Dated 24 July 2009 CLOVERIE PUBLIC LIMITED COMPANY. (incorporated with limited liability in Ireland) SERIES PROSPECTUS

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1 Dated 24 July 2009 CLOVERIE PUBLIC LIMITED COMPANY (incorporated with limited liability in Ireland) SERIES PROSPECTUS Series No.: ,000,000 Fixed to Floating Notes due 2039 secured over the 425,000,000 in principal amount of the 425,000,000 Dated Subordinated Notes of Zurich Insurance Company Ltd issued pursuant to its Secured Note Issuance Programme arranged by CITIGROUP GLOBAL MARKETS LIMITED The attention of investors is drawn to the section headed Risk Factors starting on page 6 of this Series Prospectus Managers CITI J.P. Morgan CALYON Crédit Agricole CIB

2 Table of Contents Introduction...2 Incorporation by Reference...5 Risk Factors...6 Terms and Conditions...16 Schedule Additional Amendments to the Base Conditions...26 Collateral Notes Summary...34 General Information...39 Glossary of Defined Terms...40 Appendix A Final Terms of the Collateral Notes...41 Appendix B Collateral Base Prospectus

3 Introduction This Series Prospectus in respect of the 425,000,000 Fixed to Floating Notes (the Notes ), incorporates by reference, and should be read in conjunction with, the Base Prospectus dated 21 July 2009 (the Base Prospectus ), which constitutes a base prospectus for the purposes of Directive 2003/71/EC (the Prospectus Directive ) relating to the Secured Note Issuance Programme (the Programme ) of Cloverie Public Limited Company (the Issuer ). This Series Prospectus has been approved by the Irish Financial Services Regulatory Authority (the Financial Regulator ), as competent authority under the Prospectus Directive. The Financial Regulator only approves this Series Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. This Series Prospectus constitutes a prospectus for the purposes of the Prospectus Directive. This Series Prospectus will be available on the Financial Regulator s website ( The Base Prospectus is also available for viewing on the Financial Regulator s website ( Application has been made to the Irish Stock Exchange for the Notes to be admitted to the official list and trading on its regulated market. Admission to listing and trading is expected to commence shortly following approval of this Series Prospectus. The Irish Stock Exchange s regulated market is a regulated market for the purposes of Directive 2004/39/EC (the Markets in Financial Instruments Directive ). There can be no assurance that any such application will be successful or that any such listing will be granted or maintained. Terms defined in the Base Prospectus (unless otherwise defined in this Series Prospectus) have the same meaning in this Series Prospectus. This Series Prospectus is to be read in conjunction with all documents that are deemed to be incorporated herein by reference. The Appendices to this Series Prospectus forms part of, and should be read together with, this Series Prospectus. The delivery of this Series Prospectus at any time does not imply that any information contained herein is correct at any time subsequent to the date hereof. Subject as provided below in respect of the information in the Appendices, the Issuer accepts responsibility for the information contained in this Series Prospectus. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case), the information contained in this Series Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. The information in Appendix A comprises information reproduced from the Final Terms (the Collateral Final Terms ) of the Collateral Notes (as defined in Terms and Conditions The Security Arrangements ). The information in Appendix B comprises information reproduced from the Collateral Base Prospectus (as defined below). The Issuer confirms that such information has been accurately reproduced from the Collateral Final Terms published by the Collateral Issuer (as defined in Terms and Conditions The Security Arrangements ) and the Collateral Base Prospectus (as defined below) respectively. The Collateral Final Terms are to be read together with the base prospectus dated 17 June 2009 relating to the U.S.$10,000,000,000 Euro Medium Term Note Programme of Zurich Insurance Company Ltd, which constitutes a base prospectus for the purposes of the Prospectus Directive (the Collateral Base Prospectus ), which is set out at Appendix B to this Series Prospectus. So far as the Issuer is aware and is able to ascertain from information published by the Collateral Issuer, no facts have been omitted from the Collateral Final Terms, read together with the Collateral Base Prospectus, which would render the reproduced or incorporated information inaccurate or misleading. 2

