MQ Term Plus. Supplementary Product Disclosure Statement 2 October 2007 MACQUARIE BANK LIMITED IMPORTANT INFORMATION

Transcription

1 MACQUARIE BANK LIMITED MQ Term Plus Supplementary Product Disclosure Statement 2 October 2007 IMPORTANT INFORMATION This is a Supplementary Product Disclosure Statement ( SPDS ), and supplements the Product Disclosure Statement dated 2 October 2007 ( PDS ). This SPDS sets out the Commercial Terms of two Series of MQ Term Plus (details of these Commercial Terms are not contained in the PDS). This SPDS is to be read together with the PDS, and together they establish the terms of issue of MQ Term Plus referred to below. The terms of the PDS continue in full force and effect except to the extent that those terms are expressly modified by this SPDS. Words defined in the PDS have the same meaning when used in this SPDS. This SPDS relates to the offer of the MTP001 and MTP002 Series of MQ Term Plus. Commercial Terms Series Code MTP001 (2 years approx.) MTP002 (5 years approx.) Issuer Macquarie Bank Limited ABN and AFSL Offer Open Date 2 October October 2007 Offer Close Date 26 October October 2007 Issue Date 2 November November 2007 Maturity Date 17 December December 2012 Issue Price per Note $1.00 $1.00 Fixed Interest Rate 6.50%pa 7.00%pa Cap Rate 10.00%pa 10.00%pa Reference Security S&P/ASX 200 Index S&P/ASX 200 Index

2 Commercial Terms Fixed Interest Periods Bonus Interest Periods Period 1 2 November December 2007 Period 2 21 December June 2008 Period 3 21 June December 2008 Period 4 19 December June 2009 Period 5 20 June December 2009 Period 1 2 November December 2007 Period 2 21 December December 2008 Period 3 19 December December 2009 Period 1 2 November December 2007 Period 2 21 December June 2008 Period 3 21 June December 2008 Period 4 19 December June 2009 Period 5 20 June December 2009 Period 6 18 December June 2010 Period 7 19 June December 2010 Period 8 17 December June 2011 Period 9 18 June December 2011 Period December June 2012 Period June December 2012 Period 1 2 November December 2007 Period 2 21 December December 2008 Period 3 19 December December 2009 Period 4 18 December December 2010 Period 5 17 December December 2011 Period 6 16 December December 2012 Minimum Application Amount $20,000 $20,000 Adviser Upfront Commission Percentage Up to 0.35% (incl. GST). Please refer to Section 3.1 of the PDS for further details. Up to 0.50% (incl. GST). Please refer to Section 3.1 of the PDS for further details. Adviser Trail Commission Percentage Up to 0.20% (incl. GST). Please refer to Section 3.1 of the PDS for further details. Up to 0.20% (incl. GST). Please refer to Section 3.1 of the PDS for further details. Adviser Trail Payment Date(s) 18 December December 2008, 17 December 2009, 16 December 2010, 15 December 2011 How to Apply In order to apply for these Series of MQ Term Plus you will need to complete an Application Form (which is attached to the PDS). You must ensure that Macquarie receives your completed Application Form before the Offer Close Date and payment of the Issue Price (per Note) in cleared funds before the Issue Date. See Section 10 of the PDS for more information on how to apply. Important Information Before making a decision to acquire these Series of MQ Term Plus, you should consider whether such an investment is appropriate having regard to your objectives, financial situation and particular needs, and consult your adviser. You should also read the PDS, in particular Section 4 (Risks you Should Consider) and consider it before making any decision as to whether to acquire MQ Term Plus. Information about the Reference Security The S&P/ASX 200 is a free float index representing the top 200 companies on the Australian Securities Exchange. S&P/ASX200 Disclaimer: The Notes are not sponsored, endorsed, sold or promoted by Standard & Poor s, a division of The McGraw-Hill Companies, Inc. ( S&P ) or the Australian Securities Exchange ( ASX ). S&P and ASX make no representation, condition or warranty, express or implied, to the owners of the Notes or any member of the public regarding the advisability of investing in securities generally or in the Notes particularly or the ability of the S&P/ASX 200 Index to track general stock market performance. S&P s only relationship to the Licensee is the licensing of certain trademarks and trade names of S&P and the S&P/ASX 200 Index, which is determined, composed and calculated by S&P without regard to the Licensee or the Notes. S&P has no obligation to take the needs of the Licensee or the owners of the Notes into consideration in determining, composing or calculating the S&P/ASX 200 Index. S&P is not responsible for and have not participated in the determination of the timing of, prices at, or quantities of the Notes to be issued or in the determination or calculation of the equation by which the Notes are to be converted into cash. S&P and ASX have no obligation or liability in connection with the administration, marketing or trading of the Notes. S&P SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN THE CALCULATION OF THE S&P INDEXES FROM SOURCES THAT S&P CONSIDERS RELIABLE, BUT S&P ACCEPTS NO RESPONSIBILITY FOR, AND SHALL HAVE NO LIABILITY FOR, ANY ERRORS, OMISSIONS OR INTERRUPTIONS THEREIN. S&P AND ASX DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P INDEXES OR ANY DATA INCLUDED THEREIN. S&P AND ASX MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY ANY PERSON OR ENTITY FROM THE USE OF THE S&P INDEXES OR ANY DATA INCLUDED THEREIN. S&P AND ASX MAKE NO EXPRESS OR IMPLIED WARRANTIES AND EXPRESSLY DISCLAIM ALL CONDITIONS AND WARRANTIES IMPLIED BY STATUTE, GENERAL LAW OR CUSTOM WITH RESPECT TO THE S&P INDEXES OR ANY DATA INCLUDED THEREIN EXCEPT ANY IMPLIED CONDITION OR WARRANTY THE EXCLUSION OF WHICH WOULD CONTRAVENE ANY STATUTE OR CAUSE ANY PART OF THIS SECTION TO BE VOID. OFD /07

