SOCIETA DI CARTOLARIZZAZIONE ITALIANA CREDITI A RESPONSABILITA_ LIMITATA - S.C.I.C. a r.l. _539,325,000 Asset-Backed Floating Rate Notes due 2019

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1 This Offering Circular is dated 23rd December, 2003 SOCIETA DI CARTOLARIZZAZIONE ITALIANA CREDITI A RESPONSABILITA_ LIMITATA - S.C.I.C. a r.l. (incorporated with limited liability under the laws of the Republic of ltaly) _539,325,000 Asset-Backed Floating Rate Notes due 2019 Issue Price: 100 per cent. Application has been made to the Luxembourg Stock Exchange to list the _539,325,000 Asset-Backed Floating Rate Notes due 2019 (the "Notes") of Societ_ di Cartolarizzazione Italiana Crediti a responsabilit_ limitata, a limited liability company organised under the laws of the Republic of Italy (the "Issuer"). This document is issued pursuant to article 2, paragraph 3 of Italian law No. 130 of 30th April, 1999 (legge sulla cartolarizzazione dei crediti), as amended from time to time (the "Securitisation Law"), and constitutes a prospetto informativo for the Notes in accordance with the Securitisation Law. The principal source of funds available to the Issuer for the payment of interest and the repayment of principal on the Notes will be collections received in respect of a pool of monetary claims and other connected rights arising under a portfolio of loans granted by Istituto Nazionale di Previdenza per i Dipendenti delramministrazione Pubblica - INPDAP CINPDAP '') to public administrations of the Republic of Italy (the "Claims"), winch have been purchased by the Issuer pursuant to the terms of a receivables purchase agreement dated 23rd December, 2003 between the Issuer and INPDAP, in accordance with article 15 of law No. 448 of 23rd December, 1998 (as amended by article 22 of law decree No. 350 of 25th September, 2001 converted with amendments into law No. 409 of 23rd November, 2001, by article 84 of law No. 289 of 27th December, 2002 and by article 26 of law decree No. 269 of 30th September, 2003 converted with amendments into law No. 326 of 24th November, 2003) ("Article 15"). Interest on the Notes is payable by reference to successive interest periods (each, an "Interest Period"). Interest on the Notes will accrue on a daily basis and will be payable in arrear in euro on 21st August, 2004 and, thereafter, semi-annually in arrear on 21st February and 21st August in each year (subject to adjustment for non-business days as set out in Condition 6 (Interest)) (each such date, an "Interest Payment Date"). The rate of interest applicable to the Notes for each Interest Period shall be the rate offered in the euro-zone inter-bank market ("EURIBOR") for six-month deposits in euro (save that for the first Interest Period the rate will be obtained upon linear interpolation of EURIBOR for seven- and eight-month deposits in euro) (as determined in accordance with Condition 6 (Interest)) plus a margin of 0.04 per cent. per annum. The Notes are expected, on issue, to be rated "AAA" by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies Inc. ("S&P"). A credit rating is not a reconmaendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by S&P. All payments of principal and interest on the Notes will be made free and clear of any withholding or deduction for Italian withholding taxes, unless the Issuer is required by applicable law to make such a withholding or deduction (see "Taxation in the Republic of Italy", below). Upon the occurrence of any withholding for or on account of tax, whether or not in the form of a substitute tax, from any payments under the Notes, neither the Issuer nor any other person shall have any obligation to pay any additional amount to any holder of Notes. The Notes will be limited recourse obligations solely of the Issuer. In particular, the Notes will not be obligations or responsibilities of, or guaranteed by, the Representative of the Noteholders, the Paying Agents, the Agent Bank, the Auditors, the Collection Account Bank, the Transaction Bank, the Corporate Services Provider, the Computation Agent, the Swap Counterparties, the Servicer (each as defined below in "Transaction Summary lnfortrmtion - The Principal Parties"), INPDAP (in any capacity), the Joint Lead Managers (as defined below), the Stichting Corporate Services Provider (as defined below) or the quotaholders of the Issuer. Furthermore, none of such persons accepts any liability whatsoever in respect of any failure by the Issuer to make payment of any amount due on the Notes. The Notes will be held in bearer and dematerialised form on behalf of the beneficial owners, until redemption and cancellation thereof, by Monte Titoli S.p.A. ("Monte Titoli") for the account of the relevant Monte Titoli Account Holders. The expression "Monte Titoli Account Holders" means any authorised financial intermediary institution entitled to hold accounts on behalf of its customers with Monte Titoli and includes any depository banks appointed by Clearstream, Banking, socitt6 anonyme ("Clear,stream, Luxembourg") and Euroclear Bank S.A./N.V. as operator of the Euroclear System ("Euroclear"). The Notes will be deposited by the Issuer with Monte Titoli on 30th December, 2003 and will at all times be in book entry form and title to the Notes will be evidenced by book entry in accordance with the provisions of article 28 of Italian legislative decree No. 213 of 24th June, 1998 and with resolution No of 23rd December, 1998 of the Commissione Nazionale per le Societ_ e la Borsa ("CONSOB") as subsequently amended. No physical document of title will be issued in respect of the Notes. The Notes will mature on the Interest Payment Date winch fails in February 2019 (the "Final Maturity Before the Final Maturity Date, the Notes will be subject to mandatory and/or optional redemption in whole or in part in certain circumstances (as set out in Condition 7 (Redemption, purchase and cancellation)). If the Notes cannot be redeemed in full on the Final Maturity Date, as a result of the Issuer having insufficient funds available to it, including the proceeds of any sale of Claims or any enforcement of Note Security, in accordance with the terms and conditions of the Notes (the "Conditions" and each, a "Condition") for application in or towards such redemption, any amount unpaid shall remain outstanding and the Conditions shall continue to apply in full in respect of the Notes until the earlier of (i) the date on which the Notes are redeemed in full and (ii) 21st February, 2024 (the "Cancellation Date"), at which date any amounts ren_ininoo outstanding in respect of principal or interest on the Notes shall be reduced to zero and deemed to be released by the holder of the relevant Notes and the Notes shall be cancelled. For a discussion of certain risks and other factors that should be considered in connection with an investment in the Notes, see the section below entitled "Special Considerations" beginning on page 24. Arrangers, Joint Lead Managers and Bookrunners CITIGROUP CREDIT SUISSE FIRST BOSTON UBM - UNICREDIT BANCA MOBILIARE Date").

2 None of the Issuer, the Representative of the Noteholders, the institutions named in "Subscription and Sale" below (the "Joint Lead Managers") or any other party to the Transaction Documents (as defined below) other than INPDAP as originator (the "Originator") has undertaken or will undertake any investigations, searches or other actions to verify the details of the Claims purchased by the Issuer, nor have the Issuer, the Representative of the Noteholders, the Joint Lead Managers or any other party to the Transaction Documents undertaken, nor will they undertake, any investigations, searches or other actions to establish the creditworthiness of any debtor in respect of the Claims. The Issuer accepts responsibility for the information contained in this document, other than that information for which INPDAP accepts responsibility. To the best of the knowledge and belief of the Issuer (which has taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information. The Originator has provided the information under the sections headed "The Originator", "The PorO_olio'', "The Credit and Collection Policies" and any other information contained in this document relating to itself, the collection procedures relating to the Portfolio, the Claims and the Loans (each as defined below) and accepts responsibility for the information contained in those sections. To the best of the knowledge and belief of INPDAP (having taken all reasonable care and made all due enquiries to ensure that such is the case), the information in relation to which it is responsible as described above is true as of the date of this Offering Circular and does not omit anything likely to affect the import of such information and data. Citibank, N.A., London Branch, Credit Suisse First Boston International and UniCredito Italiano S.p.A. have provided the information under the sections headed, respectively, "The Swap Counterparties - Citibank, N.A., London Branch", "The Swap Counterparties - Credit Suisse First Boston International" and "The Swap Counterparties - UniCredito Italiano S.p.A." below and, together with the Issuer, accept responsibility for the information contained in those sections, and to the best of the knowledge and belief of Citibank, N.A., London Branch, Credit Suisse First Boston International and UniCredito Italiano S.p.A. (having taken all reasonable care and made all due enquiries to ensure that such is the case), such information is true as of the date of this Offering Circular and does not omit anything likely to affect the import of such information. Save as aforesaid, Citibank, N.A., London Branch, Credit Suisse First Boston International and UniCredito Italiano S.p.A., as Swap Counterparties, have not however been involved in the preparation of, and do not accept responsibility for, this document or any part hereof. No person has been authorised to give any information or to make any representation not contained in this document and, if given or made, such information or representation must not be relied upon as having been authorised by or on behalf of the Joint Lead Managers, the Representative of the Noteholders, the Issuer, the quotaholders of the Issuer, the Swap Counterparties, INPDAP (in any capacity) or any other person. Neither the delivery of this document nor any sale or allotment made in connection with the offering of any of the Notes shall, under any circumstances, constitute a representation or imply that there has been no change in the affairs of the Issuer or INPDAP or the information contained herein since the date hereof or that the information contained herein is correct as at any time subsequent to the date hereof. The Notes constitute limited recourse obligations of the Issuer. By operation of Italian law, the Issuer's right, title and interest in and to the Claims, as well as any right that the Issuer has acquired against the Originator or any third parties in the context of the securitisation of the Claims, will be segregated from all other assets of the Issuer and, in accordance with the Conditions and the Transaction Documents, amounts deriving therefrom will only be available to satisfy the obligations of the Issuer to the holders of the Notes, each of the Other Issuer Creditors (as defined below) and any ii

3 connected third-party creditor to whom the Issuer has incurred costs, fees, expenses or liabilities in relation to the securitisation of the Claims. Amounts deriving from the Claims will not be available to any other creditors of the Issuer. The holders of the Notes, by subscribing for, or purchasing, the Notes, agree, and the Other Issuer Creditors have agreed, that amounts deriving from the Claims will be applied by the Issuer in accordance with the applicable order of priority of application of Issuer Available Funds (as defined below) contained in the Intercreditor Agreement (as defined below) and in the Conditions. See "Transaction Summary Information - Priority of Payments" and "Credit Structure", below. The Notes will also be secured over certain of the assets of the Issuer as more fully described in the section entitled "Transaction Summary Information - Summary of the Notes", below. The Claims arise out of a portfolio of loans granted by INPDAP or by any one of the Former Social Security Institutes (as defined below) to public administrations of the Republic of Italy. See "The PorOeolio'', below. The distribution of this document and the offer, sale and delivery of Notes in certain jurisdictions may be restricted by law. Persons into whose possession this document comes are required by the Issuer and the Joint Lead Managers to inform themselves about, and to observe, any such restrictions. Neither this document nor any part of it constitutes an offer, and may not be used for the purpose of an offer to sell any of the Notes, or a solicitation of any offer to buy any of the Notes, by anyone in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or is unlawful. The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"). The Notes are in bearer form and are subject to U.S. tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act). See "Subscription and Sale", below. Investors in France may only participate in the issue of the Notes for their own account in accordance with the conditions set out in ddcret No dated 1st October, The Notes may only be issued, directly or indirectly, to the public in France in accordance with articles L and L of the French Code rnondtaire etfinancier. The Notes may not be offered or sold directly or indirectly, and neither this document nor any other offering circular nor any prospectus, form of application, advertisement, other offering material nor other information relating to the Issuer or the Notes may be issued, distributed or published in any country or jurisdiction (including the Republic of Italy, the United Kingdom, France and the United States), except under circumstances that will result in compliance with all applicable laws, orders, rules and regulations. For a further description of certain restrictions on offers and sales of the Notes and the distribution of this document, see "Subscription and Sale", below. Each initial and each subsequent purchaser of a Note will be deemed, by its acceptance of such Note, to have made certain acknowledgements, representations and agreements intended to restrict the resale or other transfer thereof as described in this Offering Circular and, in connection therewith, may be required to provide confirrnation of its compliance with such resale or other transfer restrictions in certain cases. See "Subscription and Sale", below. In connection with the issue and distribution of the Notes, Citigroup Global Markets Limited may over-allot or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail for a limited period after the Issue Date (as iii

4 defined below). Such stabilising, if commenced, may be discontinued at any time and must be brought to an end after a limited period. In this Offering Circular, references to "_", "euro" and "cents" are to the single currency introduced in the Member States of the European Community which adopted the single currency in accordance with the Treaty of Rome of 25th March, 1957, as amended by, inter alia, the Single European Act 1986, the Treaty of European Union of 7th February, 1992 establishing the European Union, the European Council of Madrid of 16th December, 1995 and the Treaty of Amsterdam of 2nd October, In this Offering Circular, references to "Italy", the "Republic", the "Italian State" or the "State" are to the Republic of Italy and all references herein to a "Ministry" or a "Minister" are to a Ministry or Minister, respectively, of the Republic of Italy. iv

5 CONTENTS TRANSACTION SUMMARY INFORMATION... 6 SPECIAL CONSIDERATIONS CREDIT STRUCTURE THE PORTFOLIO THE CREDIT AND COLLECTION POLICIES THE ORIGINATOR THE ISSUER'S BANK ACCOUNTS TERMS AND CONDITIONS OF THE NOTES SCHEDULE TO THE TERMS AND CONDITIONS OF THE NOTES USE OF PROCEEDS THE ISSUER THE SWAP COUNTERPARTIES SELECTED ASPECTS OF ITALIAN LAW THE AGENCY AND ACCOUNTS AGREEMENT THE RECEIVABLES PURCHASE AGREEMENT THE SERVICING AGREEMENT TRANSACTION DOCUMENTS EXPECTED MATURITY AND AVERAGE LIFE OF THE NOTES AND ASSUMPTIONS TAXATION IN THE REPUBLIC OF ITALY SUBSCRIPTION AND SALE GENERAL INFORMATION INDEX OF DEFINED TERMS

6 TRANSACTION SUMMARY INFORMATION The following information is a summary of the transactions and assets underlying the Notes and is qualified in its entirety by reference to the detailed information presented elsewhere in this document and in the Transaction Documents. Certain terms used, but not defined, in the summary may be found in other sections of this document, unless otherwise stated. An index of defined terms is contained at the end of this document, commencing on page The principal parties Issuer Societ_ di Cartolarizzazione Italiana Crediti a responsabilit_ limitata (also known as S.C.I.C. a r.1.), formerly known as Societft per la cartolarizzazione dei crediti e dei proventi pubblici a responsabilit_ limitata (also formerly known as S.C.C.P.P. a r.1.) (the "Issuer") is a special purpose company incorporated in the Republic of Italy as a limited liability company (societgt a responsibilitgt limitata) under article 15 of law No. 448 of 23rd December, 1998 (as amended by article 22 of law decree No. 350 of 25th September, 2001 converted with amendments into law No. 409 of 23rd November, 2001, by article 84 of law No. 289 of 27 December, 2002 and by article 26 of law decree No. 269 of 30th September, 2003 converted with amendments into law No. 326 of 24th November, 2003) ("Article 15"). The Issuer is registered with the Companies Register of Rome and with the register (elenco generale) held by Ufficio Italiano dei Cambi pursuant to article 106 of the Italian legislative decree No. 385 of 1st September, 1993 (the "Banking Act") under No The registered office of the Issuer is at via Eleonora Duse, 53, Rome, Italy and its tax identification number (codice fiscale) is The issued equity capital of the Issuer, being _10,000, is held as to 50 per cent. by Stichting Palatium and as to 50 per cent. by Stichting Thesaurum. In accordance with Article 15, the Issuer is a multi-purpose vehicle and it has already engaged in: (a) a first securitisation transaction, under its former name of Societa per la cartolarizzazione dei crediti e dei proventi pubblici a responsabilith limitata, which was completed on 6th December, 2001 involving (i) the acquisition of certain revenues relating to certain lottery and betting games (the Lotto game and the Superenalotto Game) and (ii) the issue of asset-backed notes in an aggregate amount of 3,000,000,000 (the "Lotto Notes"); and (b) a second securitisation transaction which was completed on 25th November 2003, involving (i) the acquisition of the monetary claims arising from personal loans extended by INPDAP to employees of the Italian public administration and (ii) the issue of asset-backed notes in an aggregate amount of _4,230,000,000 (the "Personal Loans Notes" and, together with the Lotto Notes, the "Previous Securitisation Notes"). The Issuer may engage in the future in other securitisation transactions.

7 On 23rd December, 2003 (the "Signing Date"), the Issuer acquired the monetary claims, with effect as of the Issue Date, and other connected rights (the "Claims" or, alternatively, the "Portfolio") arising from a portfolio of loans (the "Loans") granted by INPDAP or by any one of the Former Social Security Institutes (as defined below) to public administrations of the Republic of Italy (the "Obligors"). Such acquisition will be financed by the issue of the Notes. See "The Issuer", "Transaction Summary Information - The Portfolio, administration of the Portfolio and calculations in respect thereof' and "The Portfolio", below. Stichting Palatium Stichting Palatium ("Stichting Palatium") is a Dutch foundation (stichting) established under the laws of The Netherlands whose statutory seat is at Parnassustoren, Locatellikade 1, 1076 AZ Amsterdam, The Netherlands. Stichting Stichting Thesaurum CStichting Thesaurum") is a Dutch foundation Thesaurum (stichting) established under the laws of The Netherlands whose statutory seat is at Parnassustoren, Locatellikade 1, 1076 AZ Amsterdam, The Netherlands. Originator Istituto Nazionale di Previdenza per i Dipendenti dell'amministrazione Pubblica - INPDAP, whose statutory seat is at via Santa Croce in Gerusalemme 55, Rome, Italy, ("INPDAP" or the "Originator") was formed under the laws of Italy by legislative decree No. 479 of 30th June, INPDAP sold the Claims to the Issuer, with effect as of the Issue Date, pursuant to the terms of a receivables purchase agreement between the Issuer and INPDAP dated the Signing Date (the "Receivables Purchase Agreement"). See "Transaction Summary Information - The Portfolio, administration of the Portfolio and calculations in respect thereof' and "The Receivables Purchase Agreement", below. Representative of Securitisation Services S.p.A., the registered office of which is at via Vittorio the Noteholders Alfieri 1, Conegliano (Treviso), Italy, is the representative of the holders of the Notes (the "Representative of the Noteholders") pursuant to Article 15, the Conditions and the Subscription Agreement (as defined below) dated the Signing Date. Corporate Services KPMG Fides Fiduciaria S.p.A., the registered office of which is at via Vittor Provider Pisani, 27, Milan, Italy, is the corporate services provider to the Issuer (in such capacity, the "Corporate Services Provider"). Pursuant to the terms of a corporate services agreement dated the Signing Date (the "Third Corporate Services Agreement"), the Corporate Services Provider has agreed to provide certain administrative and secretarial services to the Issuer. See "Transaction Documents - The Third Corporate Services Agreement", below. The Issuer has already appointed KPMG Fides Fiduciafia S.p.A. pursuant to an Issuer corporate services agreement (the "Issuer Corporate Services Agreement") dated 6th December, See "Transaction Documents - The Third Corporate Services Agreement", below. Servicer INPDAP (in such capacity, the "Servicer") will administer the Portfolio on

8 behalf of the Issuer pursuant to the terms of a servicing agreement dated the Signing Date (the "Servicing Agreement") between the Issuer and INPDAP, as Servicer. See "Transaction Summary Information - The Portfolio, administration of the Portfolio and calculations in respect thereof', "The Credit and Collection Policies" and "The Servicing Agreement", below. Computation Agent Citibank, N.A., London Branch, with offices at 5 Carmelite Street, London EC4Y 0PA, England, is the computation agent to the Issuer (in such capacity, the "Computation Agent") pursuant to the terms of an agency and accounts agreement dated the Signing Date between the Issuer, the Representative of the Noteholders, the Computation Agent, the Transaction Bank, the Principal Paying Agent, the Luxembourg Paying Agent, the Italian Paying Agent and the Agent Bank (the "Agency and Accounts Agreement"). See "Transaction Summary Information - The Portfolio, administration of the Portfolio and calculations in respect thereof' and "The Agency and Accounts Agreement", below. Collection Account The Tesoreria Centrale dello Stato, acting through the Bank of Italy, is the Bank account bank to the Issuer in respect of one of the Issuer's accounts (the "Collection Account Bank"). No specific fee will be due from the Issuer to the Collection Account Bank for the service of opening and maintaining the Collection Account. The Collection Account Bank will not be a party to any of the Transaction Documents. See "Transaction Summary Information - The Accounts", and "The Issuer's Bank Accounts", below. Transaction Bank Citibank, N.A., Milan Branch, with offices at Foro Buonaparte 16, Milan, Italy, is the transaction bank in respect of certain additional bank accounts of the Issuer (in such capacity, the "Transaction Bank") pursuant to the terms of the Agency and Accounts Agreement. The Transaction Bank has opened and will maintain certain bank accounts in the name of the Issuer. The Computation Agent will operate such accounts in the name and on behalf of the Issuer. See "Transaction Summary Information - The Accounts", "The Issuer's Bank Accounts" and "The Agency and Accounts Agreement", below. Principal Paying Citibank, N.A., London Branch, with offices at 5 Carmelite Street, London Agent EC4Y 0PA, England, will be the principal paying agent (in such capacity, the "Principal Paying Agent") pursuant to the terms of the Agency and Accounts Agreement. See "The Agency and Accounts Agreement", below. Italian Paying Citibank, N.A., Milan Branch, with offices at Foro Buonaparte 16, Agent Milan, Italy, will be the Italian paying agent (in such capacity, the "Italian Paying Agent") pursuant to the terms of the Agency and Accounts Agreement. See "The Agency and Accounts Agreement", below. Luxembourg Kredietbank SA Luxembourgeoise, with offices in Luxembourg at 43 Paying Agent Boulevard Royal, L-2955 Luxembourg, will be the Luxembourg paying agent (in such capacity, the "Luxembourg Paying Agent" and together with the Principal Paying Agent and the Italian Paying Agent, the "Paying Agents") pursuant to the terms of the Agency and Accounts Agreement. See "The Agency and Accounts Agreement", below. Agent Bank Citibank, N.A., London Branch, with offices at 5 Carmelite Street, London EC4Y 0PA, England, will be the agent bank (in such capacity, the "Agent Bank") pursuant to the terms of the Agency and Accounts Agreement. See

9 "The Agency and Accounts Agreement", below. Auditors PKF Italia S.p.A. with offices at Viale Vittorio Veneto 10, , Milan, Italy, has been appointed by the Issuer to audit the Issuer's accounts (the "Auditors") pursuant to the terms of the auditing agreement dated 24th November, 2003 between the Issuer, the Representative of the Noteholders and the Auditors (the "Auditing Agreement"). See "Transaction Documents - The Auditing Agreement", below. Swap (i) Citibank, N.A., London Branch, acting through its branch at Citigroup Counterparties Centre, Canada Square, London E14 5LB England; (ii) Credit Suisse First Boston International, acting through its branch at One Cabot Square, London El4 4QJ, England and (iii) UniCredito Italiano S.p.A., acting through its branch at piazza Cordusio, Milan, Italy, are the swap counterparties (in such capacity, the "Swap Counterparties") pursuant to the terms of the Swap Agreements. See "Credit Structure - The Swap Agreements" and "The Swap Counterparties ", below. 2. Summary of the Notes The Notes On 30th December, 2003 (the "Issue Date"), the Issuer will issue 6539,325,000 Asset-Backed Floating Rate Notes due 2019 (the "Notes"). The Notes will constitute direct, secured and limited recourse obligations of the Issuer. The Notes will be governed by Italian law. Form and The authorised denomination of the Notes will be 65,000. The Notes will be denomination of the held in bearer and dematerialised form on behalf of the beneficial owners, Notes until redemption and cancellation thereof, by Monte Titoli for the account of the relevant Monte Titoli Account Holder. Title to the Notes will be evidenced by book entry in accordance with the provisions of article 28 of Italian legislative decree No. 213 of 24th June, 1998 and CONSOB resolution No of 23rd December, 1998 as subsequently amended. No physical document of title will be issued in respect of the Notes. Limited recourse The obligations of the Issuer to each of the holders of the Notes will be nature of the limited recourse obligations of the Issuer. The Noteholders will have a claim Issuer's obligations against the Issuer only to the extent of the actual amount received or under the Notes recovered from time to time by or on behalf of the Issuer or the Representative of the Noteholders in respect of the Claims, the Note Security and the Transaction Documents, in each case subject to and as provided in the Intercreditor Agreement and the other Transaction Documents. Costs The costs of this Securitisation Transaction (with the exception of certain initial costs of the setting up of the transaction which will be borne by the Issuer out of the proceeds from the issue of the Notes), including the amounts payable to the various agents of the Issuer appointed in connection with the issue of the Notes, will be funded from the Issuer Available Funds (as defined below) and will therefore be included in the Priority of Payments. Interest on the The Notes will bear interest on their Principal Amount Outstanding (as Notes defined below) from and including the Issue Date at a rate equal to EURIBOR for six-month deposits in euro (save that for the first Interest Period the rate will be obtained upon linear interpolation of EURIBOR for

10 seven- and eight-month deposits in euro) (as determined by the Agent Bank in accordance with the Conditions) plus a margin of 0.04 per cent. per annum. Subject to the Priority of Payments, interest on the Notes will be payable in arrear in euro on 21 st August, 2004 and, thereafter, semi-annually in arrear on 21st February and 21st August in each year (provided that, if such a day is not a Business Day, interest will be payable on the next succeeding Business Day, subject to the Conditions). "Business Day" means any day on which banks are open for business in Milan and Rome and the Trans-European Automated Real-Time Gross Settlement Express Transfer System (or any successor thereto) is open. Mandatory If no Issuer Acceleration Notice has been delivered to the Issuer by the redemption of the Representative of the Noteholders and if, at the close of business on the Notes in part Calculation Date immediately preceding the Interest Payment Date falling in August 2004 or any Interest Payment Date thereafter, there are Issuer Available Funds available for such purpose, the Issuer will apply such Issuer Available Funds on the Interest Payment Date following each such Calculation Date in or towards repayment of the Notes, until the Notes have been redeemed in full. Final Maturity Date Unless previously redeemed and cancelled, the Issuer shall redeem the Notes at their Principal Amount Outstanding, plus any accrued but unpaid interest, on the Interest Payment Date falling in February 2019 (the "Final Maturity Date"). See also "Transaction Summary Information - Redemption of the Notes in other circumstances", below. Cancellation Date If the Notes cannot be redeemed in full on the Final Maturity Date, as a result of the Notes of the Issuer having insufficient Issuer Available Funds for application in or towards such redemption, any amount unpaid shall remain outstanding and the Conditions shall continue to apply in full in respect of the Notes until the earlier of (i) the date on which the Notes are redeemed in full and (ii) 21st February, 2024 (the "Cancellation Date"), at which date any amounts remaining outstanding in respect of principal or interest on such Notes shall be reduced to zero and deemed to be released by the holder of the relevant Notes and the Notes shall be cancelled. Withholding tax on All payments of interest and principal under the Notes will be made free and the Notes clear of any withholding or deduction for and on account of taxes, unless the Issuer is required by applicable law to make such a withholding or deduction. Upon the occurrence of any withholding for or on account of tax, whether or not through a substitute tax, from any payments of amounts due under the Notes, neither the Issuer, the Representative of the Noteholders, the Paying Agents nor any other person shall have any obligation to pay any additional amount to any Noteholders. See "Taxation in the Republic of Italy", below. Security for the By operation of Italian law, the Issuer's right, title and interest in and to the Notes Claims, as well as any right that the Issuer has acquired against the Originator or any third parties in the context of the securitisation of the Claims, will be segregated from all other assets of the Issuer and, in accordance with the 10

11 Conditions and the Transaction Documents, amounts deriving therefrom will only be available, both prior to and following a winding-up of the Issuer, to satisfy the obligations of the Issuer to the holders of the Notes (the "Noteholders"), each of the Other Issuer Creditors (as defined below) and any other third-party creditors in respect of any taxes, costs, fees, expenses or liabilities incurred by the Issuer in relation to this Securitisation Transaction (together, the "Issuer Creditors"). Pursuant to Article 15, the Claims and the other Issuer's rights acquired in the context of the Securitisation Transaction may not be seized or attached by creditors of the Issuer other than the Noteholders. On the Issue Date, the Issuer will execute an English law deed of charge (the "English Deed of Charge" and the security created thereunder, the "Note Security") pursuant to which the Issuer will grant in favour of the Representative of the Noteholders for itself and as security trustee for the Noteholders and the other Issuer Secured Creditors, inter alia, a charge over all the Issuer's rights under the Swap Agreements. Interereditor On the Signing Date, the Issuer, the Representative of the Noteholders on its Agreement own behalf and on behalf of the Noteholders, the Paying Agents, the Agent Bank, the Computation Agent, the Transaction Bank, the Swap Counterparties, the Joint Lead Managers, INPDAP (in any capacity) and the Corporate Services Provider (with the exception of the Issuer and the Noteholders, the "Other Issuer Creditors") have entered into an intercreditor agreement (the "Intercreditor Agreement") pursuant to which the Other Issuer Creditors have agreed to the limited recourse nature of the obligations of the Issuer and to the Priority of Payments described below. The Intercreditor Agreement is govemed by Italian law. Mandate Pursuant to the terms of a mandate agreement dated the Signing Date (the Agreement "Mandate Agreement"), the Noteholders and the Other Issuer Creditors have empowered the Representative of the Noteholders to take such action in the name of the Issuer, following the delivery of an Issuer Acceleration Notice, as the Representative of the Noteholders may deem necessary to protect the interests of the Noteholders and the Other Issuer Creditors. Purchase of the The Issuer may not purchase any Notes at any time. Notes Listing of the Notes Application has been made for the Notes to be listed on the Luxembourg Stock Exchange. Rating It is a condition precedent to the issue of the Notes that the Notes will be rated "AAA" by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies Inc. ("S&P"). A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by S&P. Selling restrictions There are restrictions on the sale of the Notes and on the distribution of information in respect thereof. See "Subscription and Sale", below. 11

12 Further The Issuer may, by way of a separate transaction, purchase and securitise Securitisation further portfolios of monetary claims or revenues in addition to the Claims (each, a "Further Securitisation"). Before entering into any Further Securitisation, the Issuer must comply with Condition 7(b) (Other transactions involving other portfolios) which requires, inter alia, that the Rating Agencies give prior written confirmation that the then current ratings of the Notes will not be adversely affected by such Further Securitisation. Under Article 15, the assets relating to each securitisation transaction carried out by the Issuer are stated to be segregated from all other assets of the Issuer and from those related to any other securitisation transaction, and, therefore, on a winding-up of the Issuer, such assets will only be available to holders of the notes issued (or the lenders of the loans extended) to finance the acquisition of such assets and, to the extent provided in the relevant transaction documents, to certain creditors claiming payment of debts incurred by the Issuer in connection with such securitisation transaction. Accordingly, the right, title and interest of the Issuer in and to the Claims will be segregated from all other assets of the Issuer (including, for the avoidance of doubt, any other portfolio purchased by the Issuer pursuant to any Further Securitisation) and amounts deriving therefrom will be available on a winding-up of the Issuer, in accordance with the Conditions and the Transaction Documents, only to satisfy the obligations of the Issuer to the Noteholders and the payment of any amounts due and payable to the other Issuer Creditors in respect of the Securitisation Transaction. See "Terms and Conditions of the Notes", "The Issuer" and "Selected Aspects of ltalian Law", below. 3. The Portfolio, administration of the Portfolio and calculations in respect thereof Purchase of the Pursuant to the terms of the Receivables Purchase Agreement, the Originator Claims will sell to the Issuer without recourse (pro soluto) the Claims arising from the Loans in accordance with Article 15. See "The Portfolio" and "The Receivables Purchase Agreement", below. The Claims include: (a) the residual debt under each Loan as at the Valuation Date, including, in respect of the Partially-Undrawn Loans, the debt relative to the undrawn portion; (b) the interest and any other amount (e.g. prepayment fees and indemnities) accruing on the Loans, but excluding: (i) the instalment falling due in respect of each Loan in December 2003 according to the original amortisation plan; and (ii) any amounts due to INPDAP under the contributions (if any) granted to the relevant Obligor and assigned by the latter to INPDAP to guarantee the repayment of the relevant Loan; (c) any overdue amount on the Loans; and 12

13 (d) any amount that will be due under the guarantees and other rights ancillary to the Loans. Warranties in Pursuant to the terms of the Receivables Purchase Agreement, the Originator relation to the has given certain representations and warranties in favour of the Issuer in Portfolio relation to, inter alia, the Portfolio and has agreed to indemnify the Issuer in respect of certain liabilities of the Issuer incurred in connection with the purchase and ownership of the relevant Claims. See "The Receivables Purchase Agreement", below. Servicing and Pursuant to the terms of the Servicing Agreement, the Servicer has agreed to collection administer and service the Portfolio on behalf of the Issuer and, in particular, procedures to: (a) (b) collect amounts due in respect thereof; administer the Portfolio; (c) administer relationships with the Obligors or other debtors under each Loan; and (d) commence and pursue any enforcement proceedings in respect of any Obligors or other debtors under a Loan who may default. Any monies paid in respect of the Loans (the "Collections") are paid to INPDAP in its capacity as Servicer. The Collections received by the Servicer are required to be transferred by the Servicer into the Collection Account within four Business Days of receipt. Collections in respect of the Loans will be calculated by reference to successive six-month periods (each, a "Collection Period"). Each Collection Period will commence on (and include) a Collection Date and end on (but exclude) the next succeeding Collection Date, and, in the case of the first Collection Period, will commence on (but exclude) 5th December, 2003 and end on (and include) 25th July, "Collection Date" means 26th January and 26th July of each year. The Servicer has undertaken to prepare and submit to, inter alios, the Computation Agent, the Rating Agencies, the Corporate Services Provider, the Joint Lead Managers and the Issuer by no later than 10th February and 10th August of each year or, if such day is not a Business Day, on the immediately following Business Day (each such date, a "Reporting Date"), semi-annual reports (each, a "Servicer Report") containing information as to the Portfolio and the related Collections in respect of the preceding Collection Period as set out in the Servicing Agreement. The first Reporting Date will be in August Servicing fee In return for the services provided by the Servicer in relation to the ongoing management of the Portfolio, the Issuer will pay to the Servicer a fee, payable semi-annually in arrear on each Interest Payment Date, equal to 4 basis points per annum (calculated according to the ACT/360 method) of the principal amount outstanding, as at the start of the relevant Collection Period, of the 13

14 Claims arising from Loans the amortisation plan of which, as at 31st December, 2003, is still outstanding. Computation Pursuant to the Agency and Accounts Agreement, the Computation Agent has agency agreed to provide the Issuer with certain calculation, notification and reporting services in relation to the Portfolio and the Notes. By no later than the fourth Business Day immediately preceding each Interest Payment Date (each such date, a "Calculation Date"), the Computation Agent will calculate, inter alia, the Issuer Available Funds; the Principal Payment (if any) due in respect of the Notes on the next following Interest Payment Date; the interest to be paid (if any) in respect of the Notes on the next following Interest Payment Date; the Principal Amount Outstanding of the Notes on the next following Interest Payment Date (after deducting all Principal Payments (if any) to be made on that Interest Payment Date); the amounts, if any, to be drawn from the Cash Collateral Sub-Account to augment the Issuer Available Funds; the amounts of the Cash Collateral after draw-down on the 4. The Accounts immediately following Interest Payment Date, and the other payments to be made under the Transaction Documents. Pursuant to the Agency and Accounts Agreement, the Computation Agent has also agreed to prepare and deliver (on each Interest Payment Date) to the Issuer, the Representative of the Noteholders, the Luxembourg Paying Agent, the Luxembourg Stock Exchange, INPDAP and the Rating Agencies, a report having substantially the same content set out in the Agency and Accounts Agreement (the "Investor Report") containing details of, inter alia, the Portfolio, amounts received by the Issuer from any source during the preceding Collection Period, amounts paid by the Issuer during such Collection Period and amounts paid by the Issuer on the relevant Interest Payment Date. In carrying out such duties, the Computation Agent will be entitled to rely on certain information provided to it by the Servicer, the Transaction Bank, the Agent Bank, the Swap Counterparties and the Issuer. In return for the services so provided, the Computation Agent will receive a fee as agreed on the Signing Date between the Issuer and the Computation Agent, payable by the Issuer on each Interest Payment Date in accordance with the Priority of Payments. The Accounts The Issuer has opened with the Collection Account Bank a euro-denominated current account into which the Servicer will be required to deposit the Collections received by it (the "Collection Account"). The Issuer will establish a cash reserve, funded through the issue of the Notes, in a sub-account of the Collection Account (the "Cash Collateral Sub-Account"). "Cash Collateral" means the monies standing to the credit of the Cash Collateral Sub-Account at any given time. On the Issue Date, the Issuer will credit to the Cash Collateral Sub-Account _24,247,082, being equal to the undrawn portion of the Partially-Undrawn Loans as at 5th December, The Cash Collateral will be used to augment the Issuer Available Funds if a Set-off Event occurs and INPDAP fails to indemnify the Issuer pursuant to the Receivables Purchase Agreement. 14

15 Pursuant to the terms of the Agency and Accounts Agreement, the Issuer has opened with the Transaction Bank: (a) a euro-denominated current account into which, inter alia, (i) such monies standing to the credit of the Collection Account as are to be used on each Interest Payment Date to make payments to the Noteholders and to third-party creditors of the Issuer will be transferred up to the Business Day immediately preceding the relevant Interest Payment Date, and (ii) the Swap Counterparties are obliged to make any payment due to the Issuer under the relevant Swap Agreement (the "Payment Account"). The credit balance of the Payment Account will be used to make payments due on each Interest Payment Date, to the Noteholders and the Other Issuer Creditors in accordance with the applicable Priority of Payments; and (b) a euro-denominated current account which will be replenished on each Interest Payment Date up to the Expenses Reserve Amount and which will be used by the Issuer on any Business Day (other than an Interest Payment Date) to pay all fees, costs, liabilities, expenses and taxes incurred by the Issuer in the context of this Securitisation Transaction or which is required to be paid in order to preserve the corporate existence of the Issuer or to maintain it in good standing or to comply with applicable legislation (the "Expenses Account" and, together with the Collection Account and the Payment Account, the "Accounts"). In addition, in 2001 the Issuer also opened with Banca Nazionale del Lavoro S.p.A. a euro-denominated deposit account into which the Issuer's equity capital of _10,000 was deposited and will be required to remain deposited for as long as any Notes are outstanding (the "Equity Capital Account"). Provisions relating The Collection Account will be maintained with the Tesoreria Centrale dello to the Collection Stato, acting through the Bank of Italy as the Collection Account Bank, as Account long as the Republic of Italy's short-term unsecured, unsubordinated and unguaranteed debt obligations are rated "FI" by Fitch and: (a) (b) at least "A-I" by S&P, or if the cash credited to the Collection Account is greater than or equal to 20 per cent. of the Principal Amount Outstanding of the Notes, "A- 1+" by S&P. If the ratings of the short-term, unsecured, unsubordinated and unguaranteed debt obligations of the Republic of Italy fall below "FI" by Fitch or "A-I" by S&P, pursuant to the Intercreditor Agreement, unless both Rating Agencies confirm that the Notes will not be downgraded as a result of such event, the Issuer shall, within 30 days, (a) revoke Tesoreria Centrale dello Stato, acting through the Bank of Italy, from the role of Collection Account Bank and close the Collection Account opened with it and, simultaneously, (b) open a replacement Collection Account with a replacement Collection Account Bank, the short-term unsecured, unsubordinated and unguaranteed debt obligations of which are rated at least "FI" by Fitch and "A-I+" by S&P. 15

16 If (i) the rating of the short-term, unsecured, unsubordinated and unguaranteed debt obligations of the Republic of Italy falls below "A-I+" by S&P and (ii) the cash credited to the Collection Account is greater than or equal to 20 per cent. of the Principal Amount Outstanding of the Notes, pursuant to the Intercreditor Agreement, unless S&P confirms that the Notes will not be downgraded as a result of such event, the Issuer shall, within 30 days, open an additional account with a bank, the short-term unsecured, unsubordinated and unguaranteed debt obligations of which are rated at least "FI" by Fitch and "A-I+" by S&P into which any cash in excess above 20 per cent. of the Principal Amount Outstanding of the Notes shall be credited. Provisions relating Pursuant to the Agency and Accounts Agreement, Citibank, N.A., Milan to the Payment Branch, in its capacity as Transaction Bank, has agreed to provide the Issuer Aeeount aud the with certain services in connection with account-handling and reporting Expenses Account requirements in relation to the monies from time to time standing to the credit of the Payment Account and the Expenses Account, including the preparation of statements of account on each Reporting Date. 5. Priority of Payments If at any time the ratings of the short-term, unsecured, unsubordinated and unguaranteed debt obligations of the Transaction Bank fall below "FI" by Fitch or "A-I" by S&P, the Transaction Bank will give notice of such event to the Issuer, the Computation Agent and the Representative of the Noteholders and, subject as set out below, will be required to procure, within 30 days, the transfer of the Payment Account and the Expenses Account to another bank located in Italy, the unsecured, unsubordinated and unguaranteed debt obligations of which are rated at least "FI" by Fitch and "A-I" by S&P. Issuer Available On each Calculation Date, the Computation Agent will calculate the Issuer Funds Available Funds, which will be used by the Issuer to make the payments set out in the Pre-Event Priority of Payments (as defined below). "Issuer Available Funds" means, on each Calculation Date and in respect of the immediately following Interest Payment Date, an amount equal to the sum of: (a) (b) (c) the amount standing to the credit of the Collection Account as at the Collection Date immediately preceding the relevant Calculation Date consisting of, inter alia, (i) payment of interest, repayment of principal, payment of prepayment fees and of any other fees under the Loans as well as any recovery in respect of Defaulted Loans, (ii) interest accrued on and credited to the Collection Account (including interest accrued on the Cash Collateral), and (iii) payments made by the Originator under the Receivables Purchase Agreement, but excluding the Cash Collateral; any amount due and payable, although not yet paid, to the Issuer by the Originator under any of the Transaction Documents, to the extent that such payment is made by the Originator to the Issuer no later than the Reporting Date; any amount due and payable, although not yet paid, to the Issuer by 16

17 any of the Swap Counterparties under the relevant Swap Agreement on the second Business Day before the Interest Payment Date immediately following the relevant Calculation Date; (d) (e) the amount standing to the credit of the Payment Account as at the Collection Date immediately preceding the relevant Calculation Date consisting of, without limitation, amounts received by the Issuer under any of the Transaction Documents during such Collection Period and interest accrued on and credited to the Payment Account, if any; and to the extent that the Originator does not comply with its obligations to indemnify the Issuer following the occurrence of a Set-off Event pursuant to the Receivables Purchase Agreement, the lower of the (i) Cash Collateral and (ii) the amount due by the Originator to the Issuer as a result of the occurrence of a Set-off Event, but excluding any amount held by the Issuer which properly belongs to any Swap Counterparty in respect of any Excess Swap Collateral or Tax Credit (as defined in the relevant Swap Agreement), without duplication, payable to such Swap Counterparty pursuant to the relevant Swap Agreement. Pre-Event Priority Prior to the service of an Issuer Acceleration Notice, the Issuer Available of Payments Funds as calculated on each Calculation Date will be applied by, or on behalf of, the Issuer on the Interest Payment Date immediately following such Calculation Date in making payments or provisions in the following order of priority (the "Pre-Event Priority of Payments") (after making payments of certain monies which properly belong to any Swap Counterparty in respect of any Excess Swap Collateral or Tax Credit (as defined in the relevant Swap Agreement) payable to such Swap Counterparty pursuant to the relevant Swap Agreement) but, in each case, only if and to the extent that payments or provisions of a higher priority have been made in full: (i) first, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of: (A) any and all outstanding taxes due and payable by the Issuer (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs); (B) any and all outstanding fees, costs, liabilities and any other expenses to be paid in order to preserve the corporate existence of the Issuer, to maintain it in good standing, to comply with applicable legislation and to fulfil obligations to third parties (not being Other Issuer Creditors) incurred in the course of the Issuer's business in relation to this Securitisation Transaction (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs); (C) any and all outstanding fees, costs and expenses required to be paid in connection with the listing, deposit or ratings of the Notes, or any notice to be given to the Noteholders or the other parties to the Transaction Documents (to the extent that 17

