ISSUER: LEHMAN BROTHERS UK CAPITAL FUNDING LP ( LP I ) ISSUER: LEHMAN BROTHERS UK CAPITAL FUNDING II LP ( LP II )

Transcription

1 ISSUER: LEHMAN BROTHERS UK CAPITAL FUNDING LP ( LP I ) ISSUER: LEHMAN BROTHERS UK CAPITAL FUNDING II LP ( LP II ) ISSUER: LEHMAN BROTHERS UK CAPITAL FUNDING III LP ( LP III ) AND THE LIQUIDATION OF LB GP NO.1 LTD ( THE COMPANY ) KEY DOCUMENTS DISCLOSED BY THE JOINT LIQUIDATORS OF THE COMPANY IN RELATION TO THE RELEATIVE RANKING OF SUBORIDNATED CLAIMS IN THE ADMINISTRATIONS OF LB HOLDINGS INTERMEDIATE 2 LIMITED ( LBHI2 ) AND LEHMAN BROTHERS HOLDINGS PLC ( LBH ). DATED: 1 DECEMBER 2017

2 DOCUMENT INDEX 1. $4.5 billion long term subordinated loan facility between LBH and LBHI billion long term subordinated loan facility between LBH and LBHI2. 3. $8 billion short term subordinated loan facility between LBH and LBHI2. 4. Offering Circular in respect of $6,139,000 of floating rate subordinated notes issued by LBHI2. 5. Minutes of meeting of the directors of LBHI2 amending the terms of the $6,139,000,000 floating rate subordinated notes issued by LBHI2 [Redacted]. 6. $4.5 billion long term subordinated loan facility between Lehman Brothers UK Holdings Limited ( LBUK ) and LBH billion long term subordinated loan facility between LBUK and LBH. 8. $8 billion short term subordinated loan facility between LBUK and LBH. 9. Offering Circular in respect of 225 million fixed rate subordinated notes issued by LBH to LP I. 10. Offering Circular in respect of 200 million fixed rate subordinated notes issued by LBH to LP II. 11. Offering Circular in respect of 50 million fixed rate subordinated notes issued by LBH to LP II. 12. Offering Circular in respect of 500 million fixed/floating rate subordinated notes issued by LBH to LP III.

3 1.

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20 2.

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37 3.

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56 4.

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77 5.

78 LB HOLDINGS INTERMEDIATE 2 LIMITED (the "Company") Minutes of a Meeting of the Directors of the Company held at 25 Bank Street, London E14 5LE on 28 August 2008 Present: I Redacted IRedacted (In the chair) Quorum/Chairman It was noted that the meeting was convened in accordance with the Articles of Association of the Company and that there was a quorum. IRedacted [was appointed Chairman of the meeting. Business of the meeting l. The Chairman reported that the purpose of the meeting was to consider and approve the proposed amendment (the "Amendment") to the U.S.$6,139,000,000 Floating Rate Subordinated Notes due 2017 issued on Ist May, 2007 (the "Notes") by the Company. The purpose of the amendment was to allow the Company to defer cash settlement of the interest on the Notes at its discretion. 2. It was reported that the purpose of the meeting was to approve the final form of the written resolution effecting the Amendment to be signed by the holder of the Notes and countersigned by the Company. 3. A draft of the Written Resolution (the "Written Resolution") attaching as Annex A the form of the amended Terms and Conditions of the N otes was tabled. 4. IT W AS RESOLVED that: (a) (b) (c) (d) The document tabled above be noted; The Written Resolution be approved in the form of the draft produced to the meeting, subject to such amendments as may be approved by any Director]... R-e-d-a-c-t-e-d...,1 IRedacted lor the Company Secretary (such approval (where applicable) to be conclusively deemed to be given by the signature on the behalf of the Company of such document by any such person); The Company countersign the Written Resolution in the form of the draft produced to the meeting, subject to such amendments as may be approved by any Director, I Redacted I or the Company Secretary (such approval (where applicable) to be conclusively deemed to be given by the signature on behalf of the Company of such document by any such person); The Amendment be notified to, and (where applicable) consent to the Amendment be sought from, all applicable bodies (including the Channel Islands Stock Exchange and the Financial Services Authority); (e) Any Director. Redacted or the Company Secretary, acting alone, be and to countersign on behalf of the Company, the Written

