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

available from an issue of Replacement Capital (as defined below)
that has been made for the purpose of funding the redemption, in
either of cases (ii)(a) or (b) in an amount at least equal to the
aggregate Optional Redemption Price; and
‘‘Replacement Capital’’ means shares or other securities issued by
HBOS or shares or other securities issued by a Subsidiary or other
entity which would, under the then generally accepted accounting
practice in the U.K., qualify as at the date thereof for treatment as a
minority interest or shareholders’ funds in HBOS’s accounts.
Tax Redemption: ******************
Capital Disqualification Event
Redemption: **********************
Rights upon Liquidation: ***********
If at any time a Tax Event occurs and is continuing, the effect of
which cannot be avoided by the Issuer or HBOS taking reasonable
measures available to it, the Preferred Securities will be redeemable
in whole, but not in part, at the option of the General Partner, subject
to the Law and to satisfaction of the Redemption Conditions at the
Optional Redemption Price.
As used herein, ‘‘Tax Event’’ means that, as a result of a change in
any law or regulation of the U.K. or Jersey, or in any treaty to which
the U.K. or Jersey is a party, or in the official interpretation or
application of any law, regulation or treaty by any relevant body in
the U.K. or Jersey (i) the Issuer or the General Partner would be
subject to more than a de minimis amount of tax in respect of the
Notes or the Preferred Securities (except, in the case of the General
Partner only, for any such tax that would arise as a result of
(a) profits arising to it as a result of payments received by it from the
Issuer or (b) activities (if any) carried on by it other than those
permitted or contemplated in the Limited Partnership Agreement in
respect of the Notes and the Preferred Securities) in Jersey or the
U.K., (ii) payments to Holders would be subject to deduction or to
withholding tax or would give rise to any obligation to account for
any tax in Jersey or the U.K., (iii) payments by HBOS in respect of
the Notes would be subject to deduction or to withholding tax in the
U.K. or (iv) HBOS would not obtain relief for the purposes of U.K.
corporation tax for any payment of interest in respect of the Notes.
If at any time a Capital Disqualification Event has occurred and is
continuing, the Preferred Securities are redeemable at any time in
whole, but not in part, at the option of the General Partner, subject to
the Law and to satisfaction of the Redemption Conditions, at the
Optional Redemption Price.
Alternatively, if at any time a Capital Disqualification Event has
occurred and is continuing, the General Partner may, in
circumstances where HBOS is not itself insolvent or in liquidation,
elect to substitute Substituted Preference Shares for the Preferred
Securities in the manner described under ‘‘Substitution Event and
Substitution’’ below.
As used herein, ‘‘Capital Disqualification Event’’ means a change in
any applicable law or regulation, or in the official interpretation or
application thereof, as a result of which, for the purposes of the
FSA’s capital adequacy requirements applicable to banks in the U.K.
at that time, the Preferred Securities do not constitute Tier 1
Securities.
In the event of the dissolution (other than an Involuntary Dissolution)
of the Issuer, Holders will be entitled to receive, subject as set out
herein under ‘‘Description of the Preferred Securities — Liquidation
Distributions’’, for each Preferred Security a Liquidation Distribution
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