4 No person is authorised to give any information or to make any representation not contained in this Series Prospectus and any information or representation not so contained must not be relied upon as having been authorised by or on behalf of the Issuer or the Managers. To the fullest extent permitted by law, the Issuer and the Managers accept no responsibility whatsoever for any information not included in this Series Prospectus. The Issuer and the Managers accordingly disclaim all and any liability whether arising in tort or contract or otherwise (save as referred to above) which they might otherwise have in respect of any such information. Neither the delivery of this Series Prospectus nor any sale made in connection herewith shall, under any circumstances, create any implication (a) that there has been no change in the affairs of the Issuer since the date hereof or the date upon which this Series Prospectus has been most recently amended or supplemented or that there has been no adverse change in the financial position of the Issuer since the date hereof or the date upon which this Series Prospectus has been most recently amended or supplemented or (b) that any other publicly available information relating to the Issuer, the Notes, the Collateral Notes or the Collateral Issuer is correct. To the fullest extent permitted by law, the Managers accept no responsibility whatsoever for the contents of this Series Prospectus or for any other statement, made or purported to be made by any Manager or on its behalf in connection with the Issuer, the Collateral Notes, the Collateral Issuer or the issue and offering of the Notes. Each Manager accordingly disclaims all and any liability whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in respect of this Series Prospectus or any such statement. Furthermore, in relation to the issue of the Notes and save as required by all applicable laws, no representation, warranty or undertaking, express or implied, is or will be made and no responsibility or liability to any Noteholder is or will be accepted by the Collateral Issuer as to the accuracy or completeness of the information contained in this Series Prospectus or any other information provided by the Issuer in connection with the issue and offering of the Notes. No person has been authorised to give any information or to make any representation other than those contained in this Series Prospectus in connection with the issue and sale of the Notes and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer or the Managers. The net proceeds of this issue will be 425,000,000 and will be applied by the Issuer to purchase the Collateral Notes on the Issue Date (as defined herein) and to make payment of certain fees and expenses. The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act ) or with any securities regulatory authority of any state or other jurisdiction of the United States. The Issuer has not registered and will not register under the U.S. Investment Company Act of 1940, as amended (the lnvestment Company Act ). Subject to certain exceptions, the Notes may not be offered or sold within the United States or to U.S. persons (as defined in Regulation S under the Securities Act ( Regulation S )). This Series Prospectus does not constitute, and may not be used for the purposes of, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation, and no action is being taken to permit an offering of the Notes or the distribution of this Series Prospectus in any jurisdiction where such action is required. In this Series Prospectus, unless otherwise specified or the context otherwise requires, references to U.S.$ and U.S. dollars are to United States dollars, references to EUR, euro and are to the currency introduced on 1 January 1999 pursuant to the Treaty establishing the European Community as amended by the Treaty on European Union, and references to pounds, sterling, GBP and are to the lawful currency of the United Kingdom. 3

5 The language of this Series Prospectus is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law. 4

6 Incorporation by Reference The provisions of the Base Prospectus, which constitutes a base prospectus for the purposes of the Prospectus Directive, shall be deemed to be incorporated into and form part of this Series Prospectus in their entirety, save that any statement contained in the Base Prospectus shall be deemed to be modified or superseded for the purpose of this Series Prospectus to the extent that a statement contained herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Series Prospectus. This Series Prospectus must be read in conjunction with the Base Prospectus and the other documents deemed to be incorporated by reference herein and full information on the Issuer and the offer of the Notes is only available on the basis of the combination of the provisions set out within this document, the Base Prospectus and the other documents deemed to be incorporated by reference herein. The Base Prospectus is available for viewing at, and copies may be obtained free of charge from, the office of the Issuing and Paying Agent and the office of the Issuer. The Base Prospectus is also available for viewing on the Financial Regulator s website ( The audited financial statements of the Issuer for the financial years ended 31 December 2007 and 31 December 2008 together with the auditor s reports thereon have been filed with the Irish Stock Exchange and are deemed to be incorporated by reference into this Series Prospectus. 5

7 Risk Factors THE CONSIDERATIONS SET OUT BELOW ARE NOT, AND ARE NOT INTENDED TO BE, A COMPREHENSIVE LIST OF ALL CONSIDERATIONS RELEVANT TO A DECISION TO PURCHASE OR HOLD ANY NOTES. General The purchase of Notes may involve substantial risks and is suitable only for sophisticated investors who have the knowledge and experience in financial and business matters necessary to enable them to evaluate the risks and the merits of an investment in the Notes. Before making an investment decision, prospective purchasers of Notes should consider carefully, in the light of their own financial circumstances and investment objectives, all of the information set forth in the Base Prospectus incorporated by reference herein and the Collateral Base Prospectus appended hereto and and, in particular, the considerations set forth below and in this Series Prospectus. The Issuer does not represent that the statements below regarding the risks of holding the Notes are exhaustive and the Issuer may be unable to pay interest, principal or other amounts on or in connection with the Notes for reasons other than those described below. This Series Prospectus identifies in general terms certain information that a prospective investor should consider prior to making an investment in the Notes. However, a prospective investor should, without any reliance on the Managers or their affiliates, conduct its own thorough analysis (including its own accounting, legal and tax analysis) prior to deciding whether to invest in the Notes as any evaluation of the suitability for an investor of an investment in the Notes depends upon a prospective investor s particular financial and other circumstances, as well as on specific terms of the Notes and, if it does not have experience in financial, business and investment matters sufficient to permit it to make such a determination, it should consult with its financial adviser prior to deciding to make an investment on the suitability of the Notes. This Series Prospectus is not, and does not purport to be, investment advice, and the Managers make no recommendation as to the suitability of the Notes. The provision of this Series Prospectus to prospective investors is not based on any prospective investor s individual circumstances and should not be relied upon as an assessment of suitability for any prospective investor of the Notes. Even if the Managers possess limited information as to the objectives of any prospective investor in relation to any transaction, series of transactions or trading strategy, this will not be deemed sufficient for any assessment of suitability for such person of the Notes. Any trading or investment decisions a prospective investor takes are in reliance on its own analysis and judgement and/or that of its advisers and not in reliance on the Managers or their affiliates. In particular, each prospective investor in the Notes must determine, based on its own independent review and such professional advice as it deems appropriate under the circumstances, that its acquisition of the Notes (i) is fully consistent with its (or, if it is acquiring the Notes in a fiduciary capacity, the beneficiary s) financial needs, objectives and condition, (ii) complies and is fully consistent with all investment policies, guidelines and restrictions applicable to it (whether acquiring the Notes as principal or in a fiduciary capacity) and (iii) is a fit, proper and suitable investment for it (or, if it is acquiring the Notes in a fiduciary capacity, for the beneficiary), notwithstanding the clear and substantial risks inherent in investing in or holding the Notes. Each prospective investor in the Notes should have sufficient financial resources and liquidity to bear all the risks of an investment in the Notes. 6