79 (f) Any Director, IRedacted t or the Company Secretary acting alone, be authorised to do any and all other things and to approve and sign on behalf of the Company any and all of the documents necessary or desirable in connection with the above-mentioned Amendment and the notifications of (or requests for consent to) the Amendment to or from the applicable bodies and otherwise as may be necessary or desirable in connection with the Notes; and Cg) Each of the foregoing documents to which the Company is a party, when executed by and on behalf of the Company, be delivered. Closing Chairman

80 1. Background WRITTEN RESOLUTION LB Holdings Intermediate 2 Limited (the Issuer) U.S.$6,139,OOO,OOO Floating Rate Subordinated Notes due 2017 (the Notes) The Issuer has resolved to amend the Terms and Conditions of the Notes (the Conditions) and Lehman Brothers Holdings Scottish LP 3 intends herein by way of written resolution to assent to the modification of the Conditions. 2. Resolution Lehman Brothers Holdings Scottish LP 3 confirms that it is the registered holder of 100 per cent. of the Notes and as such has the sale power to assent to any amendment or modification of the Conditions and does hereby assent to the modification of the Conditions which shall henceforth be in the form attached as Annex A to this Written Resolution. 3. Effect Pursuant to Condition 12 of the Notes (Meetings of Noteholders; Modification and Waiver). this Written Resolution shall take effect as if it were an Extraordinary Resolution (as defined in the Conditions). Resolution is dated; 3 :?!.T~-'~.:-.-:" Signed by: a duly authôñâ Countersigned by:.. a duly authorised sig

81 ANNEXA TERMS AND CONDITIONS OF THE NOTES The U.S.$ Floating Rate Subordinated Notes due 2017 (the "Notes", which expression includes any further notes issued pursuant to Condition 13 (Further Issues) and forming a single series therewith) of LB Holdings Intermediate 2 Limited (the "Issuer") are issued upon the Terms and Conditions set out below. 1. Definitions: In these Conditions the following expressions have the following meanings: "Auditors" means the auditors for the time being of the Issuer or, in the event of their being unable or unwilling to carry out any action requested of them pursuant to these Conditions, such other finn of chartered accountants as may be nominated for the relevant purpose by the Issuer; "Business Day" means a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in London and New York; "Calculation Agent" means Lehman Brothers International (Europe) or any successor calculation agent appointed from time to time in connection with the Notes; "Closing Date" means 1st May, 2007; "FSA" means The Financial Services Authority Limited whose registered office is at 25 The North Colonnade. Canary Wharf, London E14 5HS and shall include any successor organisation responsible for the Issuer's financial regulation; "Insolvency" means and includes liquidation, winding up, bankruptcy, sequestration, administration, rehabilitation and dissolution (whichever term may apply to the Issuer) or the equivalent in any other jurisdiction to which the Issuer may be subject; "Interest Determination Date" means with respect to any Interest Period, the second Business Day prior to the first day of such Interest Period; "Interest Payment Date" means the first day of each month. from and including 1st June, 2007 to and including the Maturity Date; "Interest Period" means the period from, and including, the Closing Date to, but excluding, the first Interest Payment Date and each period thereafter from, and including, one Interest Payment Date to, but excluding. the next following Interest Payment Date; "Interest Rate" means, in respect of an Interest Period, the percentage rate determined pursuant to Condition 4; "Liabilities" means all present and future sums, liabilities and obligations payable or owing by the Issuer (whether actual or contingent, jointly or severally or otherwise howsoever); "Margin" means 0.32 per cent. per annum; "Noteholder" or "holder" means, in respect of a Note, the person in whose name such Note is registered in the Register; 2

