Exhibit 4(a) (vii)

Conformed copy 




Her Majesty’s Treasury
(the “Treasury”)

1 Horse Guards Road

London 

SW1A 2HQ 


7 March 2009


Ladies and Gentlemen,


ASSET
PROTECTION SCHEME: PRE-ACCESSION COMMITMENTS


	
 

	
 


	
1.

	
Introduction





Lloyds Banking Group plc
(the “Participating Institution”) notes that:


	
 

	
 


	
(A)

	
the Participating Institution is currently in
 discussions with the Treasury concerning the potential participation by
 members of the Participating Group (as defined below) in the Asset Protection
 Scheme (the “APS”) announced by the Government on 19 January 2009; and


	
 

	
 


	
(B)

	
such participation in the APS is subject (amongst
 other things) to a legally binding agreement on the terms of any such
 participation and is expected to be subject to a number of conditions
 precedent.





In anticipation of such
potential participation in the APS, this document is being entered into by the
Participating Institution by way of a deed poll in favour of the Treasury and
specifies certain undertakings (“Pre-Accession Undertakings”) being given by
the Participating Institution (for itself and on behalf of each member of the
Participating Group). 


References in this Deed
Poll to: (i) “Participating Group” mean the Participating Institution and each
of its group undertakings (as defined in the Companies Act 2006); and (ii) the
“Interim Asset Management Undertakings” means the undertakings set out in
paragraphs 6 to 10 (inclusive). Unless otherwise defined herein, capitalised
terms used in this Deed Poll shall have the meanings ascribed to them in the
term sheet for the APS (the “Term Sheet”), the terms of which have been
published by the Treasury on 26 February 2009.


	
 

	
 


	
2.

	
Nature
 of Pre-Accession Undertakings





The Participating
Institution agrees that: (i) the Pre-Accession Undertakings are intended to be
binding on it and each member of the Participating Group; (ii) such
undertakings are a pre-requisite to the Participating Group’s participation in
the APS; and (iii) such undertakings are without prejudice to the Treasury’s
right to determine whether or not the Participating Group is eligible to
participate in the APS. 






2


The Participating
Institution will use its best endeavours to comply with the Pre-Accession
Undertakings in good faith, and to work constructively and in an open and
transparent way with the Treasury so as to facilitate the implementation of the
APS and the potential participation by the Participating Group in the APS in an
expedited and cost- and resource-efficient manner.


	
 

	
 


	
3.

	
Duration
 of Pre-Accession Undertakings





The Participating
Institution undertakes to implement the Pre-Accession Undertakings with
immediate effect (or, where a period for compliance is expressly provided for
below, within such period). The Pre-Accession Undertakings will cease to apply
on the earliest of: (i) the date on which the Participating Institution accedes
to the APS; (ii) the date when the Participating Institution indicates to the
Treasury in writing that it no longer wishes to accede to the APS; and (iii) 31
December 2009 or such other date as may be agreed between the Participating
Institution and the Treasury (such period, the “Interim Period”). If the
Participating Group does not participate in the APS, neither the Participating
Institution nor any member of the Participating Group will be liable for any
matters arising hereunder.


	
 

	
 


	
4.

	
Information
 and assistance


	
 

	
 


	
4.1

	
General





The Participating
Institution shall provide the Treasury (and its officials, employees,
representatives, agents and advisers (together “Representatives”)) with all
such assistance, and information and data, as is reasonably requested by the
Treasury or its Representatives which is pertinent to the implementation of the
APS and the Participating Group’s potential participation in the APS. 


The Participating
Institution will take all reasonable steps to ensure that the information and
data provided to the Treasury or its Representatives is accurate as of its
specified date.


Nothing in this Deed Poll
shall require any member of the Participating Group to provide to the Treasury
(or its Representatives) any information or data that either (A) any member of
the Participating Group has already provided to the Treasury (or its
Representatives) prior to the date of this Deed Poll; or (B) has already been
provided by any member of the Participating Group to the Treasury (or its
Representatives) prior to the request. 






3


	
 

	
 


	
4.2

	
Information:
 Identification of Proposed Assets





It is acknowledged and
agreed that the Treasury intends that any assets, commitments and exposures to
be included by the Participating Group within the APS will be agreed by no
later than 30 April 2009.