18 amounts standing to the credit of the Expenses Account are insufficient to pay such costs); (D) any and all outstanding fees, costs and expenses of and all other amounts due and payable to the Representative of the Noteholders or any appointee thereof; (E) all amounts due and payable to each of the Joint Lead Managers under the terms of the Subscription Agreement; and (F) the amount necessary to replenish the Expenses Account up to the Expenses Reserve Amount; (ii) second, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of any and all outstanding fees, costs and expenses of and all other amounts due and payable to the Paying Agents, the Agent Bank, the Computation Agent, the Auditors, the Servicer, the Corporate Services Provider and the Transaction Bank, each under the Transaction Document(s) to which it is a party; (iii) third, in or towards satisfaction, pro rata and pari passu, of all amounts due and payable to each of the Swap Counterparties under the terms of the Swap Agreements (including any termination payment due and payable by the Issuer under the relevant Swap Agreement other than any Subordinated Termination Payments due and payable to any Swap Counterparty under the relevant Swap Agreement); (iv) fourth, in or towards satisfaction, pro rata and pari passu, of all amounts of interest due and payable on the Notes; (v) fifth, in or towards repayment to INPDAP of amounts which properly belong to INPDAP and which were erroneously transferred by INPDAP, in its capacity as Servicer, to the Issuer; (vi) sixth, in or towards repayment, pro rata and pari passu, of principal on the Notes until repayment in full of the Notes; (vii) seventh, in or towards satisfaction, pro rata and pari passu, of any Subordinated Termination Payments due and payable to any Swap Counterparty under the relevant Swap Agreement (and, for the avoidance of doubt, not already paid to the relevant Swap Counterparty pursuant to item (iii) above); (viii) eighth, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of all amounts due and payable to the Originator in respect of any Originator's Claims under the terms of the Receivables Purchase Agreement; and (ix) ninth, in or towards satisfaction of the Deferred Purchase Price due and payable to INPDAP under the terms of the Receivables Purchase Agreement. 18

19 Post-Event Priority At any time following delivery of an Issuer Acceleration Notice (without of Payments prejudice to the proviso below concerning the possibility for the Representative of the Noteholders to accumulate funds up to a certain amount) or, in the event that the Issuer opts for the early redemption of the Notes under Condition 7(d) (Optional redemption) or Condition 7(e) (Mandatory redemption in whole for taxation, legal or regulatory reasons), on the Interest Payment Date on which the Notes are to be redeemed early, all amounts received or recovered by or on behalf of the Issuer or the Representative of the Noteholders inrespect of the Claims, the Note Security and/or any of the other Transaction Documents will be applied by or on behalf of the Representative of the Noteholders in the following order (the "Post-Event Priority of Payments" and, together with the Pre-Event Priority of Payments, the "Priority of Payments") (after making payments of certain monies which properly belong to any Swap Counterparty in respect of any Excess Swap Collateral or Tax Credit (as defined in the relevant Swap Agreement) payable to such Swap Counterparty pursuant to the relevant Swap Agreement) but, in each case, only if and to the extent that payments of a higher priority have been made in full: (i) first, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of: (A) (B) (C) any and all outstanding taxes due and payable by the Issuer (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs); any and all outstanding fees, costs, liabilities and any other expenses to be paid in order to preserve the corporate existence of the Issuer, to maintain it in good standing, to comply with applicable legislation and to fulfil obligations to third parties (not being Other Issuer Creditors) incurred in the course of the Issuer's business in relation to this Securitisation Transaction (to the extent the Issuer is not already subject to any insolvency or insolvency-like proceedings); any and all outstanding fees, costs and expenses required to be paid in connection with the listing, deposit or ratings of the Notes, or any notice to be given to the Noteholders or the other parties to the Transaction Documents (to the extent the Issuer is not already subject to any insolvency or insolvencylike proceedings); (D) all amounts due and payable to each of the Joint Lead Managers under the terms of the Subscription Agreement; and (E) any and all outstanding fees, costs and expenses of, and all other amounts due and payable to, the Representative of the Noteholders or any appointee thereof; (ii) second, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of any and all outstanding fees, 19

20 costs and expenses of, and all other amounts due and payable to, the Paying Agents, the Agent Bank, the Auditors, the Computation Agent, the Servicer, the Corporate Services Provider and the Transaction Bank, each under the Transaction Document(s) to which it is a party; (iii) third, in or towards satisfaction, pro rata and pari passu, of all amounts due and payable to each of the Swap Counterparties under the terms of the Swap Agreements (including any termination payment due and payable by the Issuer under the relevant Swap Agreement other than any Subordinated Termination Payments due and payable to any Swap Counterparty under the relevant Swap Agreement); (iv) fourth, in or towards satisfaction, pro rata and pari passu, of all amounts due and payable in respect of interest accrued but unpaid on the Notes at such date; (v) fifth, in or towards repayment to INPDAP of amounts which properly belong to INPDAP and which were erroneously transferred by INPDAP, in its capacity as Servicer, to the Issuer; (vi) sixth, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of the Notes until redemption in full of the Notes; (vii) seventh, in or towards satisfaction, pro rata and pari passu, of any Subordinated Termination Payments due and payable to any Swap Connterparty under the relevant Swap Agreement (and, for the avoidance of doubt, not already paid to the relevant Swap Counterparty pursuant to item (iii) above); (viii) eighth, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of all amounts due and payable to the Originator in respect of any Originator's Claims under the terms of the Receivables Purchase Agreement; and (ix) ninth, in or towards satisfaction of the Deferred Purchase Price due and payable to INPDAP under the terms of the Receivables Purchase Agreement, provided however that if, following the delivery of an Issuer Acceleration Notice, the amount of the monies at any time available to the Issuer, or the Representative of the Noteholders for the payments above shall be less than five per cent. of the Principal Amount Outstanding of the Notes, the Representative of the Noteholders may invest such monies (or cause such monies to be invested) in some or one of the investments authorised pursuant to the Intercreditor Agreement. The Representative of the Noteholders may vary such investments (or cause such investments to be varied) and may accumulate such investments and the resulting income (or cause such investments and the resulting income to be accumulated) until the accumulations, together with any other funds for the time being under the control of the Representative of the Noteholders and available for such purpose, amount to at least five per cent. of the Principal Amount Outstanding 2O

21 of the Notes and then such accumulations the payments above. and funds shall be applied to make 6. Redemption of the Notes in other circumstances Optional Provided that no Issuer Acceleration Notice has been served, the Issuer may, redemption of the at its option, redeem the Notes (in whole but not in part) at their Principal Notes Amount Outstanding (plus any accrued but unpaid interest) in accordance with the payment order set out in the Post-Event Priority of Payments and, subject to the Issuer having sufficient funds to redeem all the Notes and to make all payments ranking in priority thereto, on any Interest Payment Date on which the Principal Amount Outstanding of the Notes is equal to, or less than, 10 per cent. of the Principal Amount Outstanding of the Notes as at the Issue Date, subject to the Issuer: (i) giving not more than 60 nor less than 30 days' written notice to the Representative of the Noteholders and the Noteholders, pursuant to Condition 17 (Notices), of its intention to redeem the Notes (in whole but not in part); and (ii) having provided to the Representative of the Noteholders a certificate signed by the sole director or the chairman of the board of directors of the Issuer, as the case may be, to the effect that it will have the funds on such Interest Payment Date to discharge all its obligations under the Notes and any obligations ranking in priority thereto. The Issuer is entitled, pursuant to the Intercreditor Agreement, to dispose of the Claims in order to finance the redemption of the Notes in the circumstances described above. Mandatory In the circumstances in which any of the following events (each, a redemption in "Mandatory Redemption Event") occurs: whole for taxation, legal or regulatory (i) by reason of a change in law or the interpretation or administration reasons thereof since the Issue Date, the patrimonio separato of the Issuer becomes subject to taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the Republic of Italy or any political sub-division thereof or any authority thereof or therein or any applicable taxing authority having jurisdiction, provided that (a) such taxes, duties, assessments or governmental charges have adversely affected the rating of the Notes by one or more of the Rating Agencies or (b) at least one Rating Agency has confirmed in writing that such taxes, duties, assessments or governmental charges will adversely affect the then current rating of the Notes; (ii) either the Issuer or any paying agent appointed in respect of the Notes or any custodian of the Notes is required (by reason of a change in law or the interpretation or administration thereof since the Issue Date) to deduct or withhold any amount (other than when such withholding or deduction is imposed on a payment to a Noteholder being an individual) in respect of the Notes, from any payment of principal or interest on such Interest Payment Date for or on account of any present or future taxes, duties, assessments or governmental 21

22 charges of whatever nature imposed, levied, collected, withheld or assessed by the Republic of Italy or any political sub-division thereof or any authority thereof or therein or any other applicable taxing authority having jurisdiction and provided that such deduction or withholding may not be avoided by appointing a replacement paying agent or custodian in respect of the Notes before the Interest Payment Date following the change in law or the interpretation or administration thereof; (iii) any amounts of interest payable on the Loans to the Issuer are required (by reason of a change in law or the interpretation or administration thereof since the Issue Date) to be deducted or withheld from the Issuer for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the Republic of Italy or any political sub-division thereof or any authority thereof or therein or any other applicable taxing authority having jurisdiction, provided that (a) such deduction or withholding has adversely affected the rating of the Notes by one or more of the Rating Agencies or (b) at least one Rating Agency has confirmed in writing that such deduction or withholding will adversely affect the then current rating of the Notes; (iv) any of the Swap Transactions is terminated following the occurrence of a Tax Event or a Tax Event Upon Merger (both as defined in the relevant Swap Agreement) provided that the Issuer does not, within 30 Business Days from such termination, enter into a replacement swap transaction (having substantially the same terms and conditions as the Swap Transaction which was terminated) with a replacement swap counterparty whose unsecured, unsubordinated and unguaranteed debt obligations are not rated below the Minimum Swap Counterparty Rating; or (v) it is or will become unlawful for the Issuer (by reason of a change in law or the interpretation or administration thereof since the Issue Date) to perform or comply with any of its material obligations under or in respect of the Notes or any of the Transaction Documents to which it is a party, the Issuer must redeem the Notes (in whole but not in part) at their Principal Amount Outstanding (plus any accrued but unpaid interest) in accordance with the payment order set out in the Post-Event Priority of Payments on the Interest Payment Date following any direction to the Issuer to redeem all of the Notes by or pursuant to an Extraordinary Resolution of the holders of the outstanding Notes, provided that (a) the Issuer has, prior to any such Extraordinary Resolution being proposed, delivered to the Representative of the Noteholders a legal opinion (which the Issuer hereby undertakes to request as soon as it becomes aware of the possible occurrence of any one of the Mandatory Redemption Events and which the Representative of the Noteholders is entitled to request on the Issuer's behalf), satisfactory to the Representative of the Noteholders, from a firm of lawyers in the relevant jurisdiction of international repute (approved in writing by the Representative of the Noteholders) opining on the change in law or the interpretation or the 22

23 7. Credit structure administration thereof and on the effect of the relevant Mandatory Redemption Event and (b) the Representative of the Noteholders or a third party selected for this purpose by the Representative of the Noteholders certifies in writing (based also on the information provided by the Computation Agent) that the Issuer will have sufficient funds to redeem the Notes and to make all payments ranking in priority thereto due to either (i) a firm offer (which is acceptable to the Representative of the Noteholders) received by the Issuer for the purchase of the Claims by any offeror or (ii) a finn offer (which is acceptable to the Representative of the Noteholders) received by the Issuer for any form of loan facility or financing to the Issuer other than the sale of the Claims and which is acceptable to the Representative of the Noteholders. The Issuer is entitled, pursuant to the Intercreditor Agreement, to dispose of the Claims in order to finance the redemption of the Notes in the circumstances described above. Collection Account Pursuant to a Ministerial Decree issued on 23rd December, 2003 by the MEF in conjunction with the Ministry of Labour and Social Welfare, funds standing to the credit of the Collection Account will accrue interest at a rate linked to the average interest rate of Italian Treasury Bills issued in the preceding six-month period. Hedging The Issuer has entered into the Swap Transactions with the Swap arrangement Counterparties in order to hedge against the potential interest rate exposure of the Issuer in relation to its floating rate interest obligations under the Notes. See "Credit Structure - The Swap Agreements", below. Each Swap Transaction is documented under a 1992 ISDA Master Agreement (Multicurrency - Cross Border) and the Schedule thereto and a confirmation, all governed by English law, between the Issuer, the Representative of the Noteholders and the relevant Swap Counterparty. 23

24 SPECIAL CONSIDERATIONS The following is a summary of certain aspects of the issue of the Notes of which prospective Noteholders should be aware. This summary is not intended to be exhaustive, and prospective Noteholders should also read the detailed information set out elsewhere in this document and the Transaction Documents and reach their own views prior to making any investment decision. Source of payments to Noteholders The Issuer's principal assets are the Claims. The Issuer will not, as at the Issue Date, have any significant assets, for the purposes of meeting its obligations under this Securitisation Transaction, other than the Claims, any amounts standing to the credit of the Accounts and its rights under the Transaction Documents to which it is a party. Consequently, there is no assurance that, over the life of the Notes or at the redemption date of the Notes (whether on the date when amortisation of the Notes is expected to begin in accordance with the Conditions, on the Final Maturity Date, on the Cancellation Date or upon redemption by acceleration of maturity upon the occurrence of an Event of Default (as defined below) or otherwise), there will be sufficient funds to enable the Issuer to pay interest on the Notes or to repay the Notes in full. The ability of the Issuer to meet its obligations in respect of the Notes will be dependent on the Issuer's full and timely receipt of: (i) payments under the Loans, directly or through the Servicer in accordance with the Servicing Agreement, as they fall due; (ii) any payments required to be made by each Swap Counterparty under the relevant Swap Agreement; and (iii) any other amounts required to be paid to the Issuer by the parties to the Transaction Documents pursuant to the terms of the Transaction Documents. The performance of such parties of their respective obligations under the relevant Transaction Documents (including the Originator) is dependent on the solvency of each relevant party. The Noteholders, and the Representative of the Noteholders on the Noteholders' behalf, will have recourse only to (i) the Claims, (ii) the rights that the Issuer has acquired against INPDAP and any third party under the Italian Law Transaction Documents and (iii) the assets charged pursuant to the English Deed of Charge. The Issuer and the Representative of the Noteholders will have no recourse to INPDAP (in the event that the Issuer suffers a shortfall of funds in respect of the Claims or otherwise) other than for breach of representations, warranties, undertakings or covenants given or undertaken by INPDAP under any of the Transaction Documents. If, upon default by one or more Obligors or other debtors under the Loans and after the exercise by the Servicer of all remedies provided for in the Transaction Documents in respect of such Loans, the Issuer does not receive the full amount due from those Obligors or other debtors, then Noteholders may receive by way of principal repayment an amount less than the face value of their Notes and the Issuer may be unable to pay in full interest due on the Notes. Liability under the Notes The Notes will be limited recourse obligations solely of the Issuer, limited to the Claims and any right that the Issuer has acquired against the Originator or any third party in the context of this Securitisation Transaction. In particular, the Notes will not be obligations or responsibilities of, or be guaranteed by, the Representative of the Noteholders, the Computation Agent, the Servicer, the Swap Counterparties, the Corporate Services Provider, the Stichting Corporate Services Provider, the Principal Paying Agent, the Italian Paying Agent, the Luxembourg Paying Agent, the Agent Bank, the Auditors, the Collection Account Bank, the Transaction Bank, INPDAP (in any capacity), the 24

25 Ministry of Economy and Finance ("MEF"), the Republic of Italy, the Joint Lead Managers, the quotaholders of the Issuer or any other person. None of such persons accepts any liability whatsoever in respect of any failure by the Issuer to make any payment of any amount due on the Notes. The Noteholders, represented by the Representative of the Noteholders, have accepted under the Transaction Documents and, by subscribing for the Notes, will accept that, if there are insufficient funds available to the Issuer to pay in full all principal and interest and other amounts due in respect of the Notes, they will not have further claims in respect of such unpaid amounts. Performance of the Portfolio The Portfolio is exclusively comprised of monetary claims arising from loans granted to public administrations of the Republic of Italy (see "The Portfolio", below). There can be no guarantee that the Obligors or other debtors will not default under the Loans or that they will continue to perform thereunder. It should be noted that adverse changes in economic conditions may affect the ability of the Obligors and of any other debtor, as applicable, to repay the Loans. The recovery of amounts overdue in respect of Loans will be affected by the length of enforcement proceedings in respect of the Portfolio, which in the Republic of Italy can take a considerable amount of time depending on the type of action required and where such action is taken. No independent investigation in relation to the Portfolio None of the Issuer, the Joint Lead Managers nor any other party to the Transaction Documents (other than INPDAP) has undertaken or will undertake any investigation, searches or other actions to verify the details of the Claims sold by INPDAP to the Issuer, nor has any of them undertaken, nor will any of them undertake, any investigations, searches or other actions to establish the creditworthiness of any Obligor or any other debtor thereunder. The Issuer will rely instead on the representations and warranties given by the Originator in the Receivables Purchase Agreement. The only remedies of the Issuer in respect of the occurrence of a breach of a representation or warranty which materially and adversely affects the value of a Claim will be the requirement that the Originator indemnifies the Issuer for the damage deriving therefrom to the extent required to do so under the Receivables Purchase Agreement (see "The Receivables Purchase Agreement", below). There can be no assurance that the Originator will have the financial resources to honour such obligations. Liquidity and credit risk The Issuer is subject to the risk of delay arising between the receipt of payments due from any debtor under the Loans and the scheduled Interest Payment Dates. The Issuer is also subject to the risk of, amongst other things, default in payment by the Obligors and any other debtor under the Loans and the failure by the Servicer to collect or recover sufficient funds in respect of the Claims (or to transfer such collections to the Issuer) in order to enable the Issuer to discharge its obligations in respect of all amounts payable under the Notes. Interest rate risk The Issuer expects to meet its obligations under the Notes primarily from Collections in respect of the Claims. Such Collections have no correlation to EURIBOR. To protect the Issuer from a situation where EURIBOR increases to the point where such Collections are no longer sufficient to cover the Issuer's obligations under the Notes, the Issuer has executed 3 interest rate swap transactions with the Swap Counterparties documented under the Swap Agreements. However, should any of the Swap Transactions be terminated for any reason, no assurance can be given that similar protection could be 25

26 obtained. Should any of the Swap Counterparties fail to provide the Issuer with all amounts owing to the Issuer (if any) on any payment date under the relevant Swap Agreement, or should any of the Swap Transactions be otherwise terminated, then the Issuer may have insufficient funds to make payments of principal and interest on the Notes. In the event of a withholding tax being imposed on payments required to be made under any of the Swap Agreements, which are due to be made by any one of the Swap Counterparties to the Issuer, subject to the terms of the relevant Swap Agreement, the relevant Swap Counterparty will be obliged to gross up such payments. Each of the Swap Counterparties will be entitled, under certain circumstances, to terminate any Swap Transaction for which (i) it is obliged to gross up payments following any withholding or deduction for or on account of any taxes or (ii) it receives a payment in respect of which an amount is required to be deducted or withheld for or on account of any taxes. See "Credit Structure -- The Swap Agreements", below. Noteholders' directions and resolutions in respect of early redemption of the Notes In a number of circumstances, the Notes may become subject to early redemption. Early redemption of the Notes as a result of some circumstances may be dependent upon receipt by the Representative of the Noteholders of a direction from, or resolution passed by, a certain majority of Noteholders. If the economic interest of a Noteholder represents a relatively small proportion of the majority and its individual vote is contrary to the majority vote, its direction or vote may be disenfranchised and, if a determination is made by certain of the Noteholders to redeem the Notes, such minority Noteholders may face early redemption of the Notes held by them. Limited enforcement rights The protection and exercise of the Noteholders' rights against the Issuer under the Notes and the enforcement of the Note Security is one of the duties of the Representative of the Noteholders. The Conditions limit the ability of individual Noteholders to commence proceedings against the Issuer by conferring on the Meeting of the Noteholders the power to determine the ability of any Noteholder to commence any such individual actions. Accordingly, individual Noteholders may not, without breaching the Conditions, be able to commence proceedings or take other individual remedies against the Issuer unless the Meeting of the Noteholders has approved such action in accordance with the provisions of the Rules of the Organisation of the Noteholders. Relationship between Noteholders and the Other Issuer Creditors The Intercreditor Agreement contains provisions requiring the Representative of the Noteholders to have regard to the interests of Noteholders as a whole and relieves the Representative of the Noteholders from responsibility for any consequence for individual Noteholders as a result of such Noteholders being domiciled or resident in, or otherwise connected in any way with, or subject to the jurisdiction of, a particular territory or taxing jurisdiction. Claims of creditors of the Issuer Without prejudice to the right of the Representative of the Noteholders to enforce the Note Security, the Conditions contain provisions stating, and each of the Other Issuer Creditors have undertaken, that no Noteholder or Other Issuer Creditor will petition or begin proceedings for a declaration of insolvency against the Issuer until one year and one day after the Notes have been paid in full. There can be no assurance that each and every Noteholder and Other Issuer Creditor will honour its contractual obligation not to petition or begin proceedings for a declaration of insolvency against the Issuer before one year has elapsed from full repayment of the Notes. In addition, under Italian law, any other creditor of the Issuer would be able to begin insolvency or winding-up proceedings against the Issuer in respect of any unpaid debt. Such creditors could arise, for example, by virtue of 26

27 unexpected expenses owed to third parties, including those additional creditors that the Issuer will have as a result of any Further Securitisation. In order to address this risk, the Priority of Payments contains provision for the payment of amounts to third parties. Similarly, monies to the credit of the Expenses Account may be used for the purpose of paying the ongoing fees, costs, expenses and taxes of the Issuer to third parties not being Other Issuer Creditors on any Business Day other than an Interest Payment Date. The Issuer is unlikely to have a large number of creditors unrelated to this Securitisation Transaction or any other securitisation transaction because the corporate object of the Issuer as contained in its statuto is limited and the Issuer has provided certain covenants in the Intercreditor Agreement which contain restrictions on the activities which the Issuer may carry out, with the result that the Issuer may only carry out limited transactions. No creditors other than the Representative of the Noteholders on behalf of the Noteholders, the Other Issuer Creditors and any third-party creditors having the right to claim for amounts due in connection with this Securitisation Transaction would have the right to claim in respect of the Claims, even in a bankruptcy of the Issuer. Notwithstanding the above, there can be no assurance that if any bankruptcy proceedings were to be commenced against the Issuer, the Issuer would be able to meet all of its obligations under the Notes. Suitabifity Structured securities, such as the Notes, are sophisticated instruments, which can involve a significant degree of risk. Prospective investors in the Notes should ensure that they understand the nature of the Notes and the extent of their exposure to the relevant risk. Such prospective investors should also ensure that they have sufficient knowledge, experience and access to professional advice to make their own legal, tax, accounting and financial evaluation of the merits and risks of investment in the Notes and that they consider the suitability of the Notes as an investment in light of their own circumstances and financial condition. Limited liquidity Although application has been made for the Notes to be listed on the Luxembourg Stock Exchange, there is currently no market for the Notes. While the Joint Lead Managers intend to make a market for the Notes, they are under no obligation to do so. The Notes have not been registered under the Securities Act (as defined below) and will be subject to significant restrictions on resale in the United States. There can be no assurance that a secondary market for any of the Notes will develop, or, if a secondary market does develop, that it will provide the holders of the Notes with liquidity of investments or that it will continue for the life of such Notes. Consequently, any purchaser of Notes must be prepared to hold such Notes until their final redemption or cancellation. Servicing of the Portfolio The Portfolio has always been serviced by INPDAP, previously as owner of the relevant Claims and, following the transfer of the Claims to the Issuer, as Servicer pursuant to the Servicing Agreement. Consequently, the net cash flows from the Portfolio may be affected by decisions made, actions taken and collection procedures adopted by the Servicer pursuant to the provisions of the Servicing Agreement. 27

28 Rights of set-off of the Obligors Any Obligor is entitled to exercise rights of set-off in respect of amounts due under any Loan against any amounts then payable by INPDAP to such Obligor which came into existence (were crediti esistenti) prior to the publication of the notice of the transfer to the Issuer of the Claims. The Loans were granted by INPDAP or by any one of the Former Social Security Institutes to finance certain specific projects of the relevant borrowers. According to the terms and conditions of the Loans, the borrowers can make drawdowns under the Loans, up to the total approved amount, on the basis of the project' s documented expenses. The amortisation plan of each Loan is calculated on the basis of the total approved amount of the relevant Loan, regardless of the amounts actually drawn down under the Loans. The Portfolio includes Loans which, as at the date the Receivables Purchase Agreement was signed, were not entirely drawn down (the "Partially-Undrawn Loans"). In this respect, INPDAP has represented and warranted in the Receivables Purchase Agreement that the aggregate amount payable by INPDAP to the Obligors under the Partially-Undrawn Loans may not exceed, at any time after the Issue Date, _24,247,082 plus interest accruing at a rate of 2 per cent. per annum from the date when the amortisation profile of the relevant Loan commenced and the day when the relevant undrawn portion is finally drawn down. The relevant Obligors are entitled to receive from INPDAP the undrawn portion of the Partially- Undrawn Loans in accordance with the relevant loan agreement. If INPDAP fails to disburse the amounts due to the Obligors under the relevant Partially-Undrawn Loans, the relevant Obligors will be entitled to set-off such amounts against the amounts payable by them to the Issuer under the relevant Loan. As a consequence of the Obligors exercising their right of set-off, the Issuer will receive an amount lower than the amount otherwise payable to it under the relevant Loans. Similarly, if for whatever reason (including, for instance, failure by the Obligors to request the drawdown) the undrawn portion of the Partially-Undrawn Loans is never disbursed by INPDAP to the relevant Obligor, the Issuer may receive an amount lower than the amount otherwise payable to it under the relevant Loans as a result of the amortisation plan being recalculated to take into that a certain portion of the relevant Partially-Undrawn Loans has never been actually drawn down. Pursuant to the Receivables Purchase Agreement, INPDAP has agreed to hold the Issuer indemnified in case the Issuer receives an amount lower than the amount otherwise payable to it under the relevant Partially-Undrawn Loans as a result of the occurrence of any one of the above mentioned events. In addition, the Originator has agreed to indemnify the Issuer in respect of any reduction in amounts received by the Issuer in respect of any Partially-Undrawn Loan as a result of the exercise by any Obligor of any other right of set-off. The risk of set-off is further mitigated by the fact that the Issuer has created a specific cash reserve, funded through the issue of the Notes, in an amount equal to g24,247,082 (the Cash Collateral) which will be used to augment the Issuer Available Funds if INPDAP fails to hold the Issuer indenmified as described above. Amortisation proffie of the Loans The Loans were extended through a procedure perfected with the issue by INPDAP of the so-called Determinazione Dirigenziale which contains the terms and conditions of the relevant Loan. The Determinazione Dirigenziale contains also the amortisation profile of the relevant Loan. Most of the Obligors have obtained a contribution by either the State or the relevant Region or the relevant Province for the repayment of the Loans. Such contributions consist, primarily, in annual payments owed by the State or the Region or the Province, as the case may be, to the Obligor over a period of time. Those Obligors which have obtained such contributions have assigned their right 28

29 under the contributions to INPDAP as a partial repayment of the relevant Loans. In respect of these Loans, the Determinazione Dirigenziale contains two amortisation profiles: one relative to the payments due by the Obligors (which will be due to the Issuer as a result of the transfer of the Claims to the Issuer) and one relative to the payments due under the contributions by the State or the Region or the Province, as the case may be (which will be due to INPDAP, as these claims have not been transferred to the Issuer). The contribution may be increased or reduced following an assessment (the so-called couaudo) of the project financed through the Loan. If the contribution is increased, the instalments payable by the Obligors to the Issuer will reduce accordingly and, pursuant to the Receivables Purchase Agreement, INPDAP will be required to indemnify the Issuer. Reduction in the interest rate under the Loans On 31st March, 1999, the Board of Directors of INPDAP passed a resolution ("Resolution No. 956/1999") to allow public entities (including the Obligors) to renegotiate the terms of the loans extended to them (including the Loans). In particular, INPDAP allowed those entities which had previously been granted a loan by INPDAP, or the Former Social Security Institutes (as defined below), to obtain an interest-rate reduction to 6 per cent. per annum, provided that the relevant borrower filed the request with INPDAP no later than 31st December, A considerable number of requests were rejected on the grounds that they had not been filed within the required time limit. On 9th June, 2003, the Extraordinary Commissioner of INPDAP passed a new resolution ("Resolution No. 21/2003") to reopen the terms of Resolution No. 956/1999. In particular, according to Resolution No. 21/2003, borrowers must submit a request by no later than 31st December, Once the request is processed by INPDAP and accepted, the relevant loan will accrue interest, semi-annually, at a rate equal to 6 per cent. per annum. In addition, if the same entity is a borrower under two or more loans, as a result of the interest-rate reduction, all such loans (including those loans which accrued interest at a rate lower than 6 per cent. per annum) will be transformed into a single one the tenor of which will not exceed the weighted average term of the original loans and accruing interest at a rate equal to 6 per cent. per annum. The reduction in the interest rate will be effective retroactively as of 1st January, In addition, in respect of those requests which had been filed pursuant to Resolution No. 1956/1999 but had been rejected on the grounds that the requests had been filed after the deadline, the interest-rate reduction will be effective retroactively as of the 1st January of the year immediately following the original filing. For an indication of those Obligors in respect of which a request for an interest-rate reduction was filed under Resolution No. 956/1999 but was rejected on the grounds that the request had not been filed within the required time limit, please see "'The Portfolio - Obligors whose application was filed under Resolution No. 956/1999", below. Pursuant to Resolution No. 21/2003, as a result of the retroactive effect of the reduction in the interest rate, those Obligors who will be granted the interest-rate reduction in respect of one or more Loans will be entitled to claim back any amount paid by them in excess above 6 per cent. after the effective date of such interest-rate reduction (the "Excess Amount"). Pursuant to the Receivables Purchase Agreement, to the extent that INPDAP, and not the Issuer, has received the excess above 6 per cent. after such effective date, INPDAP, and not the Issuer, will be liable to pay back to the Obligors any Excess Amount due to them. However, pursuant to Resolution No. 21/2003, each Obligor may set off the Excess Amount due to it against the instalments falling due under the relevant Loan provided that both the Excess Amount and the instalment falling due have accrued during the same year. Therefore, if an Excess Amount is due to an Obligor in respect of instalments relative to year 2003, the relevant Obligor may not set off such amount against the instalments falling due in respect of year

30 If INPDAP fails to disburse the Excess Amounts payable by it to the Obligors, the relevant Obligors will be entitled to set-off such amounts against the amounts payable by them to the Issuer under the relevant Loan. As a consequence of the Obligors exercising their right of set-off, the Issuer will receive an amount lower than the amount otherwise payable to it under the relevant Loans. Pursuant to the Receivables Purchase Agreement, INPDAP has agreed to hold the Issuer indemnified from such event. Due to the fact that, under Resolution No. 21/2003, requests for interest-rate reductions may be filed until 31st December, 2003, as at the date of this Offering Circular, the precise number of the Loans which will be subject to the interest-rate reduction pursuant to Resolution No. 21/2003 is unpredictable (see assumptions under "Expected Maturity and Average Life of the Notes and Assumptions", below). For an indication of those Obligors in respect of which a request for an interest-rate reduction was filed under Resolution No. 956/1999 but was rejected on the grounds that the request had not been filed within the required time limit, please see "The Portfolio - Obligors whose application was filed under Resolution No. 956/1999", below. However, such risk is mitigated by the fact that such interest-rate reduction is conditional upon: (a) the relevant Obligors paying an indemnity (either as lump sum or by way of an increase in the residual debt of the relevant Loan, at the Obligor's option) equal to six-month interest (at their respective original rate, provided that such rate was higher than six per cent. per annum) on their residual debt; and (b) the relevant Obligors paying any overdue amount due by them. Such overdue amounts may, at the Obligors' option, either increase the residual debt of the relevant Loan or be paid as a lump sum simultaneously with the interest-rate reduction. Pursuant to the Receivables Purchase Agreement, the amounts referred to in (a) and (b) above will be due to the Issuer. Yield and repayment considerations The yield to maturity of the Portfolio will depend, inter alia, on the amount and timing of repayment of principal on the Loans (including prepayments and proceeds arising on enforcement of a Loan). Consequently, the yield to maturity of the Notes may be adversely affected by a higher or lower than anticipated rate of prepayments on the Loans. Obligors are entitled to prepay the Loans at any time. The rate of prepayment of the Loans cannot be predicted and is influenced by a wide variety of factors, including prevailing loan market interest rates and margins offered by the banking system, the availability of alternative financing and local and regional economic conditions. Therefore, no assurance can be given as to the level of prepayments that the Portfolio will experience. The stream of principal payments received by a Noteholder may not be uniform or consistent. No assurance can be given as to the yield to maturity which will be experienced by a holder of any Notes. See further "Expected Maturity and Average Life of the Notes and Assumptions", below. There can be no assurance that the monies available to the Issuer in all of these circumstances would be sufficient to ensure that the Issuer has the necessary funds to meet its payment obligations in respect of the Notes in whole or in part. Historical, financial and other information The historical, financial and other information set out in the sections headed "The Credit and Collection Policies", "The Originator" and "The Portfolio", including information in respect of 30

31 collection rates, represent the historical experience of INPDAP. There can be no assurance that the future experience and performance of INPDAP, as Servicer of the Portfolio, will be similar to the experience shown in this Offering Circular. Administration and reliance on third parties The ability of the Issuer to make payments in respect of the Notes will depend upon the due performance by the parties to the Transaction Documents of their respective various obligations thereunder. In particular, without limitation, the punctual payment of amounts due on the Notes will depend on the ability of the Servicer to service the Portfolio and the continued performance by each of the Swap Counterparties of their respective obligations under the relevant Swap Agreement. In each case, the performance by the Issuer of its obligations under the Notes is also dependent on the solvency of, inter alios, INPDAP and each of the Swap Counterparties. Furthermore, whilst INPDAP is currently an ente pubblico previdenziale and, therefore, may not be the subject of any insolvency proceedings under Italian law, there can be no assurance that INPDAP will continue to be an ente pubblico previdenziale. Any change in its legal status could allow it to become subject to insolvency proceedings and could affect its ability to exercise certain of its rights and powers currently retained by it in accordance with the Transaction Documents. There are certain elements that reduce the risk to the Noteholders that INPDAP may be dissolved. In this respect, INPDAP is a fundamental instrument of social security policy for the Italian State and, therefore, the liquidation of INPDAP could affect the constitutional requirement to provide social security services as contemplated by article 38 of the Italian Constitution. Consequently, should INPDAP cease its activities or be liquidated according to the procedure set forth in law No. 1404, the Italian State would have to act directly to fulfil those aims or transfer the duties and functions previously performed by INPDAP to another public entity. In the event of the termination of the appointment of INPDAP as Servicer under the Servicing Agreement, it would be necessary for the Issuer to appoint a substitute servicer (acceptable to the Representative of the Noteholders). Such substitute servicer would be required to assume responsibility for the provisions of the services required to be performed under the Servicing Agreement for the Loans. The ability of a substitute servicer to perform fully the required services would depend, inter alia, on the information, software and records available at the time of the relevant appointment. There can be no assurance that a substitute servicer will be found or that any substitute servicer will be willing to accept such appointment or that a substitute servicer will be able to assume and/or perform the duties of the Servicer pursuant to the Servicing Agreement. In such circumstances, the Issuer could attempt to sell all, or part of, the Claims, but there is no assurance that the amount received from such a sale would be sufficient to repay in full all amounts due to the Noteholders. The Representative of the Noteholders has no obligation to assume the role or responsibilities of the Servicer or to appoint a substitute servicer. Immunity from attachment Under article 830 of the Italian Civil Code, those assets owned by INPDAP but destined to public use may not be seized or attached by its creditors, including the Issuer (or the Representative of the Noteholders on its behalf) in respect of any amount due by INPDAP to the Issuer under any Transaction Document. Projections, forecasts and estimates Forward-looking statements including estimates, any other projections, forecasts and estimates in this Offering Circular are necessarily speculative and subjective in nature and some or all of the assumptions underlying the projections may not materialise or may vary significantly from actual results. 31

32 Such statements are subject to risks and uncertainties that could cause the actual results to differ materially from those expressed or implied by such forward-looking statements. Prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Offering Circular and are based on assumptions that may prove to be inaccurate. No-one undertakes any obligation to update or revise any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this Offering Circular. Substitute tax under the Notes According to Article 15, interest and other proceeds (including the difference between the redemption amount and the issue price) in respect of the Notes are subject to the tax treatment provided by article 2, of legislative decree No. 239 of 1st April, 1996, as subsequently amended ("Decree 239"). Where the Italian resident Noteholder is (i) an individual not engaged in an entrepreneurial activity to which the Notes are connected (unless he has opted for the application of the "risparmio gestito" regime - see under "Taxation in the Republic of Italy - Capital gains tax", below); (ii) a noncommercial partnership; (iii) a non-commercial private or public institution; or (iv) an investor exempt from Italian corporate income taxation, interest, premium and other income relating to the Notes, accrued during the relevant holding period, are subject to a tax withheld at source, referred to as imposta sostitutiva, levied at the rate of 12.5 per cent. If the Noteholders described under (i) to (iii) above are engaged in an entrepreneurial activity to which the Notes are connected, the imposta sostitutiva applies as a provisional tax. No Italian imposta sostitutiva is applied on payments to a non-italian resident Noteholder of interest or premium relating to the Notes provided that, if the Notes are held in Italy, the non-italian resident Noteholder declares itself to be a non-italian resident according to Italian tax regulations if requested. In the event that any substitutive taxes are imposed in respect of payments to Noteholders of amounts due pursuant to the Notes, the Issuer will not be obliged to gross up or otherwise compensate the Noteholders for the lesser amounts the Noteholders will receive as a result of the imposition of such substitutive taxes. Proposed European withholding tax directive On 3rd June, 2003, the European Council of Economics and Finance Ministers agreed on proposals under which Member States will be required to provide to the tax authorities of another Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to an individual resident in that other Member State, except that, for a transitional period, Belgium, Luxembourg and Austria will instead be required to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). The proposals are anticipated to take effect from 1st January, Until the final text of the directive is implemented and the details of any similar withholding systems in the relevant non-member State countries have been finalised, it is not certain what effect, if any, the adoption of the directive or similar systems would have on the payment of principal or interest in respect of the Notes. Once the proposals are in effect, payments of interest on the Notes which are made or collected through Belgium, Luxembourg, Austria or any other relevant country may be subject to withholding tax which would prevent holders of the Notes from receiving interest on their Notes in full. The Conditions provide that, if the proposals are brought into force, a paying agent will be maintained by the Issuer in a Member State that is not required to withhold tax pursuant to the directive. 32

33 Fixed and floating security Security given under the English law governed transaction documents, although expressed as fixed security, may take effect as a floating charge and thus on enforcement certain preferential creditors may rank ahead of the Issuer Secured Creditors. Political and economic developments in the Republic of Italy and in the European Union The financial condition, results of operations and prospects of the Republic of Italy and companies incorporated in the Republic of Italy may be adversely affected by events outside their control, namely European law generally, any conflicts in the region or taxation and other political, economic or social developments in or affecting the Republic of Italy generally. Change of law The structure of the transaction and, inter alia, the issue of the Notes and the rating assigned to the Notes are based on Italian and English law, tax and administrative practice in effect at the date hereof, and having due regard to the expected tax treatment of all relevant entities under such law and practice. No assurance can be given as to any possible change to Italian or English law, tax or administrative practice after the Issue Date. The Issuer believes that the risks described above are the principal risks inherent in the transaction for holders of the Notes but the inability of the Issuer to pay interest or repay principal on the Notes may occur for other reasons and the Issuer does not represent that the above statements of the risks of holding the Notes are exhaustive. While the various structural elements described in this Offering Circular are intended to lessen some of these risks for holders of the Notes, there can he no assurance that these measures will he sufficient or effective to ensure payment to the holders of the Notes of interest or principal on such Notes on a timely basis or at all. 33

34 CREDIT STRUCTURE Ratings of the Notes It is a condition precedent to the issue of the Notes that the Notes will be rated "AAA" by S&P. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by S&P. The structure of the credit arrangements may be summarised as follows. Cash flow through the Accounts In connection with this Securitisation Transaction, the Issuer has opened the following accounts: (a) the Payment Account with the Transaction Bank pursuant to the terms of the Agency and Accounts Agreement; (b) the Expenses Account with the Transaction Bank pursuant to the terms of the Agency and Accounts Agreement; and (c) the Collection Account with the Collection Account Bank, collectively, the "Accounts". The Issuer will establish a cash reserve, funded through the issue of the Notes, in a sub-account of the Collection Account (the "Cash Collateral Sub-Account"). "Cash Collateral" means the monies standing to the credit of the Cash Collateral Sub-Account at any given time. On the Issue Date, the Issuer will credit to the Cash Collateral Sub-Account c24,247,082, being equal to the undrawn portion of the Partially-Undrawn Loans as at 5th December, The Cash Collateral will be used to augment the Issuer Available Funds if a Set-off Event occurs and INPDAP fails to indemnify the Issuer pursuant to the Receivables Purchase Agreement. In this respect, a "Set-off Event" will have occurred if: (a) (b) following a failure by INPDAP to disburse the amounts due to the Obligors under the relevant Partially-Undrawn Loans, the relevant Obligors exercise their right of set-off against the amounts payable by them to the Issuer under the relevant Loan, or for whatever reason (including, for instance, failure by the Obligors to request the drawdown) the undrawn portion of the Partially-Undrawn Loans is never disbursed by INPDAP to the relevant Obligor and the amortisation plan of the relevant Partially-Undrawn Loans is reduced accordingly. Pursuant to the Receivables Purchase Agreement, on a six-monthly, basis INPDAP will notify to the Issuer and the Computation Agent (i) the amounts disbursed to the Obligors under the Partially- Undrawn Loans during the immediately preceding six-month period and (ii) the amounts disbursed to the Issuer following the occurrence of a Set-off Event pursuant to the Receivables Purchase Agreement, in each case providing evidence thereof. Upon receipt of satisfactory evidence by the Issuer, the Computation Agent will instruct the Collection Account Bank to transfer to INPDAP from the Collection Account an amount equal to such disbursements. Pursuant to the Agency and Accounts Agreement, the Computation Agent will record such payment as a debit entry of the Cash Collateral Sub-Account and the Cash Collateral will reduce accordingly. Any payment due by the 34

35 Issuer to INPDAP in respect of disbursements made by INPDAP under the Partially-Undrawn Loans may be made on any Business Day and are not subject to the order of priority set out in Condition 3 (Status, ranking and priority). In addition, in 2001 the Issuer also opened with Banca Nazionale del Lavoro S.p.A. a eurodenominated deposit account into which the Issuer's equity capital of gl0,000 was deposited and will be required to remain deposited for as long as any Notes are outstanding (the "Equity Capital Account"). Collections in respect of the Loans are initially paid by the Obligors (or any other relevant debtor thereunder) to INPDAP, in its capacity as Servicer of the Portfolio. Up to the Business Day immediately preceding each Interest Payment Date, the Computation Agent will instruct the Collection Account Bank to transfer to the Payment Account such monies standing to the credit of the Collection Account as are to be used on such Interest Payment Date to make payments to the Noteholders and to third-party creditors of the Issuer. Pursuant to a Ministerial Decree issued on 23rd December, 2003 by the MEF in conjunction with the Ministry of Labour and Social Welfare, funds standing to the credit of the Collection Account will accrue interest at a rate linked to the average interest rate of Italian Treasury Bills issued in the preceding six-month period. Note Security The Notes will be secured by the Note Security. See "Transaction of the Notes", above. Summary Information - Summary The Swap Agreements On the Signing Date, the Issuer has entered into: (i) an interest rate swap transaction (the "SC1 Swap Transaction") with Citibank, N.A., London Branch and the Representative of the Noteholders; (ii) an interest rate swap transaction (the "SC2 Swap Transaction") with Credit Suisse First Boston International and the Representative of the Noteholders; and (iii) an interest rate swap transaction (the "SC3 Swap Transaction" and, together with the SC1 Swap Transaction and the SC2 Swap Transaction, the "Swap Transactions" and "Swap Transaction" means any one of these) with UniCredito Italiano S.p.A. (Citibank, N.A., London Branch together with Credit Suisse First Boston International and UniCredito Italiano S.p.A., the "Swap Counterparties") and the Representative of the Noteholders, in order to hedge the potential interest rate exposure of the Issuer in relation to its floating rate interest obligations under the Notes. The SC1 Swap Transaction is documented under the 1992 ISDA Master Agreement (Multicurrency- Cross Border) and the Schedule thereto, as published by the International Swap & Derivatives Association, Inc. (the "1992 ISDA Master Agreement") and one confirmation, each of which is governed by English law, entered into between the Issuer, the Representative of the Noteholders and Citibank, N.A., London Branch (the "SC1 Swap Agreement"). The SC2 Swap Transaction is documented under the 1992 ISDA Master Agreement and one confirmation, each of which is governed by English law, entered into between the Issuer, the 35

