HYPO TIROL BANK AG

cash as determined in accordance with the provisions of the Final Terms. In addition, interest bearing CreditLinked Notes may cease to bear interest on or prior to the date of the occurrence of such circumstances.In case of "physical settlement" (as specified in the Final Terms), the deliverable obligations will be debtobligations of the reference entity, selected by the Issuer, of the type and having the characteristicsdescribed in the Final Terms. Thus, the Issuer may deliver any deliverable obligations of a defaultedreference entity meeting the criteria described in the Final Terms, regardless of their market value at thetime of delivery, which may be less than the principal amount of the Notes or, in certain circumstances, beequal to zero.Subordinated NotesThe obligations of HYPO TIROL BANK AG in case of Subordinated Notes constitute unsecured andsubordinated obligations. In the event of liquidation or bankruptcy of the Issuer, the obligations under theNotes may be satisfied only after non-subordinated claims of creditors have been satisfied so that in anysuch event no amounts shall be payable in respect of such obligations until the claims of all unsubordinatedcreditors of the Issuer shall have been satisfied in full. No Holder may set off his claims arising under theNotes against any claims of the Issuer. No contractual security may be provided, and will not at any time inthe future be provided by the Issuer or any other person to secure rights of the Holders under the Notes. Nosubsequent agreement may limit the subordination pursuant to the provisions set out in § 2 of the Termsand Conditions of the Notes or amend the Maturity Date in respect of the Notes to any earlier date orshorten any applicable notice period (Kündigungsfrist).Financial CrisisStarting in the middle of 2007 due to the sub-prime mortgage crisis in the United States and in Great Britainthe credit risk of market participants has been reassessed leading to a world-wide negative effect on thefinancial markets. The current financial crisis is characterised by a drastic limitation of lending activitiesbetween banks but also towards third parties. The duration and further consequences and the impact of thecrisis are not foreseeable so far. Risk can especially be seen in an increased volatility and widening ofcredit-spreads in the financial markets as well as a shortage of liquidity on the financial markets. In case ofa continuous deterioration in the international financial markets, a further limitation of lending activities anda general decline in the demand for bonds is anticipated, thus creating a negative impact on the assets, thefinancial situation and the profitability of the Issuer.Resolutions of HoldersIf the Notes provide for meetings of Holders or the taking of votes without a meeting, a Holder is subject tothe risk of being outvoted by a majority resolution of the Holders. As such majority resolution is binding onall Holders, certain rights of such Holder against the Issuer under the Terms and Conditions may beamended or reduced or even cancelled.Holders' RepresentativeIf the Notes provide for the appointment of a Holders' Representative, either in the Terms and Conditions orby a majority resolution of the Holders, it is possible that a Holder may be deprived of its individual right topursue and enforce its rights under the Terms and Conditions against the Issuer, such right passing to theHolders' Representative who is then exclusively responsible to claim and enforce the rights of all theHolders.50