Price for such date of redemption".

21


The terms and condit ions of the Tranche 5 Notes w i l l be identical to those described under "Terms and Condit ions of the Tranche 1 Notes" above, wi th the fo l lowing alternative or supplemental provisions, references to the "Notes" in the terms and condit ions of the Tranche 1 Notes being construed as references to the Tranche 5 Notes:

(A) The reference in the introductory paragraph to "euro 1,750,000,000 5.625 per cent. Notes due 2004" shall be replaced by a reference to "£700,000,000 7.5 per cent. Notes due 2016".

(B) The reference in Condit ion 1 to "denominat ions of euro1,000, euro10,000 and euro100,000" shall be replaced by a reference to "denominat ions of £1,000, £10,000 and £100,000".

(C) Condit ion 4(i) shall be amended as fo l lows:

(i) the reference to the Notes bearing interest "at the rate of 5.625 per cent. per annum" shall be replaced by a reference to interest "at the rate of 7.5 per cent. per annum" ;

(ii) the reference in the th i rd line to "16th February in each year" shall be replaced by a reference to "7th December in each year";

(iii) the references in the last sentence to "16th February, 2002" shall be replaced by references to "7th December, 2001"; and

(iv) the reference to "euro56.40 per euro1,000" shall be replaced by a reference to "£60.62 per £1,000".

(D) The references in Condit ion 5(i) to "euro" , a "euro cheque" and a "euro account" shall be replaced by references to "ster l ing", a "sterl ing cheque drawn on a bank in London" and a "sterl ing account maintained wi th a bank in the United K ingdom", respectively.

(E) Condit ion 5(v) shall be replaced by the fo l lowing:

If the date for payment of any amount of principal or interest in respect of any Note or any later date on which any Note or Coupon is presented for payment is not at the relevant place of presentation and at the place where the holder's sterl ing account is located (in the latter case, where payment is to be made by transfer to a sterl ing account specified by the holder) a business day, then the holder thereof shall not be entit led to payment at that place of presentation or, if applicable, payment of the amount payable until the next fo l lowing business day at that place of presentation and, if applicable, payment and shall not be entit led to any further interest or other payment in respect of any such delay. In this Condit ion 5(v), "business day" means, in relation to any place, any day (not being a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments in London and in that place.

(F) The reference in Condit ion 6(i) to "16th February, 2004" shall be replaced by a reference to "7th December, 2016".

(G) The references in Condit ion 6(ii) to "euro1,000" shall be replaced by references to "£1,000" and the reference in the same Condit ion to "0.20 per cent." shall be replaced by a reference to "0.35 per cent.".

(H) The definit ion of "Comparable Government Bond" in Condit ion 6(ii) shall be amended in the first line so that the reference to "European" is replaced by a reference to "Uni ted K ingdom" and the reference to "euro" in such definit ion shall be replaced by a reference to "ster l ing".

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(I) The definition of "Government Bond Rate" in Condition 6(ii) shall be deleted and replaced with the following:

"means, with respect to any date of redemption, the rate per annum equal to the semi-annual yield to maturity or interpolated yield to maturity (on an Actual/365 day count basis) of the Comparable Government Bond, assuming a price for the Comparable Government Bond (expressed as a percentage of its principal amount) equal to the Comparable Government Bond Price for such date of redemption".

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The terms and condit ions of the Tranche 6 Notes wi l l be identical to those described under "Terms and Condit ions of the Tranche 1 Notes" above, wi th the fo l lowing alternative or supplemental provisions, references to the "Notes" in the terms and condit ions of the Tranche 1 Notes being construed as references to the Tranche 6 Notes:

(A) The reference in the introductory paragraph to "euro 1,750,000,000 5.625 per cent. Notes due 2004" shall be replaced by a reference to "euro 1,000,000,000 Floating Rate Notes due 2003".

(B) Condit ion 4(i) shall be replaced by the fo l lowing:

(i) (a) Rate of Interest before Step Up Rating Change (if any)

The Notes bear interest in accordance wi th the fo l lowing provisions of this Condit ion 4(i) f rom and including 15th February, 2001 (the "Issue Date") to but excluding the first Interest Payment Date fo l lowing the date on which a Step Up Rating Change (as defined in Condit ion 4(iii)) (if any) occurs and thereafter the Margin (as defined below) wi l l be determined in accordance wi th Condit ion 4(iii).

