Fiat Finance and Trade Ltd. · 2014. 9. 19. · Fiat Finance and Trade Ltd. société anonyme (Incorporated with limited liability under the laws of the Grand-Duchy of Luxembourg;

Fiat Finance and Trade Ltd.société anonyme

(Incorporated with limited liability under the laws of the Grand-Duchy of Luxembourg; Registre de Commerce et des Sociétés de Luxembourg No. B-59500)

Fiat Finance Canada Ltd.(Incorporated with limited liability under the laws of the Province of Alberta, Canada)

Fiat Finance North America, Inc.(Incorporated under the laws of the State of Delaware)

€15,000,000,000Global Medium Term Note Programme

unconditionally and irrevocably guaranteed by

Fiat S.p.A.(incorporated as a Società per Azioni under the laws of the Republic of Italy)

Under the €15,000,000,000 Global Medium Term Note Programme (the “Programme’’) described in this base prospectus (“the Base Prospectus”),Fiat Finance and Trade Ltd. société anonyme (“FFT”), Fiat Finance Canada Ltd. (“FFC”) and Fiat Finance North America, Inc. (“FFNA”) (eachan “Issuer” and together, the “Issuers”) may from time to time issue notes (the “Notes’’) denominated in any currency agreed between the relevantIssuer and the relevant Dealer (as defined below). The payments of all amounts due in respect of Notes will be unconditionally and irrevocablyguaranteed by Fiat S.p.A. (“Fiat” or the “Guarantor’’).An investment in Notes issued under the Programme involves certain risks. For a discussion of these risks see, “Risk Factors”.Application has been made to the Irish Financial Services Regulatory Authority (the “IFSRA”), as competent authority under the ProspectusDirective, for the Base Prospectus to be approved. Such approval relates only to the Notes which are to be admitted to trading on the regulatedmarket of the Irish Stock Exchange (as defined below) or any other regulated market for the purposes of Directive 2004/39/EC or which are tobe offered to the public in any member state of the European Economic Area. There can be no assurance that any such admission to trading willbe obtained. Application has been made to the Irish Stock Exchange Limited (the “Irish Stock Exchange”) for Notes issued under the Programmeduring the 12 months from the date of the Base Prospectus to be admitted to listing on the Official List of the Irish Stock Exchange and admittedto trading on its regulated market. References in the Base Prospectus to “Irish Stock Exchange” (and all related references) shall mean theregulated market of the Irish Stock Exchange. In addition, references in the Base Prospectus to the Notes being “listed” (and all related references)shall mean that such Notes have been admitted to listing on the Official List of the Irish Stock Exchange and admitted to trading on its regulatedmarket or, as the case may be, a MiFID Regulated Market (as defined below). The regulated market of the Irish Stock Exchange is a regulatedmarket for the purposes of Directive 2004/39/EC (each such regulated market being a “MiFID Regulated Market”). This document may be usedto list Notes on the regulated market of the Irish Stock Exchange pursuant to the Programme. The Programme provides that Notes may be listedon such other or further stock exchange(s) as may be agreed between the relevant Issuer, the Guarantor and the relevant Dealer. Each Issuer mayalso issue unlisted Notes. The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme will notexceed €15,000,000,000 (or its equivalent in other currencies, subject to increase as provided herein). The Notes will be issued in suchdenominations as may be agreed between the relevant Issuer and the relevant Dealer and as specified in the applicable Final Terms, save that theminimum denomination of each Note will be such amount as may be allowed or required from time to time by the relevant central bank (orequivalent body) or any laws or regulations applicable to the relevant Specified Currency (as defined below) and save that the minimumdenomination of each Note admitted to trading on a regulated market situated or operating within the European Economic Area (the “EEA”)and/or offered to the public in an EEA State in circumstances which require the publication of a prospectus under the Prospectus Directive willbe €50,000 (or, if the Notes are denominated in a currency other than euro, the equivalent amount in such currency).Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price of Notes and any other terms andconditions not contained herein which are applicable to each Tranche (as defined under “Terms and Conditions of the Notes”) of Notes will beset out in final terms (the “Final Terms”) which, with respect to Notes to be listed on the Irish Stock Exchange, will be delivered to the IFSRAon or before the date of issue of the Notes of such Tranche. Copies of the Final Terms relating to Notes which are listed on the Irish StockExchange or offered in circumstances which require a prospectus to be published will be available free of charge, at the registered office of eachIssuer and the Guarantor.

ArrangerUBS Investment Bank

DealersABN AMRO Banca IMI

Barclays Capital BNP PARIBAS

CALYON Crédit Agricole CIB Citi

Credit Suisse Deutsche Bank

Goldman Sachs International Mediobanca

Merrill Lynch International Morgan Stanley

Société Générale Corporate & Investment Banking TD Securities

The Royal Bank of Scotland UniCredit (HVB)

UBS Investment Bank

The date of the Base Prospectus is 12th May, 2008

BASE PROSPECTUS

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The Base Prospectus comprises a base prospectus for the purposes of Article 5.4 of Directive 2003/71/EC(the “Prospectus Directive”).

The Guarantor accepts responsibility for the information contained in the Base Prospectus . To the best ofthe knowledge of the Guarantor, the information in the Base Prospectus is in accordance with the facts anddoes not omit anything likely to affect the importance of such information. Each of the Issuers acceptsresponsibility only for the information contained in the Base Prospectus relating to itself. To the best of theknowledge of each of the Issuers, the information contained in those parts of the Base Prospectus relatingto such Issuer is in accordance with the facts and does not omit anything likely to affect the importance ofsuch information.

Copies of Final Terms will be available from the registered office of each Issuer, the Guarantor and thespecified office set out below of each of the Paying Agents (as defined below).

Each of the Issuers and the Guarantor has confirmed to the Dealers that the statements contained inthe Base Prospectus (including all documents which are incorporated by reference herein – see “DocumentsIncorporated by Reference’’) relating (in the case of each Issuer) to such Issuer and (in the case of theGuarantor) to such Issuer and the Guarantor are in every material respect true and accurate and notmisleading; any opinions, predictions or intentions expressed in the Base Prospectus on the part of anyIssuer or the Guarantor (as the case may be) are honestly held or made and are not misleading in anymaterial respect; the Base Prospectus does not omit to state any material fact necessary to make suchinformation, opinions, predictions or intentions (in such context) not misleading in any material respect;and all proper enquiries have been made to ascertain and to verify the foregoing.

The Notes may be issued on a continuing basis to one or more of the Dealers specified under “Summary ofthe Programme’’ and any additional Dealer appointed under the Programme from time to time by theIssuers (each a “Dealer’’ and together the “Dealers’’), which appointment may be for a specific issue or onan ongoing basis.

References in the Base Prospectus to the “relevant Dealer’’ shall, in the case of an issue of Notes being (orintended to be) subscribed by more than one Dealer, be to all Dealers agreeing to purchase such Notes.References in the Base Prospectus to the “relevant Issuer” shall, in relation to an issue of Notes, be to theIssuer of such Notes.

The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended, (the“Securities Act’’) and may not be offered or sold in the United States or to, or for the benefit of, U.S. personsunless the Notes are registered under the Securities Act or an exemption from the registration requirementsof the Securities Act is available. See “Form of the Notes’’ for a description of the manner in which Noteswill be issued. Registered Notes (as defined under “Form of the Notes”) are subject to certain restrictionson transfer, see “Subscription and Sale and Transfer and Selling Restrictions’’.

The Base Prospectus is to be read in conjunction with all documents which are deemed to be incorporatedherein by reference (see “Documents Incorporated by Reference’’ below). The Base Prospectus shall be readand construed on the basis that such documents are incorporated and form part of the Base Prospectus.

The Dealers have not independently verified the information contained herein. Accordingly, norepresentation, warranty or undertaking, express or implied, is made and no responsibility or liability isaccepted by the Dealers as to the accuracy or completeness of the information contained or incorporated inthe Base Prospectus or any other information provided by any Issuer or the Guarantor in connection withthe Programme.

No Dealer accepts any liability in relation to the information contained or incorporated by reference in theBase Prospectus or any other information provided by any Issuer or the Guarantor in connection with theProgramme.

No person is or has been authorised by any Issuer to give any information or to make any representationnot contained in or not consistent with the Base Prospectus or any other information supplied in connectionwith the Programme or the Notes and, if given or made, such information or representation must not berelied upon as having been authorised by any Issuer or the Guarantor or any of the Dealers.

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Neither the Base Prospectus nor any other information supplied in connection with the Programme or anyNotes (a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as arecommendation by any Issuer, the Guarantor or any of the Dealers that any recipient of the BaseProspectus, or any other information supplied in connection with the Programme or any Notes shouldpurchase any Notes. Each investor contemplating purchasing any Notes should make its own independentinvestigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of therelevant Issuer and/or the Guarantor. Neither the Base Prospectus, nor any other information supplied inconnection with the Programme or the issue of any Notes constitutes an offer or invitation by or on behalfof any of the Issuers, the Guarantor or any of the Dealers to any person to subscribe for or to purchase anyNotes.

Neither the delivery of the Base Prospectus, nor the offering, sale or delivery of any Notes shall in anycircumstances imply that the information contained herein concerning the Issuers and/or the Guarantor iscorrect at any time subsequent to the date hereof or that any other information supplied in connection withthe Programme is correct as of any time subsequent to the date indicated in the document containing thesame. The Dealers expressly do not undertake to review the financial condition or affairs of the Issuers orthe Guarantor during the life of the Programme or to advise any investor in the Notes of any informationcoming to their attention. Investors should review, inter alia, the most recently published audited annualfinancial statements and, if published later, the most recently published interim financial statements (if any)of the relevant Issuer and Guarantor when deciding whether or not to purchase any Notes.

The Notes in bearer form are subject to U.S. tax law requirements and may not be offered, sold or deliveredwithin the United States or its possessions or to United States persons, except in certain transactionspermitted by U.S. tax regulations. Terms used in this paragraph have the meanings given to them by theU.S. Internal Revenue Code (the “Code”) and the regulations promulgated thereunder.

The Base Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any Notes inany jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction.The distribution of the Base Prospectus and the offer or sale of Notes may be restricted by law in certainjurisdictions. The Issuers, the Guarantor and the Dealers do not represent that the Base Prospectus may belawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicableregistration or other requirements in any such jurisdiction, or pursuant to an exemption availablethereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, noaction has been taken by any Issuer, the Guarantor or the Dealers which would permit a public offering ofany Notes or distribution of this document in any jurisdiction where action for that purpose is required.Accordingly, no Notes may be offered or sold, directly or indirectly, and neither the Base Prospectus norany advertisement or other offering material may be distributed or published in any jurisdiction, exceptunder circumstances that will result in compliance with any applicable laws and regulations. Persons intowhose possession the Base Prospectus or any Notes may come must inform themselves about, and observe,any such restrictions on the distribution of the Base Prospectus and the offering and sale of Notes. Inparticular, there are restrictions on the distribution of the Base Prospectus and the offer or sale of Notes inthe United States, Canada, Japan and the European Economic Area, including Italy, the United Kingdomand The Netherlands, see “Subscription and Sale and Transfer and Selling Restrictions’’.

In making an investment decision, investors must rely on their own examination of the relevant Issuer andthe Guarantor and the terms of the Notes being offered, including the merits and risks involved. The Noteshave not been approved or disapproved by the United States Securities and Exchange Commission (the“Commission”) or any other securities commission or other regulatory authority in the United States, norhave the foregoing authorities approved the Base Prospectus or confirmed the accuracy or determined theadequacy of the information contained in the Base Prospectus. Any representation to the contrary isunlawful.

None of the Dealers, the Issuers or the Guarantor makes any representation to any investor in the Notesregarding the legality of its investment under any applicable laws.

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U.S. INFORMATION

The Base Prospectus is being submitted on a confidential basis in the United States to a limited number ofQIBs (as defined under “Form of the Notes’’) for informational use solely in connection with theconsideration of the purchase of the Notes being offered hereby. Its use for any other purpose in the UnitedStates is not authorised. It may not be copied or reproduced in whole or in part; nor may it be distributedor any of its contents disclosed to anyone other than the prospective investors to whom it is originallysubmitted.

Registered Notes may be offered or sold within the United States only to QIBs in transactions exempt fromregistration under the Securities Act. Each U.S. purchaser of Registered Notes is hereby notified that theoffer and sale of any Registered Notes to it is being made in reliance upon the exemption from theregistration requirements of the Securities Act provided by Rule 144A under the Securities Act (“Rule144A’’).

Each purchaser or holder of Notes represented by a Rule 144A Global Note (as defined under “Form ofthe Notes”) or any Notes issued in registered form in exchange or substitution therefor (together “LegendedNotes’’) will be deemed, by its acceptance or purchase of any such Legended Notes, to have made certainrepresentations and agreements intended to restrict the resale or other transfer of such Notes as set out in“Subscription and Sale and Transfer and Selling Restrictions’’. Unless otherwise stated, terms used in thisparagraph have the meanings given to them in “Form of the Notes’’.

NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR ALICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISEDSTATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY ISEFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRECONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANYDOCUMENT FILED UNDER CHAPTER 421-B IS TRUE, COMPLETE AND NOT MISLEADING.NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION ISAVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATEHAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDEDOR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TOMAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENTANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

AVAILABLE INFORMATION

To permit compliance with Rule 144A in connection with any resales or other transfers of Notes that are“restricted securities’’ within the meaning of the Securities Act, the Issuers and the Guarantor haveundertaken in a deed poll dated 12th May, 2008 (the “Deed Poll’’) to furnish, upon the request of a holderof such Notes or any beneficial interest therein, to such holder or to a prospective purchaser designated byhim, the information required to be delivered under Rule 144A(d)(4) under the Securities Act if, at the timeof the request, the relevant Issuer is neither a reporting company under Section 13 or 15(d) of the U.S.Securities Exchange Act of 1934, as amended, (the “Exchange Act’’) nor exempt from reporting pursuantto Rule 12g3-2(b) thereunder.

SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

FFT, FFC and the Guarantor are corporations incorporated under the laws of the Grand-Duchy ofLuxembourg, Alberta (Canada) and the Republic of Italy, respectively. It may not be possible for investorsto effect service of process outside the Grand-Duchy of Luxembourg (in the case of FFT), Canada (in thecase of FFC) or the Republic of Italy (in the case of the Guarantor) or upon FFT, FFC or the Guarantor orto enforce judgments against them obtained in courts outside the Grand-Duchy of Luxembourg (in the caseof FFT), Canada (in the case of FFC) or the Republic of Italy (in the case of the Guarantor) predicated uponcivil liabilities of FFT, FFC or the Guarantor, as the case may be, under laws other than those ofLuxembourg (in the case of FFT), Canada (in the case of FFC) or the Republic of Italy (in the case of theGuarantor), including any judgment predicated upon United States federal securities laws. There are doubts

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as to the enforceability in the Grand-Duchy of Luxembourg (in the case of FFT), Canada (in the case ofFFC) and the Republic of Italy (in the case of the Guarantor) in original actions or in actions forenforcement of judgments of United States courts of civil liabilities predicated solely upon the federalsecurities laws of the United States.

PRESENTATION OF INFORMATION

All references in the Base Prospectus to “U.S. dollars’’, “U.S.$’’ and “$’’ refer to the currency of the UnitedStates of America, references to “CAN$” refer to the currency of Canada, references to “Sterling” and “£”refer to the currency of the United Kingdom, and references to “euro’’ and “€” refer to the currencyintroduced at the start of the third stage of European Economic and Monetary Union pursuant to the Treatyestablishing the European Community, as amended.

The language of the Base Prospectus is English. Certain legislative references and technical terms have beencited in their original language in order that the correct technical meaning may be ascribed to them underapplicable law.

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Table of Contents

In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the StabilisingManager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable Final Terms mayover-allot Notes or effect transactions with a view to supporting the market price of the Notes at a levelhigher than that which might otherwise prevail. However, there is no assurance that the StabilisingManager(s) (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Anystabilisation action may begin on or after the date on which adequate public disclosure of the terms of theoffer of the relevant Tranche of Notes is made and, if begun, may be ended at any time, but it must end nolater than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after thedate of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment shall beconducted by the relevant Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s))in accordance with all applicable laws and rules.

Fiat Finance North America, Inc ................ 75

Financial Information relating to Fiat Finance North America, Inc. .................... 76

The Fiat Group .......................................... 77

Financial Information relating to Fiat S.p.A 96

Financial Information relating to the FiatGroup ...................................................... 98

Book-Entry Clearance Systems.................... 100

Taxation...................................................... 104

Subscription and Sale and Transfer and Selling Restrictions.................................... 110

General Information .................................. 116

Documents Incorporated by Reference ...... 7

General Description of the Programme ...... 8

Risk Factors ................................................ 12

Form of the Notes ...................................... 20

Applicable Final Terms .............................. 24

Terms and Conditions of the Notes ............ 35

Use of Proceeds .......................................... 68

Fiat Finance and Trade Ltd. société anonyme 69

Financial Information relating to Fiat Finance and Trade Ltd. société anonyme .. 70

Fiat Finance Canada Ltd............................. 73

Financial Information relating to Fiat Finance Canada Ltd. ................................ 74

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Documents Incorporated by ReferenceThe documents referred to in paragraphs (a), (b), (c) and (d) below have been published previously and filedwith the Irish Stock Exchange and shall be deemed to be incorporated in, and to form part of, this BaseProspectus:

(a) the audit report and audited annual financial statements (including a balance sheet, statementof income, statement of changes in stockholder’s equity, statement of cash flows and notes tothe financial statements) of FFC for the financial years ended 31 December 2007 and 2006;

(b) the audit report and audited financial statements (including a balance sheet, statement ofincome, statement of changes in stockholder’s equity, statement of cash flows and notes tofinancial statements) of FFNA for the financial years ended 31 December 2007 and 2006;

(c) the audit report and audited annual financial statements (including a consolidated incomestatement, consolidated balance sheet, consolidated statement of cash flows, statement ofchanges in stockholders’ equity, consolidated statement of recognised income and expense, andnotes to the consolidated financial statements) of the Fiat Group as well as audited annualstatutory stand-alone financial statements of Fiat S.p.A., including the audit report thereon forthe financial years ended 31 December 2007 and 2006;

(d) the audit report and audited annual financial statements (including a balance sheet, statementof profit and loss, statement of cash flows, and notes to the financial statements) of FFT for thefinancial years ended 31 December 2007 and 2006.

Each Issuer and the Guarantor will provide, without charge, to each person to whom a copy of the BaseProspectus has been delivered, upon the request of such person, a copy of any or all of the documentsdeemed to be incorporated herein by reference unless such documents have been modified or superseded asspecified above. Requests for such documents should be directed to any Issuer or the Guarantor at itsaddress set out at the end of the Base Prospectus. Copies of the Base Prospectus are available on theGuarantor’s website at www.fiatgroup.com.

Each Issuer and the Guarantor will, in connection with the listing of the Notes on the Irish Stock Exchange,so long as any Notes remain outstanding and listed on such exchange, in the event of any significant newfactor, material mistake or inaccuracy relating to information included in this Base Prospectus, prepare asupplement to the Base Prospectus in accordance with Article 16 of the Prospectus Directive or publish anew Base Prospectus as may be required by the rules of the Irish Stock Exchange for use in connection withany subsequent issue of the Notes to be listed on the Irish Stock Exchange.

If the terms of the Programme are modified or amended in a manner which would make the Base Prospectusas so modified or amended, inaccurate or misleading, a new base prospectus will be prepared.

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General Description of the ProgrammeThis general description must be read as an introduction to the Base Prospectus and any decision to investin any Notes should be based on a consideration of the Base Prospectus as a whole, including the documentsincorporated by reference. The following general description does not purport to be complete and is takenfrom, and is qualified in its entirety by, the remainder of this Base Prospectus and, in relation to the termsand conditions of any particular Tranche of Notes, the applicable Final Terms. The relevant Issuer, theGuarantor and any relevant Dealer may agree that Notes shall be issued in a form other than thatcontemplated in the Terms and Conditions, in which event, in the case of listed Notes only and ifappropriate, a Base Prospectus supplement will be published.

This General Description constitutes a general description of the Programme for the purposes of Article22.5(3) of Commission Regulation (EC) No. 809/2004 implementing the Prospectus Directive.

Words and expressions defined in “Form of the Notes” and “Terms and Conditions of the Notes” shall havethe same meanings in this general description.

Issuers: Fiat Finance and Trade Ltd. société anonymeFiat Finance Canada Ltd.Fiat Finance North America, Inc.

Guarantor: Fiat S.p.A.

Risk Factors: There are certain factors that may affect the ability of each of the Issuers tofulfil its obligations under Notes issued under the Programme. These are set outunder “Risk Factors” below. There are also certain factors that may affect theGuarantor’s ability to fulfil its obligations under the Guarantee. These are alsoset out under “Risk Factors” below. In addition, there are certain factors whichare material for the purpose of assessing the market risks associated with Notesissued under the Programme. These are set out under “Risk Factors” andinclude the fact that the Notes may not be a suitable investment for allinvestors, certain risks relating to the structure of particular Series of Notes andcertain market risks.

Description: Global Medium Term Note Programme

Arranger: UBS Limited

Dealers: ABN AMRO Bank N.V.Banca IMI S.p.A.Barclays Bank PLCBayerische Hypo- und Vereinsbank AGBNP PARIBASCALYONCitigroup Global Markets LimitedCredit Suisse Securities (Europe) LimitedDeutsche Bank AG, London BranchGoldman Sachs InternationalMediobanca-Banca di Credito Finanziario S.p.A.Merrill Lynch InternationalMorgan Stanley & Co. International plcSociété GénéraleThe Royal Bank of Scotland plcThe Toronto-Dominion BankUBS Limited

and any other Dealers appointed in accordance with the Programme Agreement(as defined in “Subscription and Sale and Transfer and Selling Restrictions”).

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Certain Restrictions: Each issue of Notes denominated in a currency in respect of which particularlaws, guidelines, regulations, restrictions or reporting requirements apply willonly be issued in circumstances which comply with such laws, guidelines,regulations, restrictions or reporting requirements from time to time (see“Subscription and Sale and Transfer and Selling Restrictions’’) including thefollowing restrictions applicable at the date of the Base Prospectus.

Notes issued on terms such that they must be redeemed before their firstanniversary will, if the proceeds of the issue are accepted in the UnitedKingdom, constitute deposits for the purposes of the prohibition on acceptingdeposits contained in section 19 of the Financial Services and Markets Act 2000unless they are issued to a limited class of professional investors and have adenomination of at least £100,000 or its equivalent, see “Subscription and Saleand Transfer and Selling Restrictions”.

Citibank, N.A., London office

Registrar: Citigroup Global Markets Deutschland AG & Co. KGaA

Programme Size: Up to A15,000,000,000 (or its equivalent in other currencies calculated asdescribed in the Programme Agreement) outstanding at any time. The Issuersand the Guarantor may increase the amount of the Programme in accordancewith the terms of the Programme Agreement.

Distribution: Notes may be distributed by way of private or public placement and in eachcase on a syndicated or non-syndicated basis.

Currencies: Subject to any applicable legal or regulatory restrictions, any currency agreedbetween the relevant Issuer and the relevant Dealer.

Redenomination: The applicable Final Terms may provide that certain Notes may beredenominated in euro.

Maturities: Such maturities as may be agreed between the relevant Issuer and the relevantDealer, subject to such minimum or maximum maturities as may be allowed orrequired from time to time by the relevant central bank (or equivalent body) orany laws or regulations applicable to the relevant Issuer or the relevantSpecified Currency. Special provisions will apply to Notes issued by FFNA witha maturity of 183 days or less.

Issue Price: Notes may be issued on a fully-paid or a partly-paid basis and at an issue pricewhich is at par or at a discount to, or premium over, par.

Form of Notes: The Notes will be issued in bearer or registered form as described in “Form ofthe Notes’’. Registered Notes will not be exchangeable for Bearer Notes andvice versa.

Fixed Rate Notes: Fixed interest will be payable on such date or dates as may be agreed betweenthe relevant Issuer and the relevant Dealer and on redemption and will becalculated on the basis of such Day Count Fraction as may be agreed betweenthe relevant Issuer and the relevant Dealer.

Floating Rate Notes: Floating Rate Notes will bear interest at a rate determined:

(i) on the same basis as the floating rate under a notional interest rate swaptransaction in the relevant Specified Currency governed by an agreementincorporating the 2000 ISDA Definitions (as published by the InternationalSwaps and Derivatives Association, Inc. and as amended and updated as atthe Issue Date of the first Tranche of the Notes of the relevant Series);

(ii) on the basis of a reference rate appearing on the agreed screen page of acommercial quotation service; or

Issuing and PrincipalPaying Agent:

9

GENERAL DESCRIPTION OF THE PROGRAMME


(iii)on such other basis as may be agreed between the relevant Issuer and therelevant Dealer.

The margin (if any) relating to such floating rate will be agreed between therelevant Issuer and the relevant Dealer for each Series of Floating Rate Notes.

Index Linked Notes: Payments of principal in respect of Index Linked Redemption Notes or ofinterest in respect of Index Linked Interest Notes will be calculated by referenceto such index and/or formula or to changes in the prices of securities orcommodities or to such other factors as the relevant Issuer and the relevantDealer may agree.

Floating Rate Notes and Index Linked Interest Notes may also have amaximum interest rate, a minimum interest rate or both.

Interest on Floating Rate Notes and Index Linked Interest Notes in respect ofeach Interest Period, as agreed prior to issue by the relevant Issuer and therelevant Dealer, will be payable on such Interest Payment Dates, and will becalculated on the basis of such Day Count Fraction, as may be agreed betweenthe relevant Issuer and the relevant Dealer.

Dual Currency Notes: Payments (whether in respect of principal or interest and whether at maturityor otherwise) in respect of Dual Currency Notes will be made in suchcurrencies, and based on such rates of exchange, as the relevant Issuer and therelevant Dealer may agree.

Zero Coupon Notes: Zero Coupon Notes will be offered and sold at a discount to their nominalamount and will not bear interest.

Redemption: The applicable Final Terms will indicate either that the relevant Notes cannotbe redeemed prior to their stated maturity (other than in specified instalments,if applicable, or for taxation reasons as described in “Terms and Conditions ofthe Notes—Redemption for Tax Reasons”, or following an Event of Default) orthat such Notes will be redeemable at the option of the relevant Issuer and/orthe Noteholders upon giving notice to the Noteholders or the Issuer, as the casemay be, on a date or dates specified prior to such stated maturity and at a priceor prices and on such other terms as may be agreed between the relevant Issuerand the relevant Dealer.

The applicable Final Terms may provide that Notes may be redeemable in twoor more instalments of such amounts and on such dates as are indicated in theapplicable Final Terms.

Notes issued on terms such that they must be redeemed before their firstanniversary may be subject to restrictions on their denomination anddistribution. See “Certain Restrictions” above.

Denomination of Notes: Notes will be issued in such denominations as may be agreed between therelevant Issuer and the relevant Dealer save that the minimum denomination ofeach Note will be such as may be allowed or required from time to time by therelevant central bank (or equivalent body) or any laws or regulations applicableto the relevant Specified Currency and save that the minimum denomination ofeach Note admitted to trading on a regulated market within the EuropeanEconomic Area will be €50,000 (or, if the Notes are denominated in a currencyother than euro, the equivalent amount in such currency).

Taxation: All payments in respect of the Notes will be made without deduction for or onaccount of withholding taxes imposed by any Relevant Tax Jurisdiction, subjectas provided in Condition 8. In the event that any such deduction is made, therelevant Issuer or the Guarantor will, save in certain limited circumstances

Other provisions inrelation to Floating RateNotes and Index LinkedInterest Notes:

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provided in Condition 8, be required to pay additional amounts to cover theamounts so deducted.

Change of Control: If a Change of Control occurs, except in certain circumstances, the relevantIssuer will be required to offer to repurchase the Notes at a purchase priceequal to 101 per cent. of their aggregate principal amount, plus accrued andunpaid interest, if any, to the date of purchase.

Negative Pledge: The terms of the Notes will contain a negative pledge provision as furtherdescribed in Condition 4.

Cross Default: The terms of the Notes will contain a cross default provision as furtherdescribed in Condition 10.

Status of the Notes: The Notes and any relative Receipts and Coupons are direct, unconditional,unsubordinated and (subject to the provisions of Condition 4) unsecuredobligations of the relevant Issuer and (subject as aforesaid) rank and will rankpari passu without any preference among themselves, with all other present andfuture outstanding unsubordinated and unsecured obligations of the relevantIssuer (subject to mandatorily preferred obligations under applicable laws).

Guarantee: The payment of principal and interest in respect of the Notes and any relativeReceipts and Coupons has been irrevocably and unconditionally guaranteed bythe Guarantor pursuant to the Guarantee. The obligations of the Guarantorunder the Guarantee constitute direct, unconditional, unsubordinated and(subject to the provisions of Condition 4) unsecured obligations of theGuarantor and (subject as aforesaid) rank and will rank pari passu (subject tomandatorily preferred obligations under applicable laws) with all other presentand future outstanding unsecured and unsubordinated obligations of theGuarantor.

Application has been made to have the Notes admitted to the Official List ofthe Irish Stock Exchange and to be admitted to trading on the Irish StockExchange.

Notes may be listed or admitted to trading, as the case may be, on other orfurther stock exchanges or markets agreed between the Issuer and the relevantDealer in relation to the Series. Notes which are neither listed nor admitted totrading on any market may also be issued.

The applicable Final Terms will state whether or not the relevant Notes are tobe listed or admitted to trading and, if so, on which stock exchange(s).

Governing Law: The Notes will be governed by, and construed in accordance with, English law.

Selling Restrictions: There are restrictions on the offer, sale and transfer of the Notes in the UnitedStates, Canada, Japan and the European Economic Area (including Italy, theUnited Kingdom and The Netherlands) and such other restrictions as may berequired in connection with the offering and sale of a particular Tranche ofNotes. See “Subscription and Sale and Transfer and Selling Restrictions’’.

Listing and admissionto trading:

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Risk FactorsEach of the Issuers and the Guarantor believes that the following factors may affect its ability to fulfil itsobligations under Notes issued under the Programme. Most of these factors are contingencies which mayor may not occur and none of the Issuers nor the Guarantor is in a position to express a view on thelikelihood of any contingency occurring.

In addition, factors which are material for the purpose of assessing the market risks associated with Notesissued under the Programme are also described below.

Each of the Issuers and the Guarantor believes that the factors described below represent the principal risksinherent in investing in Notes issued under the Programme, but the inability of any Issuer or the Guarantorto pay interest, principal or other amounts on or in connection with any Notes may occur for other reasonswhich may not be considered significant risks by the Issuers and the Guarantor based on informationcurrently available to them or which they may not currently be able to anticipate and none of the Issuersor the Guarantor represents that the statements below regarding the risks of holding any Notes areexhaustive. Prospective investors should also read the detailed information set out elsewhere in the BaseProspectus and reach their own views prior to making any investment decision.

Factors that may affect the ability of the Issuers and the Guarantor to fulfil their obligations under the Notes

The Group’s businesses are affected by cyclical conditions

The Group’s businesses depend upon general activity levels in key industries, which historically have beenhighly cyclical. In particular, both general demand for automobiles and the Group’s market shares have beenvolatile in recent periods, such volatility could further increase as a result of the worldwide credit crunch.

Any event adversely affecting activity in the automotive industry, such as an economic downturn in a keymarket (whether as a result of a credit crunch or otherwise), further increases in energy prices, disruptionsof the credit markets, fluctuations in the prices of other key commodities or raw materials, or adverse shiftsin factors such as weather, interest rates, government policies (including environmental regulation),infrastructure spending or major epidemics could have a material adverse affect on the Group’s businessprospects, results of operations and financial condition.

The Group operates in highly competitive industries

Approximately 96 per cent. of the Group’s net revenues in 2007 were generated in the highly competitiveworldwide automotive industry, which includes automobiles, commercial vehicles, agricultural andconstruction equipment and automotive-related components. The Group faces strong competition inEurope and Latin America from other international automobile and commercial vehicle manufacturers, andin Europe, North America and Latin America from global, regional and local agricultural and constructionequipment manufacturers and suppliers of automotive-related components. It competes in these markets interms of product quality and features, innovation and development time, pricing, reliability, safety, fueleconomy, customer service and financing terms.

Competition, particularly with regard to price, has increased in several of the Group’s operating sectors inrecent years. In addition, overall manufacturing capacity in the global automobile industry exceeds currentdemand. This overcapacity, combined with already intense competition in the automotive industry andweakness in the economies of Europe and North America, may intensify pricing pressures. The Group’sability to maintain or improve the quality of its products, increase market share and improve profitabilityin the face of strong competitive pricing pressures will be fundamental to its future success. Any failure tomeet these competitive challenges successfully could have a material adverse effect on the Group’s businessprospects, results of operations and financial condition.

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The Group’s future performance depends on its ability to innovate and on market acceptance of new orexisting products

The Group’s ability to improve its position within its product and market segments through research toimprove current products and development of innovative new products and services will have a significantimpact on its future performance. Failure to develop and offer products that compare favourably to thoseof its competitors, particularly in more profitable segments, in terms of price, quality, styling, reliability,safety, functionality or otherwise, may result in lower market share, lower sales volumes and margins, andmay have a material adverse effect on the Group’s business prospects, results of operations and financialcondition.

Downgrades of the Group’s credit ratings would raise its cost of capital and could limit its access tofinancing and negatively affect its business

The Group is currently rated Ba1 with a positive outlook by Moody’s Investment Service (“Moody’s”),BBB- with a stable outlook by Standard & Poor’s Ratings Service, a division of the McGraw HillCompanies, Inc. (“Standard & Poor’s”), and BBB- with a stable outlook by Fitch Ratings Ltd. The Group’sability to access capital markets, and the cost of borrowing in those markets, is highly dependent on itscredit ratings. The rating agencies may review their ratings, and any downgrades would increase theGroup’s cost of capital, could potentially limit its access to sources of financing and could have a materialadverse effect on its business prospects, results of operations and financial condition, and especially thoseof the Group’s vehicle lease and sales financing businesses, which are typically financed with a highproportion of debt.

The Group may not achieve the expected benefits of mergers, acquisitions, joint ventures or other similarcorporate transactions

The Group has engaged in the past and may engage in the future in significant corporate transactions, suchas mergers, acquisitions, joint ventures and restructurings, the success of which is difficult to predict. Therecan be no assurance that it will be able to enter into such transactions without encountering administrative,technical, political, financial or other difficulties. There can also be no assurance that it will be able to carryout any such transactions now or in the future, or that it will succeed in realising any potential synergies,cost savings or other expected benefits. Any such failure could have a material adverse effect on the Group’sbusiness prospects, results of operations and financial condition.

The Group is subject to risks relating to international sales and exposure to changing local conditions

A significant portion of the Group’s current operations is conducted and located outside of Italy, and theGroup expects that revenues from sales outside of Italy, and more generally outside of the European Union,will continue to account for an increasingly material portion of its total revenues for the foreseeable future.The Group is subject to risks inherent in operating on a global basis, including risks related to:

• exposure to local economic and political conditions;

• export and import restrictions;

• multiple tax regimes, including regulations relating to transfer pricing and withholding and othertaxes on remittances and other payments to or from subsidiaries;

• foreign investment restrictions or requirements, foreign exchange controls and restrictions onrepatriation of funds; and

• local content laws and other regulatory requirements.

The degree of risk and the potential magnitude of effects of unfavourable developments in any one of theseareas vary from country to country, and, depending on the circumstances, could have a material adverseeffect on the Group’s business prospects, results of operations and financial condition.

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RISK FACTORS


Developments in emerging market countries may adversely affect the Group’s business

The Group operates in a number of emerging market countries, both directly, in markets such as Brazil andArgentina, and through joint ventures or other cooperation agreements, including in Turkey, India, Chinaand Russia. The Group’s exposure to these countries has increased in recent years, as the number andimportance of such joint venture and cooperation agreements has increased. Economic and politicaldevelopments in emerging market countries, including economic crises and political instability, have had,and may in the future have, a material adverse effect on the Group’s business prospects, results of operationsand financial condition.

The Group is subject to extensive environmental and other governmental regulation

The Group’s products and operations are subject to increasingly stringent environmental laws andregulations in many of the countries in which it operates. Such regulations govern, among other things,vehicle emissions, fuel economy, vehicle safety and the type and level of pollutants generated by industrialproduction facilities. The Group expends significant resources to comply with such regulations, and expectsto continue to incur substantial compliance and remediation costs in the future.

In addition, government initiatives that affect consumer demand for its products, such as changes in taxpolicy or the grant or repeal of subsidies to provide incentives for the purchase of vehicles, can substantiallyinfluence the timing and level of its revenue. Such government actions are unpredictable and beyond theGroup’s control, and any adverse changes in government policy could have a material adverse effect on theGroup’s business prospects, results of operations and financial condition.

Labour matters could impair the Group’s flexibility to reposition its businesses

Most of the Group’s employees worldwide are represented by labour unions. In Europe, the Group’semployees are protected by various laws giving them, through local and central works councils, rights ofconsultation with respect to specific matters regarding their employers’ businesses and operations, includingthe downsizing or closure of facilities and employment terminations. These laws and the collectivebargaining agreements to which the Group is subject could impair the Group’s flexibility in implementingmeasures to reorganise and restructure its businesses. In the past, union dissatisfaction with the Group’srestructuring initiatives has resulted in labour unrest, including occasional wildcat and other strikes ofvarying severity and duration. Any future work stoppages or labour unrest, whether involving the Group’sown employees or those of other companies on which it depends for goods and services, could have amaterial adverse effect on its business prospects, results of operations and financial condition.

The Group is subject to risks associated with exchange rate fluctuations, interest rate changes and othermarket risks

The Group is subject to currency exchange rate risk in the ordinary course of its business to the extent thatits costs are denominated in currencies other than those in which it earns revenues. Exchange ratefluctuations also affect the Group’s operating results because it recognises revenues in currencies other thaneuros but publishes its financial statements in euros. Similarly, changes in interest rates affect its results byincreasing or decreasing borrowing costs and financial income.

The Group’s financial services businesses also involve risks relating to changes in interest and inflation rates,consumer and dealer insolvency rates and the overall strength of the economies in which these businessesoperate.

The Group seeks to manage these risks through the use of financial hedging instruments. However, despitethese hedging transactions, exchange rate or interest rate fluctuations could have a material adverse effecton the Group’s business prospects, results of operations and financial condition.

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RISK FACTORS


The Group’s success is largely dependent on the ability of its current management team to operate andmanage effectively

The Group’s success depends in large part on the ability of its executive officers and other members of seniormanagement to operate and manage effectively, both independently and as a group. The loss of the servicesof any executive officer, senior manager or other key employee without adequate replacement or theinability to attract and retain new qualified personnel could have a material adverse effect upon the Group’sbusiness prospects, results of operations and financial condition.

The Guarantor is a holding company

The Guarantor is organised as a holding company that conducts essentially all of its operations through itssubsidiaries and depends primarily on the earnings and cash flows of, and the distribution of funds from,these subsidiaries to meet its debt obligations, including its guarantee obligations with respect to the Notes.Generally, creditors of a subsidiary, including trade creditors, secured creditors and creditors holdingindebtedness and guarantees issued by the subsidiary, and preferred shareholders, if any, of the subsidiary,will be entitled to the assets of that subsidiary before any of those assets can be distributed to shareholdersupon liquidation or winding up. As a result, the Guarantee will effectively be subordinated to the priorpayment of all the debts and other liabilities, including the right of trade creditors and preferredshareholders, if any, of the Guarantor’s direct and indirect subsidiaries. The Guarantor’s subsidiaries haveother liabilities, including contingent liabilities, which could be substantial.

The Guarantor’s Guarantee of the Notes may be limited by applicable laws or subject to certainprocedures that could limit or prevent the Guarantor from making payments under the Guarantee

The Guarantee provides the holders of the Notes with a direct claim against the Guarantor. However, theenforcement of the Guarantee against Fiat would be subject to certain defences generally available inconnection with guarantees. These laws and defences include those that relate to fraudulent conveyance ortransfer, bankruptcy claw-back, corporate purpose, conflicts of interest, or similar laws, regulations ordefences affecting the rights of creditors generally.

Factors which are material for the purpose of assessing the market risks associated with Notes issued underthe Programme

The Notes may not be a suitable investment for all investors

Each potential investor in the Notes must determine the suitability of that investment in light of its owncircumstances. In particular, each potential investor should:

(i) have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the meritsand risks of investing in the Notes and the information contained or incorporated by reference in theBase Prospectus or any applicable supplement;

(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of itsparticular financial situation, an investment in the Notes and the impact the Notes will have on itsoverall investment portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes,including Notes with principal or interest payable in one or more currencies, or where the currencyfor principal or interest payments is different from the potential investor’s currency;

(iv) understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevantindices and financial markets; and

(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios foreconomic, interest rate and other factors that may affect its investment and its ability to bear theapplicable risks.

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RISK FACTORS


Some Notes are complex financial instruments. Sophisticated institutional investors generally do notpurchase complex financial instruments as stand-alone investments. They purchase complex financialinstruments as a way to reduce risk or enhance yield with an understood, measured, appropriate additionof risk to their overall portfolios. A potential investor should not invest in Notes which are complexfinancial instruments unless it has the expertise (either alone or with a financial adviser) to evaluate howthe Notes will perform under changing conditions, the resulting effects on the value of the Notes and theimpact this investment will have on the potential investor’s overall investment portfolio.

Risks related to the structure of a particular issue of Notes

A wide range of Notes may be issued under the Programme. A number of these Notes may have featureswhich contained particular risks for potential investors. Set out below is a description of the most commonsuch features:

Notes subject to optional redemption by the Issuer

An optional redemption feature of Notes is likely to limit their market value. During any period when therelevant Issuer may elect to redeem Notes, the market value of those Notes generally will not risesubstantially above the price at which they can be redeemed. This also may be true prior to any redemptionperiod.