3 MQ Term Plus Product Disclosure Statement MACQUARIE BANK LIMITED 2 October 2007 Macquarie Bank Limited ABN AFSL

4 IMPORTANT NOTICE This document is a Product Disclosure Statement (PDS). The date of this PDS is 2 October Purpose Under this PDS Macquarie invites you to apply for MQ Term Plus (Notes). Notes are issued by Macquarie Bank Limited (ABN and AFSL No ) (Macquarie, Issuer, we or us). Each Note is an agreement between the Holder and Macquarie governed by the terms set out in Section 7 of this PDS (Terms) and the terms of the Nominee Deed which are summarised in Section 8 of this PDS. Notes are warrants (within the meaning of Regulation of the Corporations Regulations 2001) and securities under sections 761A and 92 of the Corporations Act. Since the offer relates to the issue of warrants, this document is a product disclosure statement, within the meaning of section 761A of the Corporations Act. MQ Term Plus is subject to risk The performance or return of capital from a Note is not guaranteed. Investments in Notes involve investment risk and significant credit exposure to Macquarie, including the risk of loss of capital invested. You should not invest in Notes unless you are experienced in equity derivatives and understand and are comfortable with the risks of investing in Notes. Before making any investment decision, you should read Section 4 of this PDS for more detailed information about the significant risks of investing in Notes. Applications The Notes to which this PDS relates will only be issued on acceptance by Macquarie of an Application Form included in, derived from, or accompanying this PDS. If you wish to invest in Notes you must: complete an Application Form which accompanies this PDS (this may be done by completing the Application Form attached to a PDS printed off our website or if available, complete an online Application Form available through our website ( More information on how to apply is set out in Section 10. No cooling-off period No cooling-off rights apply in connection with MQ Term Plus. This means that, in most cases, you cannot withdraw an Application once it has been made. Foreign Jurisdictions The offer or invitation in relation to the Notes to which this PDS relates is available to persons receiving this PDS (electronically or otherwise) in Australia. The distribution of this PDS in jurisdictions outside Australia may be restricted by law and therefore persons into whose possession this PDS comes should seek advice on and observe such restrictions. Failure to comply with relevant restrictions may violate those laws. No offer of the Notes has been or will be lodged or registered under the United States Securities Act of 1933, as amended, and the Notes may not be offered or sold directly or indirectly in the United States of America or to, or for the account or benefit of, a US Person (as defined under Regulation S under the US Securities Act). Changes to Information in PDS This PDS is current as at the date of this PDS. The information in this PDS may change from time to time. Where information changes in a manner which is not materially adverse to you, Macquarie may update the information by posting a notice on its website at Macquarie will, on request, provide a free paper copy of updated information to you if you contact Macquarie on Representations This PDS has been prepared and issued by Macquarie as issuer of the Notes. Potential investors should only rely on information in this PDS. No person, including any distributor of this PDS, is authorised to give any information or to make any representation in connection with the Notes that is not contained in this PDS. Any information or representation not in this PDS may not be relied on as having been authorised by Macquarie. Nothing in this PDS should be construed as an express or implied endorsement by Macquarie of an investment in any Reference Security or the Beneficially Owned Parcel. Role of Index Sponsor References in this PDS to an Index and/or an Index Sponsor are included solely for the purposes of identifying the Index to which the Notes may relate. Such references are not to be construed as an express or implied endorsement by the Index Sponsor of the issue of any Notes. The Index Sponsor does not accept any responsibility for any statement in this PDS and does not assume any liability in respect of any Note. This PDS has been prepared by Macquarie only from publicly available information. No Index Sponsor has been a party to its preparation or furnished any information specifically to Macquarie for the purpose of its preparation. Similarly, information in this PDS concerning the Index has not been independently verified. Therefore, to the extent permitted by law, Macquarie does not accept any liability or responsibility for, and makes no representation or warranty, express or implied, as to the accuracy or completeness of such information. You should make your own enquiries. Underlying Listed Entities References in this PDS to any Listed Entity are only included for the purposes of identifying the securities to which a Note may relate and to the issuer of those securities. Such references are not an express or implied endorsement by any Listed Entity of the Notes. No Listed Entity accepts any responsibility for any statement in this PDS or assumes any liability in respect of the Notes. Macquarie has prepared this PDS using only publicly available information. No Listed Entity has been involved in its preparation or given any information specifically to Macquarie for the purpose of its preparation. Nothing in this PDS can be relied on as implying that there has been no change in the affairs of any Listed Entity or Macquarie since the date of this PDS, or as a representation as to the future in relation to any Listed Entity or Macquarie. Information in this PDS about any Listed Entity has not been independently verified. Accordingly, we do not accept any liability or responsibility for, and make no representation or warranty, express or implied, as to the accuracy or completeness of such information. You should make your own enquiries. Glossary In Section 9 of this PDS is a Glossary in which various words and phrases used in this PDS are defined. If you do not understand a word or phrase you should refer to the Glossary. Capitalised words that are used in this PDS have the meaning given to those words in the Glossary, unless the context requires otherwise. Unless stated otherwise: (a) all dollar amounts in this PDS are quoted in Australian dollars; (b) all dates are subject to a next Business Day convention (see condition 1.4 of the Terms); and (c) all references to time are to time in Sydney. Further advice recommendation The information in this PDS is general information only and does not take into account your individual objectives, financial situation or needs. Consequently, you should consider whether the information in this PDS is appropriate for you in light of your objectives, financial situation and needs. To obtain advice or more information about Notes you should speak to an Australian financial services licensee or their authorised representative. An investment in Notes involves financial and other risks. Before making an investment in Notes, you should: carefully read all of this PDS; seek professional legal, taxation and financial advice to determine whether an investment in Notes is appropriate for you; and carefully consider the potential benefits and the risks involved in investing in the Notes, in light of your particular investment needs, objectives and financial and taxation circumstances. Please ensure that you consider the risks of investing in the Notes, including those set out in Section 4. As well as considering the risks, you should also consider how an investment in this product fits into your overall investment portfolio. By diversifying your investment portfolio, you can reduce your exposure to failure or underperformance of any one investment, manager or asset class. Disclaimer Notes are not deposits with Macquarie, and are subject to investment risk, including possible delays in repayment and loss of capital invested. Macquarie does not guarantee any particular rate of return on MQ Term Plus. Further information If you have any questions concerning the information contained in this PDS please contact us on or us at mqtermplus@macquarie.com.au