In order to achieve that
intention, the Participating Institution shall provide to the Treasury as soon
as practicable an indicative list of the assets, commitments and exposures that
it proposes to include within the APS (such assets, commitments and exposures
the “Proposed Assets” and such list of Proposed Assets the “Proposed Assets
Schedule”).


As soon as practicable
after entry into this Deed Poll, the Participating Institution will discuss and
agree in good faith with the Treasury (taking into account the outcomes of any
discussions that have already taken place prior to the date of this Deed Poll):


	
 

	
 


	
(A)

	
a satisfactory
 timetable for providing the Proposed Assets Schedule and the Indicative Asset
 Information (as defined below) to the Treasury in order to achieve the
 intention set out in the first paragraph of this paragraph 4.2; and


	
 

	
 


	
(B)

	
the form and data
 fields of the Proposed Asset Schedule for each type of Proposed Asset (the
 “Indicative Asset Information”),





provided that if
agreement is not reached then it is agreed and acknowledged that the timetable
for provision of, and the form of and information to be included in, the
Proposed Asset Schedule and the Indicative Asset Information shall be as the
Treasury may in its sole discretion deem necessary or appropriate.


Development and
finalisation of the Proposed Assets Schedule and the Indicative Asset
Information will be an iterative process and, as such: (i) if the relevant
Indicative Asset Information for a particular type of Proposed Asset is not
available to the Participating Group at the time that Proposed Asset is
included in the Proposed Asset Schedule the Participating Institution shall
provide such information to the Treasury as soon as practicable; and (ii) the
Participating Institution shall provide to the Treasury an updated Proposed
Assets Schedule and Indicative Asset Information as promptly as practicable
following: (1) any material asset, commitment or exposure becoming or ceasing
to be a Proposed Asset; or (2) any responsible personnel at the Participating
Institution involved in its participation in the APS becoming aware that any
material information included in the Proposed Asset Schedule and Indicative
Asset Information relating to a Proposed Asset has ceased to be accurate or
up-to-date in any material respect, it being acknowledged and agreed that the
Treasury will consider in good faith any request from the Participating Group
to accumulate a number of matters falling within (1) or (2) to the Treasury for
the purposes of reporting them in a cumulative updated Proposed Asset Schedule
and Indicative Asset Information, to be provided on a frequent basis, rather
than individual updates on each such matter. 


If and to the extent that
the Treasury reasonably requests further information in respect of any
information or data set out in the Proposed Assets Schedule or the Indicative
Asset Information on a case-by-case basis, the Participating Institution will
procure so far as it is able that such 






4


further information is
provided to the Treasury (or its Representatives) as soon as practicable
following that request.


	
 

	
 


	
4.3

	
Information:
 due diligence on proposed assets





The Participating
Institution shall as promptly as practicable provide to the Treasury (or its
Representatives) information and data reasonably requested by the Treasury (or
its Representatives) for the purposes of conducting due diligence on the
Proposed Assets, determining whether the Proposed Assets satisfy the Asset
Eligibility Criteria and quantifying the financial exposure which may result
from the inclusion of such Proposed Assets in the APS. In connection with the
preceding sentence, the scope and content and the provision of such information
and data will be discussed in good faith with the Treasury (taking into account
the outcomes of any discussions that have already taken place prior to the date
of this Deed Poll) with a view to agreeing a process and a schedule for each type
of Proposed Asset, provided that if agreement is not reached within a period
reasonably acceptable to the Treasury then the requirements of the Treasury
with regard to such information and data will prevail.


The Participating
Institution confirms that it has appointed a major international firm of
accountants to co-ordinate the confirmatory due diligence process within the
Participating Group relating to information provided (or to be provided) to the
Treasury in relation to the APS, the specific scope of such engagement to be
determined by the Participating Institution acting reasonably (in consultation
with the Treasury).