82 "Reference Banks" means the principal London office of each of five major banks engaged in the London inter-bank market selected by the Calculation Agent provided that, once a Reference Bank has been selected, that Reference Bank shall not be changed unless and until it ceases to be capable of acting as such; "Register" means the register of Noteholders maintained by the Registrar; "Registrar" means Lehman Brothers International (Europe) or any successor registrar appointed from time to time in connection with the Notes; "Representative Amount" means, in relation to any quotation of a rate for which a Representative Amount is relevant, an amount that is representative for a single transaction in the relevant market at the relevant time; "Screen Rate" means the rate for l-month deposits in U.S. dollars which appears on Reuters page "LIBOR01"; and "Subsidiary" means, in relation to any person (the "first Person") at any particular time, any other Person (the "second Person"): (a) Cb) whose affairs and policies the first Person controls or has the power to control, whether by ownership of share capital, contract, the power to appoint or remove members of the governing body of the second Person or otherwise; or whose financial statements are, in accordance with applicable law and generally accepted accounting principles, consolidated with those of the first Person, 2. Form, Denomination, Title and Transfer (a) (b) (c) (d) (e) Form, denomination and litle: The Notes are issued in registered definitive form in denominations of U.S.$1.000, A certificate (each a "Note Certificate") will be issued to each Noteholder in respect of its registered holding of Notes. Title to the Notes will pass only by registration in the Register. The registered holder of any Note shall (except as otherwise required by law) be treated as its absolute owner for all purposes (regardless of any notice of ownership, trust or any other interest therein or any writing on the Note Certificate) and no person shall be liable for so treating such holder. No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act Transfers: A Note may be transferred by surrendering the Note Certificate issued in respect of that Note, with the form of transfer on the back duly completed and signed, at the Specified Office of the Registrar. Delivery of new Note Certificates: Each new Note Certificate to be issued upon transfer of Notes will. within five Business Days of receipt by the Registrar of the duly completed form of transfer endorsed on the relevant Note Certificate, be mailed by uninsured mail at the risk of the holder entitled to the Note to the address specified in the form of transfer. Formalities free of charge: Registration of any transfer of Notes will be effected without charge by or on behalf of the Issuer but upon payment (or the giving of such indemnity as the Issuer may reasonably require) in respect of any tax or other governmental charges which may be imposed in relation to such transfer. Closed periods: No Noteholder may require the transfer of a Note to be registered during the period of 15 Business Days ending on the due date for any payment of principal or interest on that Note. 3

83 (f) Regulations: All transfers of Notes and entries on the Register will be made subject to the detailed regulations concerning transfers of Notes set out in the procedures memorandum maintained by the Registrar relating to the Notes (the "Procedures Memorandum"), copies of which are available for viewing at the Specified Office of the Registrar and will be mailed (free of charge) by the Registrar to any Noteholder upon request. 3. Status and Subordination (a) The Notes constitute direct, unsecured and subordinated obligations of the Issuer and the rights and claims of the Noteholders against the Issuer rank pari passu without any preference among themselves. The rights of the Noteholders against the Issuer in respect of the Notes are subordinated in right of payment to the Senior Creditors (as defined below) and accordingly payment of principal and interest (including Arrears of Interest as defined below) in respect of the Notes is (subject as provided below) conditional upon the Issuer being solvent at the time of, and immediately after, such payment, and accordingly no such amount which would otherwise fall due for payment shall be payable except to the extent that the Issuer could make such payment and still be solvent immediately thereafter. The conditionality referred to above shall not apply where an order is made by a competent court, or a resolution passed, for the winding-up or dissolution of the Issuer (except for the purposes of a reconstruction, amalgamation, reorganisation, merger or consolidation on terms previously approved in writing by an Extraordinary Resolution of the Noteholders). If any time an order is made by a competent court, or a resolution passed, for the winding-up or dissolution of the Issuer (except for the purposes of a reconstruction, amalgamation, reorganisation, merger or consolidation on terms previously approved in writing by an Extraordinary Resolution of the Noteholders), there shall be payable by the Issuer in respect of each Note (in lieu of any other payment by the Issuer) such amount, if any, as would have been payable to the Noteholder, if, on the day prior to the commencement of the winding-up and thereafter, such Noteholder were the holder of one of a class of preference shares in the capital of the Issuer having a preferential right to a return of assets in the winding-up of the Issuer over: (i) the holders of all other classes of issued shares in each case for the time being in the capital of the Issuer; and (ii) the Notional Holders, on the assumption that such preference share was entitled to receive, on a return of assets in such winding-up, an amount equal to the principal amount of such Note together with Arrears of Interest (if any) and any accrued interest (other than Arrears of Interest). For the purposes of the above provisions: "Notional Holder" means any creditor of the Issuer whose claims against the Issuer on a winding-up are quantified as though they held a Notional Share. "Notional Share" means any notional and unissued shares in the capital of the Issuer which have a preferential right to a return of assets in the winding-up of the Issuer over the holders of all other classes of issued shares for the time being in the capital of the Issuer but not further or otherwise. The Notes are intended to have a right to a refilm of assets in tite winding-up or dissolution of the Issuer in priority to the rights of the holders of any securities of the Issuer which qualify (or, save where their lion-qualification is due only to any applicable lùnitation on the amount of such capital, would qualify) as Upper Tier 2 Capital or Tier J Capital (within the respective meanings given to such terms in the General Prudential Sourcebook published by tite Financial Services Authority, as amended, supplemented or replaced from time to time). 4