5 Product Disclosure Statement MQ Term Plus Contents 2 Section 1 At a Glance 4 Section 2 Investment Details 15 Section 3 Fees and Other Costs 17 Section 4 Risks you Should Consider 21 Section 5 Taxation for Australian Residents 26 Section 6 Additional Information 28 Section 7 Terms and Conditions 38 Section 8 Nominee Deed 42 Section 9 Glossary 45 Section 10 How to Apply 1

6 Section 1 At a Glance Topic Highlights More Info Issuer Macquarie Bank Limited (ABN and AFSL ) No. 1 Martin Place Sydney NSW 2000 Australia Phone: mqtermplus@macquarie.com.au Website: Section 6.1 Notes Series Reference Security MQ Term Plus (Notes) is an equity linked investment product issued by Macquarie. Notes provide you with a regular Fixed Interest Amount plus the potential for additional amounts (the Bonus Interest Amounts ) based on the growth in the market value of the Reference Security. The growth in the value of the Reference Security is subject to a cap. The periodic return on Notes will therefore have a fl oor (the Fixed Interest Rate) and a cap (based on the Cap Rate). At Maturity of the Notes, you will receive the Issue Price of your Notes. This amount will be paid to you in cash unless you elect to take Physical Delivery (see Section 2.6.5). You may also receive: any Fixed Interest Amount which may be payable at Maturity; plus any Bonus Interest Amount which may be payable at Maturity. Notes are not bank deposits and are not secured. Notes will be issued in different Series. A Supplementary Product Disclosure Statement (SPDS) will be issued in respect of each Series that will set out the following details for that Series: the Series Code; the Offer Open Date; the Offer Close Date; the Issue Date; the Issue Price per Note; the Fixed Interest Rate; the Cap Rate; the Fixed Interest Periods; the Bonus Interest Periods; the Reference Security; the Maturity Date; the Adviser Upfront Commission Percentage; the Adviser Trail Commission Percentage; the Adviser Trail Payment Date(s); and the Minimum Application Amount. You should have received an SPDS with this PDS. The Reference Security for a Series of Notes will be specifi ed in the SPDS for that Series and may include a single security, a basket of securities or an Index. The Bonus Interest Amount (if any) will be based on the annualised performance of that Reference Security (subject to the Cap Rate). Section 2 The relevant SPDS for the Series you are considering Section