The relevant Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interestrate on the Notes. At those times, an investor generally would not be able to reinvest the redemptionproceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may onlybe able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in lightof other investments available at that time.

Index Linked Notes and Dual Currency Notes

An Issuer may issue Notes with principal or interest determined by reference to an index or formula, tochanges in the prices of securities or commodities, to movements in currency exchange rates or other factors(each, a “Relevant Factor”). In addition, an Issuer may issue Notes with principal or interest payable in oneor more currencies which may be different from the currency in which the Notes are denominated. Potentialinvestors should be aware that:

(i) the market price of such Notes may be volatile;

(ii) they may receive no interest;

(iii) payment of principal or interest may occur at a different time or in a different currency than expected;

(iv) they may lose all or a substantial portion of their principal;

(v) a Relevant Factor may be subject to significant fluctuations that may not correlate with changes ininterest rates, currencies or other indices;

(vi) if a Relevant Factor is applied to Notes in conjunction with a multiplier greater than one or containssome other leverage factor, the effect of changes in the Relevant Factor on principal or interestpayable likely will be magnified; and

(vii) the timing of changes in a Relevant Factor may affect the actual yield to investors, even if the averagelevel is consistent with their expectations. In general, the earlier the change in the Relevant Factor, thegreater the effect on yield.

The historical experience of an index should not be viewed as an indication of the future performance ofsuch index during the term of any Index Linked Notes. Accordingly, each potential investor should consultits own financial and legal advisers about the risk entailed by an investment in any Index Linked Notes andthe suitability of such Notes in light of its particular circumstances.

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RISK FACTORS


Partly-paid Notes

An Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay anysubsequent instalment could result in an investor losing all of his investment.

Variable rate Notes with a multiplier or other leverage factor

Notes with variable interest rates can be volatile investments. If they are structured to include multipliersor other leverage factors, or caps or floors, or any combination of those features or other similar features,their market values may be even more volatile than those for securities that do not include those features.

Inverse Floating Rate Notes

Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon a referencerate such as LIBOR. The market values of those Notes typically are more volatile than market values ofother conventional floating rate debt securities based on the same reference rate (and with otherwisecomparable terms). Inverse Floating Rate Notes are more volatile because an increase in the reference ratenot only decreases the interest rate of the Notes, but may also reflect an increase in prevailing interest rates,which further adversely affects the market value of these Notes.

Fixed/Floating Rate Notes

Fixed/Floating Rate Notes may bear interest at a rate that converts from a fixed rate to a floating rate, orfrom a floating rate to a fixed rate. Where an Issuer has the right to effect such conversion, this will affectthe secondary market and the market value of the Notes since an Issuer may be expected to convert the ratewhen it is likely to produce a lower overall cost of borrowing. If an Issuer converts from a fixed rate to afloating rate in such circumstances, the spread on the Fixed/Floating Rate Notes may be less favourable thanthen prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, thenew floating rate at any time may be lower than the rates on other Notes. If an Issuer converts from afloating rate to a fixed rate in such circumstances, the fixed rate may be lower than then prevailing rates onits Notes.

Notes issued at a substantial discount or premium

The market values of securities issued at a substantial discount or premium from their principal amounttend to fluctuate more in relation to general changes in interest rates than do prices for conventionalinterest-bearing securities. Generally, the longer the remaining term of the securities, the greater the pricevolatility as compared to conventional interest-bearing securities with comparable maturities.

Risks related to Notes generally

Set out below is a brief description of certain risks relating to the Notes generally.

Modification and waivers

The conditions of the Notes contain provisions for calling meetings of Noteholders to consider mattersaffecting their interests generally. These provisions permit defined majorities to bind all Noteholdersincluding Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted ina manner contrary to the majority.

EU Savings Directive

Under the EC Council Directive 2003/48/EC on the taxation of savings income (the “Savings Directive”),each member state of the European Union is required to provide to the tax authorities of another memberstate details of payments of interest (or similar income) paid by a person within its jurisdiction to anindividual resident in that other member state. However, for a transitional period, Belgium, Luxembourgand Austria are instead required (unless during that period they elect otherwise) to operate a withholding

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RISK FACTORS


system in relation to such payments (the ending of such transitional period being dependent upon theconclusion of certain other agreements relating to information exchange with certain other countries). Anumber of non-EU countries and territories have agreed to adopt similar measures (some of which involvea withholding system).

If a payment were to be made or collected through a member state which has opted for a withholdingsystem and an amount of, or in respect of tax were to be withheld from that payment, neither the relevantIssuer nor any Paying Agent nor any other person would be obliged to pay additional amounts with respectto any Note as a result of the imposition of such withholding tax. The relevant Issuer is required to maintaina Paying Agent in a member state that will not be obliged to withhold or deduct tax pursuant to the SavingsDirective.

Bearer Notes where denominations involve integral multiples: definitive bearer Notes

In relation to any issue of bearer Notes which have denominations consisting of a minimum SpecifiedDenomination and one or more higher integral multiples of another smaller amount, it is possible that suchNotes may be traded in amounts that are not integral multiples of such minimum Specified Denomination.In such a case, a holder who, as a result of such trading, holds an amount which is less than the minimumSpecified Denomination in his account with the relevant clearing system at the relevant time may not receivea definitive bearer Note in respect of such holding (should definitive bearer Notes be printed) and wouldneed to purchase a principal amount of Notes such that its holding amounts to the minimum SpecifiedDenomination.

If definitive Notes are issued, holders should be aware that definitive Notes which have a denominationwhich is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult totrade.

Risks related to the market generally

Set out below is a brief description of the principal market risks, including liquidity risk, exchange rate risk,interest rate risk and credit risk:

The secondary market generally

Notes may have no established trading market when issued, and one may never develop. If a market doesdevelop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or at pricesthat will provide them with a yield comparable to similar instruments that have a developed secondarymarket. This is particularly the case for Notes that are especially sensitive to interest rate, currency ormarket risks, are designed for specific investment objectives or strategies or have been structured to meetthe investment requirements of limited categories of investors. These types of Notes generally would havea more limited secondary market and more price volatility than conventional debt securities. Illiquidity mayhave a severely adverse effect on the market value of the Notes.

Exchange rate risks and exchange controls

The relevant Issuer will pay principal and interest on the Notes and the Guarantor will make any paymentsunder the Guarantee in the Specified Currency. This presents certain risks relating to currency conversionsif an investor’s financial activities are denominated principally in a currency or currency unit (the “Investor’sCurrency”) other than the Specified Currency. These include the risk that exchange rates may significantlychange (including changes due to devaluation of the Specified Currency or revaluation of the Investor’sCurrency) and the risk that authorities with jurisdiction over the Investor’s Currency may impose or modifyexchange controls. Appreciation in the value of the Investor’s Currency relative to the Specified Currencywould decrease (1) the Investor’s Currency-equivalent yield on the Notes, (2) the Investor’s Currency-equivalent value of the principal payable on the Notes and (3) the Investor’s Currency-equivalent marketvalue of the Notes.

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RISK FACTORS


Government and monetary authorities may impose (as some have done in the past) exchange controls thatcould adversely affect an applicable exchange rate. As a result, investors may receive less interest orprincipal than expected, or no interest or principal.

Interest rate risks

Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates mayadversely affect the value of the Fixed Rate Notes.

Credit ratings may not reflect all risks

One or more independent credit rating agencies may assign credit ratings to the Notes. The ratings may notreflect the potential impact of all risks related to structure, market, additional factors discussed above, andother factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell orhold securities and may be revised or withdrawn by the rating agency at any time.

Legal investment considerations may restrict certain investments

The investment activities of certain investors are subject to legal investment laws and regulations, or reviewor regulation by certain authorities. Each potential investor should consult its legal advisers to determinewhether and to what extent (1) Notes are legal investments for it, (2) Notes can be used as collateral forvarious types of borrowing and (3) other restrictions apply to its purchase or pledge of any Notes. Financialinstitutions should consult their legal advisers or the appropriate regulators to determine the appropriatetreatment of Notes under any applicable risk-based capital or similar rules.

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RISK FACTORS


Form of the NotesThe Notes of each Series will be in either bearer form (“Bearer Notes”), with or without interest coupons(“Coupons’’) attached, or registered form (“Registered Notes”), without Coupons attached. Bearer Noteswill be issued outside the United States in reliance on Regulation S under the Securities Act (“RegulationS’’) and Registered Notes will be issued both outside the United States in reliance on the exemption fromregistration provided by Regulation S and within the United States in reliance on Rule 144A.

BEARER NOTES

Each Tranche of Bearer Notes will be initially issued in the form of either a temporary bearer global note(a “Temporary Bearer Global Note’’) or a permanent bearer global note (a “Permanent Bearer GlobalNote’’) as indicated in the applicable Final Terms, which, in either case, will be delivered on or prior to theoriginal issue date of the Tranche to a common depository (the “Common Depository’’) for Euroclear BankS.A./N.V. (“Euroclear’’) and Clearstream Banking, société anonyme (“Clearstream”). Whilst any BearerNote is represented by a Temporary Bearer Global Note, payments of principal, interest (if any) and anyother amount payable in respect of the Notes due prior to the Exchange Date (as defined below) will bemade against presentation of the Temporary Bearer Global Note only to the extent that certification (in aform to be provided) to the effect that the beneficial owners of interests in such Bearer Note are not U.S.persons or persons who have purchased for resale to any U.S. person, as required by U.S. Treasuryregulations, has been received by Euroclear and/or Clearstream and Euroclear and/or Clearstream, asapplicable, has given a like certification (based on the certifications it has received) to the Principal PayingAgent.

On and after the date (the “Exchange Date’’) which is, in respect of each Tranche in respect of which aTemporary Bearer Global Note is issued, 40 days after the Temporary Bearer Global Note is issued, interestsin such Temporary Bearer Global Note will be exchangeable (free of charge) upon a request as describedtherein either for (i) interests in a Permanent Bearer Global Note of the same Series or (ii) for definitiveBearer Notes of the same Series with, where applicable, receipts, interest coupons and talons attached (asindicated in the applicable Final Terms and subject, (i) in the case of definitive Bearer Notes, to such noticeperiod as is specified in the applicable Final Terms), (ii) in the case of Notes issued by FFC, againstcertification of non-Canadian residence and (iii) in each case, against certification of beneficial ownershipas described above unless such certification has already been given, provided that purchasers in the UnitedStates and certain U.S. persons will not be able to receive definitive Bearer Notes. The holder of aTemporary Bearer Global Note will not be entitled to collect any payment of interest, principal or otheramount due on or after the Exchange Date unless, upon due certification, exchange of the Temporary BearerGlobal Note for an interest in a Permanent Bearer Global Note or for definitive Bearer Notes is improperlywithheld or refused.

Payments of principal, interest (if any) or any other amounts on a Permanent Bearer Global Note will bemade through Euroclear and/or Clearstream against presentation or surrender (as the case may be) of thePermanent Bearer Global Note without any requirement for certification.

The applicable Final Terms will specify that a Permanent Bearer Global Note will be exchangeable (free ofcharge), in whole but not in part, for definitive Bearer Notes with, where applicable, receipts, interestcoupons and talons attached upon either (a) not less than 60 days’ written notice from Euroclear and/orClearstream (acting on the instructions of any holder of an interest in such Permanent Bearer Global Note)to the Principal Paying Agent as described therein or (b) only upon the occurrence of an Exchange Event*.For these purposes, “Exchange Event’’ means that (i) an Event of Default (as defined in Condition 10) hasoccurred and is continuing, (ii) the relevant Issuer has been notified that both Euroclear and Clearstreamhave been closed for business for a continuous period of 14 days (other than by reason of holiday, statutoryor otherwise) or have announced an intention permanently to cease business or have in fact done so and nosuccessor clearing system is available or (iii) unless otherwise specified in the applicable Final Terms, therelevant Issuer has or will become subject to adverse tax consequences which would not be suffered were

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* (b) is not applicable where FFNA is the relevant Issuer.

the Notes represented by the Permanent Bearer Global Note to be in definitive form. The relevant Issuerwill promptly give notice to Noteholders in accordance with Condition 14 if an Exchange Event occurs. Inthe event of the occurrence of an Exchange Event, Euroclear and/or Clearstream (acting on the instructionsof any holder of an interest in such Permanent Bearer Global Note) may give notice to the Principal PayingAgent requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iii)above, the relevant Issuer may also give notice to the Principal Paying Agent requesting exchange. Any suchexchange shall occur not later than 45 days after the date of receipt of the first relevant notice by thePrincipal Paying Agent.

The following legend will appear on all Bearer Notes which have an original maturity of more than 365days (except that it shall appear on all Bearer Notes issued by FFNA) and on all receipts and interestcoupons relating to such Notes:

“ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TOLIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THELIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUECODE.’’

The sections referred to provide that United States holders, with certain exceptions, will not be entitled todeduct any loss on Bearer Notes, Receipts or Coupons and will not be entitled to capital gains treatment ofany gain on any sale, disposition, redemption or payment of principal in respect of such Notes, receipts orinterest coupons.

Bearer Notes issued by FFNA with a maturity of 183 days or less and any related Coupons will bear thefollowing legend on their face:

“By accepting this obligation, the holder represents and warrants that it is not a United States person (otherthan an exempt recipient described in section 6049(b)(4) of the Internal Revenue Code and the regulationsthereunder) and that it is not acting for or on behalf of a United States person (other than an exemptrecipient described in section 6049(b)(4) of the Internal Revenue Code and the regulations thereunder).”

Notes which are represented by a Bearer Global Note will only be transferable in accordance with the rulesand procedures for the time being of Euroclear or Clearstream, as the case may be.

REGISTERED NOTES

The Registered Notes of each Tranche offered and sold in reliance on Regulation S, which will be sold tonon-U.S. persons outside the United States, will initially be represented by a global note in registered form,without Receipts or Coupons (a “Regulation S Global Note’’), which will be deposited with the CommonDepository and registered in the name of a nominee of the Common Depository. Prior to expiry of thedistribution compliance period (as defined in Regulation S) applicable to each such Tranche of Notes,beneficial interests in a Regulation S Global Note of such Tranche may not be offered or sold to, or for theaccount or benefit of, a U.S. person save as otherwise provided in Condition 2 and may not be heldotherwise than through Euroclear or Clearstream and such Regulation S Global Note will bear a legendregarding such restrictions on transfer.

The Registered Notes of each Tranche may only be offered and sold in the United States or to U.S. personsin private transactions to “qualified institutional buyers’’ within the meaning of Rule 144A under theSecurities Act (“QIBs’’). The Registered Notes of each Tranche sold to QIBs will be represented by a globalnote in registered form, without Receipts or Coupons, (a “Rule 144A Global Note’’ and, together with aRegulation S Global Note, the “Registered Global Notes’’) which will be deposited with a custodian for,and registered in the name of a nominee of, the Depository Trust Company (“DTC”).

Persons holding beneficial interests in Registered Global Notes will be entitled or required, as the case maybe, under the circumstances described below, to receive physical delivery of definitive Notes in fullyregistered form.

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FORM OF THE NOTES


The Rule 144A Global Note will be subject to certain restrictions on transfer set forth therein and will beara legend regarding such restrictions.

Payments of principal, interest and any other amount in respect of the Registered Global Notes will, in theabsence of any provision to the contrary, be made to the person shown on the Register (as defined inCondition 6(d)) as the registered holder of the Registered Global Notes. None of the Issuers, the Guarantor,any Paying Agent or the Registrar will have any responsibility or liability for any aspect of the recordsrelating to or payments or deliveries made on account of beneficial ownership interests in the RegisteredGlobal Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownershipinterests.

Payments of principal, interest or any other amount in respect of the Registered Notes in definitive formwill, in the absence of any provision to the contrary, be made to the persons shown on the Register on therelevant Record Date (as defined in Condition 6(d)) immediately preceding the due date for payment in themanner provided in that Condition.

Interests in a Registered Global Note will be exchangeable (free of charge), in whole but not in part, fordefinitive Registered Notes without receipts, interest coupons or talons attached only upon the occurrenceof an Exchange Event. For these purposes, “Exchange Event’’ means that (i) an Event of Default hasoccurred and is continuing, (ii) DTC has notified the relevant Issuer that it is unwilling or unable to continueto act as depository for the Notes and no alternative clearing system is available, (iii) DTC has ceased toconstitute a clearing agency registered under the Exchange Act or the relevant Issuer has been notified thatboth Euroclear and Clearstream have been closed for business for a continuous period of 14 days (otherthan by reason of holiday, statutory or otherwise) or have announced an intention permanently to ceasebusiness or have in fact done so and, in any such case, no successor clearing system is available or (iv) therelevant Issuer has or will become subject to adverse tax consequences which would not be required werethe Notes represented by the Registered Global Notes to be in definitive form. The relevant Issuer willpromptly give notice to Noteholders in accordance with Condition 14 if an Exchange Event occurs. In theevent of the occurrence of an Exchange Event, DTC, Euroclear and/or Clearstream (acting on theinstructions of any holder of an interest in such Registered Global Note) may give notice to the Registrarrequesting exchange and, in the event of the occurrence of an Exchange Event as described in (iv) above,the relevant Issuer may also give notice to the Registrar requesting exchange. Any such exchange shall occurnot later than 10 days after the date of receipt of the first relevant notice by the Registrar.

Transfer of Interests

Interests in a Registered Global Note may, subject to compliance with all applicable restrictions, betransferred to a person who wishes to hold such interest in another Registered Global Note. No beneficialowner of an interest in a Registered Global Note will be able to transfer such interest, except in accordancewith the applicable procedures of DTC, Euroclear and Clearstream, in each case to the extent applicable.Registered Notes are also subject to the restrictions on transfer set forth therein and will bear a legendregarding such restrictions. See “Subscription and Sale and Transfer and Selling Restrictions’’.

GENERAL

Pursuant to the Agency Agreement (as defined under “Terms and Conditions of the Notes’’), the PrincipalPaying Agent shall arrange that, where a Tranche of Notes is issued which is intended to form a single Serieswith an existing Tranche of Notes, the Notes of such further Tranche shall be assigned a common code andISIN and, where applicable, a CUSIP and CINS number which are different from the common code, ISIN,CUSIP and CINS assigned to Notes of any other Tranche of the same Series until at least the expiry of thedistribution compliance period applicable to the Notes of such Tranche.

For so long as any of the Notes is represented by a Bearer Global Note or a Regulation S Global Note heldon behalf of Euroclear and/or Clearstream each person (other than Euroclear or Clearstream) who is for thetime being shown in the records of Euroclear or of Clearstream as the holder of a particular nominalamount of such Notes (in which regard any certificate or other document issued by Euroclear orClearstream as to the nominal amount of such Notes standing to the account of any person shall be

22


FORM OF THE NOTES

conclusive and binding for all purposes save in the case of manifest error) shall be treated by the relevantIssuer, the Guarantor and their agents as the holder of such nominal amount of such Notes for all purposesother than with respect to the payment of principal or interest on such nominal amount of such Notes, forwhich purpose the bearer of the relevant Bearer Global Note or the registered holder of the relevantRegulation S Global Note shall be treated by the relevant Issuer, the Guarantor and their agents as theholder of such nominal amount of such Notes in accordance with, and subject to the terms of, the relevantGlobal Note, and the expressions “Noteholder’’ and “holder of Notes’’ and related expressions shall beconstrued accordingly.

So long as DTC or its nominee is the registered owner or holder of a Rule 144A Global Note, DTC or suchnominee, as the case may be, will be considered the sole owner or holder of the Notes represented by suchRule 144A Global Note for all purposes under the Agency Agreement and such Notes except to the extentthat in accordance with DTC’s published rules and procedures any ownership rights may be exercised byits participants or beneficial owners through participants.

Any reference herein to Euroclear and/or Clearstream and/or DTC shall, whenever the context so permits,be deemed to include a reference to any additional or alternative clearing system specified in the applicableFinal Terms.

A Note may be accelerated automatically by the holder thereof in certain circumstances described inCondition 10. In such circumstances, where any Note is still represented by a Global Note and the GlobalNote (or any part thereof) has become due and repayable in accordance with the Terms and Conditions ofsuch Notes and payment in full of the amount due has not been made in accordance with the provisions ofthe Global Note then, unless within the period of seven days commencing on the relevant due date, paymentin full of the amount due in respect of the Global Note, is received by the bearer or the registered holder,as the case may be, in accordance with the provisions of the Global Note holders of interests in such GlobalNote credited to their accounts with Euroclear and/or Clearstream and/or DTC, as the case may be, willbecome entitled to proceed directly against the relevant Issuer on the basis of statements of accountprovided by Euroclear, Clearstream and/or DTC on and subject to the terms of a deed of covenant (the“Deed of Covenant’’) dated 12th May, 2008 and executed by the Issuers. In addition, holders of interestsin such Global Note credited to their accounts with DTC may require DTC to deliver definitive Notes inregistered form in exchange for their interest in such Global Note in accordance with DTC’s standardoperating procedures.

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FORM OF THE NOTES

APPLICABLE FINAL TERMS

Set out below is the form of Final Terms which will be completed for each Tranche of Notes issued underthe Programme.

[Date]

[FIAT FINANCE AND TRADE LTD. société anonyme/FIAT FINANCE CANADA LTD./

FIAT FINANCE NORTH AMERICA, INC.]

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]Guaranteed by Fiat S.p.A.

under the A15,000,000,000Global Medium Term Note Programme

PART A – CONTRACTUAL TERMS

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in theBase Prospectus dated 12th May, 2008 [and the supplement[s] dated [ ] (together, the “Base Prospectus”)which together constitute] [which constitutes] a base prospectus for the purposes of the Prospectus Directive(Directive 2003/71/EC) (the “Prospectus Directive”). This document constitutes the Final Terms of theNotes described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read inconjunction with such Base Prospectus. Full information on the Issuer and the Guarantor and the offer ofthe Notes is only available on the basis of the combination of these Final Terms and the Base Prospectus.The Base Prospectus is available for viewing at www.fiatgroup.com and copies may be obtained from theIssuer and the Guarantor at their respective registered offices.

[The following alternative language applies if the first tranche of an issue which is being increased wasissued under a Base Prospectus with an earlier date.

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the“Conditions”) set forth in the [Base Prospectus] dated [original date]. This document constitutes the FinalTerms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive (Directive2003/71/EC) (the “Prospectus Directive”) and must be read in conjunction with the Base Prospectus dated[current date] which constitutes a base prospectus for the purposes of the Prospectus Directive, save inrespect of the Conditions which are extracted from the [Base Prospectus] dated [original date] and areattached hereto. Full information on the Issuer and the Guarantor and the offer of the Notes is onlyavailable on the basis of the combination of these Final Terms and the [Base Prospectus[es]] dated [currentdate] and [original date]. Copies of such [Base Prospectuses] are available for viewing at [address] [and][website] and copies may be obtained from [address].]

[Include whichever of the following apply or specify as “Not Applicable’’ (N/A). Note that the numberingshould remain as set out below, even if “Not Applicable’’ is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Final Terms.]

[When adding any other final terms or information consideration should be given as to whether such termsor information constitute “significant new factors” and consequently trigger the need for a supplement tothe Base Prospectus under Article 16 of the Prospectus Directive.]

[If the Notes must be redeemed before the first anniversary of their date of issue, the minimumdenomination may need to be £100,000 or its equivalent in any other currency.]

1. (i) Issuer: [Fiat Finance and Trade Ltd. société anonyme/FiatFinance Canada Ltd./Fiat Finance North America, Inc.]

(ii) Guarantor: Fiat S.p.A.

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FINAL TERMS

2. (i) Series Number: [ ]

(ii) Tranche Number: [ ](If fungible with an existing Series, details of that Series,including the date on which the Notes become fungible)

3. Specified Currency or Currencies: [ ]

4. Aggregate Nominal Amount:

(i) Series: [ ]

(ii) Tranche: [ ]

5. Issue Price: [ ] per cent. of the Aggregate Nominal Amount [plusaccrued Interest from [insert date] (if applicable)]

6. (i) Specified Denominations: [(in the case of Registered Notes, this means theminimum integral amount in which transfers can bemade)](Note – where multiple denominations above [€50,000]or equivalent are being used the following samplewording should be followed:“[€50,000] and integral multiples of [€1,000] in excessthereof up to and including [€99,000]. No Notes indefinitive form will be issued with a denomination above[€99,000].”)(N.B. If an issue of Notes is (i) NOT admitted to tradingon an European Economic Area exchange; and (ii) onlyoffered in the European Economic Area in circumstanceswhere a prospectus is not required to be published underthe Prospectus Directive the €50,000 minimumdenomination is not required]

(If only one Specified Denomination, insert the SpecifiedDenomination.If more than one Specified Denomination, insert thehighest common factor. Note: There must be a commonfactor in the case of two or more SpecifiedDenominations.)

7. (i) Issue Date: [ ]

(ii) Interest Commencement Date: [Specify/Issue Date/Not Applicable](N.B. An Interest Commencement Date will not berelevant for certain Notes, for example Zero CouponNotes.)

8. Maturity Date: [Fixed rate – specify date/Floating rate – Interest PaymentDate falling in or nearest to [specify month]]

9. Interest Basis: [[ ] per cent. Fixed Rate][[LIBOR/EURIBOR] +/- [ ] per cent. Floating Rate][Zero Coupon][Index Linked Interest][Dual Currency Interest][specify other](further particulars specified below)

(ii) Calculation Amount:(Applicable to Notes in definitiveform.)

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FINAL TERMS

10. Redemption/Payment Basis: [Redemption at par][Index Linked Redemption][Dual Currency Redemption][Partly Paid][Instalment][specify other]

(N.B. If the Final Redemption Amount is other than 100per cent. of the nominal value, the Notes will bederivative securities for the purposes of the ProspectusDirective and the requirements of Annex XII to theProspectus Directive Regulation will apply.)

11. Change of Interest Basis orRedemption/Payment Basis: [Specify details of any provision for change of Notes into

another Interest Basis or Redemption/Payment Basis]

12. Put/Call Options: [Investor Put][Issuer Call](further particulars specified below)

13. Method of distribution: [Syndicated/Non-syndicated]

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE

14. Fixed Rate Note Provisions: [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Rate[(s)] of Interest: [ ] per cent. per annum [payable [annually/semi-annually/ quarterly/other (specify)] in arrear](If payable other than annually, consider amendingCondition 5.)

(ii) Interest Payment Date(s): [ ] in each year up to and including the MaturityDate/[specify other](N.B. This will need to be amended in the case of long orshort coupons)

(iii) Fixed Coupon Amount(s): [ ] per Calculation Amount(Applicable to Notes in definitiveform)

[ ] per Calculation Amount payable on the InterestPayment Date falling [in/on] [ ]

(v) Day Count Fraction: [30/360 or Actual/Actual (ICMA) or [specify other]]

(vi) [Determination Date(s): [ ] in each year[Insert interest payment dates, ignoring issue date ormaturity date in the case of a long or short first or lastcoupon.] (N.B. This will need to be amended in the caseof regular interest payment dates which are not of equalduration.)(NB: Only relevant where Fixed Day Count Fraction isActual/Actual (ICMA))]

(iv) Broken Amount(s):(Applicable to Notes in definitiveform)

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FINAL TERMS

(vii) Other terms relating to the method of calculating interest for Fixed Rate Notes: [None/Give details]

15. Floating Rate Note Provisions [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Specified Period(s)/Specified Interest Payment Dates: [ ]

(ii) Business Day Convention: [Floating Rate Convention/Following Business DayConvention/Modified Following Business DayConvention/ Preceding Business Day Convention/[specifyother]]

(iii) Additional Business Centre(s): [ ]

[Screen Rate Determination/ISDA Determination/ specifyother]

(v) Party responsible for calculating the Rate of Interest and Interest Amount (if not the Agent): [ ]

(vi) Screen Rate Determination:

– Reference Rate: [ ](Either LIBOR, EURIBOR or other, although additionalinformation is required if other – including fallbackprovisions in the Agency Agreement)

– Interest Determination Date(s): [ ](Second London business day prior to the start of eachInterest Period if LIBOR (other than Sterling or euroLIBOR), first day of each Interest Period if SterlingLIBOR and the second day on which the TARGETSystem is open prior to the start of each Interest Period ifEURIBOR or euro LIBOR)

– Relevant Screen Page: [ ](In the case of EURIBOR, if not Reuters EURIBOR01ensure it is a page which shows a composite rate oramend the fallback provisions appropriately)

(vii) ISDA Determination:

– Floating Rate Option: [ ]

– Designated Maturity: [ ]

– Reset Date: [ ]

(viii) Margin(s): [+/-] [ ] per cent. per annum

(ix) Minimum Rate of Interest: [ ] per cent. per annum

(x) Maximum Rate of Interest: [ ] per cent. per annum

(iv) Manner in which the Rate ofInterest and Interest Amount isto be determined:

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FINAL TERMS

(xi) Day Count Fraction: [Actual/365 Actual/365 (Fixed) Actual/365 (Sterling) Actual/360 30/360 30E/360 Other] (See Condition 5 for alternatives)

[ ]

16. Zero Coupon Note Provisions: [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Accrual Yield: [ ] per cent. per annum

(ii) Reference Price: [ ]

(iii) Any other formula/basis of determining amount payable: [ ]

(iv)

[Conditions 7(e)(iii) and (j) apply/specify other](Consider applicable day count fraction if not U.S. dollardenominated)

17. Index Linked Interest Note Provisions: [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)(N.B. If the Final Redemption Amount is other than 100per cent. of the nominal value the Notes will bederivative securities for the purposes of the ProspectusDirective and the requirements of Annex XII to theProspectus Directive Regulation will apply.)

(i) Index/Formula: [give or annex details]

(ii) Calculation Agent: [give name (and if the Notes are derivative securities towhich Annex XII of the Prospectus Directive Regulationapplies, address)]

(iii)

[ ]

(iv)

[need to include a description of market disruption eventsand adjustment provisions]

Provisions for determiningCoupon where calculation byreference to Index and/orFormula is impossible orimpracticable:

Party responsible for calculatingthe Rate of Interest (if not theCalculation Agent) and InterestAmount (if not the Agent):

Day Count Fraction in relation toEarly Redemption Amounts andlate payment:

(xii) Fall back provisions, roundingprovisions and any other termsrelating to the method of calculatinginterest on Floating Rate Notes, ifdifferent from those set out in theConditions:

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FINAL TERMS

(v) Specified Period(s)/Specified Interest Payment Dates: [ ]

(vi) Business Day Convention: [Floating Rate Convention/Following Business DayConvention/ Modified Following Business DayConvention/Preceding Business Day Convention/specifyother]

(vii) Additional Business Centre(s): [ ]

(viii) Minimum Rate of Interest: [ ] per cent. per annum

(ix) Maximum Rate of Interest: [ ] per cent. per annum

(x) Day Count Fraction: [ ]

18. Dual Currency Interest Note Provisions: [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)(N.B. If the Final Redemption Amount is other than 100per cent. of the nominal value the Notes will bederivative securities for the purposes of the ProspectusDirective and the requirements of Annex XII to theProspectus Directive Regulation will apply.)

(i) Rate of Exchange/method of calculating Rate of Exchange: [give or annex details]

(ii)

[ ]

(iii)

[need to include a description of market disruption eventsand adjustment provisions]

(iv) Person at whose option Specified Currency(ies) is/are payable: [ ]

PROVISIONS RELATING TO REDEMPTION

19. Issuer Call: [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Optional Redemption Date(s): [ ]

(ii)

[As set out in Condition 7(c)/[ ] per CalculationAmount/specify other/see Appendix]

(iii) If redeemable in part:(a) Minimum Redemption Amount: [ ](b) Maximum Redemption Amount: [ ]

(iv)[ ]

Notice period (if other than as setout in the Conditions):

Optional RedemptionAmount and method, ifany, of calculation of suchamount(s):

Provisions applicable wherecalculation by reference to Rate ofExchange impossible orimpracticable:

Party, if any, responsible forcalculating the principal and/orinterest payable (if not the Agent):

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FINAL TERMS

(N.B. If setting notice periods which are different tothose provided in the Conditions, the Issuer is advised toconsider the practicalities of distribution of informationthrough intermediaries, for example, clearing systemsand custodians, as well as any other notice requirementswhich may apply, for example, as between the Issuer andthe Agent)

20. Investor Put: [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Optional Redemption Date(s): [ ]

(ii)

[[ ] per Calculation Amount/specify other/seeAppendix]

(iii)[ ](N.B. If setting notice periods which are different tothose provided in the Conditions, the Issuer is advised toconsider the practicalities of distribution of informationthrough intermediaries, for example, clearing systemsand custodians, as well as any other notice requirementswhich may apply, for example, as between the Issuer andthe Agent)

21. Final Redemption Amount: [[ ] per Calculation Amount/specify other/seeAppendix](N.B. If the Final Redemption Amount is other than 100per cent. of the nominal value the Notes will bederivative securities for the purposes of the ProspectusDirective and the requirements of Annex XII to theProspectus Directive Regulation will apply.)

22.

[ ] per Calculation Amount/specify other/see Appendix

GENERAL PROVISIONS APPLICABLE TO THE NOTES

23. Form of Notes: [Bearer Notes:

[TEFRA D:Temporary Bearer Global Note exchangeable for aPermanent Bearer Global Note which is exchangeable fordefinitive Notes [on 60 days’ notice given at anytime/only upon an Exchange Event*].

(NB please consider whether item (iii) of the definition ofExchange Event should be disapplied here in the case of

Early Redemption Amount of each notepayable on redemption for taxationreasons or on event of default and/orthe method of calculating the same (ifrequired or if different from that set outin Condition 7(e)):

Notice period (if other than as setout in the Conditions):

Optional Redemption Amount(s)and method, if any, of calculationof such amount(s):

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FINAL TERMS

* Second alternative not applicable where FFNA is the Issuer.

** Not applicable where FFNA or FFC is the Issuer.

securities with a minimum denomination of €50,000 andtradeable integrals of €1,000 thereafter).

[Temporary Bearer Global Note exchangeable fordefinitive Notes on and after the Exchange Date.]]

[TEFRA C:[Permanent Bearer Global Note exchangeable fordefinitive Notes [on 60 days’ notice given at anytime/only upon an Exchange Event]]**](Ensure that this is consistent with the wording in the“Form of the Notes” section in the Base Prospectus andthe Notes themselves. N.B. The exchange upon notice/atany time options should not be expressed to beapplicable if the Specified Denomination of the Notes inparagraph 6 includes language substantially to thefollowing effect: “[€50,000] and integral multiples of[€1,000] in excess thereof up to and including[€99,000].” Furthermore, such Specified Denominationconstruction is not permitted in relation to any issue ofNotes which is to be represented on issue by a TemporaryGlobal Bearer Note exchangeable for definitive Notes)

[Registered Notes:

[Regulation S Global Note ([U.S.$/[ ] ][ ] nominalamount)/ Rule 144A Global Note (U.S.$[ ] nominalamount) (specify nominal amounts)]]

24.

[Not Applicable/give details](Note that this item relates to the place of payment andnot Interest Period end dates to which items 16(iii) and18(vii) relate)

25.

[Yes/No. If yes, give details]

26.

[Not Applicable/give details. NB: new forms of GlobalNote may be required for Partly Paid issues.]

27. [Not Applicable/give details]

[Not Applicable/give details]

[Not Applicable/give details]

28. Redenomination applicable: Redenomination [not] applicable(if Redenomination is applicable, specify the terms ofRedenomination in an Annex to the Final Terms)

29. Other final terms: [Not Applicable/give details](When adding any other final terms consideration shouldbe given as to whether such terms constitute “significant

Details relating to Instalment Notes:

(i) Instalment Amount(s):

(ii) Instalment Date(s):

Details relating to Partly Paid Notes:amount of each payment comprising theIssue Price and date on which eachpayment is to be made and consequencesof failure to pay, including any right of theIssuer to forfeit the Notes and interest dueon late payment:

Talons for future Coupons or Receipts tobe attached to definitive Bearer Notes (anddates on which such Talons mature):

Additional Financial Centre(s) or otherspecial provisions relating to PaymentDates:

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FINAL TERMS


new factors” and consequently trigger the need for asupplement to the Base Prospectus under Article 16 ofthe Prospectus Directive.)

DISTRIBUTION (Consider including a term providing for tax certificationif required to enable interest to be paid gross by issuers.)

30. (i) If syndicated, name and addressof Manager: [Not Applicable/give names]

(If the Notes are derivative securities to which Annex XIIof the Prospectus Directive Regulation applies, includenames of entities agreeing to underwrite the issue on afirm commitment basis and names of the entities agreeingto place the issue without a firm commitment or on a“best efforts” basis if such entities are not the same as theManagers.)

(ii) Date of [Subscription] Agreement: [ ](The above is only relevant if the Notes are derivativesecurities to which Annex XII of the Prospectus DirectiveRegulation applies).

(iii) Stabilising Manager(s) (if any): [Not Applicable/give name]

31. If non-syndicated, name of relevant Dealer: [Not Applicable/give name]

32. [Reg. S Compliance Category: TEFRA D/TEFRAC/TEFRA not applicable]

33. Additional selling restrictions: [Not Applicable/give details]

LISTING AND ADMISSION TO TRADING APPLICATION

These Final Terms comprise the final terms required for issue and admission to trading on the regulatedmarket of the Irish Stock Exchange of the Notes described herein pursuant to the A15,000,000,000 GlobalMedium Term Note Programme of Fiat Finance and Trade Ltd. société anonyme, Fiat Finance Canada Ltd.and Fiat Finance North America, Inc.

RESPONSIBILITY

The Issuer and the Guarantor accept responsibility for the information contained in these Final Terms.[Relevant third party information, for example in compliance with Annex XII to the Prospectus DirectiveRegulation in relation to an index or its components] has been extracted from [ ]. The Issuer confirms thatsuch information has been accurately reproduced and that, so far as it is aware and is able to ascertain frominformation published by [ ], no facts have been omitted which would render the reproduced informationinaccurate or misleading.

Signed on behalf of the Issuer: Signed on behalf of the Guarantor:

By: .......................................................... By: ..........................................................Duly authorised Duly authorised

U.S. Selling Restrictions:

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FINAL TERMS


PART B – OTHER INFORMATION

1. LISTING AND ADMISSION TO TRADING

(i) Listing: [Irish Stock Exchange Ltd./other (specify)/None]

(ii) Admission to trading: [Application has been made for the Notes to be admittedto trading on [ ] with effect from [ ].][Not Applicable.]

(iii) [ ]

2. RATINGS

Ratings: The Notes to be issued have been rated:

[S&P: [ ]][Moody’s [ ]][[Other]: [ ]]

(The above disclosure should reflect the rating allocatedto Notes of the type being issued under the Programmegenerally or, where the issue has been specifically rated,that rating.)

3. NOTIFICATION

The [name of competent authority in home member state] [has been requested to provide/hasprovided – include first alternative for an issue which is contemporaneous with the establishment orupdate of the Programme and the second alternative for subsequent issues] the [names of competentauthorities of host member states] with a certificate of approval attesting that the Base Prospectus hasbeen drawn up in accordance with the Prospectus Directive.]

4. INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE

[Save for any fees payable to the [Managers/Dealers], so far as the Issuer is aware, no person involvedin the issue of the Notes has an interest material to the offer. – Amend as appropriate if there are otherinterests]

[(When adding any other description, consideration should be given as to whether such mattersdescribed constitute “significant new factors” and consequently trigger the need for a supplement tothe Base Prospectus under Article 16 of the Prospectus Directive.)]

5. REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES

[(i) Reasons for the offer: [ ]

[(ii)] Estimated net proceeds: [ ]

[(iii)] Estimated total expenses: [ ]](N.B.: Delete unless the Notes are derivative securities towhich Annex XII of the Prospectus Directive Regulationapplies, in which case (i) above is required where thereasons for the offer are different from making profitand/or hedging certain risks and, where such reasons areinserted in (i), disclosure of net proceeds and totalexpenses at (ii) and (iii) above are also required.)]

Estimate of total expenses relatedto admission to trading:

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FINAL TERMS


6. YIELD (Fixed Rate Notes only)

Indication of yield: [ ]

The yield is calculated at the Issue Date on the basis ofthe Issue Price. It is not an indication of future yield.

7. PERFORMANCE OF INDEX/FORMULA, EXPLANATION OF EFFECT ON VALUE OFINVESTMENT AND ASSOCIATED RISKS AND OTHER INFORMATION CONCERNINGTHE UNDERLYING (Index-Linked Notes only)

[Need to include details of where past and future performance and volatility of the index/formula canbe obtained.]

[Where the underlying is an index need to include the name of the index and a description ifcomposed by the Issuer and if the index is not composed by the Issuer need to include details of wherethe information about the index can be obtained.]

[Include other information concerning the underlying required by paragraph 4.2 of Annex XII of theProspectus Directive Regulation.]

[(When completing the above paragraphs, consideration should be given as to whether such mattersdescribed constitute “significant new factors” and consequently trigger the need for a supplement tothe Base Prospectus under Article 16 of the prospectus Directive.)]

The Issuer [intends to provide post-issuance information [specify what information will be reportedand where it can be obtained]] [does not intend to provide post-issuance information]

(N.B. This paragraph 6 only applies if the Notes are derivative securities to which Annex XII of theBase Prospectus Regulation applies.)

8. PERFORMANCE OF RATE[S] OF EXCHANGE (Dual Currency Notes only)

[Need to include details of where past and future performance and volatility of the relevant rates canbe obtained.]

[(When completing this paragraph, consideration should be given as to whether such mattersdescribed constitute “significant new factors” and consequently trigger the need for a supplement tothe Base Prospectus under Article 16 of the Prospectus Directive.)]