84 (b) For the purposes of Condition 3(a) above, the Issuer shall be "solvent" if (i) it is able to pay its debts as they fall due and (ii) its Assets exceed its Liabilities (each as defined below) (other than its Liabilities to persons who are not Senior Creditors). A report as to the solvency of the Issuer by two directors of the Issuer or, if the Issuer is dissolved or being wound up, its liquidator, shall, in the absence of proven error, be treated and accepted by the Issuer and the Noteholders as correct and sufficient evidence thereof. For the purposes of the above provisions: "Senior Creditors" means creditors of the Issuer (i) who are unsubordinated creditors of the Issuer or (ii) who are subordinated creditors of the Issuer other than those with whose claims the claims of the Noteholders are expressed to rank pari passu and those whose claims rank, or are expressed to rank, pari passu with, or junior to, the claims of the Noteholders; "Assets" means the unconsolidated gross assets of the Issuer and "Liabilities" means the unconsolidated gross liabilities of the Issuer, all as shown by the latest published audited balance sheet of the Issuer, but adjusted for contingencies and for subsequent events, all in such manner as two directors of the Issuer, its auditors or its liquidator (as the case may be) may determine.. (c) Subject to applicable law, no Noteholder may exercise, claim or plead any right of set-off, counterclaim or retention in respect of any amount owed to it by the Issuer arising under or in connection with the Notes and each Noteholder shall, by virtue of being the holder of any Note, be deemed to have waived all such rights of such set-off, counter-claim or retention. 4. Interest (a) (b) The Notes bear interest from and including the Closing Date at the rate of interest provided for in this Condition 4, and (subject to Condition 3(a) and Condition 4(f), such interest is payable in arrear on each Interest Payment Date, subject as provided in Condition 6 (Payments). The rate of interest payable in respect of the Notes shall be determined by the Calculation Agent for each Interest Period on the basis of the following provisions: Ci) (ii) (iii) On each Interest Determination Date, the Calculation Agent will determine the Screen Rate as at a.m. (London time). If the Screen Rate is unavailable, the Calculation Agent will request each of the Reference Banks to provide the Calculation Agent with the rate of interest at which deposits in U.S. dollars are offered by it to prime banks in the London inter-bank market for l month at a.m. (London time) on such Interest Determination Date and for a Representative Amount. The rate of interest (the "Interest Rate") for the relevant Interest Period shall be the aggregate of the relevant Screen Rate (or, if the Screen Rate is unavailable, and at least two of the Reference Banks provide reference rates as described in Condition 4(b)(ii), the arithmetic mean (rounded if necessary to the fifth decimal place, with being rounded upwards) as determined by the Calculation Agent of such rates), plus the Margin. If at any relevant time the Screen Rate is unavailable and fewer than two reference rates are provided by the Reference Banks upon request, the Interest Rate for the relevant Interest Period will be the arithmetic mean, as determined by the Calculation Agent, of the rates quoted by major banks in New York City, selected by the Calculation Agent. at approximately J 1.00 a.m. (London time) on the first day of such Interest Period for loans in U.S. dollars to leading European banks for a period of l month commencing on the first day 5