7 Topic Highlights More Info Fixed Interest Amounts Bonus Interest Amounts Key Risks Adviser Fees Holders of Notes will be paid a Fixed Interest Amount on each Fixed Interest Payment Date. The Fixed Interest Amount will be calculated based on the Issue Price of the Note, the Fixed Interest Rate and the number of days in the relevant Fixed Interest Period. A Bonus Interest Amount is an additional amount which may be payable to you depending on the performance of the Reference Security. Macquarie will calculate the change in value of the Reference Security for each Bonus Interest Period based on the annualised performance of the Reference Security over that Bonus Interest Period (as determined by Macquarie). The result of this calculation is known as the Reference Security Growth Percentage. Note that the Reference Security Growth Percentage cannot be less than zero and is capped at the Cap Rate. That is, even if the annualised performance of the Reference Security is more than the Cap Rate over the relevant Bonus Interest Period, the Reference Security Growth Percentage will not exceed the Cap Rate. If the Reference Security Growth Percentage over the Bonus Interest Period is greater than the Fixed Interest Rate, Macquarie will pay you a Bonus Interest Amount (BIA) equal to: BIA = (Reference Security Growth Percentage Fixed Interest Rate) x Issue Price x number of days in the Bonus Interest Period / 365. Please note that the Bonus Interest Amount cannot be less than zero (cannot be a negative amount). Some of the signifi cant risks of investing in a Note include: Macquarie failing to perform its obligations under a Note; the early termination or redemption of your Note which may result in you receiving less than the amount you initially invested; Notes may only be redeemed before their Maturity Date with our consent. You should be aware that we will generally not accept any Early Redemption Request for a Note which is given within one year of the Issue Date of that Note; and poor or volatile performance of the Reference Security during a Bonus Interest Period, in which case there is a risk that no Bonus Interest Amount will be payable. Each time you invest in Notes, Macquarie may pay a percentage of the Issue Price of those Notes to your fi nancial adviser as an Adviser Upfront Commission. The maximum Adviser Upfront Commission Percentage will be specifi ed in the SPDS for the Series in which you are investing. Any Adviser Upfront Commission will be paid out of Macquarie s own funds, and does not represent an additional cost to you. If you continue to hold Notes on an Adviser Trail Payment Date, Macquarie may pay a percentage of the Issue Price of each Note to your adviser as an Adviser Trail Commission. The maximum Adviser Trail Commission Percentage will be specifi ed in the SPDS for the Series in which you are investing. Any Adviser Trail Commission will be paid out of Macquarie s own funds, and does not represent an additional cost to you. Section Section Section 4 Section 3.1 and the SPDS for the Series No listing Notes are not listed on the ASX or any other exchange and will not be listed. Section 4.8 Applications To apply for Notes: carefully read all of this PDS and the relevant SPDS for the Series you are considering; consult your professional legal, taxation and fi nancial adviser; and complete and submit an Application Form. Section 10 3

8 Section 2 Investment Details 2.1 Who issues MQ Term Plus? The issuer of the Notes is Macquarie Bank Limited. However, notes are not deposits or liabilities of Macquarie that is, they are not a bank account. See Section 6.1 for more information about Macquarie Bank Limited. 2.2 What is MQ Term Plus? MQ Term Plus (Notes) is an equity linked investment product issued by Macquarie. In exchange for you investing the Issue Price for a Note of a particular Series, we will issue the Note to you which will provide the following benefi ts: During the term of the Note: we will pay you a Fixed Interest Amount following the end of each Fixed Interest Period; we may pay you a Bonus Interest Amount following the end of each Bonus Interest Period. Whether a Bonus Interest Amount is payable will be determined by reference to the amount by which the positive annualised performance of the Reference Security (if any) over the relevant Bonus Interest Period exceeds the Fixed Interest Rate on your Note (up to the Cap Rate); and you will also receive a benefi cial interest in the Benefi cially Owned Parcel (however this is not expected to be material in value) (see Section 2.6.2). At Maturity At Maturity of the Notes, you will receive a Settlement Amount equal to: the Issue Price for each of your Notes; plus the sale proceeds of your benefi cial interest in the Benefi cially Owned Parcel (which is expected to be less than the amount by which Macquarie may round down the payment to you at Maturity). You may also receive: any Fixed Interest Amount which may be payable; plus any Bonus Interest Amount which may be payable. The Settlement Amount will be paid to you in cash unless you elect to take Physical Delivery. If you elect to take Physical Delivery you will receive one or more Deliverable Securities (shares in Telstra Corporation Limited) plus the balance of your Settlement Amount in cash. If you notify us in accordance with condition 4.2(a) of the Terms no less than 30 Business Days before the Maturity Date, our obligation to pay your Settlement Amount will be satisfi ed as follows: we will round the number of Deliverable Securities in your Benefi cially Owned Parcel up to the nearest whole number and transfer that number of Deliverable Securities to you; and we will pay the balance of your Settlement Amount in cash less the market value (as determined by Macquarie) of the Deliverable Securities transferred to you. Please note that a Note does not entitle you to: the benefi ts of any distribution (whether of cash or other property) made or any franking credit paid; receive any notices of meetings, or attend, speak or vote at any meeting of members; or exercise any right to vote, in relation to the Reference Security or any securities comprised in the Benefi cially Owned Parcel. How you apply for Notes is described in Section What are the signifi cant benefi ts of investing in MQ Term Plus? An investment in MQ Term Plus gives you: a fi xed base rate of interest; the potential to enhance your yield (above the fi xed base rate) by linking your total return to the annualised performance of a particular Reference Security (up to the Cap Rate); and an investment which may be an eligible investment for self managed super funds. 4