(N.B. This paragraph 7 only applies if the Notes are derivative securities to which Annex XII of theProspectus Directive Regulation applies.)

9. OPERATIONAL INFORMATION

(i) ISIN Code: [ ]

(ii) Common Code: [ ]

(iii)

[Not Applicable/give name(s) and number(s)]

(iv) Delivery: Delivery [against/free of] payment

(v)[ ]

Names and addresses of additionalPaying Agent(s) (if any):

Any clearing system(s) other thanEuroclear Bank S.A./N.V. andClearstream Banking, sociétéanonyme and the relevantidentification number(s):

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FINAL TERMS


Terms and Conditions of the NotesThe following are the Terms and Conditions of the Notes which will be incorporated by reference into eachGlobal Note (as defined below) and each definitive Note, in the latter case only if permitted by the relevantstock exchange (if any) and agreed by the relevant Issuer and the relevant Dealer at the time of issue but,if not so permitted and agreed, such definitive Note will have endorsed thereon or attached thereto suchTerms and Conditions. The applicable Final Terms in relation to any Tranche of Notes may specify otherterms and conditions which shall, to the extent so specified or to the extent inconsistent with the followingTerms and Conditions, replace or modify the following Terms and Conditions for the purpose of suchNotes. The applicable Final Terms (or the relevant provisions thereof) will be endorsed upon, or attachedto, each Global Note and definitive Note. Reference should be made to “Form of the Final Terms’’ for adescription of the content of Final Terms which will specify which of such terms are to apply in relation tothe relevant Notes.

This Note is one of a Series (as defined below) of Notes issued pursuant to the Agency Agreement (asdefined below). References herein to the “Issuer” shall be references to the party specified as such in theapplicable Final Terms (as defined below).

References herein to the “Notes’’ shall be references to the Notes of this Series and shall mean:

(i) in relation to any Notes represented by a global Note (a “Global Note’’), units of each SpecifiedDenomination in the Specified Currency;

(ii) any Global Note;

(iii) any definitive Notes in bearer form (“Bearer Notes’’) issued in exchange for a Global Note in bearerform; and

(iv) definitive Notes in registered form (“Registered Notes’’) (whether or not issued in exchange for aGlobal Note in registered form).

The Notes, the Receipts (as defined below) and the Coupons (as defined below) have the benefit of anAmended and Restated Agency Agreement (such Amended and Restated Agency Agreement as amendedand/or supplemented and/or restated from time to time, the “Agency Agreement’’) dated 12th May, 2008and made between (inter alia) the Issuer, Fiat S.p.A. (the “Guarantor”) as guarantor, Citibank, N.A.,London office as issuing and principal paying agent and agent bank (the “Principal Paying Agent’’, whichexpression shall include any successor principal paying agent) and as exchange agent (the “ExchangeAgent’’, which expression shall include any successor exchange agent), the other paying agents namedtherein (together with the Principal Paying Agent, the “Paying Agents’’, which expression shall include anyadditional or successor paying agents), Citigroup Global Markets Deutschland AG & Co. KGaA asregistrar (the “Registrar’’, which expression shall include any successor or alternative registrar) and astransfer agent and the other transfer agents named therein (together with the Registrar, the “TransferAgents’’, which expression shall include any additional or successor transfer agents).

Interest bearing definitive Bearer Notes (unless otherwise indicated in the applicable Final Terms) haveinterest coupons (“Coupons’’) and, if indicated in the applicable Final Terms, talons for further Coupons(“Talons’’) attached on issue. Any reference herein to Coupons or coupons shall, unless the contextotherwise requires, be deemed to include a reference to Talons or talons. Definitive Bearer Notes repayablein instalments have receipts (“Receipts’’) for the payment of the instalments of principal (other than the finalinstalment) attached on issue. Registered Notes and Global Notes do not have Receipts, Coupons or Talonsattached on issue.

The Final Terms for this Note (or the relevant provisions thereof) are attached to or endorsed on this Noteand supplement these Terms and Conditions (the “Conditions”) and may specify other terms and conditionswhich shall, to the extent so specified or to the extent inconsistent with these Conditions, replace or modifythese Conditions for the purpose of this Note. References to the “applicable Final Terms’’ are to the FinalTerms (or the relevant provisions thereof) attached to or endorsed on this Note.

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Level: 5 – From: 5 – Monday, May 12, 2008 – 9:03 am – g5mac4 – 3948 Section 03 : 3948 Section 03

The payment of all amounts in respect of this Note has been guaranteed by the Guarantor pursuant to aguarantee (the “Guarantee’’) dated 12th May, 2008 executed by the Guarantor. The original of theGuarantee is held by the Principal Paying Agent on behalf of the Noteholders, the Receiptholders and theCouponholders at its specified office.

Any reference to “Noteholders’’ or “holders’’ in relation to any Notes shall mean (in the case of BearerNotes) the holders of the Notes and (in the case of Registered Notes) the persons in whose name the Notesare registered and shall, in relation to any Notes represented by a Global Note, be construed as providedbelow.

Any reference herein to “Receiptholders’’ shall mean the holders of the Receipts and any reference hereinto “Couponholders’’ shall mean the holders of the Coupons and shall, unless the context otherwise requires,include the holders of the Talons.

As used herein, “Tranche’’ means Notes which are identical in all respects (including as to listing) and“Series’’ means a Tranche of Notes together with any further Tranche or Tranches of Notes which are (i)expressed to be consolidated and form a single series and (ii) identical in all respects (including as to listing)except for their respective Issue Dates, Interest Commencement Dates and/or Issue Prices.

The Noteholders, the Receiptholders and the Couponholders are entitled to the benefit of the Deed ofCovenant (the “Deed of Covenant’’) dated 12th May, 2008 and made (inter alia) by the Issuer. The originalof the Deed of Covenant is held by the Common Depository for Euroclear (as defined below) andClearstream (as defined below).

Copies of the Agency Agreement, the Guarantee, a deed poll (the “Deed Poll’’) dated 12th May, 2008 andmade (inter alia) by the Issuer, the Guarantor and the Deed of Covenant are available for inspection duringnormal business hours at the specified office of each of the Principal Paying Agent, the Registrar and theother Paying Agents and Transfer Agents (such Agents and the Registrar being together referred to as the“Agents’’). Copies of the applicable Final Terms are obtainable during normal business hours at thespecified office of each of the Agents save that, if this Note is an unlisted Note of any Series, the applicableFinal Terms will only be obtainable by a Noteholder holding one or more unlisted Notes of that Series andsuch Noteholder must produce evidence satisfactory to the Issuer and the relevant Agent as to its holdingof such Notes and identity. The Noteholders, the Receiptholders and the Couponholders are deemed to havenotice of, and are entitled to the benefit of, all the provisions of the Agency Agreement, the Guarantee, theDeed Poll, the Deed of Covenant and the applicable Final Terms which are applicable to them. Thestatements in these Conditions include summaries of, and are subject to, the detailed provisions of theAgency Agreement.

Words and expressions defined in the Agency Agreement or used in the applicable Final Terms shall havethe same meanings where used in these Conditions unless the context otherwise requires or unless otherwisestated; provided that, in the event of inconsistency between the Agency Agreement and the applicable FinalTerms, the applicable Final Terms will prevail.

1. FORM, DENOMINATION AND TITLE

The Notes are in bearer form or in registered form as specified in the applicable Final Terms and, inthe case of definitive Notes, serially numbered, in the Specified Currency and the SpecifiedDenomination(s). Notes of one Specified Denomination may not be exchanged for Notes of anotherSpecified Denomination and Bearer Notes may not be exchanged for Registered Notes and vice versa.

This Note may be a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Index LinkedInterest Note, a Dual Currency Interest Note or a combination of any of the foregoing, dependingupon the Interest Basis shown in the applicable Final Terms.

This Note may be an Index Linked Redemption Note, an Instalment Note, a Dual CurrencyRedemption Note, a Partly Paid Note or a combination of any of the foregoing, depending upon theRedemption/Payment Basis shown in the applicable Final Terms.

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TERMS AND CONDITIONS OF THE NOTES


Definitive Bearer Notes are issued with Coupons attached, unless they are Zero Coupon Notes inwhich case references to Coupons and Couponholders in these Terms and Conditions are notapplicable.

Subject as set out below, title to the Bearer Notes, Receipts and Coupons will pass by delivery andtitle to the Registered Notes will pass upon registration of transfers in accordance with the provisionsof the Agency Agreement. The Issuer, the Guarantor and any Agent will (except as otherwise requiredby law) deem and treat the bearer of any Bearer Note, Receipt or Coupon and the registered holderof any Registered Note as the absolute owner thereof (whether or not overdue and notwithstandingany notice of ownership or writing thereon or notice of any previous loss or theft thereof) for allpurposes but, in the case of any Global Note, without prejudice to the provisions set out in the nextsucceeding paragraph.

For so long as any of the Notes is represented by a Bearer Global Note or a Regulation S Global Note(as defined in Condition 2) held on behalf of Euroclear Bank S.A./N.V. (“Euroclear’’) and/orClearstream Banking, société anonyme (“Clearstream”), each person (other than Euroclear orClearstream) who is for the time being shown in the records of Euroclear or of Clearstream as theholder of a particular nominal amount of such Notes (in which regard any certificate or otherdocument issued by Euroclear or Clearstream as to the nominal amount of such Notes standing tothe account of any person shall be conclusive and binding for all purposes save in the case of manifesterror) shall be treated by the Issuer, the Guarantor and the Agents as the holder of such nominalamount of such Notes for all purposes other than with respect to the payment of principal or intereston such nominal amount of such Notes, for which purpose the bearer of the relevant Bearer GlobalNote or, as the case may be, the registered holder of the relevant Regulation S Global Note shall betreated by the Issuer, the Guarantor and any Agent as the holder of such nominal amount of suchNotes in accordance with and subject to the terms of the relevant Global Note and the expressions“Noteholder’’ and “holder of Notes’’ and related expressions shall be construed accordingly.

For so long as the Depository Trust Company (“DTC’’) or its nominee is the registered owner orholder of a Rule 144A Global Note (as defined in Condition 2), DTC or such nominee, as the casemay be, will be considered the sole owner or holder of the Notes represented by such Rule 144AGlobal Note for all purposes under the Agency Agreement and the Notes except to the extent that inaccordance with DTC’s published rules and procedures any ownership rights may be exercised by itsparticipants or beneficial owners through participants.

Notes which are represented by a Global Note will be transferable only in accordance with the rulesand procedures for the time being of DTC, Euroclear and Clearstream, as the case may be. Referencesto DTC, Euroclear and/or Clearstream shall, whenever the context so permits, be deemed to includea reference to any additional or alternative clearing system specified in the applicable Final Terms.

2. TRANSFERS OF REGISTERED NOTES

(a) Transfers of interests in Registered Global Notes: Transfers of beneficial interests in RegisteredGlobal Notes will be effected by DTC, Euroclear or Clearstream, as the case may be, and, inturn, by other participants and, if appropriate, indirect participants in such clearing systemsacting on behalf of beneficial transferors and transferees of such interests. A beneficial interestin a Registered Global Note will, subject to compliance with all applicable legal and regulatoryrestrictions, be exchangeable for Notes in definitive form or for a beneficial interest in anotherRegistered Global Note only in the authorised denominations set out in the applicable FinalTerms and only in accordance with the rules and operating procedures for the time being ofDTC, Euroclear or Clearstream, as the case may be, and in accordance with the terms andconditions specified in the Agency Agreement.

(b) Transfers of Registered Notes in definitive form: Subject as provided in paragraphs (e), (f) and(g) below, upon the terms and subject to the conditions set forth in the Agency Agreement, aRegistered Note in definitive form may be transferred in whole or in part (in the authoriseddenominations set out in the applicable Final Terms). In order to effect any such transfer (i) the

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holder or holders must (a) surrender the Registered Note for registration of the transfer of theRegistered Note (or the relevant part of the Registered Note) at the specified office of theRegistrar or any Transfer Agent, with the form of transfer thereon duly executed by the holderor holders thereof or his or their attorney or attorneys duly authorised in writing and (b)complete and deposit such other certifications as may be required by the Registrar or, as thecase may be, the relevant Transfer Agent and (ii) the Registrar or, as the case may be, therelevant Transfer Agent must, after due and careful enquiry, be satisfied with the documents oftitle and the identity of the person making the request.

Any such transfer will be subject to such reasonable regulations as the Issuer and the Registrarmay from time to time prescribe (the initial such regulations being set out in Schedule 9 to theAgency Agreement). Subject as provided above, the Registrar or, as the case may be, therelevant Transfer Agent will, within three business days (being for this purpose a day on whichbanks are open for business in the city where the specified office of the Registrar or, as the casemay be, the relevant Transfer Agent is located) of the request (or such longer period as may berequired to comply with any applicable fiscal or other laws or regulations) authenticate anddeliver, or procure the authentication and delivery of, at its specified office to the transferee or(at the risk of the transferee) send by uninsured mail to such address as the transferee mayrequest, a new Registered Note in definitive form of a like aggregate nominal amount to theRegistered Note (or the relevant part of the Registered Note) transferred. In the case of thetransfer of part only of a Registered Note in definitive form, a new Registered Note in definitiveform in respect of the balance of the Registered Note not transferred will be so authenticatedand delivered or (at the risk of the transferor) sent to the transferor.

(c) Registration of transfer upon partial redemption: In the event of a partial redemption of Notesunder Condition 7, the Issuer shall not be required to register the transfer of any RegisteredNote, or part of a Registered Note, called for partial redemption.

(d) Costs of registration: Noteholders will not be required to bear the costs and expenses ofeffecting any registration of transfer as provided above, except for any costs or expenses ofdelivery other than by regular uninsured mail and except that the Issuer may require thepayment of a sum sufficient to cover any stamp duty, tax or other governmental charge thatmay be imposed in relation to the registration.

(e) Transfers of interests in Regulation S Global Notes: Prior to the expiry of the applicableDistribution Compliance Period (as defined below), transfers by the holder of, or of a beneficialinterest in, a Regulation S Global Note to a transferee in the United States or who is a U.S.person will only be made:

(i) upon receipt by the Registrar of a written certification substantially in the form set outin the Agency Agreement, amended as appropriate (a “Transfer Certificate’’), copies ofwhich are available from the specified office of the Registrar or any Transfer Agent, fromthe transferor of the Note or beneficial interest therein to the effect that such transfer isbeing made to a person whom the transferor reasonably believes is a QIB in a transactionmeeting the requirements of Rule 144A; or

(ii) otherwise pursuant to the Securities Act or an exemption therefrom, subject to receipt bythe Issuer of such satisfactory evidence as the Issuer may reasonably require, which mayinclude an opinion of U.S. counsel, that such transfer is in compliance with anyapplicable securities laws of any State of the United States,

and, in each case, in accordance with any applicable securities laws of any State of the UnitedStates or any other jurisdiction.

In the case of (i) above, such transferee may take delivery through a Legended Note in globalor definitive form. After expiry of the applicable Distribution Compliance Period (i) beneficialinterests in Regulation S Global Notes may be held through DTC directly, by a participant in

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DTC, or indirectly through a participant in DTC and (ii) such certification requirements willno longer apply to such transfers.

(f) Transfers of interests in Legended Notes: Transfers of Legended Notes or beneficial intereststherein may be made:

(i) to a transferee who takes delivery of such interest through a Regulation S Global Note,upon receipt by the Registrar of a duly completed Transfer Certificate from the transferorto the effect that such transfer is being made in accordance with Regulation S and, if suchtransfer is being made prior to expiry of the applicable Distribution Compliance Period,that the interests in the Notes being transferred will be held immediately thereafterthrough Euroclear and/or Clearstream; or

(ii) to a transferee who takes delivery of such interest through a Legended Note where thetransferee is a person whom the transferor reasonably believes is a QIB in a transactionmeeting the requirements of Rule 144A, without certification; or

(iii) otherwise pursuant to the Securities Act or an exemption therefrom, subject to receipt bythe Issuer of such satisfactory evidence as the Issuer may reasonably require, which mayinclude an opinion of U.S. counsel, that such transfer is in compliance with anyapplicable securities laws of any state of the United States,

and, in each case, in accordance with any applicable securities laws of any state of the UnitedStates or any other jurisdiction.

Upon the transfer, exchange or replacement of Legended Notes, or upon specific request forremoval of the legend, the Registrar shall deliver only Legended Notes or refuse to remove suchlegend, as the case may be, unless there is delivered to the Issuer such satisfactory evidence asmay reasonably be required by the Issuer, which may include an opinion of U.S. counsel, thatneither the legend nor the restrictions on transfer set forth therein are required to ensurecompliance with the provisions of the Securities Act.

(g) Exchanges and transfers of Registered Notes generally: Holders of Registered Notes indefinitive form may exchange such Notes for interests in a Registered Global Note of the sametype at any time.

(h) Definitions: In these Conditions, the following expressions shall have the following meanings:

“Distribution Compliance Period’’ means the period that ends 40 days after the completion ofthe distribution of each Tranche of Notes, as certified by the relevant Dealer (in the case of anon-syndicated issue) or the relevant Lead Manager (in the case of a syndicated issue);

“Legended Note’’ means Registered Notes (whether in definitive form or represented by aRegistered Global Note) sold in private transactions to QIBs in accordance with therequirements of Rule 144A;

“QIB’’ means a “qualified institutional buyer’’ within the meaning of Rule 144A;

“Regulation S’’ means Regulation S under the Securities Act;

“Regulation S Global Note’’ means a Registered Global Note representing Notes sold outsidethe United States in reliance on Regulation S;

“Rule 144A’’ means Rule 144A under the Securities Act;

“Rule 144A Global Note” means a Registered Global Note representing Notes sold in privatetransactions to QIBs in accordance with the requirements of Rule 144A; and

“Securities Act’’ means the United States Securities Act of 1933, as amended.

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3. STATUS OF THE NOTES AND THE GUARANTEE

(a) Status of the Notes: The Notes and any relative Receipts and Coupons are direct, unconditional,unsubordinated and (subject to the provisions of Condition 4) unsecured obligations of the Issuer and(subject as aforesaid) rank and will rank pari passu without any preference among themselves, withall other present and future outstanding unsubordinated and unsecured obligations of the Issuer(subject to mandatorily preferred obligations under applicable laws).

(b) Status of the Guarantee: The payment of principal and interest in respect of the Notes and any relativeReceipts and Coupons has been irrevocably and unconditionally guaranteed by the Guarantorpursuant to the Guarantee. The obligations of the Guarantor under the Guarantee constitute direct,unconditional, unsubordinated and (subject to the provisions of Condition 4) unsecured obligationsof the Guarantor and (subject as aforesaid) rank and will rank pari passu (subject to mandatorilypreferred obligations under applicable laws) with all other present and future outstanding unsecuredand unsubordinated obligations of the Guarantor. To ensure compliance with Italian law, theGuarantee will be limited to 200 per cent. of the aggregate principal amount of the Notes.

4. NEGATIVE PLEDGE

(a) Negative Pledge: So long as any of the Notes remains outstanding (as defined in the AgencyAgreement) neither the Issuer nor the Guarantor will (unless previously authorised by anExtraordinary Resolution (as defined in the Agency Agreement) of the Noteholders) create or haveoutstanding any mortgage, charge, pledge, lien, encumbrance or other security interest (“Lien”)(other than a Permitted Lien) upon the whole or any part of its undertaking or assets (includinguncalled capital), present or future, to secure any Quoted Indebtedness (as defined below) or anyQualifying Guarantee of such Quoted Indebtedness, unless in any such case the same security (or suchother security as may be approved by an Extraordinary Resolution of the Noteholders) shallforthwith be extended equally and rateably to the Notes (or, in the case of a Lien securing any QuotedIndebtedness that is subordinated or junior in right of payment to the Notes or the Guarantee,secured by a Lien on such property, assets or proceeds that is senior in priority to such Lien).

For the purpose of these Conditions and the Guarantee:

(i) “Fiat Group” means Fiat S.p.A. and its direct and indirect subsidiaries consolidated inaccordance with International Financial Reporting Standards (“IFRS”); and

(ii) “Financial Services Subsidiary” means a subsidiary of Fiat:

(A) which carries on no material business other than the offer and sale of financial servicesproducts to customers of Members of the Fiat Group (and other related support activitiesincidental to the offer and sale of such financial services products including, withoutlimitation, input financing and the purchase and sale of equipment in connection witheqpower.com and rental business activities) in any of the following areas:

(i) retail financing for the purchase, contract hire or lease of new or old equipmentmanufactured by a Member of the Fiat Group or any other manufacturer whoseproducts are from time to time sold through the dealer network of a Member of theFiat Group;

(ii) other retail and wholesale financing programmes reasonably related thereto,including, without limitation, financing to the dealer network of any Member of theFiat Group;

(iii) insurance and credit card products and services reasonably related thereto, togetherwith the underwriting, marketing, servicing and other related support activitiesincidental to the offer and sale of such financial services products; and

(iv) licensed banking activities; or

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(B) a holding company of a Financial Services Subsidiary which carries on no materialbusiness or activity other than holding shares in that Financial Services Subsidiary and/oractivities described in paragraph (A) above;

(iii) “Indebtedness” means any indebtedness (whether principal, premium or interest) for or inrespect of (A) any notes, bonds, debenture stock, loan stock or other securities, (B) any LoanFinancing, or (C) any liability under or in respect of any banker’s acceptance or banker’sacceptance credit; provided, that (x) Indebtedness of a Member of the Fiat Group to any otherMember of the Fiat Group and (y) Indebtedness that qualifies as Non-recourse SecuritisationDebt shall, in each case, not be deemed to be Indebtedness for purposes of this Condition 4(a)or any other purpose of these Conditions of the Guarantee;

(iv) “Industrial Subsidiary” means each subsidiary of the Guarantor other than a Financial ServicesSubsidiary;

(v) “Loan Financing” means any money borrowed from (A) a bank, financial institution, hedgefund, pension fund, or insurance company or (B) any other entity having as its principalbusiness the lending of money and/or investing in loans, in each case other than public or quasi-public entities or international organisations with a public or quasi-public character;

(vi) “Member of the Fiat Group” means each of Fiat S.p.A. and any direct or indirect subsidiariesit fully consolidates on a line-by-line basis in accordance with IFRS;

(vii) “Non-recourse Securitisation” means any securitisation, asset backed financing or transactionhaving similar effect under which an entity (or entities in related transactions) on commerciallyreasonable terms:

(A) acquires receivables for principally cash consideration or uses existing receivables; and

(B) issues any notes, bonds, commercial paper, loans or other securities (whether or notlisted on a recognised stock exchange) to fund the purchase of or otherwise backed bythose receivables and/or any shares or other interests referred to in Condition4(a)(ix)(C)(ii) and the payment obligations in respect of such notes, bonds, commercialpaper, loans or other securities:

(i) are secured on those receivables; and

(ii) are not guaranteed by any Member of the Fiat Group (other than as a result of anyLien which is granted by any Member of the Fiat Group as permitted by Condition4(a)(ix)(C)(ii) or as to the extent of any Standard Securitisation Undertakings);

(viii) “Non-recourse Securitisation Debt” means any Indebtedness incurred by a Securitisation Entitypursuant to a securitisation of receivables where the recourse in respect of that Indebtedness tothe Issuer or the Guarantor is limited to:

(A) those receivables and/or related insurance and/or any Standard SecuritisationUndertakings; and

(B) if those receivables comprise all or substantially all of the business or assets of suchSecuritisation Entity, the shares or other interests of any Member of the Fiat Group insuch Securitisation Entity.

provided that any Indebtedness not qualifying as Non-recourse Securitisation Debt solelybecause the extent of recourse to any Member of the Fiat Group with respect to suchIndebtedness is greater than that provided in clauses (A) and (B) above shall only not qualifyas Non-recourse Securitisation Debt with respect to the extent of such additional recourse;

(ix) “Permitted Liens” means:

(A) Liens existing on the Issue Date; or

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(B) Liens arising by operation of law, by contract having an equivalent effect, from rights ofset-off arising in the ordinary course of business between either the Issuer or theGuarantor and any of their respective suppliers or customers, or from rights of set-off ornetting arising by operation of law (or by contract having similar effect) by virtue of theprovision to the Issuer or the Guarantor of clearing bank facilities or overdraft facilities;or

(C) any Lien over

(i) the receivables of a Securitisation Entity (and any bank account to which suchproceeds are deposited) which are subject to a Non-recourse Securitisation assecurity for Non-recourse Securitisation Debt raised by such Securitisation Entity inrespect of such receivables; and/or

(ii) the shares or other interests owned by any Member of the Fiat Group in anySecuritisation Entity as security for Non-recourse Securitisation Debt raised by suchSecuritisation Entity provided that the receivables or revenues which are the subjectof the relevant Non-recourse Securitisation comprise all or substantially all of thebusiness of such Securitisation Entity; or

(D) any Liens on assets acquired by a Member of the Fiat Group after the Issue Date,provided that (i) such Lien was existing or agreed to be created at or before the time therelevant asset was acquired by a Member of the Fiat Group, (ii) such Lien was notcreated in contemplation of such acquisition, and (iii) the principal amount then secureddoes not exceed the principal amount of the committed financing then secured (whetheror not drawn), with respect to such assets at the time the relevant asset was acquired bya Member of the Fiat Group; or

(E) any Lien created to secure all or any part of the purchase price, or to secure QuotedIndebtedness incurred or assumed to pay all or any part of the purchase price or cost ofconstruction, of property (or any improvement thereon) acquired or constructed by theIssuer or the Guarantor after the Issue Date, provided, that (i) any such Lien shall extendsolely to the item or items of property (or improvement thereon) so acquired orconstructed and (ii) the principal amount of Quoted Indebtedness secured by any suchLien shall at no time exceed an amount equal to the fair market value of such property(or any improvement thereon) at the time of such acquisition or construction; or

(F) any Lien securing Quoted Indebtedness incurred to refinance other indebtedness itselfsecured by a Lien included in clauses (A), (B), (D) or (E) above, but only if the principalamount of the Quoted Indebtedness is not increased and only the same assets are securedas were secured by the prior Lien; or

(G) any Lien provided in favour of any bank or governmental (central or local),intergovernmental or supranational body, agency, department or other authoritysecuring any Quoted Indebtedness of the Issuer or the Guarantor under a loan schemeoperated by (or on behalf of) Banco Nacional de Desenvolvimento Economico e Social,Finame, Banco de Minas Gerais, a member country of the OECD, Argentina, Brazil,China, India, South Africa or any supranational entity (such as the European Bank forReconstruction and Development or the International Finance Corporation) where theprovision of such Lien is required for the relevant loan; or

(H) (i) any Lien created on the shares of capital stock of a subsidiary, and (ii) any Lien createdon the assets of a subsidiary of the type described in Condition 4(a)(ix)(E) other thanshares of capital stock of a subsidiary; or

(x) “Qualifying Guarantee” means a direct or indirectly guarantee in respect of any Indebtednessor a direct or indirect indemnity against the consequences of a default in the payment of any

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Indebtedness, other than, in each case, by endorsement of negotiable instruments, letters ofcredit or reimbursement agreements in the ordinary course of business;

(xi) “Quoted Indebtedness” means any indebtedness in the form of, or represented by, bonds,notes, debentures, loan stock or other securities and which at the time of issue is, or is capableof being, quoted, listed or ordinarily dealt in on any stock exchange or over-the-counter marketor other securities market (whether or not initially distributed by means of a privateplacement);

(xii) “Securitisation Entity” means any special purpose vehicle created for the sole purpose ofcarrying out, or otherwise used solely for the purpose of carrying out a Non-recourseSecuritisation or any other Industrial Subsidiary which is effecting Non-recourseSecuritisations;

(xiii) “Standard Securitisation Undertakings” means representations, warranties, covenants andindemnities entered into by any Member of the Fiat Group from time to time which arecustomary in relation to Non-recourse Securitisations, including any performance undertakingswith respect to servicing obligations or undertakings with respect to breaches ofrepresentations or warranties; and

(b) Reports: If the Guarantor ceases to be listed on the Italian Stock Exchange or any other stockexchange in the European Economic Area, the Guarantor will furnish to the Noteholders so long asthe Notes are outstanding, English language annual and quarterly reports containing financialinformation substantially similar in scope to that provided in the annual and quarterly reportspublished in Italy in the financial year ended immediately prior to such cessation. For the avoidanceof doubt, the Guarantor shall not be required to provide any U.S GAAP reconciled financialinformation in any reports it is required to provide pursuant to this Condition 4(b).

So long as the Notes are listed on the Irish Stock Exchange, any reports the Guarantor providespursuant to this Condition 4(b) will also be made available in Ireland through the office of the PayingAgent in Dublin.

5. INTEREST

(a) Interest on Fixed Rate Notes: Each Fixed Rate Note bears interest from and including theInterest Commencement Date at the rate(s) per annum equal to the Rate(s) of Interest payablein arrear on the Interest Payment Date(s) in each year and on the Maturity Date if that doesnot fall on an Interest Payment Date.

If the Notes are in definitive form, except as provided in the applicable Final Terms, the amountof interest payable on each Interest Payment Date in respect of the Fixed Interest Period endingon (but excluding) such date will amount to the Fixed Coupon Amount. Payments of intereston any Interest Payment Date will, if so specified in the applicable Final Terms, amount to theBroken Amount so specified.

Except in the case of Notes in definitive form where a Fixed Coupon Amount or BrokenAmount is specified in the applicable Final Terms, interest shall be calculated in respect of anyperiod by applying the Rate of Interest to:

(A) in the case of Fixed Rate Notes which are represented by a Global Note, the aggregateoutstanding nominal amount of the Fixed Rate Notes represented by such Global Note(or, if they are Partly Paid Notes, the aggregate amount paid up); or

(B) in the case of Fixed Rate Notes in definitive form, the Calculation Amount,

and in each case, multiplying such sum by the applicable Day Count Fraction, and roundingthe resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any suchsub-unit being rounded upwards or otherwise rounded in accordance with applicable marketconvention. Where the Specified Denomination of a Fixed Rate Note in definitive form is a

43



multiple of the Calculation Amount, the amount of interest payable in respect of such FixedRate Note shall be the product of the amount (determined in the manner provided above) forthe Calculation Amount and the amount by which the Calculation Amount is multiplied toreach the Specified Denomination without any further rounding.

In these Conditions:

“Day Count Fraction’’ means, in respect of the calculation of an amount in accordance withthis Condition 5(a):

(i) if “Actual/Actual (ICMA)’’ is specified in the applicable Final Terms:

(A) in the case of Notes where the number of days in the relevant period from (andincluding) the most recent Interest Payment Date (or, if none, the InterestCommencement Date) to (but excluding) the relevant payment date (the “AccrualPeriod”) is equal to or shorter than the Determination Period during which the AccrualPeriod ends, the number of days in such Accrual Period divided by the product of (1)the number of days in such Determination Period and (2) the number of DeterminationDates (as specified in the applicable Final Terms) that would occur in one calendar year;or

(B) in the case of Notes where the Accrual Period is longer than the Determination Periodduring which the Accrual Period ends, the sum of:

(1) the number of days in such Accrual Period falling in the Determination Period inwhich the Accrual Period begins divided by the product of (x) the number of daysin such Determination Period and (y) the number of Determination Dates (asspecified in the applicable Final Terms) that would occur in one calendar year; and

(2) the number of days in such Accrual Period falling in the next Determination Perioddivided by the product of (x) the number of days in such Determination Period and(y) the number of Determination Dates that would occur in one calendar year; and

(ii) if “30/360’’ is specified in the applicable Final Terms, the number of days in the period fromand including the most recent Interest Payment Date (or, if none, the InterestCommencement Date) to but excluding the relevant payment date (such number of daysbeing calculated on the basis of 12 30-day months) divided by 360;

“Determination Period” means each period from (and including) a Determination Date to butexcluding the next Determination Date (including, where either the Interest Commencement Dateor the final Interest Payment Date is not a Determination Date, the period commencing on thefirst Determination Date prior to, and ending on the first Determination Date falling after, suchdate);

“Fixed Interest Period” means the period from (and including) an Interest Payment Date or theInterest Commencement Date) to (but excluding) the next (or first) Interest Payment Date; and

“sub-unit’’ means with respect to any currency other than euro, the lowest amount of suchcurrency that is available as legal tender in the country of such currency and, with respect to euro,means one cent.

(b) Interest on Floating Rate Notes and Index Linked Interest Notes:

(i) Interest Payment Dates: Each Floating Rate Note and Index Linked Interest Note bearsinterest from (and including) the Interest Commencement Date and such interest will bepayable in arrear on either:

(A) the Specified Interest Payment Date(s) (each an “Interest Payment Date’’) in each yearspecified in the applicable Final Terms; or

44



(B) if no express Specified Interest Payment Date(s) is/are specified in the applicable FinalTerms, each date (each an “Interest Payment Date’’) which falls the number of monthsor other period specified as the Specified Period in the applicable Final Terms after thepreceding Interest Payment Date or, in the case of the first Interest Payment Date, afterthe Interest Commencement Date.

Such interest will be payable in respect of each Interest Period (which expression shall, inthese Conditions, mean the period from (and including) an Interest Payment Date (or theInterest Commencement Date) to (but excluding) the next (or first) Interest Payment Date).

If a Business Day Convention is specified in the applicable Final Terms and (x) if there is nonumerically corresponding day in the calendar month in which an Interest Payment Dateshould occur or (y) if any Interest Payment Date would otherwise fall on a day which is nota Business Day, then, if the Business Day Convention specified is:

(1) in any case where Specified Periods are specified in accordance with Condition5(b)(i)(B) above, the Floating Rate Convention, such Interest Payment Date (i) in thecase of (x) above, shall be the last day that is a Business Day in the relevant month andthe provisions of (B) below shall apply mutatis mutandis or (ii) in the case of (y) above,shall be postponed to the next day which is a Business Day unless it would thereby fallinto the next calendar month, in which event (A) such Interest Payment Date shall bebrought forward to the immediately preceding Business Day and (B) each subsequentInterest Payment Date shall be the last Business Day in the month which falls theSpecified Period after the preceding applicable Interest Payment Date occurred; or

(2) the Following Business Day Convention, such Interest Payment Date shall be postponedto the next day which is a Business Day; or

(3) the Modified Following Business Day Convention, such Interest Payment Date shall bepostponed to the next day which is a Business Day unless it would thereby fall into thenext calendar month, in which event such Interest Payment Date shall be broughtforward to the immediately preceding Business Day; or

(4) the Preceding Business Day Convention, such Interest Payment Date shall be broughtforward to the immediately preceding Business Day.

In these Conditions, “Business Day’’ means a day which is both:

(A) a day on which commercial banks and foreign exchange markets settle payments andare open for general business (including dealing in foreign exchange and foreigncurrency deposits) in London and any Additional Business Centre specified in theapplicable Final Terms; and

(B) either (1) in relation to any sum payable in a Specified Currency other than euro, a dayon which commercial banks and foreign exchange markets settle payments and areopen for general business (including dealing in foreign exchange and foreign currencydeposits) in the principal financial centre of the country of the relevant SpecifiedCurrency (if other than London and any Additional Business Centre and which if theSpecified Currency is Australian dollars or New Zealand dollars shall be Sydney orAuckland, respectively) or (2) in relation to any sum payable in euro, a day on whichthe Trans-European Automated Real-Time Gross Settlement Express Transfer(TARGET) System (the “TARGET System’’) is open.

(ii) Rate of Interest: The Rate of Interest payable from time to time in respect of Floating RateNotes and Index Linked Interest Notes will be determined in the manner specified in theapplicable Final Terms.

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(A) ISDA Determination for Floating Rate Notes

Where ISDA Determination is specified in the applicable Final Terms as the manner inwhich the Rate of Interest is to be determined, the Rate of Interest for each InterestPeriod will be the relevant ISDA Rate plus or minus (as indicated in the applicable FinalTerms) the Margin (if any). For the purposes of this sub-paragraph (A), “ISDA Rate’’for an Interest Period means a rate equal to the Floating Rate that would be determinedby the Principal Paying Agent under an interest rate swap transaction if the PrincipalPaying Agent were acting as Calculation Agent for that swap transaction under theterms of an agreement incorporating the 2000 ISDA Definitions, as amended andupdated as at the Issue Date of the first Tranche of the Notes, published by theInternational Swaps and Derivatives Association, Inc. (the “ISDA Definitions’’) andunder which:

(1) the Floating Rate Option is as specified in the applicable Final Terms;

(2) the Designated Maturity is a period specified in the applicable Final Terms; and

(3) the relevant Reset Date is either (i) if the applicable Floating Rate Option is basedon the London inter-bank offered rate (“LIBOR’’) or on the Euro-zone inter-bankoffered rate (“EURIBOR’’) for a currency, the first day of that Interest Period or(ii) in any other case, as specified in the applicable Final Terms.

For the purposes of this sub-paragraph (A), “Floating Rate’’, “Calculation Agent’’,“Floating Rate Option’’, “Designated Maturity’’ and “Reset Date’’ have the meaningsgiven to those terms in the ISDA Definitions.

(B) Screen Rate Determination for Floating Rate Notes

Where Screen Rate Determination is specified in the applicable Final Terms as themanner in which the Rate of Interest is to be determined, the Rate of Interest for eachInterest Period will, subject as provided below, be either:

(1) the offered quotation; or

(2) the arithmetic mean (rounded if necessary to the fifth decimal place, with0.000005 being rounded upwards) of the offered quotations,

(expressed as a percentage rate per annum) for the Reference Rate or Rates which appearsor appear, as the case may be, on the Relevant Screen Page as at 11:00 a.m. (London time,in the case of LIBOR, or Brussels time, in the case of EURIBOR) on the InterestDetermination Date in question plus or minus (as indicated in the applicable Final Terms)the Margin (if any), all as determined by the Principal Paying Agent. If five or more of suchoffered quotations are available on the Relevant Screen Page, the highest (or, if there is morethan one such highest quotation, one only of such quotations) and the lowest (or, if there ismore than one such lowest quotation, one only of such quotations) shall be disregarded bythe Principal Paying Agent for the purpose of determining the arithmetic mean (rounded asprovided above) of such offered quotations.

The Agency Agreement contains provisions for determining the Rate of Interest in the eventthat the Relevant Screen Page is not available or if, in the case of (1) above, no such offeredquotation appears or, in the case of (2) above, fewer than three such offered quotationsappear, in each case as at the time specified in the preceding paragraph.

If the Reference Rate from time to time in respect of Floating Rate Notes is specified in theapplicable Final Terms as being other than LIBOR or EURIBOR, the Rate of Interest inrespect of such Notes will be determined as provided in the applicable Final Terms.

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(iii) Minimum and/or maximum Rate of Interest: If the applicable Final Terms specify aMinimum Rate of Interest for any Interest Period, then, in the event that the Rate of Interestin respect of such Interest Period determined in accordance with the provisions of paragraph(ii) above is less than such Minimum Rate of Interest, the Rate of Interest for such InterestPeriod shall be such Minimum Rate of Interest.

If the applicable Final Terms specify a Maximum Rate of Interest for any Interest Period,then, in the event that the Rate of Interest in respect of such Interest Period determined inaccordance with the provisions of paragraph (ii) above is greater than such Maximum Rateof Interest, the Rate of Interest for such Interest Period shall be such Maximum Rate ofInterest.

(iv) Determination of Rate of Interest and calculation of Interest Amounts: The Principal PayingAgent, in the case of Floating Rate Notes, and the Calculation Agent, in the case of IndexLinked Interest Notes, will at or as soon as practicable after each time at which the Rate ofInterest is to be determined, determine the Rate of Interest for the relevant Interest Period.In the case of Index Linked Interest Notes, the Calculation Agent will notify the PrincipalPaying Agent of the Rate of Interest for the relevant Interest Period as soon as practicableafter calculating the same.

The Principal Paying Agent will calculate the amount of interest (the “Interest Amount”)payable on the Floating Rate Notes or Index Linked Interest Notes for the relevant InterestPeriod by applying the Rate of Interest to:

(A) in the case of Floating Rate Notes or Index Linked Interest Notes which are representedby a Global Note, the aggregate outstanding nominal amount of the Notes representedby such Global Note (or, if they are Partly Paid Notes, the aggregate amount paid up);or

(B) in the case of Floating Rate Notes or Index Linked Interest Notes in definitive form, theCalculation Amount:

and, in each case, multiplying such sum by the applicable Day Count Fraction, and roundingthe resultant figure to the nearest sub-unit of the relevant Specified Currency, half of anysuch sub-unit being rounded upwards or otherwise in accordance with applicable marketconvention. Where the Specified Denomination of a Floating Rate Note or an Index LinkedInterest Note in definitive form is a multiple of the Calculation Amount, the Interest Amountpayable in respect of such Note shall be the product of the amount (determined in themanner provided above) for the Calculation Amount and the amount by which theCalculation Amount is multiplied to reach the Specified Denomination without any furtherrounding.