36 Representative of the Noteholders and Credit Suisse First Boston International (the "SC2 Swap Agreement"). The SC3 Swap Transaction is documented under the 1992 ISDA Master Agreement and one confirmation, each of which is governed by English law, entered into between the Issuer, the Representative of the Noteholders and UniCredito Italiano S.p.A. (the "SC3 Swap Agreement" and together with the SC1 Swap Agreement and the SC2 Swap Agreement, the "Swap Agreements" and "Swap Agreement" means any one of these). Under each of the Swap Agreements, each of the Swap Counterparties will pay to the Issuer an amount denominated in euros calculated by reference to a floating rate and the Issuer will pay to each of the Swap Counterparties an amount denominated in euros calculated by reference to a fixed rate per annum. Where the payment is due to be made by the Swap Counterparties, the Swap Counterparties will pay the Issuer two Business Days prior to the relevant Interest Payment Date; where the payment is due to be made by the Issuer, the Issuer will pay the Swap Counterparties on the relevant Interest Payment Date. If withholding taxes are imposed on payments made by the Issuer under a Swap Agreement, the Issuer will not be obliged to gross up such payments. If withholding taxes are imposed on payments made by a Swap Counterparty under the relevant Swap Agreement, subject to the terms of the relevant Swap Agreement, the Swap Counterparty shall be obliged to gross up such payments. Each of the Swap Counterparties will be entitled, under certain circumstances, to terminate any Swap Transaction for which (i) it is obliged to gross up payments following any withholding or deduction for or on account of any taxes or (ii) it receives a payment in respect of which an amount is required to be deducted or withheld for or on account of any taxes. The Swap Transactions will contain certain limited termination events and events of default which will entitle either party to terminate the relevant Swap Transaction. In particular, if at any time the ratings of the short-term, unsecured, unsubordinated and unguaranteed debt obligations of the relevant Swap Counterparty fall below "FI" by Fitch or "A-I" by S&P (together the "Minimum Swap Counterparty Rating") and the other conditions indicated in the relevant Swap Agreement are met, the relevant Swap Counterparty will be required, within the time period specified in the relevant Swap Agreement, either: (a) to transfer all of its rights and obligations with respect to such Swap Agreement to an appropriately rated entity; or (b) to arrange for an appropriately rated entity to become co-obligor in respect of the obligations of the relevant Swap Counterparty under its Swap Agreement; or (c) to put in place an appropriate mark-to-market collateral arrangement (which may be based on the credit support documentation published by ISDA or otherwise) or deliver collateral under an existing collateral arrangement in such amount as is set out in the relevant Swap Agreement (and which is acceptable to each of the Rating Agencies); or (d) to take such other action as may be agreed with the relevant Rating Agency. If the relevant Swap Counterparty does not take any of the measures described in (a), (b), (c) or (d) above, then the relevant Swap Transaction may be terminated. Under the above, a "Rating Event" will have occurred to the relevant Swap Counterparty if (a) the credit rating of the relevant Swap Counterparty has been downgraded below the Minimum Swap Counterparty Rating, (b) as a result of such downgrade, the then current rating of the Notes may in the 36

37 reasonable opinion of the relevant Rating Agency be downgraded or placed under review, or on credit watch (as the case may be) for possible downgrade and (c) the relevant Swap Counterparty has failed to successfully implement one of the options available to it pursuant to the relevant Swap Agreement within the time period specified in the relevant Swap Agreement in the case of a downgrade of its credit rating below the Minimum Swap Counterparty Rating. If any of the Swap Transactions are terminated for any reason, the relevant Swap Counterparty or the Issuer may be required to pay an amount to the other party as a result of the termination. The Issuer will make any termination payment in accordance with the applicable Priority of Payments. Accordingly, (i) any termination payment which is not a Subordinated Termination Payment, will be made in accordance with item (iii) of the Pre-Event Priority of Payments, or, as applicable, item (iii) of the Post-Event Priority of Payments; and (ii) any termination payment which is a Subordinated Termination Payment, will be made in accordance with item (vii) of the Pre-Event Priority of Payments, or, as applicable, item (vii) of the Post-Event Priority of Payments. "Subordinated Termination Payment" means, upon the occurrence of an early termination of a Swap Transaction, the termination payment payable (if any) by the Issuer to the relevant Swap Counterparty, provided that the early termination of the relevant Swap Transaction is due to: (a) the occurrence of an Event of Default (as defined in the relevant Swap Agreement and which, for the avoidance of doubt, is not the same as an Event of Default under the Notes) in relation to which the relevant Swap Counterparty is the Defaulting Party (as defined in the relevant Swap Agreement); or (b) the occurrence of a Rating Event in respect of the relevant Swap Counterparty. Any amount payable by the Issuer to any one of the Swap Counterparties in respect of (i) any Tax Credit (as defined in the Swap Agreements) realised by the Issuer under the relevant Swap Agreement or (ii) any Excess Swap Collateral (as defined in the Conditions) will be paid by the Issuer on the relevant due date and outside of the applicable Priority of Payments. The amounts due by the Issuer under (i) above will be paid out of the cash realised by the Issuer as a result of the Tax Credit. The amounts due by the Issuer under (ii) above will be paid out of the collateral released in accordance with the relevant Swap Agreement. 37

38 THE PORTFOLIO Introduction The Loans, from which the Claims arise, have been granted by INPDAP and certain Former Social Security Institutes (as defined below) subsequently merged into INPDAP (see "The Originator", below) to public administrations of the Republic of Italy (namely, Italian municipalities, provinces, regions and mountain communities) for the financing of specific projects. The Loans were granted by INPDAP until 1998 as a financial investment of certain liquid funds deriving from the core activity of INPDAP of collecting social security contributions from active employees, and providing pension treatment. Such investments were made pursuant to specific laws establishing the type of assets INPDAP was allowed to invest in, including treasury bonds, shares, annuities issued by the public sector to pay for certain investments, mortgage loans to cooperatives aimed at the construction of housing for members, etc. The Claims (which the Issuer has purchased from the Originator pursuant to the Receivables Purchase Agreement) include: (a) the residual debt under each Loan as at the Valuation Date, including, in respect of the Partially-Undrawn Loans (as defined below), the debt relative to the undrawn portion; (b) the interest and any other amount (e.g. prepayment fees and indenmities) accruing on the Loans, but excluding: (i) the instalment falling due in respect of each Loan in December 2003 according to the original amortisation plan; and (ii) any amounts due to INPDAP under the contributions (if any) granted to the relevant Obligor and assigned by the latter to INPDAP to guarantee the repayment of the relevant Loan; (c) (d) any overdue amount on the Loans; and any amount that will be due under the guarantees and other rights ancillary to the Loans. The amortisation plan of each Loan is calculated on the basis of the total approved amount of the relevant Loan, regardless of the amounts actually drawn down under the Loans. The Portfolio includes Loans which, as at the date hereof, have not entirely drawn down (the "Partially-Undrawn Loans"). The aggregate amount payable by INPDAP to the Obligors under the Partially-Undrawn Loans may not exceed, at any time after the Issue Date, _24,247,082 plus interest accruing at a rate of 2 per cent. per annum from the date when the amortisation profile of the relevant Loan commenced and the day when the relevant undrawn portion is finally drawn down. Characteristics of the Portfolio The Originator has represented and warranted in the Receivables Purchase Agreement that the Claims met the Criteria as at the Signing Date. For a description of the Criteria (as defined below), see "The Receivables Purchase Agreement", below. 38

39 Each Loan has the following characteristics: (a) Currency Each Loan is denominated in euro. (b) Interest rate Each Loan is a fixed-rate loan. (c) Payment Repayment in respect of each Loan is calculated on an annual basis and is paid by equal bimonthly or semiannual instalments. (d) Maturity Each Loan is due to be repaid on or before 31st December, The maximum original tenor under the Loans is either 10 or 15 years (except that, with regard to the Loans granted before 1992, the maximum original tenor can be 20 years) per cent. of the Portfolio by Current Outstanding Principal as of 31st December, 2003 matures in per cent. of the Portfolio by Current Outstanding Principal as of 31st December, 2003 matures in per cent. of the Portfolio by Current Outstanding Principal as of 31st December, 2003 matures in (e) Voluntary prepayment Obligors under each Loan are entitled to prepay the relevant Loan paying a prepayment fee equal to one per cent. of the residual debt. Loans to local entities and payment delegation Loans granted to municipalities, provinces and mountain communities (comunitgt montane) are guaranteed by way of a payment delegation (delegazione di pagamento). According to the article 206 of Legislative Decree No. 267 of 18th August, 2000, pursuant to the payment delegation, the treasurer bank of the relevant Obligor is ordered to make payment of each instalment falling due, using sums deriving from the revenues set out in the first three (with regard to municipalities and provinces) or the first two (with regard to mountain communities) items of its annual budget. Such income sources account for the majority of the Obligors' annual revenues and include: 1) tax collections; 2) payments received from the State, regions and other public entities; and 3) recurrent non-tax receipts of Obligors. Payment delegations on the above income streams are notified by the Obligors to their respective treasurer banks upon execution of the Loan and constitute a writ of execution (titolo esecutivo) on such funds for the payment of the instalments under the Loan. Upon notification of the payment 39

40 delegation, the treasurer bank shall immediately procure for the payment of instalments under the Loan on their due date. If the treasurer bank fails to make payments on the due date, it will be responsible to pay default interest on such payments. Amounts destined to pay instalments expiring during each six-month period, in respect of Loans which are guaranteed by way of a payment delegation, may not be subject to enforcement by third-party creditors of local entities. In addition, pursuant to article 204 of Legislative Decree No. 267 of 18th August, 2000, with regard to loans to municipalities, provinces and mountain communities, the yearly amount of interest on the new loan together with the yearly amounts due on existing bonds, loans and guarantees (less public contributions on interest) shall not exceed 25 per cent of the revenue relating to the first three budget headings (i.e. tax revenue, transfer and contributions from State and Region and extra-tax revenue) of the financial report of the year preceding the one in which the new loan should be entered into. Reduction in the interest rate under the Loans On 31st March, 1999, the Board of Directors of INPDAP passed a resolution ("Resolution No. 956/1999") to allow, inter alia, the Obligors to renegotiate the terms of the relevant Loans. In particular, INPDAP allowed the Obligors to obtain an interest-rate reduction to 6 per cent. per annum, provided that the relevant Obligor filed the request with INPDAP no later than 31st December, A considerable number of requests were rejected on the grounds that they had not been filed within the required time limit. On 9th June, 2003, the Extraordinary Commissioner of INPDAP passed a new resolution ("Resolution No. 21/2003") to reopen the terms of Resolution No. 956/1999. On 7th July 2003, INPDAP issued a circular (Circolare No. 19) to inform potential applicants of the content of Resolution No. 21/2003. In particular, according to Resolution No. 21/2003, those Obligors willing to obtain a reduction in the interest rate must submit a request by no later than 31st December, Once the request is processed by INPDAP and accepted, the Loan will accrue interest, semi-annually, at a rate equal to 6 per cent. per annum. In addition, if the same entity is an Obligor under two or more Loans, as a result of the interest-rate reduction, all such Loans (including those Loans which accrued interest at a rate lower than 6 per cent. per annum) will be transformed into a single one the tenor of which will not exceed the weighted average term of the original Loans and accruing interest at a rate equal to 6 per cent. per annum. The reduction in the interest rate will be effective retroactively as of 1st January, In addition, in respect of those requests which had been filed pursuant to Resolution No. 956/1999 but had been rejected on the grounds that the requests had been filed after the deadline, the interest-rate reduction will be effective retroactively as of the 1st January of the year immediately following the original filing. For an indication of those Obligors in respect of which a request for an interest-rate reduction was filed under Resolution No. 956/1999 but was rejected on the grounds that the request had not been filed within the required time limit, please see "The Portfolio - Obligors whose application was filed under Resolution No. 956/1999", below. Pursuant to Resolution No. 21/2003, as a result of the retroactive effect of the reduction in the interest rate, those Obligors who will be granted the interest-rate reduction in respect of one or more Loans will be entitled to claim back any amount paid by them in excess above 6 per cent. after the effective date of such interest-rate reduction (the "Excess Amount"). Pursuant to the Receivables Purchase Agreement, to the extent that INPDAP, and not the Issuer, has received the excess above 6 per cent. after such effective date, INPDAP, and not the Issuer, will be liable to pay back to the Obligors any Excess Amount due to them. However, pursuant to Resolution No. 21/2003, each Obligor may set off the Excess Amount due to it against the instalments falling due under the relevant Loan provided that both the Excess Amount and the instalment falling due have accrued during the same year. Therefore, 40

41 if an Excess Amount is due to an Obligor in respect of instalments relative to year 2003, the relevant Obligor may not set off such amount against the instalments falling due in respect of year If INPDAP fails to disburse the Excess Amounts payable by it to the Obligors, the relevant Obligors will be entitled to set-off such amounts against the amounts payable by them to the Issuer under the relevant Loan. Due to the fact that, under Resolution No. 21/2003, requests for interest-rate reductions may be filed until 31st December, 2003, as at the date of this Offering Circular, the precise number of the Loans which will be subject to the interest-rate reduction pursuant to Resolution No. 21/2003 is unpredictable (see assumptions under "Expected Maturity and Average Life of the Notes and Assumptions", below evidencing that, for the purpose of this Securitisation Transaction, it has been assumed that all Obligors who have an economic incentive in requesting the interest-rate reduction in respect of the relevant Loans in accordance with Resolution No. 21/2003 will make such request, and that those Obligors, in respect of which a request for an interest-rate reduction was filed under Resolution No. 956/1999 but was rejected on the grounds that the request had not been filed within the required time limit, will apply for an interest-rate reduction of their loans at the relevant retroactive effective date. For an indication of those Obligors, please see "The Portfolio - Obligors whose application was filed under Resolution No. 956/1999", below.) Pursuant to Resolution No. 21/2003, the interest-rate reduction is conditional upon: (a) the relevant Obligors paying an indemnity (either as lump sum or by way of an increase in the residual debt of the relevant Loan, at the Obligor' s option) equal to six-month interest (at their respective original rate, provided that such rate was higher than six per cent. per annum) on their residual debt; and (b) the relevant Obligors paying any overdue amount due by them. Such overdue amounts may, at the Obligors' option, either increase the residual debt of the relevant Loan or be paid as a lump sum simultaneously with the interest-rate reduction. Pursuant to the Receivables Purchase Agreement, the amounts referred to in (a) and (b) above will be due to the Issuer. The Portfolio The following tables set out certain statistical information as at 1st January, 2004 (the outstanding principal shown in the tables is equal to the aggregate principal instalments scheduled to be paid after 1st January, 2004). The tables in this section are derived from information provided by the Originator in connection with the purchase of the Claims by the Issuer on the Issue Date. The information in the following tables reflects the position as at the 1st January, 2004 and were selected as of 5th December, The characteristics of the Portfolio as at the Issue Date may vary from those set out in the tables as a result, inter alia, of prepayment of the Loans included in the Portfolio prior to the Issue Date. All amounts are expressed in euro. All the tables in this section do not take into account the reopening of the concession given to the Obligors to reduce the interest rate applicable to the Loans (please see "Reduction in the interest rate under the Loans" above, for details). 41

42 Number ofcontracts 5,794 Number ofobligors 2,173 TotalOutstanding Principal 556,003,476 Average Maximum Minimum CurrentOutstandingPrincipal(byloan) 95,962 21,434, CurrentOutstandingPrincipal(byObligor) 255,869 21,434, Table 1 Breakdown of the Portfolio by Type of Obligor Type of Obligor No. of % Contracts No. of Obligors Current Outstanding % Outstanding Contracts Principal Principal Comuni 5, , ,626, Provincie ,761, Regione ,132, Comunit_Montane ,483, Total: 5, , ,003, Table 2 Breakdown of the Portfolio by Obligor's Current Outstanding Principal Current Outstanding Principal No. of % Contracts No. Of Obligors Current % Contracts Outstanding Outstanding Principal Principal <=25, ,166, ,001-50, ,908, , , ,593, , ,000 1, ,554, , ,000 1, ,770, ,001-1,000, ,866, ,000,001-2,500, ,756, ,500,001-5,000, ,167, ,000,001-10,000, ,832, ,000,001 >= ,386, Total: 5, , ,003, Average 255,869 42

43 Table 3 Breakdown of the Portfolio by Frequency of Payment Frequency No. of % Contracts Current Outstanding % Outstanding Average Current Contracts Principal Principal Outstanding Semi-annually ,082, ,357 Bimonthly 5, ,920, ,758 Total: 5, ,003, ,962 Table 4 Breakdown of the Portfolio by Interest Rate Range Current Interest Rate Range(%) No. of % Contract Outstanding % Outstanding Contracts Principal Principal <= ,603, ,661, ,005, ,916, ,729, , ,458, ,428, , ,873, >= , Total: 5, ,003, Weighted average interest rate 8.0% 43

44 Table 5 Breakdown of the Portfolio by Region Region No. of %Contracts No. Of Current Outstanding % Outstanding Contracts Obligors Principal Principal Lombardia 1, ,159, Veneto ,496, Toscana ,289, Lazio ,577, Campania ,906, EmiliaRomagna ,163, Piemonte ,951, Calabria ,071, Marche ,834, Liguria ,617, Umbria ,004, Puglia ,080, FriuliVeneziaGiulia ,649, Abruzzo ,146, Sardegna ,757, Sicilia ,630, Basilicata ,358, TrentinoAltoAdige ,315, Molise ,993, Total: 5, , ,1103, No. Of No Of Current Outstanding %Outstanding Region Contracts % Contracts Obligors Principal Principal North 4, , ,642, Centre ,313, South ,047, Total: 5, , ,003, Northern Regions are Veneto, Lombardia, Emilia Romagna, Trentino Alto Adige, Piemonte, Liguria, Valle d'aosta, Friuli Venezia Giulia and Toscana. Central Regions are Marche, Umbria, Lazio, Abruzzo, Molise and Sardegna. Southern Regions are Campania, Calabria, Basilicata, Puglia and Sicilia. 44

45 Table 6 Top 20 Obligors by Current Outstanding Principal Obligor No. of % Contracts Current Outstanding % Current Contracts Principal Outstanding Comune di Napoli ,434, Comune di Milano ,948, ComunediRoma ,434, Amministrazione provinciale di Napoli ,569, Amministrazione provinciale di Pavia 2 0 9,438, RegionePugliaconsedein Bari ,132, Comunedi Magenta ,886, ComunediGenova 2 0 5,658,441 1 Amministrazioneprovincialedi Viterbo ,615,553 1 AmministrazioneprovincialediVarese 2 0 5,574,890 1 Amministrazioneprovincialedi Catanzaro ,526,809 1 Comunedi Montecatini Terme 2 0 3,968, Amministrazioneprovincialedi Cagliari 1 0 3,721, Comunedi Abbiategrasso ,509, Comunedi Civitavecchia 2 0 3,495, ComunediAcireale 2 0 2,890, Amministrazioneprovincialedi Perugia 1 0 2,857, Comune dirosa 1 0 2,842, Comune dibari 1 0 2,728, Comunedi Arezzo ,628, Other 5, ,141, Total: 5, ,003,

46 Table 7 Breakdown of the Portfolio by Province of the Obligor (Top 10 by Current Outstanding Principal) Province No. of % Contracts No. Of Current Outstanding %Outstanding Contracts Obligors Principal Principal Milano ,645, Napoli ,506, Pavia ,457, Roma ,255, Treviso ,410, Pistoia ,264, Viterbo ,391, Belluno ,108, Arezzo ,413, Bari ,218, Other 4, , ,332, Total: 5, , ,1)03,

47 Historical Performance The following table show the portfolio's historical cumulative collection rate over time for the aggregate instalments that fell due on each due date occurring in the years 2000, 2001 and The table includes all payments received up to June 30 _, The instalments analysed include both the interest and principal portion of the instalment. Instalments Due Cumulative Collection Timing Inumber of Days since due date} Dates Within 30 days Over Feb % 99.0 /` 99.4% 99.5% 99.8% 99.8% 99.8% 99.8% 99.9% 30-Apr /: 99.5 /` 99.8% 99.8% 99.8% 99.8% 99.8% 99.8% 99.9 /: 30-Jun % 98.7% 98.8% 98.8% 98.8% 98.9% 98.9 /: 98.9% 99.9% 30-Aug % 98.4 /` 98.7% 99.2% 99.2% 99.8% 99.8% 99.8% 99.9 /: 30-Oct /( 99.2 /` 99.2% 99.2% 99.2% 99.8% 99.8% 99.8% 99.9% 30-Dec /` 97.3% 97.4% 97.4% 97.4% 98.4% 98.9% 99.5% 99.9% 28-Feb /` 98.6 /` 98.8% 99.0% 99.1% 99.7% 99.8 /: 99.8 /: 99.8 /: 30-Apt /` 98.6 /` 98.9% 99.0% 99.0% 99.6% 99.7 /: 99.8% 99.8% 30-Jun /` 97.0 /` 97.2% 97.2% 97.2% 98.8% 98.9 /: 98.9 /: 99.9 /: 30-Aug /` 97.9 /` 98.6% 99.0% 99.1% 99.6% 99.7% 99.8 /: 99.8 /: 30-Oct /` 98.9% 99.0% 99.0% 99.1% 99.7% 99.7% 99.8 /: 99.8 /: 30-Dec % 96.7% 97.0% 97.1% 97.1% 98.7% 98.8% 99.3 /: 99.8 /: 28-Feb /` 97.4 /` 98.1% 98.6% 98.8% 99.5% 99.6 /: 99.6 /: 99.7 /: 3O-Apr % 98.4 /` 98.5% 98.6% 98.8% 99.4% 99.5% 99.7 /: 99.7 /: 30-Jun /` 96.6% 96.8% 96.8% 97.0% 98.4% 98.7% 98.8 /: 99.3 /: 30-Aug /` 97.2 /( 97.9% 98.7% 98.8% 98.9% 99.6% 99.6 /: 99.6 /: 30-Oot /` 97.7% 98.3% 98.6% 98.6% 99.3% 99.4% 99.6 /: 30-Dec /` 96.6 /` 96.8% 95.9% 96.9% 98.0% 98.5% Average 96.4 /, 98.0% 98.3% 98.5% 98.6% 99.2% 99.4% 99.6*/: 99.8*/: Max 98.6 /, 99.5% 99.8% 99.8% 99.8% 99.8% 99.8% 99.8 /: 99.9 /: Min 95.2 /, 96.6% 96.8% 96.8% 96.9% 98.0% 98.5 /: 98.8*/, 99.3*/: Public Entity Financial Distress Experience (Dissesti Finanziari) The following table shows historical information regarding defaults related to situations of financial distress (Dissesti) for public entities in the INPDAP portfolio. The analysis covers 79 entities in dissesto for the period 1989 to Default Amounts expressed in the table are only related to the combined unpaid amounts for three years prior and three years after the year of dissesto. The Number of Instalments missed is related to the total number of scheduled instalments, including interest and principal that were not paid for three years prior and three years after the year of dissesto. Annual Debt Service includes annual interest and principal payable by each Obligor during the period of dissesto. 47

48 Default as % of Year of Amount Numberof Annual Debt Annual Debt Public Entity Dissesto Defaulted Instalmen_ missed Service (_) Service ,688 0% ,579 0% ,240 0% ,506 0% ,652 0% ,778 0% ,966 0% % ,229 0% ,090 0% ,516 0% % ,363 0% ,084 0% ,314 0% ,723 0% ,342 0% ,440 0% ,612 0% ,593 0% ,964 0% ,721 0% ,143(1) 0% ,481 0% % ,037 0% ,508(1) 0% ,592 0% ,557 0% ,673 0% , , % ,124 0% ,415 (1) 0% 48

49 Default as % of Year of Amount Number of Annual Debt Annual Debt Public Entity Disse_o Defaulted Instalmen_ missed Service (C) Service ,449 0% ,123 0% ,038 0% ,608 0% ,873 0% ,452 0% ,890 0% ,948(1) 0% ,411 4% ,260 0% ,959 0% ,078 0% , ,856 17% ,681 0% ,421(1) 0% ,038 0% ,778 0% , ,708 83% ,149 0% ,593 0% , ,119 17% ,059 0% ,935 0% ,215 0% ,861 0% ,593 0% ,510 0% ,352,122 0% ,086, ,173,024 50% ,419 0% ,890 0% ,705 0% ,684 0% ,595 0% ,646 0% ,364 0% ,822 0% , ,862 30% ,259 0% ,619 0% ,890 0% ,978 0% ,146 0% ,186 0% , ,012 17% , ,392 17% service amount refers to year following the Dissesto year whose application was filed under Resolution No. 956/

50 The following table shows an indication of Obligors that filed a request for an interest-rate reduction under Resolution No. 956/1999 that was rejected on the grounds that the request had not been filed within the required time limit and the relevant retroactive effective date for the reduction of the interest rate pursuant to Resolution No. 21/2003. Public Entity Retroactive effective date Amministrazione provinciale di Pistoia 01/01/2002 Arnministrazione provinciale di Padova 01/01/2001 Amministrazione provinciale di Udine 01/01/2001 Amministrazione provinciale di Varese 01/01/2001 Comune di Acquanegra Sul Chiese 01/01/2002 Comune di Acquapendente 01/01/2001 Comune di Alfonsine 01/01/2001 Comune di Arezzo 01/01/2001 Comune di Asola 01/01/2002 Comune di Asolo 01/01/2002 Comune di Bagnolo In Piano 01/01/2001 Comune di Bagnoregio 01/01/2002 Comune di Bargagli 01/01/2002 Comune di Belgioioso 01/01/2002 Comune di Bordighera 01/01/2001 Comune di Borgosatollo 01/01/2001 Comune di Bossico 01/01/2001 Comune di Brugnato 01/01/2001 Comune di Caiolo 01/01/2001 Comune di Calice A1 Cornovigio 01/01/2002 Comune di Capannori 01/01/2003 Comune di Carpineto Sinello 01/01/2001 Comune di Casciago 01/01/2003 Comune di Castel di Sangro 01/01/2001 Comune di Celleno 01/01/2002 Comune di Cerro A1 Lambro 01/01/2002 Comune di Chiesa In Valmalenco 01/01/2001 Comune di Clusone 01/01/2001 Comune di Codevigo 01/01/2003 Comune di Correggio 01/01/2003 Comune di Eraclea 01/01/2003 Comune di Fagagna 01/01/2001 Comune di Frignano 01/01/2003 Comune di Gazzo 01/01/2003 Comune di Genga 01/01/2002 Comune di Germignaga 01/01/2003 Comune di Grotte Di Castro 01/01/2001 Comune di Imola 01/01/2001 Comune di Lavagna 01/01/2003 Comune di Lentiai 01/01/2002 Comune di Marano Sul Panaro 01/01/2001 Comune di Massa E Cozzile 01/01/2002 Comune di Matino 01/01/2002 Comune di Mello 01/01/2001 Comune di Mogliano 01/01/2002 Comune di Monselice 01/01/2001 Comune di Montecatini Terme 01/01/

51 Comune di Montecrestese 01/01/2001 Comune di Monteflavio 01/01/2001 Comune di Noicattaro 01/01/2002 Comune di Oppido Mamertina 01/01/2001 Comune di Orvieto 01/01/2002 Comune di Osimo 01/01/2001 Comune di Parabiago 01/01/2002 Comune di Passignano Sul Trasimeno 01/01/2003 Comune di Pavone Del Mella 01/01/2001 Comune di Pedavena 01/01/2002 Comune di Pergine Valdarno 01/01/2001 Comune di Pescina 01/01/2003 Comune di Pianoro 01/01/2003 Comune di Porpetto 01/01/2003 Comune di Rapallo 01/01/2001 Comune di Redondesco 01/01/2001 Comune di Reggio Emilia 01/01/2001 Comune di Ripe 01/01/2001 Comune di Riva Del Garda 01/01/2001 Comune di Roana 01/01/2002 Comune di Roccavione 01/01/2001 Comune di Roncade 01/01/2001 Comune di Rovello Porto 01/01/2001 Comune di Salo' 01/01/2001 Comune di San Benedetto Del Tronto 01/01/2001 Comune di San Dona' Di Piave 01/01/2003 Comune di San Ginesio 01/01/2003 Comune di San Lorenzo Nuovo 01/01/2001 Comune di San Martino Di Venezze 01/01/2001 Comune di Santa Maria Di Sala 01/01/2002 Comune di Sant'agata Bolognese 01/01/2001 Comune di Scandicci 01/01/2002 Comune di Segonzano 01/01/2001 Comune di Senna Comasco 01/01/2003 Comune di Sigillo 01/01/2002 Comune di Spilimbergo 01/01/2003 Comune di Spor Maggiore 01/01/2001 Comune di Taio 01/01/2002 Comune di Tambre 01/01/2001 Comune di Taranto 01/01/2002 Comune di Tarzo 01/01/2001 Comune di Terranova Da Sibari 01/01/2001 Comune di Vasanello 01/01/2001 Comune di Villafranca 01/01/2001 Comune di Villanterio 01/01/2001 Comunith Montana Valle Seriana Superiore 01/01/2003 Comunit?t Montana Valtellina Di Tirano 01/01/2001 The Obligors With the exception of Regione Puglia, the majority of Obligors (please see Table 1, above) are incorporated in the form of either municipalities or provinces. Regions and autonomous provinces 51

52 Italy is made up of 20 regions and the two autonomous provinces of Trento and Bolzano. The territories of the regions are divided into provinces and the territories of the provinces into municipalities. Regions are autonomous public entities with their own rules, powers and functions according to the principles set out in the constitution of the Italian Republic. Regions exercise legislative powers over matters which are not expressly reserved for State legislation. The regional bodies are the regional council (Consiglio Regionale), the regional executive board (Giunta) and its president. The regional council exercises the legislative powers attributed to the region, the executive board is the region's executive body and its president represents the region. As public entities, regions may not be declared bankrupt. There are two autonomous provinces in Italy, namely Trento and Bolzano. Autonomous provinces are Italian provinces provided with a special organisational autonomy and with legislative power according to the Italian Constitution. Autonomous provinces are provided with organisation and powers similar to those of the regions. The provincial government is the executive body of the autonomous provinces, implements the laws passed by the provincial assembly and administers the province. The provincial government consists of the president, vice-presidents and assessors. The provincial government is the highest authority as regards the provincial administration, gives instructions to subordinate provincial authorities, participates in the legislative process, defends the rights of the province vis-h-vis the State and controls the municipalities and public bodies of the province. The President is the representative of the province, is responsible for provincial policy, assigns to the assessors their departments, convokes the local government and chairs its meetings and participates in meetings of the Italian Government if questions concerning the province are on its agenda. As public entities, autonomous provinces may not be declared bankrupt. Provinces and municipalities Provinces and municipalities are autonomous local territorial public entities with their own statute, powers and functions according to the principles set out in the constitution of the Italian Republic. The provincial bodies are the provincial council (consiglio provinciale), the provincial executive board (giunta provinciale) and its president. The provincial council is the body responsible for political and administrative policy determination and control and its duties include organising public utility services, establishing special institutions and enterprises, managing the province's shareholding in corporations and outsourcing activities and services by way of convention. The provincial executive board works alongside the president in governing the province and operates by way of board decisions. The president has powers of representation and is in charge of the administration of the province. The municipal bodies are the municipal council (consiglio comunale), the municipal executive board (giunta comunale) and the mayor. The municipal council is responsible for the political and administrative policy determination and control and its duties include organising public utility services, establishing special institutions and enterprises, managing the municipality shareholding in corporations and outsourcing activities and services by way of convention. The giunta comunale works alongside the mayor in governing the municipality and operates by way of board decisions. The mayor has powers of representation and is in charge of the administration of the municipality. As public entities, provinces and municipalities may not be declared bankrupt. They may be subject to dissesto. 52

53 THE CREDIT AND COLLECTION POLICIES The borrowers Under article 68 of royal decree No. 453 of 2nd January, 1913, article 1 of law No. 855 of 13th June, 1962 and article 27 of law No. 274 of 8th August 1991, INPDAP may grant loans to such public entities specifically contemplated by the regulatory framework, namely: (a) Municipalities; (b) Municipalities Consortia; (c) (d) Provinces; Mountain Communities; (e) Public entities which are subject to control of the State or where the State has a majority interest, either direct or indirect, provided that a guarantee (by a region) or other appropriate guarantee approved by the Ministry of the Treasury have been issued in favour of such entities; (f) Public entities whose employees are registered with the Casse Pensioni, provided that a guarantee (by a region) or other appropriate guarantee approved by the Ministry of the Treasury have been issued in favour of such entities; (g) Cooperative housing companies, non-profit companies or entities aimed at the construction of low cost housing, provided that such companies benefit from State or regional contributions. Loans must be destined to the direct use of the borrowers. According to article 13 of law No. 197 of 13th May, 1983 the attachment, seizure or suspension of payment orders with regard to draw-downs under the loans are not permitted; instead administrative set-off of any sums owed by the borrowers to the social security institutes creating the fund from which the loans are granted is permitted (article 12 of law No. 855 of 13th June, 1962). Conditions for the granting of loans The granting of loans to the public entities mentioned above is subject to verification that any amortisation repayments of the loans or pension contributions due by the applicant to INPDAP are not overdue. In addition, such public entities cannot be subject to financial insolvency (dissesto finanziario) and must comply with legislative decrees No. 77 of 25th February, 1995 (Sec. II - para. IV - articles 45 and 46) and No. 336 of llth June, 1996 (article 13). Amortisation plan The amortisation plan of each loan granted to public entities runs from the 1st January of the year immediately following the year in which the loan is granted by means of the relevant administrative act. Pursuant to paragraph 7 of article 5 of law No. 539 of 20th December, 1995, the loans can be repaid from the 1st of January of the second year following the one in which the loan was granted. 53

54 Art. 13 of law No. 855 of 13th June, 1962, constituting an exception to the provisions of article 85 of royal decree No. 453 of 2nd of January, 1913, provides that the General Manager, after consultation with the Board of Directors, may authorise to postpone the amortisation of the loans which are not secured by a payment delegation on tax income. Borrowers may request a postponement of the repayments at the time the loan is granted, or, under specific circumstances, on each September preceding the commencement of the repayments originally agreed with the administrative act under which the loan was granted, in order to allow the implementation of the necessary amendment to the original amortisation plan (INPDAP Board of Directors Resolution no. 281 of 10th April, 1996). Consequently, on any amount drawn down in the period from the date in which the loan was granted up to the commencement of the amortisation plan, pre-amortisation interest will accrue at the same rate applicable to the loan, from the date of the disbursement up to the 31st December immediately following. Interest rates The laws provision applicable to interest rates due on loans granted to local public entities are mainly the royal decree No. 453 of 2nd of January, 1913, Law No. 442 of 3rd April, 1933 and the applicable ministerial decrees from time to time issued. The ministerial decree of 28th May, 1999 (published in the official gazette of the Republic of Italy, Gazzetta Ufficiale, No. 141 of 18th June, 1999) set out the rate of interest applicable to the loans at the rate of 6%. In addition, it provides that upon draw down of the funds, certain amounts will be deducted at source, as follows: (a) an amount equal to 0.50% as administrative expenses, and (b) an amount equal to 0.50% as a risk compensation premium, regardless of the duration of the loan. The procedure The loan application The loan application must contain: (a) (b) (c) the amount of the loan applied for; the amount of the costs and/or of the approved project; the duration of the amortisation plan; (d) the signature of the legal representative or other authorised signatory empowered in accordance with the by-laws of the borrower; (e) telephone numbers and/or fax numbers, in case of urgent communication. Upon filing the loan application, the Secretary or other officer responsible of the procedure pursuant to law No. 142 of 8th June, 1990, is requested to certify the "regularity" of the public entity towards INPDAP with regard to any loan repayment and pension contributions. 54

55 The project Pursuant to article 46 of legislative decree No. 77 of 25th February, 1995, before granting the loan, the borrower must have obtained approval of the working project for which the loan is requested. Should the executive project not yet be approved, a statement from the public entity's secretary of the approval of the definitive project, providing details of the main works to be carried out is sufficient. Any following change to the project must comply with article 8/ter of law No. 65 of 2nd June, 1995 and article 45, 2nd paragraph of legislative decree No. 77 of 25th February, In filing the documentation, the borrower is requested to provide the public entity secretary's statement of approval of the project to be financed while it is not necessary to provide the relevant technical certificates. As regards to the purchase of movable and/or real estate assets, a statement of suitability issued by the U.T.E. (Ufficio Tecnico Erariale) of the local public entity must be given together with the approval of the expenses estimate. With regard to the purchase of real estate assets through private acts, the authorisation issued by the provincial authority (Prefetto) pursuant to article 2 of law No. 218 of 21st June, 1896 and implementing regulations will need to be filed. Dele gazione (delegation) Local public entities, Mountains Communities and Municipalities Consortia are required to issue, as security for the repayment of the loans, a payment delegation with recourse or "pro-solvendo" on the first three headings of the annual budget (the first two headings for Mountain Communities), to be notified to their respective treasury office. As regards to loans granted to Municipalities Consortia, with a pro quota guarantee on revenues relating to the first three headings of the budget of each of the municipalities joined in the consortium, the payment of the instalment will be requested only to the consortium. State, regional and provincial contribution The local public entities which have obtained from the State, the region and/or the autonomous provinces a contribution for investments in the public interest works may transfer such sums as partial guarantee for the loan granted by INPDAP. The act granting the contribution shall expressly contain the following indications: (a) the amount of the annual instalment; (b) the number of annual instalments (maximum 15); (c) the date in which the repayment of such instalments will commence; (d) the direct and irrevocable assignment of such contribution to INPDAP; (e) the heading of the expenses contained in the budget which certifies the annual contribution. Following the start of the amortisation of the loan, the entity which has granted the contributions is not permitted to modify unilaterally any of the conditions relating to such contributions. The annual instalments of the contributions are assigned with recourse (pro solvendo) and constitute a contribution and not a guarantee. The granting of the loan by INPDAP Once the necessary documentation is furnished, the loan is granted through a resolution of the officer. 55

56 Following the accounting registration, two copies of the decree together with the amortisation plan tables are transmitted to the public entity beneficiary. One of these copies must be returned countersigned for acceptance by the legal representative of the public entity. The delivery of the copy countersigned by the legal representative is an essential condition for the draw-down of the loan. Indemnities and interests on arrears Delays in the repayment of the instalments of the loans on the due date trigger the application of penalties and late interest payments Pursuant to article 3 of law No. 843 of 21st December, 1978 penalties are applied for the first year of delay in repayment of the instalments and will be paid through the treasury office of the entity to which the payment delegation, as guarantee for the reimbursement of the loan, has been notified; such indenmification, until implementation of law No. 488 of 9th August, 1986, was calculated at the fixed rate of 2% (if the payment was delayed for a period not longer than three days) or 6%. From 29th August, 1986, date of implementation of above-mentioned law No. 488, the indemnity is applied on the basis of the actual number of days of delay. Pursuant to article 4 of law No. 498 of llth April, 1938, late payment interest are paid by the public entity as borrower and become due after one year from the delay; they are quantified at the current rate of interest at the time the unpaid instalment becomes due, with an additional surcharge of 0.5%. Collection and recovery procedures Pursuant to article 1, paragraph 1, number 7 of legislative decree No. 20 of 21st January, 1948 replaced by the first paragraph of article 1 of law No. 855 of 13th June, 1962, and article 27 of paragraph 1 letter d) of law No. 274 of 8th August, 1991, INPDAP collects the payments deriving from each of the loans granted, on two accounts held with Poste Italiane S.p.A. destined only to the collection of the credits due to INPDAP. Upon receipt of the payments, INPDAP verifies and records the documentation certifying the relative payment. Recovery procedure Should payments by a debtor be overdue, INPDAP will: (a) request the debtor for clarification about the defaulted payment within 30 days from the completion of the reconciliation activity; (b) within 20 days of the request for clarification under (i) above, send a written reminder letter ordering the debtor to pay within the next 30 business days; (c) within 30 days of the deadline indicated in the reminder warning letter under (ii) above, arrange for the legal department of INPDAP to send a second reminder letter repeating the request for payment within the next 30 business days and notifying the commencement of judicial proceedings should payments continue to result unpaid. If at least two semi-annual instalments or six bi-monthly instalments, depending on the case are unpaid, and should it be deemed necessary to recover the defaulted credits, INPDAP will decide 56

57 which attachment or insolvency proceeding will be applied to the debtor, with the co-operation of the office authorised to collect tax payments. 57

58 THE ORIGINATOR General INPDAP (the Italian National Social Security Institute for Public Administration Employees) was created by legislative decree No. 479 of 30th June, 1994 ("Decree No. 479"). INPDAP was established in the context of a process of reorganisation of the Italian pension and social security system. Within this framework, INPDAP replaced several other public entities previously responsible for the provision of pension or social security services to different categories of civil servants and public employees. In particular, Decree No. 479 dismantled, on the one hand, the social security institutes (Casse Pensioni) managed by the Ministry of the Treasury and, on the other hand, ENPAS, INADEL and ENPDEP (together the "Former Social Security Institutes") and entrusted INPDAP with the performance of the activities originally carded out by them. Thus, all the property, assets and liabilities, previously belonging to each of the Former Social Security Institutes, were transferred to INPDAP. Subsequent legislation has broadened INPDAP's range of activities either by adding new categories of employees falling under the responsibility of INPDAP or by increasing the number of activities and services performed by INPDAP. Nowadays, INPDAP carries out, inter alia, several services within the sector of social security and mandatory pension treatments, as well as other complementary services such as granting credit and assistance to its registered members. In this respect, INPDAP provides social services for retired members, their spouses, and for the sons and daughters and orphans of registered members. As a public body, INPDAP cannot be declared bankrupt, (pursuant to article 1 of royal decree No. 267 of 16th March, 1942). Instead, INPDAP is subject to a specific non-judicial liquidation procedure provided for public entities set forth in law No of 4th December, 1956, as from time to time amended. Because of the scope of its responsibilities, INPDAP is one of the largest pension and social security institutions in Italy. In 2003, selected summary information for INPDAP was as follows: 8,300 employees; 103 provincial offices; 3,283,000 registered members; 2,366,211 pensions disbursed to registered members; and 48,551 end-of-relationship indemnities (trattamento difine servizio). Regulatory framework and purpose of INPDAP The assets and liabilities transferred from the Former Social Security Institutes are organised as independent and autonomous funds within INPDAP. Each fund has separate economic and financial management entrusted to separate bodies (comitati di vigilanza). Each fund is responsible for the provision of pension and/or social security services to INPDAP members as previously performed by the Former Social Security Institutes. The overall management of INPDAP is entrusted to the 58