Interest shall be payable on the Notes quarterly in arrear on each Interest Payment Date (as defined below), in each case as provided in this Condit ion 4(i). The first payment, which shall be on the basis of the applicable Rate of Interest for the first Interest Period (as defined below) (the "init ial interest rate"), shall be made on the first Interest Payment Date, being 15th May, 2001.

The rate of interest on the Notes in respect of each Interest Period (the "Rate of Interest") wi l l be determined by the Calculation Agent on the basis of the fo l lowing provisions:

(a) On each Interest Determination Date ( as defined below) the Calculation Agent wi l l determine the offered rate (expressed as a rate per annum) for three-month euro deposits as at 11.00 a.m. ( Central European time) on such Interest Determination Date, as displayed on the display designated as page "248" on the Bridge/Telerate Moni tor ( or such other page or pages as may replace it for the purpose of displaying such information). The Rate of Interest on the Notes for the Interest Period immediately succeeding each Interest Determination Date shall be such offered rate as so determined by the Calculation Agent plus the Margin ( as defined below).

(b) If such offered rate does not so appear, or if the relevant page is unavailable, the Calculation Agent w i l l , on such date, request the principal Euro-zone (as defined below) office of each Reference Bank ( as defined below) to provide the Calculation Agent wi th its offered quotat ion to leading banks in the Euro-zone inter-bank market for three-month euro deposits as at 11.00 a.m. ( Central European time) on the Interest Determination Date in quest ion. If at least two of the Reference Banks provide the Calculation Agent wi th such offered quotat ions, the Rate of Interest on the Notes for the Interest Period immediately succeeding the relevant Interest Determination Date shall be the rate determined by the Calculation Agent to be the arithmetic mean (rounded upwards if necessary to the nearest one hundred thousandth of a percentage point) of such offered quotat ions plus the Margin.

(c) If on any Interest Determination Date to which the provisions of sub-paragraph (b) above apply, one only or none of the Reference Banks provides the Calculation Agent wi th such a quotat ion, the Rate of Interest on the Notes for the Interest Period immediately succeeding such Interest Determination Date shall be the rate which the Calculation Agent

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determines to be the aggregate of the Margin and the arithmetic mean (rounded, if necessary, up to the nearest one hundred thousandth of a percentage point) of the euro lending rates which leading banks in the Euro-zone selected by the Calculation Agent are quot ing, on the relevant Interest Determination Date, to leading European banks for a period of three months, except that, if the banks so selected by the Calculation Agent are not quot ing as ment ioned above, the Rate of Interest on the Notes for such Interest Period shall be the Rate of Interest on the Notes in effect for the last preceding Interest Period to which one of the preceding sub-paragraphs of this Condit ion 4(i) shall have applied or, if no such Rate of Interest has been in effect, the Rate of Interest on the Notes for such Interest Period shall be the rate which the Calculation Agent determines to be the aggregate of the Margin and such arithmetic mean of such euro lending rates so quoted on the first TARGET Business Day preceding the relevant Interest Determination Date on which such rates are so quoted.

(b) Determination of Rate of Interest and Calculation of Coupon Amounts

The Calculation Agent w i l l , as soon as practicable after 11.00 a.m. (Central European t ime) on each Interest Determination Date, determine the Rate of Interest in respect of the relevant Interest Period and calculate the amount of interest payable on presentation of a Coupon appertaining to Notes of each denominat ion on the Interest Payment Date for such Interest Period (the "Coupon Amounts") by applying the Rate of Interest for such Interest Period to the principal amount of a Note of the relevant denominat ion, mul t ip ly ing such sum by the actual number of days in the Interest Period concerned divided by 360 and, if necessary, rounding the resultant f igure to the nearest euro0.01 (euro0.005 being rounded upwards).

(c) Publication of Rate of Interest and Coupon Amounts

The Issuer shall cause notice of each Rate of Interest and of the Coupon Amounts and the relevant Interest Payment Date to be given to the Trustee, the paying agents, any applicable l isting authori ty and, in accordance wi th Condit ion 13, the Noteholders as soon as practicable after their determinat ion and calculation but in any event not later than the fourth business day thereafter. As used in this paragraph (c), "business day" means a day (not being a Saturday or Sunday) on which banks are open for business in London.