“Day Count Fraction’’ means, in respect of the calculation of an amount of interest for anyInterest Period:

(A) if “Actual/365’’ or “Actual/Actual’’ is specified in the applicable Final Terms, the actualnumber of days in the Interest Period divided by 365 (or, if any portion of that InterestPeriod falls in a leap year, the sum of (A) the actual number of days in that portion ofthe Interest Period falling in a leap year divided by 366 and (B) the actual number ofdays in that portion of the Interest Period falling in a non-leap year divided by 365);

(B) if “Actual/365 (Fixed)’’ is specified in the applicable Final Terms, the actual number ofdays in the Interest Period divided by 365;

(C) if “Actual/365 (Sterling)’’ is specified in the applicable Final Terms, the actual numberof days in the Interest Period divided by 365 or, in the case of an Interest Payment Datefalling in a leap year, 366;

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(D) if “Actual/360’’ is specified in the applicable Final Terms, the actual number of days inthe Interest Period divided by 360;

(E) if “30/360’’, “360/360’’ or “Bond Basis’’ is specified in the applicable Final Terms, thenumber of days in the Interest Period divided by 360 (the number of days to becalculated on the basis of a year of 360 days with 12 30-day months (unless (a) the lastday of the Interest Period is the 31st day of a month but the first day of the InterestPeriod is a day other than the 30th or 31st day of a month, in which case the monththat includes that last day shall not be considered to be shortened to a 30-day month,or (b) the last day of the Interest Period is the last day of the month of February, inwhich case the month of February shall not be considered to be lengthened to a 30-daymonth)); and

(F) if “30E/360’’ or “Eurobond Basis’’ is specified in the applicable Final Terms, thenumber of days in the Interest Period divided by 360 (the number of days to becalculated on the basis of a year of 360 days with 12 30-day months, without regard tothe date of the first day or last day of the Interest Period unless, in the case of an InterestPeriod ending on the Maturity Date, the Maturity Date is the last day of the month ofFebruary, in which case the month of February shall not be considered to be lengthenedto a 30-day month).

(v) Notification of Rate of Interest and Interest Amounts: The Principal Paying Agent will causethe Rate of Interest and each Interest Amount for each Interest Period and the relevantInterest Payment Date to be notified to the Issuer and any stock exchange on which therelevant Floating Rate Notes or Index Linked Interest Notes are for the time being listed withnotice thereof to be published in accordance with Condition 14 as soon as possible after theirdetermination but in no event later than the fourth London Business Day thereafter. EachInterest Amount and Interest Payment Date so notified may subsequently be amended (orappropriate alternative arrangements made by way of adjustment) without prior notice inthe event of an extension or shortening of the Interest Period. Any such amendment will bepromptly notified to each stock exchange on which the relevant Floating Rate Notes orIndex Linked Interest Notes are for the time being listed and to the Noteholders inaccordance with Condition 14. For the purposes of this paragraph, the expression “LondonBusiness Day’’ means a day (other than a Saturday or a Sunday) on which banks and foreignexchange markets are open for general business in London.

(vi) Certificates to be final: All certificates, communications, opinions, determinations,calculations, quotations and decisions given, expressed, made or obtained for the purposesof the provisions of this Condition 5(b), whether by the Principal Paying Agent or, ifapplicable, the Calculation Agent, shall (in the absence of wilful default, bad faith,negligence or manifest error) be binding on the Issuer, the Guarantor, the Principal PayingAgent, the Calculation Agent (if applicable), the other Agents and all Noteholders,Receiptholders and Couponholders and (in the absence as aforesaid) no liability to the Issuer,the Guarantor, the Noteholders, the Receiptholders or the Couponholders shall attach to thePrincipal Paying Agent or the Calculation Agent (if applicable) in connection with theexercise or non-exercise by it of its powers, duties and discretions pursuant to suchprovisions.

(c) Interest on Dual Currency Interest Notes: In the case of Dual Currency Interest Notes, if the rateor amount of interest falls to be determined by reference to an exchange rate, the rate or amountof interest payable shall be determined in the manner specified in the applicable Final Terms.

(d) Interest on Partly Paid Notes: In the case of Partly Paid Notes (other than Partly Paid Notes whichare Zero Coupon Notes), interest will accrue as aforesaid on the paid-up nominal amount of suchNotes and otherwise as specified in the applicable Final Terms.

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(e) Accrual of interest: Each Note (or in the case of the redemption of part only of a Note, that partonly of such Note) will cease to bear interest (if any) from the date for its redemption unless, upondue presentation thereof, payment of principal is improperly withheld or refused. In such event,interest will continue to accrue until whichever is the earlier of:

(1) the date on which all amounts due in respect of such Note have been paid; and

(2) the date on which the full amount of the monies payable in respect of such Notes has beenreceived by the Principal Paying Agent or the Registrar, as the case may be, and notice to thateffect has been given to the Noteholders in accordance with Condition 14.

6. PAYMENTS

(a) Method of payment

Subject as provided below:

(i) payments in a Specified Currency other than euro will be made by credit or transfer to anaccount in the relevant Specified Currency maintained by the payee with, or, at the optionof the payee, by a cheque in such Specified Currency drawn on, a bank in the principalfinancial centre of the country of such Specified Currency (which, if the Specified Currencyis Australian dollars or New Zealand dollars, shall be Sydney or Auckland, respectively); and

(ii) payments in euro will be made by credit or transfer to a euro account (or any other accountto which euro may be credited or transferred) specified by the payee or, at the option of thepayee, by a euro cheque.

Payments will be subject in all cases to any fiscal or other laws and regulations applicable theretoin the place of payment, but without prejudice to the provisions of Condition 8.

(b) Presentation of definitive Bearer Notes, Receipts and Coupons: Payments of principal in respectof definitive Bearer Notes will (subject as provided below) be made in the manner provided inparagraph (a) above only against presentation and surrender (or, in the case of part payment ofany sum due, endorsement) of definitive Bearer Notes, and payments of interest in respect ofdefinitive Bearer Notes will (subject as provided below) be made as aforesaid only againstpresentation and surrender (or, in the case of part payment of any sum due, endorsement) ofCoupons, in each case at the specified office of any Paying Agent outside the United States (whichexpression, as used herein, means the United States of America (including the states and theDistrict of Columbia, its territories, its possessions and other areas subject to its jurisdiction)).

Payments of instalments of principal (if any) in respect of definitive Bearer Notes, other than thefinal instalment, will (subject as provided below) be made in the manner provided in paragraph(a) above against presentation and surrender (or, in the case of part payment of any sum due,endorsement) of the relevant Receipt in accordance with the preceding paragraph. Payment of thefinal instalment will be made in the manner provided in paragraph (a) above only againstpresentation and surrender (or, in the case of part payment of any sum due, endorsement) of therelevant definitive Bearer Note in accordance with the preceding paragraph. Each Receipt mustbe presented for payment of the relevant instalment together with the definitive Bearer Note towhich it appertains. Receipts presented without the definitive Bearer Note to which theyappertain do not constitute valid obligations of the Issuer. Upon the date on which any definitiveBearer Note becomes due and repayable, unmatured Receipts (if any) relating thereto (whether ornot attached) shall become void and no payment shall be made in respect thereof.

Fixed Rate Notes in definitive bearer form (other than Dual Currency Notes, Index Linked Notesor Long Maturity Notes (as defined below)) should be presented for payment together with allunmatured Coupons appertaining thereto (which expression shall for this purpose includeCoupons falling to be issued on exchange of matured Talons), failing which the amount of anymissing unmatured Coupon (or, in the case of payment not being made in full, the same

49



proportion of the amount of such missing unmatured Coupon as the sum so paid bears to the sumdue) will be deducted from the sum due for payment. Each amount of principal so deducted willbe paid in the manner mentioned above against surrender of the relative missing Coupon at anytime before the expiry of 10 years after the Relevant Date (as defined in Condition 8) in respectof such principal (whether or not such Coupon would otherwise have become void underCondition 9) or, if later, five years from the date on which such Coupon would otherwise havebecome due, but in no event thereafter.

Upon any Fixed Rate Note in definitive bearer form becoming due and repayable prior to itsMaturity Date, all unmatured Talons (if any) appertaining thereto will become void and nofurther Coupons will be issued in respect thereof.

Upon the date on which any Floating Rate Note, Dual Currency Note, Index Linked Note orLong Maturity Note in definitive bearer form becomes due and repayable, unmatured Couponsand Talons (if any) relating thereto (whether or not attached) shall become void and no paymentor, as the case may be, exchange for further Coupons shall be made in respect thereof. A “LongMaturity Note’’ is a Fixed Rate Note (other than a Fixed Rate Note which on issue had a Talonattached) whose nominal amount on issue is less than the aggregate interest payable thereonprovided that such Note shall cease to be a Long Maturity Note on the Fixed Interest Date onwhich the aggregate amount of interest remaining to be paid after that date is less than thenominal amount of such Note.

If the due date for redemption of any definitive Bearer Note is not an Interest Payment Date,interest (if any) accrued in respect of such Note from (and including) the preceding InterestPayment Date or, as the case may be, the Interest Commencement Date shall be payable onlyagainst surrender of the relevant definitive Bearer Note.

(c) Payments in respect of Bearer Global Notes: Payments of principal and interest (if any) in respectof Notes represented by any Global Note in bearer form will (subject as provided below) be madein the manner specified above in relation to definitive Bearer Notes and otherwise in the mannerspecified in the relevant Global Note against presentation or surrender, as the case may be, of suchGlobal Note at the specified office of any Paying Agent outside the United States. A record of eachpayment made against presentation or surrender of any Global Note in bearer form,distinguishing between any payment of principal and any payment of interest, will be made onsuch Global Note by the Paying Agent to which it was presented and such record shall be primafacie evidence that the payment in question has been made.

(d) Payments in respect of Registered Notes: Payments of principal (other than instalments ofprincipal prior to the final instalment) in respect of each Registered Note (whether or not in globalform) will be made against presentation and surrender (or, in the case of part payment of any sumdue, endorsement) of the Registered Note at the specified office of the Registrar or any of thePaying Agents. Such payments will be made by transfer to the Designated Account (as definedbelow) of the holder (or the first named of joint holders) of the Registered Note appearing in theregister of holders of the Registered Notes maintained by the Registrar (the “Register’’) at theclose of business on the third business day (being for this purpose a day on which banks are openfor business in the city where the specified office of the Registrar is located) before the relevantdue date (the “Record Date’’). Notwithstanding the previous sentence, if (i) a holder does nothave a Designated Account or (ii) the principal amount of the Notes held by a holder is less thanU.S.$250,000 (or its approximate equivalent in any other Specified Currency), payment willinstead be made by a cheque in the Specified Currency drawn on a Designated Bank (as definedbelow). For these purposes, “Designated Account’’ means the account (which, in the case of apayment in Japanese Yen to a non-resident of Japan, shall be a non-resident account) maintainedby a holder with a Designated Bank and identified as such in the Register and “Designated Bank’’means (in the case of payment in a Specified Currency other than euro) a bank in the principalfinancial centre of the country of such Specified Currency (which, if the Specified Currency isAustralian dollars or New Zealand dollars, shall be Sydney or Auckland, respectively) and (in thecase of a payment in euro) any bank which processes payments in euro.

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Payments of interest and payments of instalments of principal (other than the final instalment) inrespect of each Registered Note (whether or not in global form) will be made by a cheque in theSpecified Currency drawn on a Designated Bank and mailed by uninsured mail on the businessday in the city where the specified office of the Registrar is located immediately preceding therelevant due date to the holder (or the first named of joint holders) of the Registered Noteappearing in the Register at the close of business on the fifteenth day (whether or not suchfifteenth day is a business day) before the relevant due date (the “Record Date’’) at his addressshown in the Register on the Record Date and at his risk. Upon application of the holder to thespecified office of the Registrar not less than three business days in the city where the specifiedoffice of the Registrar is located before the due date for any payment of interest in respect of aRegistered Note, the payment may be made by transfer on the due date in the manner providedin the preceding paragraph. Any such application for transfer shall be deemed to relate to allfuture payments of interest (other than interest due on redemption) and instalments of principal(other than the final instalment) in respect of the Registered Notes which become payable to theholder who has made the initial application until such time as the Registrar is notified in writingto the contrary by such holder. Payment of the interest due in respect of each Registered Note onredemption and the final instalment of principal will be made in the same manner as payment ofthe principal amount of such Registered Note.

Holders of Registered Notes will not be entitled to any interest or other payment for any delay inreceiving any amount due in respect of any Registered Note as a result of a cheque posted inaccordance with this Condition arriving after the due date for payment or being lost in the post.No commissions or expenses shall be charged to such holders by the Registrar in respect of anypayments of principal or interest in respect of the Registered Notes.

All amounts payable to DTC or its nominee as registered holder of a Global Note in registeredform in respect of Notes denominated in a Specified Currency other than U.S. dollars shall be paidby transfer by the Registrar to an account in the relevant Specified Currency of the ExchangeAgent on behalf of DTC or its nominee for payment in such Specified Currency for conversioninto U.S. dollars in accordance with the provisions of the Agency Agreement.

None of the Issuer, the Guarantor or the Agents will have any responsibility or liability for anyaspect of the records relating to, or payments made on account of, beneficial ownership interestsin the Registered Global Notes or for maintaining, supervising or reviewing any records relatingto such beneficial ownership interests.

(e) General provisions applicable to payments: The holder of a Global Note shall be the only personentitled to receive payments in respect of Notes represented by such Global Note and the Issueror, as the case may be, the Guarantor will be discharged by payment to, or to the order of, theholder of such Global Note in respect of each amount so paid. Each of the persons shown in therecords of Euroclear, Clearstream or DTC as the beneficial holder of a particular nominal amountof Notes represented by such Global Note must look solely to Euroclear, Clearstream or DTC, asthe case may be, for his share of each payment so made by the Issuer or, as the case may be, theGuarantor to, or to the order of, the holder of such Global Note.

Notwithstanding the foregoing provisions of this Condition, if any amount of principal and/orinterest in respect of Bearer Notes is payable in U.S. dollars, such U.S. dollar payments ofprincipal and/or interest in respect of such Notes will be made at the specified office of a PayingAgent in the United States if: (i) the Issuer has appointed Paying Agents with specified officesoutside the United States with the reasonable expectation that such Paying Agents would be ableto make payment in U.S. dollars at such specified offices outside the United States of the fullamount of principal and interest on the Bearer Notes in the manner provided above when due;(ii) payment of the full amount of such principal and interest at all such specified offices outsidethe United States is illegal or effectively precluded by exchange controls or other similarrestrictions on the full payment or receipt of principal and interest in U.S. dollars; and (iii) suchpayment is then permitted under United States law without involving, in the opinion of the Issuerand the Guarantor, adverse tax consequences to the Issuer or the Guarantor.

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(f) Payment Day: If the date for payment of any amount in respect of any Note, Receipt or Couponis not a Payment Day, the holder thereof shall not be entitled to payment until the next followingPayment Day in the relevant place and shall not be entitled to further interest or other paymentin respect of such delay. For these purposes, “Payment Day’’ means any day which (subject toCondition 9) is:

(i) a day on which commercial banks and foreign exchange markets settle payments and areopen for general business (including dealing in foreign exchange and foreign currencydeposits) in:

(A) the relevant place of presentation;

(B) London;

(C) any Additional Financial Centre specified in the applicable Final Terms; and

(D) where the Issuer is FFT, Luxembourg, where the Issuer is FFC, Toronto, and where theIssuer is FFNA, New York City;

(ii) either (1) in relation to any sum payable in a Specified Currency other than euro, a day onwhich commercial banks and foreign exchange markets settle payments and are open forgeneral business (including dealing in foreign exchange and foreign currency deposits) in theprincipal financial centre of the country of the relevant Specified Currency (if other than theplace of presentation, London and any Additional Financial Centre and which if theSpecified Currency is Australian dollars or New Zealand dollars shall be Sydney orAuckland, respectively) or (2) in relation to any sum payable in euro, a day on which theTARGET System is open; and

(iii) in the case of any payment in respect of a Registered Global Note denominated in a SpecifiedCurrency other than U.S. dollars and registered in the name of DTC or its nominee and inrespect of which an accountholder of DTC (with an interest in such Registered Global Note)has elected to receive any part of such payment in U.S. dollars, a day on which commercialbanks are not authorised or required by law or regulation to be closed in New York City.

(g) Interpretation of principal and interest: Any reference in these Terms and Conditions to principalin respect of the Notes shall be deemed to include, as applicable:

(i) any additional amounts which may be payable with respect to principal under Condition 8;

(ii) the Final Redemption Amount of the Notes;

(iii) the Early Redemption Amount of the Notes;

(iv) the Optional Redemption Amount(s) (if any) of the Notes;

(v) in relation to Notes redeemable in instalments, the Instalment Amounts;

(vi) in relation to Zero Coupon Notes, the Amortised Face Amount (as defined in Condition7(e)); and

(vii) any premium and any other amounts (other than interest) which may be payable by theIssuer under or in respect of the Notes.

Any reference in these Conditions to interest in respect of the Notes shall be deemed to include,as applicable, any additional amounts which may be payable with respect to interest underCondition 8.

7. REDEMPTION AND PURCHASE

(a) Redemption at maturity: Unless previously redeemed or purchased and cancelled as specifiedbelow, each Note (including each Index Linked Redemption Note and Dual Currency

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Redemption Note) will be redeemed by the Issuer at its Final Redemption Amount specified in,or determined in the manner specified in, the applicable Final Terms in the relevant SpecifiedCurrency on the Maturity Date.

(b) Redemption for tax reasons:

(i) The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time(if this Note is neither a Floating Rate Note nor an Index Linked Interest Note) or on anyInterest Payment Date (if this Note is either a Floating Rate Note or an Index Linked InterestNote), on giving not less than 30 nor more than 60 days’ notice to the Principal Paying Agentand, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable),if:

(1) either the Issuer has or will become obliged to pay additional amounts as provided orreferred to in Condition 8 or the Guarantor would be unable for reasons outside itscontrol to procure payment by the Issuer and in making payment itself would berequired to pay such additional amounts, in each case as a result of any change in, oramendment to, the laws, regulations or rulings of the Relevant Tax Jurisdiction or anychange in the application or official interpretation of such laws, regulations or rulings,which change or amendment becomes effective on or after the date on which agreementis reached to issue the first Tranche of the Notes; and

(2) such obligation cannot be avoided by the Issuer or, as the case may be, the Guarantortaking reasonable measures available to it,

provided that no such notice of redemption shall be given earlier than 90 days prior to the earliestdate on which the Issuer or, as the case may be, the Guarantor would be obliged to pay suchadditional amounts were a payment in respect of the Notes then due.

Prior to the publication of any notice of redemption pursuant to this Condition 7(b), the Issueror, as the case may be, the Guarantor shall deliver to the Principal Paying Agent a certificatesigned by one Director of the Issuer or, as the case may be, one Director of the Guarantor statingthat the Issuer or, as the case may be, the Guarantor is entitled to effect such redemption andsetting forth a statement of facts showing that the conditions precedent to the right of the Issueror, as the case may be, the Guarantor so to redeem have occurred, and an opinion of independentlegal advisers of recognised standing to the effect that the Issuer or, as the case may be, theGuarantor has or will become obliged to pay such additional amounts as a result of such changeor amendment.

Notes redeemed pursuant to this Condition 7(b) will be redeemed at their Early RedemptionAmount referred to in paragraph (e) below together (if appropriate) with interest accrued to (butexcluding) the date of redemption.

“Relevant Tax Jurisdiction’’ shall mean, in the case of payment by the Issuer, the Grand-Duchy ofLuxembourg (where the Issuer is FFT), Canada (where the Issuer is FFC) or the United States ofAmerica (where the Issuer is FFNA) or any political subdivision or any authority thereof ortherein having power to tax and, in the case of payment by the Guarantor, shall mean theRepublic of Italy and any political subdivision or any authority thereof or therein having powerto tax.

(ii) Where the Issuer is FFNA:

If the Issuer shall determine that any payment made outside the United States by the Issuer or anyof its paying agents in respect of any Bearer Note, Receipt or Coupon would, under any presentor future laws or regulations of the United States, be subject to any certification, documentation,information or other reporting requirement of any kind the effect of which requirement is thedisclosure to the Issuer, the Guarantor, any paying agent or any governmental authority of thenationality, residence or identity of a beneficial owner of such Bearer Note, Receipt or Coupon

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that is a United States Alien (as defined in Condition 8(b)) (other than a requirement (a) thatwould not be applicable to a payment by the Issuer, the Guarantor or any one of its paying agents(i) directly to the beneficial owner or (ii) to a custodian, nominee or other agent of the beneficialowner, or (b) that can be satisfied by such custodian, nominee or other agent certifying to theeffect that the beneficial owner is a United States Alien, provided that, in any case referred to inclauses (a)(ii) or (b), payment by the custodian, nominee or agent to the beneficial owner is nototherwise subject to any such requirement, or (c) that would not be applicable to a payment byat least one paying agent of the Issuer), the Issuer shall elect either (x) to redeem the Notes inwhole but not in part, at a price equal to the Early Redemption Amount, together with accruedinterest to the date fixed for redemption or (y) if the conditions of the next succeeding paragraphare satisfied, to pay the additional amounts specified in such paragraph. The Issuer shall makesuch determination as soon as practicable and publish prompt notice thereof (the “DeterminationNotice”) stating the effective date of such certification, documentation, information or otherreporting requirement, whether the Issuer will redeem the Notes or pay the additional amountsspecified in the next succeeding paragraph, and (if applicable) the last date by which theredemption must take place, as provided in the next succeeding sentence. If the Notes are to beredeemed pursuant to this paragraph, such redemption shall take place on such date, not laterthan one year after the publication of the Determination Notice, as the Issuer shall specify bynotice to the Principal Paying Agent at least 45 days before the date fixed for redemption. Noticeof such redemption of the Notes will be given to the holders of the Notes not more than 60 norless than 30 days prior to the date fixed for redemption by publication in accordance withCondition 14. Notwithstanding the foregoing, the Issuer shall not so redeem the Notes if theIssuer shall subsequently determine, not less than 30 days prior to the date fixed for redemption,that subsequent payments on the Bearer Notes, Receipts and Coupons would not be subject toany such certification, documentation, information or other reporting requirement, in which casethe Issuer shall give prompt notice of such subsequent determination by publication in accordancewith Condition 14 and any earlier redemption notice shall be revoked and of no further effect.Prior to the publication of any Determination Notice pursuant to this paragraph, the Issuer shalldeliver to the Principal Paying Agent a certificate signed by one Director of the Issuer stating thatthe Issuer is obligated to make such determination and setting forth a statement of facts showingthat the conditions precedent to the obligation of the Issuer to redeem the Notes or to pay theadditional amounts specified in the next succeeding paragraph have occurred, and an opinion ofindependent legal advisers of recognised standing to the effect that such conditions have occurred.

If and so long as the certification, documentation, information or other reporting requirementsreferred to in the preceding paragraph would be fully satisfied by payment of a backupwithholding tax or similar charge, the Issuer may elect to pay as additional interest suchadditional amounts as may be necessary so that every net payment made outside the United Statesfollowing the effective date of such requirement by the Issuer or the Guarantor or any of itspaying agents in respect of any Bearer Note, Receipt or any Coupon of which the beneficial owneris a United States Alien (but without any requirement that the nationality, residence or identity,other than status as a United States Alien, of such beneficial owner be disclosed to the Issuer, theGuarantor, any paying agent or any governmental authority), after deduction or withholding foror on account of such backup withholding tax or similar charge (other than a backup withholdingtax or similar charge that (i) would not be applicable in the circumstances referred to in theparenthetical clause of the first sentence of the preceding paragraph, or (ii) is imposed as a resultof the presentation of such Bearer Note or Coupon for payment more than 15 days after the dateon which such payment became due and payable or on which payment thereof was duly providedfor, whichever occurred later), will not be less than the amount provided for in such Bearer Note,Receipt or Coupon to be then due and payable. If the Issuer elects to pay additional amountspursuant to this paragraph, the Issuer shall have the right to redeem the Notes at any time inwhole but not in part, subject to the provisions of the last three sentences of the immediatelypreceding paragraph. Any redemption payments made by the Issuer pursuant to the twoimmediately preceding sentences shall be subject to the continuing obligation of the Issuer to payadditional amounts pursuant to this paragraph. If the Issuer elects to pay additional amounts

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pursuant to this paragraph and the condition specified in the first sentence of this paragraphshould no longer be satisfied, then the Issuer shall redeem the Notes pursuant to the provisionsof the immediately preceding paragraph.

(c) Redemption at the option of the Issuer (“Issuer Call”): If Issuer Call is specified in the applicableFinal Terms, the Issuer may, having given:

(i) not less than 15 nor more than 30 days’ notice to the Noteholders in accordance withCondition 14; and

(ii) not less than 15 days before the giving of the notice referred to in (i), notice to the PrincipalPaying Agent and, in the case of a redemption of Registered Notes, the Registrar,

(which notices shall be irrevocable and shall specify the date fixed for redemption), redeem all orsome only of the Notes then outstanding on any Optional Redemption Date and at the OptionalRedemption Amount(s) described below or as otherwise specified in, or determined in the mannerspecified in, the applicable Final Terms together, if appropriate, with interest accrued to (butexcluding) the relevant Optional Redemption Date. Any such redemption must be of a nominalamount equal to the Minimum Redemption Amount or a Higher Redemption Amount, asspecified in the applicable Final Terms. In the case of a partial redemption of Notes, the Notes tobe redeemed (“Redeemed Notes’’) will be selected individually by lot, in the case of RedeemedNotes represented by definitive Notes, and in accordance with the rules of Euroclear and/ orClearstream and/or DTC, in the case of Redeemed Notes represented by a Global Note, not morethan 30 days prior to the date fixed for redemption (such date of selection being hereinafter calledthe “Selection Date’’). In the case of Redeemed Notes represented by definitive Notes, a list of theserial numbers of such Redeemed Notes will be published in accordance with Condition 14 notless than 15 days prior to the date fixed for redemption. The aggregate nominal amount ofRedeemed Notes represented by definitive Notes or represented by a Global Note shall in eachcase bear the same proportion to the aggregate nominal amount of all Redeemed Notes as theaggregate nominal amount of definitive Notes outstanding and Notes outstanding represented bysuch Global Note, respectively, bears to the aggregate nominal amount of the Notes outstanding,in each case on the Selection Date, provided that, if necessary, appropriate adjustments shall bemade to such nominal amounts to ensure that each represents an integral multiple of the SpecifiedDenomination. No exchange of the relevant Global Note will be permitted during the period from(and including) the Selection Date to (and including) the date fixed for redemption pursuant tothis paragraph (c) and notice to that effect shall be given by the Issuer to the Noteholders inaccordance with Condition 14 at least five days prior to the Selection Date.

Except as otherwise specified in the applicable Final Terms, the Optional Redemption Amount inrelation to any Notes denominated in euro and redeemed pursuant to this Condition 7(c) shall bean amount equal to 100 per cent. of the principal amount of such Notes together (if appropriate)with interest accrued to (but excluding) the date of redemption, plus the Applicable Premium.

In these Conditions:

“Applicable Premium” means, with respect to the relevant Note(s) on any redemption date, thegreater of:

(i) 1.0 per cent. of the principal amount of such Note(s), or

(ii) the excess of:

(A) the present value at such redemption date of (i) the principal amount of such Note(s) atmaturity plus (ii) all required interest payments due on such Note(s) through theMaturity Date indicated in the relevant Final Terms, (excluding accrued but unpaidinterest to the redemption date), computed using a discount rate equal to the Bund Rateas of such redemption date plus 0.50 per cent.; over

(B) the principal amount of such Note(s), if greater.

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“Bund Rate” means, with respect to any relevant date, the rate per annum equal to the equivalentyield to maturity as of such date of the Comparable German Bund Issue, (expressed as apercentage of its principal amount) equal to the Comparable German Bund Price for such relevantdate, where:

(i) “Comparable German Bund Issue” means the German Bundesanleihe security selected byany Reference German Bund Dealer as having a fixed maturity most nearly equal to theperiod from such redemption date to the Maturity Date indicated in the relevant FinalTerms, and that would be utilised, at the time of selection and in accordance with customaryfinancial practice, in pricing new issues of euro-denominated corporate debt securities in aprincipal amount approximately equal to the then outstanding principal amount of theNotes, and of a maturity most nearly equal to the Maturity Date indicated in the relevantFinal Terms; provided, however, that, if the period from such redemption date to theMaturity Date indicated in the relevant Final Terms is less than one year, a fixed maturity ofone year shall be used;

(ii) “Comparable German Bund Price” means, with respect to any relevant date, the average ofall Reference German Bund Dealer Quotations for such date (which, in any event, mustinclude at least two such quotations), after excluding the highest and lowest such ReferenceGerman Bund Dealer Quotations or, if the Issuer obtains fewer than four such ReferenceGerman Bund Dealer Quotations, the average of all such quotations;

(iii) “Reference German Bund Dealer” means any dealer of German Bundesanleihe securitiesappointed by the Issuer; and

(iv) “Reference German Bund Dealer Quotations” means, with respect to each ReferenceGerman Bund Dealer and any relevant date, the average as determined by the Issuer of thebid and offered prices for the Comparable German Bund Issue (expressed in each case as apercentage of its principal amount) quoted in writing to the Issuer by such ReferenceGerman Bund Dealer at or about 3.30 p.m. Frankfurt time, on the third business day (beingfor this purpose a day on which banks are open for business in Frankfurt and London)preceding the relevant date.

(d) Redemption at the option of the Noteholders (“Investor Put”): If Investor Put is specified in theapplicable Final Terms, upon the holder of any Note giving to the Issuer in accordance withCondition 14 not less than 15 nor more than 30 days’ notice the Issuer will, upon the expiry ofsuch notice, redeem, subject to, and in accordance with, the terms specified in the applicable FinalTerms, in whole (but not, in the case of a Bearer Note in definitive form, in part), such Note onthe Optional Redemption Date and at the Optional Redemption Amount together, if appropriate,with interest accrued to (but excluding) the Optional Redemption Date. Registered Notes may beredeemed under this Condition 7(d) in any multiple of their lowest Specified Denomination.

If this Note is in definitive form, to exercise the right to require redemption of this Note, theholder of this Note must deliver this Note at the specified office of any Paying Agent (in the caseof Bearer Notes) or the Registrar (in the case of Registered Notes) at any time during normalbusiness hours of such Paying Agent or, as the case may be, the Registrar falling within the noticeperiod, accompanied by a duly completed and signed notice of exercise in the form (for the timebeing current) obtainable from any specified office of any Paying Agent or, as the case may be,the Registrar (a “Put Notice’’) and in which the holder must specify a bank account (or, ifpayment is required to be made by cheque, an address) to which payment is to be made underthis Condition and, in the case of Registered Notes, the nominal amount thereof to be redeemedand, if less than the full nominal amount of the Registered Notes so surrendered is to beredeemed, an address to which a new Registered Note in respect of the balance of such RegisteredNotes is to be sent subject to and in accordance with the provisions of Condition 2(b).

Any Put Notice given by a holder of any Note pursuant to this paragraph shall be irrevocableexcept where prior to the due date for redemption an Event of Default shall have occurred and

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be continuing in which event such holder, at its option, may elect by notice to the Issuer towithdraw the notice given pursuant to this paragraph and instead to declare such Note forthwithdue and payable pursuant to Condition 10.

(e) Early Redemption Amounts: For the purpose of paragraph (b) above and Condition 10, eachNote will be redeemed at its Early Redemption Amount calculated as follows:

(i) in the case of a Note with a Final Redemption Amount equal to the Issue Price, at the FinalRedemption Amount thereof;

(ii) in the case of a Note (other than a Zero Coupon Note but including an Instalment Note ora Partly Paid Note) with a Final Redemption Amount which is or may be less or greater thanthe Issue Price or which is payable in a Specified Currency other than that in which the Notesare denominated, at the amount specified in, or determined in the manner specified in, theapplicable Final Terms or, if no such amount or manner is so specified in the applicable FinalTerms, at its nominal amount; or

(iii) in the case of a Zero Coupon Note, at an amount (the “Amortised Face Amount’’) calculatedin accordance with the following formula:

Early Redemption Amount = RP x (1 + AY)y

where:

“RP” means the Reference Price;

“AY” means the Accrual Yield expressed as a decimal; and

“y” is a fraction, the numerator of which is equal to the number of days (calculated onthe basis of a 360-day year consisting of 12 months of 30 days each) from (andincluding) the Issue Date of the first Tranche of the Notes to (but excluding) thedate fixed for redemption or (as the case may be) the date upon which such Notebecomes due and repayable and the denominator of which is 360,

or on such other calculation basis as may be specified in the applicable Final Terms.

(f) Instalments: Instalment Notes will be redeemed in the Instalment Amounts and on the InstalmentDates. In the case of early redemption, the Early Redemption Amount will be determinedpursuant to paragraph (e) above.

(g) Partly Paid Notes: Partly Paid Notes will be redeemed, whether at maturity, early redemption orotherwise, in accordance with the provisions of this Condition and the applicable Final Terms.

(h) Purchases: The Issuer, the Guarantor or any of their respective subsidiaries may at any timepurchase Notes (provided that, in the case of definitive Bearer Notes, all unmatured Receipts,Coupons and Talons appertaining thereto are purchased therewith) at any price in the openmarket or otherwise. If purchases are made by tender, tenders must be available to all Noteholdersalike. Such Notes may be held, reissued, resold or, at the option of the Issuer or the Guarantor,surrendered to any Paying Agent and/or the Registrar for cancellation.

(i) Cancellation: All Notes which are redeemed will forthwith be cancelled (together with allunmatured Receipts, Coupons and Talons attached thereto or surrendered therewith at the timeof redemption). All Notes so cancelled and the Notes purchased and cancelled pursuant toparagraph (h) above (together with all unmatured Receipts, Coupons and Talons cancelledtherewith) shall be forwarded to the Principal Paying Agent and cannot be reissued or resold.

(j) Late payment on Zero Coupon Notes: If the amount payable in respect of any Zero Coupon Noteupon redemption of such Zero Coupon Note pursuant to paragraph (a), (b), (c) or (d) above orupon its becoming due and repayable as provided in Condition 10 is improperly withheld orrefused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount

57



calculated as provided in paragraph (e)(iii) above as though the references therein to the date fixedfor the redemption or the date upon which such Zero Coupon Note becomes due and payablewere replaced by references to the date which is the earlier of:

(i) the date on which all amounts due in respect of such Zero Coupon Note have been paid; and

(ii) the date on which the full amount of the monies payable in respect of such Zero CouponNotes has been received by the Principal Paying Agent or the Registrar and notice to thateffect has been given to the Noteholders in accordance with Condition 14.

(k) Repurchase at the Option of Noteholders—Change of Control: If a Change of Control occurs,the holder of any Note will have the right to require the Issuer thereof to repurchase all (but not,in the case of a Bearer Note in definitive form, any part) of such Note pursuant to a Change ofControl Offer. Registered Notes may be repurchased under this Condition 7(k) in any multiple oftheir lowest Specified Denomination. In the Change of Control Offer, the relevant Issuer will offera Change of Control Payment in cash equal to 101 per cent. of the aggregate principal amount ofNotes repurchased plus accrued and unpaid interest, if any, to the date of purchase. Within thirty(30) days following any Change of Control, the Issuer will give notice to each holder describingthe transaction or transactions that constitute the Change of Control and offering to repurchaseNotes on the Change of Control Payment Date specified in the notice, which date will be noearlier than 30 days and no later than 60 days from the date such notice is given to Noteholdersin accordance with Condition 14. If and for so long as the Notes are listed on the Irish StockExchange and the rules of that exchange so require, the Issuer will publish notices relating to theChange of Control Offer in a leading newspaper of general circulation in Ireland (which isexpected to be the Irish Times).

The Issuer will comply with any applicable securities laws and regulations thereunder to theextent those laws and regulations are applicable in connection with the repurchase of the Notesas a result of a Change of Control. To the extent that the provisions of any securities laws orregulations conflict with this provision, the relevant Issuer will comply with the applicablesecurities laws and regulations and will not be deemed to have breached its obligations under thisprovision by virtue of such compliance.

On the Change of Control Payment Date, the relevant Issuer will, to the extent lawful:

(i) accept for payment all Notes or portions of Notes properly tendered pursuant to the Changeof Control Offer;

(ii) deposit with the Principal Paying Agent an amount equal to the Change of Control Paymentin respect of all Notes or portions of Notes properly tendered; and

(iii) deliver or cause to be delivered for cancellation the Notes properly accepted together withan officers’ certificate of the relevant Issuer stating the aggregate principal amount of Notesor portions of Notes being purchased by the relevant Issuer.

If the Note is in definitive form, to exercise the right to require repurchase of the Note the holderof the Note must deliver this Note at the specified office of any Paying Agent (in the case of BearerNotes) or the Registrar (in the case of Registered Notes) at any time during normal business hoursof such Paying Agent or, as the case may be, the Registrar, within the notice period, accompaniedby a duly completed and signed acceptance notice in the form (for the time being current)obtainable from any specified office of any Paying Agent or, as the case may be, the Registrar (an“Acceptance Notice’’) and in which the holder must specify a bank account (or, if payment isrequired to be made by cheque, an address) to which payment is to be made under this Conditionand, in the case of Registered Notes, the nominal amount thereof to be redeemed and, if less thanthe full nominal amount of the Registered Notes so surrendered is to be redeemed, an address towhich a new Registered Note in respect of the balance of such Registered Notes is to be sentsubject to and in accordance with the provisions of Condition 2(b).

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Any Acceptance Notice given by a holder of any Note pursuant to this paragraph shall beirrevocable except where prior to the due date for redemption an Event of Default shall haveoccurred and be continuing in which event such holder, at its option, may elect by notice to theIssuer to withdraw the notice given pursuant to this paragraph and instead declare such Noteforthwith due and payable pursuant to Condition 10.

The Issuer will not be required to make a Change of Control Offer upon a Change of Control ifa third party makes the Change of Control Offer in the manner, at the times and otherwise incompliance with the requirements set forth herein applicable to a Change of Control Offer madeby the Issuer and purchases all Notes properly tendered and not withdrawn under the Change ofControl Offer.

In these Conditions, the following expressions shall have the following meanings:

“Change of Control” means the occurrence of both (i) an event described in clauses (1) or (2)below and (ii) a Rating Decline:

(1) the consummation of any transaction (including, without limitation, any merger orconsolidation), the result of which is that any “person” (as that term is used in Section 13(d)of the Exchange Act), other than one or more Related Parties, becomes the beneficial owner,directly or indirectly, of more than 50 per cent. of the Voting Stock of the Guarantormeasured by voting power rather than number of shares; or

(2) the stockholders of the Guarantor or the Issuer approve any plan of liquidation ordissolution of the Guarantor or the Issuer, as the case may be;

“Change of Control Offer” means the offer to repurchase the Notes following a Change ofControl as further described above;

“Person” means any individual, group, company, corporation, partnership, joint venture,association, joint-stock company, trust, unincorporated organisation, limited liability company orgovernment or other entity;

“Rating Date” means (i) the date one business day (being for this purpose a day on which banksare open for business in Turin and London) prior to the occurrence of an event specified in clauses(1) to (3) of the definition of Change of Control or, if applicable, and only with respect to the typeof transaction specified in clause (1) of the definition of Change of Control, the date one businessday before the first public announcement of a definitive agreement with respect to suchtransaction and (ii) in the event that a Rating Agency has announced a Rating Decline of theNotes within 90 days prior to the occurrence of an event specified in clauses (1) to (3) of thedefinition of Change of Control or, if applicable, and only with respect to the type of transactionspecified in clause (1) of the definition of Change of Control, within 90 days before the first publicannouncement of a definitive agreement with respect to such transaction, and the officialstatement issued by a Rating Agency announcing the Rating Decline refers to such event ortransaction as a reason for such downgrade, the date one business day prior to suchannouncement by a Rating Agency;

“Rating Agency” means Moody’s or Standard & Poor’s (each as herein defined), or, if either suchentity ceases to rate the Notes for reasons outside of the control of the Guarantor or the relevantIssuer, the equivalent investment grade credit rating from any other “nationally recognisedstatistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under theExchange Act;

“Rating Decline” means the occurrence on any date within the 60-day period following theoccurrence of the event specified in clauses (1) to (3) of the definition of a Change of Control(which period shall be extended so long as during such period any rating of the Notes is underpublicly announced consideration for possible downgrade by a Rating Agency, provided that suchextension shall not be for more than 30 days) of: (i) in the event the Notes are rated by any RatingAgency on the Rating Date below Investment Grade, the rating of the Notes by such Rating

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Agency within such period being at least one rating category below the rating of the Notes bysuch Rating Agency on the Rating Date, (ii) in the event the Notes are rated by any Rating Agencyon the Rating Date as Investment Grade, the rating of the Notes within such period by suchRating Agency being (A) at least two rating categories below the rating of the Notes by suchRating Agency on the Rating Date or (B) below Investment Grade or (iii) the Notes not beingrated by any Rating Agency. In determining how many rating categories the rating of the Noteshas decreased, gradation will be taken in account (e.g., with respect to Standard & Poor’s, adecline in a rating from BB+ to BB, or from BB to B-, will constitute a decrease of one ratingcategory);

“Related Party” means (i) each of the owners and beneficial holders of interests in GiovanniAgnelli & C. S.A.p.A. (at the Issue Date and each of their spouses, heirs, legatees, descendents andblood relatives to the third degree, (ii) Giovanni Agnelli & C. S.A.p.A. or (iii) any Person directlyor indirectly under the Control of Giovanni Agnelli & C. S.A.p.A. For the purposes of thisdefinition, the term “Control” means (1) the direct or indirect ownership (beneficial or otherwise)of more than 50 per cent. of the Voting Stock of a Person measured by voting power rather thannumber of shares or (2) the power to appoint or remove all or the majority of the directors orother equivalent officers of a Person; and

“Voting Stock” of any Person as of any date means the capital stock of such Person that is at thetime entitled to vote in the election of the board of directors of such Person.