85 I' (c) (d) (e) (f) of such Interest Period and for a Representative Amount, plus the Margin. If the Interest Rate cannot be determined in accordance with the above provisions, the Interest Rate for the relevant Interest Period shall be either (i) the Interest Rate in effect for the immediately preceding Interest Period or (ii) as otherwise determined by the Calculation Agent in its sale discretion. The Calculation Agent will, as soon as practicable after a.m. (London time) on each Interest Determination Date, determine the Interest Rate in respect of the relevant Interest Period and calculate the amount of interest in U.S. dollars payable per Note of U.S.$I,OOO on the Interest Payment Date for the relevant Interest Period (the "Interest Amount") by applying the Interest Rate for such Interest Period to the nominal amount of each Note, multiplying such sum by the number of days elapsed in the period using a calendar year of 360 days consisting of 12 months of 30 days each (unless (i) the last day of the Interest Period is the 31st day of a month, in which case the month that includes that last day shall not be considered to be shortened to a 3D-day month, or (ii) the last day of the Interest Period is the last day of February, in which case, February shall not be considered to be lengthened to a 30-day month) divided by 360 and rounding the resulting figure to the nearest cent (half a cent being rounded upwards). The Calculation Agent shall cause the relevant Interest Rate and Interest Amount payable in respect of each Interest Period to be notified to the Issuer, the Registrar and the Noteholders as soon as possible after their determination but in any event not later than the second Business Day thereafter, and shall use its best endeavours to cause the publication thereof in accordance with Condition 14 as soon as possible after determination thereof and in any event not later than two Business Days after the date of commencement of the relevant Interest Period. The Interest Amount so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of proven or manifest error. All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition 4, by the Calculation Agent, shall (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, the Registrar and the Noteholders and (in the absence as aforesaid) no liability to the Noteholders, the Registrar or the Issuer shall attach to the Calculation Agent in connection with the exercise or non-exercise by them of their powers, duties and discretions. On any Interest Payment Date there may be paid the interest accrued in the Interest Period which ends on (but excludes) that Interest Payment Date, but the Issuer shall not have any obligation to make such payment and any failure to pay (if the Issuer so decides and gives notice of such decision to the Noteholders in accordance with Condition 14) shall not constitute a default by the Issuer for any purpose. Any interest not so paid on an Interest Payment Date, together with any interest which by reason of the conditions to payment set out in Condition 3(a) has not been paid, shall, so long as the same remains unpaid, constitute Arrears of Interest. Arrears of Interest may, at the option of the Issuer, be paid in whole or in part (any such part being the whole of the interest accrued during any Interest Period or Interest Periods) at any time upon the expiration of not less than seven days' notice to such effect given to the Noteholders in accordance with Condition 14 but so that in the case of payment of only part of the Arrears of Interest the interest accrued during any Interest Period shall not be paid prior to that accrued during an earlier Interest Period. All Arrears of Interest in respect of the Notes outstanding shall become due and payable in full on the earliest of (i) (subject to Condition 3) the Maturity Date. (ii) (subject to Condition 3) the date set for any redemption pursuant to Condition 5(b) or Condition 5(c) or (iii) the commencement of the winding-up or dissolution of the Issuer (except for the purposes of a reconstruction, amalgamation, reorganisation, merger or consolidation on terms previously approved in writing by an Extraordinary Resolution of the Noteholders). In addition to the circumstances set out in (i), (ii) and (iii) above, if notice is given by the Issuer of its intention to pay the whole or part of Arrears of Interest. the Issuer shall be obliged (subject to Condition 3) to do so upon the expiry of such notice. So long as, and to the extent that, the same have not become due and payable, Arrears of Interest shall not bear interest. All references 6