9 2.4 What are some of the signifi cant risks of investing in MQ Term Plus? As with any investment decision, you need to consider an investment in MQ Term Plus carefully and in light of your individual circumstances. Some of the signifi cant risks of investing in MQ Term Plus include: Macquarie failing to perform its obligations under a Note; the Reference Security Growth Percentage over the relevant Bonus Interest Period must exceed the Fixed Interest Rate before any Bonus Interest Amount will be paid to you; each Bonus Interest Amount is dependent on the annualised performance of the Reference Security over a Bonus Interest Period and is capped by the Cap Rate; the early termination of your Note due to Early Maturity (following the occurrence of an Extraordinary Event) or on Early Redemption following a request by you, may result in you receiving less than the amount you initially invested; Notes will not be listed on any exchange and we will generally not accept any Early Redemption Request for a Note which is given within one year of the Issue Date of that Note. We may also reject an Early Redemption Request in our discretion at any time. An investment in Notes is therefore a relatively illiquid investment; adjustments or suspensions of the Reference Security (which may lead to an Extraordinary Event and Early Maturity); and Macquarie or the Nominee exercising any discretion it has under the Terms or the Nominee Deed (including its discretion to vary the Terms (including the Commercial Terms) in certain circumstances). You should refer to Section 4 Risks you Should Consider of this PDS for more detailed information about the risks of investing in MQ Term Plus. Potential investors should ensure that they fully understand the risks involved and consult with relevant advisers before making any investment decision. 2.5 What are the terms of each Series of Notes? The terms on which a Series of Notes are issued are set forth in this PDS (see Section 7 and Section 8) and the Supplementary Product Disclosure Statement (SPDS) applicable to that Series. Macquarie may from time to time issue an SPDS for one or more Series of Notes which will specify: the Series Code; the Offer Open Date; the Offer Close Date; the Issue Date; the Issue Price per Note; the Fixed Interest Rate; the Cap Rate; the Fixed Interest Periods; the Bonus Interest Periods; the Reference Security; the Maturity Date; the Adviser Upfront Commission Percentage; the Adviser Trail Commission Percentage; the Adviser Trail Payment Date(s); and the Minimum Application Amount, and any other details which may be relevant to the Series of Notes to which that SPDS relates. You should have received the SPDS for the Series you are considering with this PDS. 5

10 2.6 How does MQ Term Plus work? On Application How you apply for Notes is described in Section 10. If we have accepted your Application for Notes, and you have paid the Issue Price for each Note to us in cleared funds before the Issue Date, we will issue you with the relevant Notes on the Issue Date of the Series. Once we have issued the Note, we will send you a written Confi rmation confi rming the issue of your Notes. Please note that: if your Application is accepted, the Notes will be issued to you on the Issue Date applicable to that Series of Notes. All application monies paid by you and held by Macquarie prior to the Issue Date will be held on trust by Macquarie and any interest earned on such monies will be for the benefi t of Macquarie; we may accept late Applications (together with payment of the relevant Issue Price in cleared funds) if they are received before the Issue Date of the relevant Series of Notes; and we may accept, reject or partially accept an Application in our discretion. For example, assume Sam has paid $50,000 to Macquarie in cleared funds in order to acquire 50,000 Notes with the following terms: an Offer Close Date of 15 October 2007; an Issue Date of 22 October 2007; the Reference Security is the S&P/ASX 200 Index; the Issue Price is $1.00 per Note; a Fixed Interest Rate of 6.5%pa; a fi rst Fixed Interest Period of 22 October 2007 to 31 December 2007; a fi rst Bonus Interest Period of 22 October 2007 to 31 December 2007; a Cap Rate of 10%pa; and a Maturity Date of 22 October What is the Beneficially Owned Parcel? Each Series of Notes issued under this PDS relates to a parcel of fi ve ordinary shares in Telstra Corporation Limited (TLS). These shares are referred to as the Deliverable Securities. A Note entitles its Holder to a fractional interest in the Deliverable Securities which is held on a separate trust for each Holder of a Note by Belike Nominees Pty Ltd (Nominee) in accordance with the Nominee Deed. The benefi cial interest held by each Holder of Notes in relation to those fi ve ordinary shares in TLS (the Beneficially Owned Parcel) will be determined by reference to the number of Notes in that Series held by the Holder and the total number of Notes in that Series issued by Macquarie. For example, assume Sam has purchased 50,000 Notes in a Series in which a total of 3,000,000 Notes have been issued by Macquarie. Sam s Benefi cially Owned Parcel is initially calculated as follows: Benefi cially Owned Parcel = = Notes held by Sam Total Number of Notes 50,000 3,000,000 = shares x 5 shares x 5 shares The Benefi cially Owned Parcel for Sam in relation to his 50,000 Notes is therefore TLS shares (ie. less than one). Note in certain circumstances shares may be held in a company other than TLS (see the defi nition of Deliverable Securities in the Glossary). 6

11 2.6.3 During the Term Fixed Interest Amounts On each Fixed Interest Payment Date we will pay to you a Fixed Interest Amount calculated as follows for each Note: Fixed Interest Amount = Issue Price x Fixed Interest Rate x Number of Days 365 Number of Days is the number of calendar days from (and including) the fi rst day in the relevant Fixed Interest Period to (and including) the last day of the relevant Fixed Interest Period (except in the case of the fi rst Fixed Interest Period, where the Number of Days is the number of calendar days from (and excluding) the fi rst day in the relevant Fixed Interest Period to (and including) the last day of the fi rst Fixed Interest Period). Continuing our example, the Fixed Interest Amount payable to Sam in relation to the Fixed Interest Period starting 22 October 2007 (which is also the Issue Date) and ending 31 December 2007 is calculated for each Note as follows: Fixed Interest Amount = $1.00 x 6.5%pa x = $ As Sam holds 50,000 Notes, Sam is entitled to receive $ (being $ x 50,000) within 15 Business Days of the last day of the Fixed Interest Period. Bonus Interest Amounts In order to calculate the Bonus Interest Amount for any Bonus Interest Period, Macquarie will, on the last day of each Bonus Interest Period (End Date), determine the annualised percentage return of the Reference Security since the last day of the previous Bonus Interest Period (or the fi rst day of the Bonus Interest Period in the case of the fi rst Bonus Interest Period) (Start Date) by comparing the closing prices of the Reference Security on the Start Date and the End Date. This is the Reference Security Growth Percentage, which is capped at the Cap Rate. If the Reference Security Growth Percentage is greater than the Fixed Interest Rate, then Macquarie will pay you a Bonus Interest Amount calculated as follows: Bonus Interest Amount Where: (Reference Security = Issue Price x Growth Percentage x Fixed Interest Rate) Number of Days 365 Reference Security Growth Percentage equals the lesser of: (1) the greater of: (a) Closing Level Opening Level Opening Level and and (b) zero; (2) the Cap Rate. x 365 Number of Days Closing Level means the closing price (as determined by Macquarie) of the Reference Security on the last day of the relevant Bonus Interest Period; and Opening Level means: for the fi rst Bonus Interest Period, the closing price (as determined by Macquarie) of the Reference Security on the fi rst day of the Bonus Interest Period; and for each subsequent Bonus Interest Period, the closing price (as determined by Macquarie) of the Reference Security on the last day of the immediately preceding Bonus Interest Period. Number of Days is the number of calendar days from (and including) the Start Date in the relevant Bonus Interest Period to (and including) the End Date of the relevant Bonus Interest Period (except for the fi rst Bonus Interest Period, where the Number of Days is the number of calendar days from (and excluding) the fi rst day in the relevant Bonus Interest Period to (and including) the last day of the fi rst Bonus Interest Period). Please note that the Bonus Interest Amount cannot be a negative number (ie. cannot be less than zero). Please be aware that the Reference Security Growth Percentage is capped at the Cap Rate. That is, even if the annualised performance of the Reference Security is greater than the Cap Rate over the relevant Bonus Interest Period, the Reference Security Growth Percentage will be capped at the Cap Rate. Section 2 Investment Details 7