8 Investment activities of certain investors are subject to investment laws and regulations, or review or regulation by certain authorities. Each prospective investor should therefore consult its legal advisers to determine whether and to what extent (i) the Notes are legal investments for it, (ii) if relevant, the Notes can be used as underlying security for various types of borrowing and (iii) other restrictions apply to its purchase or, if relevant, pledge of the Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Notes under any applicable riskbased capital or similar rules. Factors that may affect the Issuer s ability to fulfil its obligations under the Notes The Issuer is a special purpose vehicle The Issuer s sole business is the raising of money by issuing notes or other obligations for the purposes of purchasing assets and entering into related derivatives and other contracts. The Issuer has covenanted not to have any subsidiaries or employees, consolidate or merge with any other person or issue any shares (other than such shares as were in issue on the date of its incorporation). As such, the Issuer has, and will have, no assets other than its issued and paid-up share capital, such fees (as agreed) payable to it in connection with the issue of the Notes or entry into of other obligations from time to time, the Mortgaged Property and any other assets on which the Notes are secured and the Managers Security (as defined in Terms and Conditions The Security Arrangements ). There is no day-to-day management of the business of the Issuer. Regulation of the Issuer by any regulatory authority The Issuer is not required to be licensed, registered or authorised under any current securities, commodities or banking laws of its jurisdiction of incorporation and will operate without supervision by any authority in any jurisdiction. There is no assurance, however, that regulatory authorities in one or more jurisdictions would not take a contrary view regarding the applicability of any such laws to the Issuer. The taking of a contrary view by such regulatory authority could have an adverse impact on the Issuer or the holders of the Notes. Any investment in the Notes does not have the status of a bank deposit and is not within the scope of any deposit protection scheme. Preferred creditors under Irish law The Issuer is an Irish company. Under Irish law, upon an insolvency of an Irish company, when applying the proceeds of assets subject to fixed security which may have been realised in the course of a liquidation or receivership, the claims of a limited category of preferential creditors will take priority over the claims of creditors holding the relevant fixed security. These preferred claims include the remuneration, costs and expenses properly incurred by any examiner of the company (which may include any borrowings made by an examiner to fund the company s requirements for the duration of his appointment) which have been approved by the Irish courts (see Examinership below). In relation to the disposal of assets of any Irish tax resident company which are subject to security, a person entitled to the benefit of the security may be liable for tax in relation to any capital gains made by the company on a disposal of those assets on exercise of the security. Examinership Examinership is a court procedure available under the Irish Companies (Amendment) Act 1990, as amended, to facilitate the survival of Irish companies in financial difficulties. The Issuer, the directors of the Issuer, a contingent, prospective or actual creditor of the Issuer, or shareholders of the Issuer holding, at the date of presentation of the petition, not less than one-tenth of the voting share capital of the Issuer are each entitled to petition the court for the appointment of an 7