59 president of INPDAP (presidente), the board of directors (consiglio di amministrazione), the policymaking and supervisory council (consiglio di indirizzo e vigilanza), the board of auditors (collegio dei sindaci) and the general manager (direttore generale). Their duties and functions are regulated by the presidential decree (Decreto del Presidente della Repubblica) No. 368 of 24th September, INPDAP's pension and social security services are granted to public employees and civil servants who were previously registered with one of the Former Social Security Institutes. Law No. 662 of 23rd December, 1996, and the implementing ministerial decree No. 463 of 28th July, 1998, have established within INPDAP another autonomous fund whose main scope is the provision of credit and social services for all the registered members. INPDAP is supervised by the Ministry of Labour and Social Welfare and the Ministry of Economy and Finance CMEF"). Activities INPDAP's core activity comprises the distribution of pension treatments to its registered members. The pensions are disbursed through one of the autonomous funds under the overall management of INPDAP. In particular, the pensions are disbursed through: Cassa Dipendenti degli Enti Locali (Pensions for Local Entities Employees), governed by royal decree No. 680, of 3rd March, 1938, in respect of pension treatments in favour of employees of local entities; Cassa Pensioni Sanitari (Pensions for Healthcare Providers), governed by law No. 1035, of 6th July, 1939, in respect of pension treatments in favour of healthcare providers; Cassa Pensioni Insegnanti (Pensions for Teachers), governed by law No. 176, of 6th February, 1941, in respect of pension treatments in favour of teachers; and Cassa Pensioni Ufficiali Giudiziari (Pensions for Bailiffs), governed by law No of 12th July, 1934, in respect of pension treatments in favour of bailiffs. In addition, INPDAP is responsible for the pensions of state government employees, as a result of article 2 of law No. 335 of 8th August, 1995, through the so-called Cassa Trattamento Pensioni Dipendenti dello Stato, in respect of pension treatments in favour of state government employees. With respect to social security benefits, INPDAP distributes the mandatory severance payments, including: the end-of-relationship indemnity (indennitgt di buonuscita), previously managed by the former ENPAS pursuant to the provisions of D.P.R. No of 1973; the premium indemnity for seniority, previously managed by the former INADEL (indennith di premio servizio), pursuant to the provisions of law No. 152 of 1968; and the severance pay (trattamento difine rapporto) created by law No. 335 of 8th August, In addition, INPDAP distributes a monetary indemnity for the death of the insured, as was previously done by the former ENPDEP (created by law No of 28th July, 1939). INPDAP currently offers the only life insurance programme available within the national framework for social security for the public sector. 59

60 INPDAP's services, within its lending activity to registered members, are carried out through the socalled Gestione unitaria delle prestazioni creditizie e sociali (the "Gestione Unitaria"). Gestione Unitaria was established within INPDAP pursuant to article 1, paragraph 245, of law No. 662 of 23rd December, 1996, which transferred to Gestione Unitaria all the assets and liabilities as of the entry into force of Ministerial Decree No. 463/1998 ("DM 463") relating to (i) the lending and social services formerly managed by ENPAS and (ii) the social services formerly carried out by INADEL. The rules governing the functioning of Gestione Unitaria are set forth in DM 463. In general, all the employees who benefit from pension treatments granted by INPDAP are registered with Gestione Unitaria. The primary sources of funds for Gestione Unitaria are: (i) a mandatory contribution due by each member in an amount equal to 0.35 per cent. of his/her salary determined pursuant to article 2 (paragraphs 9 and 10) of Law No. 335/1995; and (ii) the revenues deriving from the repayment of loans previously granted. Gestione Unitaria is regulated as a separate fund with financial autonomy within INPDAP. The lending activity conducted by INPDAP through Gestione Unitaria has a social security nature (natura previdenziale). INPDAP's services in the lending sector conducted through Gestione Unitaria include the following: loans (both short-term and medium-term) granted to registered members; issue of guarantees in favour of entities authorised under article 15 of D.P.R. 180/1950; and mortgage loans granted to registered members. In addition to the lending activity, Gestione Unitaria is entrusted with the management of social services to be provided to registered members and to their families. Such social services include, inter alia, the provision of scholarships both for graduate and post-graduate studies, the provision of study vacations, the management of boarding schools and vacation camps for the children or orphans of the registered members, as well as the provision of retirement homes for formerly registered members. Organisational structure INPDAP's organisational structure includes central and local levels; at the central level, the strategic and business policies are entrusted with the Board of directors, which is the body governing INPDAP (composed of the President and six members selected among managers and experts in public administration), and supervised by the policy-making and supervisory council (Consiglio di indirizzo e vigilanza) (composed of registered members' representatives and of the Ministries controlling INPDAP). The administration of INPDAP is entrusted with central and local management. The central administrative structure, directed by the office of the general manager, co-ordinates 15 central directorates, each specifically responsible for a subject area, which carry out their functions by issuing directives and regulations addressed to local offices. In addition to the directorates, the central structure of INPDAP currently has four independent (Uffici Autonomi): offices special projects; management supervision; official deeds and management of the archives; and services for the general manager's office, and three consultancy services offices, each in charge of specific responsibilities requiring specialised knowledge: 60

61 legal department (Avvocatura); actuarial and statistical consultancy; and technical and construction consultancy. At a local level, INPDAP is structured in 12 sectors, each responsible for co-ordinating and assisting the 103 provincial offices, and for facilitating communication between the Directorates and the local offices in order to guarantee a common policy of action for the entire organisation. Furthermore, each sector defines its objectives, co-ordinates and supervises the activity of the local structures, manages the real estate assets in its own territory, with the support of their own legal teams, co-ordinates legal proceedings involving the local structures, and plans, manages and supervises the continuing education and training of the organisation's employees. The provincial offices are responsible for ensuring the accurate and timely distribution of the services to registered members in the territory and they act as INPDAP's representative, within the relevant territory, for dealing with the registered and retired members, other administrative entities and bodies, and the social and labour unions. Each provincial office operates independently and with an independent budget. Management and Supervisory Bodies The management and supervisory bodies of INPDAP are as follows: the extraordinary commissioner (commissario straordinario), who is responsible (i) for planning and deciding on all institutional activities and related activities and (ii) for defining the general criteria for investment and divestment, assisted by two vice-commissioners (normally such powers are entrusted to the President of INPDAP and to the board of directors: at the moment, the natural term of appointment of these bodies has expired and the management ad interim of INPDAP is carried out by the extraordinary commissioner until the appointment of new bodies); the policy-making and supervisory council (consiglio di inidirizzo e vigilanza), which determines the general policy guidelines and decides its long-term objectives; the board of auditors (collegio dei sindaci), who carries out all the functions required of it under article 2403 et sequitur of the Italian Civil Code; the general manager (direttore generale), who is head of the management structure; the internal control structure (struttura di controllo interno), which is an independent body entrusted with the control of management by means of checking the results achieved by the managers; the supervising committees (comitati di vigilanza); and the Judge of the Corte dei Conti (an institution with the role of safeguarding public finance and guaranteeing the respect of jurisdictional order), who is authorised to draft reports to Parliament. 61

62 Financial information INPDAP's last published financial statements are for the year In accordance with Decree No. 479, such financial statements were prepared by the administrative structure (struttura amministrativa), deliberated by the board of directors, approved by the policy-making and supervisory council, and submitted to the supervising Ministries. 62

63 THE ISSUER'S BANK ACCOUNTS The Issuer has opened with the Collection Account Bank a euro-denominated current account into which the Servicer will be required to deposit, inter alia, the Collections received by it (the "Collection Account"). In addition to the Collections, certain additional payments (including, for instance, payment of indemnities due by the Originator to the Issuer under the Receivables Purchase Agreement) will be made to the Collection Account. Up to the Business Day immediately preceding each Interest Payment Date, the Computation Agent will instruct the Collection Account Bank to transfer to the Payment Account such monies standing to the credit of the Collection Account as are to be used on such Interest Payment Date to make payments to the Noteholders and to third-party creditors of the Issuer. The Issuer will establish a cash reserve, funded through the issue of the Notes, in a sub-account of the Collection Account (the "Cash Collateral Sub-Account"). "Cash Collateral" means the monies standing to the credit of the Cash Collateral Sub-Account at any given time. On the Issue Date, the Issuer will credit to the Cash Collateral Sub-Account _24,247,082, being equal to the undrawn portion of the Partially-Undrawn Loans as at 5th December, The Cash Collateral will be used to augment the Issuer Available Funds if a Set-off Event occurs and INPDAP fails to indemnify the Issuer pursuant to the Receivables Purchase Agreement. In addition to the Collection Account, pursuant to the terms of the Agency and Accounts Agreement, the Issuer has also opened with the Transaction Bank: (a) a euro-denominated current account into which, inter alia, (i) such monies standing to the credit of the Collection Account as are to be used on each Interest Payment Date to make payments to the Noteholders and to third-party creditors of the Issuer will be transferred up to the Business Day immediately preceding the relevant Interest Payment Date, (ii) the Swap Counterparties are obliged to make any payment due to the Issuer under the relevant Swap Agreement, and (iii) any other payments due to the Issuer under the Transaction Documents will be made (with the exception of those payments which, under the Transaction Documents, are required to be made to the Collection Account) (the "Payment Account"). The credit balance of the Payment Account will be used to make payments due on each Interest Payment Date, to the Noteholders and the other Issuer Creditors in accordance with the applicable Priority of Payments; and (b) a euro-denominated current account (the "Expenses Account" and, together with the Collection Account and the Payment Account, the "Accounts") into which the net proceeds from the issue of the Notes equal to _539,055,338 will be credited on the Issue Date to allow the Issuer (i) to pay the Originator the Initial Purchase Price, (ii) to retain the Expenses Reserve Amount, (iii) to credit _24,247,082 to the Collection Account and (iv) to meet its payment obligations, on or about the Issue Date, in respect of certain up-front fees and expenses. Subject to the availability of Issuer Available Funds for such purpose, the Expenses Account will be replenished on each Interest Payment Date, in accordance with the Pre-Event Priority of Payments, up to the Expenses Reserve Amount. Monies from time to time standing to the credit of the Expenses Account will be applied by, or on behalf of, the Issuer on any Business Day (other than an Interest Payment Date) throughout the course of this Securitisation Transaction to pay all properly incurred fees, costs, liabilities, expenses and taxes required to be paid by the Issuer in the context of this Securitisation Transaction or which are required to be paid in order to preserve the corporate existence of the Issuer or to maintain it in good standing or to comply with applicable legislation. 63

64 In addition, in 2001 the Issuer also opened with Banca Nazionale del Lavoro S.p.A. a eurodenominated deposit account into which the Issuer's equity capital of _ 10,000 was deposited and will be required to remain deposited for as long as any Notes are outstanding (the "Equity Capital Account"). The Collection Account will be maintained with the Tesoreria Centrale dello Stato, acting through the Bank of Italy as the Collection Account Bank, as long as the Republic of Italy's short-term unsecured, unsubordinated and unguaranteed debt obligations are rated "FI" by Fitch and: (a) (b) at least "A-I" by S&P, or if the cash credited to the Collection Account is greater than or equal to 20 per cent. of the Principal Amount Outstanding of the Notes, "A-l+" by S&P. If the ratings of the short-term, unsecured, unsubordinated and unguaranteed debt obligations of the Republic of Italy fall below "FI" by Fitch or "A-1" by S&P, pursuant to the Intercreditor Agreement, unless both Rating Agencies confirm that the Notes will not be downgraded as a result of such event, the Issuer shall, within 30 days, (a) revoke Tesoreria Centrale dello Stato, acting through the Bank of Italy, from the role of Collection Account Bank and close the Collection Account opened with it and, simultaneously, (b) open a replacement Collection Account with a replacement Collection Account Bank, the short-term unsecured, unsubordinated and unguaranteed debt obligations of which are rated at least "FI" by Fitch and "A-l+" by S&P. If (i) the rating of the short-term, unsecured, unsubordinated and unguaranteed debt obligations of the Republic of Italy falls below "A-I+" by S&P and (ii) the cash credited to the Collection Account is greater than or equal to 20 per cent. of the Principal Amount Outstanding of the Notes, pursuant to the Intercreditor Agreement, unless S&P confirms that the Notes will not be downgraded as a result of such event, the Issuer shall, within 30 days, open an additional account with a bank, the short-term unsecured, unsubordinated and unguaranteed debt obligations of which are rated at least "F1" by Fitch and "A-l+" by S&P into which any cash in excess above 20 per cent. of the Principal Amount Outstanding of the Notes shall be credited. The Tesoreria Centrale dello Stato, acting through the Bank of Italy, in its capacity as Collection Account Bank will not be a party to any Transaction Documents. If at any time the ratings of the short-term, unsecured, unsubordinated and unguaranteed debt obligations of the Transaction Bank fall below "FI" by Fitch or "A-I" by S&P, the Transaction Bank will give notice of such event to the Issuer, the Computation Agent and the Representative of the Noteholders and, subject as set out below, will be required to procure, within 30 days, the transfer of the Payment Account and the Expenses Account to another bank located in Italy, the unsecured, unsubordinated and unguaranteed debt obligations of which are rated at least "FI" by Fitch and "A-l" by S&P. In accordance with Article 15, the Issuer is a multi-purpose vehicle and, under its former name of Societh per la cartolarizzazione dei crediti e dei proventi pubblici a responsabilith limitata, it has already engaged in a securitisation transaction which was completed on 6th December, 2001, in the context of which the Issuer has opened the following bank accounts: (a) a "transaction account" and an "expenses reserve account" with the Transaction Bank; and (b) a "collection account" with the Collection Account Bank. The Issuer has also already engaged in a second securitisation transaction which was completed on 25th November, 2003, in the context of which the Issuer has opened the following bank accounts: 64

65 (c) a "payment account" and an "expenses account" with the Transaction Bank; and (d) a "collection account" with the Collection Account Bank. The sums standing from time to time to the credit of the bank accounts under (a), (b), (c) and (d) above will not be available to the Issuer Creditors, because, pursuant to Article 15, the assets relating to each securitisation transaction will constitute assets segregated for all purposes from the assets of the Issuer and from assets relating to other securitisation transactions. The assets relating to a particular securitisation transaction will not be available to the holders of notes issued (or to the lenders in respect of loans extended) to finance any other securitisation transaction or to the general creditors of the Issuer. 65

66 TERMS AND CONDITIONS OF THE NOTES The following is the text of the Terms and Conditions of the Notes (the "Cond_'ons"): The g539,325,000 Asset-Backed Floating Rate Notes due 2019 (the "Notes") will be issued by Societ_ di Cartolarizzazione Italiana Crediti a responsabilit?_ limitata (also known as S.C.I.C. a r.1.) (the "Issuer") on 30th December, 2003 (the "Issue Date") in order to finance the purchase of the Claims (as defined below). The Notes are subject to and have the benefit of an agency and accounts agreement (the "Agency and Accounts Agreement") dated 23rd December, 2003 (the "Signing Date") between the Issuer, Citibank, N.A., Milan Branch as account bank and Italian paying agent (in such capacities, respectively, the "Transaction Bank" and the "Italian Paying Agent", which expressions include any successor account bank or Italian paying agent respectively appointed from time to time in respect of the Notes), Citibank, N.A., London Branch as computation agent, principal paying agent and agent bank (in such capacities, respectively, the "Computation Agent", the "Principal Paying Agent" and the "Agent Bank", which expressions include any successor computation agent, principal paying agent and agent bank respectively appointed from time to time in respect of the Notes), Kredietbank SA Luxembourgeoise as Luxembourg paying agent (the "Luxembourg Paying Agent", which expression includes any successor Luxembourg paying agent appointed from time to time in respect of the Notes) and Securitisation Services S.p.A. as representative of the holders of the Notes (the "Representative of the Noteholders", which expression includes any successor or additional representative of the Noteholders appointed from time to time). The Noteholders are deemed to have notice of and are bound by and shall have the benefit of, inter alia, the terms of the rules of the organisation of Noteholders (the "Rules of the Organisation of Noteholders", which constitute an integral and essential part of these Conditions). The Rules of the Organisation of Noteholders are attached hereto as a schedule. The rights and powers of the Representative of the Noteholders and the Noteholders may be exercised only in accordance with the Rules of the Organisation of Noteholders. Certain of the statements in these Conditions include summaries of the Agency and Accounts Agreement, the Intercreditor Agreement (as defined below) and the other Transaction Documents (as defined below) and are subject to their detailed provisions. Any reference in these Conditions to a particular Transaction Document is a reference to such Transaction Document as from time to time created and/or modified and/or supplemented in accordance with the provisions therein contained and any deed or other document expressed to be supplemental thereto, as from time to time so amended and/or modified and/or supplemented. The holders of the Notes (the "Noteholders" and each a "Noteholder"), are bound by, and are deemed to have notice of, all the provisions of the Agency and Accounts Agreement, the Rules of the Organisation of Noteholders, the Intercreditor Agreement and the other Transaction Documents applicable to them. Copies of the Agency and Accounts Agreement, the Rules of the Organisation of Noteholders, the Intercreditor Agreement and the other Transaction Documents are available for inspection during normal business hours at the Specified Office (as defined below) for the time being of the Representative of the Noteholders, being at the date hereof via Vittorio Alfieri 1, Conegliano (Treviso), Italy, and at the Specified Offices of each of the Paying Agents. The Issuer has published to prospective Noteholders the prospetto informativo required by article 2 of law No. 130 of 30th April, 1999 (legge sulla cartolarizzazione dei crediti), as amended from time to time (the "Securitisation Law"). Copies of the prospetto informativo will be available, upon request, to the holder of any Note during normal business hours at the Specified Offices of the Representative of the Noteholders and at the Specified Offices of the Paying Agents. 66

67 The principal source of funds available to the Issuer for the payment of amounts due on the Notes will be collections and recoveries made in respect of the Claims. The Claims will be segregated from all other assets of the Issuer by operation of article 15 of law No. 448 of 23rd December, 1998 (as amended by article 22 of law decree No. 350 of 25th September, 2001 converted with amendments into law No. 409 of 23rd November, 2001 and by article 84 of law No. 289 of 27 December, 2002 converted with amendments into law No. 326 of 24th November, 2003) ("Article 15") and, in accordance with these Conditions and the Transaction Documents, amounts deriving therefrom will only be available, both prior to and following a winding-up of the Issuer, to satisfy the obligations of the Issuer to the holders of the Notes, each of the Other Issuer Creditors (as defined below) and any connected third-party creditor to whom the Issuer has incurred costs, fees, expenses or liabilities in relation to the securitisation of the Claims. In these Conditions: 1. Definitions "Accounts" means the Collection Account, the Payment Account and the Expenses Account, and "Account" means any one of them; "Auditing Agreement" means the auditing agreement dated 24th November, 2003 between the Issuer, the Auditors and the Representative of the Noteholders; "Auditors" means PKF Italia S.p.A., with offices at Viale Vittorio Veneto 10, , Milan, Italy, and includes any successor firm of auditors appointed from time to time by the Issuer; "Basic Terms Modification" has the meaning given to it in the Rules of the Organisation of Noteholders; "Business Day" means any day on which banks are open for business in Milan and Rome and the Trans-European Automated Real-Time Gross Settlement Express Transfer System (or any successor thereto) is open; "Calculation Date" means a date no later than the fourth Business Day immediately preceding each Interest Payment Date; "Cancellation Date" means 21st February 2024; "Cash Collateral" means the monies standing to the credit of the Cash Collateral Sub-Account at any given time; "Cash Collateral Sub-Account" means the sub-account established within the Collection Account; "Claims" has the meaning given to the term "Crediti" in the Receivables Purchase Agreement, term identifies the debt claims arising from the Loans; which "Clearstream, Luxembourg" means Clearstream, Banking, socirt6 anonyme; "Collection Account" means, the euro-denominated current account opened by the Issuer with the Collection Account Bank, as better identified in the Transaction Documents, or any other account as may replace it, into which the Servicer will be required to deposit, inter alia, the Collections received by it; 67

68 "Collection Account Bank" means the Tesoreria Centrale deuo Stato, acting through the Bank of Italy, or any successor account bank appointed from time to time by the Issuer in respect of the Collection Account; "Collection Date" means 26th January and 26th July of each year; "Collection Period" means each period commencing on (and including) a Collection Date and ending on (but excluding) the next succeeding Collection Date and, in the case of the first Collection Period, commencing on (but excluding) 5th December, 2003 and ending on (and including) 25th July, 2004; "Collections" means any monies from time to time received by, or on behalf of, the Issuer, as of (but excluding) 5th December, in respect of the Loans; "Corporate Services Provider" means KPMG Fides Fiduciaria S.p.A., and includes any successor corporate services provider appointed from time to time under the Third Corporate Services Agreement; "Decree 239" means legislative decree No. 239 of 1st April, 1996, as subsequently amended; "Defaulted Loans" means the Loans under which there are at least two unpaid instalments (with regard to those Loans which repay on a semi-annual basis) or six unpaid instalments (with regard to those Loans which repay on a bimonthly basis); "Deferred Purchase Price" means in respect of any Interest Payment Date following redemption in full of the Notes, an amount equal to: (a) prior to the service of an Issuer Acceleration Notice, the positive difference between: (i) (ii) the Issuer Available Funds relating to such Interest Payment Date, and the sum of the amounts to be applied by the Issuer under items (i) to (viii) of the Pre- Event Priority of Payments; or (b) following the service of an Issuer Acceleration Notice, the positive difference between: (i) (ii) all amounts received or recovered by or on behalf of the Issuer or the Representative of the Noteholders in respect of the Claims, the Note Security and/or any of the other Transaction Documents, and the sum of the amounts to be applied by the Issuer under items (i) to (viii) of the Post- Event Priority of Payments, and which is due to the Originator under the Receivables Purchase Agreement; "English Deed of Charge" means the deed of charge to be executed on the Issue Date between the Issuer and the Representative of the Noteholders and governed by English law; "English Law Transaction Documents" means each of the Swap Agreements and all future swap agreements to which the Issuer may become a party in relation to this Securitisation Transaction which will be governed by English law and the English Deed of Charge; "Equity Capital Account" means the euro-denominated deposit account opened by the Issuer with Banca Nazionale del Lavoro S.p.A., or any other bank account as may replace it, into which the 68

69 Issuer's equity capital of _ 10,000 was deposited in 2001 and will be required to remain deposited for as long as any Notes are outstanding; "EURIBOR" "Euroclear" has the meaning given in Condition 6(c) (Interest on the Notes); means Euroclear Bank S.A./N.V. as operator of the Euroclear System; "euro-zone" means the region comprising those Member States of the European Union that adopted the single currency in accordance with the Treaty establishing the European Community (signed in Rome on 25th March, 1957) as amended by the Treaty on European Union (signed in Maastricht on 7th February, 1992) and the Treaty of Amsterdam (signed on 2nd October, 1997); "Event of Default" has the meaning given in Condition 10(a) (Events of Default); "Excess Swap Collateral" means an amount equal to the value of any collateral (or the applicable part thereof) transferred by a Swap Counterparty to the Issuer pursuant to a Swap Agreement that is in excess of such Swap Counterparty's liability to the Issuer thereunder (i) as at the date of termination of a transaction thereunder and (ii) that such Swap Counterparty is otherwise entitled to have returned to it in accordance with the terms of such Swap Agreement; "Expenses Account" means the euro-denominated current account opened by the Issuer with the Transaction Bank, as better identified in the Agency and Accounts Agreement, or any other account as may replace it, which will be replenished on each Interest Payment Date up to the Expenses Reserve Amount and which will be used by the Issuer on any Business Day (other than an Interest Payment Date) to pay all fees, costs, liabilities, expenses and taxes incurred by the Issuer in the context of this Securitisation Transaction or which is required to be paid in order to preserve the corporate existence of the Issuer or to maintain it in good standing or to comply with applicable legislation; "Expenses Reserve Amount" means _75,000; "Extraordinary Resolution" has the meaning given in the Rules of the Organisation of Noteholders; "Final Maturity Date" has the meaning given in Condition 7(a) (Final redemption); "Fitch" means Fitch Ratings Ltd.; "Further Loans" has the meaning given in Condition 7(b) (Other transactions involving other portfolios); "Further Notes" has the meaning given in Condition 7(b) (Other transactions involving other portfolios); "Further Portfolios" has the meaning given in Condition 7(b) (Other transactions involving other portfolios); "Further Securitisation" has the meaning given in Condition 7(b) (Other transactions involving other portfolios); "Further Security" has the meaning given in Condition 7(b) (Other transactions involving other portfolios); "Initial Purchase Price" means _514,716,310, payable by the Issuer to the Originator on the Issue Date as consideration for the Claims; 69

70 "INPDAP" means Istituto Nazionale di Previdenza per i Dipendenti dell'amministrazione Pubblica - INPDAP, whose statutory seat is at via Santa Croce in Gerusalemme 55, Rome, Italy; "Insolvency Event" will have occurred in respect of the Issuer if." (a) the Issuer becomes subject to any applicable bankruptcy, liquidation, administration, insolvency, composition or reorganisation (among which, without limitation, "fallimento", "liquidazione coatta amministrativa", "concordato preventivo ", "amministrazione straordinaria" and "amministrazione controllata", each such expression bearing the meaning ascribed to it by the laws of the Republic of Italy, and including also any equivalent or analogous proceedings under the law of the jurisdiction in which the Issuer is deemed to carry on business including the seeking of liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief of debtors) or similar proceedings or the whole or any substantial part of the undertaking or assets of the Issuer are subject to a pignoramento or similar procedure having a similar effect (other than any portfolio of assets purchased by the Issuer for the purposes of other securitisation transactions), unless in the opinion of the Representative of the Noteholders (who may in this respect rely on the advice of a lawyer selected by it), such proceedings are being disputed in good faith with a reasonable prospect of success; or (b) an application for the commencement of any of the proceedings under (a) above is made in respect of or by the Issuer or the same proceedings are otherwise initiated against the Issuer and, in the opinion of the Representative of the Noteholders (who may in this respect rely on the advice of a lawyer selected by it), the commencement of such proceedings is not being disputed in good faith with a reasonable prospect of success; or (c) the Issuer takes any action for a re-adjustment or deferment of any of its obligations or makes a general assignment or an arrangement or composition with or for the benefit of its creditors (other than the Issuer Secured Creditors) or is granted by a competent court a moratorium in respect of any of its indebtedness or any guarantee of any indebtedness given by it or applies for suspension of payments; or (d) an order is made or an effective resolution is passed for the winding-up, liquidation or dissolution in any form of the Issuer (except a winding-up for the purposes of or pursuant to a solvent amalgamation or reconstruction, the terms of which have been previously approved in writing by the Representative of the Noteholders, who may in this respect rely on the advice of a lawyer selected by it) or any of the events under article 2448 of the Italian civil code occurs with respect to the Issuer. "Insolvent" means, in respect of the Issuer, that: (a) (b) (c) the Issuer ceases or threatens to cease to carry on its business or a substantial part of its business; or the Issuer is deemed unable to pay its debts pursuant to or for the purposes of any applicable law; or the Issuer becomes unable to pay its debts as they fall due; "Intercreditor Agreement" means the intercreditor agreement dated the Signing Date between the Issuer, the Noteholders (represented by the Representative of the Noteholders) and the Other Issuer Creditors; "Interest Amount" has the meaning given in Condition 6(d) (Calculation of Interest Amounts); 70

71 "Interest Determination Date" has the meaning given in Condition 6(c) (Interest on the Notes); "Interest Payment Date" has the meaning given in Condition 6(a) (Interest Payment Dates); "Interest Period" means each period beginning on (and including) an Interest Payment Date (or, in the case of the first Interest Period, the Issue Date) and ending on (but excluding) the next (or, in the case of the first Interest Period, the first) Interest Payment Date; "Issuer Acceleration Notice" has the meaning given in Condition 10(b) (Delivery of an Issuer Acceleration Notice); "Issuer Available Funds" means, on each Calculation Date and in respect of the immediately following Interest Payment Date, an amount equal to the sum of: (a) the amount standing to the credit of the Collection Account as at the Collection Date immediately preceding the relevant Calculation Date consisting of, inter alia, (i) payment of interest, repayment of principal, payment of prepayment fees and of any other fees under the Loans as well as any recovery in respect of Defaulted Loans, (ii) interest accrued on and credited to the Collection Account (including interest accrued on the Cash Collateral), and (iii) payments made by the Originator under the Receivables Purchase Agreement but excluding the Cash Collateral; (b) (c) any amount due and payable, although not yet paid, to the Issuer by the Originator under any of the Transaction Documents, to the extent that such payment is made by the Originator to the Issuer no later than the Reporting Date; any amount due and payable, although not yet paid, to the Issuer by any of the Swap Counterparties under the relevant Swap Agreement on the second Business Day before the Interest Payment Date immediately following the relevant Calculation Date; (d) the amount standing to the credit of the Payment Account as at the Collection Date immediately preceding the relevant Calculation Date consisting of, without limitation, amounts received by the Issuer under any of the Transaction Documents during such Collection Period and interest accrued on and credited to the Payment Account, if any; and (e) to the extent that the Originator does not comply with its obligations to indemnify the Issuer following the occurrence of a Set-off Event pursuant to the Receivables Purchase Agreement, the lower of the (i) Cash Collateral and (ii) the amount due by the Originator to the Issuer as a result of the occurrence of a Set-off Event, but excluding any amount held by the Issuer which properly belongs to any Swap Counterparty in respect of any Excess Swap Collateral or Tax Credit (as defined in the relevant Swap Agreement), without duplication, payable to such Swap Counterparty pursuant to the relevant Swap Agreement; "Issuer Creditors" means (i) the Noteholders (represented, as the case may be, by the Representative of the Noteholders); (ii) the Other Issuer Creditors; and (iii) any other third-party creditors in respect of any taxes, costs, fees, expenses or liabilities incurred by the Issuer in relation to this Securitisation Transaction; "Issuer Secured Creditors" means the Representative of the Noteholders, the Paying Agents, the Agent Bank, the Computation Agent, the Transaction Bank, the Swap Counterparties, the Servicer, the Corporate Services Provider, the Noteholders, the Joint Lead Managers and the Originator; 71

72 "Issuer's Rights" means the Issuer's right, title and interest in and to the Claims, any rights that the Issuer has under the Transaction Documents and any other rights that the Issuer has against the Originator, any Other Issuer Creditors (including any applicable guarantors or successors) or third parties in connection with this Securitisation Transaction; "Italian Law Transaction Documents" means the Agency and Accounts Agreement, the Third Corporate Services Agreement, the Servicing Agreement, the Intercreditor Agreement, the Mandate Agreement, the Receivables Purchase Agreement and the Subscription Agreement; "Joint Lead Managers" means Citigroup Global Markets Limited, Credit Suisse First Boston (Europe) Limited and Unicredit Banca Mobiliare S.p.A.; "Letter of Undertaking" means the letter of undertaking delivered by Stichting Palatium, Stichting Thesaurum and the Stichting Corporate Services Provider to the Representative of the Noteholders on the Signing Date; "Loans" has the meaning attributed to the word "Mutui" in the Receivables Purchase Agreement, which term identifies the loans from which the Claims arise; "Mandate Agreement" means the agreement titled "Mandato di Gestione" dated the Signing Date between the Issuer and the Representative of the Noteholders; "Mandatory Redemption Event" has the meaning given in Condition 7(e) (Mandatory redemption in whole for taxation, legal or regulatory reasons); "Meeting" has the meaning given to it in the Rules of the Organisation of Noteholders; "Minimum Swap Counterparty Rating" means the short-term, unsecured, unsubordinated and unguaranteed credit rating of "FI" by Fitch and "A-l" by S&P; "Monte Titoli" means Monte Titoli S.p.A.; "Note Security" has the meaning given thereto in Condition 4 (Security); "Ohligors" means the debtors under the Loans; "Organisation of Noteholders" means the organisation of the Noteholders created by the issue and subscription of the Notes and regulated by the Rules of the Organisation of Noteholders attached hereto as a schedule; "Originator" means INPDAP; "Originator's Claims" means, collectively, the monetary claims that the Originator may from time to time have against the Issuer under the Receivables Purchase Agreement but excluding the Initial Purchase Price and the Deferred Purchase Price; "Other Issuer Creditors" means the Paying Agents, the Representative of the Noteholders (on its own behalf but not on behalf of the Noteholders), the Agent Bank, the Computation Agent, the Transaction Bank, the Swap Counterparties, the Joint Lead Managers, INPDAP (in any capacity) and the Corporate Services Provider; "Paying Agents" means, collectively, the Principal Paying Agent, the Italian Paying Agent and the Luxembourg Paying Agent; 72

73 "Payment Account" means the euro-denominated current account opened by the Issuer with the Transaction Bank, as better identified in the Agency and Accounts Agreement, or any other account as may replace it, into which, inter alia, such monies standing to the credit of the Collection Account as are to be used on each Interest Payment Date to make payments to the Noteholders and to thirdparty creditors of the Issuer will be transferred up to the Business Day immediately preceding the relevant Interest Payment Date; "Partially-Undrawn Loans" means the Loans which, as at 5th December, 2003, were not entirely drawn down; "Portfolio" means the aggregate of the Claims; "Post-Event Priority of Payments" means the provisions relating to the order of priority of payments as set out in Condition 3(e) (Post-Event Priority of Payments); "Pre-Event Priority of Payments" means the provisions relating to the order of priority of payments in respect of the Issuer Available Funds as set out in Condition 3(d) (Pre-Event Priority of Payments); "Principal Amount Outstanding" means, on any day: (a) in relation to the Notes, the aggregate principal amount outstanding of all Notes; (b) in relation to a Note, the principal amount of that Note upon issue less the aggregate amount of all Principal Payments in respect of that Note which have become due and payable (and which have actually been paid) on or prior to that date; "Principal Payment" has the meaning given in Condition 7(c) (Mandatory pro rata redemption in whole or in part); "Priority of Payments" means the Pre-Event Priority of Payments or the Post-Event Priority of Payments, as the context requires; "Rate of Interest" has the meaning given in Condition 6(c) (Interest on the Notes); "Rating Agencies" means, collectively, Fitch and S&P; "Rating Event" will have occurred, with respect to the relevant Swap Agreement, to the relevant Swap Counterparty if: (a) the credit rating of the relevant Swap Counterparty has been downgraded below the Minimum Swap Counterparty Rating; (b) as a result of such downgrade, the then current rating of the Notes may, in the reasonable opinion of the relevant Rating Agency, be downgraded or placed under review, or on credit watch (as the case may be) for possible downgrade; and (c) the relevant Swap Counterparty has failed to successfully implement one of the options available to it pursuant to the relevant Swap Agreement within the time period specified in the relevant Swap Agreement in the case of a downgrade of its credit rating below the Minimum Swap Counterparty Rating; "Receivables Purchase Agreement" means the receivables purchase agreement dated the Signing Date between the Issuer and the Originator; 73

74 "Reference Banks" means, initially, Barclays Bank PLC, Lloyds TSB Bank plc, HSBC Bank plc and Royal Bank of Scotland plc, each acting through its principal London office and, if the principal London office of any such bank is unable or unwilling to continue to act as a Reference Bank, the principal London office of such other bank as the Issuer shall appoint and as may be approved in writing by the Representative of the Noteholders to act in its place; "Relevant Date" means, in respect of any payment in relation to the Notes, whichever is the later of: (a) (b) the date on which the payment in question first becomes due; and if the full amount payable has not been received by the Principal Paying Agent or the Representative of the Noteholders on or prior to such date, the date on which, the full amount having been so received, notice to that effect has been given to the Noteholders in accordance with Condition 17 (Notices); "Relevant Screen" means the page of the Reuters service or of the Bloomberg service, or any other medium for electronic display of data as may be previously approved in writing by the Representative of the Noteholders and as has been notified to the Noteholders in accordance with Condition 17 (Notices); "Reporting Date" means 10th February and 10th August of each year or, if such day is not a Business Day, the immediately following Business Day, the first Reporting Date being in August 2004; "Rules of the Organisation of Noteholders" means the rules of the Organisation of Noteholders attached hereto as a schedule, as amended, modified or supplemented from time to time; "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies Inc.; "SC1 Swap Agreement" means the ISDA Master Agreement, the schedule and the conflrmation dated the Signing Date between the Issuer, the Representative of the Noteholders and Citibank, N.A., London Branch; "SC1 Swap Transaction" means the swap transaction documented under the SC1 Swap Agreement; "SC2 Swap Agreement" means the ISDA Master Agreement, the schedule and the confirmation dated the Signing Date between the Issuer, the Representative of the Noteholders and Credit Suisse First Boston International; "SC2 Swap Transaction" means the swap transaction documented under the SC2 Swap Agreement; "SC3 Swap Agreement" means the ISDA Master Agreement, the schedule and the confirmation dated the Signing Date between the Issuer, the Representative of the Noteholders and UniCredito Italiano S.p.A.; "SC3 Swap Transaction" means the swap transaction documented under the SC3 Swap Agreement; "Screen Rate" has the meaning given in Condition 6(c) (Interest on the Notes); "Secured Amounts" means all the amounts due, owing or payable by the Issuer, whether present or future, actual or contingent, to the Noteholders under the Notes and the other Issuer Secured Creditors pursuant to the Transaction Documents; "Securitisation Transaction" means the securitisation of the Claims by the Issuer through the issuance of the Notes; 74

75 "Security Interest" means any mortgage, charge, pledge, lien, right of set-off, right of counterclaim, right of combination, special privilege (privilegio speciale), assignment by way of security, retention of title or any other security interest whatsoever or any other agreement or arrangement having the effect of conferring security; "Servicer" means INPDAP, which expression includes any successor servicer of the Portfolio; "Servicing Agreement" means the servicing agreement dated the Signing Date between the Issuer and the Servicer relating to the servicing of the Portfolio; "Set-off Event" will have occurred if: (a) following a failure by INPDAP to disburse the amounts due to the Obligors under the relevant Partially-Undrawn Loans, the relevant Obligors exercise their right of set-off against the amounts payable by them to the Issuer under the relevant Loan, or (b) for whatever reason (including, for instance, failure by the Obligors to request the drawdown) the undrawn portion of the Partially-Undrawn Loans is never disbursed by INPDAP to the relevant Obligor and the amortisation plan of the relevant Partially-Undrawn Loans is reduced accordingly; "Specified Office" means in respect of the agents listed in Condition 17(d) (Initial Specified Offices) the addresses indicated in the same Condition 17(d), or any specified office notified to the Noteholders in accordance with Condition 17 (Notices) from time to time; "Stichting Corporate Services Provider" means TMF Management B.V.; "Stichting Palatium" means Stichting Palatium, being a Dutch foundation (stichting) established under the laws of The Netherlands whose statutory seat is at Parnassustoren, Locatellikade 1, 1076 AZ Amsterdam, The Netherlands; "Stichting Thesaurum" means Stichting Thesaurum, being a Dutch foundation (stichting) established under the laws of The Netherlands whose statutory seat is at Parnassustoren, Locatellikade 1, 1076 AZ Amsterdam, The Netherlands; "Subordinated Termination Payment" means, upon the occurrence of an early termination of a Swap Transaction, the termination payment payable (if any) by the Issuer to the relevant Swap Counterparty, provided that the early termination of the relevant Swap Transaction is due to: (a) the occurrence of an Event of Default (as defined in the relevant Swap Agreement and which, for the avoidance of doubt, is not the same as an Event of Default under the Notes) in relation to which the relevant Swap Counterparty is the Defaulting Party (as defined in the relevant Swap Agreement); or (b) the occurrence of a Rating Event in respect of the relevant Swap Counterparty; "Subscription Agreement" means the subscription agreement dated the Signing Date between the Issuer, the Representative of the Noteholders and the Joint Lead Managers; "Swap Agreements" means, collectively, the SC1 Swap Agreement, the SC2 Swap Agreement and the SC3 Swap Agreement and "Swap Agreement" means any one of these, as the context requires; "Swap Counterparties" means, collectively, Citibank, N.A., London Branch, Credit Suisse First Boston International and UniCredito Italiano S.p.A.; 75

76 "Swap Transactions" means, collectively, the SC1 Swap Transaction, the SC2 Swap Transaction and the SC3 Swap Transaction and "Swap Transaction" means any one of these; "Third Corporate Services Agreement" means the corporate services agreement dated the Signing Date between the Issuer, the Representative of the Noteholders and the Corporate Services Provider; "Transaction Documents" means the Letter of Undertaking, the English Law Transaction Documents and the Italian Law Transaction Documents and "Transaction Document" means any one of these; "Valuation Date" means 31st December, 2003; and "Written Resolution" means a resolution in writing signed by or on behalf of all holders of Notes who for the time being are entitled to receive notice of a Meeting of such holders of Notes in accordance with the Rules of the Organisation of Noteholders, whether contained in one document, or several documents in the same form, each signed by or on behalf of one or more such holders of Notes. 2. Form, denomination and title (a) Form The Notes are in bearer and dematerialised form and will be wholly and exclusively deposited with Monte Titoli in accordance with article 28 of legislative decree No. 213 of 24th June, 1998 of the Republic of Italy, through the authorised institutions listed in article 30 of such legislative decree. (b) Denomination The Notes are issued in the denomination of _5,000. (c) Title The Notes will be held by Monte Titoli on behalf of the Noteholders until redemption and cancellation for the account of each relevant Monte Titoli Account Holder. The expression "Monte Titoli Account Holder" means any authorised financial intermediary institution entitled to hold accounts on behalf of its customers with Monte Titoli and includes any depository banks appointed by Clearstream, Luxembourg and Euroclear. The Notes will at all times be in book entry form and title to the Notes will be evidenced by book entry in accordance with the provisions of (i) article 28 of Italian legislative decree No. 213 of 24th June, 1998; and (ii) Resolution No of 23rd December, 1998 of the Commissione Nazionale per le Societgz e la Borsa (CONSOB) as subsequently amended. No physical document of title will be issued in respect of the Notes. 3. Status, ranking and priority (a) Status The Notes constitute limited recourse obligations of the Issuer and, accordingly, the extent of the obligation of the Issuer to make payments under the Notes is limited to the amounts received or recovered by or on behalf of the Issuer or the Representative of the Noteholders in respect of the Claims and under the Transaction Documents. The Notes are secured over certain assets of the Issuer pursuant to the English Deed of Charge. The Noteholders acknowledge that the limited recourse nature of the Notes produces the effects of a contratto 76

77 aleatorio and they accept the consequences thereof, including but not limited to the provisions of article 1469 of the Italian civil code. The rights arising from the English Deed of Charge are included in each Note. (b) Ranking (i) The Notes will at all times rank pari passu and without preference or priority among themselves. (ii) Under the Intercreditor Agreement, the Rules of the Organisation of Noteholders and these Conditions, in connection with the exercise of the powers, authorities, rights, duties and discretions of the Representative of Noteholders under or in relation to the Notes or any of the Transaction Documents, the Representative of the Noteholders shall have regard to the interests of all Noteholders as a whole. (c) Sole obligations The Notes are obligations solely of the Issuer and are not obligations of, or guaranteed by, any of the other parties to the Transaction Documents. (d) Pre-Event Priority of Payments Prior to the service of an Issuer Acceleration Notice, the Issuer Available Funds as calculated on each Calculation Date will be applied by, or on behalf of, the Issuer on the Interest Payment Date immediately following such Calculation Date in making payments or provisions in the following order of priority (the "Pre-Event Priority of Payments") (after making payments of certain monies which properly belong to any Swap Counterparty in respect of any Excess Swap Collateral or Tax Credit (as defined in the relevant Swap Agreement) payable to such Swap Counterparty pursuant to the relevant Swap Agreement) but, in each case, only if and to the extent that payments or provisions of a higher priority have been made in full: (i) first, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of: (A) any and all outstanding taxes due and payable by the Issuer (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs); (B) any and all outstanding fees, costs, liabilities and any other expenses to be paid in order to preserve the corporate existence of the Issuer, to maintain it in good standing, to comply with applicable legislation and to fulfil obligations to third parties (not being Other Issuer Creditors) incurred in the course of the Issuer's business in relation to this Securitisation Transaction (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs); (C) any and all outstanding fees, costs and expenses required to be paid in connection with the listing, deposit or ratings of the Notes, or any notice to be given to the Noteholders or the other parties to the Transaction Documents (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs); 77