12 Annualised Performance In annualising the performance of a Reference Security over a particular period (eg. 70 days) the return is converted to the equivalent annual return that would have applied had the performance of the Reference Security over that period occurred for a full 365-day year. For positive period returns for a period of less than one year, the equivalent annualised return will be a greater number. For positive period returns that are for a period of greater than one year, the annualised return will be a lesser number. For example: Annualised return = Period return x 365 Number of Days Example 1: Period: 22 October 2007 to 31 December 2007 = 70 days Period return: 2.35% Annualised return Example 2: = 2.35% x = 12.25%pa Period: 22 October 2007 to 31 December 2008 = 436 days Period return: 12.00% Annualised return = 12.00% x = 10.05%pa It is therefore important to remember that where the performance of the Reference Security is measured over a Bonus Interest Period which is less than, or greater than, 365 days, the performance of the Reference Security will need to be annualised for the purposes of determining the Reference Security Growth Percentage. 8

13 Continuing with our example, Sam has purchased 50,000 Notes with an Issue Price of $1.00 each, a Fixed Interest Rate of 6.5%pa, a Cap Rate of 10%pa and an Issue Date of 22 October On 22 October 2007, the fi rst day of the fi rst Bonus Interest Period, we assume the closing price of the Reference Security was 1,000. On the last day of the relevant Bonus Interest Period (31 December 2007), the Bonus Interest Amount (if any) payable to Sam will depend on the closing price of the Reference Security on that date. For example: Section 2 Investment Details Scenario Reference Security Growth Percentage Bonus Interest Amount Closing Price = 990 Number of Days = 70 Closing Price = 1008 Number of Days = 70 Closing Price = 1016 Number of Days = 70 Closing Price = 1030 Number of Days = 70 Equals the lesser of: (1) the greater of: ( ) 365 x = %pa and zero. and (2) 10%pa Therefore, the Reference Security Growth Percentage is zero. Equals the lesser of: (1) the greater of: ( ) 365 x = %pa and zero. and (2) 10%pa Therefore, the Reference Security Growth Percentage is %pa. Equals the lesser of: (1) the greater of: ( ) 365 x = %pa and zero. and (2) 10%pa Therefore, the Reference Security Growth Percentage is %pa. Equals the lesser of: (1) the greater of: ( ) 365 x = %pa and zero. and (2) 10%pa In this example, the performance of the Reference Security has exceeded the Cap Rate (10%pa). As the Reference Security Growth Percentage cannot exceed the Cap Rate, the Reference Security Growth Percentage is, in this case, 10%pa. Nil. No Bonus Interest Amount is payable to Sam for that Bonus Interest Period. Nil. No Bonus Interest Amount is payable to Sam for that Bonus Interest Period as the Reference Security Growth Percentage is less than the Fixed Interest Rate. $ As Sam holds 50,000 Notes, Sam would receive an additional $ as the Bonus Interest Amount (being 50,000 x % x the Number of Days / 365 x the Issue Price). We would pay this Bonus Interest Amount to Sam within 15 Business Days of the last day of the relevant Bonus Interest Period. $ As Sam holds 50,000 Notes, Sam would receive an additional $ as the Bonus Interest Amount (being 50,000 x 3.5% x the Number of Days / 365 x the Issue Price). We would pay this Bonus Interest Amount to Sam within 15 Business Days of the last day of the relevant Bonus Interest Period. These are illustrative examples only and there can be no guarantee that any Bonus Interest Amount will be payable on any Notes. 9