	
 

	
 


	
4.4

	
Information:
 other requirements





In addition to the other
information and data set out in this paragraph 4, the Participating Institution
shall as promptly as practicable provide information and data reasonably
requested by the Treasury (or its Representatives) concerning: 


	
 

	
 


	
(A)

	
the Participating
 Group’s business and financial condition;


	
 

	
 


	
(B)

	
the financial
 performance and its risk assessment of Proposed Assets (provided that the
 Treasury will consider in good faith reasonable requests of the Participating
 Institution to provide information and data on such matters on an aggregated
 basis by reference to the relevant type of Proposed Assets);


	
 

	
 


	
(C)

	
the Participating
 Group’s proposed strategy with respect to the management of the Proposed
 Assets, transactions relating to Proposed Assets, the anticipated costs of
 managing the Proposed Assets and its strategy for managing such costs (the
 “Asset Management Strategy”);


	
 

	
 


	
(D)

	
the Participating
 Group’s: (i) current remuneration policy and any proposed changes thereto;
 (ii) organisational structures, including, without limitation, in respect of
 staffing and resourcing; and (iii) monitoring, reporting, risk management and
 conflict processes, systems and controls, in each case including actions and
 steps being taken or proposed to be taken to adapt, change or replace the
 foregoing in preparation for the Participating Group’s potential participation
 in the APS; and












5


	
 

	
 


	
(E)

	
any other material
 actions and steps being taken by the Participating Group to prepare for the
 implementation of the APS and the potential participation by the
 Participating Group in the APS.


	
 

	
 


	
No member of the Participating
 Group shall be required to comply with any requests from the Treasury or its
 Representatives under this paragraph 4.4 to the extent that they are
 excessive, or constitute an unreasonable interference with the Participating
 Group’s commercial operations or an unreasonable impediment to management and
 personnel of the Participating Group of their ability to fulfil their day to
 day functions at the Participating Group.


	
 


	
4.5

	
Access
 and assistance


	
 

	
 


	
The Participating
 Institution shall procure that:


	
 

	
 


	
(A)

	
the Treasury and its
 Representatives are given access to the Participating Group’s premises, books
 and records on reasonable notice; and 


	
 

	
 


	
(B)

	
its senior executives,
 managers and other relevant personnel, together with its accountants, auditors
 and other advisers, are made available upon reasonable notice to give (and
 are instructed to give as promptly as practicable) all information,
 explanations and assistance requested by the Treasury (or its
 Representatives),





in either case as the
Treasury deems reasonably necessary: (i) to facilitate implementation of the
APS and the potential participation by the Participating Group in the APS; and
(ii) to conduct due diligence on the Proposed Assets in the manner contemplated
by paragraph 4.3 following discussion between the Participating Institution and
the Treasury as referred to in paragraph 4.3. 


The Treasury shall, in
particular (but without limitation), be entitled to require the Participating
Institution to allow the Treasury’s reporting accountants such access to the
Participating Group’s premises, books and records as it deems reasonably
necessary to monitor and oversee the management of the Proposed Assets. In
doing so, the Treasury shall have regard to any process that may be agreed with
the Participating Group for this purpose including, without limitation, as to
the seniority of personnel required to attend, when they are required to attend
and what information they are required to have available for that purpose.


No member of the
Participating Group shall be required to comply with any requests from the
Treasury or its Representatives under this paragraph 4.5 to the extent that
they are excessive, or constitute an unreasonable interference with the
Participating Group’s commercial operations or an unreasonable impediment to
management and personnel of the Participating Group of their ability to fulfil
their day to day functions at the Participating Group.


	
 

	
 


	
5.

	
Consultation
 rights





The Participating
Institution will consult fully with the Treasury with regard to:






6


	
 

	
 


	
(A)

	
the design, preparation
 and implementation of the operational and management structures within the
 Participating Group to manage the Proposed Assets, including the remuneration
 policy applying to personnel involved in managing the Proposed Assets;


	
 

	
 


	
(B)

	
its Asset Management
 Strategy (including, without limitation, any proposals: (i) to amend its
 existing ordinary course business practices for the management of the
 Proposed Assets; or (ii) to apply materially different ordinary course
 business practices for the management of the Proposed Assets on the one hand
 and assets which the Participating Institution does not propose to include
 within the APS on the other hand (such assets, the “non-APS Assets”)); 


	
 

	
 


	
(C)

	
the development of any
 conflict resolution processes which are necessary to ensure that any
 conflicts, or potential conflicts, arising in respect of the management of
 Proposed Assets and the non-APS Assets are managed without regard to any
 benefits that may be provided by the APS; and


	
 

	
 


	
(D)

	
proposals to adapt,
 change or replace the Participating Group’s policies, processes, systems and
 controls (including, without limitation, in relation to monitoring,
 reporting, risk management, conflicts, auditing and compliance) in each case
 to the extent such proposals relate to the implementation of the APS or the
 Participating Group’s potential participation in the APS.


