Lloyds TSB Bank plc

(c) Exchange for Upper Tier 2 Securities, Variation or Redemption due to TaxationIf the Bank satisfies the Trustee immediately prior to the giving of the notice referred to belowthat, on the next due date for a Coupon Payment:(i)(ii)(iii)the Bank would, for reasons outside its control, be unable to make such payment withoutbeing required to pay additional amounts as provided or referred to in Condition 11; orpayments of amounts in respect of interest on the Capital Securities including, for theavoidance of doubt, the issue of Bank Shares pursuant to Condition 6, may be treated as"distributions" within the meaning of Section 832(1) of the Income and Corporation TaxesAct 1988 (or such other Section and/or Act as may from time to time supersede or replaceSection 832(1) of the Income and Corporation Taxes Act 1988 for the purposes of suchdefinition) and such requirement or circumstance cannot be avoided by the Bank takingsuch measures as it (acting in good faith) deems appropriate; oras a result of any change in or proposed change in, or amendment to or proposedamendment to, the laws of the United Kingdom or any political subdivision or authoritythereof having power to tax, or any change in or proposed change in the application ofofficial or generally published interpretation of such laws, or any interpretation orpronouncement by any relevant tax authority that provides for a position with respect tosuch law or regulations that differs from the previously generally accepted position inrelation to similar transactions or which differs from any specific written confirmation givenby a tax authority in respect of the Capital Securities, which change or amendmentbecomes, or would become, effective, or in the case of a change or proposed change in lawif such change is enacted (or, in the case of a proposed change, is expected to be enacted)by Act of Parliament or made by Statutory Instrument on or after 18 October 2002, thereis more than an insubstantial risk that the Bank will not obtain full or substantially fullrelief for the purposes of United Kingdom corporation tax for any payment of interestincluding, for the avoidance of doubt, where the payment of interest is to be satisfied by theissue of Bank Shares and Ordinary Shares pursuant to Condition 6 or, as a result of theCapital Securities being in issue, the Bank may be unable to claim or surrender losses asgroup relief, and such requirement or circumstance cannot be avoided by the Bank takingsuch measures as it (acting in good faith) deems appropriate,then(aa)(bb)in any case where (i) applies, the Bank may (subject to the prior consent of the FinancialServices Authority and Condition 2(b)(i)), having given not less than 30 nor more that 60days' notice to the Trustee, the Principal Paying Agent and, in accordance withCondition 16, the Holders (which notice shall be irrevocable), redeem, in accordance withthese Terms and Conditions, at any time all, but not some only, of the Capital Securities attheir principal amount together with any Outstanding Payments on any CouponPayment Date;in any case where either paragraph (ii) or (iii) above applies, the Bank may (subject to theprior consent of the Financial Services Authority but without any requirement for theconsent or approval of the Holders or, save as specified below, the Trustee) having given notless than 30 nor more than 60 days' notice to the Trustee, the Principal Paying Agent and,in accordance with Condition 16, the Holders (which notice shall be irrevocable) exchangethe Capital Securities for, or vary the terms of the Capital Securities so that they become,Upper Tier 2 Securities on terms which preserve any existing rights under these Terms andConditions to Outstanding Payments. Notice of any such exchange or variation shall bepublished in accordance with Condition 16 and shall set out, inter alia, details of themanner in which such exchange or variation shall be effected. If any of the conditions listedin paragraphs (i), (ii) or (iii) above apply or continue to apply to the Upper Tier 2 Securitiesfor or into which the Capital Securities have been exchanged or varied, or if the Bank showsto the satisfaction of the Trustee that any of these conditions would apply if such exchangeor variation were to take place, or if the consent of the Financial Services Authority is notgiven, the Bank may, subject to Condition 2(b)(i), having given not less than 30 nor morethan 60 days' notice to the Holders in accordance with Condition 16, the Trustee and thePrincipal Paying Agent (which notice shall be irrevocable) redeem, in accordance with theseTerms and Conditions, at any time all, but not some only, of the Capital Securities or anysuch Upper Tier 2 Securities for or into which they have been exchanged or varied at their15