14 On Maturity At Maturity of the Note, you will receive (within 15 Business Days of the Maturity Date) a Settlement Amount equal to: the Issue Price for each of your Notes; plus the sale proceeds of your benefi cial interest in the Benefi cially Owned Parcel. You will also receive: any Fixed Interest Amount which may be payable at Maturity; plus any Bonus Interest Amount which may be payable at Maturity. On payment of the Settlement Amount to you, either in cash or by way of Physical Delivery, your Notes will terminate and the Nominee s obligation to you in respect of your benefi cial interest in the Benefi cially Owned Parcel will be discharged. Continuing with our example, where Sam purchased 50,000 Notes with an Issue Price of $1.00 each and a Maturity Date of 22 October 2009 which results in Sam having a Benefi cially Owned Parcel comprising ordinary shares in TLS (assume that Sam s Benefi cially Owned Parcel has not changed since the Issue Date and Sam has not elected to receive Physical Delivery). Assume also that the proceeds from the sale of the TLS shares on 22 October 2009 were $0.42 (being $5.00 per share). Within 15 Business Days of the Maturity Date, Sam would be entitled to receive the following cash payments from Macquarie with respect to his 50,000 Notes: $50,000, being the 50,000 Notes multiplied by their Issue Price of $1.00 each; plus $0.42, being the proceeds from the sale of Sam s Benefi cially Owned Parcel. Please note that Macquarie may round down the amount payable on Maturity by up to $ If, however, Sam had elected to take Physical Delivery, Sam would receive one fully paid ordinary share in TLS, but the cash payment would, without rounding, reduce from $50, to $49, the $5.00 being the market value of the ordinary share received by him. These amounts (subject to any rounding) would be paid to Sam by Macquarie within 15 Business Days of the Maturity Date, together with any Bonus Interest Amount or Fixed Interest Amount which Sam might be entitled to if the Maturity Date is also the last day of a Fixed Interest Period and/or a Bonus Interest Period. This is an illustrative example only and there can be no guarantee that the figures indicated in this example will be payable in relation to any Notes. This is not a forecast of the TLS share price and a price of $5.00 has been used as an illustration only. Please note that on Maturity and payment and/or delivery of the amounts or shares due to you, your Notes will terminate Physical Delivery If you notify us in accordance with condition 4.2 of the Terms no less than 30 Business Days before the Maturity Date that you wish to take Physical Delivery, our obligation to pay your Settlement Amount will be satisfi ed as follows: we will round the number of Deliverable Securities in your Benefi cially Owned Parcel up to the nearest whole number and transfer that number of Deliverable Securities to you within 15 Business Days of the Maturity Date; and we will pay the balance of your Settlement Amount in cash within 15 Business Days of the Maturity Date (that is your Settlement Amount less the market value of the Deliverable Securities transferred to you). 2.7 What are Adjustment Events and how do they affect my Notes? If a Reference Security is affected by an Adjustment Event, amendments are likely to be required to any Note linked to that Reference Security to preserve the economic equivalence of the rights and obligations of you and Macquarie immediately before the Adjustment Event occurred. Corporate actions and certain other events are defi ned as Adjustment Events (see over page). In these circumstances, Macquarie has broad discretions to make corresponding adjustments to the Commercial Terms of any related Note. For example: where securities are issued as consideration for a takeover of the Listed Entity, Macquarie may replace the original Reference Security with a Reference Security in a different entity; or where the Index Sponsor fails or ceases to calculate the Index comprising the Reference Security, Macquarie may select a replacement Index satisfactory to it as the Reference Security, and amend the Terms and any other Commercial Term relevant to the Note as it considers appropriate to account for the Adjustment Event. Please refer to condition 1.6 of the Terms for more information.

15 What is an Adjustment Event? An Adjustment Event occurs in relation to a Reference Security where a corporate action occurs that may have a dilutive or concentrative effect on the theoretical value of the Reference Security. For example, in the case of a Reference Security which is a share, this may include: (a) a special or abnormal dividend; (b) a capital reconstruction (eg. subdivision, reclassifi cation or consolidation of a Listed Entity s capital); (c) a cancellation or repurchase of any of the Reference Securities; (d) a rights or bonus issue; (e) a takeover or buy-back; and (f) where the Listed Entity which issued the Reference Security becomes insolvent. In the case of a Reference Security which is an Index, Adjustment Events also include where: (i) the Index Sponsor makes a material change in the formula for, or method of calculating the Index (other than one prescribed in the rules of the Index); or (ii) the Index Sponsor fails or ceases to calculate and announce the Index on a regular basis, in which case Macquarie may, if it does not treat such event as an Extraordinary Event, select a replacement Index satisfactory to it. 2.8 Can I get out early? If Macquarie allows you to redeem early at your request or if Notes are subject to Early Maturity due to an Extraordinary Event, the amount you receive may be less than the Issue Price of your Notes. Early Redemption You may ask us to redeem (that is, terminate) a Note held by you at any time, by: giving us a duly signed written notice in the form available from us; or any other method acceptable to Macquarie, (an Early Redemption Request). Once you give an Early Redemption Request, it is irrevocable and Macquarie may, at its sole discretion, accept or reject your Early Redemption Request. If we accept your Early Redemption Request and agree to redeem the relevant Note(s) prior to their original Maturity Date: your Notes will be redeemed on the last Business Day of the calendar month in which your Early Redemption Request was accepted by Macquarie (the Early Redemption Date); if we receive your Early Redemption Request within ten Business Days of the end of any calendar month, Macquarie will not consider your Early Redemption Request until the following month; we will pay you the Early Redemption Amount (if any) within 15 Business Days of the Early Redemption Date. Note you cannot elect to take Physical Delivery; and payment of the Early Redemption Amount discharges the Nominee s obligations to you in respect of your benefi cial interest in the Benefi cially Owned Parcel. You should be aware that we will generally NOT ACCEPT any Early Redemption Request for a Note which is given within one year of the Issue Date of that Note. Section 2 Investment Details 11