8. TAXATION

All amounts payable in respect of the Notes, Receipts and Coupons by the Issuer or the Guarantor, asthe case may be, will be made without withholding or deduction for or on account of any present orfuture taxes or duties of whatever nature imposed or levied by or on behalf of the Relevant TaxJurisdiction (as defined in Condition 7) unless such withholding or deduction is required by law. Insuch event, the Issuer or, as the case may be, the Guarantor will pay such additional amounts as shallbe necessary in order that the net amounts received by the holders of the Notes, Receipts or Couponsafter such withholding or deduction shall equal the respective amounts which would otherwise havebeen receivable in respect of the Notes, Receipts or Coupons, as the case may be, in the absence of suchwithholding or deduction except as follows:

(a) Where the Issuer is FFT:

No such additional amounts shall be payable with respect to any Note, Receipt or Coupon:

(i) presented for payment in Luxembourg or the Republic of Italy; or

(ii) presented for payment by, or by a third party on behalf of, a holder who is liable to those taxesor duties in respect of that Note, Receipt or Coupon by reason of his having some connectionwith the Relevant Tax Jurisdiction other than the mere holding of the Note, Receipt or Couponor the receipt of principal or interest in respect of it; or

(iii) presented for payment by a holder who is able to avoid the withholding by making a declarationof non-residence or other similar claim for exemption to the relevant tax authority; or

(iv) presented for payment more than 30 days after the Relevant Date except to the extent that theholder thereof would have been entitled to additional amounts on presenting it for payment onthe last day of such 30-day period assuming that day to have been a Payment Date; or

(v) where such withholding or deduction is imposed on a payment to an individual and is requiredto be made pursuant to European Council Directive 2003/48/EC or any law implementing orcomplying with, or introduced in order to conform to, such Directive; or

(vi) presented for payment by or on behalf of a holder who would be able to avoid suchwithholding or deduction by presenting the relevant Note, Receipt or Coupon to anotherPaying Agent in a member state of the European Union.

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(b) Where the Issuer is FFC:


(i) presented for payment in the Republic of Italy;

(ii) presented for payment by, or by a third party on behalf of, a holder who is liable for such taxesor duties in respect of such Note, Receipt or Coupon by reason of his having some connectionwith the Relevant Tax Jurisdiction other than the mere holding or use or ownership of suchNote, Receipt or Coupon or deemed holding or use outside Canada or ownership as a non-resident of Canada of such Note, Receipt or Coupon;

(iii) presented for payment by, or by a third party on behalf of, a holder in respect of whom suchtaxes or duties are required to be withheld or deducted by reason of the holder being a personwith whom FFC is not dealing at arm’s length (within the meaning of the Income Tax Act(Canada));

(iv) presented for payment more than 30 days after the Relevant Date except to the extent that theholder thereof would have been entitled to an additional amount on presenting the same forpayment on such thirtieth day assuming that day to have been a Payment Day;

(v) presented for payment by, or by a third party on behalf of, a holder in respect of whom anysuch taxes or duties would not have been so imposed but for the failure of such holder tocomply with any requirement under relevant income tax treaties or Canadian statutes andregulations (or any administrative practice in Canada) to claim or establish entitlement toexemption from or reduction of such taxes or duties;

(vi) presented for payment in respect of any taxes or duties required to be withheld by any PayingAgent from any payment in respect of any Note, Receipt or Coupon, if such payment can bemade without such withholding by any other Paying Agent; or

(vii) where such withholding or deduction is imposed on a payment to an individual and is requiredto be made pursuant to European Council Directive 2003/48/EC or any law implementing orcomplying with, or introduced in order to conform to, such Directive.

(c) Where the Issuer is FFNA:


(i) presented for payment for or on account of any tax assessment or other governmental chargethat would not have been imposed but for (x) the existence of any present or former connectionbetween such holder (or between a fiduciary, settlor or beneficiary of, or a person holding apower over, such holder, if such holder is an estate or a trust, or a member or shareholder ofsuch holder, if such holder is a partnership or a corporation) and the Relevant Tax Jurisdiction(other than the mere receipt of such payment or the holding of such Note), including, withoutlimitation, such holder (or such fiduciary, settlor, beneficiary, person holding a power, memberor shareholder) being or having been a citizen or resident thereof or being or having beenengaged in trade or business or present therein or having or having had a permanentestablishment therein or (y) (where the Relevant Tax Jurisdiction is the United States) suchholder’s past or present status as a personal holding company or private foundation or othertax-exempt organisation with respect to the United States or as a corporation that accumulatesearnings to avoid United States federal income tax;

(ii) presented for payment for or on account of any estate, inheritance, gift, sales, transfer orpersonal property tax or any similar tax, assessment or other governmental charge;

(iii) presented for payment for or on account of any tax, assessment or other governmental chargethat would not have been imposed but for the presentation by the holder of a Note, Receipt orCoupon for payment more than 30 days after the Relevant Date;

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(iv) presented for payment for or on account of any tax, assessment or other governmental chargethat is payable otherwise than by deduction or withholding from a payment on a Note, Receiptor Coupon;

(v) presented for payment for or on account of any tax, assessment or other governmental chargerequired to be deducted or withheld by any Paying Agent from a payment on a Note, Receiptor Coupon, if such payment can be made without such deduction or withholding by any otherPaying Agent;

(vi) presented for payment for or on account of any tax, assessment or other governmental chargethat would not have been imposed but for a failure to comply with any applicable certification,documentation, information or other reporting requirement concerning the nationality,residence, identity or connection with the United States of the holder or beneficial owner of aNote, Receipt or Coupon if, without regard to any tax treaty, such compliance is required bystatute or regulation of the United States as a precondition to relief or exemption from suchtax, assessment or other governmental charge;

(vii) presented for payment for or on account of any tax, assessment or other governmental chargeimposed on a holder that actually or constructively owns 10 per cent. or more of the combinedvoting power of all classes of stock of the Issuer or that is a controlled foreign corporationrelated to the Issuer through stock ownership; or

(viii) where such withholding or deduction is imposed on a payment to an individual and is requiredto be made pursuant to European Council Directive 2003/48/EC or any law implementing orcomplying with, or introduced in order to conform to, such Directive;

nor shall such additional amounts be paid with respect to a payment on a Note, Receipt orCoupon to a holder that is a fiduciary or partnership or other than the sole beneficial owner ofsuch payment to the extent a beneficiary or settlor with respect to such fiduciary or a memberof such partnership or a beneficial owner would not have been entitled to the additionalamounts had such beneficiary, settlor, member or beneficial owner been the holder of suchNote, Receipt or Coupon.

The term “United States Alien” means any person who, for United States federal income taxpurposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciaryof a foreign estate or trust, or a foreign partnership one or more of the members of which is, forUnited States federal income tax purposes, a foreign corporation, a non-resident alien individualor a non-resident alien fiduciary of a foreign estate or trust.

As used in these Conditions, “Relevant Date”, in respect of any payment, means the date onwhich that payment first becomes due but, if the full amount of the monies payable has not beenreceived by the Principal Paying Agent on or before the due date, it means the date on which, thefull amount of those monies having been so received, notice to that effect has been duly given tothe relevant Noteholders in accordance with Condition 14.

9. PRESCRIPTION

The Notes (whether in bearer or registered form), Receipts and Coupons will become void unlesspresented for payment within a period of 10 years (in the case of principal) and five years (in the caseof interest) after the Relevant Date (as defined in Condition 8) therefor.

There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claimfor payment in respect of which would be void pursuant to this Condition or Condition 6(b) or anyTalon which would be void pursuant to Condition 6(b).

10. EVENTS OF DEFAULT

If any of the following events (each an “Event of Default’’) shall occur:

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(i) there is a default for more than 14 days after the date when due in the payment of principal orinterest (if any) due in respect of the Notes; or

(ii) there is default in the performance of any other obligation under the Agency Agreement, theNotes or the Guarantee (a) which is incapable of remedy or (b) which, being a default capable ofremedy, continues for 30 days after written notice of such default has been given through thePrincipal Paying Agent by the holder of any Note to the Issuer and the Guarantor; or

(iii) any final order shall be made by any competent court or other authority or resolution passed bythe Issuer or the Guarantor for the dissolution or winding-up of the Issuer or the Guarantor orfor the appointment of a liquidator, receiver or trustee of the Issuer or the Guarantor or of all ora substantial part of their respective assets, provided that there shall be no Event of Default in thecase of a resolution passed by the Issuer or the Guarantor for the liquidation or dissolution of theIssuer or the Guarantor, as at the case may be, to the extent that the Issuer has made a Change ofControl Offer and repurchased the Notes from Noteholders following a Change of Control; or

(iv) the Issuer or the Guarantor shall stop payment or shall be unable to, or shall admit to creditorsgenerally its inability to pay its debts as they fall due, or shall be finally adjudicated or foundbankrupt or insolvent, or shall enter into any composition or other arrangement with its creditorsgenerally (including without limitation, in the case of the Guarantor, the procedures of fallimento,amministrazione controllata or concordato preventivo under R.D. No. 267 of 16th March, 1942,as amended, and amministrazione straordinaria delle grandi imprese in crisi under D.L. No. 26of 30th January, 1979, enacted by Law No. 95 of 3rd April, 1979 as amended), or, where FFT isthe Issuer, the Issuer shall apply for controlled management (gestion contrôlée) or reprieve frompayment (sursis de paiement); or

(v) the Issuer or the Guarantor ceases, or threatens to cease, to carry on business unless suchcessation, or threatened cessation, is in connection with a merger, consolidation or any other formof combination with another company and such company in the case of the Issuer, assumes allobligations of the Issuer under the Notes, and in the case of the Guarantor, assumes all obligationsof the Guarantor under the Guarantee; or

(vi) the Issuer ceases to be controlled directly or indirectly by the Guarantor, for which purpose theGuarantor shall be deemed to control the Issuer only if the Guarantor directly or indirectly,through one or more companies controlled by it within the meaning of this definition, (a) ownsmore than 50 per cent. of the voting share capital of the Issuer; or (b) has power to appoint orremove more than 50 per cent. of the board of directors (or other similar senior supervisory body)of the Issuer; or

(vii) there shall have occurred a default under any mortgage, indenture or instrument under whichthere may be issued or by which there may be secured or evidenced any Indebtedness of therelevant Issuer, the Guarantor or any Material Subsidiary (as defined below in this Condition 10)(or the payment of which is guaranteed by the relevant Issuer, the Guarantor or any such MaterialSubsidiary) which default (A) is caused by a failure to pay the principal, interest or premium, ifany, of any such Indebtedness (including without limitation a such failure under any called butunpaid guarantee issued or given by the Issuer, the Guarantor or any such Material Subsidiary inrespect of any such Indebtedness) whether in the case of a repayment at maturity, a mandatoryprepayment or otherwise, in each case after any applicable grace period provided in suchIndebtedness or guarantee on the date of such failure (each such failure being a “paymentdefault”), which payment default has not been validly waived in accordance with the terms ofsuch Indebtedness or guarantee and applicable law, provided that the amount unpaid pursuant tosuch payment default, together with the amount unpaid pursuant to any other such paymentdefault that has not been so waived or has not been otherwise validly cured aggregates€100,000,000 or (B) results in the acceleration of such Indebtedness prior to its express maturity,and such acceleration has not been validly waived in accordance with the terms of suchIndebtedness and applicable law, provided that the principal amount of such Indebtedness soaccelerated, together with the principal amount of any such other Indebtedness the maturity of

63



which has been so accelerated and has not been waived or otherwise validly cured, aggregates€250,000,000; or

(viii) the Guarantee shall be held in any judicial proceeding (in each case being a judgment or orderfrom which no further appeal or judicial review is permissible under applicable law) to beunenforceable or invalid or shall cease for any reason to be in full force and effect or theGuarantor shall deny or disaffirm its obligations under the Guarantee, as the case may be,

then any holder of a Note may, by written notice to the Issuer at the specified office of the PrincipalPaying Agent, effective upon the date of receipt thereof by the Principal Paying Agent, declare anyNotes held by the holder to be forthwith due and payable whereupon the same shall become forthwithdue and payable at the Early Redemption Amount (as described in Condition 7(e)), together withaccrued interest (if any) to the date of repayment, without presentment, demand, protest or othernotice of any kind.

For the purposes of this Condition 10, the term “Material Subsidiary” means (A) each of Fiat GroupAutomobiles S.p.A., CNH Global N.V. and Iveco S.p.A. (and any other person Controlled by Fiatwhich any of Fiat Group Automobiles S.p.A., CNH Global N.V. and Iveco S.p.A is consolidated ormerged with or into or to whom all or substantially all of the assets of such entity is sold, assigned,transferred, leased or otherwise disposed of); (B) any Member of the Fiat Group the total assets ofwhich on a stand-alone basis (excluding intra-Group items and as determined from the entity's mostrecent IFRS financial data used by Fiat in the preparation of its most recent audited IFRS consolidatedfinancial statements) constitutes five per cent. or more of the consolidated total assets of the Fiat Group(as determined from Fiat’s most recent audited IFRS consolidated financial statements); (C) anyTreasury Subsidiary or (D) any entity under the direct or indirect Control of Fiat that directly orindirectly Controls a subsidiary that meets the requirements of the preceding clauses (A), (B) or (C),provided that if any such entity Controls such a subsidiary only pursuant to the aggregate ownershiptest specified in the proviso to clause (1) of the definition of “Control”, “Controls” or “Controlled”below, then, and only then, the Issuer and Fiat shall have the right to designate which such entities shallbe deemed to so Control such a subsidiary provided that, in each case, such designated entities Controlin the aggregate more than 50 per cent. of the relevant subsidiary's Voting Stock. For purposes of thisdefinition of “Material Subsidiary,” (i) the term “Control”, “Controls” or “Controlled” means (1) thedirect or indirect ownership (beneficial or otherwise) of more than 50 per cent. of the Voting Stock ofa Person measured by voting power rather than number of shares, provided that to the extent that nosingle entity directly owns more than 50 per cent. of the Voting Stock of a Person, entities withaggregate direct or indirect ownership of more than 50 per cent. of the Voting Stock of a Person willbe deemed to Control such Person or (2) the power to appoint or remove all or the majority of thedirectors or other equivalent officers of a Person and (ii) no Financial Services Subsidiary shall beconsidered or deemed to be a Material Subsidiary. Notwithstanding the foregoing, a subsidiary shallbe considered or deemed to be a Material Subsidiary only to the extent that such is located ordomiciled in an OECD Country (or, to the extent that the Organisation for Economic Co-operationand Development or a successor organisation no longer exists, the countries that were members of therelevant organisation on the date such organisation ceased to exist).

For purposes of this Condition 10, the term “OECD Country” means a country that is member of theOrganisation for Economic Co-operation and Development or any successor organisation at the timeof the occurrence of a payment default or acceleration specified in clause (vii) of this Condition 10 (or,to the extent that the Organisation for Economic Co-operation and Development or a successororganisation no longer exists, at the time the relevant organisation ceased to exist).

For purposes of this Condition 10, “Treasury Subsidiary” means (A) each of Fiat Finance and TradeLtd. société anonyme, Fiat Finance North America, and Fiat Finance Canada Ltd. and (B) any othersubsidiary of Fiat the primary purpose of which is borrowing funds, issuing securities or incurringIndebtedness. For the avoidance of doubt, “Treasury Subsidiary” does not, and shall not be deemedto, include any Financial Services Subsidiary.

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11. REPLACEMENT OF NOTES, RECEIPTS, COUPONS AND TALONS

Should any Note, Receipt, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may bereplaced at the specified office of the Principal Paying Agent (in the case of Bearer Notes, Receipts orCoupons) or the Registrar (in the case of Registered Notes) upon payment by the claimant of suchcosts and expenses as may be incurred in connection therewith and on such terms as to evidence andindemnity as the Issuer may reasonably require. Mutilated or defaced Notes, Receipts, Coupons orTalons must be surrendered before replacements will be issued.

12. AGENTS

The names of the initial Agents and their initial specified offices are set out below.

The Issuer is entitled to vary or terminate the appointment of any Agent and/or appoint additional orother Agents and/or approve any change in the specified office through which any Agent acts, providedthat:

(a) there will at all times be a Principal Paying Agent and a Registrar;

(b) so long as the Notes are listed on any stock exchange, there will at all times be a Paying Agent(in the case of Bearer Notes) and a Transfer Agent (in the case of Registered Notes) with aspecified office in such place as may be required by the rules and regulations of the relevant stockexchange; and

(c) the Issuer will ensure that it maintains a Paying Agent in an EU member state that will not beobliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or anylaw implementing or complying with, or introduced in order to conform to such Directive.

In addition, the Issuer shall forthwith appoint a Paying Agent having a specified office in New YorkCity in the circumstances described in Condition 6(e). Any variation, termination, appointment orchange shall only take effect (other than in the case of insolvency, when it shall be of immediate effect)after not less than 30 nor more than 45 days’ prior notice thereof shall have been given to theNoteholders in accordance with Condition 14.

In acting under the Agency Agreement, the Agents act solely as agents of the Issuer and the Guarantorand do not assume any obligation to, or relationship of agency or trust with, any Noteholders,Receiptholders or Couponholders. The Agency Agreement contains provisions permitting any entityinto which any Agent is merged or converted or with which it is consolidated or to which it transfersall or substantially all of its assets to become the successor agent.

13. EXCHANGE OF TALONS

On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheetmatures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specifiedoffice of the Principal Paying Agent or any other Paying Agent in exchange for a further Coupon sheetincluding (if such further Coupon sheet does not include Coupons to (and including) the final date forthe payment of interest due in respect of the Note to which it appertains) a further Talon, subject tothe provisions of Condition 9.

14. NOTICES

All notices regarding the Bearer Notes will be deemed to be validly given if published (i) in a leadingEnglish language daily newspaper of general circulation in London, and (ii) if and for so long as theBearer Notes are listed on the Irish Stock Exchange and the rules of the Irish Stock Exchange sorequire, a daily newspaper of general circulation in Ireland. It is expected that such publication will bemade in the Financial Times in London and the Irish Times in Ireland. The Issuer shall also ensure thatnotices are duly published in a manner which complies with the rules and regulations of any stockexchange on which the Bearer Notes are for the time being listed. Any such notice will be deemed to

65



have been given on the date of the first publication or, where required to be published in more thanone newspaper, on the date of the first publication in all required newspapers.

All notices regarding the Registered Notes will be deemed to be validly given if sent by first class mailor (if posted to an address overseas) by airmail to the holders (or the first named of joint holders) attheir respective addresses recorded in the Register and will be deemed to have been given on the fourthday after mailing and, in addition, for so long as any Registered Notes are listed on a stock exchangeand the rules of that stock exchange so require, such notice will be published in a daily newspaper ofgeneral circulation in the place or places required by the rules of that stock exchange.

Until such time as any definitive Notes are issued, there may, so long as any Global Notes representingthe Notes are held in their entirety on behalf of Euroclear and/or Clearstream and/or DTC, besubstituted for such publication in such newspaper(s) the delivery of the relevant notice to Euroclearand/or Clearstream and/or DTC for communication by them to the holders of the Notes and, inaddition, for so long as any Notes are listed or admitted to trading on a stock exchange and the rulesof that stock exchange so require, such notice will be published in a daily newspaper of generalcirculation in the place or places required by the rules of that stock exchange. Any such notice shall bedeemed to have been given to the holders of the Notes on the seventh day after the day on which thesaid notice was given to Euroclear and/or Clearstream and/or DTC.

Notices to be given by any Noteholder shall be in writing and given by lodging the same, together (inthe case of any Note in definitive form) with the relative Note or Notes, with the Principal PayingAgent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes). Whilst any ofthe Notes are represented by a Global Note, such notice may be given by any holder of a Note to thePrincipal Paying Agent or the Registrar through Euroclear and/or Clearstream and/or DTC, as the casemay be, in such manner as the Principal Paying Agent, the Registrar and Euroclear and/or Clearstreamand/or DTC, as the case may be, may approve for this purpose.

15. MEETINGS OF NOTEHOLDERS, MODIFICATION AND WAIVER

The Agency Agreement contains provisions for convening meetings of the Noteholders to consider anymatter affecting their interests, including the sanctioning by Extraordinary Resolution of amodification of the Notes, the Receipts, the Coupons or any of the provisions of the AgencyAgreement. Such a meeting may be convened by the Issuer or Noteholders holding not less than fiveper cent. in nominal amount of the Notes for the time being remaining outstanding. The quorum atany such meeting for passing an Extraordinary Resolution is one or more persons holding orrepresenting a clear majority in nominal amount of the Notes for the time being outstanding, or at anyadjourned meeting one or more persons being or representing Noteholders whatever the nominalamount of the Notes so held or represented, except that at any meeting the business of which includesthe modification of certain provisions of the Notes, the Receipts or the Coupons (including modifyingthe date of maturity of the Notes or any date for payment of interest thereon, reducing or cancellingthe amount of principal or the rate of interest payable in respect of the Notes or altering the currencyof payment of the Notes, the Receipts or the Coupons), the quorum shall be one or more personsholding or representing not less than three-quarters in nominal amount of the Notes for the time beingoutstanding, or at any adjourned such meeting one or more persons holding or representing not lessthan a clear majority in nominal amount of the Notes for the time being outstanding. AnExtraordinary Resolution passed at any meeting of the Noteholders shall be binding on all theNoteholders, whether or not they are present at the meeting, and on all Receiptholders andCouponholders.

The Principal Paying Agent and the Issuer may agree, without the consent of the Noteholders,Receiptholders or Couponholders, to:

(a) any modification (except as mentioned above) of the Notes, the Receipts, the Coupons or theAgency Agreement which is not prejudicial to the interests of the Noteholders; or

66



(b) any modification of the Notes, the Receipts, the Coupons or the Agency Agreement which is of aformal, minor or technical nature or is made to correct a manifest error or to comply withmandatory provisions of the law.

Any such modification shall be binding on the Noteholders, the Receiptholders and the Couponholdersand any such modification shall be notified to the Noteholders in accordance with Condition 14 assoon as practicable thereafter.

Where the Issuer is FFT, the provisions of articles 86 to 94-8 of the Luxembourg law of 10th August,1915 on commercial companies, as amended, are hereby excluded.

16. FURTHER ISSUES

The Issuer shall be at liberty from time to time without the consent of the Noteholders, theReceiptholders or the Couponholders to create and issue further notes having terms and conditions thesame as the Notes or the same in all respects save for the amount and date of the first payment ofinterest thereon and so that the same shall be consolidated and form a single Series with theoutstanding Notes.

17. RIGHTS OF THIRD PARTIES

The Notes confer no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any termof the Notes, but this does not affect any right or remedy of a third party which exists or is availableapart from that Act.

18. GOVERNING LAW AND SUBMISSION TO JURISDICTION

(a) Governing law: The Agency Agreement, the Guarantee, the Deed of Covenant, the Deed Poll, theNotes, the Receipts and the Coupons are governed by, and shall be construed in accordance with,English law.

(b) Submission to jurisdiction: The Issuer agrees, for the exclusive benefit of the Noteholders, theReceiptholders and the Couponholders, that the courts of England are to have jurisdiction tosettle any disputes which may arise out of or in connection with the Notes, the Receipts and/orthe Coupons and that, accordingly, any suit, action or proceedings (together referred to as“Proceedings’’) arising out of or in connection with the Notes, the Receipts and the Coupons maybe brought in such courts.

The Issuer hereby irrevocably waives any objection which it may have now or hereafter to thelaying of the venue of any such Proceedings in any such court and any claim that any suchProceedings have been brought in an inconvenient forum and hereby further irrevocably agreesthat a judgment in any such Proceedings brought in the English courts shall be conclusive andbinding upon it and may be enforced in the courts of any other jurisdiction.

Nothing contained in this Condition shall limit any right to take Proceedings against the Issuer inany other court of competent jurisdiction, nor shall the taking of Proceedings in one or morejurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently ornot.

(c) Appointment of Process Agent: The Issuer appoints Fiat Finance and Trade Ltd. société anonyme,UK Branch at its registered office for the time being in England as its agent for service of process,and undertakes that, in the event of Fiat U.K. Limited ceasing so to act or ceasing to be registeredin England, it will appoint another person as its agent for service of process in England in respectof any Proceedings. Nothing herein shall affect the right to serve proceedings in any other mannerpermitted by law.

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Use of ProceedsThe net proceeds from each issue of Notes will be used to finance the activities of the Fiat Group. If, inrespect of any particular issue of Notes which are derivative securities for the purposes of Article 15 of theCommission Regulation No. 809/2004 implementing the Prospectus Directive, there is a particularidentified use of proceeds, this will be stated in the applicable Final Terms.

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Fiat Finance and Trade Ltd.société anonyme

BUSINESS AND INCORPORATION

Fiat Finance and Trade Ltd. société anonyme (“FFT”) was registered for an unlimited duration on 6th May,1985 under the laws of the Cayman Islands and was incorporated on 18th June, 1997 with limited liabilityunder the laws of the Grand-Duchy of Luxembourg. Its registered office is 13 Rue Aldringen, L-1118,Luxembourg, telephone number + 352 262 05621 and it is registered in the Luxembourg trade andcompany register (Registre de Commerce et des Sociétés de Luxembourg) under number B-59500. TheArticles of Incorporation of FFT have been published in the Mémorial C, Journal Officiel du Grand-Duchéde Luxembourg, Recueil Spécial des Sociétés et Associations under number C. 384 of 17th July, 1997. Thearticles were modified on 9th October, 1997 (published in the Mémorial C under number 635 of 13thNovember, 1997), on 31st December, 1998 (published in the Mémorial C under number 237 of 6th April,1999), on 25th June, 1999 (published in the Mémorial C under number 705 of 22nd September, 1999), on27th November, 2000 (published in the Mémorial C under number 514 of 7th July, 2001), on 12thNovember, 2004 (published in the Mémorial C under number 118 of 9th February, 2005) and on 27thJanuary, 2006 (published in the Mémorial C under number 792 of 20th April, 2006).

FFT, which is 99.99 per cent. owned by Fiat Finance S.p.A. (formerly Fiat Ge.Va. S.p.A.), which in turn isa wholly-owned subsidiary of the Guarantor, is the central treasury vehicle for the Fiat Group in theinternational financial markets. Its object, according to article 3 of its Articles of Association, is the holdingof participations in other companies and/or enterprises and the direct and/or indirect financing of suchentities or entities being members of its group.

The registered share capital of FFT is €251,494,000, represented by 13,416 shares without a nominal value.

Directors

FFT is managed by a board of directors comprising five members. The names of the directors are listedbelow:

Name Position on Board111111111111111 111111111111111

Ernesto Rodoni ChairmanGiancarlo Ghione DirectorJacques Loesch DirectorClaudio Chiorazzi DirectorMario Bruni Director

The business address for the board of directors is 13 Rue Aldringen, L-1118, Luxembourg.

The directors of FFT do not hold any principal executive directorships outside the Fiat Group which aresignificant with respect to FFT, and there are no potential conflicts of interest of the members of the boardof directors between their duties to FFT and their private interests and/or other duties.

FFT is in compliance with those corporate governance laws of the Grand-Duchy of Luxembourg to whichit may be subject, if any.

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Financial information relating to Fiat Finance and Trade Ltd.société anonyme

The following financial information is extracted without material adjustment from the audited annualfinancial statements of Fiat Finance and Trade Ltd. société anonyme as at 31st December, 2007 and 2006and for the years then ended, prepared in accordance with Luxembourg GAAP:

BALANCE SHEET

As at 31st December,2007 2006

(euro)

AssetsFixed assetsIntangible assets .......................................................................................... 512,382 614,730Tangible assets ............................................................................................ 276,764 341,568

Current assetsDebtorsAmounts owed by Group companies ............................................................ 6,889,964,737 7,239,250,406Other debtors................................................................................................ 3,672,621 574,937Transferable securities .................................................................................. – 217,223,697Cash at banks .............................................................................................. 1,087,427,514 428,192,567Accrued Income ............................................................................................ 170,781,229 174,042,347Deferred expenses ........................................................................................ 32,590,928 41,320,072

1111112 1111112

Total Assets .................................................................................................. 8,185,226,175 8,101,560,32411111111111111aaaaaaaaaaaaaa

LiabilitiesShareholders equitySubscribed capital ....................................................................................... 251,494,000 251,494,000Legal reserve ............................................................................................... 10,364,000 9,500,000Other reserve .............................................................................................. 178,000 105,865Profit brought forward................................................................................ 1,405,280 70,338Profit of the year......................................................................................... 15,402,578 17,271,077

1111112 1111112

Total Shareholders’ Equity ............................................................................ 278,843,858 278,441,28011111111111111aaaaaaaaaaaaaa

Provision for liabilities and chargesProvision for taxation ................................................................................. 1,616,143 1,314,039

CreditorsBonds and other notes payableDue in one year or less.................................................................................. 258,625,242 346,514,071Due in more than one year ........................................................................... 4,768,200,000 4,993,906,378

1111112 1111112

5,026,825,242 5,340,420,449Amounts owed to credit institutions ............................................................. 8,494,178 1,211,251Amounts owed to Group companies............................................................. 2,660,326,636 2,256,706,861Other creditors.............................................................................................. 776,685 536,092Accrued expenses .......................................................................................... 170,817,662 173,990,012Deferred income ........................................................................................... 37,525,771 48,940,340

1111112 1111112

Total Liabilities ............................................................................................ 8,185,226,175 8,101,560,32411111111111111aaaaaaaaaaaaaa

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71


STATEMENTS OF PROFIT AND LOSS

Year ended 31st December,2007 2006

(euro)

Interest receivable and similar incomeBanks ............................................................................................................ 28,664,805 23,906,845Other investments ......................................................................................... 24,261,473 22,711,452Group companies and third parties............................................................... 393,005,314 387,228,606

111111 111111

445,931,592 433,846,903111111 111111aaaaaa aaaaaa

Interest payable and similar chargesBanks ............................................................................................................ (128,900) (71,625)Group companies and third parties............................................................... (123,026,239) (103,235,271)Bonds and other notes payable ..................................................................... (308,968,755) (354,369,006)

111111 111111

(432,123,894) (457,675,902)111111 111111aaaaaa aaaaaa

Other financial income and expensesNet result on off-balance sheet items ............................................................ 15,389,002 63,348,561Foreign exchange gain/(loss) ......................................................................... 5,125,060 (5,041,216)Other financial income.................................................................................. 503,922 1,159,892Fees, commissions and other financial expenses............................................ (14,783,097) (13,521,692)

111111 111111

6,234,887 45,945,545111111 111111aaaaaa aaaaaa

Net Profit before operating charges and taxation .................................. 20,042,585 22,116,546Operating charges ......................................................................................... (4,315,443) (4,520,600)Taxation........................................................................................................ (324,564) (324,869)

111111 111111

Profit for the Financial Year.......................................................................... 15,402,578 17,271,077111111 111111aaaaaa aaaaaa

FINANCIAL INFORMATION RELATING TO FIAT FINANCE AND TRADE LTD.

STATEMENT OF CASH FLOWS


(euro)

Cash flows from operating activitiesProfit for the year ........................................................................................ 15,402,578 17,271,077Interest and similar charges .......................................................................... 432,123,894 457,675,902Interest and similar income .......................................................................... (445,931,592) (433,846,903)Interest paid .................................................................................................. (435,296,244) (501,866,400)Interest received ............................................................................................ 449,192,710 459,001,070

1111112 1111112

15,491,346 (1,765,254)

Decrease/(Increase) in operating assets:Fixed assets .................................................................................................. 167,152 (359,261)Amounts owed by Group companies ............................................................ 349,285,669 1,941,333,121Amounts owed by third parties .................................................................... (3,097,684) (122,667)Deferred expenses ........................................................................................ 8,729,144 (15,571,438)

Increase/(Decrease) in operating liabilities:Bank loans and overdrafts ............................................................................ 7,282,927 (6,149,178)Borrowings from Group companies .............................................................. 403,619,775 (2,520,869,739)Amounts owed to third parties .................................................................... 240,593 107,601Deferred income............................................................................................ (11,414,569) (9,870,838)Provision for charges and other risk ............................................................ – (500,000)Provisions for taxation.................................................................................. 302,104 230,938

1111112 1111112

Net cash (used in) generated by operating activities.............................. 770,606,457 (613,536,715)

Cash flows from investing activitiesDecrease in investment in transferable securities .......................................... 217,223,697 312,926,623

Cash flows from financing activitiesNet decrease in bonds and other notes payable ............................................ (313,595,207) (400,200,177)Decrease in financial fixed assets ..................................................................Dividends paid .............................................................................................. (15,000,000) (64,000,000)

1111112 1111112

Net cash used in financing activities ........................................................ (328,595,207) (464,200,177)

Net change in cash and cash equivalents ................................................ 659,234,947 (764,810,269)

Cash and cash equivalents at the beginning of the year........................ 428,192,567 1,193,002,836

Cash and cash equivalents at the end of the year .................................. 1,087,427,514 428,192,567111111 111111aaaaaa aaaaaa

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FINANCIAL INFORMATION RELATING TO FIAT FINANCE AND TRADE LTD.

Fiat Finance Canada Ltd.BUSINESS AND INCORPORATION

Fiat Finance Canada Ltd. (“FFC”) was incorporated on 2nd May, 1991 under the Business CorporationsAct of the Province of Alberta, Canada with corporate access number 204927990 and began operations on6th May, 1991. Its registered office is at 855 – 2nd Street SW, Suite 3500, Calgary, Alberta T2P 4J8,Canada, and its telephone number is +1 212 207-0956.

FFC is a wholly owned subsidiary of Fiat Finance S.p.A., which in turn is a wholly-owned subsidiary of theGuarantor. FFC performs cash management, investment and corporate finance services and providesworking capital financing for Fiat Group companies in Canada.

The authorised share capital of FFC is an unlimited number of common shares without nominal or parvalue. The issued capital is CAN$10,099,885 represented by 493 common shares.

Directors

FFC has a board of directors comprising five members. The names of the directors are listed below:


Marco Casalino DirectorDavid A. Jackson DirectorPaul K. Tamaki DirectorDavid J. Toswell DirectorEnrico Zecchini Director

The business address for the board of directors is 855 – 2nd Street SW, Suite 3500, Calgary, Alberta T2P 4J8.

The directors of FFC do not hold any principal executive directorships outside the Fiat Group which aresignificant with respect to FFC nor do there exist any potential conflicts of interest between their duties toFFC and their private interests and/or other duties.

FFC is in compliance with those corporate governance laws of the province of Alberta, and any federal lawsapplicable therein, to which it may be subject, if any.

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74


Financial information relating to Fiat Finance Canada Ltd.The following financial information is extracted from the audited annual financial statements of FFC as at31st December, 2007 and 2006 and for the years then ended, prepared in accordance with IFRS:

BALANCE SHEETSAs at 31st December,

2007 2006

(thousands of CAN$)

AssetsCash and cash equivalents ............................................................................ CAN$33,069 CAN$11,948Amounts owed by affiliated company........................................................... 353,142 155,480Financial derivatives – at fair value............................................................... 92 190Deferred tax assets ........................................................................................ – 1Other assets .................................................................................................. 59 102

111111 111111

Total assets ................................................................................................... CAN$386,362 CAN$167,721111111 111111aaaaaa aaaaaa

Liabilities & Stockholder’s EquityLiabilities:Bank borrowings........................................................................................... CAN$150,182 CAN$150,000Borrowings from affiliated companies .......................................................... 214,234 180Financial derivatives – at fair value............................................................... 3,355 157Deferred tax liabilities................................................................................... 4 –Accrued expenses and other liabilities........................................................... 493 524

111111 111111

Total liabilities .............................................................................................. 368,268 150,861111111 111111

Stockholder’s equity:Capital Stock (no par value; unlimited shares authorised;493 shares outstanding at assigned value)................................................... 10,100 10,100

Retained earnings.......................................................................................... 7,994 6,760111111 111111

Total stockholder’s equity ............................................................................. 18,094 16,860111111 111111

Total ............................................................................................................. CAN$386,362 CAN$167,721111111 111111aaaaaa aaaaaa

STATEMENTS OF INCOMEYear ended 31st December,2007 2006

(thousands of CAN$)

RevenuesInterest income.............................................................................................. CAN$21,749 CAN$21,011Other income ................................................................................................ 1 6Net result on trading activities ...................................................................... 15 (33)

111111 111111

Total revenues............................................................................................... 21,765 20,984111111 111111

ExpensesInterest expense............................................................................................. 19,668 19,873General and administrative expenses ............................................................ 100 456Other expenses.............................................................................................. 164 293

111111 111111

Total expenses............................................................................................... 19,932 20,622111111 111111

Income before provision for income taxes..................................................... 1,833 362Provision for income taxes............................................................................ 599 117

111111 111111

Net income ................................................................................................... CAN$1,234 CAN$245111111 111111aaaaaa aaaaaa

75


Fiat Finance North America, Inc.BUSINESS AND INCORPORATION

Fiat Finance North America (“FFNA”) was incorporated in the State of Delaware on 5th August, 1996 andbegan operations on 15th September, 1996. Its registered office is at 1209 Orange Street, Wilmington,County of New Castle, Delaware, United States of America and its telephone number is +1 212 2070910.

FFNA is a majority owned subsidiary of Fiat Finance S.p.A., which is in turn a wholly owned subsidiary ofthe Guarantor, and performs cash management, investment and corporate finance services and providesworking capital financing for Fiat Group companies in the United States.

The authorised share capital of FFNA is represented by 5,000 common shares without par value. Thesubscribed capital is U.S.$40,090,000 represented by 380 common shares without par value.

In 1999, FFNA issued 230 common shares to Fiat Finance S.p.A. Prior to 1999, FFNA was wholly ownedby I.H.F.-Internazionale Holding Fiat S.A., which continues to own 150 common shares.

Directors

FFNA is managed by a board of directors comprising three members. The names of the directors are set outbelow:


Gianluigi Gabetti ChairmanMarco Casalino DirectorEnrico Zecchini Director

The business address of the board of directors is 1209 Orange Street, Wilmington, County of New Castle,Delaware, United States of America.

Gianluigi Gabetti, the chairman of the board of directors of FFNA, is the chairman of Giovanni Agnelli &C. S.A.p.A. (“GA”), an Italian limited partnership, which owns 100 per cent. of the voting power andapproximately 53 per cent. of the equity of Istituto Finanziario Industriale S.p.A. (“IFI”). IFI, through its62.03 per cent.-owned subsidiary IFIL S.p.A. (“IFIL”), owns 30.06 per cent. of Fiat. Mr. Gabetti ischairman of both IFI and IFIL. He is also chairman of Exor Group S.A. (Luxembourg), a Luxembourgholding company controlled by GA, and a director of Mediobanca S.p.A., an Italian investment bank whichacts as a Dealer under the Programme.

With the exception of Mr. Gabetti, as disclosed above, no potential conflicts of interest exist between anyduties to FFNA of the FFNA directors, senior managers or statutory auditors and the private interests,and/or other duties, of such persons.

FFNA is in compliance with those corporate governance laws of the State of Delaware to which it may besubject, if any.


76

Financial information relating to Fiat Finance North America, Inc.The following financial information is extracted from the audited annual financial statements of FFNA, asat 31st December, 2007 and 2006 and for the years then ended, prepared in accordance with IFRS:

BALANCE SHEETSAs at 31st December,

2007 2006

(thousands of U.S. dollars)

AssetsCash and cash equivalents ....................................................................................... $ 14,700 $ –Marketable securities – at fair value ........................................................................ – 24,985Amounts owed by affiliated companies ................................................................... 1,504,617 326,837Financial derivatives – at fair value.......................................................................... 199,836 4,206Deferred tax assets................................................................................................... 14,520 35Property, plant and equipment................................................................................. 90 4Prepaid expenses and other assets............................................................................ 128 1,761

11111 11111

Total assets .............................................................................................................. $ 1,733,891 $ 357,82811111 1111111111 11111

Liabilities and Stockholder’s EquityLiabilities:Bank borrowings ..................................................................................................... $ 7 $ 194,991Borrowings from affiliated company ....................................................................... 127,640 110,867Notes payable .......................................................................................................... 1,507,462 –Financial derivatives – at fair value.......................................................................... 65,477 1,924Accrued expenses and other liabilities...................................................................... 486 1,766

11111 11111

Total liabilities ......................................................................................................... 1,701,072 309,54811111 11111

Stockholder’s Equity:Capital stock (no par value; authorised 5,000 shares;380 shares outstanding at assigned value................................................................. 40,090 40,090Retained earnings .................................................................................................... 9,131 8,190Cash flow hedge reserve .......................................................................................... (16,402) –

11111 11111

Total stockholders’ equity........................................................................................ 32,819 48,28011111 11111

Total ........................................................................................................................ $ 1,733,891 $ 357,82811111 1111111111 11111

STATEMENT OF INCOMEYear ended 31st December,

2007 2006

(thousands of U.S. dollars)

RevenuesInterest income ........................................................................................................ $ 182,725 $ 44,237Other income........................................................................................................... 294 486Net result on hedging activities................................................................................ (979) –

11111 11111

Total revenues.......................................................................................................... 182,040 44,72311111 11111

ExpensesInterest expense ....................................................................................................... 177,888 39,987General and administrative expenses ....................................................................... 1,570 1,268Other expenses ........................................................................................................ 706 207

11111 11111

Total expenses ......................................................................................................... 180,164 41,46211111 11111

Income before provision for income taxes ............................................................... 1,876 3,261Provision for income taxes....................................................................................... 935 1,476

11111 11111

Net income .............................................................................................................. $ 941 $ 1,78511111 1111111111 11111

The Fiat GroupThe Guarantor and its consolidated subsidiaries (the “Fiat Group” or the “Group”) constitute the largestprivate sector industrial group in Italy. The Group also has extensive operations in the rest of Europe andin other parts of the world. In 1999, Fiat celebrated its centenary, having been founded in Turin in 1899 asa manufacturer of automobiles.

Fiat is a società per azioni, or corporation limited by shares, organised under the laws of Italy. Under itscurrent Statuto, or by-laws, Fiat has a duration expiring on 31st December, 2100. Fiat’s registered officeand principal place of business is located at Via Nizza, 250, Turin, Italy (telephone number +39-011-0061111)and it is registered in the Turin Company Register under number 00469580013.

The Fiat Group performs automotive manufacturing and financial service activities through companieslocated in 50 countries and is engaged in commercial activities with customers in more than 190 countries.