78 (D) any and all outstanding fees, costs and expenses of and all other amounts due and payable to the Representative of the Noteholders or any appointee thereof; (E) all amounts due and payable to each of the Joint Lead Managers under the terms of the Subscription Agreement; and (F) the amount necessary to replenish the Expenses Account up to the Expenses Reserve Amount; (ii) second, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of any and all outstanding fees, costs and expenses of and all other amounts due and payable to the Paying Agents, the Agent Bank, the Computation Agent, the Auditors, the Servicer, the Corporate Services Provider and the Transaction Bank, each under the Transaction Document(s) to which it is a party; (iii) third, in or towards satisfaction, pro rata and pari passu, of all amounts due and payable to each of the Swap Counterparties under the terms of the Swap Agreements (including any termination payment due and payable by the Issuer under the relevant Swap Agreement other than any Subordinated Termination Payments due and payable to any Swap Counterparty under the relevant Swap Agreement); (iv) fourth, in or towards satisfaction, pro rata and pari passu, of all amounts of interest due and payable on the Notes; (v) fifth, in or towards repayment to INPDAP of amounts which properly belong to INPDAP and which were erroneously transferred by INPDAP, in its capacity as Servicer, to the Issuer; (vi) sixth, in or towards repayment, pro rata and pari passu, of principal on the Notes until repayment in full of the Notes; (vii) seventh, in or towards satisfaction, pro rata and pari passu, of any Subordinated Termination Payments due and payable to any Swap Counterparty under the relevant Swap Agreement (and, for the avoidance of doubt, not already paid to the relevant Swap Counterparty pursuant to item (iii) above); (viii) eighth, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of all amounts due and payable to the Originator in respect of any Originator's Claims under the terms of the Receivables Purchase Agreement; and (ix) ninth, in or towards satisfaction of the Deferred Purchase Price due and payable to INPDAP under the terms of the Receivables Purchase Agreement. (e) Post-Event Priority of Payments At any time following delivery of an Issuer Acceleration Notice (without prejudice to the proviso below concerning the possibility for the Representative of the Noteholders to accumulate funds up to a certain amount) or, in the event that the Issuer opts for the early redemption of the Notes under Condition 7(d) (Optional redemption) or Condition 7(e) (Mandatory redemption in whole for taxation, legal or regulatory reasons), on the Interest Payment Date on which the Notes are to be redeemed early, all amounts received or recovered by or on behalf of the Issuer or the Representative of the Noteholders in respect of the Claims, the Note Security and/or any of the other Transaction Documents will be applied 78

79 by or on behalf of the Representative of the Noteholders in the following order (the "Post- Event Priority of Payments" and, together with the Pre-Event Priority of Payments, the "Priority of Payments") (after making payments of certain monies which properly belong to any Swap Counterparty in respect of any Excess Swap Collateral or Tax Credit (as defined in the relevant Swap Agreement) payable to such Swap Counterparty pursuant to the relevant Swap Agreement) but, in each case, only if and to the extent that payments of a higher priority have been made in full: (i) first, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of: (A) (B) (C) (D) (E) any and all outstanding taxes due and payable by the Issuer (to the extent that amounts standing to the credit of the Expenses Account are insufficient to pay such costs); any and all outstanding fees, costs, liabilities and any other expenses to be paid in order to preserve the corporate existence of the Issuer, to maintain it in good standing, to comply with applicable legislation and to fulfil obligations to third parties (not being Other Issuer Creditors) incurred in the course of the Issuer's business in relation to this Securitisation Transaction (to the extent the Issuer is not already subject to any insolvency or insolvency-like proceedings); any and all outstanding fees, costs and expenses required to be paid in connection with the listing, deposit or ratings of the Notes, or any notice to be given to the Noteholders or the other parties to the Transaction Documents (to the extent the Issuer is not already subject to any insolvency or insolvency-like proceedings); all amounts due and payable to each of the Joint Lead Managers under the terms of the Subscription Agreement; and any and all outstanding fees, costs and expenses of, and all other amounts due and payable to, the Representative of the Noteholders or any appointee thereof; (ii) second, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of any and all outstanding fees, costs and expenses of, and all other amounts due and payable to, the Paying Agents, the Agent Bank, the Auditors, the Computation Agent, the Servicer, the Corporate Services Provider and the Transaction Bank, each under the Transaction Document(s) to which it is a party; (iii) third, in or towards satisfaction, pro rata and pari passu, of all amounts due and payable to each of the Swap Counterparties under the terms of the Swap Agreements (including any termination payment due and payable by the Issuer under the relevant Swap Agreement other than any Subordinated Termination Payments due and payable to any Swap Counterparty under the relevant Swap Agreement); (iv) fourth, in or towards satisfaction, pro rata and pari passu, of all amounts due and payable in respect of interest accrued but unpaid on the Notes at such date; (v) fifth, in or towards repayment to INPDAP of amounts which properly belong to INPDAP and which were erroneously transferred by INPDAP, in its capacity as Servicer, to the Issuer; 79

80 (vi) sixth, in or towards repayment, pro rata and pari passu, of the Principal Amount Outstanding of the Notes until redemption in full of the Notes; (vii) seventh, in or towards satisfaction, pro rata and pari passu, of any Subordinated Termination Payments due and payable to any Swap Counterparty under the relevant Swap Agreement (and, for the avoidance of doubt, not already paid to the relevant Swap Counterparty pursuant to item (iii) above); (viii) eighth, in or towards satisfaction, pro rata and pari passu, according to the respective amounts thereof, of all amounts due and payable to the Originator in respect of any Originator's Claims under the terms of the Receivables Purchase Agreement; and (ix) ninth, in or towards satisfaction of the Deferred Purchase Price due and payable to INPDAP under the terms of the Receivables Purchase Agreement, provided however that if, following the delivery of an Issuer Acceleration Notice, the amount of the monies at any time available to the Issuer, or the Representative of the Noteholders for the payments above shall be less than five per cent. of the Principal Amount Outstanding of the Notes, the Representative of the Noteholders may invest such monies (or cause such monies to be invested) in some or one of the investments authorised pursuant to the Intercreditor Agreement. The Representative of the Noteholders may vary such investments (or cause such investments to be varied) and may accumulate such investments and the resulting income (or cause such investments and the resulting income to be accumulated) until the accumulations, together with any other funds for the time being under the control of the Representative of the Noteholders and available for such purpose, amount to at least five per cent. of the Principal Amount Outstanding of the Notes and then such accumulations and funds shall be applied to make the payments above. 4. Security (a) As security for the discharge of the Secured Amounts, on the Issue Date the Issuer will create, pursuant to the English Deed of Charge, an English law deed of charge over all the Issuer's fights, title, interest and benefit, present and future, in, to and under the Swap Agreements and all future swap agreements to which the Issuer may become a party in relation to this Securitisation Transaction which will be governed by English law in favour of the Representative of the Noteholders for itself and as security trustee for the Noteholders and the other Issuer Secured Creditors (the "Note Security"). (b) In addition, by operation of Italian law, the Issuer's right, title and interest in and to the Claims, as well as any right that the Issuer has acquired against the Originator or any third parties in the context of this Securitisation Transaction, is segregated from all other assets of the Issuer and, in accordance with these Conditions and the Transaction Documents, amounts deriving therefrom will only be available, both prior to and following a winding-up of the Issuer, to satisfy the obligations of the Issuer to the Noteholders, each of the Other Issuer Creditors and the other Issuer Creditors. 5. Covenants (a) Covenants by the Issuer For so long as any Note remains outstanding, the Issuer shall not, save with the prior written consent of the Representative of the Noteholders or as provided in or envisaged by any of the Transaction Documents: 80

81 (i) Negative pledge create or permit to subsist any Security Interest whatsoever over any of its assets or undertakings, or sell, lend, part with or otherwise dispose of all or any part of its assets (including any uncalled capital) or its undertaking, present or future, whether in one transaction or in a series of transactions; (ii) Restrictions on activities (A) engage in any activity whatsoever which is not incidental to or necessary in connection with any of the activities in which the Transaction Documents provide or envisage that the Issuer will engage; (B) have any subsidiaries, societgt controllata (as defined in article 2359 of the Italian civil code) or any employees or premises; or (C) at any time approve or agree or consent to any act or thing whatsoever or do, or permit to be done, any act or thing which is materially prejudicial to the interests of the Noteholders under the Transaction Documents; (iii) Dividends or distributions pay any dividend or make any other distribution or return or repay any equity capital to its quotaholders, or increase its equity capital, save as required by law; (iv) Borrowings incur any indebtedness in respect of borrowed money whatsoever or give any guarantee in respect of any indebtedness or of any obligation of any person; (v) Merger consolidate or merge with any other person or convey or transfer its properties or assets substantially as an entirety to any other person; (vi) No variation or waiver permit the validity or effectiveness of any of the Transaction Documents to which it is a party, or the priority of the Security Interests created thereby, to be amended, terminated or discharged, or consent to any variation of, or exercise any powers of consent or waiver pursuant to the terms of, the Intercreditor Agreement, these Conditions or any of the other Transaction Documents to which it is a party, or permit any party to any of the Transaction Documents to which it is a party, or any other person whose obligations form part of the Note Security, to be released from such obligations, save as envisaged in the Transaction Documents to which it is a party; (vii) Loans agree to any request by the Servicer to change the rate of interest on any Loan or to waive any of its rights under any Loan; 81

82 (viii) Bank accounts with the exception of the Equity Capital Account and such other accounts that the Issuer may have opened or may open in the future in the context of securitisation transactions other than this Securitisation Transaction, have an interest in any bank account other than the Collection Account, the Expenses Account and the Payment Account, unless the Representative of the Noteholders receives confm-nation that the opening of such account(s) will be needed in the context of this Securitisation Transaction and will not prejudice the ratings of the Notes and that the net remuneration on any such new account(s) will not be lower than that of the Accounts; or (ix) Statutory documents amend, supplement or otherwise modify its statuto or atto costitutivo except where such amendment, supplement or modification is required by any compulsory provision of Italian law or by the competent regulatory authorities; (x) Corporate records, financial statements and books of account cease to maintain corporate records, financial statements and books of account separate from those of the Originator and of any other person or entity; or (xi) Compliance with corporate formalities cease to comply with all necessary corporate formalities. (b) Other transactions involving other portfolios None of the covenants in this Condition 5 shall prohibit the Issuer from: (i) acquiring, by way of separate transactions unrelated to this Securitisation Transaction, further portfolios of monetary claims or revenues in addition to the Claims from the Originator or any other entity ("Further Portfolios"); (ii) securitising such Further Portfolios (each, a "Further Seeuritisation") through the issue of further debt securities additional to the Notes (the "Further Notes") and/or borrowing loans (the "Further Loans"); (iii) entering into agreements and transactions, with the Originator or any other entity, that are incidental to or necessary in connection with such Further Securitisation including, inter alia, the ring-fencing or the granting of security over such Further Portfolios and any right, benefit, agreement, instrument, document or other asset of the Issuer relating thereto to secure such Further Notes or Further Loans (the "Further Security"), provided that: (A) the Issuer confirms in writing to the Representative of the Noteholders that such Further Security does not comprise or extend over any of the Claims or any of the other Issuer's Rights; (B) the Issuer confirms in writing to the Representative of the Noteholders that the terms and conditions of the Further Notes or the Further Loans contain provisions to the effect that the obligations of the Issuer whether in respect of interest, principal, premium or other amounts in respect of such Further Notes 82

83 or Further Loans, are limited recourse obligations of the Issuer, limited to some or all of the assets comprised in such Further Security; (C) the Issuer confirms in writing to the Representative of the Noteholders that each person party to such Further Securitisation agrees and acknowledges that the obligations of the Issuer to such person in connection with such Further Securitisation are limited recourse obligations of the Issuer, limited to some or all of the assets comprised in such Further Security and that each creditor in respect of such Further Securitisation or the representative of the holders of such Further Notes has agreed to limitations on its ability to take action against the Issuer, including in respect of insolvency proceedings relating to the Issuer, on terms in all significant respects equivalent to those contained in the Intercreditor Agreement; (D) the Rating Agencies give written confirmation to the Representative of the Noteholders that the issue of such Further Notes or borrowing of such Further Loans would not adversely affect the then current rating of the Notes or the then current rating of any other series or class of Further Notes issued by the Issuer and outstanding; (E) the Issuer confirms in writing to the Representative of the Noteholders that the terms and conditions of such Further Notes or Further Loans will include: (1) covenants by the Issuer in all significant respects equivalent to those covenants provided in paragraphs (A) to (D) above; and (2) provisions which are the same as or, in the sole discretion of the Representative of the Noteholders, equivalent to this proviso; and (F) the Representative of the Noteholders is satisfied that conditions (A) to (E) of this proviso have been satisfied. In giving any consent to the foregoing, the Representative of the Noteholders may require the Issuer to make such modifications or additions to the provisions of any of the Transaction Documents (as may itself consent thereto on behalf of Noteholders) or may impose such other conditions or requirements as the Representative of the Noteholders may deem expedient (in its absolute discretion) in the interests of the Noteholders and may rely on any written confirmation from the Issuer as to the matters contained therein. 6. Interest (a) Interest Payment Dates Each Note bears interest on its Principal Amount Outstanding at the applicable rate determined in accordance with this Condition 6 from (and including) the Issue Date, payable in euro in arrear on 21st August, 2004 and, thereafter, semi-annually in arrear on 21st February and 21st August in each year, subject as provided in Condition 8 (Payments), provided, however, that, if any such date falls on a date which is not a Business Day, it will be postponed to the next Business Day (each such date, an "Interest Payment Date"). (b) Termination of interest Each Note shall cease to bear interest from its due date for final redemption unless payment of principal is improperly withheld or refused or default is otherwise made in respect thereof, in 83

84 which case it will continue to bear interest in accordance as before judgment) until whichever is the earlier of: with this Condition 6 (as well after (i) (ii) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder; and the Cancellation Date. (c) Interest on the Notes The rate of interest applicable to the Notes (the "Rate of Interest") for each Interest Period will be determined by the Agent Bank on the following basis: (i) the Agent Bank will determine the rate offered in the euro-zone inter-bank market for six-month deposits in euro ("EURIBOR") (save that for the first Interest Period the rate will be obtained upon linear interpolation of EURIBOR for seven- and eightmonth deposits in euro) which appears on Telerate Monitor at Telerate Page 248 (the "Screen Rate") or (aa) such other page as may replace Telerate Monitor at Telerate Page 248 on that service for the purpose of displaying such information or (bb) if that service ceases to display such information, such page as displays such information on such equivalent service (or, if more than one, that one which is approved by the Representative of the Noteholders) as may replace the Telerate Monitor at Telerate Page 248 at or about 11 a.m. (Brussels time) on the second Business Day immediately preceding such Interest Period (the "Interest Determination Date"); or (ii) if the Screen Rate is unavailable at such time for six-month deposits in euro, then the rate for any relevant period shall be the arithmetic mean (rounded to four decimal places with the mid-point rounded upwards) of the rates notified to the Agent Bank at its request by each of the Reference Banks as the rate at which six-month deposits in euro in a representative amount are offered by that Reference Bank to leading banks in the euro-zone inter-bank market at or about 11 a.m. (Brussels time) on that date; or (iii) if, at that time, the Screen Rate is unavailable and only two or three of the Reference Banks provide such offered quotations to the Agent Bank, the relevant rate shall be determined, as aforesaid, on the basis of the offered quotations of those Reference Banks providing such quotations; or (iv) if, at that time, the Screen Rate is unavailable and only one or none of the Reference Banks provides the Agent Bank with such an offered quotation, the relevant rate shall be the rate in effect for the immediately preceding period to which one of subparagraphs (i) or (ii) above shall have applied; and the Rate of Interest for such Interest Period shall be the sum of: (A) 0.04 per cent. per annum; and (B) the EURIBOR or (as the case may be) the arithmetic mean as determined above. (d) Calculation of Interest Amounts The Agent Bank will, as soon as practicable after the Interest Determination Date in relation to each Interest Period, calculate the amount of interest (the "Interest Amount") payable in respect of the Notes for such Interest Period. The Interest Amount will be calculated by applying the Rate of Interest for such Interest Period to the Principal Amount Outstanding of 84

85 the Notes during such Interest Period, multiplying the product of such calculation by the actual number of days in such Interest Period and dividing by 360, and rounding the resulting figure to the nearest cent (half a cent being rounded upwards). (e) Publication of Rate of Interest and Interest Amount The Agent Bank will cause each Rate of Interest and each Interest Amount determined by it, together with the relevant Interest Payment Date, to be notified to the Paying Agents, Monte Titoli, the Computation Agent, the Corporate Services Provider, the Representative of the Noteholders and each stock exchange on which the Notes are then listed as soon as practicable after such determination but in any event not later than the first day of the relevant Interest Period. Notice thereof shall also promptly be given by or on behalf of the Issuer to the Noteholders, pursuant to Condition 17 (Notices), if required by the rules of the relevant stock exchange. (f) Amendments to publications The Agent Bank will be entitled to recalculate any Rate of Interest or Interest Amount (on the basis of the foregoing provisions) without notice in the event of an extension or shortening of the relevant Interest Period. (g) Determination or calculation by the Representative of the Noteholders If the Agent Bank does not at any time for any reason determine the Rate of Interest or the Interest Amount for the Notes in accordance with this Condition 6, the Representative of the Noteholders shall (but without incurring any liability to any person as a result): (i) determine the Rate of Interest at such rate as, in its absolute discretion (having such regard as it shall think fit to the procedures described in this Condition 6), it shall deem fair and reasonable in all the circumstances; and/or (as the case may be) (ii) calculate the relevant Interest Amount in the manner specified in this Condition 6, and any such determination and/or calculation shall be deemed to have been made by the Agent Bank. 7. Redemption, purchase and cancellation (a) Final redemption Unless previously redeemed and cancelled as provided in this Condition 7, the Issuer shall redeem the Notes at their Principal Amount Outstanding, plus any accrued but unpaid interest, on the Interest Payment Date falling in February 2019 (the "Final Maturity Date"), subject as provided in Condition 8 (Payments). (b) Cancellation Date If the Notes cannot be redeemed in full on the Final Maturity Date, as a result of the Issuer having insufficient Issuer Available Funds for application in or towards such redemption, any amount unpaid shall remain outstanding and these Conditions shall continue to apply in full in respect of the Notes until the Cancellation Date, at which date any amount outstanding, whether in respect of interest, principal or other amounts in respect of the Notes shall be finally and definitively cancelled. 85

86 (c) Mandatory pro rata redemption in whole or in part (i) If no Issuer Acceleration Notice has been delivered to the Issuer by the Representative of the Noteholders and if, at the close of business on the Calculation Date immediately preceding the Interest Payment Date falling in August 2004 or any Interest Payment Date thereafter, there are Issuer Available Funds available for the purpose after making all higher-ranking payments pursuant to the Pre-Event Priority of Payments, the Issuer will apply such Issuer Available Funds on the Interest Payment Date following each such Calculation Date in or towards the mandatory redemption of the Notes, until the Notes have been redeemed in full, and will cause details of such mandatory redemption to be published in accordance with Condition 17 (Notices) by not later than one Business Day prior to such Interest Payment Date. (ii) The principal amount redeemable in respect of each Note (a "Principal Payment") on any Interest Payment Date shall be a pro rata share of the Issuer Available Funds determined in accordance with the provisions of this Condition 7 to be available to redeem the Notes on such date, calculated by reference to the ratio borne by the then Principal Amount Outstanding of such Note to the then Principal Amount Outstanding of the Notes (rounded down to the nearest cent), provided always that no such Principal Payment may exceed the Principal Amount Outstanding of the relevant Note. (d) Optional redemption Provided that no Issuer Acceleration Notice has been served, the Issuer may, at its option, redeem the Notes (in whole but not in part) at their Principal Amount Outstanding (plus any accrued but unpaid interest) in accordance with the payment order set out in the Post-Event Priority of Payments and, subject to the Issuer having sufficient funds to redeem all the Notes and to make all payments ranking in priority thereto, on any Interest Payment Date on which the Principal Amount Outstanding of the Notes is equal to, or less than, 10 per cent. of the Principal Amount Outstanding of the Notes as at the Issue Date, subject to the Issuer: (i) giving not more than 60 nor less than 30 days' written notice to the Representative of the Noteholders and the Noteholders, pursuant to Condition 17 (Notices), of its intention to redeem the Notes (in whole but not in part); and (ii) having provided to the Representative of the Noteholders a certificate signed by the sole director or the chairman of the board of directors of the Issuer, as the case may be, to the effect that it will have the funds on such Interest Payment Date to discharge all its obligations under the Notes and any obligations ranking in priority thereto. The Issuer (and the Representative of the Noteholders acting in the name and on behalf of the Issuer) is entitled to dispose of the Claims in order to finance the redemption of the Notes in the circumstances described in this Condition 7(d). (e) Mandatory redemption in whole for taxation, legal or regulatory reasons In the circumstances in which any of the following events (each, a "Mandatory Redemption Event") occurs: (i) by reason of a change in law or the interpretation or administration thereof since the Issue Date, the patrimonio separato of the Issuer becomes subject to taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the Republic of Italy or any political sub-division thereof or 86

87 any authority thereof or therein or any applicable taxing authority having jurisdiction, provided that (a) such taxes, duties, assessments or governmental charges have adversely affected the rating of the Notes by one or more of the Rating Agencies or (b) at least one Rating Agency has confirmed in writing that such taxes, duties, assessments or governmental charges will adversely affect the then current rating of the Notes; (ii) (iii) either the Issuer or any paying agent appointed in respect of the Notes or any custodian of the Notes is required (by reason of a change in law or the interpretation or administration thereof since the Issue Date) to deduct or withhold any amount (other than when such withholding or deduction is imposed on a payment to a Noteholder being an individual) in respect of the Notes, from any payment of principal or interest on such Interest Payment Date for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the Republic of Italy or any political sub-division thereof or any authority thereof or therein or any other applicable taxing authority having jurisdiction and provided that such deduction or withholding may not be avoided by appointing a replacement paying agent or custodian in respect of the Notes before the Interest Payment Date following the change in law or the interpretation or administration thereof; any amounts of interest payable on the Loans to the Issuer are required (by reason of a change in law or the interpretation or administration thereof since the Issue Date) to be deducted or withheld from the Issuer for or on account of any present or future taxes, duties assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the Republic of Italy or any political subdivision thereof or any authority thereof or therein or any other applicable taxing authority having jurisdiction, provided that (a) such deduction or withholding has adversely affected the rating of the Notes by one or more of the Rating Agencies or (b) at least one Rating Agency has confirmed in writing that such deduction or withholding will adversely affect the then current rating of the Notes; (iv) any of the Swap Transactions is terminated following the occurrence of a Tax Event or a Tax Event Upon Merger (both as defined in the relevant Swap Agreement) provided that the Issuer does not, within 30 Business Days from such termination, enter into a replacement swap transaction (having substantially the same terms and conditions as the Swap Transaction which was terminated) with a replacement swap counterparty whose unsecured, unsubordinated and unguaranteed debt obligations are not rated below the Minimum Swap Counterparty Rating; or (v) it is or will become unlawful for the Issuer (by reason of a change in law or the interpretation or administration thereof since the Issue Date) to perform or comply with any of its material obligations under or in respect of the Notes or any of the Transaction Documents to which it is a party, the Issuer must redeem the Notes (in whole but not in part) at their Principal Amount Outstanding (plus any accrued but unpaid interest) in accordance with the payment order set out in the Post-Event Priority of Payments on the Interest Payment Date following any direction to the Issuer to redeem all of the Notes by or pursuant to an Extraordinary Resolution of the holders of the outstanding Notes, provided that (a) the Issuer has, prior to any such Extraordinary Resolution being proposed, delivered to the Representative of the Noteholders a legal opinion (which the Issuer hereby undertakes to request as soon as it becomes aware of the possible occurrence of any one of the Mandatory Redemption Events 87

88 and which the Representative of the Noteholders is entitled to request on the Issuer's behalf), satisfactory to the Representative of the Noteholders, from a firm of lawyers in the relevant jurisdiction of international repute (approved in writing by the Representative of the Noteholders) opining on the change in law or the interpretation or the administration thereof and on the effect of the relevant Mandatory Redemption Event and (b) the Representative of the Noteholders or a third party selected for this purpose by the Representative of the Noteholders certifies in writing (based also on the information provided by the Computation Agent) that the Issuer will have sufficient funds to redeem the Notes and to make all payments ranking in priority thereto due to either (i) a firm offer (which is acceptable to the Representative of the Noteholders) received by the Issuer for the purchase of the Claims by any offeror or (ii) a firm offer (which is acceptable to the Representative of the Noteholders) received by the Issuer for any form of loan facility or financing to the Issuer other than the sale of the Claims and which is acceptable to the Representative of the Noteholders. The Issuer (and the Representative of the Noteholders acting in the name and on behalf of the Issuer) is entitled to dispose of the Claims in order to finance the redemption of the Notes in the circumstances described in this Condition 7(e). (f) Calculations on the Calculation Date On or before each Calculation Date, the Issuer shall determine or shall cause the Computation Agent to determine: (i) the Issuer Available Funds; (ii) the Principal Payments (if any) due on the Notes on the next following Interest Payment Date; (iii) the interest to be paid (if any) in respect of the Notes on the next following Interest Payment Date; (iv) the Principal Amount Outstanding of the Notes on the next following Interest Payment Date (after deducting all Principal Payments (if any) to be made on that Interest Payment Date); (v) the amounts, if any, to be drawn from the Cash Collateral Sub-Account to augment the Issuer Available Funds; (vi) the amounts of the Cash Collateral after draw-down on the immediately following Interest Payment Date, and (vii) the other payments to be made to each of the parties to the Intercreditor Agreement under the relevant Transaction Documents. (g) Calculations final and binding Each determination by or on behalf of the Issuer under Condition 7(f) (Calculations on the Calculation Date) shall in each case (in the absence of wilful default, bad faith or manifest error) be final and binding on all persons. (h) Notice of determination and redemption The Issuer will cause each determination of a Principal Payment (if any) and Principal Amount Outstanding in relation to the Notes to be notified immediately after calculation to 88

89 the Representative of the Noteholders, the Paying Agents, the Corporate Services Provider, the Agent Bank, Monte Titoli, and, for so long as any Notes are listed on the Luxembourg Stock Exchange, the Luxembourg Stock Exchange and will immediately cause details of each determination of a Principal Payment and Principal Amount Outstanding in relation to the Notes to be published in accordance with Condition 17 (Notices) by not later than one Business Day prior to such Interest Payment Date if required by the rules of the Luxembourg Stock Exchange. (i) Notice of no Principal Payment If no Principal Payment is due to be made on the Notes the Interest Payment Date falling in August 2004 or on any Interest Payment Date thereafter, the Issuer shall give, or cause to be given, a notice to this effect to the relevant Noteholders in accordance with Condition 17 (Notices) by not later than one Business Day prior to each such Interest Payment Date if required by the rules of the relevant stock exchange. (j) Notice irrevocable Any such notice as is referred to in Condition 7(h) (Notice of determination and redemption) or Condition 7(i) (Notice of no Principal Payment) shall be irrevocable and the Issuer shall, in the case of a notice under Condition 7(h) (Notice of determination and redemption), be bound to redeem the relevant Notes to which such notice relates (in whole or in part, as applicable) in accordance with this Condition 7. (k) Determinations by the Representative of the Noteholders If the Issuer does not at any time for any reason determine or cause to be determined a Principal Payment or the Principal Amount Outstanding in accordance with the preceding provisions of this Condition 7, such Principal Payment and/or, as applicable, Principal Amount Outstanding shall be determined by the Representative of the Noteholders in accordance with this Condition (but without the Representative of the Noteholders incurring any liability to any person as a result) and each such determination shall be deemed to have been made by the Issuer. (1) No purchase by Issuer The Issuer shall not purchase any of the Notes. (m) Cancellation All Notes redeemed in full will be cancelled upon their redemption and may not be resold or re-issued. 8. Payments (a) Payments through Monte Titoli, EurocIear atut Clearstream, Luxembourg Payments of principal and interest in respect of the Notes deposited with Monte Titoli will be credited, according to the instructions of Monte Titoli, by or on behalf of the Issuer to the accounts with Monte Titoli of the banks and authorised brokers whose accounts are credited with those Notes and, thereafter, credited by such banks and authorised brokers from such aforementioned accounts to the accounts of the beneficial owners of those Notes. Alternatively, the Principal Paying Agent may arrange for payments of principal and interest in respect of the Notes to be made to the Noteholders through Euroclear and Clearstream, 89

90 Luxembourg to be credited to the accounts with Euroclear and Clearstream, Luxembourg of the beneficial owners of the Notes, in accordance with the rules and procedures of Euroclear or, as the case may be, Clearstream, Luxembourg. (b) Payments subject to fiscal laws All payments in respect of the Notes are subject to any applicable fiscal or other laws and regulations applicable thereto. (c) Payments on Business Days If the due date for payment of any amount in respect of any Note is not a Business Day, the holder shall not be entitled to payment until the next succeeding Business Day and shall not be entitled to any further interest or other payment in respect of any such delay. (d) Notifications to befinal All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of Condition 6 (Interest) or Condition 7 (Redemption, purchase and cancellation), whether by the Reference Banks (or any of them), the Paying Agents, the Agent Bank, the Computation Agent or the Representative of the Noteholders, shall (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, all Noteholders and all Other Issuer Creditors and (in the absence of wilful default, bad faith or manifest error) no liability to the Representative of the Noteholders, the Noteholders or the Other Issuer Creditors shall attach to the Reference Banks, the Paying Agents, the Agent Bank, the Computation Agent or the Representative of the Noteholders in connection with the exercise or non-exercise by any of them of their powers, duties and discretions under Condition 6 (Interest) or Condition 7 (Redemption, purchase and cancellation). 9. Taxation in the Republic of Italy All payments in respect of the Notes will be made without withholding or deduction for or on account of any present or future taxes, duties or charges of whatsoever nature other than a withholding or deduction imposed on payments to individuals pursuant to Decree 239 or any other withholding or deduction required to be made by applicable law. The Issuer shall not be obliged to pay any additional amount to any Noteholder on account of such withholding or deduction. 10. Events of Default (a) Events of Default Subject to the other provisions of this Condition 10, each of the following events shall be treated as an "Event of Default": (i) Non-payment the Issuer fails (A) to repay any amount of principal in respect of the Notes on the Final Maturity Date or, if earlier, on the due date for repayment of such principal or (B) fails to pay any Interest Amount in respect of the Notes within five days of the relevant Interest Payment Date; or 90

91 (ii) Breach of other obligations the Issuer defaults in the performance or observance of any of its other obligations under or in respect of the Notes, the Intercreditor Agreement or any other Transaction Document to which it is a party and such default is, in the sole opinion of the Representative of the Noteholders, (a) incapable of remedy or (b) capable of remedy, but remains unremedied for 30 days or such longer period as the Representative of the Noteholders may agree (in its sole discretion) after the Representative of the Noteholders has given written notice of such default to the Issuer; or (iii) Failure to take action any action, condition or thing at any time required to be taken, fulfilled or done in order: (A) to enable the Issuer lawfully to exercise its rights, perform and comply with its obligations under and in respect of the Notes and the Transaction Documents to which the Issuer is a party; and (B) to ensure that those obligations are legal, valid, binding and enforceable, is not taken, fulfilled or done at any time; or (iv) Insolvency Event an Insolvency Event occurs in relation to the Issuer or the Issuer becomes Insolvent; or (v) Unlawfulness it is or will become unlawful for the Issuer to perform or comply with any of its obligations under or in respect of the Notes or the Transaction Documents to which the Issuer is a party. (b) Delivery of an Issuer Acceleration Notice If an Event of Default occurs, then (subject to Condition 10(c) (Consequences of delivery of an Issuer Acceleration Notice)) the Representative of the Noteholders may, at its sole discretion, and shall: (i) if so directed in writing by the holders of at least 45 per cent. of the Principal Amount Outstanding of the Notes; or (ii) if so directed by an Extraordinary Resolution of the holders of the Notes, give written notice (an "Issuer Acceleration Notice") to the Issuer and to the Servicer declaring the Notes to be due and payable, provided that: (A) in the case of the occurrence of any of the events mentioned in Condition 10(a)(ii) (Breach of other obligations), the service of an Issuer Acceleration Notice has been approved either in writing by the holders of at least 45 per cent. of the Principal Amount Outstanding of the Notes or by an Extraordinary Resolution of the holders of the Notes; and 91

92 (B) in each case, it shall have been indemnified and/or secured to its satisfaction against all fees, costs, expenses and liabilities (provided that supporting documents are delivered) to which it may thereby become liable or which it may incur by so doing except insofar as the same are incurred as a result of its gross negligence (colpa grave) or wilful default (dolo). (c) Consequences of delivery of an lssuer Acceleration Notice Upon the delivery of an Issuer Acceleration Notice: (i) the Notes shall become immediately due and repayable at their Principal Amount Outstanding, together with any interest accrued but which has not been paid on any preceding Interest Payment Date, without further action, notice or formality; (ii) the Note Security shall become immediately enforceable; and (iii) the Representative of the Noteholders may, subject to Condition 1l(b) (Restrictions on disposal of Issuer's assets) dispose of the Claims in the name and on behalf of the Issuer. The Noteholders hereby irrevocably appoint, as from the date hereof and with effect on and from the date on which the Notes shall become due and payable following the service of an Issuer Acceleration Notice, the Representative of the Noteholders as their exclusive agent (mandatario esclusivo) to receive on their behalf from the Issuer any and all monies payable by the Issuer to the Noteholders and the Other Issuer Creditors from and including the date on which the Notes shall become due and payable, such monies to be applied in accordance with the Post-Event Priority of Payments. 11. Enforcement (a) Proceedings The Representative of the Noteholders may, at its discretion and without further notice, institute such proceedings as it thinks fit at any time after the delivery of an Issuer Acceleration Notice to enforce repayment of the Notes and payment of accrued interest thereon or at any time to enforce any other obligation of the Issuer under the Notes or any Transaction Document, but, in either case, it shall not be bound to do so unless it shall have been: (i) so requested in writing by the holders of at least 25 per cent. of the Principal Amount Outstanding of the Notes; or (ii) so directed by an Extraordinary Resolution of the holders of the Notes, and, in any such case, only if it shall have been indemnified and/or secured to its satisfaction against all fees, costs, expenses and liabilities (provided that supporting documents are delivered) to which it may thereby become liable or which it may incur by so doing. (b) Restrictions on disposal of lssuer's assets If an Issuer Acceleration Notice has been delivered by the Representative of the Noteholders otherwise than by reason of non-payment (as set out in Condition 10(a)(i) (Events of Default)) of any amount due in respect of the Notes, the Representative of the Noteholders will not be entitled to dispose of the assets of the Issuer or any part thereof unless either: (i) a sufficient amount would be realised to allow payment in full of all amounts owing to the holders of the Notes after payment of all other claims ranking in priority to the Notes in accordance with the Post-Event Priority of Payments; or 92

93 (ii) the Representative of the Noteholders is of the opinion, which shall be binding on the Noteholders and the other Issuer Secured Creditors, reached after considering at any time and from time to time the advice of a merchant or investment bank or other financial adviser selected by the Representative of the Noteholders (and if the Representative of the Noteholders is unable to obtain such advice having made reasonable efforts to do so, this Condition 1l(b)(ii) shall not apply), that the cash flow prospectively receivable by the Issuer will not (or that there is a significant risk that it will not) be sufficient, having regard to any other actual, contingent or prospective liabilities of the Issuer, to discharge in full in due course all amounts due in respect of the Notes after payment of all other claims ranking in priority to the Notes in accordance with the Post-Event Priority of Payments, and the Representative of the Noteholders shall not be bound to make the determination contained in Condition l l(b)(ii) unless the Representative of the Noteholders shall have been indemnified and/or secured to its satisfaction against all fees, costs, expenses and liabilities (provided that supporting documents are delivered) to which it may thereby become liable or which it may incur by so doing. 12. Representative of the Noteholders (a) Legal representative The Representative of the Noteholders is Securitisation Services S.p.A. at its offices at via Vittorio Alfieri Conegliano (Treviso), Italy, and is the legal representative (rappresentante legale) of the Noteholders in accordance with Article 15, these Conditions, the Rules of the Organisation of Noteholders and the other Transaction Documents. (b) Powers of the Representative of the Noteholders The duties and powers of the Representative of the Noteholders are set forth in the Rules of the Organisation of Noteholders. (c) Meetings of Noteholders The Rules of the Organisation of Noteholders contain provisions for convening Meetings of Noteholders as well as the subject matter of Meetings and the relevant quorums. (d) Individual action The Rules of the Organisation of Noteholders contain provisions limiting the powers of the Noteholders, inter alia, to bring individual actions or take other individual remedies to enforce their rights under the Notes. In particular, such actions will be subject to the Meeting of the Noteholders approving by way of Extraordinary Resolution such individual action or other remedy. No individual action or remedy can be taken by a Noteholder to enforce his or her rights under the Notes before the Meeting of the Noteholders has approved such action or remedy in accordance with the provisions of the Rules of the Organisation of Noteholders. (e) Resolutions binding The resolutions passed at any Meeting of the Noteholders under the Rules of the Organisation of Noteholders will be binding on all Noteholders whether or not they are absent or dissenting and whether or not voting at the Meeting. 93

94 (f) Written Resolutions A Written Resolution will take effect as if it were an Extraordinary Resolution passed at a Meeting of the Noteholders. 13. Modification and waiver (a) Modification Under these Conditions and pursuant to Article 15, the Representative of the Noteholders may, without the consent of the Noteholders or any Other Issuer Creditors, concur with the Issuer and any other relevant parties in making: (i) any amendment or modification to these Conditions (other than in respect of a Basic Terms Modification) or any of the other Transaction Documents which, in the reasonable opinion of the Representative of the Noteholders, it may be proper to make and will not be materially prejudicial to the interests of the holders of the Notes; or (ii) any amendment or modification to these Conditions or to any of the Transaction Documents if, in the reasonable opinion of the Representative of the Noteholders, such amendment or modification is expedient to make; is of a formal, minor or technical nature; is made to correct a manifest error or an error which is, in the reasonable opinion of the Representative of the Noteholders, proven; or is necessary or desirable for the purposes of clarification, provided that (A) if, in its reasonable opinion, the Representative of the Noteholders considers any such amendment to be material, the Representative of the Noteholders shall obtain prior written confirmation from the Rating Agencies that such amendment will not adversely affect the then current rating of the Notes; and (B) if any such amendment or modification relates to, or otherwise affects, Condition 6(c) (Interest on the Notes), the Representative of the Noteholders shall obtain the prior written consent of the Swap Counterparties. (b) Waiver In addition, the Representative of the Noteholders may, without the consent of the Noteholders or any Other Issuer Creditor, authorise or waive any proposed breach or breach of the Notes (including an Event of Default) or of the Intercreditor Agreement or any other Transaction Document (provided that, for the avoidance of doubt, any authorisation or waiver in respect of any breach or proposed breach by the Issuer of any of the Swap Agreements will require the prior approval of the relevant Swap Counterparty) if, in the opinion of the Representative of the Noteholders, the interests of the holders of the Notes will not be materially prejudiced by such authorisation or waiver. (c) Restriction on power to waive The Representative of the Noteholders shall not exercise any powers conferred upon it by Condition 13(b) (Waiver) in contravention of any express direction by an Extraordinary Resolution (as defined in the Rules of the Organisation of Noteholders) or of a request in writing made by the holders of not less than 25 per cent. in aggregate Principal Amount Outstanding of the Notes (which such direction or request shall not affect any authorisation, waiver or determination previously given or made) or so as to authorise or waive any proposed breach or breach relating to a Basic Terms Modification. 94

95 (d) Notification Unless the Representative of the Noteholders agrees otherwise, any such authorisation, waiver, modification or determination shall be notified to the Noteholders, in accordance with Condition 17 (Notices), as soon as practicable after it has been made. 14. Representative of the Noteholders and Agents (a) Organisation of Noteholders The Organisation of Noteholders is created by the issue and subscription of the Notes and will remain in force and effect until full repayment and cancellation of the Notes. (b) Appointment of Representative of the Noteholders Pursuant to the Rules of the Organisation of Noteholders and Article 15, for as long as any Note is outstanding, there will at all times be a Representative of the Noteholders. The appointment of the Representative of the Noteholders as legal representative of the Organisation of Noteholders is made by the Noteholders subject to and in accordance with the Rules of the Organisation of Noteholders. However, the initial Representative of the Noteholders has been appointed at the time of issue of the Notes by the Joint Lead Managers pursuant to the Subscription Agreement. Each Noteholder is deemed to accept such appointment. (c) Paying Agents, Agent Bank, Computation Agent and the Transaction Bank as sole agents of Issuer In acting under the Agency and Accounts Agreement (where applicable), and in connection with the Notes, the Principal Paying Agent, the Luxembourg Paying Agent, the Agent Bank, the Computation Agent and the Transaction Bank act as agents solely of the Issuer and (to the extent provided therein) the Representative of the Noteholders and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders. (d) Initial Agents The initial Paying Agents, the initial Agent Bank, the initial Computation Agent, the initial Collection Account Bank and the initial Transaction Bank and their initial Specified Offices are listed in Condition 17 (Notices). The Issuer reserves the right (with the prior written approval of the Representative of the Noteholders) to vary or terminate the appointment of any of the Paying Agents, the Agent Bank, the Computation Agent, the Collection Account Bank or the Transaction Bank and to appoint a successor paying agent, agent bank, computation agent, collection account bank or transaction bank or additional or successor paying agents at any time in accordance with the terms of the Agency and Accounts Agreement (where applicable) and these Conditions. (e) Maintenance of Agents The Issuer shall at all times maintain: (a) if any European Union Directive on the taxation of savings implementing the conclusions of the ECOFIN Council Meeting of 26th-27th November, 2000 or any law implementing or complying with, or introduced in order to conform to, such Directive is introduced, a paying agent in a Member State that will not be obliged to withhold or deduct tax pursuant to any such Directive or law; and 95

96 (b) a paying agent having its specified office in Milan and Luxembourg, a computation agent, an account bank and an agent bank. Notice of any change in any of the Paying Agents, the Agent Bank, the Computation Agent, the Collection Account Bank or the Transaction Bank or in their Specified Offices shall promptly be given by the Issuer to the Noteholders in accordance with Condition 17 (Notices). 1S. Statute of limitation Claims against the Issuer for payments in respect of the Notes will be barred and become void unless made within 10 years (in the case of principal) or five years (in the case of interest) from the Relevant Date in respect thereof. 16. Limited recourse and non-petition (a) Limited recourse Notwithstanding any other provision of these Conditions, the obligation of the Issuer to make any payment under the Notes shall be equal to the lesser of (i) the nominal amount of such payment and (ii) the actual amount received or recovered from time to time by or on behalf of the Issuer or the Representative of the Noteholders in respect of the Claims and the Transaction Documents, and which the Issuer or the Representative of the Noteholders is entitled to apply in accordance with the applicable Priority of Payment and the terms of the Intercreditor Agreement, and neither the Representative of the Noteholders nor any relevant Noteholder may take any further steps against the Issuer or any of its assets to recover any unpaid sum and the Issuer's liability for any unpaid sum will be extinguished. (b) Non-petition Without prejudice to the right of the Representative of the Noteholders to enforce the Note Security or to exercise any of its other rights, no Noteholder shall be entitled to institute against the Issuer or join any other person in instituting against the Issuer any reorganisation, liquidation, bankruptcy, insolvency or similar proceedings until one year plus one day has elapsed following the full repayment of all notes (including the Notes), or cancellation thereof, issued or to be issued in future by the Issuer in the course of its corporate activity. 17. Notices (a) Validnotices Any notice to Noteholders shall be validly given if such notice is: (i) published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or, if such newspaper shall cease to be published or publication therein shall not be practicable, in such English language newspaper or newspapers having general circulation in Europe as the Representative of the Noteholders shall approve; or (ii) published on the Relevant Screen (which shall be in addition to the publication in a newspaper only in the case of a notice required to be made pursuant to Condition 6 (Interest) or Condition 7 (Redemption, purchase and cancellation)); or 96