The Coupon Amounts and the Interest Payment Date so notif ied may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) w i thout notice in the event of any extension or shortening of the relevant interest Period or in the event of proven or manifest error.

(d) Determination or Calculation by Trustee

The Trustee shall , if the Calculation Agent does not at any relevant t ime for any reason determine the Rate of Interest on the Notes or calculate any Coupon Amount in accordance w i th this Condit ion 4(i), determine the Rate of Interest in respect of the relevant Interest Period or calculate such Coupon Amount at such rate or in such amount as, in its absolute discretion (having such regard as it shall think fit to the procedure described in this Condit ion 4(i)), it shall deem fair and reasonable in all the circumstances, and such determinat ion and calculation shall be deemed to be a determinat ion thereof by the Calculation Agent.

(e) Calculation Agent

So long as any Notes remain outstanding the Issuer wi l l maintain a Calculation Agent, which shall init ial ly be Citibank, N.A., London branch. The specified office of the initial Calculation Agent is set out at the end of these Terms and Condit ions.

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The Issuer may, w i th the prior wr i t ten approval of the Trustee, f rom t ime to t ime replace the Calculation Agent by another leading investment, merchant or commercial bank in London. If the Calculation Agent is unable or unwi l l ing to continue to act as the Calculation Agent or ( w i thout prejudice to paragraph (d)) fails duly to determine the Rate of Interest or calculate the Coupon Amount on the Notes in respect of any Interest Period as provided in this Condit ion 4( i), the Issuer shall for thwi th appoint another leading investment, merchant or commercial bank in London approved in wr i t ing by the Trustee to act as such in its place. The Calculation Agent may not resign its duties or be removed wi thout a successor having been appointed and approved as aforesaid.

(f) Determinations Binding All notif ications, opinions, determinat ions, certificates, calculations, quotat ions and decisions given, expressed, made or obtained for the purposes of this Condit ion 4(i) by the Calculation Agent or the Trustee shall (in the absence of wi l fu l default, bad faith or manifest error) be binding on the Issuer, the Calculation Agent, the Trustee, the paying agents and all Noteholders and Couponholders and ( in the absence as aforesaid) no l iabil i ty to the Noteholders and Couponholders or the Issuer shall attach to the Calculation Agent or the Trustee in connection wi th the exercise or non-exercise by it of its powers, duties and discretions.

(g) Definitions For the purpose of this Condit ion 4:

"Euro-zone" means the region comprised of member states of the European Union that adopt or have adopted the single currency in accordance wi th the Treaty;

"Interest Determination Date" means the second TARGET Business Day prior to the first day of the first Interest Period and thereafter the second TARGET Business Day prior to the first day of each subsequent Interest Period;

"Interest Payment Date" means 15th February, 15th May, 15th August and 15th November in each year, commencing 15th May, 2001, or if any such day is not a TARGET Business Day, the next fo l lowing TARGET Business Day unless such day wou ld thereby fall into the next calendar month , in which event it shall be brought forward to the immediately preceding TARGET Business Day;

"Interest Period" means the period commencing on ( and including) 15th February, 2001 and ending on (but excluding) the first Interest Payment Date and thereafter each successive period commencing on ( and including) an Interest Payment Date and ending on ( but excluding) the next fo l lowing Interest Payment Date;

"Marg in " means plus 0.625 per cent. per annum;

"Reference Banks" means four major banks in the Euro-zone inter-bank market as selected by the Calculation Agent;

"TARGET" means the Trans European Real Time Gross Sett lement Express Transfer (TARGET) System;

"TARGET Business Day" means a day on which TARGET is operat ing; and

"Treaty" means the Treaty establishing the European Communit ies (signed in Rome on 25th March, 1957), as amended by the Treaty on European Union (signed in Maastricht on 7th February, 1992) and as amended by the Treaty of Amsterdam (signed in Amsterdam on 2nd October, 1997).

(C) The first paragraph of Condit ion 4(ii) shall be deleted.

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(D) The references in Condition 4(iii)(b) to "rate of interest payable on" shall be replaced by references to "Margin in respect of".