	
 

	
 


	
6.

	
Oversight
 and control procedures


	
 

	
 


	
The Participating
 Institution shall, during the Interim Period, use its best endeavours to
 maintain monitoring, reporting, risk management and audit controls and
 procedures in order to:


	
 


	
(A)

	
provide the directors
 and senior management of the Participating Group with a reasonable level of
 assurance that the Participating Institution is complying with its
 obligations under paragraphs 7 and 10 below;


	
 

	
 


	
(B)

	
identify, assess,
 report, manage and mitigate risks relating to key business processes which
 affect the assets of the Participating Group; and


	
 

	
 


	
(C)

	
ensure that material
 information relating to the assets of the Participating Group is made known
 to the directors and senior management of the Participating Group,


	
 

	
 


	
and shall ensure that
 its directors and senior management are provided with regular updates
 regarding the progress of establishing sufficient systems, processes and
 controls to enable the Participating Group to comply with the terms of the
 APS.


	
 


	
7.

	
Management
 of assets


	
 


	
The Participating
 Institution will during the Interim Period use its best endeavours:


	
 

	
 


	
(A)

	
to ensure that the
 management of all of its and the Participating Group’s assets and any assets
 held by a special purpose entity for which a member of the Participating
 Group is 












7


	
 

	
 


	
 

	
a servicer or
 equivalent, including both the Proposed Assets and the non-APS Assets, is
 undertaken without regard to any benefits that may be provided by the APS;


	
 

	
 


	
(B)

	
to ensure that each
 member of the Participating Group which owns Proposed Assets, or which acts
 as a servicer or equivalent in relation to special purpose entities that own
 Proposed Assets, continues to manage all Proposed Assets in accordance with
 its usual business and banking practices as a prudent banking institution
 without regard to any benefits that may be provided by the APS; 


	
 

	
 


	
(C)

	
to act in a way that
 aims to maximise the long-term value of any Proposed Assets without regard to
 any benefits that may be provided by the APS and, in particular, will use all
 commercially reasonable efforts to mitigate Losses and maximise Recoveries
 with respect to Proposed Assets, provided that this shall not require any
 member of the Participating Group to engage in any practices that are not
 consistent with industry standards or its usual business and banking
 practices as a prudent banking institution or are not consistent with
 Government policies regarding the economy and UK business; and 


	
 

	
 


	
(D)

	
not to sell or dispose
 of, nor make any amendment or modification to the terms of a Proposed Asset,
 other than in accordance with (A), (B) and (C) above.


	
 

	
 


	
8.

	
Remuneration
 Policy


	
 

	
 


	
The Participating
 Institution:


	
 


	
(A)

	
acknowledges that it
 has agreed with the Government certain commitments regarding remuneration for
 2008 and 2009***1; and


	
 

	
 


	
(B)

	
acknowledges that the
 Treasury and the FSA propose to commence a consultation in relation to a Code
 of Remuneration Practice for banking institutions and confirms that it will
 develop a remuneration policy which complies with any such Code by no later
 than 3 months following the date of this Deed Poll and will implement such
 policy as soon as practicable thereafter.


	
 

	
 


	
9.

	
Commitment regarding deleveraging activities





At
or around the same date as this Deed Poll, the Participating Institution has
agreed certain commitments in relation to its lending activities, including
commitments in respect of financing facilities to be made available to
“Large Corporates” (being UK businesses with a turnover which is typically in
excess of £500 million) (the “Large Corporate Lending Commitment”). The
Participating Institution will inform the Department of
Business, Enterprise and Regulatory Reform prior to making significant
reductions in the level of lending being made available to 


	
 

	
 


	



	
 

	
 


	
1*** Indicates omission of
 material, which has been separately filed, pursuant to a request for confidential
 treatment.