9 examiner. The examiner, once appointed, has the power to set aside contracts and arrangements entered into by the company after his appointment and, in certain circumstances, can avoid a negative pledge given by the company prior to his appointment. Furthermore, he may sell assets the subject of a fixed charge. However, if such power is exercised he must account to the holders of the fixed charge for the amount realised and discharge the amount due to them out of the proceeds of sale. During the period of protection, the examiner will compile proposals for a compromise or scheme of arrangement to assist the survival of the company or the whole or any part of its undertaking as a going concern. A scheme of arrangement may be approved by the Irish High Court when at least one class of creditors has voted in favour of the proposals and the Irish High Court is satisfied that such proposals are fair and equitable in relation to any class of members or creditors who have not accepted the proposals and whose interests would be impaired by implementation of the scheme of arrangement. In considering proposals by the examiner, it is likely that secured and unsecured creditors would form separate classes of creditors. In the case of the Issuer, if the Trustee represented the majority in number and value of claims within the secured creditor class (which would be likely given the restrictions agreed to by the Issuer in the Conditions), the Trustee would be in a position to reject any proposal not in favour of the Noteholders. The Trustee would also be entitled to argue at the Irish High Court hearing at which the proposed scheme of arrangement is considered that the proposals are unfair and inequitable in relation to the Noteholders, especially if such proposals included a writing down of the value of amounts due by the Issuer to the Noteholders. The primary risks to the holders of Notes if an examiner were to be appointed to the Issuer are as follows: (i) (ii) the potential for a scheme of arrangement to be approved involving the writing down of the debt owed by the Issuer to the Noteholders as secured by the Trust Deed; the potential for the examiner to seek to set aside any negative pledge in the Notes prohibiting the creation of security or the incurring of borrowings by the Issuer to enable the examiner to borrow to fund the Issuer during the protection period; and (iii) in the event that a scheme of arrangement is not approved and the Issuer subsequently goes into liquidation, the examiner s remuneration and expenses (including certain borrowings incurred by the examiner on behalf of the Issuer and approved by the Irish High Court) will take priority over the monies and liabilities which from time to time are or may become due, owing or payable by the Issuer to the Noteholders. Risks relating to the Notes generally Set out below is a brief description of certain risks relating to the Notes generally: Limited recourse obligations The Notes are direct, secured, limited recourse obligations of the Issuer payable solely out of the assets charged by the Issuer in favour of the Trustee on behalf of the Noteholders and other secured parties. The Issuer will have no other assets or sources of revenue available for payment of any of its obligations under the Notes. No assurance can be made that the proceeds available for and allocated to the repayment of the Notes at any particular time will be sufficient to cover all amounts that would otherwise be due and payable in respect of the Notes. If the proceeds of the realisation of the charged assets received by the Trustee for the benefit of the Noteholders prove insufficient to make payments on the Notes, no other assets will be available for payment of the shortfall, and, following distribution of the proceeds of such realisation, the Issuer will have no further obligation to pay any amounts in respect of such shortfall and accordingly no debt will be owed by the Issuer in respect of any such shortfall. Further, neither the Trustee, nor the Noteholders, nor any other secured party will be entitled at any time to petition or take any other step for the insolvency, examinership, winding-up or liquidation of the Issuer. 8

10 No person other than the Issuer will be obliged to make payments on the Notes. Taxation and no gross up Each Noteholder will assume and be solely responsible for any and all taxes of any jurisdiction or governmental or regulatory authority, including, without limitation, any state or local taxes or other like assessments or charges that may be applicable to any payment to it in respect of the Notes. In the event that any withholding tax or deduction for tax is imposed on payments of interest on the Notes, the Noteholders will not be entitled to receive grossed-up amounts to compensate for such withholding tax and no Event of Default shall occur as a result of any such withholding or deduction. Modification, waivers and substitution The Conditions contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority. The Trustee may, in certain circumstances, without the consent of Noteholders, (i) agree to any modification of, or the waiver or authorisation of any breach or proposed breach of, any of the provisions of the Notes or (ii) determine without the consent of the Noteholders that any Event of Default or potential Event of Default shall not be treated as such or (iii) agree to the substitution of another company as principal debtor under the Notes in place of the Issuer. Earlier redemption for tax reasons The Issuer may, for specified tax reasons as detailed in Condition 7.3 (Redemption for taxation and other reasons), upon giving notice to Noteholders, redeem all Notes earlier than they would otherwise redeem as described below. Condition 7.3 provides for redemption of the Notes in cases where the Issuer is required by Irish law to make any withholding or deduction on payments to be made by the Issuer under the Notes or if the Issuer is unable to receive any payment in respect of the Collateral Notes without withholding or deduction being required by Swiss law. Although the terms of the Collateral Notes provide that, in the event of any withholding or deduction on account of Swiss tax being required by Swiss law, the Collateral Issuer shall pay additional amounts so that the net amount received by the holders of the Collateral Notes shall equal the amount which would have been received by such holder in the absence of such withholding or deduction, such an obligation may contravene Swiss legislation and be null and void. In such case the amount received by the Issuer, as the holder of the Collateral Notes, and the corresponding amounts payable by the Issuer to the holders of the Notes would be reduced by any such withholding or deduction. Condition 7.3 provides that if the Issuer is required by Irish law to make any withholding or deduction or payments to be made by it in respect of the Notes or if the Issuer is unable to receive any payment due in respect of the Collateral Notes in full on the due date therefor without deduction for or on account of any withholding tax or duties or charges of whatsoever nature then the Issuer shall so inform the Trustee, and shall use its best endeavours to arrange the substitution of a company incorporated in another jurisdiction approved beforehand in writing by the Trustee (provided that such substitution does not have an adverse effect on any rating awarded to any Series of Notes then outstanding at the time of such substitution) as the principal obligor of the Notes or to change (provided that no such change has an adverse effect on any rating awarded to any Series of Notes then outstanding at the time of such change) its residence for taxation purposes to another jurisdiction approved beforehand in writing by the Trustee. If it is unable to arrange such substitution or change before the next payment is due in respect of the Notes then the Issuer is obliged to give a notice that it will redeem the Notes at their outstanding principal unless the Trustee shall certify to the Issuer that it considers in its absolute discretion that it is in 9