86 in these Conditions to "interest" on the Notes shall, unless the context otherwise requires, include Arrears of Interest. 5. Redemption and Purchase (a) (b) Scheduled redemption: Unless previously redeemed, or purchased and cancelled, the Notes will be redeemed at their principal amount, together with Arrears of Interest (if any) on 1st May, 2017 (the "Maturity Date"), subject as provided in Condition 3 (Status and Subordination) and Condition 6 (Payments). Redemption for tax reasons: The Notes may be redeemed at the option of the Issuer in whole or in part at any time. on giving not less than 30 nor more than 60 days' notice to the Noteholders in accordance with Condition 14 (Notices) (which notice shall be irrevocable), at their principal amount, together with Arrears of Interest (if any) and interest accrued to the date fixed for redemption, if. immediately before giving such notice: (i) (ii) the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 7 (Taxation) as a result of any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after 1st May, 2007; and such obligation cannot be avoided by the Issuer taking reasonable measures available to it; provided, however, that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts if a payment in respect of the Notes were then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Registrar a certificate signed by two directors of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and an opinion of independent legal advisers of recognised standing to the effect that the Issuer has or will become obliged to pay additional amounts as a result of such change or amendment. Upon the expiry of any such notice as is referred to in this Condition 5(b), the Issuer shall be bound to redeem the Notes in accordance with this Condition 5(b). (c) (d) (e) Redemption at tite option of the Issuer: The Notes may be redeemed at the option of the Issuer in whole or in part at any time on or after 1st May, 2012 (the date of redemption being the "Call Settlement Date") at a redemption price equal to 100 per cent. of their principal amount plus Arrears of Interest (if any) and accrued interest (if any) up to but excluding the Call Settlement Date on the Issuer giving not less than 15 nor more than 30 days' notice to the Noteholders in accordance with Condition 14 (Notices) (which notice shall be irrevocable and shall oblige the Issuer to redeem the Notes on the Call Settlement Date at such price plus Arrears of Interest (if any) and accrued interest to such date). No other redemption: The Issuer shall not be entitled to redeem the Notes otherwise than as provided in paragraphs (a) (Scheduled redemption) to (c) (Redemption at the option of the Issuer) above. Purchase: The Issuer or any of its Subsidiaries or any person within the group of companies of which the Issuer is a member may at any time purchase Notes in the open market or otherwise and at any price. 7