8


existing
Large Corporate borrowers or counterparties (where such borrowers or
counterparties are creditworthy and meet the Participating Institution’s
ordinary course commercial and risk assessment criteria).


	
 

	
 


	
10.

	
Servicing
 of assets


	
 

	
 


	
The Participating
 Institution shall use its best endeavours to continue to:


	
 


	
(A)

	
ensure that internal
 services within the Participating Group (including, without limitation, IT,
 accounting, audit, tax, legal, compliance and administrative) required for
 the management of the Proposed Assets are provided: (i) on a basis which is
 no less favourable than the basis upon which services are provided to non-APS
 assets, (including, without limitation, with regard to the level and quality
 of such services); and (ii) in accordance with its usual business and banking
 practices as a prudent banking institution; 


	
 

	
 


	
(B)

	
dedicate sufficient
 staff (with the requisite qualifications) to the management of the Proposed
 Assets to ensure compliance with the Pre-Accession Undertakings; and


	
 

	
 


	
(C)

	
ensure that such other
 resources are deployed in the management of the Proposed Assets as are
 necessary to comply with the Pre-Accession Undertakings.


	
 

	
 


	
The Participating
 Institution shall provide written notification to the Treasury promptly after
 the execution of any contract pursuant to which any third party (other than a
 member of the Participating Group) will manage any of the Proposed Assets
 other than in accordance with its usual business and banking practices as a
 prudent banking institution.


	
 


	
11.

	
Registration
 Rights Agreement





Prior to the date on
which the Participating Institution or relevant members of the Participating
Group accedes to the APS, the Participating Institution shall enter into a
registration rights agreement with the Treasury, in the form and substance
reasonably satisfactory to the Treasury, in order to enable the ordinary
shares, Class B shares and other securities held by the Treasury in the
Participating Institution from time to time, and any securities of any
description issued by the Treasury from time to time and which are exchangeable
for, convertible into, give rights over or are referable to such ordinary
shares or other securities, to be sold in such jurisdictions and in such manner
as the Treasury may determine, including, without limitation, the provision of
assistance with due diligence, marketing and such documentation (including
without limitation any offering memorandum, whether or not a prospectus) as the
Treasury may reasonably require. 


Neither the Participating
Institution nor any member of the Participating Group shall be required:


	
 

	
 


	
(A)

	
to obtain a listing for
 any securities on any exchange or in any market in which it does not already
 have a listing where the Participating Institution and the Treasury, both
 acting reasonably, decide that obtaining such listing would be unduly onerous
 having regard to the additional listing obligations to which the
 Participating Institution or












9


	
 

	
 


	
 

	
relevant member of the
 Participating Group would be subject as a result of or in connection with
 obtaining such listing; or


	
 

	
 


	
(B)

	
to provide any
 assistance to the Treasury prior to 22 July 2009 in relation to the
 preparation of any prospectus, listing particulars, offering memorandum or
 other marketing materials if such work would require (in the view of the
 Participating Institution and the Treasury, both acting reasonably) onerous
 financial, accounting or audit work in order to ensure that the requested
 materials comply with relevant securities laws.


	
 

	
 


	
12.

	
Public
 disclosure 


	
 

	
 


	
The Participating
 Institution understands that the Treasury will not publicly announce the
 details of the Pre-Accession Undertakings.


	
 

	
 


	
13.

	
Confidentiality





The Participating
Institution’s disclosure obligations hereunder will be subject to any
confidentiality obligations imposed on it by applicable law or regulation and
(to the extent in existence at the date of this Deed Poll) contractual
limitations on the Participating Institution’s or any member of the Participating
Group’s ability to disclose information, save to the extent that compliance
with any such obligation or limitation can be achieved by anonymising data or
information to preserve customer confidentiality. If requested by the Treasury
following a refusal to provide information on the above grounds, to the extent
reasonably practicable the Participating Institution shall demonstrate to the
Treasury’s reasonable satisfaction the existence (and details) of any such
grounds which results in the Participating Institution being unable to provide
such information. 