97 (iii) published through the Monte Titoli system for so long as the Notes are held on behalf of the beneficial owners thereof by Monte Titoli. (b) Date of publication Any notice so published shall be deemed to have been given on the date of such publication or, if published more than once or on different dates, on the first date on which publication shall have been made in the newspaper or newspapers in which publication is required (and, as the case may be, on the Relevant Screen). (c) Other methods The Representative of the Noteholders shall be at liberty to sanction some other method of giving notice to the Noteholders or to a category of them if, in its opinion, such other method is reasonable, having regard to market practice then prevailing and to the requirements of the stock exchange on which any of the Notes are then listed, and provided that notice of such other method is given to the Noteholders in such manner as the Representative of the Noteholders shall require. (d) Initial Specified Offices The Specified Offices of the Transaction Bank, the Principal Paying Agent, the Agent Bank, the Computation Agent, the Luxembourg Paying Agent and the Collection Account Bank, are as follows: (i) Principal Paying Agent and Agent Bank: Citibank, N.A., London Branch, with offices at 5 Carmelite Street, London EC4Y 0PA, England; (ii) Computation Agent: Citibank, N.A., London Branch, with offices at 5 Carmelite Street, London EC4Y 0PA, England; (iii) Luxembourg Paying Agent: Kredietbank SA Luxembourgeoise, with offices in Luxembourg at 43 Boulevard Royal, L-2955 Luxembourg; (iv) Collection Account Bank: Tesoreria Centrale dello Stato, acting through the Bank of Italy, with offices at via XX Settembre 97, Rome, Italy; and (v) Transaction Bank and Italian Paying Agent: Citibank, N.A., Milan Branch, with offices at Foro Buonaparte 16, Milan, Italy. 18. Governing law and jurisdiction (a) Governing law The Notes, these Conditions, the Rules of the Organisation of Noteholders and the Italian Law Transaction Documents are governed by, and shall be construed in accordance with, Italian law. The English Law Transaction Documents are governed by, and shall be construed in accordance with, English law. (b) Jurisdiction (i) The Courts of Rome are to have exclusive jurisdiction to settle any disputes that may arise out of or in connection with the Notes, these Conditions, the Rules of the Organisation of Noteholders and the Italian Law Transaction Documents and, 97

98 accordingly, any legal action or proceedings arising out of or in connection with any Notes, these Conditions, the Rules of the Organisation of Noteholders or any Italian Law Transaction Document may be brought in such courts. The Issuer has in each of the Italian Law Transaction Documents irrevocably submitted to the jurisdiction of such courts. (ii) The Courts of England and Wales are to have jurisdiction to settle any disputes that may arise out of or in connection with the English Law Transaction Documents and, accordingly, any legal action or proceedings arising out of or in connection with any English Law Transaction Document may be brought in such courts. The Issuer has in each of the English Law Transaction Documents irrevocably submitted to the jurisdiction of such courts. (c) Process agent The Issuer will agree in the English Deed of Charge, inter alia, at all times to maintain an agent for service of process in England. The Issuer appoints Clifford Chance Secretaries Limited of 10 Upper Bank Street, London El4 5JJ to act as such agent. Any writ, judgment or other notice of legal process issued out of the English Courts in respect of any English Law Transaction Document shall be sufficiently served on the Issuer if delivered to such agent at its address for the time being. The Issuer undertakes not to revoke the authority of the above agent, and if, for any reason, such agent no longer serves as process agent of the Issuer to receive service of process, the Issuer shall promptly appoint another such agent and advise the Representative of the Noteholders of the details of such new agent. 98

99 SCHEDULE TO THE TERMS AND CONDITIONS OF THE NOTES RULES OF THE ORGANISATION OF NOTEHOLDERS TITLE I GENERAL PROVISIONS Article 1 General The Organisation of Noteholders is created by the issue and subscription of the Notes, and shall remain in force and in effect until full repayment and cancellation of the Notes. The contents of these rules are deemed to form part of each Note issued by the Issuer. Article 2 Definitions In these rules, the following terms shall have the following meanings: "Basic Terms Modification" means: (a) a modification of the date of maturity of the Notes; (b) a modification which would have the effect of postponing any date for payment of interest or principal on the Notes; (c) a modification which would have the effect of reducing or cancelling the amount of principal payable in respect of the Notes or the rate of interest applicable in respect of the Notes; (d) a modification which would have the effect of altering the majority required to pass a specific resolution or the quorum required at any Meeting; (e) a modification which would have the effect of altering the currency of payment of the Notes or the order of priority of payments due in respect of the Notes; (f) the appointment and removal of the Representative of the Noteholders; and (g) an amendment of this definition; "Blocked Notes" means the Notes which have been blocked in an account with a clearing system for the purposes of obtaining a Voting Certificate or a Blocked Voting Instruction and will not be released until the conclusion of the Meeting; "Blocked Voting Instruction" means, in relation to any Meeting, a document: (a) certifying that the Blocked Notes have been blocked in an account with a clearing system and will not be released until the conclusion of the Meeting; (b) certifying that the holder of each Blocked Note or a duly authorised person on its behalf has instructed the Principal Paying Agent that the votes attributable to such Blocked Note are to be cast in a particular way on each 99

100 resolution to be put to the Meeting and that, during the period of 48 Hours before the time fixed for the Meeting, such instructions may not be amended or revoked; (c) listing the total number of the Blocked Notes, distinguishing for each resolution between those in respect of which instructions have been given to vote for, or against, the resolution; and (d) authorising a named individual or individuals to vote in respect of the Blocked Notes in accordance with such instructions; "Chairman" means, in relation to any Meeting, the individual who takes the chair in accordance with Article 9 (Chairman of the Meeting); "Extraordinary Resolution" means a resolution of a Meeting duly convened and held in accordance with the provisions contained in these rules on any of the subjects covered by Article 21 (Powers exercisable by Extraordinary Resolution); "Meeting" means a joint meeting of all Noteholders, whether originally convened or resumed following an adjournment; "Proxy" means, in relation to any Meeting, a person appointed to vote under a Blocked Voting Instruction; "Relevant Fraction" means: (a) for all business other than voting on an Extraordinary Resolution, one-tenth of the Principal Amount Outstanding of the Notes; (b) for voting on any Extraordinary Resolution other than one relating to a Basic Terms Modification, two-thirds of the Principal Amount Outstanding of the Notes; and (c) for voting on any Extraordinary Resolution relating to a Basic Terms Modification, three-quarters of the Principal Amount Outstanding of the Notes; provided, however, that, in the case of a Meeting which has resumed after adjoumment for want of a quorum, it means: (d) for all business other than voting on an Extraordinary Resolution relating to a Basic Terms Modification, the fraction of the Principal Amount Outstanding of the Notes represented at such Meeting; and (e) for voting on any Extraordinary Resolution relating to a Basic Terms Modification, one-third of the Principal Amount Outstanding of the Notes; "Voter" means, in relation to any Meeting, the holder of a Blocked Note; "Voting Certificate" means, in relation to any Meeting, a certificate issued by the Principal Paying Agent and dated, stating: (a) that the Blocked Notes have been blocked in an account with a clearing system and will not be released until the conclusion of the Meeting; and (b) that the bearer of such certificate is entitled to attend and vote at the Meeting in respect of the Blocked Notes; "24 Hours" means a period of 24 hours including all or part of a day upon which banks are open for business in the place where the Meeting is to be held and in the place where the Principal Paying Agent has its Specified Office (disregarding for this purpose the day upon which such Meeting is to be held) and such period shall be extended by one or, to the extent necessary, more periods of 24 Hours until there is included as aforesaid all or part of a day upon which banks are open for business as aforesaid; and "48 Hours" means two consecutive periods of 24 Hours. 100

101 Capitalised terms not defined herein shall have the meaning attributed to them in the terms and conditions of the Notes. Article 3 Organisation purpose Each holder of the Notes is a member of the Organisation of Noteholders. The purpose of the Organisation of Noteholders is to co-ordinate the exercise of the rights of the Noteholders and the taking of any action for the protection of their interests. TITLE II THE MEETING OF NOTEHOLDERS Article 4 General Subject to the proviso of Article 21 (Powers exercisable by Extraordinary Resolution), any resolution passed at a Meeting, duly convened and held in accordance with these rules, shall be binding upon all the Noteholders, whether or not absent or dissenting and whether or not voting and, in each case, all the Noteholders shall be bound by such resolution irrespective of its effect upon such Noteholders and such Noteholders shall be bound to give effect to any such resolution accordingly and the passing of any such resolution shall be conclusive evidence that the circumstances justify the passing thereof. Notice of the result of every vote on a resolution duly passed by the Noteholders shall be published by and at the expense of the Issuer in accordance with the Conditions and given to the Principal Paying Agent (with a copy to the Issuer and the Representative of the Noteholders) within 14 days of the conclusion of the Meeting. Article 5 Issue of Voting Certificates and Blocked Voting Instructions Noteholders may obtain a Voting Certificate from the Principal Paying Agent or require the Principal Paying Agent to issue a Blocked Voting Instruction by arranging for their Notes to be blocked in an account with a clearing system not later than 48 Hours before the time fixed for the Meeting, providing to the Principal Paying Agent, where appropriate, evidence that the Notes are so blocked. The Noteholders may obtain such evidence by requesting their Monte Titoli Account Holders to release a certificate in accordance with article 34 of CONSOB Regulation No of 23rdDecember, 1998 (as subsequently amended and integrated). A Voting Certificate or Blocked Voting Instruction shall be valid until the release of the Blocked Notes to which it relates. So long as a Voting Certificate or Blocked Voting Instruction is valid, the bearer thereof (in the case of a Voting Certificate) or any Proxy named therein (in the case of a Blocked Voting Instruction) shall be deemed to be the holder of the Blocked Notes to which it relates for all purposes in connection with the Meeting. A Voting Certificate and a Blocked Voting Instruction cannot be outstanding simultaneously in respect of the same Note. Article 6 Validity of Blocked Voting Instructions A Blocked Voting Instruction shall be valid only if it is deposited at the Specified Office of the Principal Paying Agent, or at some other place approved by the Principal Paying Agent, at least 24 Hours before the time fixed for the Meeting, and if not deposited before such deadline, the Blocked Voting Instruction shall not be valid unless the Chairman decides otherwise before the Meeting proceeds to business. If the Principal Paying Agent so requires, a notarised copy of each Blocked Voting Instruction and satisfactory proof of the identity of each Proxy named therein shall be produced at the Meeting, but the 101

102 Principal Paying Agent shall not be obliged to investigate the validity of any Blocked Voting Instruction or the authority of any Proxy. Article 7 Convening of Meeting The Issuer or the Representative of the Noteholders may convene a Meeting at any time, and the Issuer shall be obliged to do so upon the request in writing of Noteholders holding not less than one-tenth of the Principal Amount Outstanding of the Notes. If the Issuer fails to convene a Meeting when obliged to do so, the Meeting may be convened by the Representative of the Noteholders. Whenever the Issuer is about to convene any such Meeting, it shall immediately give notice in writing to the Representative of the Noteholders of the date thereof and of the nature of the business to be transacted thereat. Every such Meeting shall be held at such time and place as the Representative of the Noteholders may designate or approve. Article 8 Notice At least 21 days' notice (exclusive of the day on which the notice is given and of the day on which the Meeting is to be held) specifying the date, time and place of the Meeting shall be given to the Noteholders and the Principal Paying Agent (with a copy to the Issuer and to the Representative of the Noteholders). Any notice to Noteholders shall be given in accordance with Condition 17 (Notices). The notice shall set out the full text of any resolutions to be proposed and shall state that the Notes must be blocked in an account with a cleating system for the purpose of obtaining Voting Certificates or appointing Proxies not later than 48 Hours before the time fixed for the Meeting. Article 9 Chairman of the Meeting Any individual (who may, but need not, be a Noteholder) nominated in writing by the Representative of the Noteholders may take the chair at any Meeting but: (i) if no such nomination is made, or (ii) if the individual nominated is not present within 15 minutes after the time fixed for the Meeting, those present shall elect one of themselves to take the chair, failing which the Issuer may appoint a Chairman. The Chairman of an adjourned Meeting need not be the same person as the Chairman of the original Meeting. The Chairman co-ordinates matters to be transacted at the Meeting and monitors the fairness of the Meeting's proceedings. Article 10 Quorum The quorum at any Meeting shall be at least one Voter representing or holding not less than the Relevant Fraction relative to the Notes. Article 11 Adjournment for want of quorum If within 15 minutes after the time fixed for any Meeting the quorum is not present, then: (a) in the case of a Meeting requested by Noteholders, it shall be dissolved; and 102

103 (b) in the case of any other Meeting, it shall be adjoumed for such period (which shall be not less than 14 days and not more than 42 days) and to such place as the Chairman determines; provided, however, that: (i) the Meeting shall be dissolved if the Issuer so decides; and (ii) no Meeting may be adjourned by resolution of a Meeting that represents less than a Relevant Fraction applicable in the case of Meetings which have been resumed after adjournment for want of a quorum. Article 12 Adjourned Meeting The Chairman may, with the consent of (and shall if directed by) any Meeting, adjourn such Meeting from time to time and from place to place, but no business shall be transacted at any adjourned Meeting except business which might lawfully have been transacted at the Meeting from which the adjournment took place. Article 13 Notice following adjournment Article 8 (Notice) shall apply to any Meeting adjourned for want of a quorum save that: (a) at least 10 days' notice (exclusive of the day on which the notice is given and of the day on which the Meeting is to be resumed) shall be given; and (b) the notice shall specifically set out the quorum requirements which will apply when the Meeting resumes. It shall not be necessary to give notice of the convening of a Meeting which has been adjourned for any other reason. Article 14 Participation The following may attend and speak at a Meeting: (a) Voters; (b) the Issuer or its representative and the Principal Paying Agent; (c) the financial advisers to the Issuer; (d) the legal counsel to each of the Issuer, the Representative of the Noteholders, and the Principal Paying Agent; (e) the Representative of the Noteholders; (f). the Originator, if the matters upon which the Meeting is called to resolve are the disposal of the Claims by the Issuer in accordance with Condition 7(d) (Optional redemption) or Condition 7(e) (Mandatory redemption in whole for taxation, legal or regulatory reasons); and (g) such other person as may be resolved by the Meeting and as may be approved by the Representative of the Noteholders. 103

104 Article 15 Passing of Resolution A resolution is validly passed when the majority of votes cast by the Voters attending the relevant Meeting have been cast in favour of it. Article 16 Show of hands Every question submitted to a Meeting shall be decided in the first instance by a show of hands. Unless a poll is validly demanded before or at the time that the result of the show of hands is declared, the Chairman's declaration that on a show of hands a resolution has been passed, passed by a particular majority, rejected or rejected by a particular majority, shall be conclusive, without proof of the number of votes cast for, or against, the resolution. Article 17 Poll A demand for a poll shall be valid if it is made by the Chairman, the Issuer, the Representative of the Noteholders or one or more Voters holding a Voting Certificate or being a Proxy. The poll may be taken immediately or after such adjournment as the Chairman directs, but any poll demanded on the election of the Chairman or on any question of adjournment shall be taken at the Meeting without adjournment. A valid demand for a poll shall not prevent the continuation of the Meeting for any other business. Article 18 Votes Every Voter shall have: (a) on a show of hands, one vote; and (b) on a poll, one vote in respect of each _ 5,000 in principal amount of Note(s) represented by the Voting Certificate produced by such Voter or in respect of which he is a Proxy. In the case of equality of votes, the Chairman shall, both on a show of hands and on a poll, have a casting vote in addition to the votes (if any) to which he may be entitled as a Noteholder or as a holder of a Voting Certificate or as a Proxy. Unless the terms of any Blocked Voting Instruction state otherwise, a Voter shall not be obliged to exercise all the votes to which he is entitled or to cast all the votes which he exercises in the same manner. Article 19 Vote byproxies Any vote by a Proxy in accordance with the relevant Blocked Voting Instruction shall be valid even if such Blocked Voting Instruction or any instruction pursuant to which it was given has been amended or revoked, provided that the Principal Paying Agent has not been notified in writing of such amendment or revocation by the time being 24 Hours before the time fixed for the Meeting. Unless revoked, any appointment of a Proxy under a Blocked Voting Instruction in relation to a Meeting shall remain in force in relation to any Meeting resumed following an adjournment, except for any appointment of a Proxy in relation to a Meeting which has been adjourned for want of a quorum. Any person appointed to vote at such a Meeting must be re-appointed under a Blocked Voting Instruction to vote at the Meeting when it is resumed. 104

105 Article 20 Exclusive powers of the Meeting The Meeting shall have exclusive powers on the following matters: (a) to approve any Basic Terms Modification; (b) (without prejudice to the discretionary powers vested in the Representative of the Noteholders under these rules, the Conditions, the Transaction Documents, or otherwise) to approve any proposal by the Issuer for any alteration, abrogation, variation or compromise of the rights of the Representative of the Noteholders or the Noteholders against the Issuer or against any of its property or against any other persons whether such rights shall arise under these rules, the Notes, or arrangements in respect of, the Conditions, any of the Transaction Documents or otherwise; (c) to approve the substitution of any person for the Issuer (or any previous substitute) as principal obligor under the Notes; (d) to direct the Representative of the Noteholders to serve an Issuer Acceleration Notice under Condition 10(a) (Events of Default); (e) to waive any breach or authorise any proposed breach by the Issuer of its obligations under or in respect of the Notes or any Transaction Document or any act or omission which might otherwise constitute an Event of Default; (f) to direct the Representative of the Noteholders to concur in and execute and do all such documents, acts and things as may be necessary to carry out and give effect to any resolution of the Noteholders; (g) to exercise, enforce or dispose of any right and power on payment and application of funds deriving from any claims on which a security interest is created in favour of the Noteholders, otherwise than in accordance with the Transaction Documents; and (h) to appoint and remove the Representative of the Noteholders. Article 21 Powers exercisable by Extraordinary Resolution Without limitation to the exclusive powers of the Meeting listed in Article 20 of Title II (Exclusive powers of the Meeting), each Meeting shall have the following powers exercisable only by way of an Extraordinary Resolution: (a) approval of any Basic Terms Modification; (b) (without prejudice to the discretionary powers vested in the Representative of the Noteholders under these rules, the Conditions, the Transaction Documents or otherwise) approval of any proposal by the Issuer for any alteration, abrogation, variation or compromise of, or arrangement in respect of, the rights of the Representative of the Noteholders or the Noteholders against the Issuer or against any of its property or against any other person whether such rights shall arise under these rules, the Notes, the Conditions, any of the Transaction Documents or otherwise; (c) approval of any scheme or proposal for the exchange or substitution of any of the Notes for, or the conversion of the Notes into, or the cancellation of the Notes in consideration of, shares, stock, notes, bonds, debentures, debenture stock and/or other obligations and/or securities of the Issuer or of any other body corporate formed or to be formed, or for or into or in consideration for cash, or partly for or into or in consideration of such shares, stock, notes, bonds, debentures, debenture stock and/or other obligations and/or securities as aforesaid and partly for or into or in consideration for cash; 105

106 (d) (without prejudice to the discretionary powers vested in the Representative of the Noteholders under these rules, the Conditions, the Transaction Documents, or otherwise) approval of any alteration of the provisions contained in these rules, the Notes, the Conditions, the Intercreditor Agreement or any other Transaction Document which shall be proposed by the Issuer and/or the Representative of the Noteholders or any other party thereto; (e) discharge or exoneration of the Representative of the Noteholders from any liability in respect of any act or omission for which the Representative of the Noteholders may have become responsible under or in relation to these rules, the Notes, the Conditions or any other Transaction Document; (f) giving any direction or granting any authority or sanction which under the provisions of these rules, the Conditions or the Notes is required to be given by Extraordinary Resolution; (g) authorisation and sanctioning of actions of the Representative of the Noteholders under these rules, the Notes, the Conditions, the terms of the Intercreditor Agreement or any other Transaction Document and, in particular, power to sanction the release of the Issuer by the Representative of the Noteholders. Article22 Challenge of resolution Any Noteholder can challenge a resolution which is not passed in conformity with the provisions of these rules. Article23 Minutes Minutes shall be made of all resolutions and proceedings at each Meeting. The Chairman shall sign the minutes, which shall be conclusive evidence of the resolutions and proceedings recorded therein. Unless and until the contrary is proved, every such Meeting in respect of the proceedings of which minutes have been made and signed shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted at it to have been duly passed or transacted. Article 24 Written Resolution A Written Resolution shall take effect as if it were an Extraordinary Resolution. Article 25 Individual actions and remedies The right of each Noteholder to bring individual actions or seek other individual remedies to enforce his or her rights under the Notes will be subject to the Meeting passing an Extraordinary Resolution authorising such individual action or other remedy. In this respect, the following provisions shall apply: (a) the Noteholder intending to enforce his or her rights under the Notes will notify the Representative of the Noteholders in writing of his or her intention; (b) the Representative of the Noteholders will, within 30 days of receiving such notification, convene a Meeting of the Noteholders in accordance with these rules at the expense of such Noteholder; (c) if the Meeting does not pass a resolution authorising the individual enforcement or remedy, the Noteholder will be prevented from seeking such enforcement or remedy (provided that the same matter can be submitted again to a further Meeting after a reasonable period of time has elapsed); and 106

107 (d) if the Meeting does pass an Extraordinary Resolution authorising the individual enforcement or remedy, the Noteholder will be permitted to seek such individual enforcement or remedy in accordance with the terms of the Extraordinary Resolution. No individual action or remedy can be sought by a Noteholder to enforce his or her rights under the Notes unless a Meeting of Noteholders has been held to resolve on such action or remedy and in accordance with the provisions of this Article 25. TITLE III THE REPRESENTATIVE OF THE NOTEHOLDERS Article 26 Appointment, removal and remuneration Each appointment of a Representative of the Noteholders must be approved by an Extraordinary Resolution of the Noteholders in accordance with the provisions of this Article 26, save in respect of the appointment of the first Representative of the Noteholders, which will be Securitisation Services S.p.A. The Representative of the Noteholders shall be: (a) a bank incorporated in any jurisdiction of the European Union or a bank incorporated in any other jurisdiction, in either case provided it is licensed to conduct banking business in Italy; or (b) a financial institution registered under article 107 of the Italian Banking Act; or (c) any other entity which may be permitted to act in such capacity by any specific provisions of Italian law applicable to the securitisation of monetary rights and/or by any regulations, instructions, guidelines and/or specific approvals issued by the competent Italian supervising authorities. The Representative of the Noteholders shall be appointed for an unlimited term and can be removed by way of an Extraordinary Resolution of the Noteholders at any time. In the event of a termination of the appointment of the Representative of the Noteholders for any reason whatsoever, such Representative of the Noteholders shall remain in office until acceptance of the appointment by the Issuer of a substitute Representative of the Noteholders designated among the entities indicated in (a), (b) or (c) above, and, provided that a Meeting of the Noteholders has not appointed such a substitute within 45 days of such termination, such representative may appoint such a substitute. The powers and authority of the Representative of the Noteholders whose appointment has been terminated shall be limited to those necessary for the performance of the essential functions which are required to be complied with in connection with the Notes. The Issuer shall pay to the Representative of the Noteholders a fee for its services as Representative of the Noteholders as from the date hereof. Such remuneration shall be payable in accordance with the Subscription Agreement and the Priority of Payments up to (and including) the date when the Notes have been repaid in full and cancelled in accordance with the Conditions. Article 27 Duties and powers The Representative of the Noteholders is the legal representative of the Organisation of Noteholders, subject to and in accordance with Article 15, the Conditions, these rules, the Intercreditor Agreement and the other Transaction Documents to which it is a party (together, the "Relevant Provisions"). 107

108 Subject to the Relevant Provisions, the Representative of the Noteholders is responsible for implementing the directions of a Meeting and for representing the interests of the Noteholders as one class vis-gt-vis the Issuer. The Representative of the Noteholders has the right to attend Meetings. The Representative of the Noteholders may convene a Meeting in order to obtain the authorisation or directions of the Meeting in respect of any action proposed to be taken by the Representative of the Noteholders. All actions taken by the Representative of the Noteholders in the execution and exercise of its powers and authorities and of the discretions vested in it shall be taken by duly authorised officer(s) for the time being of the Representative of the Noteholders. The Representative of the Noteholders may also, whenever it considers it expedient, whether by power of attorney or otherwise, delegate to any person(s) all or any of its duties, powers, authorities or discretions vested in it as aforesaid. Any such delegation may be made upon such terms and conditions, and subject to such regulations (including power to sub-delegate), as the Representative of the Noteholders may think fit in the interests of the Noteholders. The Representative of the Noteholders shall not be bound to supervise the proceedings of any such delegate or sub-delegate and shall not in any way or to any extent be responsible for any loss incurred by any misconduct or default on the part of such delegate or subdelegate. The Representative of the Noteholders shall, as soon as reasonably practicable, give notice to the Issuer of the appointment of any delegate and of any renewal, extension or termination of such appointment, and shall make it a condition of any such delegation that any delegate shall also, as soon as reasonably practicable, give notice to the Issuer of any subdelegate. The Representative of the Noteholders shall be authorised to represent the Organisation of Noteholders in judicial proceedings, including proceedings involving the Issuer in court-supervised administration (amministrazione controllata), creditors' agreement (concordato preventivo), forced liquidation _Callimento) or compulsory administrative liquidation (liquidazione coatta amministrativa). The Representative of the Noteholders shall have regard to the interests of all the Issuer Creditors as regards the exercise and performance of all powers, authorities, duties and discretions of the Representative of the Noteholders under these rules, the Intercreditor Agreement or under the Mandate Agreement (except where expressly provided otherwise), but, notwithstanding the foregoing, the Representative of the Noteholders shall have regard to the interests only: (i) of the Noteholders, and (ii) subject to item (i), of whichever Issuer Creditor ranks higher in the Priority of Payments hereof for the payment of the amounts therein specified if, in its opinion, there is or may be a conflict between the Noteholders and any other Issuer Creditors. The foregoing provision shall not affect the payment order set forth in the applicable Priority of Payments. Article 28 Resignation of the Representative of the Noteholders The Representative of the Noteholders may resign at any time, upon giving not less than three calendar months' notice in writing to the Issuer, without assigning any reason therefor and without being responsible for any costs incurred as a result of such resignation. The resignation of the Representative of the Noteholders shall not become effective until a Meeting of the Noteholders has appointed a new Representative of the Noteholders, provided that, if a new Representative of the Noteholders has not been so appointed within 60 days of the date of such notice of resignation, the Representative of the Noteholders may appoint a new Representative of the Noteholders. Article29 Exoneration of the Representative of the Noteholders The Representative of the Noteholders shall not assume any other obligations in addition to those expressly provided herein and in the other Transaction Documents to which it is a party. Without limiting the generality of the foregoing, the Representative of the Noteholders: 108

109 (a) shall not be under obligation to take any steps to ascertain whether an Event of Default or any other event, condition or act, the occurrence of which would cause a right or remedy to become exercisable by the Representative of the Noteholders or any Noteholder hereunder or under any of the other Transaction Documents, has happened and, until it shall have actual knowledge or express notice to the contrary, the Representative of the Noteholders shall be entitled to assume that no Event of Default or such other event, condition or act has occurred; (b) shall not be under any obligation to monitor or supervise the observance or performance by the Issuer or any other party to the Transaction Documents of the provisions of, and its obligations under, these rules, the Notes, the Conditions or any other Transaction Document, and, until it shall have actual knowledge or express notice to the contrary, it shall be entitled to assume that the Issuer and each such other party is observing and performing all such provisions and obligations; (c) shall not be under any obligation to give notice to any person of the execution of these rules, the Notes, the Conditions or any of the Transaction Documents or any transaction contemplated hereby or thereby; (d) shall not be responsible for, or for investigating, the legality, validity, effectiveness, adequacy, suitability or genuineness of these rules, the Notes, the Conditions, any Transaction Document or any other document, or any obligation or rights created or purported to be created hereby or thereby or pursuant hereto or thereto, and (without prejudice to the generality of the foregoing) it shall not have any responsibility for, or have any duty to make any investigation in respect of, or in any way be liable whatsoever for: (i) the nature, status, creditworthiness or solvency of the Issuer or any other party to the Transaction Documents; (ii) the existence, accuracy or sufficiency of any legal or other opinions, searches, reports, certificates, valuations or investigations delivered or obtained, or required to be delivered or obtained, at any time in connection herewith or with any Transaction Document; (iii) the suitability, adequacy or sufficiency of any collection or recovery procedures operated by the Servicer or compliance therewith; (iv) the failure by the Issuer to obtain or comply with any licence, consent or other authority in connection with the purchase or administration of the Claims; or (v) any accounts, books, records or files maintained by the Issuer, the Servicer, the Principal Paying Agent or any other person in respect of the Portfolio; (e) shall not be responsible for the receipt or application by the Issuer of the proceeds of the issue of the Notes, or the distribution of any of such proceeds, to the persons entitled thereto; (f) shall have no responsibility for the maintenance of any rating of the Notes by the Rating Agencies or any other credit or rating agency or any other person; (g) shall not be responsible for, or for investigating, any matter which is the subject of any recitals, statements, warranties or representations of any party, other than the Representative of the Noteholders, contained herein or in any Transaction Document; (h) shall not be bound or concerned to examine, or enquire into, or be liable for, any defect or failure in the right or title of the Issuer to the Claims or any part thereof, whether such defect or failure was known to the Representative of the Noteholders or might have been discovered upon examination or enquiry, or whether capable of remedy or not; (i) shall not be liable for any failure, omission or defect in registering or filing, or procuring registration or filing of, or otherwise protecting or perfecting, these rules, the Notes or any Transaction Document; (j) shall not be under any obligation to insure the Claims or any part thereof; (k) shall not have regard to the consequences of any modification of these rules, the Notes, the Conditions or any of the Transaction Documents for individual Noteholders or any relevant persons resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to, the jurisdiction of any particular territory; and 109

110 (1) shall not (unless and to the extent ordered so to do by a court of competent jurisdiction) be under any obligation to disclose to any Noteholder, any Other Issuer Creditor or any other person, any confidential, financial, price sensitive or other information made available to the Representative of the Noteholders by the Issuer or any other person in connection with these rules, the Notes or any other Transaction Document, and none of the Noteholders, Other Issuer Creditors nor any other person shall be entitled to take any action to obtain from the Representative of the Noteholders any such information. The Representative of the Noteholders notwithstanding anything to the contrary contained in these rules: (i) may, without the consent of the Noteholders or any Other Issuer Creditors, concur with the Issuer and any other relevant parties in making any amendment or modification to these rules, the Conditions (other than a Basic Terms Modification) or to any of the Transaction Documents which, in the reasonable opinion of the Representative of the Noteholders, it is expedient to make or is to correct a manifest error, or an error which is, in the reasonable opinion of the Representative of the Noteholders, proven, or is of a formal, minor or technical nature or is necessary or desirable for the purposes of clarification. Any such amendment or modification shall be binding on the Noteholders and, unless the Representative of the Noteholders otherwise agrees, the Issuer shall cause such amendment or modification to be notified to the Noteholders as soon as practicable thereafter; (ii) may, without the consent of the Noteholders, concur with the Issuer and any other relevant parties in making any amendment or modification (other than in respect of a Basic Terms Modification) to these rules, the Conditions or to any of the Transaction Documents which, in the opinion of the Representative of the Noteholders, it may be proper to make, provided that the Representative of the Noteholders is of the opinion that such amendment or modification will not be materially prejudicial to the interests of the Noteholders; (iii) may, without the consent of the Noteholders or any Other Issuer Creditor, authorise or waive any proposed breach or breach of the Notes (including an Event of Default) or of the Intercreditor Agreement or any other Transaction Document if, in the opinion of the Representative of the Noteholders, the interests of the Noteholders will not be materially prejudiced by such authorisation or waiver; provided that the Representative of the Noteholders shall not exercise any such powers in contravention of any express direction by an Extraordinary Resolution, or of a request in writing made by the holders of not less than 25 per cent. in aggregate Principal Amount Outstanding of the Notes (but so that no such direction or request shall affect any authorisation, waiver or determination previously given or made) or so as to authorise or waive any proposed breach or breach relating to a Basic Terms Modification; (iv) may act on the advice, certificate, opinion or information (whether or not addressed to the Representative of the Noteholders) obtained from any lawyer, accountant, banker, broker, credit or rating agency or other expert, whether obtained by the Issuer, the Representative of the Noteholders or otherwise, and shall not, in the absence of gross negligence (colpa grave) or wilful default (dolo) on the part of the Representative of the Noteholders, be responsible for any loss incurred by so acting. Any such advice, certificate, opinion or information may be sent or obtained by letter, telex, telegram, facsimile transmission or cable and, in the absence of gross negligence (colpa grave) or wilful default (dolo) on the part of the Representative of the Noteholders, the Representative of the Noteholders shall not be liable for acting on any advice, certificate, opinion or information contained in, or purported to be conveyed by, any such letter, telex, telegram, facsimile transmission or cable, notwithstanding any error contained therein or the non-authenticity of the same; (v) may call for, and shall be at liberty to accept as sufficient evidence of any fact or matter or as to the expediency of any dealing, transaction, step or thing, a certificate duly signed by or on behalf of the sole director or, as applicable, the chairman of the board of directors of the Issuer, and the Representative of the Noteholders shall not be bound, in any such case, to call for further evidence or be responsible for any loss that may be occasioned as a result of acting on such certificate; (vi) save as expressly otherwise provided herein, shall have absolute and unfettered discretion as to the exercise, or non-exercise, of any right, power and discretion vested in the Representative of the Noteholders by these rules, the Notes, any Transaction Document or by operation of law, and the Representative of the Noteholders shall not ll0

111 be responsible for any loss, costs, damages, expenses or other liabilities that may result from the exercise, or non-exercise thereof except insofar as the same are incurred as a result of its gross negligence (colpa grave) or wilful default (dolt); (vii) shall be at liberty to leave in custody these roles, the Transaction Documents and any other documents relating thereto or to the Notes in any part of the world with any bank, financial institution or company whose business includes undertaking the safe custody of documents, or with any lawyer or firm of lawyers considered by the Representative of the Noteholders to be of good repute, and the Representative of the Noteholders shall not be responsible for, or required to insure against, any loss incurred in connection with any such custody, and may pay all sums required to be paid on account of, or in respect of, any such custody; (viii) in connection with matters in respect of which the Representative of the Noteholders is entitled to exercise its discretion hereunder, the Representative of the Noteholders is entitled to convene a Meeting of the Noteholders in order to obtain instructions as to how the Representative of the Noteholders should exercise such discretion provided that nothing herein shall be construed so as to oblige the Representative of the Noteholders to convene such a Meeting. The Representative of the Noteholders shall not be obliged to take any action in respect of these rules, the Notes, the Conditions or any Transaction Document unless it is indemnified and/or provided with security to its satisfaction against all actions, proceedings, claims and demands which may be brought against it and against all costs, charges, damages, expenses and liabilities (provided that supporting documents are delivered) which it may incur by taking such action; (ix) in connection with matters in respect of which the Noteholders are entitled to direct the Representative of the Noteholders, the Representative of the Noteholders shall not be liable for acting upon any resolution purported to have been passed at any Meeting of Noteholders in respect of which minutes have been drawn up and signed notwithstanding that subsequent to so acting, it transpires that the Meeting was not duly convened or constituted, such resolution was not duly passed or that the resolution was otherwise not valid or binding upon the relevant Noteholders; (x) may call for, and shall be at liberty to accept and place full reliance on as sufficient evidence of the facts stated therein, a certificate or letter of confirmation certified as true and accurate and signed on behalf of any common depository as the Representative of the Noteholders considers appropriate, or any form of record made by any such depository, to the effect that at any particular time or throughout any particular period any particular person is, was, or will be, shown in its records as entitled to a particular principal amount of Notes; (xi) may certify whether or not an Event of Default is, in its opinion, materially prejudicial to the interests of the Noteholders and any such certificate shall be conclusive and binding upon the Issuer, the Noteholders, the Other Issuer Creditors and any other relevant person; (xii) may determine whether or not a default in the performance by the Issuer of any obligation under the provisions of these rules, the Notes, the Conditions or any other Transaction Document is capable of remedy and, if the Representative of the Noteholders certifies that any such default is, in its opinion, not capable of remedy, such certificate shall be conclusive and binding upon the Issuer, the Noteholders, the Other Issuer Creditors and any relevant person; (xiii) may assume, without enquiry, that no Notes are for the time being held by, or for the benefit, of the Issuer; (xiv) shall be entitled to call for, and to rely upon, a certificate or any letter of confirmation or explanation reasonably believed by it to be genuine, of any party to the Intercreditor Agreement, any Other Issuer Creditor or any rating agency in respect of any matter and circumstance for which a certificate is expressly provided for hereunder or under any Transaction Document or in respect of the ratings of the Notes and it shall not be bound, in any such case, to call for further evidence or be responsible for any loss, liability, costs, damages, expenses or inconvenience that may be incurred by its failing to do so; and 111

112 (xv) shall be entitled to assume, for the purposes of exercising any power, authority, duty or discretion, under or in relation hereto or to the Notes, the Conditions or any Transaction Document, that such exercise will not be materially prejudicial to the interests of the Noteholders if the Rating Agencies has/have confirmed that the then current ratings of the Notes would not be adversely affected by such exercise, or have otherwise given their consent. Any consent or approval given by the Representative of the Noteholders under these rules, the Notes, the Conditions or any other Transaction Document may be given on such terms and subject to such conditions (if any) as the Representative of the Noteholders thinks fit and, notwithstanding anything to the contrary contained herein, in the Conditions or in any Transaction Document, such consent or approval may be given retrospectively. No provision of these rules, the Notes, the Conditions or any Transaction Document shall require the Representative of the Noteholders to do anything which may be illegal or contrary to applicable law or regulations, or expend or risk its own funds, or otherwise incur any financial liability in the performance of any of its duties, or in the exercise of any of its powers or discretions, and the Representative of the Noteholders may refrain from taking any action if it has reasonable grounds to believe that it will not be reimbursed for any funds, or that it will not be indemnified against any loss or liability which it may incur as a result of such action. Article 30 Note Security The Representative of the Noteholders shall be entitled to exercise all the rights granted by the Issuer in favour of the Representative of the Noteholders on behalf of the Noteholders and the other Issuer Secured Creditors under the Note Security. The Representative of the Noteholders, acting on behalf of the Issuer Secured Creditors, may: (a) prior to enforcement of the Note Security, appoint and entrust the Issuer to collect, in the Issuer Secured Creditors' interest and on their behalf, any amounts deriving from the Note Security and may instruct, jointly with the Issuer, the obligors whose obligations form part of the Note Security to make any payments to be made thereunder to an Account of the Issuer; (b) agree that all funds credited to the Accounts from time to time shall be applied prior to enforcement of the Note Security, in accordance with the Conditions and the Intercreditor Agreement; and (c) agree that cash deriving from time to time from the Note Security and the amounts standing to the credit of the Accounts shall be applied prior to enforcement of the Note Security, in and towards satisfaction not only of amounts due to the Issuer Secured Creditors, but also of such amounts due and payable to the other Issuer Creditors that rank pari passu with the Issuer Secured Creditors, according to the applicable Priority of Payments and, to the extent that all amounts due and payable to the Issuer Secured Creditors have been paid in full, also towards satisfaction of amounts due to the other Issuer Creditors that rank below the Issuer Secured Creditors. The Issuer Secured Creditors irrevocably waive any right which they may have hereunder in respect of cash deriving from time to time from the Note Security and amounts standing to the credit of the Accounts which is not in accordance with the foregoing. The Representative of the Noteholders shall not be entitled to collect, withdraw or apply, or issue instructions for the collection, withdrawal or application of, cash deriving from time to time from the Note Security, except in accordance with the foregoing, the Conditions and the Intercreditor Agreement. The Representative of the Noteholders, on behalf of the Issuer Secured Creditors, acknowledges and agrees that the sums credited to the Expenses Account representing the net subscription price of the Notes will be applied in and towards payment of the Initial Purchase Price of the Claims on the Issue Date. 112

113 Article 31 Indemnity It is hereby acknowledged that the Issuer has covenanted and undertaken under the Subscription Agreement to reimburse, pay or discharge (on a full indemnity basis) all costs, liabilities, losses, charges, expenses (provided, in each case, that supporting documents are delivered), damages, actions, proceedings, claims and demands (including, without limitation, legal fees and any applicable value added tax or similar tax) properly incurred by or made against the Representative Noteholders or by any person to whom the Representative of the Noteholders has delegated any power, authority or discretion or any appointee thereof, in relation to the preparation and execution of, the exercise or the purported exercise of its powers, authority and discretion and performance of its duties under and in any other manner in relation to, these rules, the Notes, the Conditions, the Intercreditor Agreement or any other Transaction Document, of the including but not limited to legal and travelling expenses and any stamp, issue, registration, documentary and other taxes or duties paid by the Representative of the Noteholders in connection with any action and/or legal proceedings brought or contemplated by the Representative the Noteholders pursuant to these rules, the Notes, the Conditions or any Transaction Document, against the Issuer or any other person for enforcing any obligations under these rules, the Notes or the Transaction Documents, except insofar as the same are incurred as a result of gross negligence (colpa grave) or wilful default (dolo) on the part of the Representative of the Noteholders. of TITLE IV THE ORGANISATION OF NOTEHOLDERS UPON SERVICE OF AN ISSUER ACCELERATION NOTICE Article 32 Powers It is hereby acknowledged that, upon service of an Issuer Acceleration Notice and/or failure by the Issuer to exercise its rights, the Representative of the Noteholders shall, pursuant to the Mandate Agreement, be entitled, in its capacity as legal representative of the Organisation of Noteholders, also in the interest and for the benefits of the Other Issuer Creditors, pursuant to articles 1411 and 1723 of the Italian civil code, to exercise certain rights in relation to the Claims. Therefore, the Representative of the Noteholders, in its capacity as legal representative of the Organisation of Noteholders, will be authorised, also pursuant to the terms of the Mandate Agreement, to exercise, in the name and on behalf of the Issuer and as mandatario in rein propriam of the Issuer, all and any of the Issuer's Rights, including the right to give directions and instructions to the relevant parties to the Transaction Documents. In particular and without limiting the generality of the foregoing, following the service of an Issuer Acceleration Notice, the Representative of the Noteholders will be entitled, until the Notes have been repaid in full or cancelled in accordance with the Conditions: (a) to request the Collection Account Bank within a reasonable time to transfer all monies standing to the credit of the Collection Account to a replacement Collection Account opened for such purpose by the Representative of the Noteholders with a replacement Collection Account Bank; (b) to request the Transaction Bank to transfer all monies standing to the credit of the Payment Account and the Expenses Account, as the case may be, to, respectively, a replacement Payment Account or a replacement Expenses Account, as applicable, opened for such purpose by the Representative of the Noteholders with a replacement Transaction Bank; (c) to require performance by any Issuer Creditor of its obligations under the relevant Transaction Document to which such Issuer Creditor is a party, to bring any legal actions and exercise any remedies in the name and on behalf of the Issuer that are available to the Issuer under the relevant Transaction Document against such Issuer Creditor in the case of failure to perform and generally to take such action in the name and on behalf of the Issuer as the 113

114 Representative of the Noteholders may deem necessary to protect the interests of the Issuer, the Noteholders and the Other Issuer Creditors in respect of the Portfolio, the Claims and the Issuer's Rights; (d) to instruct the Servicer in respect of the recovery of the Issuer's Rights; (e) to take possession, as an agent of the Issuer and to the extent permitted by applicable laws, of all Collections and of the Claims and to sell or otherwise dispose of the Claims or any of them in such manner and upon such terms and at such price and such time or times as the Representative of the Noteholders shall, in its absolute discretion, deem appropriate and to apply the proceeds in accordance with the Post-Event Priority of Payments; provided, however, that if the amount of the monies at any time available to the Issuer or the Representative of the Noteholders for the payments above shall be less than five per cent. of the Principal Amount Outstanding of the Notes the Representative of the Noteholders may invest such monies (or cause such monies to be invested) in some or one of the investments authorised below. The Representative of the Noteholders may vary such investments (or cause such investments to be varied) and may accumulate such investments and the resulting income (or cause such investments and the resulting income to be accumulated) until the accumulations, together with any other funds for the time being under the control of the Representative of the Noteholders and available for such purpose, amount to at least five per cent. of the Principal Amount Outstanding of the Notes and then such accumulations and funds shall be applied to make the payments above. Any monies which under these rules or the Conditions may be invested by the Representative of the Noteholders may be invested in the name or under the control of the Representative of the Noteholders in any investments or other assets in any part of the world whether or not they produce income or by placing the same on deposit in the name or under the control of the Representative of the Noteholders at such bank or other financial institution and in such currency as the Representative of the Noteholders may think fit. The Representative of the Noteholders may at any time vary any such investments for or into other investments or convert any monies so deposited into any other currency and shall not be responsible for any loss resulting from any such investments or deposits, whether due to depreciation in value, fluctuations in exchange rates or otherwise, except insofar as such loss is incurred as a result of its gross negligence (colpa grave) or wilful default (dolt); and (f) to distribute the monies from time to time standing to the credit of the Accounts and such other accounts as may be opened by the Representative of the Noteholders pursuant to paragraphs (a) and (b) above to the Noteholders and the Other Issuer Creditors in accordance with the Post-Event Priority of Payments. For the purposes of this paragraph (f), all the Noteholders and the Other Issuer Creditors irrevocably appoint, as from the date hereof and with effect from the date on which the Notes will become due and payable following the service of an Issuer Acceleration Notice, the Representative of the Noteholders as their exclusive agent (mandatario esclusivo) to receive on their behalf from the Issuer any and all monies payable by the Issuer to the Noteholders and the Other Issuer Creditors from and including the date on which the Notes will become due and payable, such monies to be applied in accordance with the applicable Priority of Payments. TITLE V GOVERNING LAW AND JURISDICTION Article 33 Governing law and jurisdiction These rules are governed by, and will be construed in accordance with, the laws of Italy. All disputes arising out of or in connection with these rules, including those concerning their validity, interpretation, performance and termination, shall be settled exclusively by the courts of Rome. 114