For organisational and financial reporting purposes, the Fiat Group’s operations are defined by “Sectors”.For the purpose of simplifying and better focusing the presentation, certain of these Sectors are grouped into“Businesses”. Each of the Fiat Group’s Businesses is described below, and a table of financial highlights bySector follows on page 79.

AUTOMOBILES

The Fiat Group develops, produces and sells automobiles (Fiat, Abarth, Alfa Romeo and Lancia brands)and light commercial vehicles (Fiat Professional brand) through the Fiat Group Automobiles Sector. TheSector’s main financing activities in Europe were grouped into Fiat Group Automobiles Financial Services(“FAFS”), a 50-50 joint venture established at the end of 2006 with Crédit Agricole.

The Fiat Group also controls Maserati and Ferrari. They produce luxury sports cars that excel for theirexclusive characteristics, technology and performance.

AGRICULTURAL AND CONSTRUCTION EQUIPMENT

CNH - Case New Holland operates in the field of tractors and agricultural equipment through the Case IHand New Holland brands and in the construction equipment business through the Case and New Hollandbrands. Its financial services operations provide support to its end customers and dealers.

TRUCKS AND COMMERCIAL VEHICLES

Iveco designs, produces and sells a complete line of commercial vehicles under the Iveco brand, buses underthe Iveco Irisbus brand, and fire-fighting and special purpose vehicles under the Iveco, Astra and Magirusbrands. In addition, Iveco provides a wide range of financing services to its customers and dealers mainlythrough Iveco Finance Holdings Ltd, a joint venture company 51 per cent. owned by the Barclays Groupand 49 per cent. by Iveco.

COMPONENTS AND PRODUCTION SYSTEMS

FPT Powertrain Technologies is the Sector which includes passenger car engine and transmission activities,as well as the powertrain operations of Iveco and of the Centro Ricerche Fiat (C.R.F. - Fiat ResearchCentre). Within the framework of its technological development projects, FPT also coordinates Elasis’powertrain activities.

Magneti Marelli develops and produces automotive components for lighting systems, exhaust systems,suspensions and shock absorbers, engine control units, and electronic systems. In addition, since May 2007the Sector has operated in the aftermarket business.

Teksid supplies engine blocks, cylinder heads and other cast-iron components for engines; as well as cast-iron components for transmissions, gearboxes and suspensions. Since September 2007, Teksid AluminumSrl, a company operating in the aluminium business, is represented in this Sector.

77

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78

THE FIAT GROUP


Comau produces industrial automation systems for the automotive industry in the areas of product andprocess engineering, logistics and management, manufacturing, installation, production start-up andmaintenance.

OTHER BUSINESSES

Other Businesses includes the Publishing and Communications Sector (La Stampa daily newspaper andPublikompass, a company that sells advertising space for multimedia customers) and Fiat Services S.p.A.,which provides services exclusively within the Fiat Group, in addition to holding and other companies.

Highlights – The Fiat Group

2007 20061111 1111

(in millions of euro, exceptemployee numbers and

per-share amounts)

Net revenues .......................................................................................................... 58,529 51,832Trading profit ........................................................................................................ 3,233 1,951Operating result .................................................................................................... 3,152 2,061Income before taxes .............................................................................................. 2,773 1,641Net result for the year ............................................................................................ 2,054 1,151Attributable to:– Equity holders of the parent................................................................................ 1,953 1,065– Minority interests ................................................................................................ 101 86Basic earnings per ordinary and preference share (in euros)(1) ................................ 1.537 0.789Basic earnings per savings share (in euros)(1) .......................................................... 1.692 1.564Diluted earnings per ordinary and preference share (in euros)(1) ............................ 1.526 0.788Diluted earnings per savings share (in euros)(1) ...................................................... 1.681 1.563Investments in tangible and intangible assets ........................................................ 3,985 3,789

of which: Capitalised R&D costs ...................................................................... 932 813R&D expenses(2) .................................................................................................... 1,741 1,591Total Assets(3).......................................................................................................... 60,136 58,404Net (Debt)/Cash position ...................................................................................... (10,423) (11,836)

of which: Net industrial (Debt)/Cash position.................................................... 355 (1,773)Stockholders’ equity before minority interest ........................................................ 11,279 10,036Group interest in stockholders’ equity .................................................................. 10,606 9,362Employees at year-end (number) ............................................................................ 185,227 172,012

(1) For additional information on the calculation of basic and diluted earnings per share see Note 12 of the Notes to the Consolidatedfinancial statements of the Fiat Group as at and for the years ended 31st December, 2007 and 2006 incorporated by reference herein.

(2) This amount includes capitalised R&D costs and costs charged directly to operations during the fiscal year.

(3) Total Assets at 31st December, 2006 differ from the figure previously published due to the reclassification of 101 million eurosdescribed in the Notes to the Consolidated financial statements of the Fiat Group as at and for the year ended 31st December, 2007incorporated by reference herein.

SELECTED DATA BY REGION

RevenuesNumber Number Number Number (in millions

of Companies of Employees of Facilities of R&D Centres of euros)111111 111111 111111 111111 111111

2007 2006 2007 2006 2007 2006 2007 2006 2007 2006112 112 112 112 112 112 112 112 112 112

Italy .......................................... 162 146 77,679 75,751 56 52 49 50 15,857 14,851

Europe excluding Italy.............. 281 285 45,999 42,904 54 56 32 32 23,461 20,298

North America ........................ 74 76 11,364 11,714 22 25 14 15 5,842 6,315

Mercosur .................................. 32 31 39,324 30,877 24 20 10 10 8,318 5,416

Other regions............................ 111 99 10,861 10,766 22 27 9 9 5,051 4,952112 112 112 112 112 112 112 112 112 112

Total ........................................ 660 637 185,227 172,012 178 180 114 116 58,529 51,832112 112 112 112 112 112 112 112 112 112

aas aas aas aas aas aas aas aas aas aas


HIGHLIGHTS BY SECTOR

Total

Net revenues Trading profit Operating result operating assets1111111 1111111 1111111 1111111

(in millions of euros) 2007 2006 2007 2006 2007 2006 2007 20061113 1113 1113 1113 1113 1113 1113 1113

Fiat Group Automobiles............ 26,812 23,702 803 291 635 727 13,949 12,948Maserati .................................... 694 519 24 (33) 22 (33) 364 300Ferrari ...................................... 1,668 1,447 266 183 266 183 1,068 918Agricultural and

Construction Equipment(CNH) .................................. 11,843 10,527 990 737 953 592 18,458 17,756

Trucks and CommercialVehicles (Iveco)...................... 11,196 9,136 813 546 803 565 6,398 6,131

FPT PowertrainTechnologies .......................... 7,075 6,145 271 168 257 102 4,284 4,103

Components(Magneti Marelli) .................. 5,000 4,455 214 190 209 175 2,626 2,294

Metallurgical Products(Teksid).................................. 783 979 47 56 47 26 544 616

Production Systems (Comau) .... 1,089 1,280 (23) (66) (33) (272) 1,129 1,034Publishing and

Communications (Itedi) ........ 391 401 12 11 11 12 228 243Holding companies,

Other companiesand Eliminations.................... (8,022) (6,759) (184) (132) (18) (16) (912) (354)

1113 1113 1113 1113 1113 1113 1113 1113

Total for the Group .................. 58,529 51,832 3,233 1,951 3,152 2,061 48,136 45,9891113 1113 1113 1113 1113 1113 1113 1113

aaa3 aaa3 aaa3 aaa3 aaa3 aaa3 aaa3 aaa3

Total operating Number

liabilities Investments(*) R&D expenses(**) of employees1111111 1111111 1111111 1111111

2007 2006 2007 2006 2007 2006 2007 20061113 1113 1113 1113 1113 1113 1113 1113

(in millions of euros)

Fiat Group Automobiles............ 13,522 12,446 1,865 2,163 751 675 50,542 44,691Maserati .................................... 435 367 97 82 54 46 695 649Ferrari ...................................... 752 634 246 142 147 83 2,926 2,870Agricultural and Construction

Equipment (CNH) ................ 15,582 14,653 648 394 308 289 28,173 25,335Trucks and Commercial

Vehicles (Iveco)...................... 6,456 5,784 347 342 207 174 26,461 24,533FPT Powertrain Technologies...... 2,787 2,444 365 254 70 74 19,876 18,924Components (Magneti Marelli) .. 1,822 1,625 319 293 221 210 27,962 25,195Metallurgical Products (Teksid) .. 344 365 32 32 1 5 7,826 8,342Production Systems (Comau) ...... 941 813 33 56 12 20 11,960 12,293Publishing and

Communications (Itedi) ........ 158 188 5 45 – – 809 836Holding companies,

Other companiesand Eliminations.................... (1,305) (867) 28 (14) (30) 15 7,997 8,344

1113 1113 1113 1113 1113 1113 1113 1113

Total for the Group .................. 41,494 38,452 3,985 3,789 1,741 1,591 185,227 172,0121113 1113 1113 1113 1113 1113 1113 1113

aaa3 aaa3 aaa3 aaa3 aaa3 aaa3 aaa3 aaa3

(*) Investments in tangible and intangible assets (net of vehicles sold with buy-back commitments).

(**) The item includes capitalised R&D costs and costs charged directly to operations during the fiscal year.

79

THE FIAT GROUP


Financial Review of the Group

Major financial highlights for the year included:

• The Fiat Group recorded revenues of 58.5 billion euros in 2007, up 12.9 per cent. from 2006.

• In 2007 trading profit amounted to 3.2 billion euros, nearly 66 per cent. higher than in 2006, withall major sectors contributing to the improvement. Trading margin rose accordingly to 5.5 per cent.from 3.8 per cent. in 2006, with the Automobiles Business more than doubling trading profit to 1.1billion euros, CNH recording trade profit of 1 billion euros (up 34.3 per cent., or an increase of 46.7per cent. in dollar terms) and Iveco recording trade profit of 0.8 billion euros (an increase of 48.9 percent.).

• Net income of 2.1 billion euros was up 78.5 per cent. on 2006, and, as a result, Fiat’s board ofdirectors has recommended a 509 million euro (excluding treasury shares held by Fiat Group)aggregate dividend payout across all share classes that was approved by the annual shareholders’meeting on 31st March, 2008. The date for the detachment of coupons was 21st April, 2008 and thedividend was paid on 24th April, 2008.

• The Fiat Group extinguished its net industrial debt in 2007, and closed the year with 355 millioneuros in net industrial cash position.

Principal Transactions that affected the Scope of Consolidation in 2007

• On 28th February, 2007, the procedure for the sale of Ingest Facility S.p.A. to Pirelli RE FacilityManagement was concluded following receipt of approval from the antitrust authorities.

• On 2nd March, 2007, the sale of Meridian Technologies Inc. was finalised following receipt ofapproval from the competent authorities and the closing of the financing provided to the purchaserby financial institutions.

• At the end of April 2007, Magneti Marelli reacquired control of its former automotive spare partsdistribution operations. As a result of this, the aftermarket parts and services business line, whichoperates at a worldwide level in the distribution of spare parts in the independent aftermarket sector,was consolidated as of 1st May, 2007.

• In May 2007, the Fiat Group acquired the entire ownership of the I.T.C.A. group which carries outits business in the automotive supplies sector.

• In August 2007, Fiat acquired the entire ownership of Teksid Aluminum S.r.l.

• On 28th December, 2007, the Fiat Group completed the work necessary for the establishment of a50-50 joint venture with Tata Motors. As of that date, therefore, the assets and liabilities of the Indianbusiness of Fiat Group Automobiles were transferred to the joint venture and thereforedeconsolidated.

Effective 1st January, 2007 the activities which were previously part of the Group’s “Services Sector” weretransferred to Fiat Services S.p.A., a company now included among “Holding companies and Othercompanies”. Fiat Services S.p.A. and its subsidiaries outside of Italy provide administrative and professionalservices to Fiat Group companies. In accordance with IAS 14 – Segment Reporting, effective 1st January,2007, the Services Sector is no longer reported as a separate Sector and the relevant figures for 2006presented herein have consequently been reclassified. Fiat Services’ activities are organised in three serviceunits: Transactional Processes (Finance and Payroll), Information and Communication Technology andCustoms Services.

80

THE FIAT GROUP


OPERATING PERFORMANCE OF THE GROUP

2007 20061111 1111

(in millions of euro)

Net revenues .......................................................................................................... 58,529 51,832Cost of sales .......................................................................................................... 48,924 43,888Selling, general and administrative costs ................................................................ 4,924 4,697Research and development costs ............................................................................ 1,536 1,401Other income (expenses) ........................................................................................ 88 105

1111 1111

Trading profit .................................................................................................... 3,233 1,951Gains (losses) on the disposal of investments ........................................................ 190 607Restructuring costs ................................................................................................ 105 450Other unusual income (expenses) .......................................................................... (166) (47)

1111 1111

Operating result ................................................................................................ 3,152 2,061Financial income (expenses) .................................................................................. (564) (576)Result from investments: ........................................................................................ 185 156– Net result of investees accounted for using the equity method .......................... 210 125– Other income and expenses from investments.................................................... (25) 31

1111 1111

Result before taxes ............................................................................................ 2,773 1,641Income taxes ........................................................................................................ 719 490

1111 1111

Result from continuing operations .................................................................... 2,054 1,151Result from discontinued operations...................................................................... – –

1111 1111

Net result for the year ........................................................................................ 2,054 1,151Attributable to:– Equity holders of the parent .............................................................................. 1,953 1,065– Minority interests .............................................................................................. 101 86

In the review that follows, net revenues and trading profit are discussed by single Business and/or Sector;the consolidated data presented refer to the Group as a whole.

Net revenues

In 2007, the Fiat Group had net revenues of 58,529 million euros, up 12.9 per cent. over 2006, driven byhigher volumes across all of its major industrial Businesses.

Revenues by Business

2007 2006 % change1111 1111 1111


Automobiles (Fiat Group Automobiles, Maserati, Ferrari) ................ 29,015 25,577 13.4Agricultural and Construction Equipment

(CNH – Case New Holland) .......................................................... 11,843 10,527 12.5Trucks and Commercial Vehicles (Iveco) ............................................ 11,196 9,136 22.5Components and Production Systems (FPT, Magneti Marelli,

Teksid, Comau) .............................................................................. 13,375 12,366 8.2Other Businesses (Publishing and Communications, Holding

companies and Other companies) .................................................. 1,378 1,513 -8.9Eliminations........................................................................................ (8,278) (7,287) –

1111 1111 1111

Total for the Group ............................................................................ 58,529 51,832 12.91111 1111 1111aaaa aaaa aaaa

81

THE FIAT GROUP


A detailed review of net revenues by Business and/or Sector is provided below.

Automobiles

In 2007 the Automobiles Business posted revenues of 29,015 million euros, up 13.4 per cent. over 2006driven by higher revenues at Fiat Group Automobiles (+13.1 per cent.). Significant contributions also camefrom Ferrari, whose revenues increased by 15.3 per cent., and Maserati, which recorded revenue growth of33.7 per cent.

2007 2006 % change1111 1111 1111


Fiat Group Automobiles .................................................................... 26,812 23,702 13.1Maserati ............................................................................................ 694 519 33.7Ferrari ................................................................................................ 1,668 1,447 15.3Eliminations........................................................................................ (159) (91) –

1111 1111 1111

Total .................................................................................................. 29,015 25,577 13.41111 1111 1111aaaa aaaa aaaa

• In 2007 Fiat Group Automobiles had net revenues of 26,812 million euros, an increase of 13.1 percent. with respect to 2006, driven by the success of new models which contributed to the successfulsales performance recorded notwithstanding the flattening of the Western European automobilemarket compared to the previous year.

Excluding the impact of the financial services operations that were transferred to FAFS joint ventureat the end of 2006, Sector revenues would have risen by approximately 15 per cent.

2007 saw the launch of models that were key to the expansion of the Fiat Group Automobilesproduct line: in particular the Fiat Bravo, the Fiat 500 (the icon of the new Fiat), the New Croma,the Fiat Linea, the Grande Punto Abarth (the first street model of the revived Scorpion brand), as wellas the New Musa and the Sport Momo Design version of the Ypsilon for the Lancia brand and thediesel version of the Alfa Spider. New light commercial vehicles launched included the Panoramaversion of the Scudo, the new Fiorino Cargo and the Ducato Minibus Elegant.

Fiat Group Automobiles delivered a total of 2,233,800 automobiles and light commercial vehicles,up 12.8 per cent. (approximately 250,000 units) from 2006. In Western Europe deliveries increasedby 5.2 per cent. to 1,357,000 units. Volumes rose sharply in all major European countries (+5.7 percent. in Italy, +14.1 per cent. in Spain, +7.6 per cent. in France, +2.1 per cent. in Great Britain). Theonly exception was Germany where, notwithstanding a particularly sluggish market, the drop involumes was modest (-2.5 per cent.). Fiat Group Automobiles’ share of the automobile marketimproved to reach 31.3 per cent. in Italy (+0.6 percentage points) and 8.0 per cent. in Western Europeas a whole (+0.5 percentage points).

In Brazil, where automobile market demand continued to be particularly buoyant, Fiat GroupAutomobiles achieved a 31.9 per cent. increase in deliveries and achieved a 25.9 per cent. share of theautomobile market (+0.6 percentage points), thus confirming its leadership position. In Poland,deliveries increased by 18.6 per cent., with a market share of 10.1 per cent. (-0.2 percentage points).

• In 2007, Maserati reported revenues of 694 million euros, an increase of 33.7 per cent. from theprevious year due to the excellent performance of the automatic version of the Quattroporte and ofthe new Maserati GranTurismo, whose sales started at the end of July 2007.

• Ferrari had revenues of 1,668 million euros, up 15.3 per cent. from 2006, mainly due to the successof the F430 and 599 GTB Fiorano models. A significant contribution came from sales in the UnitedStates, and in the Middle and Far East markets.

82

THE FIAT GROUP


Agricultural and Construction Equipment

CNH – Case New Holland had revenues of 11,843 million euros. The 12.5 per cent. increase from 2006was negatively impacted by the euro/dollar exchange rate; in U.S. dollar terms, revenues increased by 22.8per cent., reflecting higher volumes, an improved product mix and prices and new products.

In 2007, the global market for agricultural equipment grew by 2 per cent. over 2006. In North Americademand for tractors and combine harvesters rose by 2 per cent. Increases in demand for both product lineswere also recorded in Western Europe and in Latin America, where demand for tractors and combineharvesters rose more sharply. In the Sector’s “Rest of the World” markets, demand for tractors decreased,offsetting a very positive performance for combines. All CNH brands gained market share, with particularlysignificant improvements in combines and high-horsepower tractors.

In 2007, global deliveries of CNH agricultural equipment to the dealer network and retail unit volumesincreased in all major markets.

The global construction equipment market grew by 13 per cent. over 2006. Demand for both heavy andlight equipment grew significantly in all main regions apart from North America, where it declined by 12per cent.

CNH construction equipment deliveries to the network and retail unit sales increased overall, with stronggrowth in Western Europe, Latin America and in the Rest of the World, more than offsetting the decline, inline with the unfavourable performance of the market, reported in North America.

Trucks and Commercial Vehicles

In 2007, lveco had revenues of 11,196 million euros, up 22.5 per cent. from 2006 as a result of higher salesvolumes and improved pricing.

In 2007, Iveco delivered a total of 211,700 vehicles, including 13,300 with buy-back commitments, anincrease of 16.6 per cent. from the previous year. Deliveries benefited from the success of the Daily lightvehicle range, as well as higher sales in the heavy vehicle range due to the new Stralis model. In WesternEurope deliveries totalled 147,500 units (+9.1 per cent.). Among the principal countries, particularlypositive performances were posted in France (+12.9 per cent.), Germany (+12.4 per cent.) and Italy (+7.9per cent.); deliveries increased by 2.9 per cent. in Spain, while they were down in Great Britain. Volumesrose sharply in Eastern Europe (+58 per cent.) and Latin America (+45 per cent.).

Iveco’s share of the Western European market for trucks and commercial vehicles (GVW ≥2.8 tons) stoodat 10.3 per cent. (-0.3 percentage points from 2006). Its share in the light vehicle segment (-0.4 percentagepoints) was negatively affected by competition from car derived vehicles (vans), while lveco’s share rose inthe medium segment (+0.7 percentage points) and in the heavy segment (+0.5 percentage points), where itbenefitted from the launch of the new Stralis in March 2007.

In 2007, Iveco’s share of the Eastern European market (GVW ≥2.8 tons) was 13 per cent. (as compared to11.8 per cent. in 2006), with improvements in all three segments.

Components and Production System

Revenues of the Components and Production Systems Business totalled 13,375 million euros, for anincrease of 8.2 per cent. Sales increased by 15.1 per cent. at FPT Powertrain Technologies and 12.2 per cent.at Magneti Marelli. Teksid revenues decreased by 20.0 per cent., mainly due to changes in the scope ofconsolidation (revenues were down approximately 3.4 per cent. on a comparable basis). Comau reported adecline in revenues of 14.9 per cent., in line with the reshaping of the business initiated in 2006.

83

THE FIAT GROUP


2007 2006 % change1111 1111 1111


FPT Powertrain Technologies ............................................................ 7,075 6,145 15.1Components (Magneti Marelli) .......................................................... 5,000 4,455 12.2Metallurgical Products (Teksid) .......................................................... 783 979 -20.0Production Systems (Comau) .............................................................. 1,089 1,280 -14.9Eliminations........................................................................................ (572) (493) –

1111 1111 1111

Total .................................................................................................. 13,375 12,366 8.21111 1111 1111aaaa aaaa aaaa

• Revenues of FPT Powertrain Technologies totalled 7,075 million euros, an increase of 15.1 per cent.from the previous year, as a result of a significant growth in volumes (mainly due to higher demandfrom Fiat Group Automobiles and Iveco). Sales to third parties and joint ventures represented 24 percent. of revenues (as compared to 26 per cent. of revenues in 2006).

In 2007 revenues of the Sector’s passenger & commercial vehicles product line totalled 3,891 millioneuros (+12.9 per cent. from 2006), 79 per cent. of which represented sales to Group companies, withthe remainder mainly representing sales of diesel engines to third parties. During the year, 2,597,000engines (+11.5 per cent.) and 2,093,000 transmissions (+23.5 per cent.) were sold.

FPT’s industrial & marine product line had revenues of 3,166 million euros, an increase of 18.2 percent. compared with 2006. Sales to Fiat Group companies accounted for approximately 74 per cent.of the total (as compared to 72 per cent. in 2006). A total of 505,000 engines (an increase of 13.9per cent.) were delivered, mainly to Iveco (45 per cent.), CNH (19 per cent.) and the Sevel jointventure with PSA (26 per cent.). In addition, 123,000 transmissions (+8.4 per cent.) and 300,000axles (+14.4 per cent.) were sold.

• In 2007 Magneti Marelli had revenues of 5,000 million euros, an increase of 12.2 per cent. over 2006.The impact of the consolidation, as of May 2007, of the aftermarket parts & services business waslargely offset by the effect of the sale to Fiat Group Automobiles of the activities for the final assemblyof suspension systems earmarked for Fiat models, which took place in the second quarter of 2006(such activities therefore having contributed to the 2006 results). On a comparable consolidationbasis, revenues would have increased by approximately 11.7 per cent., reflecting higher volumes soldto both Fiat Group companies and third parties.

All Magneti Marelli business lines posted positive performances. The lighting business, with its high-tech products and a high incidence of sales to third parties, posted significant increases in volumes inall its principal markets. Sales of Selespeed systems and Gasoline Direct Injection systems in Europe,as well as higher volumes in Brazil and China, drove growth in the engine control business line.Revenues of the electronic systems business line benefitted from higher sales of instrument panels toboth Fiat and third parties, as well as occupant compartment modules earmarked for Fiat customers.The positive performance of suspensions systems business line in Poland, Italy and Brazil was mainlyconnected to growth at its main customer, Fiat. The exhaust systems business line’s improved resultsreflected higher sales to Fiat (in Italy, Poland and Brazil) and to third parties (in Brazil and Spain).

• In 2007, Teksid reported revenues of 783 million euros, down 20.0 per cent. from 2006. The decreasewas mainly due to the sale of the Meridian Technologies magnesium activities at the beginning ofMarch 2007, the impact of which was only partially offset by the consolidation of Teksid Aluminumstarting in September 2007. On a comparable scope of operations basis, revenues would have beendown approximately 3.4 per cent., reflecting a 3.8 per cent. drop in volume at the cast iron business.Lower sales in North America were partly offset by positive performance in the Brazilian andEuropean markets.

• Comau had revenues of 1,089 million euros in 2007. The decrease of 14.9 per cent. from 2006 wasmainly due to the Sector’s operations in North America, which were impacted by difficult tradingconditions and unfavourable exchange rate trends. Lower decreases were reported by the body-

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THE FIAT GROUP


welding and powertrain operations in Europe and by the service businesses, consistent with the reshapingof the scope of its operations the Sector began in 2006.

Other Businesses

“Other Businesses” include those of the Group’s Publishing and Communications Sector, as well as thoseof its Holding companies and Other companies (which now include the figures previously reported for theformer Services Sector, now Fiat Services).

2007 2006 % change1111 1111 1111


Publishing and Communications (Itedi) .............................................. 391 401 -2.5Holding companies and Other companies .......................................... 987 1,112 -11.2

1111 1111 1111

Total .................................................................................................. 1,378 1,513 -8.91111 1111 1111aaaa aaaa aaaa

• In 2007 Itedi had revenues of 391 million euros, down 2.5 per cent. from 2006 due to loweradvertising revenues at Publikompass.

• Holding companies and Other companies had revenues of 987 million euros in 2007, a decrease of11.2 per cent. from the previous year. The decrease reflected the disposal of some activities that hadbelonged to the former Services Sector (and are therefore reported as part of this Business’ reclassifiedresults in 2006), in particular the sale of Ingest Facility (a company operating in the facilitymanagement business) at the end of February 2007.

Trading profit

In 2007, trading profit totalled 3,233 million euros (5.5 per cent. of revenues), an increase of 65.7 per cent.compared to 1,951 million euros in 2006 (3.8 per cent. of revenues), with all the major Businesses postingsignificant improvements.

Trading profit by Business

2007 2006 change1111 1111 1111

(in millions of euro, except trading margin)

Automobiles (Fiat Group Automobiles, Maserati, Ferrari) ................ 1,093 441 652Agricultural and Construction Equipment (CNH – Case

New Holland) ................................................................................ 990 737 253Trucks and Commercial Vehicles (Iveco) ............................................ 813 546 267Components and Production Systems (FPT, Magneti Marelli,

Teksid, Comau) .............................................................................. 509 348 161Other Businesses (Publishing and Communications, Holding

companies and other companies) and Eliminations ........................ (172) (121) -511111 1111 1111

Total for the Group ............................................................................ 3,233 1,951 1,2821111 1111 1111aaaa aaaa aaaa

Trading margin (%) ............................................................................ 5.5 3.8

The breakdown of trading profit by Business and/or Sector is illustrated below:

Automobiles

The Automobiles Business more than doubled its trading profit, recording a total of 1,093 million euros (anincrease of 652 million euros compared to 2006). Trading margin grew from 1.7 per cent. in 2006 to 3.8per cent. in 2007. Fiat Group Automobiles, with a 512 million euro increase in trading profit, almost tripledits 2006 result. Ferrari’s trading profit rose by 45.4 per cent. Maserati posted a turnaround in results,reporting a trading profit of 24 million euros against a trading loss of 33 million euros in 2006.

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THE FIAT GROUP


2007 2006 change1111 1111 1111

(in millions of euro, except trading margin)

Fiat Group Automobiles .................................................................... 803 291 512Maserati ............................................................................................ 24 (33) 57Ferrari ................................................................................................ 266 183 83

1111 1111 1111

Total .................................................................................................. 1,093 441 6521111 1111 1111aaaa aaaa aaaa

Trading margin (%) ............................................................................ 3.8 1.7

• Fiat Group Automobiles had a trading profit of 803 million euros (3.0 per cent. of revenues) a sharpimprovement (+512 million euros) from the 291 million euros (1.2 per cent. of revenues) reported in2006. The increase was mainly attributable to higher volumes, (which also allowed for increasedabsorption of fixed production costs) and a more favourable product mix following the introductionof new models, which were partially offset by higher costs for research and development andadvertising and network development supporting our commercial strategy in both Western Europeand Latin America. The contribution of a one-off gain related to the disposal of fixed assets (net ofone-off expenses) of approximately 65 million euros also positively impacted trading profit.

• In 2007 Maserati had a trading profit of 24 million euros (3.5 per cent. of revenues), a sharpimprovement (up 57 million euros) from the loss of 33 million euros reported in 2006. Highervolumes and cost-containment initiatives enabled Maserati to report a positive trading result for thefirst time since its entry into the Fiat Group in 1993.

• Ferrari closed 2007 with a trading profit of 266 million euros, up 45.4 per cent. from 183 millioneuros in 2006. The improvement was mainly attributable to higher sales volumes and efficiency gains,offset in part by increased R&D expenses and an unfavourable U.S. dollar exchange rate. Tradingmargin was 15.9 per cent. in 2007, as compared to 12.6 per cent. in 2006.

Agricultural and Construction Equipment

In 2007 CNH - Case New Holland had a trading profit of 990 million euros, representing a trading marginof 8.4 per cent., up from 7.0 per cent. in 2006. The 253 million euro improvement in trading profit(representing an increase of 34.3 per cent., or +46.7 per cent. in U.S. dollar terms) from the 737 millioneuros of 2006 was mainly due to higher sales volumes, a more favourable product mix and pricing (allowingfor the absorption of higher raw material costs), as well as benefits deriving from improved product quality.

Trucks and Commercial Vehicles

Iveco had a trading profit of 813 million euros (7.3 per cent. of revenues), a sharp improvement (+267million euros, or +48.9 per cent.) over trading profit of 546 million euros in 2006 (6.0 per cent. ofrevenues). The increase was mainly attributable to strong growth in sales volume and better pricingresulting from the competitive repositioning of its products, especially heavy vehicles, which were partiallyoffset by higher costs both for R&D and for the international expansion initiatives started by Iveco overthe last two years.

Components and Production Systems

The Components and Production Systems Businesses posted trading profit of 509 million euros, for atrading margin of 3.8 per cent. (as compared to 2.8 per cent. in 2006). The 161 million euro overallimprovement reflected higher trading profit at FPT Powertrain Technologies and Magneti Marelli, and thereduced loss at Comau, while weaker results at Teksid were primarily attributable to changes in its scopeof activities.

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THE FIAT GROUP


2007 2006 change1111 1111 1111


FPT Powertrain Technologies ............................................................ 271 168 103Components (Magneti Marelli) .......................................................... 214 190 24Metallurgical Products (Teksid) .......................................................... 47 56 -9Production Systems (Comau) .............................................................. (23) (66) 43

1111 1111 1111

Total .................................................................................................. 509 348 1611111 1111 1111aaaa aaaa aaaa

Trading margin (%) ............................................................................ 3.8 2.8

• In 2007, FPT Powertrain Technologies had a trading profit of 271 million euros, an increase of 103million euros (+61.3 per cent.) over 2006, resulting in an improvement in trading margin from 2.7per cent. in 2006 to 3.8 per cent. in 2007. The improvement was mainly due to efficiencies in thepurchasing and manufacturing areas and growth in volumes, while higher costs for internationalbusiness development negatively impacted the trading results.

• Magneti Marelli had a trading profit of 214 million euros, an increase of 24 million euros (or 12.6per cent.) compared to 2006. Higher sales volumes and efficiency gains compensated for the negativeimpact of price pressures, increased raw material prices and industrial start-up costs for newproducts. Trading margin was 4.3 per cent., in line with that in 2006.

• Teksid closed 2007 with a trading profit of 47 million euros, which was lower than the 56 millioneuros recorded in 2006, largely as a result of the trading loss of 9 million euros recorded at TeksidAluminum (for the period following its consolidation in 2007), in addition to the fact that the 2006results included a positive contribution of 16 million euros relating to operations sold in 2007.Calculated so as to exclude these two effects, trading profit would have increased by approximately16 million euros due to efficiency gains, which more than offset higher energy and materials costs.

• Comau closed 2007 with a trading loss of 23 million euros (with losses concentrated in the firstquarter of 2007 and followed by near breakeven results in the rest of the year), a substantialimprovement from the loss of 66 million euros reported in 2006. The improvement is the result ofthe reshaping plan launched in the second half of 2006, the effects of which are starting to be felt.The most important improvements were reported by the body-welding operations in Europe.

Other Businesses

The trading loss reported by Other Businesses totalled 172 million euros, compared with a trading loss of121 million euros in 2006.

2007 2006 change1111 1111 1111


Publishing and Communications (Itedi) .............................................. 12 11 1Holding Companies, Other Companies and Eliminations .................. (184) (132) -52

1111 1111 1111

Total .................................................................................................. (172) (121) -511111 1111 1111aaaa aaaa aaaa

• In 2007, Itedi had a trading profit of 12 million euros (3.1 per cent. of revenues), as compared to aprofit of 11 million euros in 2006 (2.7 per cent. of revenues). The improvement was mainlyattributable to general, industrial and distribution cost-containment initiatives at Editrice La Stampa(whose trading margin rose by 2 percentage points), notwithstanding higher amortisation costsconnected to the new rotary press project, and the termination of government paper cost subsidies.

• The trading loss in Holding Companies, Other Companies and Eliminations rose from 132 millioneuros in 2006 (which included a profit of 37 million euros of the Services Sector) to 184 million eurosin 2007. The increase of 52 million euros was attributable to lower volumes of activity for the “TrenoAlta Velocità” (T.A.V.) contract (in the first quarter of 2006 there was significant income from theTurin-Novara line, which was completed in that period), and changes in the scope of consolidation,

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THE FIAT GROUP


in particular due to the disposal of B.U.C. - Banca Unione di Credito, as well as higher non-cash costsrecognised in connection with stock option plans.

Operating result

In 2007 Operating income totalled 3,152 million euros, against 2,061 million euros in 2006. The 1,091million euro improvement from 2006 reflected the increase in trading profit of 1,282 million euros, partiallyoffset by a reduction in total unusual income of 191 million euros. As detailed below, the latter figurereflects the combined effect of lower gains on the disposal of investments (417 million euros) and higherother net unusual expenses (119 million euros), offset in part by lower restructuring costs (345 millioneuros).

Net gains on the disposal of investments in 2007 totalled 190 million euros and mainly included thefollowing gains: 118 million euros for the sale of the interest held in Mediobanca S.p.A., and 42 millioneuros realised on the completion of the sale of Ingest Facility S.p.A.

In 2006 this item amounted to 607 million euros and included the gain of 463 million euros resulting fromthe establishment of the FAFS joint venture, the gains on the sales of B.U.C. - Banca Unione di Credito (80million euros), Immobiliare Novoli S.p.A. (39 million euros), Machen Iveco Holding SA, which controlled51 per cent. of Ashok Leyland Ltd (23 million euros), Atlanet S.p.A. (22 million euros) and our residualinterest in IPl S.p.A. (9 million euros), as well as the 29 million euro loss, recorded in 2006, in connectionwith the sale of Meridian Technologies Inc., which was finalised on 2nd March, 2007.

Restructuring costs in 2007 totalled 105 million euros and in 2007 related primarily to Fiat GroupAutomobiles (40 million euros), CNH (30 million euros) and Comau (21 million euros).

In 2006, restructuring costs totalled 450 million euros and were mainly attributable to Comau (179 millioneuros) in connection with with the restructuring and reshaping of the scope of the Sector’s operations, CNH(145 million euros), FPT Powertrain Technologies (60 million euros), Magneti Marelli (16 million euros),and our former “Business Solutions” Sector (12 million euros).

Other unusual income (expenses) in 2007 consisted of net expenses of 166 million euros, largely inconnection with the rationalisation of certain strategic suppliers of the Group, some of which were acquiredin 2007.

The 47 million euros in net expenses reported in 2006 included 26 million euros attributable to theimpairment of the goodwill of certain European companies of Comau, resulting from the restructuring andreshaping of its scope of operations, and 17 million euros due to the reorganisation and rationalisation ofrelationships with Group suppliers.

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THE FIAT GROUP


The following table illustrates the components of our operating result broken down by Sector:

Gains/Losseson the Other unusual

disposal of Restructuring income OperatingTrading profit investments costs (expenses) results

111111 111111 111111 111111 111111

2007 2006 2007 2006 2007 2006 2007 2006 2007 2006(in millions of euros)

Fiat Group Automobiles .............. 803 291 8 461 40 9 (136) (16) 635 727Maserati ...................................... 24 (33) - - - - (2) - 22 (33)Ferrari.......................................... 266 183 - - - - - - 266 183Agricultural and Construction Equipment (CNH) .................... 990 737 - - 30 145 (7) - 953 592

Trucks and Commercial Vehicles (Iveco)........................................ 813 546 - 25 10 6 - 803 565

FPT Powertrain Technologies ...... 271 168 - 1 60 (13) (6) 257 102Components (Magneti Marelli).... 214 190 - - - 16 (5) 1 209 175Metallurgical Products (Teksid) .. 47 56 - (29) (1) 4 (1) 3 47 26Production Systems (Comau) ...... (23) (66) 11 (1) 21 179 - (26) (33) (272)Publishing and Communications (Itedi) ........................................ 12 11 - 1 1 - - - 11 12

Holding Companies, Other companies and Eliminations ...... (184) (132) 171 150 3 31 (2) (3) (18) (16)

112 112 112 112 112 112 112 112 112 112

Total for the Group .................... 3,233 1,951 190 607 105 450 (166) (47) 3,152 2,061112 112 112 112 112 112 112 112 112 112

aas aas aas aas aas aas aas aas aas aas

Net result

Net financial expenses totalled 564 million euros in 2007, against 576 million euros in 2006, and includedthe positive impact of 70 million euros (71 million euros in 2006) from two stock option-related equityswaps on Fiat shares. The improvement arising from lower net industrial debt was in part offset by expensesof 43 million euros recognised in relation to the accelerated redemption of CNH senior notes originally duein 2011. The financial component of costs for pension plans and other employee benefits totalled 155million euros in 2007, compared with 166 million euros in 2006.

In 2007 investment income totalled 185 million euros, against income of 156 million euros in the previousyear. The improvement of 29 million euros was largely due to the contribution of FAFS and higher resultsat the main industrial joint ventures (Tofas and Sevel).

In 2007 income before taxes totalled 2,773 million euros, against income of 1,641 million euros in 2006.The 1,132 million euro improvement is due to the increase of 1,091 million euros in operating income,lower net financial expenses (down 12 million euros) and an increase in investment income of 29 millioneuros.

Income taxes totalled 719 million euros in 2007 (as compared to 490 million euros in 2006), 188 millioneuros of which represented IRAP (an Italian local tax on production activities that amounted to 149 millioneuros in 2006) and 21 million euros of which represented prior years’ taxes (56 million euros in 2006). In2007, the increase in the charge for income taxes was primarily the consequence of the significant rise inprofits from operations, partially offset by an increase in recognised deferred tax assets and lower taxesrelating to previous years.

Excluding IRAP, the Group’s effective tax rate was 19 per cent. in 2007 (21 per cent. in 2006).

In 2007, net income totalled 2,054 million euros, as compared to net income of 1,151 million euros in 2006,an increase of 78.4 per cent.

Net income attributable to the equity holders of the Parent amounted to 1,953 million euros in 2007 (ascompared to 1,065 million euros in 2006, an increase of 83.3 per cent.).

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THE FIAT GROUP


CONSOLIDATED STATEMENT OF CASH FLOWS

The consolidated statement of cash flows is presented as a component of the Consolidated FinancialStatements incorporated by reference herein. A condensed version thereof, as well as comments on theprincipal trends, are provided below.

2007 20061111 1111


Cash and cash equivalents at beginning of the year as reported ............................ 7,736 6,417of which: Cash and cash equivalents included under “assets held for sale” .......... 5 -Cash and cash equivalents at beginning of the year net of “assets held for sale” .. 7,741 6,417Cash flows from (used in) operating activities during the year .............................. 5,909 4,618Cash flows from (used in) investment activities(a) .................................................. (4,601) (1,390)Cash flows from (used in) financing activities ........................................................ (2,375) (1,731)Translation exchange differences............................................................................ (33) (173)Total change in cash and cash equivalents ............................................................ (1,100) 1,324Cash and cash equivalents at end of the year ........................................................ 6,641 7,741of which: Cash and cash equivalents included under “assets held for sale” .......... 2 5Cash and cash equivalents at end of the year as reported in the

Consolidated Financial Statements net of “assets held for sale” ........................ 6,639 7,736

(a) In 2006, the reimbursement of loans extended by the Group’s centralised cash management to the financial services companiestransferred to the FAFS joint venture had accounted for proceeds of approximately 3 billion euros.

In 2007, cash flows from operating activities during the year totalled 5,909 million euros.

Income cash flow – that is net income plus amortisation and depreciation, dividends, changes in provisionsand items related to sales with buy-back commitments, net of gains/losses on disposal and other non-cashitems – amounted to 4,321 million euros, to which should be added the cash generated by the decrease inworking capital which, when calculated on a comparable consolidation and exchange rate basis, amountedto 1,588 million euros.

Cash flows used in investment activities totalled 4,601 million euros. Net of the increase in securities heldas current assets (63 million euros), which mainly represent a temporary investment of funds, investmentactivities used a total of 4,538 million euros.

Investments in tangible assets (net of vehicles sold with buy-back commitments) and intangible assetstotalled 3,985 million euros (3,789 million euros in 2006) of which 302 million euros (926 million eurosin 2006, 750 million euros of which relating to activities performed in 2007 by FAFS) related to vehiclesfor long-term renting operations while 932 million euros (813 million euros in 2006) related to capitaliseddevelopment costs.