Confidential information
or data provided to the Treasury (or its Representatives) pursuant to this Deed
Poll will be subject to the confidentiality agreement between the Treasury and
the Participating Institution dated 27 February 2009.


	
 

	
 


	
14.

	
Miscellaneous


	
 

	
 


	
14.1

	
Representations
 and warranties


	
 

	
 


	
The Participating
 Institution represents and warrants that:


	
 


	
(A)

	
it has the corporate
 power and the authority to enter into this Deed Poll and to carry out its
 obligations, and the undertakings given by it, hereunder;


	
 

	
 


	
(B)

	
it is duly organised
 and validly existing under the laws of its jurisdiction of organisation, and
 the execution of this Deed Poll and the carrying out its obligations, and the
 undertakings given by it, hereunder have been duly authorised by all
 necessary action, and no other act or proceeding, corporate or otherwise, on
 its part is necessary to authorise the execution of this Deed Poll or the
 carrying out its obligations, and the undertakings given by it, hereunder;
 and


	
 

	
 


	
(C)

	
it has duly executed
 and delivered this Deed Poll.












10


	
 

	
 


	
14.2

	
Costs


	
 

	
 


	
The Participating
 Institution acknowledges and agrees that it shall pay its own costs and
 expenses in relation to the negotiation, preparation, execution and carrying
 into effect of this Deed Poll and compliance with the Pre-Accession
 Undertakings.


	
 

	
 


	
14.3

	
Remedies


	
 

	
 


	
The Participating
 Institution acknowledges and agrees that:


	
 


	
(A)

	
(without prejudice to
 any other rights or remedies which the Treasury may have) damages would not
 be an adequate remedy for any breach by the Participating Institution of the
 provisions of this Deed Poll and the Treasury shall be entitled to the
 remedies of injunction, specific performance and other equitable relief for
 any threatened or actual breach of any such provision by the Participating
 Institution and no proof of special damages shall be necessary for the
 enforcement by the Treasury of its rights under this Deed Poll; 


	
 

	
 


	
(B)

	
no failure of the
 Treasury to exercise, and no delay by the Treasury in exercising, any right,
 power or remedy in connection with this Deed Poll will operate as a waiver
 thereof, nor will any single or partial exercise of any such right preclude
 any other or further exercise of such right or the exercise of any other
 right; and


	
 

	
 


	
(C)

	
the rights provided in
 this Deed Poll are cumulative and not exclusive of any rights (whether
 provided by law or otherwise). 


	
 

	
 


	
14.4

	
Invalidity


	
 

	
 


	
If any provision of
 this Deed Poll shall be held to be illegal, invalid or unenforceable, in
 whole or in part, under any enactment or rule of law, such provision or part
 shall to that extent be deemed not to form part of this Deed Poll but the
 legality, validity and enforceability of the remainder of this Deed Poll
 shall not be affected.


	
 

	
 


	
14.5

	
Variation


	
 

	
 


	
Any term of this Deed
 Poll may be amended, and the observance of any term of this Deed Poll may be
 waived (either generally or in a particular instance and either retroactively
 or prospectively), by the Participating Institution only with the written
 consent of the Treasury.


	
 

	
 


	
14.6

	
Governing
 law


	
 

	
 


	
This Deed Poll and any
 non-contractual obligations arising out of or in connection with it shall be
 governed by and construed in accordance with the laws of England.












11


IN
WITNESS WHEREOF this Deed Poll has been executed and delivered as a
deed on 7 March 2009.


	
 

	
 

	
 


	
Executed and delivered
 as a deed by

	
)

	
 


	
LLOYDS
 BANKING GROUP PLC

	
)

	
 


	
acting by two directors
 / one director and its secretary

	
)

	
By:          Tim
 Tookey


	
 

	
)

	
 


	
 

	
)

	
                Director


	
 

	
)

	
 


	
 

	
)

	
 


	
 

	
)

	
 


	
 

	
)

	
By:
           J. Eric Daniels


	
 

	
)

	
 


	
 

	
)

	
                 Group
 Chief Executive