87 (f) (g) Cancellation: All Notes redeemed pursuant to Condition S(a), S(b) or S(c) shall, and all Notes purchased pursuant to Condition See) may at the option of the Issuer, be cancelled. All Notes redeemed or purchased and cancelled as aforesaid may not be reissued or resold. FSA Provisions: Notwithstanding anything to the contrary in these Conditions, no repayment, prepayment or purchase of the Notes may be made by the Issuer, in whole or in part, pursuant to Condition 5(b), S(c) or See) before the Maturity Date, unless the Issuer Ci) shall have given at least one month's notice to the FSA prior to the date of the proposed redemption, (ii) shall have obtained the prior written consent of the FSA to such repayment, prepayment or purchase, if such consent is then required, and (iii) at the time of such redemption complies with, and following such redemption continues to comply with, the requirements of Chapter 2 of the General Prudential Sourcebook published by the FSA as applicable to the Notes. 6. Payments (a) (b) (c) (d) Ce) Cf) Method of payment: Payments of principal and interest will be made by transfer to the registered account of the entitled Noteholder or, if no such account is registered, by cheque in U.S. dollars drawn on a bank in London mailed to the registered address of the Noteholder. Payments of principal will only be made against surrender of the relevant Note Certificate at the Specified Office of the Registrar. In this Condition 6, the "registered account" of a Noteholder means the U.S. dollar account maintained by it or on its behalf with a bank that processes payments in U.S. dollars, and the "registered address" of a Noteholder means its mailing address, in each case appearing in the Register at close of business on the relevant record date (as described below). Determination of payee: Payments of interest or principal in respect of any Note will be paid to the person appearing on the Register as the owner of such Note at the close of business on the day (the "record date") falling (i) in respect of payments of interest, fifteen Business Days before the relevant Interest Payment Date, or (ii) in respect of payments of principal, two Business Days before the due date for payment. Payments subject to fiscal laws: All payments in respect of the Notes are subject in all cases to any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 7 (Taxation). No commissions or expenses shall be charged to the Noteholders in respect of such payments. Payments Oil business days: Where payment is to be made by transfer to a registered account, payment instructions (for value the due date or, if that is not a Business Day, for value the first following day which is a Business Day) will be initiated and, where payment is to be made by cheque, the cheque will be mailed, on the due date for payment or, in the case of a payment of principal, if later, on the Business Dayan which the relevant Note Certificate is surrendered at the Specified Office of the Registrar. Noteholders shall not be entitled to any further interest or other payment for any delay after the due date in receiving the amount due if the due date is not a Business Day, or if a cheque mailed in accordance with this Condition arrives after the due date for payment, or, in the case of payments of principal, if the Noteholder is late in surrendering its Note Certificate. Partial payments: If the amount of principal or interest which is due on the Notes is not paid in full, the Registrar will annotate the Register with a record of the amount of principal, premium (if any) or interest in fact paid. No commissions: No commissions or expenses shall be charged to the Noteholders in respect of any payments made in accordance with this Condition. 8

88 7. Taxation All payments of principal and interest in respect of the Notes by or on behalf of the Issuer shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of the United Kingdom or any political subdivision thereof or any authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law. In that event the Issuer shall pay such additional amounts as will result in receipt by the Noteholders after such withholding or deduction of such amounts as would have been received by them had no such withholding or deduction been required, except that no such additional amounts shall be payable in respect of any Note:, (a) (b) (c) by or on behalf of a holder which is liable to such taxes, duties, assessments or governmental charges in respect of such Note by reason of its having some connection with the United Kingdom other than the mere holding of the Note; or where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48tEC on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive; or more than 30 days after the Relevant Date. In these Conditions, "Relevant Date" means whichever is the later of (1) the date on which the payment in question first becomes due and (2) if the full amount payable has not been received in London by the Registrar on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders. Any reference in these Conditions to principal or interest shall be deemed to include any additional amounts in respect of principal or interest (as the case may be) which may be payable under this Condition 7. If the Issuer becomes subject at any time to any taxing jurisdiction other than the United Kingdom, references in these Conditions to the United Kingdom shall be construed as references to the United Kingdom and/or such other jurisdiction. 8. Events of Default and Enforcement (a) If default is made for a period of (i) 7 days or more in the payment of any principal due, or (ii) 14 days or more in the payment of any interest due, the Noteholders may, at their discretion and after taking such preliminary steps or actions as may be necessary, enforce payment by instituting proceedings for the Insolvency of the Issuer after giving seven Business Days' prior written notice to the FSA of their intention to do so. For the purposes of this Condition 8(a) only, a payment of principal which would be due except for the operation of the solvency condition set out in Condition 3 shall be deemed to be due as if that solvency condition had not been applicable. (b) (c) If an order is made by any competent court or a resolution passed for the winding-up or dissolution of the Issuer, any Noteholder may, by written notice to the Registrar, declare the Notes to be due and payable, and they shall accordingly forthwith become immediately due and repayable at their principal amount, together with Arrears of Interest (if any) and accrued interest. Subject to applicable laws, no remedy (including the exercise of any right of set-off or analogous event) against the Issuer other than as specifically provided by Conditions 8(a) and 8(b) or submitting a claim in the winding-up of the Issuer will be available to the Noteholders. 9