16 What is the Early Redemption Amount? The Early Redemption Amount of any Note is determined by us in our sole discretion. Factors which may affect the level of the Early Redemption Amount, and the way in which changes in those variables may affect the level of the Early Redemption Amount we pay you (other factors being equal) are as follows: Factor (with all other factors assumed to remain constant) Level Early Redemption Amount Prevailing level of interest rates Change in market value of the Reference Security since the most recent Opening Level was set Costs of unwinding any hedging arrangement Macquarie has entered into in connection with the Note In addition to the factors listed above, in the majority of cases the Early Redemption Amount of a Note will increase as the time remaining to the last day of the relevant Bonus and Fixed Interest Periods decreases. Other factors, including the expected volatility and dividends of the Reference Security may also affect the level of the Early Redemption Amount payable to you. However, the effect that these factors may have on the Early Redemption Amount may be positive or negative, and cannot be specifi ed in advance of the Early Redemption Date. Because these factors are unpredictable, it is not possible to determine the level of these factors that could apply to a Note in advance of an Early Redemption. Further, these factors may substantially influence the value of the Early Redemption Amount we pay you. Accordingly, you should not consider investing in a Note intending to redeem early or otherwise withdrawing before the nominated Maturity Date. If you have any concerns or queries about this aspect of Notes, you should seek advice from a professional financial adviser. Note: While Early Redemption will be made available in the ordinary course of business, there is no guarantee that Early Redemption will be available in all cases. The Early Redemption Amount is determined as at the last Business Day of the calendar month in which Macquarie accepts your Early Redemption Request and not necessarily on the day you provide your Early Redemption Request. This means that movements in the variables referred to in the table to the left after you have given an Early Redemption Request may affect the level of the Early Redemption Amount paid to you (if Macquarie subsequently accepts your Early Redemption Request). 2.9 Can Macquarie terminate my Notes without my approval? Yes, on the occurrence of an Extraordinary Event, in which case the amount you receive may be less than the Issue Price of your Notes. We may terminate your Notes if we determine that an Extraordinary Event has occurred. If we determine that an Extraordinary Event has occurred, we may nominate an Early Maturity Date on which we will redeem your Notes and the amount you receive will be the Early Redemption Amount, calculated as if you had made an Early Redemption Request which had been accepted by Macquarie (see Section 2.8). For this purpose, the Early Redemption Amount will be paid to you within 15 Business Days of the Early Maturity Date. Your Early Redemption Amount will be paid in cash unless you notify us in accordance with condition 4.2(a) of the Terms within two Business Days of receiving notice of the Early Maturity that you wish to receive Physical Delivery of the Benefi cially Owned Parcel, in which case our obligation to pay your Early Redemption Amount will be satisfi ed as follows: we will round the number of Deliverable Securities in your Benefi cially Owned Parcel up to the nearest whole number and transfer that number of Deliverable Securities to you; and we will pay the balance of your Early Redemption Amount in cash (that is your Early Redemption Amount less the market value of the Deliverable Securities transferred to you). 12

17 What is an Extraordinary Event? An Extraordinary Event occurs, in respect of a Note, if: (a) it becomes unlawful (other than as a result of Macquarie s actions) for Macquarie to perform any of its obligations to pay or deliver or to receive a payment or delivery in respect of the Note due to the adoption of, or change in, a law, or the offi cial publication of, or any change in, the interpretation by any court, tribunal or regulatory authority within a competent jurisdiction of any law after the Issue Date; (b) Macquarie determines that an Adjustment Event makes it impractical for the Note to remain on issue; (c) an event occurs which Macquarie determines has, or will have, a material effect on Macquarie s ability to satisfactorily hedge its exposure under any Note; (d) there is any material change or limitation or disruption to trading in the Reference Security or any futures or options contracts over such Reference Security on any exchange which Macquarie determines to be material; or (e) in the case of a Reference Security which is an Index: (i) the Index Sponsor makes a material change in the formula for, or method of calculating the Index (other than one prescribed in the rules of the Index); or (ii) the Index Sponsor fails, or ceases to calculate the Index, and Macquarie does not select a replacement Index satisfactory to it Can I sell my Notes? Notes will not be listed on any exchange and a secondary market in Notes is unlikely to develop. You are however entitled to transfer a Note if your transfer request is accompanied by a duly executed and (if necessary) stamped instrument of transfer under the Corporations Act. We will also effect a transfer of Notes to a Holder s legal personal representative (in the event of death) on receipt of satisfactory evidence of the representative s due appointment (eg. a certifi ed copy of probate issued by an Australian court). All sales and transfers of the Note are subject to the sale or transfer complying with the law What are the signifi cant tax consequences of investing in Notes? You should read section 5 Taxation for Australian Residents for some of the signifi cant tax consequences of investing in Notes if you are an Australian resident. We recommend you obtain your own tax advice before investing in Notes. You should be aware that any payments to be made to you during the term of your Note will be subject to any deduction for any tax (ie. withholding tax where you do not provide a TFN, ABN or relevant exemption (or are a non-resident)). Section 2 Investment Details 13