In addition to investments, receivables from financing activities increased (by 1,032 million euros) mainlydue to growth in financing extended by the financial services companies of CNH - Case New Holland,which was partly offset by the decrease in financing activities performed by the financial services companiesof Fiat Group Automobiles that were not conveyed to FAFS at the end of 2006.

In 2007, the sale of non-current assets generated net proceeds of 735 million euros, mainly as a result ofthe sale of our interest in Mediobanca (225 million euros), the sale of Meridian Technologies Inc. (55million euros) and the sale of Ingest Facility (49 million euros), the final payment received on the sale of 51per cent. of FAFS (85 million euros) and the payment received within the framework of the creation of the50-50 joint venture with Tata Motors in India (28 million euros), as well as the proceeds from the sales ofvehicles as part of the long-term rental operations (54 million euros) and of other tangible and intangibleassets.

Cash flows used in financing activities totalled 2,375 million euros mainly due to the reduction of theGroup’s debt by approximately 1.7 billion euros (1 billion euros of which related to asset-backed financing)and the payment of dividends (310 million euros, 36 million euros of which was attributable to minoritystockholders of Group companies) as well as the purchase of treasury stock as part of the buy-back

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THE FIAT GROUP


programme approved at the stockholders meeting in April 2007 (426 million euros), net of sales resultingfrom the exercise of stock options (31 million euros).

Significant Events Occurring since the End of the Fiscal Year

The most significant transactions completed by the Fiat Group during early 2008 are set out below:

• The share buy-back programme continued in 2008. As of 31st March 2008, the total number ofordinary shares purchased from the beginning of the programme amounted to 31.54 million, for atotal invested amount of 603.4 million euros. The Group intends to continue its share buy-backprogramme throughout 2008 through to September 2009 in accordance with the approval receivedon 31st March 2008 at the annual stockholders meeting.

• On 11th January, 2008 Magneti Marelli and Sumi Motherson Group signed an agreement for thecreation of a joint venture in India aimed at the production of automotive components in the area oflighting and engine control systems. The joint venture’s products will target the Indian market andlocal and international carmakers operating in the territory.

• On 20th January, 2008 an agreement was reached between Federmeccanica (the nationalorganisation representing the metallurgical and mechanical industries including Group companies)and the Fim-Cisl, Fiom-Cgil, Uilm-Uil and Fismic labour unions for the renewal of the NationalCollective Labour Agreement for Metalworkers (white and blue collar). This agreement affectsapproximately 77,000 Fiat Group employees in Italy. The agreement will be valid for 30 months(until 31st December, 2009) in respect of the wage related provisions and until 31st December, 2011in respect of the regulatory provisions. Individual wage increases were agreed to for a total of 127euros gross per month (using the representative example of a worker classified in Category 5) grantedin three instalments: 60 euros from 1st January, 2008, another 37 euros from 1st January, 2009 anda further 30 euros from 1st September, 2009. Furthermore, a one-time payment of 300 euros grosswill be made in March 2008 to cover the period between July and December 2007. The changesenvisaged in the regulatory provisions include certain measures regarding working time aimed atimproving flexibility (an 8-hour increase in the amount of overtime that companies may implementwithout having to obtain prior consent from worker representatives); the standardisation ofregulatory provisions for blue and white collar workers that will come into effect on 1st January,2009; revision and reinforcement of the information and consultation system, particularly in regardto safety at work and the definition of employment stabilisation paths for fixed-term and supplycontract workers.

• On 28th January, 2008 FPT Powertrain Technologies, the Region of Piedmont, the Province of Biellaand the Municipality of Verrone (Biella) signed a Protocol of Understanding aimed at boosting anddeveloping the Verrone plant, where a new transmission named C635 will be produced for mid-sizedcars. It will be offered in three versions: manual, Dual Dry Clutch (DDCT, automatic transmissionwith dual dry clutch) and automatic. It is estimated that FPT Powertrain Technologies will investapproximately 500 million euros between fixed assets and research and development costs, which isexpected to permit a production capacity of approximately 800,000 transmissions in 2012. Once itis in full operation, the plant could employ 1,100 workers, or about 600 more than at present.

• On 30th April, 2008 Standard & Poor’s raised its long- and short-term credit ratings for the FiatGroup to an investment-grade level of BBB-/A-3, with a stable outlook. In its report, Standard &Poor’s cited the Fiat Group’s improvements in operating performance, cash generation and debtreduction.

Corporate Governance

Introduction

The Fiat Group has adopted and abides by the Corporate Governance Code of Italian Listed Companiesissued in March 2006, supplemented and amended as necessary to align its corporate governance system tothe characteristics of the Group.

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THE FIAT GROUP


In compliance with the obligations imposed by law and regulations, every year Fiat S.p.A. prepares its“Annual Report on Corporate Governance” which provides a general description of the corporategovernance system adopted by the Group and contains information on its ownership structure, adherenceto the Corporate Governance Code, and compliance with consequent commitments. This report, which isavailable in the Corporate Governance section of the website www.fiatgroup.com, is divided into foursections: the first contains a description of the governance structure, the second gives information on ourownership structure, the third provides an analysis on the implementation of the provisions of the Code,and the fourth consists of summary tables and corporate governance documents of the Fiat Group as wellas a comparison in which information on the modalities of implementation of the Corporate GovernanceCode is organised and supplemented according to each principle and criterion of the Code. Highlightsrelevant to this Base Prospectus are illustrated below.

Board of Directors

As envisaged in the By-laws, the number of members of the board of directors ranges from nine to fifteen.The stockholders meeting held on 3rd May, 2006 set the number of members of the board of directors atfifteen and they will remain in office until the date of the stockholders meeting that will be called to approvethe 2008 financial statements.

Pursuant to amendments to the Company’s By-laws (Article 11) effected in 2007, the board of directorsmust be appointed through the voting-list system so that minority stockholders can elect a director. Theminimum equity interest required for submission of a list of candidates is currently 0.5 per cent. of ordinaryshares, in accordance with the communication published by Consob (the Italian securities law regulator)applicable to the 2007 fiscal year. Each list must indicate at least one candidate that satisfies theindependence requirements imposed by law.

As envisaged in Article 16 of the Company’s By-laws, the management of the Company is vested, severally,in all executive directors, and as envisaged in Article 12, the Vice Chairman, if appointed, shall act asChairman if the latter is absent or prevented from acting. As in the past, the board of directors has adopteda model for delegation of broad operating powers to the Chairman and the Chief Executive Officer,authorising them to severally perform all ordinary and extraordinary acts that are consistent with theCompany’s purpose and not reserved by law or otherwise delegated or reserved to the board of directorsitself. In practice, the Chairman exercises coordination and strategic guidance functions, while the ChiefExecutive Officer is in charge of the operational management of the Group.

The Board has defined “Guidelines for Significant Transactions and Transactions with Related Parties,” bywhich it reserved the right to examine and approve in advance any transaction of significance in the balancesheet, economic and financial figures, including the most significant transactions with related parties, andsubject all transactions with related parties to special criteria of substantial and procedural fairness.

Therefore, decisions regarding significant transactions are excluded from the mandate granted to executivedirectors. The term “significant transactions” refers to those transactions that in and of themselves requirethe company to file prospectuses regarding such transactions, in accordance with rules established bymarket supervisory authorities.

When Fiat S.p.A. needs to execute significant transactions, the executive directors must provide the boardof directors reasonably in advance with a summary analysis of the strategic consistency, economicfeasibility, and expected return for Fiat.

Decisions regarding the most significant transactions with related parties are also excluded from themandate granted to executive directors, with all transactions being subject to special rules of substantial andprocedural fairness and disclosure to the board of directors.

With reference to transactions carried out with related parties, including intra-Group transactions, during2007 there were no transactions that could be defined as atypical or unsual, insofar as all transactions werepart of the normal business of Group companies. These transactions are entered into on market conditions,taking into account the characteristics of the goods sold and the services provided.

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THE FIAT GROUP


Information on transactions with related parties, including that required by the Consob communication of28th July, 2006, is presented in Note 35 of the Consolidated Financial Statements incorporated herein byreference.

At 31st December, 2007, the board was composed of three executive directors and twelve non-executivedirectors – that is, directors who do not hold delegated authority or perform executive functions in theCompany or the Group – eight of whom qualified as independent under applicable Italian rules.

The current members of the board are as follows:

Name Position112 1111

Luca Cordero di Montezemolo(4)...................... ChairmanJohn Elkann(1)(4) ................................................ Vice ChairmanSergio Marchionne(4) ........................................ Chief Executive Officer Andrea Agnelli ................................................ Director Roland Berger(3)(4) ............................................ Director Tiberto Brandolini d’Adda .............................. Director René Carron(*) .................................................. Director Luca Garavoglia(1)(3) .......................................... Director Gian Maria Gros-Pietro(1)(2) .............................. Director Virgilio Marrone.............................................. Director Vittorio Mincato(2)............................................ Director Pasquale Pistorio(4) .......................................... Director Carlo Sant’Albano .......................................... DirectorRatan Tata ...................................................... DirectorMario Zibetti(2)(3)................................................ Director

(*) Co-opted on 24th July, 2007, in replacement of Hermann-Josef Lamberti

(1) Member of the Nominating and Corporate Governance Committee

(2) Member of the Internal Control Committee

(3) Member of the Compensation Committee

(4) Member of the Strategic Committee

The executive directors are the Chairman, the Vice Chairman, who substitutes for the Chairman if the latteris absent or prevented from acting, and the Chief Executive Officer. They also hold management positionsin subsidiaries: Luca Cordero di Montezemolo is chairman of Ferrari S.p.A., John Elkann is chairman ofItedi S.p.A., and Sergio Marchionne, in addition to being chairman of the principal subsidiaries, includingCNH Global N.V. – a company listed on the NYSE – is also chief executive officer of Fiat GroupAutomobiles S.p.A.

An adequate number of independent directors is essential to protect the interests of stockholders,particularly minority stockholders. In order to achieve this objective and in the conviction that enhancingprotections against potential conflicts of interest is a priority for the Company, particularly in those areasless prone to control by the stockholders, the board of directors submitted a motion to the stockholdersmeeting, on 3rd May, 2006, to confirm the principle of a board with a majority of independent directors aswell as the selective criteria for determining independence, already adopted in 2005. This principle wasaccepted by the stockholders meeting and reaffirmed on the occasion of the co-optation of René Carron, inreplacement of resigning director Hermann-Josef Lamberti, which took place on 24th July, 2007. On 31stMarch, 2008 René Carron was confirmed by the ordinary shareholders meeting of the Company. Fiat’sboard of directors is made up of a majority of independent directors.

The qualifications of independent directors are assessed annually and based on the absence or non-relevanceduring the previous three years of investment, economic, or other relationships maintained directly,indirectly, or on behalf of third parties with the Company, its executive directors and managers withstrategic responsibilities or its controlling companies or subsidiaries, or with parties otherwise related to theCompany. The results of these assessments are disclosed in the Annual Report on Corporate Governance.

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THE FIAT GROUP


At its meeting held on 24th July, 2007, the board of directors confirmed that the directors Roland Berger,René Carron, Luca Garavoglia, Gian Maria Gros-Pietro, Vittorio Mincato, Pasquale Pistorio, Ratan Tataand Mario Zibetti satisfied these requirements of independence.

Board of Statutory Auditors

The Board of Statutory Auditors is composed of three regular auditors and three alternates, all of whom,as required by Article 17 of the By-laws, must be entered in the Italian Auditors’ Register and have at leastthree years’ experience as chartered accountants. Furthermore, they may hold other positions as directorsor regular auditors within the limits prescribed by law and regulation.

Following the resolutions of the Stockholders Meeting of 3rd May, 2006, the Board of Statutory Auditorsis made up of the Chairman Carlo Pasteris and regular auditors Giuseppe Camosci and Cesare Ferrero.Their term expires on the date of the Stockholders Meeting that approves the 2008 financial statements.

As prescribed in the Consolidated Financial Act and in accordance with Article 17 of the Company’s By-laws, properly organised minority groups have the right to appoint one regular auditor, to whom thechairmanship is assigned, and one alternate auditor. In accordance with the By-laws, the minimum equityinterest required for submission of a list of candidates is set at a percentage no lower than that required byapplicable laws for the submission of lists of candidates for the appointment of the board of directors ofthe Company. In accordance with the communication published by Consob with regard to fiscal 2007, thispercentage is currently equal to 0.5 per cent. of the ordinary shares. The lists presented together with thedocumentation required by law and the Company’s By-laws, must be deposited at the Company’s offices atleast fifteen days prior to the date set for the meeting on first call, or, in specific cases, up to five days afterthat date.

The business address of the directors and statutory auditors is c/o Fiat S.p.A. at Via Nizza 250, I-10126Turin, Italy.

Save as disclosed in this Base Prospectus and/or in the Annual Report and Consolidated financial statementsof the Fiat Group incorporated herein by reference, none of Fiat’s directors, senior managers or statutoryauditors has any potential conflicts of interest between any duties to Fiat and their private interests and/orother duties.

Major Stockholders

Fiat is directly controlled by its largest single stockholder, IFIL, which in turn is controlled by IFI. As of11th April, 2008, IFIL owned 30.45 per cent. of Fiat’s ordinary shares outstanding as of such date.

The following table presents information on stockholders who owned more than 2 per cent. of Fiat’sordinary shares as of 11th April, 2008.

% of ordinaryshares

11111

IFIL ................................................................................................................................ 30.45%*Barclays Global Investors UK Holding Ltd. (through affiliates)...................................... 3.17% FMR LLC ...................................................................................................................... 5.05%**Credit Suisse Group ........................................................................................................ 3.40% Capital Research and Management Company ................................................................ 2.22%

* in addition to 3.01% of treasury stock held by Fiat S.p.A.

** between them, 1.75% with the sole power to vote

None of the shares held by the stockholders listed above provides any special voting rights.

94

THE FIAT GROUP


Human Resources

The Group had 185,227 employees as at 31st December, 2007, compared with 172,012 a year earlier.About 32,300 new hires were made during the year, while approximately 21,400 persons left the Group.Changes in the Group’s scope of operations caused a net increase of about 2,300 employees, particlarly asa consequence of the consolidation of Magneti Marelli After Market Parts and Services, the I.T.C.A. Group,which carries out its business in the automotive supplies sector, and Teksid Aluminum, which were in partoffset by the sale of the magnesium operations of Teksid and of Ingest Facility. The Group’s new employeesinclude over 1,649 recent university graduates, mainly in the engineering area. There are approximately28,000 employees with special professional skills and 43 per cent. of them work outside Italy.

Research and Innovation

To promote sustainable mobility on multiple fronts, the Fiat Group has organised its research andinnovation work through two companies, the Centro Ricerche Fiat (Fiat Research Centre) and Elasis, whosestrategies are coordinated by the Technical Committee of the Group Executive Council.

In 2007, the Group’s research and development expenses1 amounted to approximately 1.7 billion euros oraround 3 per cent. of net revenues of our industrial activities. Overall, R&D activities involve some 12,900people at 114 centres.

1 Includes capitalised research and development expenses and those charged directly to income for the year.

95

THE FIAT GROUP


96


Financial information relating to Fiat S.p.A.The following financial information is extracted from the annual audited financial statements of Fiat S.p.A.as at 31st December, 2007 and 2006 and for the years then ended, prepared in accordance with IFRS.

BALANCE SHEETSAssets


(euro)Non-current assetsIntangible assets ................................................................................................................ 811,118 771,530Property, plant and equipment .......................................................................................... 34,664,232 37,252,689Investments ....................................................................................................................... 13,311,484,271 14,499,594,748Other financial assets........................................................................................................ 19,493,464 20,134,319Other non-current assets ................................................................................................... 115,652 1,573,473Deferred tax assets............................................................................................................ – –

11111122 11111122

Total non-current assets.................................................................................................... 13,366,568,737 14,559,326,75911111122 11111122aaaaaaa aaaaaaa

Current assetsInventoriesTrade receivables .............................................................................................................. 180,980,765 154,692,452Current financial receivables ............................................................................................ 1,223,431,224 84,173,202Other current receivables .................................................................................................. 892,160,645 626,428,489Cash and cash equivalents ................................................................................................ 523,747 608,105

11111122 11111122

Total current assets .......................................................................................................... 2,297,096,381 865,902,24811111122 11111122aaaaaaa aaaaaaa

Assets held for sale............................................................................................................ – –11111122 11111122

Total Assets ...................................................................................................................... 15,663,665,118 15,425,229,00711111122 11111122aaaaaaa aaaaaaa

Stockholders’ Equity and LiabilitiesStockholders’ equityCapital stock .................................................................................................................... 6,377,262,975 6,377,257,130Additional paid-in capital ................................................................................................ 1,540,884,892 1,540,856,410Legal reserve .................................................................................................................... 536,059,918 446,561,763Other reserves and retained earnings ................................................................................ 1,587,248,228 (310,383,070)Treasury stock .................................................................................................................. (419,309,657) (24,138,811)Net result .......................................................................................................................... 2,068,858,902 2,343,374,972

11111122 11111122

Total stockholders’ equity ................................................................................................ 11,691,005,258 10,373,528,39411111122 11111122aaaaaaa aaaaaaa

Non-current liabilitiesProvisions for employee benefits and other non-current provisions .................................. 21,301,993 18,104,487Non-current financial payables ........................................................................................ 2,809,388,000 2,810,029,000Other non-current liabilities.............................................................................................. 15,852,305 20,000,576Deferred tax liabilities ...................................................................................................... 4,256,709 3,438,000

11111122 11111122

Total non-current liabilities .............................................................................................. 2,850,799,007 2,851,572,06311111122 11111122aaaaaaa aaaaaaa

Current liabilitiesProvisions for employees benefits and other current provisions ........................................ 127,628 26,790,951Trade payables .................................................................................................................. 246,495,446 184,660,883Current financial payables ................................................................................................ 294,695,310 1,627,429,902Other payables.................................................................................................................. 580,542,469 361,246,814

11111122 11111122

Total current liabilities...................................................................................................... 1,121,860,853 2,200,128,55011111122 11111122

Liabilities held for sale ...................................................................................................... – –11111122 11111122

Total stockholders’ equity and liabilities .......................................................................... 15,663,665,118 15,425,229,00711111122 11111122aaaaaaa aaaaaaa

INCOME STATEMENTS

Year ended 31st December,2007 2006

(euro)

Dividends and other income from investments .................................. 823,248,147 362,418,522(Impairment losses) reversal of impairment losses of investments ...... 1,247,068,762 2,099,350,000Gains (losses) on the disposal of investments...................................... 118,470,663 425,380Other operating income...................................................................... 120,321,883 79,238,202Personnel costs.................................................................................... (55,982,600) (48,799,405)Other operating costs ........................................................................ (163,102,898) (150,106,365)Financial income (expenses)................................................................ (149,004,117) (24,846,809)

1111112 1111112

Result before taxes ............................................................................ 1,941,019,840 2,317,679,5251111112 1111112

Income taxes ...................................................................................... (127,839,062) (25,695,447)1111112 1111112

Result from continuing operations...................................................... 2,068,858,902 2,343,374,9721111112 1111112

Result from discontinued operations .................................................. – –1111112 1111112

Net result............................................................................................ 2,068,858,902 2,343,374,9721111112 1111112aaaaaas aaaaaas

97

FINANCIAL INFORMATION RELATING TO FIAT S.p.A.


98


Financial information relating to the Fiat GroupThe following financial information is extracted from the annual audited financial statements of the FiatGroup as at 31st December, 2007 and 2006 and for the years then ended, prepared in accordance withIFRS.

CONSOLIDATED BALANCE SHEETSAt 31st December,

2007 2006

(millions of euro)

AssetsIntangible assets............................................................................................ 6,523 6,421Property, plant and equipment .................................................................... 11,246 10,540Investment property...................................................................................... 10 19Investments and other financial assets: ........................................................ 2,214 2,280– Investments accounted for using the equity method .................................. 1,930 1,719– Other investments and financial assets ...................................................... 284 561Leased assets ................................................................................................ 396 247Defined benefit plan assets .......................................................................... 31 11Deferred tax assets ...................................................................................... 1,892 1,860

11111 11111

Total non-current assets .............................................................................. 22,312 21,37811111 11111

Inventories.................................................................................................... 9,990 8,548Trade receivables .......................................................................................... 4,384 4,944Receivables from financing activities ............................................................ 12,268 11,743Other receivables .......................................................................................... 3,203 2,839Accrued income and prepaid expenses ........................................................ 241 247Current financial asset: ................................................................................ 1,016 637– Current equity investments ........................................................................ 22 31– Current securities ...................................................................................... 291 224– Other financial assets ................................................................................ 703 382Cash and cash equivalents ............................................................................ 6,639 7,736

11111 11111

Total current assets ...................................................................................... 37,741 36,69411111 11111

Assets held for sale ...................................................................................... 83 33211111 11111

TOTAL ASSETS .......................................................................................... 60,136 58,40411111 11111

Total assets adjusted for asset-backed financing transactions .................... 53,316 50,06011111 11111aaaaa aaaaa

CONSOLIDATED BALANCE SHEETSAt 31st December,

2007 2006

(millions of euro)

LiabilitiesStockholders’ equity .................................................................................... 11,279 10,036– Stockholders’ equity of the Group ............................................................ 10,606 9,362– Minority interest ........................................................................................ 673 674Provisions .................................................................................................... 8,562 8,611– Employee benefits...................................................................................... 3,597 3,761– Other provisions........................................................................................ 4,965 4,850Debt ............................................................................................................ 17,951 20,188– Asset-backed financing .............................................................................. 6,820 8,344– Other debt ................................................................................................ 11,131 11,844Other financial liabilities .............................................................................. 188 105Trade payables.............................................................................................. 14,725 12,603Other payables ............................................................................................ 6,120 5,120Deferred tax liabilities .................................................................................. 193 263Accrued expenses and deferred income ........................................................ 1,083 1,169Liabilities held for sale ................................................................................ 35 309

111116 11111

TOTAL STOCKHOLDERS’ EQUITY AND LIABILITIES ........................ 60,136 58,40411111 11111

Total liabilities adjusted for asset-backed financing transactions .............. 53,316 50,06011111 11111aaaaa aaaaa

CONSOLIDATED INCOME STATEMENTSFor the years ended

31st December2007 2006

(millions of euro)

Net revenues ................................................................................................ 58,529 51,832Cost of sales ................................................................................................ 48,924 43,888Selling, general and administrative costs ...................................................... 4,924 4,697Research and development costs .................................................................. 1,536 1,401Other income (expenses) .............................................................................. 88 105Trading profit .............................................................................................. 3,233 1,951Gains (losses) on the disposal of equity investments .................................... 190 607Restructuring costs ...................................................................................... 105 450Other unusual income (expenses) ................................................................ (166) (47)Operating result .......................................................................................... 3,152 2,061Financial income (expenses) ........................................................................ (564) (576)Result from equity investments .................................................................... 185 156Result before taxes ...................................................................................... 2,773 1,641Income taxes ................................................................................................ 719 490Result from continuing operations .............................................................. 2,054 1,151Result from discontinued operations ............................................................ – –Net result .................................................................................................... 2,054 1,151Attributable to:– Equity holders of the parent ...................................................................... 1,953 1,065– Minority interests ...................................................................................... 101 86

(in euros)

Basic Earnings per ordinary and preference share ........................................ 1.537 0.789Basic Earnings per savings share .................................................................. 1.692 1.564Diluted earnings per ordinary and preference share .................................... 1.526 0.788Diluted earnings per savings share................................................................ 1.681 1.563

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FINANCIAL INFORMATION RELATING TO THE FIAT GROUP

Book-Entry Clearance SystemsThe information set out below is subject to any change in or reinterpretation of the rules, regulations andprocedures of DTC, Euroclear or Clearstream (together, the “Clearing Systems’’) currently in effect. Theinformation in this section concerning the Clearing Systems has been obtained from sources that the Issuersand the Guarantor believe to be reliable, but none of the Issuers, the Guarantor nor any Dealer takes anyresponsibility for the accuracy thereof. Investors wishing to use the facilities of any of the Clearing Systemsare advised to confirm the continued applicability of the rules, regulations and procedures of the relevantClearing System. None of the Issuers, the Guarantor nor any other party to the Agency Agreement will haveany responsibility or liability for any aspect of the records relating to, or payments made on account of,beneficial ownership interests in the Notes held through the facilities of any Clearing System or formaintaining, supervising or reviewing any records relating to such beneficial ownership interests.

BOOK-ENTRY SYSTEMS

DTC

DTC has advised the Issuers that it is a limited purpose trust company organised under the New YorkBanking Law, a “banking organisation’’ within the meaning of the New York Banking Law, a “clearingcorporation’’ within the meaning of the New York Uniform Commercial Code and a “clearing agency’’registered pursuant to Section 17A of the Exchange Act. DTC holds securities that its participants(“Participants’’) deposit with DTC. DTC also facilitates the settlement among Participants of securitiestransactions, such as transfers and pledges, in deposited securities through electronic computerised book-entry changes in Participants’ accounts, thereby eliminating the need for physical movement of securitiescertificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearingcorporations and certain other organisations. DTC is owned by a number of its Direct Participants and bythe New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association ofSecurities Dealers, Inc. Access to the DTC System is also available to others such as securities brokers,dealers, banks and trust companies that clear through or maintain a custodial relationship with a DirectParticipant, either directly or indirectly (“Indirect Participants’’).

Under the rules, regulations and procedures creating and affecting DTC and its operations (the “Rules’’),DTC makes book-entry transfers of Registered Notes among Direct Participants on whose behalf it actswith respect to Notes accepted into DTC’s book-entry settlement system (“DTC Notes’’) as described belowand receives and transmits distributions of principal and interest on DTC Notes. The Rules are on file withthe Commission. Direct Participants and Indirect Participants with which beneficial owners of DTC Notes(“Owners’’) have accounts with respect to the DTC Notes similarly are required to make book-entrytransfers and receive and transmit such payments on behalf of their respective Owners. Accordingly,although Owners who hold DTC Notes through Direct Participants or Indirect Participants will not possessRegistered Notes, the Rules, by virtue of the requirements described above, provide a mechanism by whichDirect Participants will receive payments and will be able to transfer their interests in the DTC Notes.

Purchases of DTC Notes under the DTC system must be made by or through Direct Participants, which willreceive a credit for the DTC Notes on DTC’s records. The ownership interest of each actual purchaser ofeach DTC Note (“Beneficial Owner’’) is in turn to be recorded on the Direct and Indirect Participants’records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but BeneficialOwners are expected to receive written confirmations providing details of the transaction, as well asperiodic statements of their holdings, from the Direct or Indirect Participant through which the BeneficialOwner entered into the transaction. Transfers of ownership interests in the DTC Notes are to beaccomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. BeneficialOwners will not receive certificates representing their ownership interests in DTC Notes, except in the eventthat use of the book-entry system for the DTC Notes is discontinued.

To facilitate subsequent transfers, all DTC Notes deposited by Participants with DTC are registered in thename of DTC’s partnership nominee, Cede & Co. The deposit of DTC Notes with DTC and theirregistration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledgeof the actual Beneficial Owners of the DTC Notes; DTC’s records reflect only the identity of the DirectParticipants to whose accounts such DTC Notes are credited, which may or may not be the Beneficial

100


Owners. The Participants will remain responsible for keeping account of their holdings on behalf of theircustomers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants toIndirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will begoverned by arrangements among them, subject to any statutory or regulatory requirements as may be ineffect from time to time.

Redemption notices shall be sent to Cede & Co. If less than all of the DTC Notes within an issue are beingredeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in suchissue to be redeemed.

Neither DTC nor Cede & Co. will consent or vote with respect to DTC Notes. Under its usual procedures,DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxyassigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the DTCNotes are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments on the DTC Notes will be made to DTC. DTC’s practice is to credit DirectParticipants’ accounts on the due date for payment in accordance with their respective holdings shown onDTC’s records unless DTC has reason to believe that it will not receive payment on the due date. Paymentsby Participants to Beneficial Owners will be governed by standing instructions and customary practices, asis the case with securities held for the accounts of customers in bearer form or registered in “street name’’,and will be the responsibility of such Participant and not of DTC or the relevant Issuer, subject to anystatutory or regulatory requirements as may be in effect from time to time. Payment of principal and interestto DTC is the responsibility of the relevant Issuer, disbursement of such payments to Direct Participants isthe responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibilityof Direct and Indirect Participants.

Under certain circumstances, including if there is an Event of Default under the Notes, DTC will exchangethe DTC Notes for definitive Registered Notes, which it will distribute to its Participants in accordance withtheir proportionate entitlements and which, if representing interests in a Rule 144A Global Note, will belegended as set forth under “Subscription and Sale and Transfer and Selling Restrictions’’.

Since DTC may only act on behalf of Direct Participants, who in turn act on behalf of Indirect Participants,any Owner desiring to pledge DTC Notes to persons or entities that do not participate in DTC, or otherwisetake actions with respect to such DTC Notes, will be required to withdraw its Registered Notes from DTCas described below.

Euroclear and Clearstream

Euroclear and Clearstream each hold securities for their customers and facilitate the clearance andsettlement of securities transactions by electronic book-entry transfer between their respective accountholders. Euroclear and Clearstream provide various services including safekeeping, administration,clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclearand Clearstream also deal with domestic securities markets in several countries through establisheddepository and custodial relationships.

Euroclear and Clearstream have established an electronic bridge between their two systems across whichtheir respective participants may settle trades with each other.

Euroclear and Clearstream customers are worldwide financial institutions, including underwriters,securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access toEuroclear and Clearstream is available to other institutions that clear through or maintain a custodialrelationship with an account holder of either system.

BOOK-ENTRY OWNERSHIP OF AND PAYMENTS IN RESPECT OF DTC NOTES

The Issuers will apply to DTC in order to have each Tranche of Notes represented by Rule 144A GlobalNotes accepted in its book-entry settlement system. Upon the issue of any Rule 144A Global Notes, DTCor its custodian will credit, on its internal book-entry system, the respective nominal amounts of theindividual beneficial interests represented by such Rule 144A Global Notes to the accounts of persons who

101

BOOK-ENTRY CLEARANCE SYSTEMS


have accounts with DTC. Such accounts initially will be designated by or on behalf of the relevant Dealer.Ownership of beneficial interests in a Rule 144A Global Note will be limited to Direct Participants orIndirect Participants. Ownership of beneficial interests in a Rule 144A Global Note will be shown on, andthe transfer of such ownership will be effected only through, records maintained by DTC or its nominee(with respect to the interests of Direct Participants) and the records of Direct Participants (with respect tointerests of Indirect Participants).

Payments in U.S. dollars of principal and interest in respect of a Rule 144A Global Note registered in thename of DTC’s nominee will be made to the order of such nominee as the registered holder of such Note.In the case of any payment in a currency other than U.S. dollars, payment will be made to the ExchangeAgent on behalf of DTC’s nominee and the Exchange Agent will (in accordance with instructions receivedby it) remit all or a portion of such payment for credit directly to the beneficial holders of interests in theRegistered Global Notes in the currency in which such payment was made and/or cause all or a portion ofsuch payment to be converted into U.S. dollars and credited to the applicable Participants’ account.

The Issuers expect DTC to credit accounts of Direct Participants on the applicable payment date inaccordance with their respective holdings as shown in the records of DTC unless DTC has reason to believethat it will not receive payment on such payment date. The Issuers also expect that payments by Participantsto beneficial owners of Notes will be governed by standing instructions and customary practices, as is thecase with securities held for the accounts of customers, and will be the responsibility of such Participant andnot the responsibility of DTC, the Principal Paying Agent, the Registrar or the Issuer. Payments of principal,premium, if any, and interest, if any, on Notes to DTC is the responsibility of the Issuer.

TRANSFERS OF NOTES REPRESENTED BY REGISTERED GLOBAL NOTES

Transfers of any interests in Notes represented by a Registered Global Note within DTC, Euroclear andClearstream will be effected in accordance with the customary rules and operating procedures of therelevant clearing system. The laws in some States within the United States require that certain persons takephysical delivery of securities in definitive form. Consequently, the ability to transfer Notes represented bya Registered Global Note to such persons may depend upon the ability to exchange such Notes for Notesin definitive form.

Similarly, because DTC can only act on behalf of Direct Participants in the DTC system who in turn act onbehalf of Indirect Participants, the ability of a person having an interest in Notes represented by a RegisteredGlobal Note to pledge such Notes to persons or entities that do not participate in the DTC system or tootherwise take action in respect of such Notes may depend upon the ability to exchange such Notes forNotes in definitive form. The ability of any holder of Notes represented by a Registered Global Note toresell, pledge or otherwise transfer such Notes may be impaired if the proposed transferee of such Notes isnot eligible to hold such Notes through a direct or indirect participant in the DTC system.

Subject to compliance with the transfer restrictions applicable to the Registered Notes described under“Subscription and Sale and Transfer and Selling Restrictions’’, cross-market transfers between DTC, on theone hand, and directly or indirectly through Clearstream or Euroclear accountholders, on the other, will beeffected by the relevant clearing system in accordance with its rules and through action taken by theRegistrar, the Principal Paying Agent and any custodian (“Custodian’’) with whom the relevant RegisteredGlobal Notes have been deposited.

On or after the Issue Date for any Series, transfers of Notes of such Series between accountholders inClearstream and Euroclear and transfers of Notes of such Series between participants in DTC will generallyhave a settlement date three business days after the trade date (T+3). The customary arrangements fordelivery versus payment will apply to such transfers.

Cross-market transfers between accountholders in Clearstream or Euroclear and DTC participants willneed to have an agreed settlement date between the parties to such transfer. Because there is no direct linkbetween DTC, on the one hand, and Clearstream and Euroclear, on the other, transfers of interests in therelevant Registered Global Notes will be effected through the Registrar, the Principal Paying Agent and theCustodian receiving instructions (and where appropriate certification) from the transferor and arranging fordelivery of the interests being transferred to the credit of the designated account for the transferee. In thecase of cross-market transfers, settlement between Euroclear or Clearstream accountholders and DTC

102



participants cannot be made on a delivery versus payment basis. The securities will be delivered on a freedelivery basis and arrangements for payment must be made separately.

DTC, Clearstream and Euroclear have each published rules and operating procedures designed to facilitatetransfers of beneficial interests in Registered Global Notes among participants and accountholders of DTC,Clearstream and Euroclear. However, they are under no obligation to perform or continue to perform suchprocedures, and such procedures may be discontinued or changed at any time. None of the Issuer, theGuarantor, the Agents or any Dealer will be responsible for any performance by DTC, Clearstream orEuroclear or their respective direct or indirect participants or accountholders of their respective obligationsunder the rules and procedures governing their operations and none of them will have any liability for anyaspect of the records relating to or payments made on account of beneficial interests in the Notesrepresented by Registered Global Notes or for maintaining, supervising or reviewing any records relatingto such beneficial interests.

103



TaxationLUXEMBOURG

The following discussion is a summary of the Luxembourg tax consequences to potential purchasers orholders of Notes, based on current law and practice in Luxembourg. This discussion is for generalinformation purposes only and does not purport to be a comprehensive description of all possible taxconsequences that may be relevant. Potential purchasers of Notes should consult their own professionaladvisers as to the consequences of making an investment in, holding or disposing of the Notes and thereceipt of any amount in connection with the Notes and Coupons.

Withholding Tax

Under Luxembourg tax laws currently in effect and with the possible exception of interest paid toindividuals, there is no Luxembourg withholding tax on payments of interest, including accrued but unpaidinterest. There is also no Luxembourg withholding tax, with the possible exception of payments made toindividuals, upon repayment of principal in case of reimbursement, redemption, repurchase or exchange ofthe Notes.

Luxembourg non-resident individuals

Under the Luxembourg laws dated 21st June, 2005 implementing the Savings Directive and severalagreements concluded between Luxembourg and certain dependent or associated territories of the EuropeanUnion (“EU”), a Luxembourg based paying agent (within the meaning of the Savings Directive) is requiredsince 1st July, 2005 to withhold tax on interest and other similar income paid by it to (or under certaincircumstances, to the benefit of) an individual resident in another member state or in certain EU dependentor associated territories, unless the beneficiary of the interest payments elects for an exchange ofinformation or for the tax certificate procedure. The same regime applies to payments of interest and othersimilar income made to certain so-called “residual entities” within the meaning of Article 4.2 of the SavingsDirective (i.e. an entity without legal personality (the Finnish and Swedish companies listed in Article 4.5of the Savings Directive are not considered as legal persons for this purpose) and whose profits are not taxedunder the general arrangements for the business taxation and that is not, or has not opted to be consideredas, a UCITS recognised in accordance with Council Directive 85/611/EEC) established in a member state orin certain EU dependent or associated territories.

The withholding tax rate is initially 15 per cent., increasing steadily to 20 per cent. (as from 1st July, 2008)and to 35 per cent. (as from 1st July, 2011). The withholding tax system will only apply during atransitional period, the ending of which depends on the conclusion of certain agreements relating toinformation exchange with certain third countries.

Luxembourg resident individuals

A 10 per cent. withholding tax is levied on interest payments made by Luxembourg paying agents (definedin the same way as in the Savings Directive) to Luxembourg individual residents.

Taxes on Income and Capital Gains

Holders of Notes will not become residents or be deemed to be residents, in Luxembourg by reason only ofthe holding of the Notes.

Holders of Notes who are non-residents of Luxembourg and who do not hold the Notes through apermanent establishment, a permanent representative or a fixed base of business in Luxembourg with whichthe holding of the Notes is connected are not liable to Luxembourg income tax on (i) payments of principalor interest, (ii) accrued but unpaid interest, (iii) payments received upon redemption, repurchase orexchange of the Notes or (iv) realise capital gains on the sale or exchange of any Notes.

Individual holders of Notes resident in Luxembourg and receiving the interest as business income must forincome tax purposes include any interest received (or accrued) in their taxable income. The 10 per cent.

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Luxembourg withholding tax levied will be credited against their final income tax liability. The 10 per cent.Luxembourg withholding tax (see the above section “Withholding tax – Luxembourg resident individuals”)represents the final tax liability on interest received for the Luxembourg resident individuals acting in thecourse of their private wealth. Holders of Notes will not be liable to any Luxembourg taxation on incomeon repayment of principal of the Notes.

Individual Luxembourg resident holders of Notes are not subject to taxation on capital gains upon thedisposition of the Notes unless the disposition of the Notes precedes the acquisition of the Notes or theNotes are disposed of within six months of the date of acquisition of these Notes. The portion of the sale,repurchase, redemption or exchange price corresponding to capitalised or accrued but unpaid interest will,however, be subject to the 10 per cent. withholding tax. Individual Luxembourg resident holders of Notesreceiving the interest as business income must include the portion of the sale, repurchase, redemption orexchange price corresponding to accrued but unpaid interest in their taxable income. The 10% Luxembourgwithholding tax levied will be credited against their final income tax liability.

A corporate entity or “société de capitaux”, which is a Luxembourg resident holder of Notes or a foreignentity of the same type which has a Luxembourg permanent establishment or a permanent representative inLuxembourg with which the holding of Notes is connected, will need to include in its taxable income anyinterest (including accrued but unpaid interest) and in case of sale, repurchase, redemption or exchange, thedifference between the sale, repurchase, redemption or exchange price (including accrued but unpaidinterest) and the lower of cost or book value of the Notes sold, repurchased, redeemed or exchanged. Theseholders of Notes should not be liable for any Luxembourg income tax on repayment of principal uponrepurchase, redemption or exchange of the Notes.

Other Taxes

There is no Luxembourg registration tax, stamp duty or any other similar tax or duty payable inLuxembourg by a holder of Notes as a consequence of the issuance of the Notes, nor will any of these taxesbe payable as a consequence of a subsequent transfer or redemption or repurchase of the Notes.

Luxembourg net wealth tax will not be levied on a holder of Notes, unless such holder of Notes is (i) a fullytaxable Luxembourg resident company, or (ii) a non-resident company and the Notes are attributable to anenterprise of part thereof which is carried on in Luxembourg through a permanent establishment.

No Luxembourg estate or inheritance taxes are levied on the transfer of the Notes upon the death of aholder of Notes in cases where the deceased was not a resident of Luxembourg for inheritance tax purposes.

No Luxembourg gift tax will be levied on the transfer of the Notes by way of gift unless the gift is registeredin Luxembourg

Taxation of the Issuer

The Issuer is a company subject to corporate income tax and municipal business tax in Luxembourg at thestandard rate.

The Issuer will be subject to a 0.5 per cent. capital duty on any capital contribution in kind or in cash.

It will not be subject to VAT in Luxembourg in respect of payments in consideration for the issue of theNotes or in respect of payments of interest or principal under the Notes or the transfer of the Notes.

Luxembourg VAT may however be payable in respect of fees charged for certain services rendered to theIssuer if, for Luxembourg VAT purposes, such services are rendered or are deemed to be rendered inLuxembourg and an exemption from Luxembourg VAT does not apply with respect to such services.

CANADA

Subject to the following, in the case of a Note issued by FFC (a “Canadian Issuer Note”), interest paid orcredited by FFC or the Guarantor or deemed to be paid or credited by FFC or the Guarantor on such Note

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(including accrued interest on such Note in certain cases involving the assignment or transfer of such Noteto FFC) to a Non-Resident of Canada (as defined below) who is the beneficial owner of such Note, will notbe subject to Canadian non-resident withholding tax for the purposes of the Canadian federal income taxlaws provided such interest is not “participating debt interest” for purposes of the Canadian federal incometax laws. Interest paid or deemed to be paid on the Canadian Issuer Notes will be participating debt interestfor these purposes if all or any portion of such interest on the Canadian Issuer Notes is contingent ordependent upon the use of, or production from, property in Canada or is computed by reference to revenue,profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid orpayable on any class of shares of the capital stock of a corporation. The Canadian non-resident withholdingtax is at the rate of 25 per cent., or such lower rate as may be provided for under the terms of any applicablebilateral tax treaty.