11 the best interests of the Noteholders that such notice be delayed or not given or an Extraordinary Resolution of the Noteholders shall otherwise direct. If the Notes become subject to redemption on such circumstances it is likely that the security for the Notes would become enforceable and the Collateral Notes realised which may result in the amount payable to Noteholders being less than their principal amount. Managers Security The proceeds of the Managers Security (as defined in Terms and Conditions The Security Arrangements ) will, in the event that the Managers Security becomes enforceable, be held by Citicorp Trustee Company Limited in its capacity as Managers Trustee (the Managers Trustee ) on behalf of itself and the Managers and applied in respect of any Manager s Claims (as defined in Terms and Conditions The Security Arrangements ). Noteholders have no direct or indirect interest in the Managers Security and will not be entitled to the proceeds of enforcement of the Managers Security. Change of law The Conditions are governed by English law in effect as at the Issue Date. No assurance can be given as to the impact of any possible judicial decision or change to English law or administrative practice after the Issue Date. Provision of information Neither the Issuer, the Trustee, the Managers Trustee, any Manager nor any affiliate of such persons makes any representation as to the credit quality of the Collateral Issuer. Any of such persons may have acquired, or during the term of the Notes may acquire, non-public information with respect to the Collateral Issuer. None of such persons is under any obligation to make such information directly available to Noteholders. None of such persons is under any obligation to make available any information relating to, or keep under review on the Noteholders behalf, the business, financial condition, prospects, creditworthiness or state of affairs of the Collateral Issuer or conduct any investigation or due diligence into the Collateral Notes (either with respect to the Collateral Issuer, or the terms and conditions of the Collateral Notes). Credit Ratings The Notes and the Collateral Notes are rated securities. Credit ratings of debt securities represent the rating agencies opinions regarding their credit quality and are not a guarantee of quality. Rating agencies attempt to evaluate the safety of principal and interest payments and do not evaluate the risks of fluctuations in market value; therefore, credit ratings may not fully reflect the true risks of an investment. Rating agencies may fail to make timely changes in credit ratings in response to subsequent events, so that an issuer s current financial condition may be better or worse than a rating indicates. Rating agencies may change their rating methodology, which could adversely affect the rating of the Notes. Risks relating to the Collateral Notes Potential investors should make their own investigations in respect of the Collateral Issuer and the Collateral Notes, including having regard to the risks and investment considerations set out in the Collateral Base Prospectus and the Collateral Final Terms. No investigations No investigations, searches or other enquiries have been made by or on behalf of the Issuer, the Managers, the Trustee or the Managers Trustee in respect of the Collateral Notes and no representations or warranties, express or implied, have been given by the Issuer, the Managers, the Trustee, the Managers Trustee or any other person on their behalf in respect of the Collateral Notes. 10

