HBOS Capital Funding No. 1 L.P. HBOS plc - Lloyds Banking Group

4 Redemption and Purchase
4.1 The Preferred Securities have no fixed final redemption date and Holders have no rights to call for the
redemption of the Preferred Securities.
4.2 The Preferred Securities are redeemable, at the option of the General Partner, subject to the
satisfaction of the Redemption Conditions and the Law, in whole, but not in part, on any Optional
Redemption Date upon not less than 30 nor more than 60 days’ notice to the Holders specifying the
Optional Redemption Date (which notice shall be irrevocable). Upon the expiry of such notice, the
Issuer shall be bound to redeem each of the Preferred Securities accordingly by payment of an amount
equal to the Optional Redemption Price. For so long as the Preferred Securities are listed on the
Luxembourg Stock Exchange, the General Partner shall cause notice of such redemption to be given to
the Luxembourg Stock Exchange.
4.3 If at any time a Tax Event has occurred and is continuing, the effect of which cannot be avoided by the
Issuer or HBOS taking reasonable measures available to it, then the Preferred Securities may be
redeemed, in whole but not in part, at the option of the General Partner, subject to the satisfaction of
the Redemption Conditions and to the Law, at any time upon not less than 30 nor more than 60 days’
notice to the Holders specifying the Tax Event Redemption Date (which notice shall be irrevocable),
each Preferred Security being redeemable at the Optional Redemption Price. Prior to the publication
of any notice of redemption pursuant to the foregoing, the General Partner shall deliver to the
Registrar a certificate signed by two Directors of HBOS stating that the Issuer is entitled to effect such
redemption and an opinion of counsel to HBOS experienced in such matters to the effect that a Tax
Event has occurred (and specifying which of clauses (i) to (iv) as set out in the definition of ‘‘Tax
Event’’ is applicable). Upon the expiry of such notice, the Issuer shall be bound to redeem each of the
Preferred Securities accordingly in accordance with and subject to the Law. For so long as the
Preferred Securities are listed on the Luxembourg Stock Exchange, the General Partner shall cause
notice of such redemption to be given to the Luxembourg Stock Exchange.
4.4 If at any time a Capital Disqualification Event has occurred and is continuing, either (i) the General
Partner may (in circumstances where HBOS is itself not insolvent or in liquidation) in its absolute
discretion on behalf of the Issuer elect to substitute the Substituted Preference Shares for the Preferred
Securities in the manner provided in paragraph 5 or (ii) the Preferred Securities may be redeemed, in
whole but not in part, at the option of the General Partner, subject to the satisfaction of the
Redemption Conditions and to the Law, at any time upon not less than 30 nor more than 60 days’
notice to the Holders specifying the Capital Disqualification Event Redemption Date (which notice
shall be irrevocable), each Preferred Security being redeemable at the Optional Redemption Price.
Prior to the publication of any notice of redemption pursuant to the foregoing, the General Partner
shall deliver to the Registrar a certificate signed by two Directors of HBOS stating that the Issuer is
entitled to effect such redemption and an opinion of counsel to HBOS experienced in such matters to
the effect that a Capital Disqualification Event has occurred. Upon the expiry of such notice, the Issuer
shall be bound to redeem each of the Preferred Securities accordingly in accordance with and subject
to the Law. For so long as the Preferred Securities are listed on the Luxembourg Stock Exchange, the
General Partner shall cause notice of such redemption to be given to the Luxembourg Stock Exchange.
4.5 Under existing FSA requirements, neither the Issuer nor HBOS may redeem or purchase any Preferred
Securities unless the FSA gives its prior written consent. The FSA may impose conditions on any such
redemption or purchase.
5 Substitution by Preference Shares
5.1 As soon as reasonably practicable following the occurrence of a Substitution Event or the Involuntary
Dissolution of the Issuer (in circumstances where HBOS is itself not insolvent or in liquidation) or
following an election by the General Partner in its absolute discretion on behalf of the Issuer to
substitute Substituted Preference Shares following a Capital Disqualification Event as contemplated in
paragraph 4.4, the General Partner shall cause notice thereof to be given in accordance with
paragraph 10 and take all reasonable steps to cause the substitution of the Preferred Securities by
fully-paid preference shares issued directly by HBOS (the ‘‘Substituted Preference Shares’’) the terms
of which provide the Holders in all material commercial respects with the same economic rights and
benefits (including those relating to non-cumulative distributions and status) as are attached to the
Preferred Securities and the Guarantee taken together. However, in the event that at the time of any
such substitution HBOS is unable, by reason of the operation of Article 4.7 of its Articles of
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