For the purposes of this summary a Non-Resident of Canada means a person who, at all relevant times andfor the purposes of the Canadian federal income tax laws, deals at arm’s length with FFC and theGuarantor, is the beneficial owner of the Note and is neither a resident nor deemed to be a resident ofCanada at any time during which the Canadian Issuer Note is held (and to whom the Canadian Issuer Noteis not a “designated insurance property” within the meaning of the Act), who does not use or hold and isnot deemed to use or hold the Canadian Issuer Note in or in the course of carrying on a business in Canadaand is not otherwise required by or for the purposes of such laws to include an amount in respect of theCanadian Issuer Note in computing income from a business carried on in Canada (“Non-Resident ofCanada”).

In the event that a Canadian Issuer Note is redeemed, cancelled, repurchased or purchased by FFC from aNon-Resident of Canada or assigned or otherwise transferred by a Non-Resident of Canada to a residentor deemed resident of Canada at a time when there is accrued interest on the Canadian Issuer Note, or foran amount which exceeds, generally, the issue price thereof (as calculated in Canadian dollars at the timeof issue), the accrued interest or the difference between the price for which such Note is redeemed,cancelled, repurchased or purchased or otherwise assigned or transferred (as calculated in Canadian dollarsat such time) and the issue price (as calculated in Canadian dollars at the time of issue) may, in certaincircumstances, be deemed to be interest on such Note. Such deemed interest on such Note will be subjectto Canadian non-resident withholding tax if such interest is not otherwise exempt from Canadian non-resident withholding tax (as described above) or if the Non-Resisent of Canada does not deal at arm’slength, within the meaning of the Canadian federal income tax laws, with the resident or deemed residentof Canada to which the Candian Issuer Note is assigned or otherwise transferred. An exception to thisdeemed interest rule (except in the case of accrued interest) may apply if the Canadian Issuer Note wasissued for at least 97 per cent. of its principal amount and its annual yield is not more than four-thirds ofthe interest stipulated to be payable on such Note. Depending upon the terms set forth in the applicableFinal Terms, Canadian Issuer Notes issued at a discount or redeemable at a premium may be subject to thesedeemed interest rules, and accordingly may be subjected to Canadian non-resident withholding tax.

Additional considerations relating to Canadian Issuer Notes may be set forth in the Final Terms relating tothe issue of such Notes.

Under the existing federal laws of Canada, generally, there are no other taxes on income (including taxablecapital gains) payable in respect of a Canadian Issuer Note or interest, discount, or premium thereon by aNon-Resident of Canada

The foregoing is general information with respect to certain Canadian federal income tax considerationsapplicable under current law to Non-Residents of Canada. It is not exhaustive. Holders of Notes shouldconsult their own tax advisors for advice with respect to their particular situations. In particular, thissummary only considers Notes contemplated by terms and conditions set out herein.

UNITED STATES

The following is a summary of certain United States federal tax considerations that may be relevant to aholder which is a beneficial owner of Notes, Receipts or Coupons issued by FFNA and is a United StatesAlien (as defined in clause (c) of “Terms and Conditions of the Notes—Taxation”). This summary is based

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on laws, regulations, rulings and decisions now in effect, all of which are subject to change. The informationprovided below does not purport to be a complete summary of United States tax law and practice currentlyapplicable.

THIS SUMMARY HAS BEEN WRITTEN TO SUPPORT THE MARKETING OF THE NOTES. IT WASNOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY ANY TAXPAYER, FORTHE PURPOSE OF AVOIDING U.S. FEDERAL INCOME TAX PENALTIES. INVESTORS SHOULDCONSULT THEIR OWN TAX ADVISORS IN DETERMINING THE TAX CONSEQUENCES TOTHEM OF INVESTING IN THE NOTES, INCLUDING THE APPLICATION TO THEIR PARTICULARSITUATIONS OF THE U.S. FEDERAL INCOME TAX CONSIDERATIONS DISCUSSED BELOW, ASWELL AS THE APPLICATION OF STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.

Under current United States federal income and estate tax law:

(i) payment on a Note, Receipt or Coupon by the Issuer, the Guarantor, or any Paying Agent to a holderthat is a United States Alien will not be subject to withholding of United States federal income tax,provided that, with respect to payments of interest, (i) the holder does not actually or constructivelyown 10 per cent. or more of the combined voting power of all classes of stock of the Issuer and, isnot a controlled foreign corporation related to the Issuer through stock ownership, (ii) the interest isnot contingent interest described in section 871(h)(4) of the Code (very generally, interest based onor determined by reference to income, profits, cash flow or other comparable attributes of the obligoror an affiliate of the issuer) and (iii) in the case of a Registered Note, the beneficial owner provides astatement signed under penalties of perjury that includes its name and address and certifies that it isa United States Alien in compliance with applicable requirements (or satisfies certain documentaryevidence requirements for establishing that it is a United States Alien);

(ii) a holder of a Note, Receipt or Coupon that is a United States Alien will not be subject to United Statesfederal income tax on gain realised on the sale, exchange or redemption of the Note, Receipt orCoupon, unless (x) such gain is effectively connected with the conduct by the holder of a trade orbusiness in the United States or (y) in the case of gain realised by an individual holder, the holder ispresent in the United States for 183 days or more in the taxable year of the sale and either (A) suchgain or income is attributable to an office or other fixed place of business maintained in the UnitedStates by such holder or (B) such holder has a tax home in the United States;

(iii) a beneficial owner of a Bearer Note, Receipt or Coupon that is a United States Alien will not berequired to disclose its nationality, residence or identity to the Issuer, the Guarantor, a Paying Agent(acting in its capacity as such) or any United States governmental authority in order to receivepayment on such Bearer Note, Receipt or Coupon from the Issuer, the Guarantor, or a Paying Agentoutside the United States; and

(iv) a Note, Receipt or Coupon will not be subject to United States federal estate tax as a result of thedeath of a holder who is not a citizen or resident of the United States at the time of death, providedthat such holder did not at the time of death actually or constructively own 10 per cent. or more ofthe combined voting power of all classes of stock of the Issuer and, at the time of such holder’s death,payments of interest on such Note, Receipt or Coupon would not have been effectively connectedwith the conduct by such holder of a trade or business in the United States.

United States information reporting requirements and backup withholding tax will not apply to paymentson a Bearer Note, Receipt or Coupon made outside the United States by the Issuer, the Guarantor, or anyPaying Agent to a holder that is a United States Alien. Payments on a Registered Note owned by a UnitedStates Alien will not be subject to such requirements or tax if the statement described in clause (i) of thepreceding paragraph is duly provided to the Principal Paying Agent.

Information reporting requirements and backup withholding tax will not apply to any payment on a BearerNote, Receipt or Coupon outside the United States by a foreign office of a foreign custodian, foreignnominee or other foreign agent of the beneficial owner of such Note, Receipt or Coupon, provided that suchcustodian, nominee or agent (i) derives less than 50 per cent. of its gross income from certain periods fromthe conduct of a trade or business in the United States, (ii) is not a controlled foreign corporation for UnitedStates federal income tax purposes and (iii) is not a foreign partnership that, at any time during its taxable

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year, is 50 per cent. or more (by income or capital interest) owned by U.S. persons or is engaged in theconduct of a U.S. trade or business. Payment on a Bearer Note, Receipt or Coupon outside the United Statesto the beneficial owner thereof by a foreign office of any other custodian, nominee or agent will not besubject to backup withholding tax, but will be subject to information reporting requirements unless suchcustodian, nominee or agent has documentary evidence in its records that the beneficial owner is a UnitedStates Alien or the beneficial owner otherwise establishes an exemption. Payment on a Registered or BearerNote, Receipt or Coupon by the United States office of a custodian, nominee or other agent of the beneficialowner of such Note, Receipt or Coupon will be subject to information reporting requirements and backupwithholding tax unless the beneficial owner certifies its non-U.S. status under penalties of perjury orotherwise establishes an exemption.

Information reporting requirements and backup withholding tax will not apply to any payment of theproceeds of the sale of a Registered or Bearer Note, Receipt or Coupon effected outside the United Statesby a foreign office of a foreign “broker” (as defined in applicable Treasury regulations), provided that suchbroker (i) derives less than 50 per cent. of its gross income for certain periods from the conduct of a tradeor business in the United States, (ii) is not a controlled foreign corporation for United States federal incometax purposes and (iii) is not a foreign partnership that, at any time during its taxable year, is 50 per cent.or more (by income or capital interest) owned by U.S. persons or is engaged in the conduct of a U.S. tradeor business. Payment of the proceeds of the sale of a Registered or Bearer Note, Receipt or Coupon effectedoutside the United States by a foreign office of any other broker will not be subject to backup withholdingtax, but will be subject to information reporting requirements unless such broker has documentary evidencein its records that the beneficial owner is a United States Alien and certain other conditions are met, or thebeneficial owner otherwise establishes an exemption. Payment of the proceeds of a sale of a Registered orBearer Note, Receipt or Coupon by the United States office of a broker will be subject to informationreporting requirements and backup withholding tax unless the beneficial owner certifies its non-U.S. statusunder penalties of perjury or otherwise establishes an exemption.

For the purposes of applying the rules set forth under this heading “Taxation – United States” to an entitythat is treated as fiscally transparent (e.g. a partnership) for U.S. federal income tax purposes, the beneficialowner means each of the ultimate beneficial owners of the entity.

EUROPEAN UNION DIRECTIVE ON TAXATION OF SAVINGS INCOME

Under EC Council Directive 2003/48/EC on the taxation of savings income, member states of the EuropeanUnion are required to provide to the tax authorities of another member state details of payments of interest(or similar income) paid by a person within its jurisdiction to an individual resident in that other memberstate. However, for a transitional period, Belgium, Luxembourg (see “Taxation – Luxembourg –Luxembourg non-resident individuals”, above) and Austria are instead required (unless during that periodthey elect otherwise) to operate a withholding system in relation to such payments (the ending of suchtransitional period being dependent upon the conclusion of certain other agreements relating to informationexchange with certain other countries). A number of non-EU countries and territories including Switzerlandhave adopted similar measures (a withholding system in the case of Switzerland).

REPUBLIC OF ITALY

According to one interpretation of Italian tax law, payments in lieu of interest made by the Guarantor underthe guarantee to Noteholders not resident in Italy for tax purposes may be subject to an Italian final taxlevied by means of withholding currently levied at a rate of 12.5 per cent. or 27 per cent., depending on thematurity and/or the features of the Notes or, in any event, of 27 per cent., in case the Noteholder is residentfor tax purposes in a country listed as a tax haven under Ministerial Decree of 23rd January, 2002, asamended from time to time. A reduced rate of taxation may apply pursuant to an applicable doubletaxation convention provided that a certification of residence issued by the competent tax authorities of thetreaty partner country is duly produced. Pursuant to another interpretation, Noteholders resident in acountry that has an adequate exchange of information program in place with Italy (as listed in MinisterialDecree of 4th September, 1996, as amended from time to time) and certain other Noteholders (includinginternational bodies or entities set up pursuant to international agreements executed by Italy or a centralbank or entity that manages, inter alia, the official reserves of a foreign bank) may be eligible for an

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exemption from Italian taxation insofar as they produce a tax exemption application form for non-residentspursuant to Decree 12th December, 2001, Annex 1, as amended from time to time.

Prospective purchasers are urged to consult their own tax advisors as to the tax consequences of any suchwithholding, including the potential availability of foreign tax credits or deductions for such withholding.

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Subscription and Sale and Transfer and Selling RestrictionsThe Dealers have, in an amended and restated programme agreement (the “Programme Agreement’’) dated12th May, 2008, agreed with the Issuers and the Guarantor a basis upon which they or any of them mayfrom time to time agree to purchase Notes and resell such Notes. Any such agreement will extend to thosematters stated under “Form of the Notes’’ and “Terms and Conditions of the Notes’’. In the ProgrammeAgreement, each of the Issuers (failing which the Guarantor) has agreed to reimburse the Dealers for certainof their expenses in connection with the establishment of the Programme and the issue of Notes under theProgramme and to indemnify the Dealers against certain liabilities incurred by them in connectiontherewith.

In order to facilitate the offering of any Tranche of the Notes, certain persons participating in the offeringof the Tranche may engage in transactions that stabilise, maintain or otherwise affect the market price ofthe relevant Notes during and after the offering of the Tranche. Specifically such persons may over-allot orcreate a short position in the Notes for their own account by selling more Notes than have been sold tothem by the relevant Issuer. Such persons may also elect to cover any such short position by purchasingNotes in the open market. In addition, such persons may stabilise or maintain the price of the Notes bybidding for or purchasing Notes in the open market and may impose penalty bids, under which sellingconcessions allowed to syndicate members or other broker-dealers participating in the offering of the Notesare reclaimed if Notes previously distributed in the offering are repurchased in connection with stabilisationtransactions or otherwise. The effect of these transactions may be to stabilise or maintain the market priceof the Notes at a level above that which might otherwise prevail in the open market. The imposition of apenalty bid may also affect the price of the Notes to the extent that it discourages resales thereof. Norepresentation is made as to the magnitude or effect of any such stabilising or other transactions. Suchtransactions, if commenced, may be discontinued at any time. Under U.K. laws and regulations stabilisingactivities may only be carried on by the Stabilising Manager named in the applicable Final Terms and onlyfor a period of 30 days following the Issue Date of the relevant Tranche of Notes.

TRANSFER RESTRICTIONS

As a result of the following restrictions, purchasers of Notes in the United States are advised to consult legalcounsel prior to making any purchase, offer, sale, resale or other transfer of such Notes.

Each purchaser of Registered Notes (other than a person purchasing an interest in a Registered Global Notewith a view to holding it in the form of an interest in the same Global Note) or person wishing to transferan interest from one Registered Global Note to another or from global to definitive form or vice versa, willbe required to acknowledge, represent and agree as follows (terms used in this paragraph that are definedin Rule 144A or in Regulation S are used herein as defined therein):

(i) that either: (a) it is a QIB, purchasing (or holding) the Notes for its own account or for theaccount of one or more QIBs and it is aware that any sale to it is being made in reliance onRule 144A or (b) it is outside the United States and is not a U.S. person;

(ii) that the Notes are being offered and sold in a transaction not involving a public offering in theUnited States within the meaning of the Securities Act, and that the Notes have not been andwill not be registered under the Securities Act or any other applicable U.S. state securities lawsand may not be offered or sold within the United States or to, or for the account or benefit of,U.S. persons except as set forth below;

(iii) that, unless it holds an interest in a Regulation S Global Note and either is a person locatedoutside the United States or is not a U.S. person, if in the future it decides to resell, pledge orotherwise transfer the Notes or any beneficial interests in the Notes, it will do so, prior to thedate which is one year after the later of the last Issue Date for the Series and the last date onwhich the relevant Issuer or an affiliate of the relevant Issuer was the owner of such Notes, only(a) to the Issuer or any affiliate thereof, (b) inside the United States to a person whom the sellerreasonably believes is a QIB purchasing for its own account or for the account of a QIB in atransaction meeting the requirements of Rule 144A, (c) outside the United States in compliance

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with Rule 903 or Rule 904 under the Securities Act, (d) pursuant to the exemption fromregistration provided by Rule 144 under the Securities Act (if available) or (e) pursuant to aneffective registration statement under the Securities Act, in each case in accordance with allapplicable U.S. State securities laws;

(iv) it will, and will require each subsequent holder to, notify any purchaser of the Notes from it ofthe resale restrictions referred to in paragraph (iii) above, if then applicable;

(v) that Notes initially offered in the United States to QIBs will be represented by one or more Rule144A Global Notes and that Notes offered outside the United States in reliance on RegulationS will be represented by one or more Regulation S Global Notes;

(vi) that the Notes, other than the Regulation S Global Notes, will bear a legend to the followingeffect unless otherwise agreed to by the relevant Issuer:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF1933, AS AMENDED (THE “SECURITIES ACT’’), OR ANY OTHER APPLICABLE U.S.STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLDWITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITSACQUISITION HEREOF, THE HOLDER (A) REPRESENTS THAT IT IS A “QUALIFIEDINSTITUTIONAL BUYER’’ (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)PURCHASING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNTOF ONE OR MORE QUALIFIED INSTITUTIONAL BUYERS; (B) AGREES THAT IT WILLNOT RESELL OR OTHERWISE TRANSFER THE SECURITIES EXCEPT INACCORDANCE WITH THE AGENCY AGREEMENT REFERRED TO HEREIN AND,PRIOR TO THE DATE WHICH IS ONE YEAR AFTER THE LATER OF THE LAST ISSUEDATE FOR THE SERIES AND THE LAST DATE ON WHICH THE ISSUER OR ANAFFILIATE OF THE ISSUER WAS THE OWNER OF SUCH SECURITIES OTHER THAN(1) TO THE ISSUER OR ANY AFFILIATE THEREOF, (2) INSIDE THE UNITED STATESTO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIEDINSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THESECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNTOF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THEREQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES IN COMPLIANCEWITH RULE 903 OR RULE 904 UNDER THE SECURITIES ACT, (4) PURSUANT TO THEEXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THESECURITIES ACT (IF AVAILABLE) OR (5) PURSUANT TO AN EFFECTIVEREGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE INACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THEUNITED STATES AND ANY OTHER JURISDICTION; AND (C) IT AGREES THAT ITWILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED ANOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

THIS SECURITY AND RELATED DOCUMENTATION (INCLUDING, WITHOUTLIMITATION, THE AGENCY AGREEMENT) MAY BE AMENDED OR SUPPLEMENTEDFROM TIME TO TIME, WITHOUT THE CONSENT OF, BUT UPON NOTICE TO, THEHOLDERS OF SUCH SECURITIES SENT TO THEIR REGISTERED ADDRESSES, TOMODIFY THE RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHERTRANSFERS OF THIS SECURITY TO REFLECT ANY CHANGE IN APPLICABLE LAWOR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICESRELATING TO RESALES OR OTHER TRANSFERS OF RESTRICTED SECURITIESGENERALLY. THE HOLDER OF THIS SECURITY SHALL BE DEEMED, BY ITSACCEPTANCE OR PURCHASE HEREOF, TO HAVE AGREED TO ANY SUCHAMENDMENT OR SUPPLEMENT (EACH OF WHICH SHALL BE CONCLUSIVE ANDBINDING ON THE HOLDER HEREOF AND ALL FUTURE HOLDERS OF THISSECURITY AND ANY SECURITIES ISSUED IN EXCHANGE OR SUBSTITUTION

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SUBSCRIPTION AND SALE AND TRANSFER AND SELLING RESTRICTIONS

THEREFOR, WHETHER OR NOT ANY NOTATION THEREOF IS MADE HEREON).’’;

(vii) if it is outside the United States and is not a U.S. person, that if it should resell or otherwisetransfer the Notes prior to the expiration of the distribution compliance period (defined as 40days after the later of the commencement of the offering and the closing date with respect tothe Tranche of which such Registered Notes form part), it will do so only (a)(i) outside theUnited States in compliance with Rule 903 or 904 under the Securities Act or (ii) to a QIB incompliance with Rule 144A and (b) in accordance with all applicable U.S. State securities laws;and it acknowledges that the Regulation S Global Notes will bear a legend to the followingeffect unless otherwise agreed to by the relevant Issuer:

“THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S.SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT’’), OR ANY OTHERAPPLICABLE U.S. STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BEOFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNTOR BENEFIT OF, U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE AGENCYAGREEMENT AND PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDERTHE SECURITIES ACT OR PURSUANT TO AN EFFECTIVE REGISTRATIONSTATEMENT UNDER THE SECURITIES ACT. THIS LEGEND SHALL CEASE TO APPLYUPON THE EXPIRY OF THE PERIOD OF 40 DAYS AFTER THE COMPLETION OF THEDISTRIBUTION OF ALL THE NOTES OF THE TRANCHE OF WHICH THIS NOTEFORMS PART.’’; and

(viii) that the relevant Issuer and others will rely upon the truth and accuracy of the foregoingacknowledgements, representations and agreements, and agrees that if any of suchacknowledgements, representations or agreements made by it are no longer accurate, it shallpromptly notify the relevant Issuer; and if it is acquiring any Notes as a fiduciary or agent forone or more accounts it represents that it has sole investment discretion with respect to eachsuch account and that it has full power to make the foregoing acknowledgements,representations and agreements on behalf of each such account.

No sale of Legended Notes in the United States to any one purchaser will be for less than U.S.$250,000 (orits foreign currency equivalent) principal amount and no Legended Note will be issued in connection withsuch a sale in a smaller principal amount. If the purchaser is a non-bank fiduciary acting on behalf of others,each person for whom it is acting must purchase at least U.S.$250,000 (or its foreign currency equivalent)of Registered Notes.

SELLING RESTRICTIONS

United States

The Notes have not been and will not be registered under the Securities Act and may not be offered or soldwithin the United States or to, or for the account or benefit of, U.S. persons except in certain transactionsexempt from the registration requirements of the Securities Act.

The Notes in bearer form are subject to U.S. tax law requirements and may not be offered, sold or deliveredwithin the United States or its possessions or to a United States person, except in certain transactionspermitted by U.S. tax regulations. Terms used in this paragraph have the meanings given to them by theCode and regulations thereunder.

In connection with any Notes which are offered or sold outside the United States in reliance on anexemption from the registration requirements of the Securities Act provided under Regulation S(“Regulation S Notes’’), each Dealer has represented and agreed, and each further Dealer appointed underthe Programme will be required to represent and agree, that it will not offer, sell or deliver such RegulationS Notes (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion ofthe distribution, as determined and certified by the relevant Dealer or, in the case of an issue of Notes on asyndicated basis, the relevant lead manager, of all Notes of the Tranche of which such Regulation S Notesare a part or (iii) in the event of a distribution of a Tranche that is fungible therewith, until 40 days after

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the completion of the distribution of such fungible Tranche, as determined by the parties described in clause(ii), within the United States or to, or for the account or benefit of, U.S. persons. Each Dealer has furtheragreed, and each further Dealer appointed under the Programme will be required to agree, that it will sendto each dealer to which it sells any Regulation S Notes during the distribution compliance period aconfirmation or other notice setting forth the restrictions on offers and sales of the Regulation S Noteswithin the United States or to, or for the account or benefit of, U.S. persons.

Until 40 days after the commencement of the offering of any Series of Notes, an offer or sale of such Noteswithin the United States by any dealer (whether or not participating in the offering) may violate theregistration requirements of the Securities Act if such offer or sale is made otherwise than in accordancewith an available exemption from registration under the Securities Act.

Dealers may arrange for the resale of Notes to QIBs pursuant to Rule 144A and each such purchaser ofNotes is hereby notified that the Dealers may be relying on the exemption from the registrationrequirements of the Securities Act provided by Rule 144A. The minimum aggregate principal amount ofNotes which may be purchased by a QIB pursuant to Rule 144A is U.S.$100,000 (or the approximateequivalent thereof in any other currency). To the extent that the relevant Issuer is not subject to or does notcomply with the reporting requirements of Section 13 or 15(d) of the Exchange Act or the informationfurnishing requirements of Rule 12g3-2(b) thereunder, the relevant Issuer has agreed to furnish to holdersof Notes and to prospective purchasers designated by such holders, upon request, such information as maybe required by Rule 144A(d)(4).

Each issuance of Index Linked Notes or Dual Currency Notes shall be subject to such additional U.S. sellingrestrictions as the relevant Issuer and the relevant Dealer may agree as a term of the issuance and purchaseof such Notes, which additional selling restrictions shall be set out in the applicable Final Terms.

Public Offer Selling Restriction under the Prospectus Directive

In relation to each member state of the European Economic Area which has implemented the ProspectusDirective (each, a “Relevant Member State”), each Dealer has represented and agreed, and each furtherDealer appointed under the Programme will be required to represent and agree, that with effect from andincluding the date on which the Prospectus Directive is implemented in that Relevant Member State (the“Relevant Implementation Date”) it has not made and will not make an offer of Notes which are the subjectof the offering contemplated by this Base Prospectus as contemplated by the final terms in relation theretoto the public in that Relevant Member State, except that it may, with effect from and including the RelevantImplementation Date, make an offer of such Notes to the public in that Relevant Member State:

(a) at any time to legal entities which are authorised or regulated to operate in the financial markets or,if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

(b) at any time to any legal entity which has two or more of (1) an average of at least 250 employeesduring the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annualnet turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

(c) at any time to fewer than 100 natural or legal persons (other than qualified investors as defined inthe Prospectus Directive) subject to obtaining the prior consent of the relevant Dealer or Dealersnominated by the relevant Issuer for any such offer; or

(d) at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of Notes referred to in (a) to (d) above shall require the relevant Issuer or anyDealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectuspursuant to Article 16 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of Notes to the public” in relation to any Notesin any Relevant Member State means the communication in any form and by any means of sufficientinformation on the terms of the offer and the Notes to be offered so as to enable an investor to decide to

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purchase or subscribe the Notes, as the same may be varied in that member state by any measureimplementing the Prospectus Directive in that member state.

Canada

The Notes have not been, and will not be, qualified for sale under the securities laws of any province orterritory of Canada. Each Dealer has represented and agreed, and each further Dealer appointed under theProgramme will be required to represent and agree, that it has not offered, sold or delivered, and that it willnot offer, sell or deliver, any Notes, directly or indirectly, in Canada or to, or for the benefit of, any residentthereof in contravention of the securities laws of any province or territory of Canada or, in the case of Notesissued by FFC (the “FFC Notes”), without the consent of FFC. Each Dealer has also agreed not to distributethe Base Prospectus or any other offering material relating to the Notes, in Canada without the writtenpermission of FFC. Each Dealer has further agreed that until 40 days after any closing date, it will deliverto any purchaser who purchases from it any FFC Notes a notice stating in substance that, by purchasingsuch FFC Notes, such purchaser represents and agrees that it has not offered or sold and will not offer orsell, directly or indirectly, any of such FFC Notes in Canada or to, or for the benefit of, any resident thereof,except pursuant to available exemptions from applicable Canadian provincial or territorial securities lawsand will deliver to any other purchaser to whom it sells any of such FFC Notes a notice containingsubstantially the same statement as in this sentence. Any Canadian investor contemplating purchasingNotes should refer to the Final Terms, which may describe additional subscription and sale and transfer andselling restrictions applicable to Canadian purchasers if Notes are to be offered in Canada.

Italy

The offering of the Notes has not been registered pursuant to Italian securities legislation and, accordingly,no Notes may be offered, sold or delivered, nor may copies of the Base Prospectus or of any other documentrelating to the Notes be distributed in the Republic of Italy, except:

(i) to qualified investors (investitori qualificati), as defined pursuant to Article 100 of Legislative DecreeNo. 58 of 25 February 1998, as amended (the Financial Services Act) and the relevant implementingCONSOB regulations, as amended from time to time, and in Article 2 of the Prospectus Directive; or

(ii) in other circumstances which are exempted from the rules on public offerings pursuant to Article 100of the Financial Services Act and Article 33, first paragraph, of CONSOB Regulation No. 11971 of14 May 1999, as amended.

Any offer, sale or delivery of the Notes or distribution of copies of the Base Prospectus or any otherdocument relating to the Notes in the Republic of Italy under (i) or (ii) above must be:

(a) made by an investment firm, bank or financial intermediary permitted to conduct such activities inthe Republic of Italy in accordance with the Financial Services Act, CONSOB Regulation No. 16190of 29 October 2007, as amended from time to time, and Legislative Decree No. 385 of 1 September1993, as amended (the Banking Act);

(b) in compliance with Article 129 of the Banking Act and the implementing guidelines of the Bank ofItaly, as amended form time to time, pursuant to which the Bank of Italy may request information onthe issue or the offer of securities in the Republic of Italy; and

(c) in compliance with any other applicable laws and regulations or requirement imposed by CONSOBor other Italian authority.

United Kingdom

Each Dealer has represented and agreed and each further Dealer appointed under the Programme will berequired to represent and agree that:

(i) in relation to any Notes which have a maturity of less than one year, (a) it is a person whoseordinary activities involve it in acquiring, holding, managing or disposing of investments (as

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principal or agent) for the purposes of its business and (b) it has not offered or sold and willnot offer or sell any Notes other than to persons whose ordinary activities involve them inacquiring, holding, managing or disposing of investments (as principal or as agent) for thepurposes of their businesses or who it is reasonable to expect will acquire, hold, manage ordispose of investments (as principal or agent) for the purposes of their business where the issueof the Notes would otherwise constitute a contravention of Section 19 of the Financial Servicesand Markets Act 2000 (“FSMA”) by the relevant Issuer;

(ii) it has only communicated or caused to be communicated and will only communicate or causeto be communicated an invitation or inducement to engage in investment activity (within themeaning of Section 21 of the FSMA) received by it in connection with the issue or sale of anyNotes in circumstances in which Section 21(1) of the FSMA does not apply to the relevantIssuer or the Guarantor; and

(iii) it has complied and will comply with all applicable provisions of the FSMA, with respect toanything done by it in relation to any Notes in, from or otherwise involving the UnitedKingdom.

The Netherlands

Each Dealer has represented and agreed and each further Dealer appointed under the Programme will berequired to represent and agree, that any Notes with a maturity of less than 12 months and a denominationof less than €50,000 will only be offered in The Netherlands to professional market parties as defined inthe Financial Supervision Act and the decrees issued pursuant thereto.

Japan

The Notes have not been and will not be registered under the Financial Instruments and Exchange Law ofJapan (the Law No. 25 of 1948, as amended; (the “FIEL”)) and each Dealer has agreed and each furtherDealer appointed under the Programme will be required to agree that it will not offer or sell any Notes,directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used hereinmeans any person resident in Japan, including any corporation or other entity organised under the laws ofJapan), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, aresident of Japan except pursuant to an exemption from the registration requirements of, and otherwise incompliance with, the FIEL and any other applicable laws, regulations and ministerial guidelines of Japan.

General

Each Dealer has agreed and each further Dealer appointed under the Programme will be required to agreethat it will (to the best of its knowledge and belief) comply with all applicable securities laws and regulationsin force in any jurisdiction in which it purchases, offers, sells or delivers Notes or possesses or distributesthe Base Prospectus and will obtain any consent, approval or permission required by it for the purchase,offer, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction to which itis subject or in which it makes such purchases, offers, sales or deliveries and none of the Issuers, theGuarantor nor any of the other Dealers shall have any responsibility therefor.

None of the Issuers, the Guarantor or the Dealers represents that Notes may at any time lawfully be soldin compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to anyexemption available thereunder, or assumes any responsibility for facilitating such sale.

With regard to each Tranche, the relevant Dealer will be required to comply with such other restrictions asthe relevant Issuer and the relevant Dealer shall agree and as shall be set out in the applicable Final Terms.

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General Information

AUTHORISATION

The amendment and restatement of the Programme and the issue of Notes have been duly authorised by aresolutions of the board of directors of each of FFT and FFNA and the sole shareholder of FFC dated,respectively, 23rd April, 2008, 23rd April, 2008 and 2nd May, 2008. The Guarantee has been givenpursuant to Article 3 of the Guarantor’s By-Laws.

LISTING OF NOTES ON THE IRISH STOCK EXCHANGE

Application has been made to the IFSRA, as competent authority under the Prospectus Directive, for theBase Prospectus to be approved. Such approval relates only to the Notes which are to be admitted to tradingon the regulated market of the Irish Stock Exchange or other MiFID Regulated Market or which are to beoffered to the public in any member state of the EEA. Application has been made to the Irish StockExchange for the Notes to be admitted to the Official List and trading on its regulated market.

However, Notes may be issued pursuant to the Programme which will not be listed on the Irish StockExchange or any other stock exchange or which will be listed on such stock exchange as the relevant Issuerand the relevant Dealer(s) may agree.

DOCUMENTS AVAILABLE

Copies of the following documents may be physically inspected at the offices of the Paying Agent in Irelandfor the life of the Base Prospectus:

(i) the constitutional documents (in the case of FFT, with an English translation thereof) of each Issuerand the By-laws (with an English translation thereof) of the Guarantor;

(ii) the unconsolidated audited financial statements of each Issuer in respect of the financial years ended31st December, 2006 and 2007 (in the case of FFT, with an English translation thereof) and theconsolidated and unconsolidated financial statements of the Guarantor in respect of the financialyears ended 31st December, 2006 and 2007 (with an English translation thereof) (each Issuercurrently prepares audited non-consolidated accounts on an annual basis and the Guarantor preparesaudited consolidated and non-consolidated accounts on an annual basis);

(iii) the most recently published audited annual financial statements of each Issuer and the Guarantor andthe most recently published unaudited interim financial statements (if any) of each Issuer and theGuarantor (in the case of FFT, with an English translation thereof) (the Guarantor prepares unauditedconsolidated interim accounts on a semi-annual basis and unaudited non-consolidated interimaccounts on a quarterly basis);

(iv) the Programme Agreement, the Agency Agreement, the Guarantee, the Deed of Covenant, the DeedPoll and the forms of the Global Notes, the Notes in definitive form, the Receipts, the Coupons andthe Talons;

(v) a copy of the Base Prospectus;

(vi) any future prospectuses, information memoranda and supplements including Final Terms (save thatFinal Terms relating to an unlisted Note will only be available for inspection by a holder of such Noteand such holder must produce evidence satisfactory to each Issuer and the Paying Agent as to itsholding of Notes and identity) to the Base Prospectus and any other documents incorporated hereinor therein by reference; and

(vii) in the case of each issue of listed Notes subscribed pursuant to a subscription agreement, thesubscription agreement (or equivalent document).

CLEARING SYSTEMS

The Notes in bearer form have been accepted for clearance through Euroclear and Clearstream. Theappropriate Common Code and ISIN for each Tranche of Bearer Notes allocated by Euroclear and

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117

GENERAL INFORMATION


Clearstream will be specified in the applicable Final Terms. In addition, the relevant Issuer may make anapplication for any Notes in registered form to be accepted for trading in book-entry form by DTC. TheCUSIP and/or CINS numbers for each Tranche of Registered Notes, together with the relevant ISIN andcommon code, will be specified in the applicable Final Terms. If the Notes are to clear through an additionalor alternative clearing system (including Sicovam) the appropriate information will be specified in theapplicable Final Terms.

The address of Euroclear is Euroclear Bank SA/NV, 1 Boulevard du Roi Albert II, B-1210 Brussels and theaddress of Clearstream, Luxembourg is Clearstream Banking, 42 Avenue JF Kennedy, L-1855 Luxembourg.

CONDITIONS FOR DETERMINING PRICE

The price and amount of Notes to be issued under the Programme will be determined by the relevant Issuerand each relevant Dealer at the time of issue in accordance with prevailing market conditions.

MATERIAL CHANGE

Except as disclosed in the Base Prospectus, there has been no significant change in the financial or tradingposition of any of the Issuers, the Guarantor or the Fiat Group (taken as whole) since 31st December, 2007,and there has been no material adverse change in financial condition of any of the Issuers or the Guarantorsince 31st December, 2007, being the date of the Guarantor’s last published audited consolidated financialstatements and the date of each of the Issuers’ last published audited financial statements.

LITIGATION

None of the Issuers nor the Guarantor nor any other member of the Group is or has been involved in anylegal, governmental or arbitration proceedings (including any proceedings which are pending or threatenedof which the Issuers or the Guarantor are aware) which is reasonably likely to have or have had in the 12months preceding the date of this document a significant effect on the financial position of the Issuers, theGuarantor or the Group.

AUDITORS

The independent auditors of FFT from 2nd July, 2002 are Deloitte S.A. 560 Rue De Neudorf, L-2220Luxembourg, Grand-Duchy of Luxembourg who have audited the accounts of FFT which are presented inaccordance with Luxembourg GAAP, without qualification, in accordance with auditing standardsgenerally accepted in Luxembourg for the financial years ended on 31st December, 2007 and 2006.

Deloitte S.A. is member of the Institut des Réviseurs d’Entreprises, the national member body forLuxembourg of the International Federation of Accountants (IFAC). Deloitte S.A. is on the register ofauthorised auditors held by the Ministry of Justice.

The independent auditors of FFNA and FFC are Deloitte & Touche LLP of Two World Financial Center,New York NY 10281, United States of America, who audited the accounts of FFNA and FFC which arepresented in accordance with IFRS, without qualification, in accordance with auditing standards generallyaccepted in the United States of America for the financial years ended on 31st December, 2007 and 2006.

Deloitte & Touche LLP, are independent certified public accountants with respect to FFNA and FFC underRule 101 of the AICPA’s Code of Professional Conduct, and its interpretations and rulings.

The independent auditors of the Guarantor are Deloitte & Touche S.p.A., of Galleria San Federico, 54,10121 Turin, Italy who audited the Guarantor’s accounts which are presented in accordance with IFRS asadopted by the European Union, without qualification, in accordance with auditing standards generallyaccepted in Italy for the financial years ended on 31st December, 2007 and 2006.

Deloitte & Touche S.p.A. is registered in the Special Register (Albo Speciale) maintained by CONSOB andset out at article 161 of the Unified Text of the Rules for the Capital Markets (Testo Unico delleDisposizioni in materia di mercati finanziari) and in the Register of Auditors (Registro dei Revisori

Contabili) maintained by Ministero di Grazia e Giustizia, as per Legislative Decree 27 January, 1992, n. 88.Deloitte & Touche S.p.A. is a member of ASSIREVI, an Italian association of auditing firms.

POST ISSUANCE INFORMATION

The Issuers do not intend to provide any post-issuance information in relation to such assets underlyingissues of Notes constituting derivative securities.

ISSUES BY FFC

For the purposes of disclosure pursuant to the Interest Act (Canada) and not for any other purpose, wherein any Note issued by FFC (i) a rate of interest is to be calculated on the basis of a year of 360 days, theyearly rate of interest to which the 360 day rate is equivalent is such rate multiplied by the number of daysin the year for which such calculation is made and divided by 360, or (ii) a rate of interest is to be calculatedduring a leap year, the yearly rate of interest to which such rate is equivalent is such rate multiplied by 366and divided by 365.

ISSUES BY FFNA

Bearer Notes issued by FFNA with a maturity of 183 days or less will have a minimum denomination of$500,000 (or its equivalent, at the spot rate on the date of issue, in the currency in which those Notes aredenominated).

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GENERAL INFORMATION


REGISTERED OFFICES OF THE ISSUERSFiat Finance and Trade Ltd.

société anonyme 13, Rue Aldringen

L-1118 Luxembourg

Fiat Finance Canada Ltd. Fiat Finance North America, Inc.855 – 2nd Street SW 1209 Orange Street

Suite 3500 WilmingtonCalgary County of New Castle

Alberta T2P 4J8 State of Delaware

REGISTERED OFFICE OF THE GUARANTORFiat S.p.A

Via Nizza 250Turin

PRINCIPAL PAYING AGENTCitibank, N.A.

21st FloorCitigroup CentreCanada SquareCanary Wharf

London E14 5LB

OTHER PAYING AGENTCitibank International plc

1 North Wall QuayDublin 1

REGISTRARCitigroup Global Markets Deutschland AG & Co. KGaA

Reuterweg 6D-60323 Frankfurt am Main

LEGAL ADVISERSTo FFT as

to Luxembourg lawLinklaters LLP, Luxembourg35, Avenue John F. Kennedy

BP 1107L-1011 Luxembourg

To FFC as to Canadian lawBlake, Cassels & Graydon LLP

Suite 2800, Commerce Court WestToronto, Ontario M5L 1A9

To FFNA as to US law and to the Guarantor as to Italian lawCleary Gottlieb Steen & Hamilton LLP

Via S. Paolo, 720121 Milan

To the Dealers as to English and Italian lawAllen & Overy

Via Manzoni, 41-4320121 Milan


AUDITORS

To Fiat Finance and Trade Ltd. To Fiat Finance North America, Inc. To Fiat S.p.A.Deloitte S.A. and Fiat Finance Canada Ltd. Deloitte & Touche S.p.A.

560, rue de Neudorf Deloitte & Touche LLP Galleria San Federico, 54BP 1173 Two World Financial Center 10121 Turin

L-1011 Luxembourg New York NY 10281

DEALERS

ABN AMRO Bank N.V. Banca IMI S.p.A.250 Bishopsgate Piazzetta Giordano Dell’Amore 3

London EC2M 4AA 20121 Milan

Barclays Bank PLC Bayerische Hypo- und Vereinsbank AG5 The North Colonnade Arabellastraße 12

Canary Wharf 81925 MunichLondon E14 4BB

BNP PARIBAS CALYON10 Harewood Avenue 9 Quai du President Paul Doumer

London NW1 6AA 92920 Paris La Defense Cedex

Citigroup Global Markets Limited Credit Suisse Securities (Europe) LimitedCitigroup Centre One Cabot SquareCanada Square London E14 4QJCanary Wharf

London E14 5LB

Deutsche Bank AG, London Branch Goldman Sachs InternationalWinchester House Peterborough Court

1 Great Winchester Street 133 Fleet StreetLondon EC2N 2DB London EC4A 2BB

Mediobanca – Banca di Credito Finanziario S.p.A. Merrill Lynch InternationalPiazzetta Enrico Cuccia, 1 Merrill Lynch Financial Centre

20121 Milan 2 King Edward StreetLondon EC1A 1HQ

Morgan Stanley & Co. International plc Société Générale25 Cabot Square 29 Boulevard Haussmann

Canary Wharf 75009 ParisLondon E14 4QA

The Royal Bank of Scotland plc The Toronto – Dominion Bank135 Bishopsgate Triton Court

London EC2M 3UR 14/18 Finsbury SquareLondon EC2A 1DB

UBS Limited1 Finsbury AvenueLondon EC2M 2PP

IRISH LISTING AGENT

J & E DavyDavy House

49 Dawson StreetDublin 2


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