(E) Conditions 4(iii)(e), (f), (g), (h) and ( i) shall be deleted.

(F) The reference in Condition 6(i) to "16th February, 2004" shall be replaced by a reference to "the Interest Payment Date falling in February, 2003".

(G) Condition 6(ii) shall be deleted and references to Condition 6(ii) shall be removed by deletion of the words "unless it has already given notice under Condition 6(ii) above," in Condition 6(iii) and the words "Condition 6(ii) or Condition 6(iii) in each case" in Condition 6(iv) shall be replaced by the words "Condition 6(ii)".

(H) Condition 6(iii) shall be amended to insert the words "on any Interest Payment Date" after the word "redeem" in the first paragraph.

(I) Condition 6(iv)(c) shall be deleted.

(J) The definition of "Put Date" in Condition 6(iv) shall be replaced by the following new definition:

"Put Date" means the Interest Payment Date next following the date of the Put Event Notice.

(K) Condition 10(i)(a) shall be amended by deleting the words "principal or" where they appear twice in that Condition.

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SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE REPRESENTED BY THE GLOBAL NOTES

The following is a summary of the provisions to be contained in the Trust Deed and the Global Notes in respect of each Tranche of Notes which will apply to, and in some cases modify, the Terms and Conditions of such Tranche of Notes while such Tranche of Notes is represented by such Global Notes.

1. Interests in the Permanent Global Note wi l l only be exchangeable in whole but not in part (free of charge to the Accountholders (as defined in paragraph (4) below) for definit ive Notes (i) if the Notes become due and repayable pursuant to Condit ion 10, (ii) if either Clearstream, Luxembourg or Euroclear is closed for business for a cont inuous period of 14 days (other than by reason of holiday, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so and no alternative clearance system satisfactory to the Trustee is available, or (iii) if on the occasion of the next payment in respect of the Notes, the Issuer wou ld suffer a material disadvantage in respect of the Notes as a result of a change in the laws or regulations (taxation or otherwise) of any jur isdict ion referred to in Condit ion 7 which wou ld not be suffered were the Notes in definit ive fo rm and a certificate to such effect is given to the Trustee. in any such event, the Issuer wi l l issue definit ive Notes in bearer fo rm, serially numbered, in the denominat ions of euro1,000, euro10,000 and euro100,000 in the case of the euro Notes and in the denominat ions of £1,000, £10,000 and £100,000 in the case of the sterl ing Notes each wi th Coupons attached on issue (in exchange for the entire Permanent Global Note) wi th in 45 days of the occurrence of the relevant event in (i), (ii) or (iii) above, subject, in the case of (i), to a request for such exchange f rom the holder of the Permanent Global Note acting on the instructions of an Accountholder.

On exchange of the Permanent Global Note, the Issuer wi l l procure that it is cancelled.

2. No payment wi l l be made on the Temporary Global Note unless exchange for an interest in the Permanent Global Note is improperly wi thheld or refused. Payments of principal and interest in respect of Notes represented by a Global Note w i l l , subject as set out below, be made against presentation for endorsement and, if no further payment falls to be made in respect of the Notes, surrender of such Global Note to the order of the principal paying agent or such other paying agent as shall have been notif ied to the Noteholders for such purposes. A record of each payment made wi l l be endorsed on the appropriate schedule to the relevant Global Note by or on behalf of the principal paying agent, which endorsement shall be prima facie evidence that such payment has been made in respect of the Notes. Payments of interest on the Temporary Global Note w i l l only be made upon certif ication as to non-U.S. beneficial ownership.

3. For so long as the Notes are represented by one or both of the Global Notes and such Global Note(s) is/are held on behalf of Clearstream, Luxembourg and/or Euroclear, notices to Noteholders may be given by delivery of the relevant notice to Clearstream, Luxembourg and/or Euroclear (as the case may be) for communicat ion to the relative Accountholders rather than by publication as required by Condit ion 13 provided that, so long as the Notes are admitted to the Official List and admitted to t rading on the London Stock Exchange, the requirements of the UK Listing Author i ty have been compl ied wi th . Any suc

bt · 2009. 7. 22. · notes due 2016 (the "tranche 5 notes") and the €1,000,000,000 floating...

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