115 USE OF PROCEEDS The net proceeds from the issue of the Notes, being equal to _539,055,338, will be applied by the Issuer on the Issue Date: (a) (b) to pay the up-front fees and expenses due by the Issuer to any third party involved in this Securitisation Transaction; to credit the Expenses Reserve Amount to the Expenses Account; (c) to credit _24,247,082 to the Cash Collateral Sub-Account, and (d) to pay the Initial Purchase Price to the Originator. 115

116 THE ISSUER Introduction Societ_ di Cartolarizzazione Italiana Crediti a responsabilith limitata (also known as S.C.I.C. a r.1.), formerly known as Societh per la cartolarizzazione dei crediti e dei proventi pubblici a responsabilith limitata (also formerly known as S.C.C.P.P. a r.1.) (the "Issuer") is a limited liability company (Societgt a responsabilitgt limitata) incorporated on 20th November, 2001, under article 15 of law No. 448 of 23rd December, 1998 (as amended by article 22 of law decree No. 350 of 25th September, 2001 converted with amendments into law No. 409 of 23rd November, 2001, by article 84 of law No. 289 of 27th December, 2002 and by article 26 of law decree No. 269 of 30th September, 2003 converted with amendments into law No. 326 of 24th November, 2003) ("Article 15"). The Issuer is registered with the Companies Register of Rome, with the register (elenco generale) held by Ufficio ltaliano dei Cambi pursuant to article 106 of the Italian legislative decree No. 385 of 1st September, 1993 (the "Banking Act") under No The registered office of the Issuer is at via Eleonora Duse, 53, Rome, Italy and its tax identification number (codice fiscale) is In accordance with Article 15, the Issuer is a multi-purpose vehicle and it has already engaged in: (a) a first securitisation transaction, under its former name of Societ_ per la cartolarizzazione dei crediti e dei proventi pubblici a responsabilit_ limitata, which was completed on 6th December, 2001 involving (i) the acquisition of certain revenues relating to certain lottery and betting games (the Lotto game and the Superenalotto Game) and (ii) the issue of asset-backed notes in an aggregate amount of 6 3,000,000,000 (the "Lotto Notes"); and (b) a second securitisation transaction which was completed on 25th November 2003, involving (i) the acquisition of the monetary claims arising from personal loans extended by INPDAP to employees of the Italian public administration and (ii) the issue of asset-backed notes in an aggregate amount of 64,230,000,000 (the "Personal Loans Notes" and, together with the Lotto Notes, the "Previous Securitisation Notes"). No indebtedness other than the Previous Securitisation Notes and the Issuer's costs and expenses of incorporation and operation has been incurred by the Issuer to date. The Issuer may engage in the future in other securitisation transactions. Pursuant to Article 15, the assets relating to each securitisation transaction will constitute assets segregated for all purposes from the assets of the Issuer and from assets relating to other securitisation transactions. The assets relating to a particular securitisation transaction will not be available to the holders of notes issued (or to the lenders in respect of loans extended) to finance any other securitisation transaction or to the general creditors of the Issuer. The authorised equity capital of the Issuer is 610,000. The issued equity capital of the Issuer is 610,000. The quotaholders of the Issuer (together, the "Quotaholders") and their equity interests are as follows: Quotaholders Quotaholding in the Issuer Quotaholding in the Issuer expressed in 6 expressed in % StichtingPalatium 6 5,000 50percent. Stichting Thesaurum 6 5, per cent. 116

117 Accounting treatment of the Portfolio Pursuant to Bank of Italy regulations, the accounting information relating to the securitisation of the Claims will be contained in the explanatory notes to the Issuer's accounts (Nota Integrativa). The explanatory notes, together with the balance sheet and the profit and loss statements, form part of the financial statements of Italian limited liability companies (Societ_ a responsabilit& limitata). Accounts of the Issuer The fiscal year of the Issuer begins on 1st January of each calendar year and ends on 31st December of the same calendar year with the exception of the first fiscal year which started on 20th November, 2001, and ended on 31st December, Consequently, the first statutory accounts of the Issuer are those relating to the fiscal year ended in December 2001 and approved on 20th July, The second statutory accounts are those relating to the fiscal year ended in December 2002 and approved on 30th April, Principal activities The principal corporate objectives of the Issuer, as set out in article 2 of its by-laws (statuto), include the acquisition of monetary receivables from the Republic of Italy or from other public entities for the purpose of securitisation transactions either through the issuance of asset-backed notes or through borrowing loans. So long as any of the Notes remain outstanding, the Issuer shall not, without the consent of the Representative of the Noteholders and as provided in the Conditions and the Transaction Documents, incur any other indebtedness for borrowed monies, engage in any activities except pursuant to the Transaction Documents, pay any dividends, repay or otherwise return any equity capital, have any subsidiaries, employees or premises, consolidate or merge with any other person, convey or transfer its property or assets to any person, or increase its equity capital. The Issuer will covenant to observe, inter alia, those restrictions which are detailed in Condition 5 (Covenants). Director of the Issuer The current sole director (amministratore unico) of the Issuer is Mr. Gordon E.C. Burrows (the "Director"). The Director was appointed on 20th November, 2001 for an undetermined period of time. Capitalisation and indebtedness statement The capitalisation and indebtedness of the Issuer as at the date of this Offering Circular, adjusted for the issue of the Notes on the Issue Date, are as follows: Issuedequitycapital 10,000fullypaidup 10,000 10,

118 Indebtedness Previous Securitisation Notes 1,000,000 Class A2 Asset-Backed Floating Rate Notes due ,000,000,000 1,000,000 Class A3 Asset-Backed Floating Rate Notes due ,000,000,000 _1,170,000,000 Class A1 PL Asset-Backed Floating Rate Notes due ,170,000,000 1,500,000,000 Class A2 PL Asset-Backed Floating Rate Notes due ,500,000,000 _860,000,000 Class A3 PL Asset-Backed 3.95 per cent. Notes due ,000,000 _700,000,000 Class A4 PL Asset-Backed Floating Rate Notes due ,000,000 TotalPreviousSecuritisationNotes 6,230,000,000 Notes to be issued _539,325,000 Asset-Backed Floating Rate Notes due ,325,000 Total capitalisation and indebtedness as at 23rd December, 2003 as adjusted for the 6,769,335,000 Notes to be issued Save for the foregoing, at the Issue Date, the Issuer will not have borrowings or indebtedness in the nature of borrowings (including loan capital issued or created but unissued), term loans, liabilities under acceptances or acceptance credits, mortgages, charges or guarantees, or other contingent liabilities. 118

119 Financial information relative to the Issuer as at 30th June, 2002 and 30th June, 2003 Balance Sheet 30 June June 02 Duefrombanks 9,930 9,984 IntangibleAssets 1,610 0,000 OtherAssets 9,380 26,443 20,920 36,427 Other liabilities 10,920 26,427 Quotacapital 10,000 10,000 20,920 36,427 Profit and Loss 30 June June 02 Commission expense Administrative costs 19,524 16,192 19,595 16,242 Interest Income Other operating expenses 19,564 16,231 19,595 16,242 All amounts are in EURO. Auditors' report The following is the text of a report received by the sole director of the Issuer from Deloitte ERS S.r.l., the external auditors to the Issuer. "Societ_ di Cartolarizzazione Via Eleonora Duse, Rome (the "Issuer") and Citigroup Global Markets Limited Citigroup Centre 33 Canada Square Canary Wharf London El4 5LB United Kingdom and Credit Suisse First Boston One Cabot Square London El4 4QJ United Kingdom and Italiana dei Crediti a r.l. 119

120 UniCredit Banca Mobiliare S.p.A. Via Tommaso Grossi, Milan - Italy (together with Citigroup Global Markets Limited and Credit Suisse First Boston, the "Joint Lead Managers") Dear Sirs, We are reporting on the financial information set out below. This financial information has been prepared for inclusion in the Offering Circular dated 23rd December, 2003 related to the issue by the Issuer of Euro 539,325,000 Asset-Backed Floating Rate Notes due 2019 (the "Notes"). The financial information set out below, is based on the non-statutory unaudited financial statements as at December 31, 2002 (the "Financial Statements") of the Issuer prepared on the basis described in note 2.1. No adjustments to the financial statements were considered necessary in compiling the financial information set out below. The statutory Financial Statements of the Issuer as of December 31, 2002, inclusive of the explanatory notes and the financial information related to the Portfolio, have been approved by the sole Director and the quotaholders' meeting of the Issuer. Our Auditors' Report on the non-statutory unaudited financial statements of the Issuer as of December 31, 2002 is dated 23rd December, The Financial Statements are the responsibility of the Director of the Issuer. The Issuer is also responsible for the contents of the Offering Circular in which this report is included. It is our responsibility to compile the financial information set out below from the Financial Statements, to form an opinion on the financial information, and to report our opinion to you. We conducted our examination in accordance with generally accepted auditing standards in Italy as recommended by the Italian Regulatory Commission for Companies and the Stock Exchange ("Consob"). Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the financial statements are free from material misstatement and are, as a whole, reliable. Our work included the examination of the evidence supporting the amounts and disclosures of the financial information set out below. It also included an assessment of the significant estimates and judgments made by those responsible for preparing the Financial Statements that underlie the financial information set out below. Furthermore, for the financial information set out below, we verified whether the accounting policies are appropriate to the entity's circumstances and consistently applied. We planned and performed our examination so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to express our opinion on the financial information set out below. In our opinion the financial information set out below gives, for the purposes of the Offering Circular, a true and fair view of the state of affairs of the Issuer as at the date stated. We do not express any opinion on the financial information and items related to the previous Portfolios and relative Claims, disclosed on 2.3 paragraph, which were purchased respectively on December 6, 2001 and 25th November,

121 1. Financial Information BalanceSheet 31Dec Dec Due from banks 9,959 10,001 OtherAssets 9,742 3,767 19,701 13,768 Otherliabilities 9,701 3,524 Provisionforcharges 244 Quotacapital 10,000 10,000 19,701 13,768 ProtTt andloss 31 Dec Dec Commission expense Administrative costs 30,361 3,524 Income taxes on the income 11 of the period 30,505 3,541 Interest Income Other operating expenses 30,405 3,537 30,505 3,541 Allamounts are in EURO. 2. Notes to the Financial Information 2. I Accounting policies The financial information has been prepared under the historical cost convention and in accordance with applicable accounting principles in Italy. 2.2 Registration During the period, the Issuer has applied for and obtained registrations as follows: Companies' register of Rome with the number ; The Italian Exchange Office (Ufficio ltaliano dei Cambi) pursuant to article 106 of the Italian legislative decree No. 385 of 1st September 1993, with number Trading activity As detailed in other sections of the Offering Circular, the Issuer has already engaged in: (a) a first securitisation transaction which was completed on December 6, 2001 involving both the acquisition of certain revenues relating to certain lottery and betting games (the Lotto game and the Superenalotto Game) and the issue of asset-backed notes in an aggregate amount of 3,000,000,000 and (b) a second securitisation transaction which was completed on November 25, 2003 involving both the acquisition of the monetary claims arising from personal loans 121

122 2.4 Equity extended by INPDAP to employees of the Italian public administration and the issue of assetbacked notes in an aggregate amount of _4,230,000,000. The information related to the Portfolio and Notes of the previous securitisation, according to the accounting standards currently applicable in Italy, have been disclosed only in the notes to the Financial Statements of the Issuer as of December 31, The authorized equity capital of the Issuer is Euro 10,000 divided into 2 quotas. DELOITTE ERS - Enterprise Risk Services S.r.1. Manlio Genero - Partner Milan, Italy December " 122

123 THE SWAP COUNTERPARTIES Citibank, N.A., London Branch Citibank, N.A. ("Citibank") was originally organised on 16 June 1812, and Citibank now is a national banking association organised under the National Bank Act of 1864 of the United States. Citibank is a wholly-owned subsidiary of Citicorp, a Delaware corporation, and is Citicorp's principal subsidiary. Citicorp is an indirect wholly-owned subsidiary of Citigroup Inc. ("Citigroup"), a Delaware holding company. As of 30 June 2003 the total assets of Citibank and its consolidated subsidiaries represented approximately 69 per cent. of the total assets of Citicorp and its consolidated subsidiaries. Citibank is a commercial bank that, along with its subsidiaries and affiliates, offers a wide range of banking and trust services to its customers throughout the United States and the world. Citibank, N.A., London Branch was registered in the United Kingdom as a foreign company in July The principal offices of the London Branch are located at Citigroup Centre, Canada Square, Canary Wharf, London El4 5LB, England. The London Branch is primarily regulated by The Financial Services Authority and operated in the United Kingdom as a fully authorised commercial banking institution offering a wide range of corporate banking products. For further information regarding Citibank, reference should be made to Citicorp's Quarterly Report on Form 10-Q for the quarter ended 30 June 2003 and to any subsequent reports of Citicorp on Forms 10-K, 10-Q and 8-K which are filed with the Securities and Exchange Commission of the United States ("SEC"). Copies of such material may be obtained, upon payment of a duplicating fee, by writing to the SEC at 450 Fifth Street, N.W., Washington, D.C In addition, such reports are available at the SEC Web site ( In addition, Citibank submits quarterly to the United States Office of the Controller of the Currency (the "Controller") certain reports called "Consolidated Reports of Condition and Income for a Bank With Domestic and Foreign Offices" ("Call Reports"). The Call Reports are on file with and publicly available at the Controller's offices at 250 E Street, S.W., Washington, D.C and are also available on the Web site of the Federal Deposit Insurance Corporation of the United States ( Each Call Report consists of a Balance Sheet, Income Statement, Changes in Equity Capital and other supporting schedules at the end of and for the period to which the report relates. The Call Reports are prepared in accordance with the regulatory instructions issued by the Federal Financial Institutions Examination Council. While the Call Reports are supervisory and regulatory documents, not primarily accounting documents, and do not provide a complete range of financial disclosure about Citibank, the reports nevertheless provide important information concerning the financial condition and results of operations of Citibank. The obligations of Citibank, N.A., London Branch under the SC1 Swap Agreement or any other hedging agreement will not be guaranteed by Citicorp or Citigroup or by any other affiliate. The information in the preceding six paragraphs has been provided by Citibank for use in this Offering Circular. Except for the foregoing six paragraphs on this page, Citibank, Citicorp, Citigroup and their affiliates do not accept responsibility for this Offering Circular as a whole. 123

124 Credit Suisse First Boston International Introduction Credit Suisse First Boston Intemational ("CSFBi") was incorporated in England and Wales under the Companies Act 1985, on 9th May, 1990, with registered no and was re-registered as an unlimited liability company under the name "Credit Suisse Financial Products" on 6th July, Its registered office and principal place of business is at One Cabot Square, London El4 4QJ. CSFBi is an English bank and is regulated as an EU credit institution by The Financial Services Authority ("FSA") under the Financial Services and Markets Act The FSA has issued a scope of permission notice authorising the Issuer to carry out specified regulated investment activities. With effect from 27th March 2000, CSFBi was renamed "Credit Suisse First Boston Intemational". CSFBi is an unlimited liability company and, as such, its shareholders have a joint, several and unlimited obligation to meet any insufficiency in the assets of CSFBi in the event of its liquidation. CSFBi commenced business on 16th July Its principal business is banking, including the trading of derivative products linked to interest rates, equities, foreign exchange and credit. The primary objective of CSFBi is to provide comprehensive treasury and risk management derivative product services worldwide. CSFBi has established a significant presence in global derivative markets through offering a full range of derivative products and continues to develop new products in response to the needs of its customers and changes in underlying markets. CSFBi is part of the Credit Suisse First Boston business unit of Credit Suisse Group. Credit Suisse First Boston is a leading global investment bank, serving institutional, corporate, government and individual clients. Shareholders Credit Suisse First Boston owns 56 per cent, Credit Suisse First Boston (International) Holding AG, a wholly owned subsidiary of Credit Suisse First Boston, owns 24 per cent and Credit Suisse Group owns 20 per cent of CSFBi's ordinary voting shares. Credit Suisse First Boston and Credit Suisse First Boston (International) Holding AG have entered into a voting agreement relating to the election of directors. With respect to CSFBi's participating non-voting shares (other than an issue of "Class A" participating non-voting shares) Credit Suisse First Boston owns 4.9 per cent, Credit Suisse First Boston (UK) Investments, a wholly owned subsidiary of Credit Suisse First Boston, owns 75.1 per cent and Credit Suisse Group owns 20 per cent. In addition, Credit Suisse First Boston and Credit Suisse First Boston (UK) Investments each hold half of the Issuer's "Class A" participating non-voting shares and Credit Suisse First Boston (UK) Investments holds 80 per cent and Credit Suisse Group holds 20 per cent of the Issuer's perpetual non-cumulative "Class A" preference shares. UniCredito Italiano S.p.A. UniCredito Italiano S.p.A. will act as Swap Counterparty under the SC3 Swap Agreement. UniCredito Italiano S.p.A. is a joint stock company registered with the Bank of Italy, pursuant to Article 13 of the Legislative Decree No. 385 of 1st September 1993, as a bank, duly existing under the laws of the Republic of Italy. Its head office is at Piazza Cordusio, Milan, and its registered office is at Via Dante 1, Genoa, Italy. Established in 1998 from the aggregation of Credito Italiano and Rolo Banca 1473 with Cariverona, Cassa di Risparmio di Torino, and Cassamarca. In 1999 UniCredito Italiano S.p.A. group also aggregated Cassa di Risparmio di Trento e Rovereto and Cassa di Rispannio di Trieste. A far-reaching reorganisation project approved in 2001 and called "$3" (= 3 segments) has led to the group's present organisation, structured in four divisions (Retail, Corporate, Private & Asset Management, and New Europe) and heading three new banks specialised by customer segment: 124

125 (1) UniCredito Banca serves families and small businesses; (2) UniCredit Banca d'impresa serves the mid and large corporate segment and public organizations; and (3) UniCredit Private Banking is dedicated to high-net-worth individuals and families. UniCredito Italiano S.p.A. is one of the largest financial services groups in Italy and is engaged in a wide range of banking, financial and related activities, in Italy and abroad. These activities include deposit-taking, lending, portfolio management, securities brokerage services and trading, investment banking, international trade finance, corporate finance, foreign exchange, leasing, factoring and insurance. UniCredito Italiano S.p.A. is one of the main Italian banking group in terms of market capitalisation (over E 26 billion in mid-october 2003). In Europe it is one of the most recognised banking groups in terms of efficiency and profitability with a cost/income ratio of 52% and a 20.2% ROE, and with total assets of E 228,760 million as at the end of June The current rating of UniCredito Italiano S.p.A. is: Long Term: AA- Standard & Poor's; AA- Fitch; AA2 Moody's Investors Service. Short Term: A-l+ Standard & Poor's FI+ Fitch; P-1 Moody's Investors Service. 125

126 SELECTED ASPECTS OF ITALIAN LAW Article 15 of law No. 448 of 23rd December, 1998 The transaction described in this Offering Circular is subject to specific legislation passed by the Italian Parliament. Article 15 of law No. 448 of 23rd December, 1998, as amended by law decree No. 350 of 25th September, 2001 (converted with amendments into law No. 409 of 23rd November, 2001), by law No. 289 of 27th December, 2002 and by article 26 of law decree No. 269 of 30th September, 2003 converted with amendments into law No. 326 of 24th November, 2003 ("Article 15"), sets forth specific rules in respect of securitisations of claims or revenues originated by the Republic of Italy or any other Italian public entity. Article 15 supplements and, to a certain extent, amends the legal environment set out in respect of securitisation transactions by law No. 130 of 30th April, 1999 (the "Securitisation Law"). Those aspects of this Securitisation Transaction for which Article 15 does not contain any express provision are regulated by the Securitisation Law. Under Article 15, the MEF may set up, or promote the setting-up of, a special purpose vehicle for the purpose of carrying out one or more securitisation transactions. Such special purpose vehicle must be a limited liability company (societgt a responsabilith limitata) with a minimum quota capital of 10,000. On 20th November, 2001, the limited liability company Societ_ per la cartolarizzazione dei crediti e dei proventi pubblici a responsabilit_ limitata (also known as S.C.C.P.P. a r.1.) was incorporated pursuant to Article 15. By way of an extraordinary quotaholders' meeting, held on 24th October, 2003, Societ?t per la cartolarizzazione dei crediti e dei proventi pubblici a responsabilit_ limitata changed its name to Societh di Cartolarizzazione Italiana crediti a responsabilit2t limitata (also known as S.C.I.C. a r.1.) (the "Issuer"). In accordance with Article 15, the Issuer is a multi-purpose vehicle and, under its former name of Societh per la cartolarizzazione dei crediti e dei proventi pubblici a responsabilitfi limitata, it has already engaged in a first securitisation transaction which was completed on 6th December, 2001 and a second securitisation transaction which was completed on 25th November, Article 15 provides for several specific rules, which relate to, inter alia: (i) the means of financing available to the Issuer (i.e. the issue of asset-backed securities and the borrowing of loans), (ii) the limited recourse nature of the asset-backed securities, (iii) the statutory ring-fencing of the Issuer's assets and (iv) a preferred tax treatment applicable to each securitisation transaction compared to that applicable to securitisation vehicles incorporated under Law 130. Furthermore, Article 15 sets out certain regulatory requirements in respect of the Issuer. The assets from time to time securitised by the Issuer in the context of any transaction, together with any other rights that the Issuer may acquire against the Republic of Italy, public entities or other third parties in connection with the relevant securitisation transaction, will constitute segregated assets (patrimonio separato), ring-fenced from any other assets of the Issuer itself, including assets securitised by the Issuer in the context of other transactions. The appointment of a representative of the holders of the securities issued by the Issuer is compulsory. In addition to the powers given to the representative upon his appointment, the representative of the noteholders will have the power to approve any changes to be made to the transaction documents under Article 15. The characteristics of each securitisation transaction carded out by the Issuer are set forth in a specific ministerial decree to be issued by the Ministry of Economy and Finance ("MEF") (in conjunction, where necessary, with the competent Ministry, in charge of the relevant Originator, if any). The assignment of the claims or the revenues, as applicable, will be opposable against the assigned debtors and any third-party creditor by way of publication in the Italian Official Gazette of a notice of the 126

127 assignment of the claims or revenues, so avoiding the need for notification to be served on each assigned debtor. As a result of the above mentioned publications in the Italian Official Gazette, (i) the benefit of any privilege, guarantee or security interest guaranteeing or securing repayment of the claims or revenues will automatically be transferred to and perfected with the same priority in favour of the Issuer, without the need for any formality or annotation, and (ii) no legal actions may be brought against the segregated assets other than actions brought by the noteholders or by the lenders who have financed the purchase of the claims or the revenues. According to Article 15, the activity of servicing the revenues or the claims (as referred to in Article 2, paragraph 6 of the Securitisation Law) can be performed also by the Republic of Italy or by any other public entity, in addition to banks and financial intermediaries registered in the register held by the Bank of Italy pursuant to article 107 of legislative decree No. 385 of 1st September, 1993 (the "Banking Act"). Article 15 provides that no stamp duty or any other indirect taxation will be levied on the securitisation, the transaction documents, the transferred assets or the services provided in relation to the completion of the transaction nor will any interest on monies accrued in the Issuer's bank current accounts be subject to withholding tax. The segregated assets are, in addition, exempt from both Imposta sui Redditi or Imposta Regionale sulle Attivit?_ Produttive. Article 15 states further that the securities issued by the Issuer will be treated for tax purposes as bonds issued by the Republic of Italy. For a description of the tax treatment of the Notes, see "Taxation in the Republic of Italy", below. The specifics of the securitisation transaction described in this Offering Circular have been determined by way of a decree issued on 23rd December, 2003 by the MEF in conjunction with the Ministry of Labour and Social Welfare. Usury Law The interest payments and other remuneration paid by the borrowers in relation to any loan are subject to Italian law No. 108 of 7th March, 1996 (the "Usury Law"), which introduced legislation preventing lenders from applying interest rates equal to or higher than rates (the "Usury Rates") set every three months on the basis of a decree issued by the Italian Treasury. In addition, even where the applicable Usury Rates are not exceeded, interest and other advantages and/or remuneration may be held to be usurious if (i) they are disproportionate to the amount lent (taking into account the specific situations of the transaction and the average rate usually applied for similar transactions), and (ii) the person who paid or agreed to pay them was in financial and economic difficulties. The provision of usurious interest, advantages or remuneration has the same consequences as non-compliance with the Usury Rates. In some judgements issued during 2000, the Italian Supreme Court (Cone di Cassazione) ruled that the Usury Law applied both to loans advanced prior to and after the entry into force of the Usury Law. Moreover, according to a certain interpretation of the Usury Law (which was generally considered, in the Italian legal community, to have been accepted in the above-mentioned rulings of the Corte di Cassazione), if at any point in time the rate of interest payable on a loan (including a loan entered into before the entry into force of the Usury Law or a loan which, when entered into, was in compliance with the Usury Law) exceeded the then applicable Usury Rate, the contractual provision providing for the borrower's obligation to pay interest on the relevant loan became null and void in its entirety. The Italian Government intervened with law decree No. 394 of 29th December, 2000 (the "Usury Law Decree" and, together with the Usury Law, the "Usury Regulations"), converted into law by law No. 24 of 28th February, 2001, which provides, inter alia, that interest is to be deemed usurious only if the interest rate agreed by the parties exceeds the Usury Rate applicable at the time the relevant 127

128 agreement is reached. The Usury Law Decree also provides that, as an extraordinary measure due to the exceptional fall in interest rates in the years 1998 and 1999, interest rates due on instalments payable after 2nd January, 2001 on loans already entered into on the date on which the Usury Law Decree came into force (such date being 31st December, 2000) are to be substituted with a lower interest rate fixed in accordance with parameters fixed by the Usury Law Decree. As the Usury Law Decree became law at the end of February 2001, no official or judicial interpretation of it is yet available. However, the Italian Constitutional Court has rejected, with decision No. 29/2002 (deposited on 25th February, 2002), a constitutional exception raised by the Court of Benevento (2nd January, 2001) concerning article 1, paragraph 1, of the Usury Law Decree (now reflected in article 1, paragraph 1 of the above mentioned conversion law No. 24 of 28th February, 2001). In so doing, it has confirmed the constitutional validity of the provisions of the Usury Law Decree which holds that interest rates may be deemed to be void due to usury only if they infringe Usury Regulations at the time they are agreed as between the borrower and the lender and not at the time such rates are actually paid by the borrower. If a loan is found to contravene the Usury Regulations, the relevant borrower might be able to claim relief on any interest previously paid and oblige the lender (or the assignee of the relevant claims) to accept a reduced rate of interest, or potentially no interest on such loan. Insolvency of provinces and municipalities According to the Italian Bankruptcy Act, local territorial public entities may not be declared bankrupt. Legislative Decree No. 267 of 18th August, 2000 contains specific rules regulating the financial distress of provinces, municipalities and mountain communities (dissesto). The dissesto occurs if local entities cannot afford the expenses related to their ordinary functions and essential services or are unable to pay third party creditors for amounts due and payable to them. The main consequences of dissesto can be summarised as follows: (a) an extraordinary liquidation body responsible for the settlement of the overdue debts, must be appointed by presidential decree on the initiative of the Home Secretary; (b) the extraordinary liquidation body is competent for the extraordinary administration relating to: (i) the identification of liabilities; (ii) the acquisition and management of the available funds for the rebalancing of the accounts (including through the sale of assets); and (iii) the liquidation and repayment of debts; (c) the ordinary management continues to be carried out by the institutional bodies of the relevant entity, especially by the Council, and is aimed at rebalancing the budget; and (d) executory actions against the relevant local entity, with reference to the debts falling within the competence of the extraordinary liquidation body, are prohibited and pending proceedings are extinguished by means of law; seizure proceedings are also extinguished by means of law. Enforcement against local public entities Pursuant to Article 14 of Law Decree No. 669 of 31st December, 1996, converted with amendments into Law No. 30 of 28th February, 1997, State administrations and non-economic public entities (such as provinces, regions, municipalities and mountain communities) must comply with enforceable judgements or arbitration awards which provide an obligation to pay a sum of money, within 120 days from the service of the deed of execution (titolo esecutivo). 128

129 Prior to the expiry of the 120-day term, creditors are not entitled to enforce a deed of execution against such local public entities nor do they have the right to implement any enforcement procedure. In addition, pursuant to (i) article 11 of Law Decree No. 8 of 18th January, 1993, converted into Law No. 68 of 19th March, 1993 ("Article 11") with respect to regions and (ii) article 159 of Legislative Decree No. 267 of 18th August, 2000 with respect to local public entities ("Article 159"), the sums set aside by resolution of the executive board thereof to pay amortisation instalments of loans due in the current six months period may not attached by creditors, provided that the executive board of the relevant entity has, in its quarterly resolution (or semi-annual resolution, as to local public entities), already specified such amounts. Public entity debtor immunity None of the public entity debtors is entitled to claim, in respect of itself or any of it assets or revenues, immunity from suit, execution, attachment or other legal process in the Republic of Italy, except as mandatorily required by law (such as articles 822, 828 and 830 of the Italian Civil Code and other items of special legislation, stating that certain assets of the Italian State and public entities which are indicated therein or which are used to provide a public service may not be attached or distracted from such use except as allowed by specific laws concerning such assets). Payment delegations (Delegazione di pagamento ) Pursuant to article 206 of Legislative Decree No. 267 of 18th August, 2000, local entities may grant, as a guarantee for payment of instalments due under loans, a payment delegation, by which the relevant treasurer bank is ordered to make payments using sums deriving from the revenues set out in the first three (or, in the case of mountain communities, two) items of their annual budget. The payment delegation has to be notified to the treasurer bank and constitutes titolo esecutivo. Upon notification of the payment delegation, if the treasurer bank fails to make payments on the due date, it must pay default interest on such payments, unless it can prove that the delay is not attributable to it. Description of treasurer banks of local entities Articles 208 and following of Legislative Decree No. 267 of 18th August, 2000 provide rules on the treasurer banks of local entities (such as provinces and municipalities). The treasurer bank must be: (i) for the larger local public entities (capoluogo di provincia) and for provinces, a bank authorised to collect savings and to grant loans pursuant to article 10 of the Banking Act, while (ii) for smaller municipalities, either (a) a bank authorised to collect savings and to grant loans or (b) a joint stock company whose statutory purpose is the provision of treasury services. Local entities must select an external treasurer bank for the operation of their financial activities, to be selected through a public tender procedure. Tax treatment of the Issuer Pursuant to paragraph 8 of Article 15, the Issuer is exempt from any corporate income tax and local tax on productive activities ("IRAP") with regard to any income or profit arising from the Claims or any other segregated portfolios of securitised assets. Interests accrued on the Issuer's bank accounts are not subject to the 27 per cent. provisional withholding tax provided by article 26, paragraphs 2 and 3 of the Presidential Decree No. 600 of 29th September,

130 THE AGENCY AND ACCOUNTS AGREEMENT The description of the Agency and Accounts Agreement set out below is a summary of certain features of that Transaction Document and is qualified in its entirety by reference to the detailed provisions of such Agency and Accounts Agreement. Prospective Noteholders may inspect a copy of the Agency and Accounts Agreement upon request at the registered office of the Representative of the Noteholders and at the Specified Office of the Principal Paying Agent and the Luxembourg Paying Agent. Pursuant to the Agency and Accounts Agreement, the Issuer has appointed: (a) the Principal Paying Agent, for the purpose of, inter alia, supervising payments in respect of the Notes made by the Italian Paying Agent; (b) the Italian Paying Agent, for the purpose of, inter alia, making payments in respect of the Notes; (c) the Agent Bank, for the purpose of, inter alia, determining the rate of interest payable in respect of the Notes; (d) the Computation Agent, for the purpose of, inter alia, determining certain of the Issuer's liabilities and the funds available to pay the same (subject to the receipt of certain information and in reliance thereon) and instructing (i) the Transaction Bank to make certain payments into and out of the Accounts, and (ii) the Collection Account Bank to transfer from the Collection Account to the Payment Account up to the Business Day immediately preceding each Interest Payment Date such monies as are to be used on such Interest Payment Date in accordance with the Payments Report. (e) the Luxembourg Paying Agent, as Luxembourg paying agent in respect of the Notes; (f) the Transaction Bank for the purpose of maintaining and handling the Payment Account and the Expenses Account. Duties of the Transaction Bank Pursuant to the Agency and Accounts Agreement, the Issuer has opened and will maintain with the Transaction Bank the Payment Account and the Expenses Account. The Transaction Bank has agreed to provide to the Issuer certain services in connection with accounthandling in relation to the monies from time to time standing to the credit of the Accounts. In performing its obligations, the Transaction Bank may rely on the instructions and determinations of the Issuer and the Computation Agent and will not be liable for any omission or error in so doing. Duties of the Agent Bank On each Interest Determination Date, the Agent Bank will, in accordance with Condition 6 (Interest), determine EURIBOR and the Rate of Interest applicable to the Notes during the following Interest Period, as well as the Interest Amount and the Interest Payment Date in respect of such following Interest Period, all subject to and in accordance with the Conditions, and will notify such amounts to the Issuer, the Representative of the Noteholders, the Principal Paying Agent, the Italian Paying Agent, the Servicer, the Corporate Services Provider, the Swap Counterparties, the Luxembourg Paying Agent and the Luxembourg Stock Exchange. 130

131 Duties of the Computation Agent The duties of the Computation Agent include the making of certain calculations in respect of the Securitisation. The Computation Agent will make such calculations based on: (a) (b) the statements of accounts in relation to the Accounts prepared by the Transaction Bank on each Reporting Date; the Servicer Reports prepared by the Servicer on each Reporting Date; (c) the determinations received from the Agent Bank concerning the Rates of Interest, Interest Amount and Interest Payment Date; (d) the calculation made by the Swap Counterparties in their capacities as calculation agents under the relevant Swap Agreement; and (e) the instructions and determinations of the Issuer and Monte Titoli, and the Computation Agent shall not be liable for any omission or error in so doing save as caused by its own gross negligence (colpa grave) or wilful default (dolo). The Computation Agent will calculate, inter alia, on or before each Calculation Date: (i) the Issuer Available Funds; (ii) the Principal Payments (if any) due on the Notes on the next following Interest Payment Date; (iii) the interest to be paid (if any) in respect of the Notes on the next following Interest Payment Date; (iv) the Principal Amount Outstanding of the Notes on the next following Interest Payment Date (after deducting all Principal Payments (if any) to be made on that Interest Payment Date); (v) the amounts, if any, to be drawn from the Cash Collateral Sub-Account to augment the Issuer Available Funds; (vi) the amounts of the Cash Collateral after draw-down on the immediately following Interest Payment Date, and (vii) the other payments to be made to each of the parties to the Intercreditor Agreement under the relevant Transaction Documents, and will determine how the Issuer's funds available for distribution pursuant to the Conditions will be applied, on the immediately following Interest Payment Date pursuant to the applicable Priority of Payments, and will deliver to, inter alios, the Servicer, the Transaction Bank and the Principal Paying Agent a report (the "Payments Report") setting forth such determinations and amounts. Pursuant to the Agency and Accounts Agreement, the Computation Agent has also agreed to prepare and deliver (on each Interest Payment Date) to the Issuer, the Representative of the Noteholders, the Luxembourg Paying Agent, the Luxembourg Stock Exchange, INPDAP and the Rating Agencies, a report having substantially the same content set out in the Agency and Accounts Agreement (the "Investor Report"). 131

132 The Investor Report will contain, inter alia, summaries of the following items in respect of the preceding Collection Period: (i) the Principal Amounts Outstanding under the Notes and the interest rates applicable thereto; (ii) the revenues received by the Issuer; and (iii) the payments of principal, interest and other costs and expenses paid by the Issuer. In carrying out such duties, the Computation Agent will be entitled to rely on certain information provided to it by, inter alia, the Servicer, the Computation Agent, the Agent Bank and the Transaction Bank. In addition, the Computation Agent will operate the Collection Account, the Payment Account and the Expenses Account in the name of and on behalf of the Issuer under a power of attomey given to it by the Issuer and will make payments from such Accounts in the amounts set out in the Payments Report or as otherwise permitted to do so in accordance with the terms of the Transaction Documents. For a description of the operation of the Accounts and the cash flows through the Accounts, see "Credit structure - Cash flow through the Accounts", above. Copies of the Investor Reports will be available, free of charge, at the office of the Luxembourg Paying Agent. Duties of the Paying Agents The Italian Paying Agent will, on each Interest Payment Date, receive from the Issuer, the monies necessary to make the payments due on the Notes on the immediately following Interest Payment Date and will apply such funds in or towards such payments as specified in the Payments Report. The Principal Paying Agent will provide the Issuer and the Corporate Services Provider with the data necessary to maintain and update the Noteholders' register (registro degli obbligazionisti) in accordance with Italian law and any other applicable law. The Luxembourg Paying Agent will act as intermediary between the Noteholders and the Issuer for certain purposes and make available for inspection during normal business hours at its Specified Office such documents as may from time to time be required by the Luxembourg Stock Exchange and, upon reasonable request, will allow copies of such documents to be taken. The Principal Paying Agent will keep a record of all Notes and of their redemption, purchase, cancellation and repayment and will make such records available for inspection during normal business hours by the Issuer, the Representative of the Noteholders and the Computation Agent. In performing their obligations, the Paying Agents may rely on the instructions and determinations of the Issuer, Monte Titoli and the Computation Agent, and will not be liable for any omission or error in so doing. General Provisions The Principal Paying Agent, the Italian Paying Agent, the Luxembourg Paying Agent, the Agent Bank, the Transaction Bank and the Computation Agent (hereinafter collectively referred to as the "Agents") will act as agents solely of the Issuer and will not assume any obligation towards, or relationship of agency or trust for or with, any of the Noteholders. Each of the Issuer and the Representative of the Noteholders has agreed that it will not consent to any amendment to the Conditions that materially affects the obligations of any of the Agents without such Agent's prior written consent (such consent not to be unreasonably withheld). The Issuer has undertaken to indemnify each of the Agents and its respective directors, officers and employees against all losses, liabilities, costs, claims, actions, damages, expenses or demands which any of them may incur or which may be made against any of them as a result of or in connection with 132

133 the appointment of or the exercise of the powers and duties by any Agent, except as may result from its wilful default (dolo) or gross negligence (colpa grave), or that of its directors, officers or employees or any of them, or breach by it of the terms of the Agency and Accounts Agreement. In return for the services so provided, the Agents will receive a fee agreed on or about the Signing Date between the Issuer and the relevant Agent, payable by the Issuer in accordance with the Priority of Payments. The appointment of any Agent may be terminated by the Issuer (with the prior written approval of the Representative of the Noteholders) upon 30 days' written notice or upon the occurrence of certain events of default or insolvency or of similar events occurring in relation to such Agent. Citibank, N.A., Milan Branch, is the soggetto incaricato dei servizi di cassa e pagamento to the extent and within the limits that such role is required in relation to this Securitisation Transaction in accordance with article 2, paragraph 6 of the Securitisation Law, Article 15 and the instructions issued by the Bank of Italy on 23rd August, The Agency and Accounts Agreement is governed by Italian law. 133

134 THE RECEIVABLES PURCHASE AGREEMENT The description of the Receivables Purchase Agreement set out below is a summary of certain features of such Transaction Document and is qualified in its entirety by reference to the detailed provisions of such Receivables Purchase Agreement. Prospective Noteholders may inspect a copy of the Receivables Purchase Agreement upon request at the registered office of the Representative of the Noteholders and at the Specified Office of the Principal Paying Agent and the Luxembourg Paying Agent. Assignment of Claims On 23rd December, 2003 (the "Signing Date"), the Issuer and the Originator entered into a receivables purchase agreement, pursuant to which the Originator has sold without recourse (pro soluto), in accordance with Article 15, all of its rights, title and interests in and to the Claims with effect as of the Issue Date. On 5th December, 2003, the Originator prepared a prospective list containing details of the Loans from which the Claims arise as at the Valuation Date. On or before 31st January, 2004 (the "Updated List Date"), the Originator will confirm or update, as the case may be, the list of Loans providing details, inter alia, of the Loans that have been early redeemed in the period between 5th December, 2003 and the Valuation Date. Pursuant to the Receivables Purchase Agreement, the Originator will transfer to the Issuer any amount collected in respect of the Claims in the period between 5th December, 2003 and the Valuation Date (with the exception of the instalment falling due, according to the relevant amortisation plan, in December 2003). Pursuant to the Receivables Purchase Agreement, the Claims comprise all monetary claims arising from loans granted by INPDAP (or in respect of which INPDAP has become the owner pursuant to paragraph 2 of article 4 of Decree 479) to certain public entities as identified by paragraph 1, letter a) of article 68 of royal decree No. 453 of 2nd January, 1913, as subsequently amended, with the exclusion of loans granted to state administrations, non territorial public entities, mixed public-private companies and commercial companies (the "Criteria"). Minimum Guaranteed Balance and existence of Claims Under the Receivables Purchase Agreement, the aggregate outstanding principal balance of the Claims as at the Valuation Date (together with amounts collected in respect of prepayments in the period between 5th December, 2003 and the Valuation Date) shall be at least equal to _556,003,475 (the "Minimum Guaranteed Balance"). The Originator and the Issuer have agreed that, if as at the Updated List Date the aggregate principal balance of the Claims is less than the Minimum Guaranteed Balance: (i) such shortfall will be set off pro-quota against all overdue amounts collected by the Issuer after the Valuation Date with respect to the loans the amortisation plan of which was expired as of the Valuation Date; and/or (ii) if the set-off mechanism under (i) above may not be put in place or is not sufficient to cover the shortfall entirely, INPDAP will transfer to the Issuer a cash amount equal to the residual shortfall plus interest at a rate equal to the interest rate then accruing on the Notes plus a margin of 0.20 per cent., accruing from the Issue Date to the date when such payment is made. With regard to the existence of the Claims, the Originator has represented and warranted that each of the Claims is existing in an amount indicated in the list referred to above. The Receivables Purchase 134

135 Agreement contains specific provisions regulating those instances where, at any time after the Issue Date, a Claim is declared in whole or in part non-existent by a Court decision or by the Originator. The Claims are considered as existing, inter alia: (i) until otherwise declared or ascertained, in whole or in part, by any judicial authority at least with a judgment of first instance (sentenza di primo grado); and (ii) until otherwise declared or ascertained, in whole or in part, by the Originator. Any partial, or total, non-existence of Claims will be set off against (i) the positive difference, if any, between the aggregate principal balance of the Claims and the Minimum Guaranteed Balance; and (ii) all overdue amounts collected after the Valuation Date with respect to the loans the amortisation plan of which was expired as of the Valuation Date. If such set-off mechanism cannot be put in place in whole or in part,, INPDAP will transfer to the Issuer a cash amount equal to the outstanding principal amount of the non-existing Claims plus interest at a rate equal to the average interest rate on the Notes plus a margin of 0.20%, accruing from the Issue Date to the date when such payment is made. Purchase Price The purchase price for the Claims consists of two components: (a) _514,716,310 (the "Initial Purchase Price") to be paid in full to the Originator on the later of: (i) the Issue Date; (ii) the date of the publication in the Italian Official Gazette (Gazzetta Ufficiale della Repubblica Italiana) of a notice as described in the Receivables Purchase Agreement; or (iii) the date on which the conditions precedent referred to in the Receivables Purchase Agreement are satisfied; and (b) provided that the Notes have been redeemed in full, a deferred purchase price (the "Deferred Purchase Price") payable by way of: (i) transfer to the Originator of all sums collected in respect of the Claims and the Transaction Documents which is in excess of the aggregate of the Initial Purchase Price and of all costs (including payments made under the Notes) incurred in connection with this Securitisation Transaction, or at the request of INPDAP (ii) transfer to the Originator of: (a) the amounts referred to under (i) above; (b) title to all of the Claims then outstanding, provided that the Issuer shall not be responsible for the existence of such Claims nor for the solvency of the relevant underlying debtors; and (c) any other rights of the Issuer against any other party to the Transaction Documents. Adjustment of the Purchase Price The Receivables Purchase Agreement provides that if, at any time after the Issue Date, it transpires that any of the Loans does not meet the Criteria and was therefore erroneously transferred to the Issuer, then the Claims relating to such Loan (the "Excluded Claims") will be deemed as never having been transferred to the Issuer pursuant to the Receivables Purchase Agreement. In this event, the principal balance of the Excluded Claims will be set off against (i) the positive difference, if any, between the aggregate principal balance of the Claims and the Minimum Guaranteed Balance; and (ii) all overdue amounts collected after the Valuation Date with respect to the loans the amortisation plan of which was expired as of the Valuation Date. If the amounts due in respect of the Excluded Claims, for whatever reason, cannot be set-off in whole or in part, as described above, INPDAP will transfer to the Issuer a cash amount equal to the outstanding principal amount of the Excluded Claims plus interest at a rate equal to the relevant average interest rate on the Notes plus a margin of 0.20%, accruing from the Issue Date to the date when such payment is made. 135