12 Collateral Notes Noteholders may be exposed to the market price of the Collateral Notes. The Issuer, the Trustee (in connection with the realisation or enforcement of the security for the Notes) or the Disposal Agent may in certain circumstances have to fund the Issuer s payment obligations by the sale of the Collateral Notes. The market price of the Collateral Notes will generally fluctuate with, among other things, the liquidity and volatility of the financial markets, general economic conditions, domestic and international political events, developments or trends in a particular industry and the financial condition of the Collateral Issuer. Additionally, the transfer of the Collateral Notes is restricted by Condition 10(j) (Restrictions on Transfer of Certain Notes) and Condition 10(k) (Grants of Security) of the Collateral Notes Conditions (as defined in Terms and Conditions Interest Rate ) (the Collateral Notes Transfer Restrictions ). The Collateral Notes are not listed or admitted to trading on any exchange and have not been accepted for clearance through any clearing system. As a result, there will be no established trading market in the Collateral Notes and the Collateral Notes will be illiquid. The illiquidity of the Collateral Notes may have a severely adverse effect on the market value of the Collateral Notes. In certain circumstances (as more specifically set out in the Agency Agreement), if the Issuer is required to sell the Collateral Notes in order to make a payment on the Notes, Citibank, N.A. is required, provided that it can do so in accordance with the Collateral Notes Transfer Restrictions, to purchase the Collateral Notes if the Disposal Agent is unable to obtain any other firm bid quotes from purchasers qualified to purchase the Collateral Notes within a specified period. However, investors should note that the purchase price to be paid in connection with any such purchase will be based on the fair market value of the Collateral Notes as determined by Citibank, N.A. acting in a reasonable commercial manner. Change of law The Collateral Notes Conditions are governed by English law in effect as at the date of issue of the relevant Collateral Notes provided that the provisions relating to subordination of the Collateral Notes are governed by the laws of Switzerland. No assurance can be given as to the impact of any possible judicial decision or change to English law or Swiss law and/or English or Swiss administrative practice after the date of issue of the Collateral Notes. Payments on the Notes linked to payments on the Collateral Notes Investors should note that the performance of the Notes is linked to the performance of the Collateral Notes. Any event that causes the Collateral Issuer not to make all or part of any scheduled payments on the Collateral Notes, or to delay any such payments, will result in corresponding reductions and delays in respect of principal and interest payable in respect of the Notes. The Notes may also redeem earlier than anticipated due to tax and other events affecting the Collateral Notes, all as more particularly set out in the Collateral Final Terms and the Collateral Base Prospectus. Certain of these events may cause significant losses to Noteholders and may result in the Notes paying no interest or redeeming at zero. The Noteholders will have no right to physical delivery of the Collateral Notes under the terms of the Notes. Any enforcement of security over the Collateral Notes is subject to the transfer restrictions set forth in the Collateral Notes Conditions. These transfer restrictions severely limit the potential transferees of the Collateral Notes. No withholding and early redemption The Collateral Notes Conditions provide that, subject to certain exemptions, the Collateral Issuer shall make all payments of principal and interest on the Collateral Notes, free of any withholding or deduction for or on account of any other taxes, duties or assessments or governmental charges in Switzerland unless such withholding or deduction is required by law. The Issuer and the Managers have received a legal opinion from Swiss counsel of the Collateral Issuer that the Collateral Issuer is not at the date of issue of the Collateral Notes required by law to make such deduction or withholding and the Collateral Issuer has obtained a tax ruling in principle from the relevant Swiss authorities that, in respect of 11

13 transactions similar to the Collateral Notes, no Swiss withholding or deduction will be required to be made by it. Furthermore, the Collateral Issuer has obtained a specific tax ruling approving a similar transaction with the Issuer earlier this year. The Collateral Issuer will apply for a specific tax ruling as soon as possible following the issue of the Collateral Notes to the effect that no Swiss withholding or deduction will be required to be made by it in respect of payments due to be made by it to the Issuer. However, there can be no assurance as to the future impact of any possible administrative or judicial decision or change to any relevant Swiss law and/or administrative practice after the date of issue of the relevant Collateral Notes. Although the Collateral Notes provide for the payments of additional amounts to be paid by the Collateral Issuer if the Collateral Issuer becomes obliged by Swiss law to make any withholding or deduction in respect of payments of principal and interest under the Collateral Notes, the obligation to pay such additional amounts may not be enforceable under Swiss law. The Notes may become subject to redemption in such circumstances and may result in amounts payable to Noteholders being less than their principal amount. See "Risks relating to the Notes generally - Earlier redemption for tax reasons. If the Collateral Issuer becomes obliged to pay additional amounts in respect of the Collateral Notes pursuant to the imposition of any withholding or deduction in respect of payments of principal and interest under the Collateral Notes as a result of a change in, or amendment to the laws and regulations of Switzerland, the Collateral Issuer may redeem all of the Collateral Notes which will result in the redemption of all of the Notes. The Collateral Issuer may on the First Call Date and on each Collateral Notes interest payment date thereafter redeem some or all of the Collateral Notes which would result in a pro rata redemption of each Note. Purchase, Exchange or Retirement of Notes: Tender Offers and Exchange Offers The terms of the Notes provide that in certain circumstances (as set out in the Special Conditions of Condition 7.4 (Purchases)), the Issuer may participate in a Tender Offer or an Exchange Offer (each as defined in the Special Conditions) of the Collateral Issuer with respect to the Collateral Notes. If, in such circumstances, the Collateral Issuer defaults in the performance of its payment or delivery obligations under the terms of any such Tender Offer or Exchange Offer, then the Issuer will not be able to satisfy its corresponding payment or delivery obligations to Noteholders in respect of any corresponding Cloverie Tender Offer or Cloverie Exchange Offer (each as defined in the Special Conditions). Any failure by the Issuer to make a payment or delivery due in connection with any Cloverie Tender Offer or Cloverie Exchange Offer shall constitute a default in payment in respect of the Notes for purposes of Condition 11.1, leading to the security for the Notes becoming enforceable. Accordingly, Noteholders must recognise that they will be exposed to the risk of default by the Collateral Issuer in respect of any Tender Offer or Exchange Offer, regardless of whether or not they participate in any corresponding Cloverie Tender Offer or Cloverie Exchange Offer. Any Cloverie Tender Offer or Cloverie Exchange Offer is subject to any terms or conditions required by the Trustee and, for so long as the Notes are listed on the official list of the Irish Stock Exchange and admitted to trading on the regulated market of the Irish Stock Exchange, all applicable rules and regulations of the Irish Stock Exchange, and to notification of Moody s and Standard & Poor s and confirmation from Standard & Poor s that the then current rating of the Notes by Standard & Poor s will not be adversely affected after the conclusion of any such Cloverie Tender Offer or Cloverie Exchange Offer. Exercise of rights under Collateral Notes Condition 13.1 provides that, other than in circumstances involving a Tender Offer or an Exchange Offer, which are subject to the Special Conditions of Condition 7.4 (Purchases), the Issuer may exercise any rights in its capacity as holder of the Collateral Notes pursuant to the consent of the Trustee or the authority of an Extraordinary Resolution of the Noteholders and, if such direction is given, the Issuer will 12

