MEMORANDUM by tyndale

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									                                            MEMORANDUM
           To:       Clients and Friends

         From:       Cadwalader, Wickersham & Taft

         Date:       August 7, 2001

           Re:       United Kingdom – Changes to the Quoted Eurobond Exemption



                   Introduction

                   The Finance Act 2000 (the "Act") broadens the exemption from UK withholding tax in respect of
interest on 'Quoted Eurobond(s)' (section 124 of the Income and Corporation Taxes Act 1988 (the “Taxes Act”)) (“the
Quoted Eurobond Exemption”). The relevant provisions became effective on 1 April 2001.

                   Prior to 1 April 2001

                   Prior to 1 April 2001, the Quoted Eurobond Exemption permitted the payment of interest on bonds
without deduction of UK income tax only if the following conditions were satisfied: (i) the bonds were in bearer form and
listed on a stock exchange designated by the UK Inland Revenue as a “recognised stock exchange” and (ii) the interest
on the bonds was paid by a non-UK issuer or through a non-UK paying agent or, if the interest was paid by a UK
issuer or through a UK paying agent, either (a) the beneficial owner of the bonds was a non-UK resident or (b) the
bonds were held in a recognised clearing system such as Euroclear or Clearstream, Luxembourg.

                   On or after 1 April 2001

                      In an 'Explanatory Note' issued by Her Majesty’s Treasury (“HM Treasury”), it was acknowledged that
the requirement that all Quoted Eurobonds be in bearer form was 'no longer appropriate'. HM Treasury recognized the
inherent difficulties in the dual structure (registered / bearer) and further recognized that the use of registered instruments
'improves liquidity and eases trading procedures' and that there was no longer any real reason to retain the bearer
requirement.
                   Effective as of 1 April 2001, the Act revised the definition of Quoted Eurobond to mean any corporate
bond which is listed on a recognized stock exchange and which carries a right to interest. Therefore, payment of
interest on any Quoted Eurobond should be made without deduction of UK Income tax irrespective of whether the bond
is bearer or registered, and regardless of the status of the recipient, the place of business of the paying agent or the
clearing system in which the bond is held.

                   Practically speaking, this means that in certain offerings being made in both the United States and
Europe, the issuer of the notes may now find it economically advantageous to exclusively issue registered notes.

                   However, it should be noted that there are certain exceptions to a company’s ability to issue registered
notes in the United Kingdom where the instruments being offered may not be considered straight debt securities, such as
convertible or exchangeable bonds or bonds with other equity related features.

                  If you have any questions regarding this issue, please do not hesitate to contact a member of the
Capital Markets Department.




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