136 The Receivables Purchase Agreement also provides that if, at any time after the Issue Date, it transpires that a loan which, at the Signing Date, met the relevant Criteria was not included in the Portfolio, then the claims under such loan (the "Included Claim") shall be deemed as having been sold to the Issuer by the Originator on the Issue Date. In respect of such Included Claim, the Issuer shall pay to the Originator, in accordance with the Priority of Payments, an amount calculated, inter alia, on the basis of the residual debt of such Included Claims. Early Redemption of the Notes The Receivables Purchase Agreement provides that on or about any Interest Payment Date on which the principal amount outstanding of the Notes is equal to, or lower than, 10 per cent. of the principal amount outstanding of the Notes as of the Issue Date, the Originator may repurchase, if so authorised by a Mnisterial Decree, the Claims then outstanding for a consideration, to be credited to the Collection Account, equal to the aggregate of (1) the principal amount outstanding of the Notes as of such Interest Payment Date; (2) interest accrued and not paid on the Notes until such Interest Payment Date; and (3) all amounts payable with priority on the Deferred Purchase Price pursuant to the Priority of Payments (the "Overall Amount"). The Overall Amount shall be paid by the Originator to the Issuer as consideration for the purchase by the Originator from the Issuer of the Claims then outstanding, provided that neither the Issuer nor any third party shall be responsible for the existence of such Claims nor for the solvency of the relevant underlying debtors. The Overall Amount will be used by the Issuer for the early redemption of the Notes in accordance with the Priority of Payments. In addition, if the Notes become redeemable under Condition 7(e) (Mandatory redemption in whole for taxation, legal or regulatory reasons), the Issuer (and the Representative of the Noteholders acting in the name and on behalf of the Issuer) will be entitled to dispose of the Claims in order to finance the redemption of the Notes in the circumstances described in Condition 7(e) (Mandatory redemption in whole for taxation, legal or regulatory reasons). Pursuant to the Receivables Purchase Agreement, in respect of such disposal, the Originator has a pre-emptive right (diritto di prelazione) for the purchase of the Claims. Additional provisions The Receivables Purchase Agreement contains certain representations and warranties given by the Originator in respect of the Claims and the Loans. The Originator has represented and warranted, inter alia: (i) that the Originator is validly existing as a public legal entity, has the power and corporate authority to enter into the Receivables Purchase Agreement and the other Transaction Documents to which it is a party and to assume the obligations contemplated therein and has all necessary authorisation therefor; (ii) that general bankruptcy or liquidation procedures would not apply to the Originator and only the liquidation procedures set out in law No of 4th December, 1956 ("Law 1404") relating to public entities could apply to the Originator; (iii) that the Originator is currently not subject to any such liquidation procedure governed by Law 1404; (iv) that the execution of the Receivables Purchase Agreement and the performance of the assignment of the Claims are private law acts even if regulated and authorised by public or administrative acts; and (v) that the Originator may not raise against the Issuer any immunity or privilege deriving from its public nature. With regard the Claims, the Originator has represented and warranted, inter alia, that: (i) the residual debt and any other information relating to the Claims contained in the list referred to above, delivered by the Originator to the Issuer is complete, true and accurate in matters of substance; 136

137 (ii) the Claims originate from contracts duly executed in accordance with any applicable provision and with the Originator's credit policies from time to time applicable; (iii) (iv) the Originator is the only entity authorised to transfer the Claims and that the Claims have not been already transferred by the Originator to any third parties and are free of any charge, lien or privilege of whatsoever nature; the debtors under the Claims are obliged to make payments in euro; and (v) the Originator is not obliged to make any withholdings or deductions in respect of the Claims. With regard to the Loans, the Originator has represented and warranted, inter alia, that: (i) each Loan, with the exception of the Loans the amortisation plan of which was expired as of the Valuation Date, is a performing loan (in bonis) provided however that INPDAP is currently reconciling payments due before INPDAP was established; (ii) each Loan with the exception of the Partially-Undrawn Loans, is entirely drawn down; (iii) each Loan is guaranteed by a payment delegation (delegazione di pagamento) and such payment delegation has been duly perfected in accordance with all applicable laws and all formalities required to make such payment delegation valid, enforceable and opposable vis-g_- vis third parties have been duly put in place;and (iv) once duly notified to the relevant treasurer bank, payment delegations oblige the relevant treasurer bank to make payments in or towards repayment of the Loans using sums deriving from the revenues set out in the first three (or, in the case of mountain communities, two) items of the relevant Borrower's annual budget. If any of the representations or warranties set out in the Receivables Purchase Agreement proves to be untrue or incorrect in respect of any Claim, the Originator must notify the Issuer and indemnify the Issuer against any damages, costs or expenses arising therefrom. Under the Receivables Purchase Agreement, the payment and/or indemnification obligations of the Originator in respect of (i) non compliance with the Minimum Guaranteed Balance, (ii) non-existing Claims or (iii) Excluded Claims will not be due and payable until and unless the aggregate amount of such payment and/or indemnification obligations exceeds _ 6,000,000. The Receivables Purchase Agreement also contains a number of undertakings of the Originator in respect of its activities relating to the Claims. The Originator has undertaken, inter alia, to refrain from carrying out activities with respect to the Claims which may prejudice the validity or recoverability of any Claims and not to assign or transfer the Claims to any third party or to create any security interest, charge, lien or encumbrance or other right in favour of any third party over the Claims between the Signing Date and the date of publication of the relevant notice of transfer in the Italian Official Gazette (Gazzetta Ufficiale della Repubblica ltaliana). 137

138 THE SERVICING AGREEMENT The description of the Servicing Agreement set out below is a summary of certain features of such Transaction Document and is qualified in its entirety by reference to the detailed provisions of such Servicing Agreement. Prospective Noteholders may inspect a copy of the Servicing Agreement upon request at the registered office of the Representative of the Noteholders and at the Specified Office of the Principal Paying Agent and the Luxembourg Paying Agent. On the Signing Date, the Issuer and INPDAP (in such capacity, the "Servicer") entered into a servicing agreement (the "Servicing Agreement"), pursuant to which the Servicer has agreed to administer and service the Loans, including the collection of the related Claims, on behalf of the Issuer and, following the giving of an Issuer Acceleration Notice, the Representative of the Noteholders. Duties of the Servicer The Servicer is responsible for the receipt of cash collections Claims. in respect of the Loans and related The Servicer has undertaken in relation to each of the Loans and related Claims, inter alia: (a) to collect the Collections and to credit them into the Collection Account within four Business Days of receipt, with the exception of Collections collected in the period comprised between the Signing Date and the Issue Date (consisting of prepayments (if any) under the Loans) which will be credited to the Collection Account no later than 26th January, 2004; (b) to strictly comply with the procedures set out in the Servicing Agreement in respect of the collection of the Claims; (c) to carry out the administration and management of such Claims and to manage any possible legal proceedings (procedura giudiziale) against the relative Obligor or other debtor under a Loan, if any (the "Judicial Proceedings"), any possible enforcement proceedings against any Obligor ("Enforcement Proceedings", and, together with Judicial Proceedings, the "Proceedings") in accordance with its ordinary diligence (diligenza quam suis); (d) (e) to reconcile the amounts paid by the Obligors with the amounts due by them under the Loans; to initiate any Proceedings in respect of any Defaulted Loans; and (f) to maintain and implement administrative and operating procedures (including, without limitation, copying recordings in case of destruction thereof), keep and maintain all books, records and all the necessary or advisable documents (i) in order to collect all the Claims and all the other amounts which are to be paid for any reason whatsoever in connection with the Claims (including, without limitation, records which make it possible to identify the nature of any payment and the precise allocation of payment and collected amounts to capital and interest), and (ii) in order to check the amount of all the Collections received. INPDAP will monitor, on an on-going basis, the timely payments by the Obligors of the amounts due under the Loans. If a payment is overdue for more than 30 days, INPDAP will first contact the relevant Obligor informally. If the payment remains overdue for another 20 days, INPDAP will send a letter to the relevant Obligor requesting the overdue payment. Finally, if the payment is still overdue after 30 days from the payment date indicated in the above-mentioned letter, the legal 138

139 department of INPDAP will send a formal letter requesting payment within the following 30 business days and threatening legal actions. Pursuant to the terms of the Servicing Agreement, the Servicer will indemnify the Issuer from and against any and all damages and losses incurred or suffered by the Issuer as a consequence of a default by the Servicer of any obligation of the Servicer under the Servicing Agreement. The Servicer has acknowledged and accepted that, pursuant to the terms of the Servicing Agreement, it will not have any recourse against the Issuer for any damages, claims, liabilities or costs incurred by it as a result of the performance of its activities under the Servicing Agreement except as may result from the Issuer's wilful default (dolo) or gross negligence (colpa grave). Payments by the Obligors Pursuant to the Servicing Agreement, the Servicer will instruct the Obligors and any other debtors in respect of the Loans to make payment in respect of the Loans to an account opened, exclusively in connection with this Securitisation Transaction, in the name of INPDAP with Poste Italiane S.p.A. (the "Postc Account"). The Collections thus received by the Servicer are required to be transferred by the Servicer into the Collection Account within four Business Days of receipt. So long as the Republic of Italy owns at least 51 per cent. of the issued and outstanding share capital of Poste Italiane S.p.A., if the short-term, unsecured, unsubordinated and unguaranteed debt obligations of the Republic of Italy cease to be rated at least "FI" by Fitch and if the short-term, unsecured, unsubordinated and unguaranteed debt obligations of Poste Italiane S.p.A. are not rated (albeit unofficially) at least "FI" by Fitch, the Servicer will either: (a) close the Poste Account and open a replacement Poste Account with a bank the short-term, unsecured, unsubordinated and unguaranteed debt obligations of which are rated at least "FI" by Fitch; or (b) instruct Poste Italiane S.p.A. to transfer the balance of the Poste Account to the Collection Account on a daily basis so that such balance will be credited to the Collection Account within one Business Day of receipt in the Poste Account. If the Republic of Italy ceases to own at least 51 per cent. of the issued and outstanding share capital of Poste Italiane S.p.A. and if the short-term, unsecured, unsubordinated and unguaranteed debt obligations of Poste Italiane S.p.A. are not rated (albeit unofficially) at least "FI" by Fitch, the Servicer will either: (a) close the Poste Account and open a replacement Poste Account with a bank, the short-term, unsecured, unsubordinated and unguaranteed debt obligations of which are rated at least "FI" by Fitch; or (b) instruct Poste Italiane S.p.A. to transfer the balance of the Poste Account to the Collection Account on a daily basis so that such balance will be credited to the Collection Account within one Business Day of receipt in the Poste Account. Pursuant to the Servicing Agreement, the Servicer may instruct the Obligors to make payments in respect of the Loans directly into the Collection Account, without prejudice to the obligation of the Services in connection with the reconciliation activities. Reduction in the interest rate The Servicer has undertaken to process all the requests for reduction in the interest rate under the Loans by no later than 30th June, The Servicer has also undertaken to update the database 139

140 (containing various information on the Loans and the Claims and delivered by INPDAP to the Issuer pursuant to the Receivables Purchase Agreement) accordingly by no later than 31st July, Reporting requirements The Servicer has undertaken to prepare and submit to the Issuer, the Corporate Services Provider and the Computation Agent, on each Reporting Date, the Servicer Report which will contain information on the Portfolio and any relevant Collections in respect of the preceding Collection Period as set out in the Servicing Agreement. Moreover, the Servicer has undertaken to furnish to the Issuer and the Computation Agent such further information as the Issuer and/or the Computation Agent and/or the Rating Agencies and/or the Representative of the Noteholders may reasonably request with respect to the relevant Claims and/or the related Proceedings. Remuneration of the Servicer In return for the services provided by the Servicer in relation to the ongoing management of the Portfolio, the Issuer will pay to the Servicer a fee, payable semi-annually in arrear on each Interest Payment Date, equal to 4 basis points per annum (calculated according to the ACT/360 method) of the principal amount outstanding, as at the start of the relevant Collection Period, of the Claims arising from Loans the amortisation plan of which, as at 31st December, 2003, is still outstanding. Subordination and limited recourse The Servicer has agreed that the obligations of the Issuer under the Servicing Agreement are subordinated and limited recourse obligations and will be payable only in accordance with the applicable Priority of Payments. If, due to an error or otherwise, the Servicer transfers to the Issuer amounts which do not belong to the Issuer, the Servicer may set off such amounts against the amounts due by it to the Issuer under the Servicing Agreement. If, as a result of such set-off, the Issuer would not have sufficient funds to make the payments falling due on the immediately following Interest Payment Date under items (i) to (iv) of the Pre-Event Priority of Payments, INPDAP will be obliged to transfer back to the Issuer, on or before the Reporting Date immediately preceding such Interest Payment Date, the lower of (i) the amount set-off by INPDAP and (ii) the amounts collected by INPDAP during the relevant Collection Period in accordance with the amortisation plan of the Loan. If, notwithstanding the set-off mechanism above, INPDAP is not able to recover the amounts erroneously transferred to the Issuer, such amount will be paid by the Issuer to INPDAP under item (v) of the applicable Priority of Payments. Termination and resignation of the Servicer and withdrawal of the Issuer The termination and the resignation, for whatever reason, of the Servicer shall not become effective until a substitute servicer is appointed which is duly licensed to conduct such activity. The Servicing Agreement is governed by Italian law. 140

141 TRANSACTION DOCUMENTS The description of the Transaction Documents set out below is a summary of certain features of such Transaction Documents and is qualified in its entirety by reference to the detailed provisions of such Transaction Documents. Prospective Noteholders may inspect a copy of such Transaction Documents upon request at the registered office of the Representative of the Noteholders and at the Specified Office of the Principal Paying Agent and the Luxembourg Paying Agent. The Third Corporate Services Agreement Under an agreement dated the Signing Date (the "Third Corporate Services Agreement") between the Issuer, KPMG Fides Fiduciaria S.p.A. (a company incorporated under the laws of the Republic of Italy, acting through its office at via Eleonora Duse, 53, Rome, Italy) as Corporate Services Provider and the Representative of the Noteholders, the Corporate Services Provider has agreed to provide certain corporate administration and secretarial services to the Issuer related to the Securitisation Transaction (including the safekeeping of the documents pertaining to the meetings of the Noteholders) and to liaise with the Representative of the Noteholders. The services will also include the safekeeping of the documents pertaining to the meetings of the Issuer's quotaholders, directors and auditors (if any), maintaining the quotaholders' register, preparing tax and accounting records and preparing the Issuer's annual financial statements. In the context of a previous securitisation transaction, the Issuer had already appointed KPMG Fides Fiduciaria S.p.A. pursuant to an Issuer corporate services agreement (the "Issuer Corporate Services Agreement") dated 6th December, 2001, as "Issuer Corporate Servicer" to provide, inter alia, certain corporate administration and secretarial services to the Issuer. The Third Corporate Services Agreement is governed by Italian law. The English Deed of Charge Pursuant to an English law deed of charge (the "English Deed of Charge") to be executed on the Issue Date, the Issuer will grant in favour of the Representative of the Noteholders on its own behalf and as security trustee for the Noteholders and the other Issuer Secured Creditors a charge over all the Issuer's rights, title, interest and benefit, present and future, in, to and under the Swap Agreements and all future swap agreements to which the Issuer may become a party in relation to this Securitisation Transaction which will be governed by English law. The English Deed of Charge will be governed by English law. The Intercreditor Agreement Pursuant to an agreement dated the Signing Date between the Issuer, the Representative of the Noteholders on its own behalf and on behalf of the Noteholders, the Paying Agents, the Agent Bank, the Computation Agent, the Transaction Bank, the Swap Counterparties, the Joint Lead Managers, INPDAP (in any capacity) and the Corporate Services Provider (the "Intercreditor Agreement"), provision has been made as to the application of the proceeds of collections in respect of the Claims and as to the circumstances in which the Representative of the Noteholders will be entitled to exercise certain rights in relation to the Claims. The Intercreditor Agreement also sets out the order of priority for payments to be made by the Issuer in connection with the securitisation transaction contemplated in this Offering Circular. Pursuant to the Intercreditor Agreement, following the service of an Issuer Acceleration Notice, the Representative of the Noteholders will be entitled (as an agent of the Issuer and to the extent 141

142 permitted by applicable laws), until the Notes have been repaid in full or cancelled in accordance with the Conditions, to take possession of all Collections and of the Claims and to sell or otherwise dispose of the Claims or any of them in such manner and upon such terms and at such price and such time or times as the Representative of the Noteholders shall, in its absolute discretion, deem appropriate and to apply the proceeds in accordance with the Post-Event Priority of Payments. The Intercreditor Agreement is governed by Italian law. The Auditing Agreement Pursuant to the terms of the auditing agreement dated 24th November, 2003 between the Issuer, the Representative of the Noteholders and the Auditors (the "Auditing Agreement"), PKF Italia S.p.A. with offices at Viale Vittorio Veneto 10, , Milan, Italy, has been appointed by the Issuer to audit the Issuer's accounts. The Auditing Agreement is governed by Italian law. The Mandate Agreement Pursuant to the terms of a mandate agreement dated the Signing Date (the "Mandate Agreement"), the Noteholders and the Other Issuer Creditors have empowered the Representative of the Noteholders to take such action in the name of the Issuer, following the delivery of an Issuer Acceleration Notice, as the Representative of the Noteholders may deem necessary to protect the interests of the Noteholders and the Other Issuer Creditors. The Mandate Agreement is governed by Italian law. The Letter of Undertaking Pursuant to a letter of undertaking dated the Signing Date delivered to the Representative of the Noteholders by Stichting Thesaurum, Stichting Palatium and the Stichting Corporate Services Provider (the "Letter of Undertaking"), Stichting Thesaurum, Stichting Palatium and the Stichting Corporate Services Provider have given certain undertakings to the Representative of the Noteholders in relation to the continued corporate existence and management of Stichting Thesaurnm and Stichting Palatium. In particular, each of Stichting Thesaurum, Stichting Palatium and the Stichting Corporate Services Provider have agreed not to take any action to liquidate or wind up Stichting Thesaurum and Stichting Palatium and not to replace any director of the Issuer without the prior written consent of the Representative of the Noteholders. Stichting Thesaurum and Stichting Palatium have also agreed not to dispose of, charge or pledge, their respective quotas in the Issuer without the prior written consent of the Representative of the Noteholders. "Stichting Corporate Services Provider" means TMF Management B.V. The Letter of Undertaking is governed by the laws of The Netherlands. The Warranty and Indemnity Agreement The Originator and the Joint lead Managers entered into a warranty and indemnity agreement on the Signing Date (the "Warranty and Indemnity Agreement") in which the Originator made certain representations and warranties to the Joint Lead Managers. Furthermore, the Originator agreed to indemnify the Joint Lead Managers in connection with these representations and warranties to the extent set out therein. The Warranty and Indemnity Agreement is governed by Italian law. 142

143 The other Transaction Documents For a description of the Swap Agreements, see "Credit Structure - The Swap Agreements", above. For a description of the Receivables Purchase Agreement, see "The Receivables Purchase Agreement", above. For a description of the Servicing Agreement, see "The Servicing Agreement", above. For a description of the Agency and Accounts Agreement, see "The Agency and Accounts Agreement", above. 143

144 EXPECTED MATURITY AND AVERAGE LIFE OF THE NOTES AND ASSUMPTIONS The average lives of the Notes cannot be predicted as the actual rate at which the Loans will be repaid and a number of other relevant factors are unknown. Calculations of possible average lives of the Notes can be made under certain assumptions. Based on the assumptions that: (a) no Event of Default and no Mandatory Redemption Event has occurred in respect to the Notes; (b) (c) the Issuer will exercise the option to redeem the Notes on the Interest Payment Date on which the Principal Amount Outstanding of all outstanding Notes is equal to, or less than, 10 per cent. of the Principal Amount Outstanding of the Notes as at the Issue Date; none of the Loans have been terminated before the relevant maturity date; (d) all instalments on the Loans have been paid on their respective due dates; (e) the fees referred to in the relevant Transaction Documents are not increased; (f) all the Obligors who have an economic incentive in reducing the interest rate under the Loans pursuant to Resolution No. 21/2003 have opted for such reduction and those Obligors, in respect of which a request for the reduction in the interest rate was filed under Resolution No. 956/1999 but was rejected on the grounds that the request had not been filed within the required time limit, will have applied for an interest-rate reduction in respect of their loans as at the relevant retroactive effective date (for an indication of these Obligors please see "The Portfolio - Obligors whose application was filed under Resolution No. 956/1999", above); (g) no default by the parties to the Transaction Documents. Assumption (d) above assumes all instalments have been paid on their respective due dates, but no assurance can be made that payments in relation to the Loans will always be made on time. Assumption (f) above assumes that an indemnity equal to 6-month interest (at the Loans' respective original rate, provided that such rate was higher than six per cent. per annum) applied on their residual debt is added to the notional of all the Loans assumed to have their interest rate reduced. The weighted average lives of the Notes are subject to factors outside the control of the Issuer and consequently no assurance can be given that the assumptions and estimates set forth above will be realised. Expected Maturity Weighted Average Life Notes August years 144

145 TAXATION IN THE REPUBLIC OF ITALY The statements herein regarding taxation are based on the laws in force in Italy as at the date of this Offering Circular and are subject to any changes in law occurring after such date, which changes could be made on a retroactive basis. The following summary does not purport to be a comprehensive description of all the tax considerations which may be relevant to a decision to subscribe for, purchase, own or dispose of the Notes and does not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities or commodities) may be subject to special rules. Prospective purchasers of the Notes are advised to consult their own tax advisers concerning the overall tax consequences of their ownership of the Notes. Tax treatment of the Notes According to article 15 of law No. 448 of 23rd December, 1998 ("Law 448"), as amended by article 22 paragraph 8 of Law Decree No. 350 of 25th September, 2001, converted with amendments into Law No. 409 of 23rd December, 2001, interest and other proceeds (including the difference between the redemption amount and the issue price) in respect of securities (i) issued by a securitisation vehicle incorporated pursuant to article 15 of law 448 and (ii) listed on a foreign regulated market (including the Luxembourg Stock Exchange) are subject to the same tax treatment provided for securities regulated by article 31 of Presidential Decree No. 601 of 29th September, 1973 (public bonds) and by article 2, of Legislative Decree No. 239 of 1st April, 1996, as subsequently amended, ("Decree 239"). Decree 239 provides for the applicable regime with respect to the tax treatment of interest, premium and other income from notes falling within the category of bonds (obbligazioni) or debentures similar to bonds (titoli similari alle obbligazioni) issued, inter alia, by the above Italian securitisation vehicles. Italian resident Noteholders Where the Italian resident Noteholder is (i) an individual not engaged in an entrepreneurial activity to which the Notes are connected (unless he has opted for the application of the "risparmio gestito" regime - see under "Capital gains tax", below); (ii) a non-commercial partnership; (iii) a noncommercial private or public institution; or (iv) an investor exempt from Italian corporate income taxation, interest, premium and other income relating to the Notes, accrued during the relevant holding period, are subject to a tax withheld at source, referred to as imposta sostitutiva, levied at the rate of 12.5 per cent., irrespective of whether or not the Notes have a maturity shorter than 18 months. If the Noteholders described under (i) to (iii) above are engaged in an entrepreneurial activity to which the Notes are connected, the imposta sostitutiva applies as a provisional tax. Where an Italian resident Noteholder is a company or similar commercial entity and a permanent establishment in Italy of foreign corporation, the Notes are deposited with an authorised intermediary, interest, premium and other income from the Notes will not be subject to imposta sostitutiva, but must be included in the relevant Noteholder's income tax return and are therefore subject to general Italian corporate taxation (and, in certain circumstances, depending on the "status" of the Noteholder, also to IRAP - the regional tax on productive activities). Where an Italian resident Noteholder is an open-ended or a closed-ended investment fund or a SICAV and the Notes are deposited with an authorised intermediary, interest, premium and other income relating to the Notes and accrued during the holding period will not be subject to imposta sostitutiva, but must be included in the result of the relevant portfolio accrued at the end of the tax period, to be subject to a 12.5 per cent. substitute tax. 145

146 Pursuant to article 6 of law decree No. 351 of 25th September, 2001, converted with amendments into law No. 410 of 23rd November, 2001, Italian real estate investment funds established on or after 26th September, 2001 are subject to a substitute tax at the rate of one per cent. levied on the net value of the fund. Interest, premium and other income from the Notes, as well as the value of such Notes, will contribute to determine such net value. The tax is paid by the company managing the fund (SGR). The new regime also applies to those Italian real estate investment funds established before 26th September, 2001 whose managing company has so requested by 25th November, Where an Italian resident Noteholder is a pension fund (subject to the regime provided for by articles 14, 14ter and 14quater, paragraph 1 of legislative decree No. 124 of 21st April, 1993) and the Notes are deposited with an authorised intermediary, interest, premium and other income relating to the Notes and accrued during the holding period will not be subject to imposta sostitutiva, but must be included in the result of the relevant portfolio accrued at the end of the tax period, to be subject to an 11 per cent. substitute tax. Pursuant to Decree 239, imposta sostitutiva is applied by banks, SIMs, fiduciary companies, SGRs, stockbrokers and other entities identified by a decree of the Ministry of Economy and Finance (each an "Intermediary"). An Intermediary must (i) be resident in Italy or be a permanent establishment in Italy of a non-italian resident financial intermediary; and (ii) intervene, in any way, in the collection of interest or in the transfer of the Notes. For the purpose of the application of the imposta sostitutiva, a transfer of Notes includes any assignment or other act, either with or without consideration, which results in a change of the ownership of the relevant Notes or in a change of the Intermediary with which the Notes are deposited. Where the Notes are not deposited with an Intermediary, the imposta sostitutiva is applied and withheld by any entity paying interest to a Noteholder. Non-Italian resident Noteholders Where the Notes are deemed not to have been issued in Italy (as per article 16-bis of presidential decree No. 917 of 22nd December, 1986, as subsequently amended) no Italian imposta sostitutiva is applied on payments to a non-italian resident Noteholder of interest or premium relating to the Notes provided that, if the Notes are held in Italy, the non-italian resident Noteholder declares itself to be a non-italian resident according to Italian tax regulations if requested. Capital gains tax Any gain obtained from the sale or redemption of the Notes would be treated as part of the taxable income (and, in certain circumstances, depending on the "status" of the Noteholder, also as part of the net value of production for IRAP purposes) if realised by an Italian company or a similar commercial entity (including the Italian permanent establishment of foreign entities to which the Notes are connected) or Italian resident individuals engaged in an entrepreneurial activity to which the Notes are connected. Where an Italian resident Noteholder is an individual not holding the Notes in connection with an entrepreneurial activity and certain other persons, any capital gain realised by such Noteholder from the sale or redemption of the Notes would be subject to an imposta sostitutiva, levied at the current rate of 12.5 per cent. Noteholders may set off losses with gains. In respect of the application described below. of the imposta sostitutiva, taxpayers may opt for one of the three regimes 146

147 Under the tax declaration regime (regime della dichiarazione), which is the default regime for Italian resident individuals not engaged in entrepreneurial activity to which the Notes are connected, the imposta sostitutiva on capital gains will be chargeable, on a cumulative basis, on all capital gains, net of any incurred capital loss, realised by the Italian resident individual Noteholder holding Notes not in connection with an entrepreneurial activity pursuant to all sales or redemptions of the Notes carded out during any given tax year. Italian resident individuals holding Notes not in connection with an entrepreneurial activity must indicate the overall capital gains realised in any tax year, net of any relevant incurred capital loss, in the annual tax return and pay imposta sostitutiva on such gains together with any balance of income tax due for such year. Capital losses in excess of capital gains may be carried forward against capital gains realised in any of the four succeeding tax years. As an alternative to the tax declaration regime, Italian resident individual Noteholders holding the Notes not in connection with an entrepreneurial activity may elect to pay the imposta sostitutiva separately on capital gains realised on each sale or redemption of the Notes (the "risparmio amministrato" regime). Such separate taxation of capital gains is allowed subject to (i) the Notes being deposited with Italian banks, SIMs or certain authorised financial intermediaries; and (ii) an express election for the risparmio amministrato regime being punctually made in writing by the relevant Noteholder. The depository is responsible for accounting for imposta sostitutiva in respect of capital gains realised on each sale or redemption of the Notes (as well as in respect of capital gains realised upon the revocation of its mandate), net of any incurred capital loss, and is required to pay the relevant amount to the Italian tax authorities on behalf of the taxpayer, deducting a corresponding amount from the proceeds to be credited to the Noteholder or using funds provided by the Noteholder for this purpose. Under the risparmio amministrato regime, where a sale or redemption of the Notes results in a capital loss, such loss may be deducted from capital gains subsequently realised, within the same securities management, in the same tax year or in the following tax years up to the fourth. Under the risparmio amministrato in its annual tax return. regime, the Noteholder is not required to declare the capital gains Any capital gains realised by Italian resident individuals holding the Notes not in connection with an entrepreneurial activity and who have entrusted the management of their financial assets, including the Notes, to an authorised intermediary and have opted for the so-called "risparmio gestito" regime will be included in the computation of the annual increase in value of the managed assets accrued, even if not realised, at year end, subject to a 12.5 per cent. substitute tax, to be paid by the managing authorised intermediary. Under the risparmio gestito regime, any depreciation of the managed assets accrued at year end may be carded forward against increase in value of the managed assets accrued in any of the four succeeding tax years. Under the risparmio gestito regime, the Noteholder is not required to declare the capital gains realised in its annual tax return. Any capital gains realised by a Noteholder which is an Italian open-ended or a closed-ended investment fund or a SICAV will be included in the results of the relevant portfolio accrued at the end of the tax period, to be subject to the 12.5 per cent. substitute tax. Any capital gains realised by a Noteholder which is an Italian pension fund (subject to the regime provided for by articles 14, 14ter and 14quater, paragraph 1, of legislative decree No. 124 of 21st April, 1993) will be included in the result of the relevant portfolio accrued at the end of the tax period, and are subject to the 11 per cent. substitute tax. Capital gains realised by non-italian resident Noteholders from the sale or redemption of Notes traded on regulated markets are not subject to the imposta sostitutiva. Capital gains realised by non-italian resident Noteholders from the sale or redemption of the Notes not traded on regulated markets are not subject to the imposta sostitutiva, provided that the effective beneficiary: (i) is resident in a country which allows a satisfactory exchange of information with Italy 147

148 and, pursuant to Law Decree No. 269 of 30th September, 2003, until 1st January, 2004 is not a tax haven (as defined and listed in Ministerial Decree of 23rd January, 2002, as amended from time to time); or (ii) is an international entity or body set up in accordance with international agreements which have entered into force in Italy; or (iii) is a Central Bank or an entity which manages, inter alia, the official reserves of a foreign State; or (iv) is an institutional investor which is resident in a country which allows a satisfactory exchange of information with Italy and, pursuant to Law Decree No. 269 of 30th September, 2003, until 1st January, 2004, is not a tax haven (as defined above), even if it does not possess the status of a taxpayer in its own country of residence. If none of the conditions described above is met, capital gains realised by non-italian resident Noteholders from the sale or redemption of the Notes not traded on regulated markets are subject to the imposta sostitutiva at the current rate of 12.5 per cent. In any event, non-italian resident individuals or entities without a permanent establishment in Italy to which the Notes are connected, that may benefit from a double taxation treaty with the Republic of Italy provided that capital gains realised upon the sale or redemption of Notes are to be taxed only in the country of tax residence of the recipient, will not be subject to imposta sostitutiva on any capital gains realised upon the sale or redemption of the Notes. Italian gift tax Italian inheritance tax has been abolished by law No. 383 of 18th October, 2001 in respect of gifts made or succession proceedings started after 25th October, Transfers of the Notes by reason of gift to persons other than the spouse, siblings, ascendants, descendants or relatives within the fourth degree will be subject to the transfer taxes ordinarily applicable to the relevant transfer for consideration, if due, in respect of the value of the gift received by each person exceeding 180, Moreover, an anti-avoidance rule is provided for in case of gifts of assets whose sale for consideration would give rise to capital gains which would be subject to the imposta sostitutiva provided for by legislative decree No. 461 of 21st November, 1997, as subsequently amended, such as the Notes. In particular, if the donee sells the Notes for consideration within five years from their receipt as a gift, the donee is required to pay the relevant imposta sostitutiva as if the gift had never taken place. Local taxes There are no regional taxes (including withholding taxes) that would be imposed upon any Noteholder. Transfer tax Pursuant to Italian legislative decree No. 435 of 21st November, 1997, which partly amended the regime set forth by Royal Decree No of 30th December, 1923, the transfer of the Notes may be subject to Italian transfer tax, which is currently payable at a rate between a maximum of _ and a minimum of _ per _ (or fraction thereof) of the price at which the Notes are transferred. Where the transfer tax is applied at a rate of _ per _ (or fraction thereof) of the price at which the Notes are transferred, the transfer tax cannot exceed _ However, the transfer tax does not apply, inter alia, to: (i) contracts entered into on regulated markets relating to the transfer of securities, including contracts between the intermediary and its principal or between qualified intermediaries; (ii) off-market transactions regarding securities listed on regulated markets, provided that the contracts are entered into (a) between banks, SIMs or other financial intermediaries regulated by legislative decree No. 415 of 23rd July, 1996, as superseded by legislative decree No. 58 of 24th February, 1998, or stockbrokers; (b) between the subjects mentioned in (a) 148

149 above, on the one hand, and non-italian residents, on the other hand; and (c) between the subjects mentioned in (a) above, even if non-resident in Italy, on the one hand, and undertakings for collective investment in transferable securities, on the other hand; (iii) contracts related to sales of securities occurring in the context of a public offering (offerta pubblica di vendita) aimed at the listing on regulated markets, or involving financial instruments already listed on regulated markets; or (iv) contracts regarding securities not listed on a regulated market entered into between the authorised intermediaries referred to in (ii)(a) above, on the one hand, and non-italian residents on the other hand. Proposed EU Savings Directive On 3rd June, 2003, the European Council of Economics and Finance Ministers agreed on proposals under which Member States will be required to provide to the tax authorities of another Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to an individual resident in that other Member State, except that, for a transitional period, Belgium, Luxembourg and Austria will instead be required to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). The proposals are expected to take effect from 1st January,

150 SUBSCRIPTION AND SALE Citigroup Global Markets Limited, Credit Suisse First Boston (Europe) Limited and Unicredit Banca Mobiliare S.p.A. (together, the "Joint Lead Managers") have, pursuant to a subscription agreement dated the Signing Date between the Issuer, the Joint Lead Managers and the Representative of the Noteholders in respect of the Notes (the "Subscription Agreement"), agreed to subscribe and pay the Issuer for the Notes at the issue price of 100 per cent, according to the following percentages: Joint Lead Manager Notes per cent. Citigroup Global Markets Limited Credit Suisse First Boston (Europe) Limited Unicredit Banca Mobiliare S.p.A The Issuer will pay to the Joint Lead Managers a selling, management and underwriting commission of 0.05 per cent. of the aggregate principal amount of the Notes. The Subscription Agreement is subject to a number of conditions and may be terminated by the Joint Lead Managers in certain circumstances prior to payment to the Issuer for the Notes. Pursuant to the terms of the Subscription Agreement, the Issuer has agreed to indemnify each Joint Lead Manager against certain liabilities in connection with the issue of the Notes. United States of America The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except in certain transactions exempt from the registration requirements of the Securities Act. The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. tax regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986, as amended and the regulations thereunder. Each Joint Lead Manager has represented and agreed that, except as permitted by the Subscription Agreement, it will not offer, sell or deliver Notes: (i) as part of its distribution at any time; or (ii) otherwise until 40 days after the later of the date of commencement of the offering of the Notes and the Issue Date (the "distribution compliance period"), within the United States or to, or for the account or benefit of, U.S. persons. Each Joint Lead Manager has also agreed that, it will send to each dealer to which it sells any Notes during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of Notes within the United States or to, or for the account or benefit of, U.S. persons. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act. In addition, until the expiration of 40 days after the commencement of the offering, an offer or sale of the Notes within the United States by any dealer (whether or not participating in this offering) may violate the requirements of the Securities Act. Terms used in this paragraph have the meaning given to them by Regulation S under the Securities Act. 150

151 Republic of Italy The offering of the Notes has not been cleared by CONSOB (the Italian Securities Exchange Commission) pursuant to Italian securities legislation and, accordingly, no Notes may be offered, sold or delivered, nor may copies of the Offering Circular or of any other document relating to the Notes be distributed in the Republic of Italy, except: (i) to professional investors (operatori qualificati), as defined in article 31, second paragraph, of CONSOB Regulation No of 1st July, 1998, as successively amended; or (ii) in circumstances which are exempted from the rules on solicitation of investments pursuant to article 100 of legislative decree No. 58 of 24th February, 1998 (the "Financial Services Act") and article 33, first paragraph, of CONSOB Regulation No of 14th May, 1999, as successively amended. Any offer, sale or delivery of the Notes or distribution of copies of the Offering Circular or any other document 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 in the Republic of Italy in accordance with the Financial Services Act and legislative decree No. 385 of 1st September, 1993 (the "Banking Act"); (b) in compliance with article 129 of the Banking Act and the implementing guidelines of the Bank of Italy pursuant to which the issue or the offer of securities in the Republic of Italy may need to be preceded and followed by an appropriate notice to be filed with the Bank of Italy depending on, inter alia, the aggregate value of the securities issued or offered in the Republic of Italy and their characteristics; and (c) in accordance with any other applicable laws and regulations. United Kingdom Each Joint Lead Manager under the Subscription Agreement has represented and agreed with the Issuer that: (a) it has not offered or sold and, prior to the expiry of the period of six months from the Issue Date, will not offer or sell any Notes to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the "FSMA")) received by it in connection with the issue or sale of any Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer; and (c) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom. 151

152 The Netherlands Each Joint Lead Manager has represented and agreed that: (a) it has not offered, sold, delivered or transferred, and will not offer, sell, deliver or transfer, any of the Notes, as part of their initial distribution or at any time thereafter, directly or indirectly, in The Netherlands other than to Professional Market Parties (as defined below) that trade or invest in securities in the conduct of their profession or business; and (b) it will have sent to each person in The Netherlands to which it sells Notes a confirmation or other notice setting forth the above restrictions and stating that by purchasing any Note, the purchaser represents and agrees that it will send to any other person to whom it sells any such Note a notice containing substantially the same statement as is contained in this sentence. "Professional Market Parties" are any of the following persons but no other person: (a) banks, insurance companies, securities firms, investment institutions and pension funds that are (i) supervised or licensed under Dutch law or (ii) established and acting under supervision in a European Union member state (other than The Netherlands), Hungary, Monaco, Poland, Puerto Rico, Saudi Arabia, Slovakia, Czech Republic, Turkey, South Korea, the United States of America, Japan, Australia, Canada, Mexico, New Zealand or Switzerland; (b) investment institutions which offer their participation rights exclusively to professional market parties and are not required to be supervised or licensed under Dutch law; (c) the State of The Netherlands, the Dutch Central Bank, a foreign central government body, a foreign central bank, Dutch regional and local governments and comparable foreign decentralised government bodies, international treaty organisations and supranational organisations; (d) enterprises or entities with total assets of at least E500,000,000 (or the equivalent thereof in another currency) as per the balance sheet as of the year end preceding the obtaining of the repayable funds; (e) enterprises, entities or individuals with net assets of at least El0,000,000 (or the equivalent thereof in another currency) as of the year end preceding the obtaining of the repayable funds who or which have been active in the financial markets on average twice a month over a period of at least two consecutive years preceding the obtaining of the repayable funds; (f) subsidiaries of the entities referred to under (a) above provided such subsidiaries are subject to supervision; and (g) an enterprise or institution that has a rating from a rating agency that in the opinion of the Dutch Central Bank is an expert or that issues securities that have a rating from a rating agency that in the opinion of the Dutch Central Bank is an expert. Belgium This Offering Circular is not intended to constitute a public offer in Belgium. The Belgian Banking and Finance Commission has not reviewed nor approved this Offering Circular, or commented on its accuracy or adequacy, or recommended or endorsed the purchase of the Notes. This Offering Circular may not be distributed to the Belgian public. 152

153 The Notes may not: (i) be offered for sale, sold or marketed in Belgium by means of a public offer under Belgian law; nor (ii) be sold to any person qualifying as a consumer within the meaning of article 1.7 of the Belgian law of 14th July, 1991 on consumer protection and trade practices unless such sale is made in compliance with the Belgian law of 14th July, 1991 on consumer protection and trade practices and with its implementing legislation. Any offers may only be made in Belgium to persons who subscribe for a minimum amount of EUR 250,000 each, or to "Qualifying Institutional Investors" acting for their own account and listed in article 3.2 of the Royal Decree of 7th July, Grand Duchy of Luxembourg The Notes may not be offered or sold to the public in the Grand Duchy of Luxembourg, directly or indirectly, and neither this Offering Circular nor any other circular, prospectus, form of application, advertisement or other material may be distributed, or otherwise made available in, or from or published in, the Grand Duchy of Luxembourg, except for the sole purpose of the listing of the Notes on the Luxembourg Stock Exchange and except in circumstances which do not constitute a public offer of securities. Portugal No document, circular, advertisement or any offering material in relation to the securities has been or will be approved by the Portuguese Securities Commission (Comiss_o do Mercado de Valores Mobili6rios, "CMVM"). The Notes have not been offered, advertised, sold or delivered and the Notes may not be directly or indirectly offered, advertised, sold, re-sold, re-offered or delivered in circumstances which could qualify as a public offer pursuant to the Portuguese Securities Code (C6digo dos Valores Mobili6rios) or in circumstances which would qualify as an issue or public placement of securities in the Portuguese market. All applicable provisions of the C6digo dos Valores Mobili6rios and of any applicable CMVM Regulations have been complied with regarding the securities, in any matters involving Portugal. Spain The Notes may not be offered or sold in Spain other than in compliance with the requirements of Law 24/1988 of 28th July (as amended by Law 37/1998 of 16th November), on the Spanish Securities Market and the Royal Decree 291/1992, of 27th March (as amended by Royal Decree 2590/1998 of 7th December and Royal Decree 705/2002 of 19th July), on issues and public offers for the sale of securities. Germany The Notes will not be offered or sold in the Federal Republic of Germany except (i) for an aggregate purchase price per purchaser of at least _ 40,000 (or the foreign currency equivalent) or such other amount as may be stipulated from time to time by applicable German law, or (ii) as may otherwise be permitted in accordance with applicable German law. France The Issuer and each Joint Lead Manager have represented and agreed that it has not offered or sold, and will not offer or sell, directly or indirectly, the Notes to the public in France and has not distributed or caused to be distributed and will not distribute or cause to be distributed to the public in France the Offering Circular or any other offering material relating to the Notes and that such offers, sales and distributions have been and will only be made in France to qualified investors (investisseurs 153