14 act only in accordance with such direction (as more specifically set out in the Trust Deed). In particular, the Issuer will not attend or vote at any meeting of holders of the Collateral Notes, or give any consent or notification or make any declaration in relation to the Collateral Notes, unless it shall have been so requested by the Trustee or by any Extraordinary Resolution of the Noteholders. In addition, the Issuer shall, if so directed in writing by the holders of at least one-fifth in principal amount of the Notes then outstanding, or if so directed by an Extraordinary Resolution of the Noteholders (in each case, a Noteholder Direction ) (subject in each case to its being indemnified to its satisfaction), exercise any rights in its capacity as holder of the Collateral Notes (including to direct the trustee in respect of the Collateral Notes to enforce the terms of the Collateral Notes as contemplated thereby) or its right under the Purchase Agreement to acquire the Collateral Notes in accordance with such direction (as more specifically set out in the Trust Deed). At any time after the security for the Notes has become enforceable, Citigroup Global Markets Deutschland AG & Co. KGaA in its capacity as Enforcement Agent (the Enforcement Agent ) shall, if the Issuer is directed to do so by any Noteholder Direction (subject in each case to the Enforcement Agent being indemnified and/or secured to its satisfaction), exercise on behalf of the Issuer as the Issuer s agent any rights of the Issuer in the Issuer s capacity as holder of the Collateral Notes (including to direct the trustee in respect of the Collateral Notes to enforce the terms of the Collateral Notes as contemplated thereby) or the Issuer's right under the Purchase Agreement to acquire the Collateral Notes and the Enforcement Agent will act only in accordance with any Noteholder Direction (as more specifically set out in the Trust Deed). Without prejudice to the foregoing, in no circumstances shall the Trustee be permitted when acting in its capacity as trustee for the Noteholders and the other secured parties, nor shall the Noteholders and the other secured parties (when acting in their respective capacities) be permitted, to take any action against the Collateral Issuer or enforce any claim that the Issuer may have against the Collateral Issuer under the Collateral Notes or the Purchase Agreement or otherwise whether before, upon, or after any security created by or pursuant to the Trust Deed becoming enforceable. Enforcement of the rights that the Issuer has under the Collateral Notes through the Issuer or the Enforcement Agent on behalf of the Issuer, as the Issuer s agent, whether prior to or after the security created in respect of the Notes has become enforceable, may be subject to delay pending receipt of relevant Noteholder Directions. Risks relating to the other parties Reliance on creditworthiness of other parties The ability of the Issuer to meet its obligations under the Notes will depend on the receipt by it of payments by the Collateral Issuer. Consequently, the Issuer is exposed to the risk that the Collateral Issuer will not perform its obligations pursuant to the terms of the Collateral Notes. The ability of the Issuer to meet its obligations under the Notes may also depend on the receipt by it of payments by Citibank N.A. as Custodian in respect of its accounts with the Custodian. Consequently, the Issuer is also exposed to the risk that the Custodian will not perform its obligations pursuant to the terms of the Custody Agreement or the Agency Agreement. Investors in the Notes are also exposed to, and rely upon performance of certain obligations by, other parties including, but not limited to, Citibank N.A acting as Issuing and Paying Agent, Citigroup Global Markets Limited as Disposal Agent and Citigroup Global Markets Deutschland AG & co.kgaa as Enforcement Agent. Default by any such entities of their obligations or the inability of any of the above entities to continue in their roles will disrupt the cash flows flowing from the Collateral Issuer and may result in the inability of the Issuer to make payments in respect of the Notes. Replacing one or more of 13