89 9. Prescription Claims for principal shall become prescribed unless made within ten years of the appropriate Relevant Date. Claims for interest shall become prescribed unless made within five years of the appropriate Relevant Date. 10. Replacement of Note Certificates 11. Agents If any Note Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Registrar, subject to all applicable laws and stock exchange requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer may reasonably require. Mutilated or defaced Note Certificates must be surrendered before replacements will be issued. Lehman Brothers International (Europe) will act as Paying Agent in respect of the Notes. The Registrar, the Calculation Agent and the Paying Agent (together, the "Agents") act solely as agents of the Issuer and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders. The initial Specified Office of each of the Registrar, the Calculation Agent and the Paying Agent is 25 Bank Street, London E14 5LE. The Issuer reserves the right at any time to vary or terminate the appointment of the Registrar, the Calculation Agent and/or the Paying Agent and to appoint a successor registrar, calculation agent or paying agent, as the case may be; provided, however, thar the Issuer shall at all times maintain a registrar, a calculation agent and a paying agent. Notice of any change in any Agent or in the Specified Office of any Agent shall promptly be given to the Noteholders. 12. Meetings of Noteholders; Modification and Waiver (a) Meetings of Noteholders: The Procedures Memorandum contains provisions for convening meetings of Noteholders to consider matters relating to the Notes, including the modification by Extraordinary Resolution of any provision of these Conditions. The quorum at any meeting (except for passing an Extraordinary Resolution) will be one or more persons holding or representing a clear majority of the aggregate principal amount of the outstanding Notes or, at any adjourned meeting, one or more persons being or representing Noteholders whatever the principal amount of the Notes held or represented; provided, however, that certain proposals (including any proposal to change any date fixed for payment of principal or interest in respect of the Notes, lo reduce the amount of principal or interest payable on any date in respect of the Notes, lo alter the method of calculating the amount of any payment in respect of the Notes or the date far any such payment, to change the currency of payments under the Notes or to change the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution (each, a "Reserved Matter")) may only be sanctioned by an Extraordinary Resolution passed at a meeting of Noteholders at which one or more persons holding or representing not less than two-thirds or, at any adjourned meeting, representing any (or, in certain circumstances specified in the Procedures Memorandum, not less than one third) of the aggregate principal amount of the outstanding Notes form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders, whether present or not. In addition, a resolution in writing signed by or on behalf of all Noteholders who for the time being are entitled to receive notice of a meeting of Noteholders under the Procedures Memorandum will take effect as if it were an Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders. lo

90 (b) Modification and waiver: The Registrar may, without the consent of the Noteholders, agree to any modification of these Conditions (other than in respect of a Reserved Matter) which is proper to make if such modification will not be materially prejudicial to the interests of NotehoJders and to any modification of the Notes which is of a formal, minor or technical nature or is to correct a manifest error. No modification (save in respect of a modification which is of a formal, minor or technical nature or is to correct a manifest error) to, and no waiver or authorisation of any proposed breach or breach of, the Notes may be made unless the Issuer shall have given at least one month's prior written notice to, and received no objection from, the FSA (or such other period of notice as the FSA may from time to time require or accept and, in any event, provided that there is a requirement lo give such notice), and any such modification, waiver or authorisation made or purported to be made without such notice la and non-objection from the FSA is void. Unless the Registrar agrees otherwise, any such authorisation, waiver or modification shall be notified to the Noteholders as soon as practicable thereafter. 13. Further Issues 14. Notices The Issuer may from time to time, without the consent of the NotehoJders, create and issue further notes having the same terms and conditions as the NOles in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Notes. Notices to the Noteholders shall be valid if mailed to them at their respective addresses in the Register, or otherwise in accordance with the requirement of the Channel Islands Stock Exchange. Any mailed notice shall be deemed la have been given on the second Business Day after it is mailed. 15. Governing Law The Notes are governed by, and shall be construed in accordance with, English law. lcm:663915j.3 Il

91

92 6.

93

94

95

96

97

98

99

100

101

102

103

104

105

106