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

SUBORDINATED GUARANTEE
The following is the Guarantee substantially in the form to be executed by HBOS.
THIS DEED OF GUARANTEE (the ‘‘Guarantee’’), dated 21 March 2003, is executed and delivered by HBOS
plc (‘‘HBOS’’) for the benefit of the Holders (as defined below).
WHEREAS:
(i)
(ii)
HBOS desires to issue this Guarantee for the benefit of the Holders, as provided herein; and
this Guarantee is intended to provide the Holders, on a dissolution of the Issuer (as defined below) or on a
default by the Issuer in discharging its obligations in respect of the Preferred Securities (as defined below),
with rights against HBOS in respect of the Guaranteed Payments (as defined below) which are as nearly as
possible equivalent to those which they would have had if the Preferred Securities had been directly issued
preference shares of HBOS (whether or not HBOS could in fact have issued such securities)
NOW, THEREFORE HBOS executes and delivers this Guarantee as a deed poll for the benefit of the Holders.
1 Definitions
As used in this Guarantee, capitalised terms not defined herein shall have the meanings ascribed to them in
the Partnership Agreement (as defined below) and the following terms shall, unless the context otherwise
requires, have the following meanings:
‘‘Guaranteed Payments’’ means (without duplication) collectively (i) all Distributions due on the Preferred
Securities, (ii) any Liquidation Distribution to which Holders are entitled, (iii) the Optional Redemption
Price and (iv) any Additional Amounts;
‘‘Holder’’ means, in respect of each Preferred Security, each person registered on the Register as the limited
partner holding such Preferred Security at the relevant time save for as long as the Preferred Securities are
registered in the name of a common depositary (or of a nominee for a common depositary) for Clearstream,
Luxembourg and Euroclear, in which case each person (other than Euroclear and Clearstream, Luxembourg)
who is for the time being shown in the records of Euroclear and Clearstream, Luxembourg as the holder of
any Preferred Securities (in which regard any certificate or other document issued by Euroclear or
Clearstream, Luxembourg as to the number of Preferred Securities standing to the account of any person
shall be conclusive and binding for all purposes) other than with respect to payments, the right to which shall
be vested in the name of the person appearing as the relative limited partner in the Register;
‘‘Issuer’’ means HBOS Capital Funding No. 1 L.P.;
‘‘Partnership Agreement’’ means the Limited Partnership Agreement dated 19 March 2003 establishing the
Issuer as amended from time to time; and
‘‘Preferred Securities’’ means the U.S.$1,000,000,000 6.85 per cent. Guaranteed Non-voting Noncumulative
Perpetual Preferred Securities outstanding of the Issuer, including any further Preferred
Securities of the same series, whether or not in issue on the date of this Guarantee, the Holders of which are
entitled to the benefits of this Guarantee as evidenced by the execution of this Guarantee.
2 Guarantee
2.1 Subject to the exceptions and limitations contained in the following provisions of this clause 2, HBOS
irrevocably agrees to pay in full to the Holders the Guaranteed Payments, as and when due, to the
extent that such payments shall not have been paid when due and payable by the Issuer regardless of
any defence, right of set-off or counterclaim which the Issuer may have or assert. This Guarantee is
continuing, irrevocable and absolute. The rights and claims of the Holders against HBOS under this
Guarantee are subordinated to the claims of the Senior Creditors (as defined in clause 2.3) in that
payment of the Guaranteed Payments is conditional upon satisfaction of the conditions set out in the
following provisions of this clause 2.
2.2 Notwithstanding clause 2.1, HBOS will not, save to the extent provided in clause 2.5, be obliged to
make any Guaranteed Payment if HBOS is prevented by applicable U.K. banking regulations or other
requirements from making payment in full under this Guarantee. In addition, notwithstanding
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