15 such entities may take significant amounts of time since the holders of the Notes may need to give instructions to the Trustee and/or the Issuer to effect such replacements. In addition the Trustee and Cloverie may, in such circumstances, require indemnities or reimbursement of expenses before they are able to act. No regard to individual Noteholders In connection with the exercise of its functions, the Trustee shall have regard to the interests of the Noteholders as a class and shall not have regard to the consequences of such exercise for individual Noteholders and the Trustee shall not be entitled to require, nor shall any Noteholder be entitled to claim, from the Issuer any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders. In connection with the exercise of its functions, the Managers Trustee shall have regard solely to the interests of the Manager s Secured Parties and shall not assume any duty or responsibility to, or have regard to the interests of, any Noteholder or other Secured Party. Business relationships and capacity of Citi The Managers, the Custodian, the Disposal Agent, the Enforcement Agent, the Calculation Agent and any of their affiliates may have existing or future business relationships with the Collateral Issuer (including, but not limited to, lending, depository, risk management, advisory and banking relationships), and will pursue actions and take steps that they deem or it deems necessary or appropriate to protect their or its interests arising therefrom without regard to the consequences for a Noteholder. In addition, the Managers, the Custodian, the Disposal Agent, the Calculation Agent and any of their affiliates may make a market or hold positions in respect of any of the Collateral Notes. From time to time, the Managers, the Custodian, the Disposal Agent, the Enforcement Agent, the Calculation Agent and any of their affiliates may own significant amounts of Notes. Citi and its affiliates may act in a number of capacities in respect of the Notes including, without limitation, Manager, Disposal Agent, Enforcement Agent and Calculation Agent. Citi and its affiliates acting in such capacities in connection with the Notes shall have only the duties and responsibilities expressly agreed to by such entities in the relevant capacity and shall not, by virtue of acting in any other capacity, be deemed to have other duties or responsibilities or be deemed to hold a standard of care other than as expressly provided with respect to each such capacity. Citi and its affiliates, including the Trustee and the Managers Trustee, in their various capacities in connection with the Notes may enter into business dealings, from which they may derive revenues and profits in addition to any fees, without any duty to account therefor. Legality of purchase None of the Issuer, the Trustee, the Managers Trustee, the Managers or any affiliate of such persons has or assumes responsibility for the lawfulness of the acquisition of the Notes by a prospective purchaser of the Notes (whether for its own account or for the account of any third party), whether under the laws of the jurisdiction of its incorporation or the jurisdiction in which it operates (if different), or for compliance by that prospective purchaser (or any such third party) with any law, regulation or regulatory policy applicable to it. 14

16 Risks related to the market generally Set out below is a brief description of certain market risks. The secondary market generally Although application has been made to have the Notes admitted to the official list of the Irish Stock Exchange and admitted to trading on the regulated market of the Irish Stock Exchange, the Notes may have no established trading market when issued, and one may never develop. If a market does develop, it may not be liquid. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. Exchange rate risks and exchange controls The Issuer will pay principal and interest on the Notes in EUR. This presents certain risks relating to currency conversions if an investor s financial activities are denominated principally in a currency or currency unit (the Investor s Currency ) other than EUR. These include the risk that exchange rates may significantly change (including changes due to devaluation of EUR or revaluation of the Investor s Currency) and the risk that authorities with jurisdiction over the Investor s Currency may impose or modify exchange controls. An appreciation in the value of the Investor s Currency relative to the EUR would decrease (i) the Investor s Currency-equivalent yield on the Notes, (ii) the Investor s Currencyequivalent value of the principal payable on the Notes and (iii) the Investor s Currency-equivalent market value of the Notes. Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal. 15

17 Terms and Conditions The terms and conditions of the Notes shall consist of the terms and conditions (the Base Conditions ) set out in the Base Prospectus dated 21 July 2009 (the Base Prospectus ), which constitutes a base prospectus for the purposes of Directive 2003/71/EC (the Prospectus Directive ), as amended or supplemented below (including in the Schedule hereto) (the Conditions ). References in the Base Prospectus and in the Conditions to Final Terms shall be deemed to refer to the terms set out below (including the Schedule hereto), provided that such terms do not constitute final terms within the meaning of the Prospectus Directive. 1 Issuer: Cloverie Public Limited Company 2 Relevant Dealer/Lead Manager (including, if Syndicated Issue, Managers): Pursuant to a Syndication Agreement dated 23 July 2009 (the Syndication Agreement between Citigroup Global Markets Limited ( Citi, and in such capacity a Manager ), CALYON ( Calyon and in such capacity a Manager ) and J.P. Morgan Securities Ltd. (a Manager and together with Citi and Calyon, the Managers ) and the Issuer which is supplemental to the Dealer Agreement dated 21 July 2009 between, inter alios, the Issuer and Citi, the Managers have agreed, subject to the satisfaction of certain conditions, to subscribe for the Notes at the Issue Price. 3 Series No: Tranche No: 1 5 ISIN: XS Common Code: CUSIP: Not Applicable 8 PORTAL Code: Not Applicable 9 Currency (or Currencies in the case of Dual Currency Notes): EUR 10 Principal Amount: (i) Series: 425,000,000 (ii) Tranche: 425,000, (i) Issue Date: 24 July 2009 (ii) Date Board approval for issuance of Notes obtained: 21 July Issue Price: per cent. 13 (i) Form: (ii) CGN / NGN: Bearer CGN 14 Denomination(s): 50,000 (reference to a Note's pro rata share of any amount means a proportion of such amount equal to the proportion which the Denomination of such Note nears to 16